Conrad Black: Europe's cracked foundation

Six decades of history led to the European Union’s current financial crisis. What went wrong—and how to fix it.

Protesters demonstrate at Catalunya square in Barcelona on May 20, 2011 during a protest against Spain’s economic crisis and its sky-high jobless rate (Photo: Lluis Gene/AFP/Getty)

The European Union is facing the problems that were always certain to arise because its raison d’etre was an aggregation of ambitions that it was never going to be possible to cause all western and central Europe to embrace. The essential European idea was born of the horrors of the world wars and the terrors of the Cold War. The western European powers, and especially France and (West) Germany, had to compose their differences and eliminate any possibility of serious conflict between them again. The surest way to achieve this was through economic and military co-operation. It was an admirable goal, and it has been achieved.

The presence of Stalin’s Soviet empire armed with hydrogen bombs and the 300 divisions of the Red Army, only 100 miles from the Rhine at one point, compelled military collaboration and an intimate and subordinate alliance with the United States. One of the very greatest acts of statesmanship in the postwar world was when the founding chancellor of the German Federal Republic (West Germany), Konrad Adenauer, declined Stalin’s offer of reunification in exchange for German neutrality in the Cold War. Adenauer said West Germany would remain faithful to its allies and would eventually achieve reunification anyway. He carried German public opinion, and he was correct.

As it has been since the Thirty Years War, Germany is central to the European question. Statesmen including Richelieu, Napoleon, Metternich and Stalin, knew that the key to the security of Germany’s neighbours lay in keeping Germany divided. And it is a truism, but an accurate one, to say that Germany’s problems were that it was (for that reason) too late unified, had great difficulty determining whether it was an eastern or western-facing country, and that whenever it set out to assure its own security, it disturbed the security of its neighbours. Bismarck unified Germany, and William II squandered that union. Hitler unified Germany and then waged aggressive war on almost all his neighbours and even the United States, and Germany was occupied and fragmented again.

The Tehran Conference in 1943 moved the Soviet Union and Poland each 200 miles to the west, condensing Germany, and approximately 10 million Germans fled on foot or by oxcart westward before the Red Army, voting with their feet to make Germany a western country. The statesmen of the United States, President Truman and President Eisenhower, General Marshall and Dean Acheson, welcomed Germany into the western alliance in a spirit of forgiveness and solidarity. And when the containment strategy succeeded and the Soviet Union disintegrated, though the British, Russian and French leaders (Margaret Thatcher, Mikhail Gorbachev, and François Mitterand), true to their traditions, all opposed German reunification, George Bush Sr. and James Baker, as the United States had never feared Germany, worked out with German chancellor Helmut Kohl, the reunification of Germany.

Thus were Germany’s three traditional conundrums resolved: she was unified peacefully, was an esteemed and prominent nation of the West, and her security was assured in a defensive alliance of democratic states (NATO) that had gone together, successfully through the Cold War. The admission of Poland to NATO and the European Union ensured that the eastern border of the western world was not a German border. Helmut Kohl’s father and elder brother had died in France in the world wars, and he was suspicious of Germany’s aptitude for self-government if not cosseted in a close alliance with responsible countries. He was absolutely sincere when he spoke of “a European Germany and not a German Europe.” To this end, he sought, after the reunification of Germany, an ever larger and closer European Union, as Germany would always be substantial enough to protect its interests, and the larger the European Union, the surer it would be that no one, including Germany, would dominate.

These were creditable ambitions, but they inevitably led to problems. And these problems were compounded by the parallel objectives of some of the other leading European factions. The bureaucracy in Brussels is largely made up of officials from the smaller countries, who saw the EU as a method of enabling themselves to exercise far greater influence than they could as leaders in their own governments. Brussels was a magic carpet to political and bureaucratic and regulatory authority for provincial officials encumbered with all the pretensions and pettifogging instincts of the clerical bourgeois European. Regulation, meddling, dirigisme were its own power-famished, self-accelerating vocation. This was bound to create serious abrasions in some countries, such as Britain, a people not used to overbearing regulation but accustomed to law-abiding conduct, distinguishing them from the French and Italians, who are accustomed to ignoring authoritarian regulatory regimes.

Another powerful motive for many in the southern countries, Greece, Italy, Spain, Portugal, countries that had never in their very long histories had a hard currency, was to exploit the desire of the Germans, and the permanent EU civil service, for a larger, closer Europe, by signing into the euro, acquiring for the first time a hard currency, that they confidently expected Germany to finance. In effect, these countries filed false prospectuses; they fluffed up their assets, disguised the liabilities in their pension and benefit schemes, and managed to adopt the euro at a rate of exchange that exaggerated the value of their currencies. There was plenty of precedent for this, as Helmut Kohl had paid one Deutschmark for every worthless East German Ostmark at reunification, and it caused a serious inflationary burden in the Federal Republic, though it was generally assimilated by the force and the executive and engineering quality of the German manufacturing industries.

And there was the underlying mentality of many of the more ardent Euro-federalists in the leading countries, including many British, French and Italians; that the coming together of Europe was a miraculous renascence that would restore to the old continent the headship of the world. Europe had led the world up to 1914; terrible wars occurred, and toxic ideologies arose and blighted Europe until the end of the Cold War. Europe had paid for bellicosity and for being the cradle of communism, fascism and Nazism, by being half-occupied by the Russians and half-subordinated to the Americans. Now that the Russian menace had collapsed, the soft yoke of the Americans could be dispensed with, this version of events held, and Europe could come together and all, standing harmoniously on each others’ shoulders, would again lead the world. Resentments of America returned, 50 years after General Eisenhower’s (mainly American) armies had liberated western Europe, including most of Germany, 75 years after General Pershing’s Expeditionary Forces saved the victory of France and the British Empire on the Western Front, and as soon as American firmness and economic and military power had induced the bloodless collapse of the Soviet empire and Union, and of international communism.

In almost all of the eurozone countries, for notoriously well-known historic reasons, political society paid Danegeld to the working classes and small farmers. The Common Agricultural Policy and Euro-labour rules ensure guaranteed incomes and the availability of a very relaxed work regime. In Greece, which is far from a rich country, only about 30% of the people work at all, and they have short work weeks and retire early. It was the most egregious of these cases, but no part of Europe is martyred to the work ethic. It is a tired, dyspeptic continent, incapable of reproducing itself, and accustomed to replacing the unborn with large numbers of immigrants, many of whom are hostile to the host cultures, especially militant Muslims. It seems only yesterday that Europeans were pointing smugly to the United States as a country that was about to cease to be predominantly white. That was never a real concern, as long as immigrants assimilate, and it no longer lies in the mouths of Europeans, struggling with a minority of indigestible and militant Muslims who occupy vast no-go areas across Europe, to comment on the relatively manageable sociological problems of America.

The cocktail comprising all these different ambitions and attitudes was bound to be explosive. There are many ironies: Germany, which so frightened Europe for nearly a century, as it had in late Roman times, is now being beseeched virtually to take economic suzerainty over chunks of the continent where the physical German occupiers in bygone days were violently unwelcome. Contrary to Helmut Kohl’s ambitions, it could be something of a German Europe after all. And, counterintuitively, to the extent that the euro is devalued because of the fiscal basket cases on the southern fringe of Europe and in Ireland, it facilitates German exports.

But, inevitably, the character of German opinion has evolved. The youth appear uninterested in carrying any longer the burden of national moral responsibility for the evils of the Third Reich, and the hard-working people of Europe are disenchanted with the concept of toiling to keep idle Greeks and Portuguese at the beach on their state benefits that began when they retired prematurely from unproductive state jobs.

The concept of Europe has not lost its grandeur; it is a magnificent thing for all these ancient nationalities to co-operate and pull together. But they are going to have to dismantle some of their welfare state, create labour market flexibility, stop being terrorized by organized labour and the farmers, accept real austerity in the offender countries, abandon this imbecility about leading the world, raise the birth rate and develop less meddlesome and authoritarian institutions. For decades, they could afford to be militarily weak because the United States was overwhelmingly strong. Finally, freakishly, there is an American president who does not want to lead the world, and doesn’t want to do anything in the world except get out of Afghanistan and Iraq on an acceptable basis, doesn’t care a fig for the western alliance, and doesn’t think American strength or leadership is a good thing. He has gone about bowing obsequiously to foreign figureheads and apologizing for some of America’s greatest and most internationally respected leaders, including Franklin D. Roosevelt, Harry S. Truman and Dwight D. Eisenhower.

The Libyan operation has shown how weak Europe is; the French and British have almost run out of munitions. They are paper tiger cubs. It is a replay of Jacques Poos calling Bosnia “the hour of Europe” before all Europe beseeched American assistance, or Jacques Chirac speaking of the European Deployment Force as “projecting European power.” It was a force of parade ground soldiers who were transported around by the U.S. Air Force to march down the main boulevards of the different national capitals on their national days and projected only pageantry. Europe could not lead itself across the Pont Alexandre III.

“What,” to quote Lenin, “is to be done?” It is all salvageable. There are two immediate problems and one more fundamental one. The three bailed-out countries, Greece, Ireland and, soon, Portugal, are all going to have to restructure debt. Greece is now paying 20% on two-year notes, and only someone who is completely innumerate could imagine that Greece can afford such a thing. Yet recently, France’s capable finance minister, Christine Lagarde, declared that Greece would not default; of course it will default, unless remedial action is taken first. The restructuring can be relatively gentle, such as a cut in rate, stretch-out of term, and the loss paid in some form of equity participation bonds in the future growth of the countries. That would cushion the lending banks from shattering hits, and could be combined with a modification of austerity based on longer working lives, a step most countries, including the United States, are going to have to take. (The life expectancy of Americans has risen by almost 10 years since Roosevelt established Social Security in 1935, and the retirement has to be raised.) Some reaffirmation of the work ethic, sensibly getting more people contributing and fewer taking, could be incentivized and also sold as the survival issue that it is. Europe is like the person who took early retirement and then discovered that he didn’t like it.

There is more discussion than at any time of a “two-speed Europe”; a division between those that wish federal union and those that only seek a free trade area. This is now being discussed as a division between the 17 EU countries that share the euro, and the 10 that do not. But that demarcation is misleading, as some of the outer group, such as Britain, are there because they have reservations about political union, and some, such as Romania, are there because they can’t meet the criteria. The whole structure should be redefined along two regimes, one unitary and relatively regulated, and the other individualistic and representing a variety of tax rates and welfare and regulatory systems, and liberated from Brussels’ manic control-freakishness, that requires regulation of banana displays in grocery stores and the size of condoms. Both groups should include candidate members and countries that both have the euro as their currency and do not. The present French agitation for a “competitiveness pact” is just a classic French ruse for jacking up their own influence as gatekeepers of the inner circle, and has nothing to do with competitiveness, except to reduce it. Like many Euroisms, it is a misnomer, like the assessment of value-added tax on legal bills. At least in Canada, it was called a goods and services tax.

The longer-term question is the development of a real raison d’etre; it isn’t enough to be European—there is no particular distinction in that. Europe must formally espouse and embrace traditional Judeo-Christian values, democratic government, the free enterprise economy and a reduced but humane social-benefit system. It must stop nursing a viper of Europhobic Islam at its breast, and end its dependence on unassimilable cheap labour. It must rediscover some martial strength and the will to use it in good causes. It has an ethos distinguishable from, but not antagonistic to, the United States, and should proclaim it, but must stop imagining that its stagnant, debt-lofty social democracy can carry it forward much longer. And the central bureaucracy should be dismantled; the European Parliament should be reconstituted as delegations from the member state parliaments, and the head of Europe should be a re-electable head of one of the member governments. The overlapping jurisdictions are causing chaos; the constitution that emerged from Lisbon is incomprehensible nonsense, and the whole grand design of Europe is, like the United States and Japan are, sinking because of lack of leadership. That problem can certainly be remedied, and usually is.