Shards of Europe

Integration had its own historical momentum; if and when it goes into reverse, that process will have a counter-momentum. The argument against European structures depends on hostility to a transfer union that might lead to some redistribution of resources. Why should our money be taken away and given to people in a very different area? What sort of claim do those people have?

Germans thinking about the likelihood of transfers to southern Europe doubtless recall their country’s reunification after the collapse of communist East Germany in 1989-1990. There were massive transfers, and national resources were devoted to gigantic infrastructure projects. That was not enough to halt the hollowing out of the eastern Länder, as many of the ablest and most entrepreneurial people left – an experience that put enormous strain on national solidarity.

Problems of transfers in a large political unit are at the heart of federalism. The United States’ early history was dominated by a passionate debate about the issue of solidarity. In 1790, when Alexander Hamilton argued that the new federal government should assume the states’ debts from the War of Independence, he encountered fierce hostility. The only way to sustain such a new political order, James Madison argued in The Federalist Papers, was to ensure that federal powers were few and limited.

Europe is confronting a similar moment of destiny. It is now mired in an existential crisis more profound than at any point since 1945. And, while muddling through is a characteristic response of complex political systems, it is deeply destructive.

If Europe’s political center is widely perceived to be arbitrary and overweening, its authority will be rejected and resisted. While adopting a new treaty may look like an unwieldy process, ill-suited to managing a fast-moving modern financial crisis, it is the only way to generate legitimacy for the institutions that are needed to address that crisis – in particular to provide reassurance that transfers will not be indefinite and unlimited.

If European integration shifts into reverse, the outcome will not be a series of happy and prosperous nation-states, living in a sort of replica of the 1950’s or 1960’s. Southern Germans would wonder whether they were not transferring too much to the north’s old industrial rustbelt; northern Italians who support the anti-EU Lega Nord in the self-styled unit of Padania would want to escape from the rule of Rome and the south.

Setting the clock back would thus not simply return Europe to the mid-twentieth century. The small states of the mid-nineteenth century, with no fiscal transfers out of a relatively limited area, might be recreated. But the dynamic might go further: the German territories had around 350 independent political entities in the mid-eighteenth century, and more than 3,000 before the middle of the seventeenth century. Watch out, Trans-Dniestr.

Harold James is Professor of History and International Affairs at Princeton University and Professor of History at the European University Institute, Florence. He is the author of The Creation and Destruction of Value: The Globalization Cycle.

Copyright: Project Syndicate, 2012.www.project-syndicate.org

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