"Europe is either going to fall forward or fall back," my friend Pierre, a French diplomat, told me when I was in Paris last month. "And it must fall forward." By "fall forward," he meant that European countries must agree to surrender to the European Union much of their control over economic issues, as they already have over currency, internal migration, and the like. And by "must" he meant that the crisis over the euro had brought the system to a supreme moment of decision in which Europeans had to choose between greater integration and collapse.
"But will Europeans agree to fall forward?" I asked.
"That's the problem," said Pierre with a rueful grin.
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Yes, that's the problem -- or rather, the Gordian knot that Europe's policy intellectuals and political leaders can neither cut nor unravel. The American sense of institutional dysfunction -- a lobbyist-owned Congress, a minority able to block a majority in the Senate -- seems modest by comparison. For an equivalent sense of crisis, you'd almost have to go back to the period in the 1780s when Americans recognized that the Articles of Confederation provided too weak a framework to keep the former colonies -- at the time more like separate countries than provinces -- bound together; the states ultimately accepted the need to surrender much of their sovereignty to an empowered central government.
In a recent essay, Mark Leonard, director of the European Council on Foreign Policy, wrote of "the necessity and impossibility of integration." The "necessity" part of the equation is clear enough. A deep recession, along with an acute banking crisis, has left Europe's weaker economies, including Greece, Ireland, Italy, and Portugal, with enormous debts relative to the size of their economies. The market has responded by refusing to buy the bonds those countries issue save at interest rates so high that first one of them, then another, has been threatened with bankruptcy. And the wealthier countries of the eurozone, fearing a contagion that could engulf them all, have agreed -- in the most piecemeal and grudging manner possible -- to raise sufficient capital to temporarily avert default, leaving publics in both debtor and creditor nations furious and resentful. A currency union of 17 nations, each with their own tax rates and public sector employment rates and labor market rules -- and above all, their own wildly varying rates of productivity -- cannot last. Either a mechanism has to be found to make them behave more like one another, or the 20-year-old experiment that is the euro, and perhaps even the half-century-old experiment that is the EU, will come to an end.
What would that mechanism to be? Most of the suggestions involve a so-called "two-speed Europe," with an avant-garde accepting a much greater degree of mutual integration and a rearguard adhering more or less to the current system -- in effect, falling forward and standing pat at the same time. The avant-garde would likely consist of the current euro states, while the others, like Britain, Denmark, and Poland, would constitute the rearguard. The "euro-core" countries could achieve their federated system by changes in EU treaty, by operating inside existing treaties, or by reaching a series of intergovernmental arrangements. One scheme envisions a kind of consolation-prize entity for the non-core countries, a free-trade zone that might even incorporate non-EU members like Turkey and Russia.
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