Varoufakis, Y. (2014) “Why is Europe Not ‘Coming Together’ in Response to the Euro Crisis?”, Yanis Varoufakis Blog: thoughts for the post-2008 world, 29 August.
In this article I ask a question on everyone’s lips: Almost everyone agrees that the Eurozone was a one-legged giant; a monetary union lacking a political ‘leg’ to stabilise it. If so, why has the Euro Crisis (which surely strengthened that view on the back of its ferocity and durability) not strengthen the hand of the federalists? Of those who were, supposedly, waiting to pounce upon any opportunity to create a United States of Europe? (This article was compiled from extracts of a keynote speech I have on 25th August 2014 at the University of Tampere, Finland, in the context of a conference entitled Power, Knowledge and Society.)
Monetary Union is an attempt to usher in Federation through the back door.” Margaret Thatcher, 1990
We now know that Mrs Thatcher was wrong. The Euro Crisis, that broke out in th aftermath of the 2008 global financial implosion, was a splendid opportunity for federalists in Berlin, Brussels and Paris to push for the federal moves that they, purportedly, always planned to make on the back on the common currency.
Just look at the so-called Banking Union that the EU has agreed. The unification of banking sectors across the Eurozone, which was and is absolutely essential for the survival of the Eurozone, was recently proclaimed in name to be denied in practice.
This raises a poignant question: The United States also had serious trouble consolidating its union, its federation. It took a century of deliberation, a bloody civil war, a series of banking crises and depressions and, of course, the Great Crash of 1929, not to mention the civil rights marches in the 1960s (which spawned Lyndon B. Johnson’s Great Society) for the United States to achieve proper political unity. But with every crisis, the United States pulled closer together.
Europe is doing the opposite. It is coming apart. Even though we came to the brink in 2012, when Mr Mario Draghi, the head of the ECB, admitted that the euro was about to collapse (famously invoking the ‘convertibility risk’), not only did we not come closer together but, indeed, we did precisely the opposite, if one looks at the reality behind the rhetoric.
The question is: Why was Mrs Thatcher wrong? Why was a genuine political union not on the cards? Why is this crisis causing the re-nationalisation of many areas of policymaking, including the link between banks and governments? Why is the crisis failing to produce an Alexander Hamilton or a Franklin Roosevelt but, instead, reinforces unendingly the centrifugal forces tearing the EU edifice down?
Relevant posts:
- Véron, Ν. (2014) “Euro crisis turning point: Two years of Banking Union – Europe’s leaders avoided their usual muddling-through complacency to do something radical—and it worked!“, Bruegel Institute, 30 June.
- Legrain, P. (2014) “Europe’s Bogus Banking Union“, Project Syndicate, 08 April.
- Huertas, T. & Nieto, J. M. (2014) “How Much is Enough? The Case of the Resolution Fund in Europe“, VoxEU Organisation, 18 March.