By Doug Bandow

Two years ago, the Lisbon Treaty created a stronger, more powerful European Union with a president and foreign minister. The continent seemed to have answered Henry Kissinger’s derisive question: What is the phone number for Europe? But it still isn’t clear who will answer.

Europe is the world’s most important economic aggregation. The Continent hosts several of the world’s most venerable democracies. Europe’s historical and cultural ties circle the globe.

However, the EU has failed to live up to the lofty ambitions of the Eurocrats, the business, political, bureaucratic and academic elites who dominate continental politics and policy. Europe remains a geographic conglomeration, not a political unit.

While the common economic market is huge, the continent isn’t functioning very well as an economic collaboration. Moreover, there is no common foreign policy, let alone a unified military. Most European politicians advocate further political consolidation in Brussels but disagree on the specific form. The European public seems increasingly skeptical of what the European project has become.

Euro on the Brink

The EU’s immediate challenge is preserving what unity it has achieved, most notably the euro zone. As Greece inched toward another bailout, violent protests against the unity government’s further cutbacks engulfed Athens. Private creditors continue to resist baptizing Greece’s de facto default, while official creditors continue to resist accepting any losses. Earlier this week, after withholding approval of aid to Greece while seeking greater budget cutbacks and political assurances by Athens, European Union officials approved a $170 billion second bailout. Nevertheless, European Union negotiators withheld final approval of aid to Greece while seeking greater budget cutbacks and political assurances by Athens. Many continental analysts and political leaders believe that an official Greek default is inevitable. The only question is whether Athens could then retain the euro; increasingly Greece’s neighbors aren’t interested in the answer.

Worse, efforts to contain the crisis so far have failed. Moody’s recently downgraded Portugal, which may be heading toward a Greek-style crash. The agency reduced ratings for Spain and Italy as well and cut the outlook for France and Great Britain. Refinancing existing debt will be more difficult as global investors back away from European securities, creating “a pretty terrible spiral,” observed Peter R. Fisher of asset manager BlackRock. And every new EU bailout further burdens already heavily indebted states. Read more…

Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to President Ronald Reagan, he is the author of several books, including Foreign Follies: America’s New Global Empire (Xulon).

As published in nationalinterest.org on February 22, 2012.


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