THE SPINE DECEMBER 22, 2010
I am no fan of the European Union. It is an artificial contraption, run by the corporate and bureaucratic elites of the continent, without democratic sanction because the various peoples subsumed under its rule themselves see that it is without democratic values or ambitions. Had it at least energized the economies of Europe there might be some raison d'être for its intrusive rules which wreak havoc with every member nation's culture and identity.
The fact is, however, that the prosperous countries are still more or less prosperous, some paradigmatically so. There is a large middle stratum that muddles through. And then there are the historically backward polities:
Ireland, Iceland, Spain, Greece, Portugal, perhaps even Italy which I believe somehow will rescue itself from its own follies. Italy aside, then, each of them is an ongoing drain on "Europe."
One lesson to be drawn from this grand experiment of what is really nearly half a century is that there does not exist "one Europe." Not anymore than there exists what was the idealistic folly of the early United Nations era, "one world."
Still, the E.U. struts around the globe issuing dicta in the name of Europe. Behind them lay the power of nothing.
As some of my readers will recall, from time to time I bring to their attention writings by John Bolton. Yes, I know he was George Bush's ambassador to the U.N. But, then, Susan Rice, President Obama's envoy to that corrupt, falsifying and haughty body, is still counseling us down that international quagmire. He wins by any standard.
In any event, Bolton's argument is good politics and even better economics.
As the euro encounters even graver difficulties, America should resist the temptation to save the EU from itself. We must avoid propping it up directly through loans or financial assistance or indirectly through the International Monetary Fund.
Make no mistake: Europe's crisis is real. Greece's financial situation continues to deteriorate despite an EU bailout earlier this year. Irish Prime Minister Brian Cowan's popularity has fallen to record lows, with the opposition almost certain to win the next election, even as Ireland's debt is massively downgraded once again.
And third-quarter EU employment statistics spell more trouble ahead: Employment contracted in troubled states like Greece and Spain, while rising in the stronger economies of France and Germany.
Spain's credit ratings are plummeting, as are Portugal's. Spain's last 2010 sovereign-bond sale missed its fund-raising target of 4 billion Euros, raising only 2.4 billion, and required much higher interest rates than before. Portugal is trying to fashion an austerity program, but is receiving poor marks.
Italy seems more interested in opposition efforts to remove Prime Minister Silvio Berlusconi from office than saving its precarious finances. Despite criticism of his flamboyant life style, Berlusconi remains the most business-savvy EU leader -- which may explain the intense animosity he faces.
Germany, the rock of Europe's currency union, has had it with the prodigal states. Chancellor Angela Merkel rejects the idea of "Euro-bonds" (EU-wide financial instruments) to minimize the risk of default on sovereign debt, seeking instead "deeper political and economic integration."
This is always the Europhile answer to each new failure in their quest to build a European super-state: more of the same. But even countries firmly in Germany's sphere, like Austria, concede that their banks must raise more capital to ensure financial worthiness.
Yet Great Britain -- which never abandoned its own national currency, the pound sterling -- will strenuously oppose the transfer of any new fiscal powers to EU headquarters in Brussels. That alone could trigger a split within the EU, encouraging other countries to revert to national currencies rather than surrender even more sovereignty to the Brussels bureaucrats.
Nor would it be a real solution for the EU to amend its basic treaties to create a permanent stabilization mechanism for sovereign-debt crises. To the contrary, a permanent bailout facility is a self-fulfilling prophecy, virtually guaranteeing that it will be used repeatedly.
US government officials argue that we must not permit any EU country to default on its obligations because of the interconnectedness of international financial markets. But if no one is allowed to fail, both businesses and nation-states will be less careful and responsible in their decision making.
Default on a major EU sovereign-debt obligation may just be just the thing to wake up the rest of Europe to get its house in order. It wouldn't be a bad lesson for Washington, either. We should worry about President Obama's staggering deficit spending and let Europe worry about its own.