Managing Essentials

International The Euro: Looking for its nation

Definitely the topic of the year when it comes to economics is the Euro in its philosophy, stability and future. Will Greece be bailed out? What will it cost? Will Italy, Spain, Portugal and Ireland have to be bailed out? What might that cost? Is it possible at all? Should countries be expelled from the Euro? While most reporting went on the numerous meetings and their outcome, we focus here on the interdependency between hard economical facts and institutional processes on the one hand and the psychological side of statehood on the other. As it shows, the problems with the Euro reflect primarily a problem of national identity. In fact, the Euro is a unique currency. Institutionally, it is backed not by a government of a country and its central bank but by a loose union of countries and a central bank created to serve them all. Historically, the Euro deviates in its very existence from the normal developmental pattern of currencies. The introduction of a common currency was in history always the crown of political and economical unification. In contrast, the Euro was intended to serve as a common pair of shoes in which the countries of the European Union should walk towards integration. In fact, its origin is hard to locate. The idea of a common currency reaches back into the 60ties, but realization had to wait until the 90ties. Influential German weekly Der Spiegel regularly speculates the shoes of the Euro were designed by Chancellor Kohl of Germany and President Mitterrand of France to tie the now reunited Germany to France forever. What makes matters even more complicated is that the Euro did not become the currency of the European Union. Two big (United Kingdom, Poland) and some small (e.g. Czech Republic, Denmark, Sweden) countries kept their local currencies. This national individualism reflects the problem of the European Union in general. Not all liked these shoes and it was never agreed upon on which roads the shoes of the Euro and the European Union should travel when it comes to integration and real power sharing. On the contrary, all member states of the Union stress their sovereign rights especially when it comes to their household. Germanys Supreme Court just recently confirmed a prior ruling that its the sole privilege of Germanys parliamentarians to decide about any funds. The fiscal measures and external controls imposed mainly by Germany and France on Greece would not be possible for these countries themselves. This does not mean that the Europeans dislike Europe. In fact, they love it spending their holidays in their neighbor countries, studying or working there and sharing food, cars, commodities, and lifestyle. But they have in common a strong skepticism when it comes to their own local politicians. This skepticism turns into real dislike when it comes to European institutions. These institutions are simply hard to sell in their rights and functions. In front of a national sovereignty expressed in local royalty, presidents, chancellors, and their parliaments, its not easy to understand what all the people in the big office complexes in Brussels actually are doing. Evidently they create complicated texts which are not taken too seriously by the national governments. Most governments did not dare to submit the Maastricht treaty, the central document of unification, to a public referendum and those who dared sometimes needed to have it voted upon twice to achieve at least a narrow majority. And people seem to be right. For what are these treaties worth? When France and Germany violated the 3% GDP debt barrier of the stability pact in 2003, not the stipulated fines were imposed but just a few eyebrows raised. As far as national debt is concerned 195 of the Maastricht Treaty states in one clear sentence that no country can be held liable for the debt of another one. And when Denmark

Managing Essentials
International
this summer became afraid of having to harbor refugees from the arabellion in Northern Africa, border patrols keeping them out were reactivated. Barrack Obama mocked that the G20 summit in Cannes taught him an obviously incomplete lesson on how many institutions and voices have to be heard when it comes to European affairs. However, his obvious relief that governing the US may be easier at least when it comes to the institutional side, points to the ever growing complexity of the European Union. The result of the Euro crisis 2011 is not a new statutory for the European Central Bank, but again the emergence of new institutions like the ESF (European Stability Fund) or the EFSF (European Financial Stability Facility). The European Union disintegrated visibly when member states without the Euro had to leave the conference hall so that members of the Eurozone could confer in private. Yes, a new institution to integrate these two zones seems to be a good idea. If the Euro should fail one day it will not do so because of the debt of some countries. Debt can be settled. But the institutionalism of the European Union can hardly be tamed and will express even more what it does already now: The European Union is a matter of the mind and not of the heart of its people. In essence, they want to determine their fate primarily in the context of their nations embedded in something practical when it comes to the neighbors, which was once the European Economic Union. A united military, a real president of Europe, a common household is currently not only beyond imagination but also incompatible with national constitutions. Certainly no king and queen in Europe wants a new Emperor. But as much as they haggle when it comes to the debt of neighbors, all bigger countries of the European Union face the problem of creating equal conditions of living for its citizens despite strong regional differences in productivity. They regularly solve this problem generously by their heart and not with their mind: (West-) Germany transferred a staggering 1.000 bn Euro, five times more money than its share in the EFSF, into its formerly communistic states after the unification. But even nowadays, more than twenty years later, this goal is not reached and many think it never will be. Nevertheless, only a few complain. Equal conditions of living are not only expressed as a state goal in the German constitution, people also want them with their hearts. Help and support depend on something the European Union just does not and maybe cannot have: The heart of a European identity. Unfortunately.

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