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September 30, 2010
 by Steven Hill

EUROPEAN DOUBTS ABOUT THE UNITED STATES; CAUTIOUS OPTIMISM OVER RECOVERY FROM GREEK CRISIS…I am still attending the conference, "The Crisis in Europe: Re-inventing EU Policies Delivering Growth and Fighting Poverty." The signature conference event for today is a round table called "Europe 2020 from a Center-Right Perspective: Priorities for Stronger Growth in Europe." This is a "big conversation" about the impact of the economic crisis, steps being taken to cope with it and prevent its reoccurrence, and also a discussion about how to move forward from the “new normal” to make Europe stronger economically. In typically European fashion, the event is being translated simultaneously into six different languages. Participants include Margaritis Schinas from the European Commission and an adviser to European Commission President Jose Manuel Barroso (which is the closest thing that Europe has to President Obama); Andreas Schwab, a member of the European Parliament from Germany; Theodor Dumitru Stolojan, member of the European Parliament from Romania; Tomi Huhtanen, director of the Center for European Studies; and several other directors and researchers from various economic think tanks. The big theme here is economic growth, with the representative from the European Commission announcing that the Commission has a new plan for increasing the competitiveness of European businesses and economies and renewing the “single market” across the continent. The plan is greeted with equal measures of seriousness and skepticism. In the early 2000s the Commission launched a similar plan designed to make Europe the most competitive economy in the world, and that plan produced only modest results.

What I find most interesting are the introductory comments from the Commission representative, Margaritis Schinas. He talks about how the current economic crisis actually has created opportunities for the European Union to "plug holes in its financial and economic architecture" that had failed during the Greek debt crisis (a theme that I have written about previously). Specifically, a degree of fiscal union is being added to the monetary union that is unprecedented in its scope and ambitions. Various reforms have been passed or are in process, including allowing Ecofin to look over national budgets even before national parliaments have a chance to, creating the ability to "name and shame" laggard governments. And of course Europe already had fashioned a trillion dollar bailout, essentially a European Monetary Fund, that was used to shield Greece from the bond markets and bankruptcy. As I listen to the Commission representative, it strikes me as darn near miraculous that countries like France, Germany, Italy and others -- which had fought horrible wars against each other for centuries -- had banded together to bail out a fellow member state, with no previous history or even institutions for doing so. Yet in the United States, when my home state of California was going through its own “Greek debt crisis” in 2009 and Governor Schwarzenegger asked the White House for a bailout, the Golden State was sent packing and had to issue IOUs to pay its debts. It suddenly occurred to me that this European intervention and display of, yes, unity and solidarity, was historic and unprecedented. Yet instead of recognizing it as such, the US media continues to malign Europe and report it as being close to collapse. It seems to have only a single narrative for Europe, a “glass half empty” storyline, sounding like a one-note tuba.

Mr. Schinas was somewhat congratulatory in saying that, despite the predictions of the doomsayers and Euroskeptics, the EU had effectively dealt with the sovereign default crisis that had threatened Europe throughout the spring. "From March 25 through May 9 (when the bailout fund was created), the member states showed tremendous discipline and unity. Greece is like a heart patient, if you don't stop smoking and lead a healthy life, you will have problems. Well the heart surgery for Greece worked."

He cautioned, however, that the crisis was by no means over and vigilance is necessary. "Sustained political will must continue, and will continue," he says. Going further, he says that in effect "a kind of new economic government has formed because there is substantial agreement across all euro countries. We don't need to create new institutions because consensus has been achieved." There appears to be substantial agreement about these points both from the panelists and the audience. Though in private conversations after the panel, I note a degree of skepticism among a few panelists as well as audience members. “The Commission representative’s job is to be a cheerleader,” says one person. “I take it with a grain of salt.”

The most eye-opening comments during this Round Table came next, and they had to do with how Europe regards the United States. During a discussion about the overall global situation, one panelist, Christian Stoffaes, who is chairman of the Center for International Prospective Studies based in Paris, says that the "United States is in disarray, extremely polarized. It is practically a civil war there, and you can't count on it." This theme is echoed by several panelists, one who says that "we need to shift our emphasis eastward (towards Asia) and not wait for the Obama administration." I find these statements to be surprising, and even vaguely alarming, given the importance of the transatlantic relationship in the post-World War II period. Europe is feeling ignored by the Obama administration and so it’s hard to tell if these are “jilted lover” comments or are ones based on a more profound shift. Others on the panel and in the audience seem to find these statements to be noncontroversial. There seems to be a widespread perception that the US is being consumed by the severity of the Great Recession, brought on by a broken Wall Street capitalism, as well as by the quagmires of the Iraq and Afghanistan conflicts, and an inability to change or reform. Previously, Obama’s failure at the Copenhagen summit on climate change to deliver a serious sign of US commitment to that agenda, and instead to shake hands on a deal with the Chinese to do next to nothing, was a real wakeup call to the Europeans. It was as if they suddenly “got” it, that it wasn’t George W. Bush who was the problem but something more profound about a broken political system (with a sclerotic “filibuster-gone-wild” U.S. Senate) that prevents any leader, even a Democrat as talented as Obama, from delivering.

Keep in mind that these are the conservatives of Europe talking in this session, the political party/perspective currently in control of the European Parliament as well as the European Commission, with conservative governments also in Germany, France, Britain, Italy and more. Afterward, in a conversation with Roland Freudenstein, who is head of research for the Centre for European Studies (and is one of these impressive Europeans who speaks better English than many of my relatives), we remark with amazement about how both Europe and the US seem to be writing each other off and looking eastward towards Asia. Truly remarkable.

Steven Hill 12:26 PM Permalink | Trackbacks | Comments (1)

too few seem to be reading this - and man, what they miss.
Thanks, Steven, from a German reader. Great stuff! I wished the German press would somehow pick this up.

Posted by: Vokoban on October 1, 2010 at 9:37 AM | PERMALINK

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