After more than a year in crisis mode, the euro-zone countries are still scrambling to salvage their common currency. Their plan is to stick to the fiscal discipline needed to calm financial markets while introducing measures that could seed growth. And it's likely they will succeed.
Whether or not Greece exits the euro zone, Germany will ultimately do what is necessary to keep the currency alive; the euro is too big to fail. German Chancellor Angela Merkel and new French President Francois Hollande — leaders of the key partnership that anchors the European Union — appear headed toward a compromise between Berlin's call for austerity and Paris's preference for stimulus.
Though it is not too late to save the euro, it is growing too late to save the E.U. The German-enforced belt-tightening needed to bring down debt is producing a popular backlash against the E.U. that could be its undoing. A dangerous gap has opened between the collective governance Europe needs to thrive and national populations that have grown openly hostile to the European project. Saving the euro is the easy part; restoring confidence in integration will prove both more decisive and more elusive.
The E.U. has doled out successive years of economic pain in the name of good housekeeping, but in doing so it has suffocated growth. By the end of this year, Greece's GDP is expected to have fallen by almost 20 percent since 2009. Italy and Spain are back in recession. Unemployment among Spanish youth now stands at about 50 percent. The euro zone as a whole experienced zero growth during the first quarter of 2012.
These conditions are eating away at the bonds that hold the E.U. together. Not only has the push toward austerity claimed 11 governments, but one election after another has strengthened the political forces that are skeptical of integration. Most of the main parties have been converging toward the ideological middle and remain firmly committed to the union. But the political mainstream is fast losing market share to smaller parties on the left and right that are much less taken with the E.U.
In Greek elections last month, the share of votes won by the two main parties plunged to just above 30 percent, down from more than 75 percent in elections in 2009. The primary beneficiaries were parties that oppose the austerity package that is Greece's ticket to staying in the euro zone. With the political landscape so divided that no party has been able to form a government, another vote will be held June 17. Despite the renewed campaigning, some pro-austerity politicians are reportedly shying away from public events out of concern for their physical safety.
In France's first round of presidential voting on April 22, roughly 30 percent of the electorate voted for either Marine Le Pen, whose far-right party calls for France's withdrawal from the euro zone, or the leftist Jean-Luc Mélenchon, who frequently attacks the E.U.'s economic liberalism and its infringements on French sovereignty. As they campaigned during the runoff round, it is hardly surprising that both Hollande and Nicolas Sarkozy, the incumbent he defeated on May 6, played the anti-E.U. card.
The story is the same in Italy. In local elections last month, a protest party led by a stand-up comic, Beppe Grillo, made substantial inroads against the main parties. Grillo calls for Italy to abandon the euro.
The German economy has been doing reasonably well, but the Social Democrats and the Christian Democrats have nonetheless been ceding ground to alternative parties. Support for the E.U. remains solid among German voters, but the electorate is fast tiring of footing the bill for bailing out the union's economic laggards — precisely why Merkel has been so determined to impose austerity on her neighbors.
Even worse is the situation in Britain, where hostility to the E.U. has gone mainstream. The British have always kept the union at arm's length, preferring, for example, to stay out of the euro zone. But among the governing Conservatives, skepticism of the E.U. is growing into a phobia. Last October, a sizable faction of Conservative lawmakers sought Parliament's approval for a public referendum on the country's withdrawal from the E.U. Although the motion was defeated, a poll revealed that 49 percent of the public would have voted for — and 40 percent against — a proposition to quit the union.
Opinion surveys offer an equally sobering assessment of the E.U.'s frailty. In a study released this past week titled "European Unity on the Rocks," the Pew Research Center reported widespread doubts among Europeans about the economic benefits of integration and the single currency. In most of the countries surveyed, support for the E.U. has fallen sharply over the past five years, with only 28 percent of Czechs, 30 percent of Britons and 43 percent of Greeks now believing that membership has been good for their country.
People across the union are revolting against Brussels and its brand of governance. After decades of public complacency about the E.U., the question of unity has at long last been politicized; people are debating it in pubs, cafes, beer gardens and tavernas. But unfortunately for Brussels, the E.U. has become an object of scorn, not affection.
The euro will probably survive, but Europe risks saving itself only in form, not in spirit. The collective institutions that bring the E.U. to life will ring hollow if its citizens see the union as irrelevant or, worse, illegitimate and ineffective.
Offsetting draconian cuts with growth-producing measures will certainly help matters; brighter economic prospects should ease the disaffection. But reclaiming growth will not be enough. The E.U.'s political foundations are far too eroded.
To reverse that erosion, Europe's leaders will need to shape public opinion, not cater to it. It was not until late last year that Merkel dared to admonish German voters, finally warning them that Europe faced its "toughest hour since World War II" and adding that "the challenge of our generation is to finish what we started in Europe, and that is to bring about, step by step, a political union."
Now it is up to Merkel's fellow European leaders to do the same and drive home the point that Europe can compete in a globalized world only as a collective whole. Its citizens may be more comfortable living in autonomous nation-states, but they must confront the reality that a fragmented E.U. will slip into geopolitical oblivion.
The best way to stave off the unraveling is to move rapidly toward the full fiscal union needed to backstop the euro zone and revive growth. Ireland's approval of a new fiscal pact in a referendum Thursday was a positive development on this front. E.U. members should also pool resources on foreign policy and defense, the sole means through which Europeans can make their presence felt on the global stage. The E.U.'s popular legitimacy depends on its ability to provide prosperity and security, which only a deeper and more effective union can deliver.
This course would require that the E.U. institutionalize a "multi-speed" structure in which an inner circle of willing countries advances toward more extensive integration than the rest. A union of 27 states (and counting) can no longer afford to move as slowly as its most reluctant members.
Europe has arrived at a make-or-break moment. As Europeans know well, their darkest hours arose from the economic turmoil and nationalism of the 1930s. Unless the E.U. can couple fiscal discipline with growth, tame nationalism and relaunch the project of union, Europe's troubled past may become its future.
Charles A. Kupchan is a professor of international affairs at Georgetown University and a senior fellow at the Council on Foreign Relations. He is the author of "No One's World: The West, the Rising Rest, and the Coming Global Turn.''
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