Some political analysts argue that Brexit could be the beginning of the dissolution of the EU that is increasingly looking like a jumbled jigsaw of disparate nations. Others believe that Brexit is a consequence rather than a possible cause of the EU’s dysfunctional existence.
The more pragmatic consider the EU as a marriage of convenience that will continue to exist as long as those in this marriage believe that they have more to gain than lose by being members.
Following World War II, Europe’s political leaders were full of optimism and hope that they could avoid the atrocities of war if only they could bring their people to forget their differences and work together to increase wealth.
The Cold War saw the Soviet Union and the United States vying for political, economic and military supremacy. European leaders were more modest and aimed at rebuilding their countries and promoting trade among themselves.
This aim has largely been achieved mainly through the creation of the EU in phased stages. As European leaders mapped out further integration of diverse countries with no common culture to achieve political union, the stress on the Union’s infrastructure became evident.
Multiculturalism was an experiment that failed in most EU countries with the notable exception of Britain. The Christian faith is no longer the glue that keeps the EU together as it did in the past. Many Europeans today are either non-believers or practise other faiths like Islam. Countries like Italy, Germany and France have very fragmented societies where a sense of loyalty to the nation is a very low priority for most people.
Ironically, one to the things that unites most people at a national level is sports where loyalty to the country’s national teams is the most manifest but dubious proof of national unity.
The refugee crisis is showing how today EU political leaders are unable to build on their predecessors’ success of unifying Europeans to make the old continent a robust global political and economic force. The breakdown of Christian democracy and social democracy in most countries is a direct consequence of ordinary people’s lack of trust in traditional political parties.
Structural reforms and more fiscal integration may be the best way to keep the economic union functioning effectively. But the political will to go down this road is lacking
So traditional politicians in the cast of Nicolas Sarkozy of France are trying to emulate the more maverick political leaders by promoting a new nationalism aimed at further marginalising minority groups that are swelling in numbers. The recent terrorist incidents, many of which were executed by EU citizens coming from minority groups, have added momentum to the spreading frustration of ordinary people who are feeling the pain of unemployment and negligible economic growth.
But political unions that still reap benefits to their members like a common market and free movement of people will not crumble overnight. The biggest political challenge for the EU in the next decade will be that of dealing with fringe political parties that gradually are gaining strength in different countries – parties that have exploited popular discontent but have so far offered very little workable solutions to the EU economic and social challenges.
The monetary union which saw the creation of the euro will continue to be under stress as the present lax monetary policy will affect countries in different ways.
The low interest rate scenario may have avoided an even bigger economic crisis but is no long-term solution to the EU’s sluggish economic growth.
The German Finance Minister is justified in claiming that low interest rates are penalising savers, many of whom are elderly people who depend on their interest income to supplement their pensions.
The fair pricing of risk is another casualty of lax monetary policy across the EU. Sustainable economic growth will depend on entrepreneurs taking risk and reaping benefits that emanate if their projects are successful.
The financing of such risk has to be done in a way that does not expose ordinary investors who have little financial analysis experience to losing their hard-earned money.
Structural reforms and more fiscal integration may be the best way to keep the economic union functioning effectively. But the political will to go down this road is lacking.
Monetary policy on its own will never resolve the idiosyncrasies that characterise the different economies of EU member states.
As long as politicians continue to resist tacking labour market reforms and using fiscal policy more creatively to encourage people to be more productive, the EU will continue to fall behind the US, the UK and emerging economies in economic growth.
johncassarwhite@yahoo.com