October 15, 2012

Economic crisis and change of European geopolitical power

By José Balsa Barreiro

(Translated by Sarah Landsperger)

At the end of the last century and the beginning of the current century, the global hegemonic power seemed to change. In recent years this transfer of power became more apparent with the beginning of the global financial crisis from which the U.S. economy suffered greatly. With permission of the emerging powers it was then conceived that the European community could assume the leading role for its strong economic and political weight in the world. In principle, it represented a cohesive and complementary model, which had implemented a number of convergence criteria based on the principle of inter-regional solidarity since the establishment of the EEC.

This happened to take place within a growing number of countries which agreed to cede sovereignty and which understood economic growth on basis of a single market, getting to settle a huge market of over 500 million people in 2011. Apart from existing regional inequalities, the European Union had a competitive economy by sectors, a complementary development based on interregional solidarity, a competitive industry, social solidarity structures on the basis of welfare states of great tradition and high levels of environmental sensitivity leading all environmental policies and action plans.

The attempt to create a single market, as it were the United States of Europe, based in Brussels seemed a necessity confirmed by a global market and a multicultural context. A very difficult challenge having in mind the history of each people and considering the many attempts to unite Europe that so far had been imposed out through force of arms.

Thus, Europe gain a centripetal power practically since its founding ratified by the different countries with a few and punctual exceptions with the signing of successive treaties and agreements in favor of a union with a single market

However, the arrival of the financial and economic crisis in Europe threatens to break the good claims and the regime of this union. Without time to assimilate this development, the two-speed Europe is again established with both similar and different socio-economic models. The authority and financial transparency imposed by the Northern countries over the Southern ones asks for a tight control of their financial agendas.

The loss of Europe´s hegemonic power in the world becomes clear caused by political and territorial disagreements at European level. It is characterized by Germany prescribing the standards due to the Bundesbank´s dominant position over the ECB and by German policies pretending to be European ones.

On the on hand, there is Northern Europe or first-speed Europe, headed by the Franco-German axis that is assuming the role as a judge. The German government, formed by a coalition of Christian Democrats and Liberals, adopts extreme Keynesian policies justified in the attempt to avoid social conflicts. In 1933 the Nazis came to power on the basis of social conflicts that had originated the beginning of the crisis.

In this context the availability of credits has been restricted depending on the fulfillment of certain deficit targets that changes in relation to GDP of each country and / or region. On the other hand, there are the Southern European countries which had posted strong economic growth in the last decade before the crisis and which are now highly indebted having great difficulties to refinance its debt via the markets.

In this way second-speed Europe is formed by a group of countries (the PIIGS), entering a dynamic of economic slowdown due to austerity policies, limited credits, speculations on the market and having the traditional reputation of being countries with high levels of political corruption. In this way these countries fall into a downward spiral due to an external (market and other countries) and internal (the societies in the countries) loss of confidence.

Thus, Europe´s power is reversed acting as a mere market but not as a principal decision-maker. The territorial federalization on the basis of the Euro regions is of mere symbolic character. It is becoming clearer that Europe loses its central power and that the two great powers, Germany and France, gain political weight. Recent examples of this development are the ongoing visits and receptions to an exhausted Greece by German ministers, a doubting Spain
or the French Presidential elections (2012) with the main candidates focusing their election campaign on national issues and hardly mentioning/making reference to Europe.

Europe initiates a centrifugal process of loss of political power towards a number of countries which are determining the financial budgets of the Southern European countries. The first-speed Europe communicates to its societies the interests of its companies and performs its role as guide (and savior) of the Southern European countries on the basis of a political-economical roadmap defined by the Northern countries themselves. Due to the limitations of their political actions and the internal social conflicts they are suffering from, it is observed in many of these countries, such as Finland, that the far right-wing parties are gaining again more votes criticizing the “solidarity” of the Community policies towards the South.

Recovering national sovereignty is an attempt to return to the past, to some political models focusing more on societies and less on the markets. Thus, eurosceptic parties and/or anti-European parties become visible and gain more importance, although having very different political approaches: on the one hand the extreme left-wing parties trying to break the chains of the neo-liberal market and, on the other hand, the extreme right-wing parties calling on the people´s sense of identity, on patriotism and national pride.

In this manner the political activity is polarized in both Europes as can be observed in Greece as well as in the richer countries as France.

In this context of polarization of national politics,the traditional parties try to adapt their speeches and thus fall into a contradiction of losing their political space in favor of more radical positions.

Thus, we find ourselves in a paradoxical situation appealing to the European awareness in terms of the markets and to the national pride in terms of the respective societies to finally accept social sacrifices.

However, there are no common economic policies focused on solidarity as would be expected from a
real European Union.

This current context gives rise to conflicts and intensifies existing conflicts both between the different countries and within the countries. The conflict between Wallonia and Flanders in Belgium or in Padania in Italy becomes clearer in an attempt of showing different solutions to the crisis on the basis of the different nature of the various peoples. In the case of Spain the national policies adopted by the national government(government removal, trimming autonomy) may be offset by its historical nationalism*.

The upcoming elections in the Basque Country and negotiating a fiscal pact demanded by Catalonia for the coming weeks may be key dates for these events.

Balsa Barreiro , PhD in Civil Engineering and Ports. University of A Coruña (UDC) – University of Valencia (UV), wrote from  Valencia (Spain).