Europe: Iceberg Ahead

Readers of Proust will remember M. de Norpois, the writer on diplomatic affairs who sprinkles his articles in the Revue with “The Court of St. James was not the last to be sensible of the peril” or “that perpetual double-dealing which is so characteristic of the Ballplatz.” John Newhouse is a latterday M. de Norpois. His Europe is one of discreet, off-the-record chats with distinguished, silver-haired officials in thick-carpeted rooms, of conference chambers, received wisdom, and grand generalizations. Except that nowadays some things have to be explained for an Anglo-Saxon readership. Thus, for example: “The institutions of Paris, starting with the ‘Quai’ (Quai d’Orsay), as the Foreign Ministry is generally known, were all but genetically programmed against having an intime relationship with America.” Later we read that “pace Paris” Britain might develop a stronger relationship with Germany. M. de Norpois would be proud of that little “pace Paris.” In between, we have quotations from a host of unnamed senior diplomats, politicians, observers, and so on.

In fact, Newhouse makes almost every point by quoting other people, and his own argument consists mainly of very tentative suggestions, as if the deferential interviewer were saying to some diplomatic bigwig, “But might one not respectfully suggest that…” The effect can be soporific, rather like sitting through a long day’s discussion at a conference on Europe. Moreover, Newhouse is patently not at home in the less well-heeled and thick-carpeted parts of Europe. He has a brave stab at looking at Central and Eastern Europe, also at Turkey, Greece, Cyprus, even at Algeria-but the observations of his chosen sources don’t really add up to much. Asides like “the sight of the Balkans again behaving like the Balkans” are hardly illuminating, and “the Poles no longer worry about being threatened militarily by Russia” is simply misleading. He quotes an attempt to define Central Europe by the “vodka line” (i.e., beer and wine prevails in Central, vodka in Eastern Europe) or the “secret police line” (old security forces persist means that you’re Eastern), but Poland would fall into Eastern Europe by the first of these criteria, and until recently also by the second. Yet in terms of contemporary geopolitics, the idea of “Central Europe” makes no sense without Poland.

Another obvious problem with put-ting what is essentially an extended piece of analytical reportage (Newhouse was formerly a staff writer on foreign affairs for The New Yorker) between hard covers is that some of it is inevitably out of date. And nothing is more out of date than an out-of-date prediction. I don’t think I am betraying any trade secrets if I reveal that the bound proof version in which I started reading this book was an extraordinary concertina of revised chapters, reset passages, and updates. Despite these heroic efforts of author and publisher, the analysis of Britain, for example, deals largely with the Thatcher and Major years of Conservative rule. Here, some of the judgments are odd. “What befalls the diminished Tory party in the years ahead,” he writes, “will depend on who prevails, the shires or the suburbs.” In fact, the gentlemen of the shires are minimally represented in today’s Conservative Party. The key divides, such as that between so-called Euroskeptics and so-called Europhiles, do not coincide at all with this piece of antiquated amateur sociology. But Newhouse’s real problem is that, given the timing, he cannot seriously analyze the new start in Tony Blair’s New Britain.

His own concluding prognostications are astrologically elusive: “Europe’s enigmatic new order, as it slowly develops behind the façade of institutions, will be essentially benign. It may also be regressive, though not necessarily; the regressive tendencies could be offset by events or by new and creative leadership.” So everything is, indeed, possible. Turning to the transatlantic community: “As weapons of mass destruction reach the desperate and the irreconcilable, the rule of law will become increasingly attractive to Europe and America.” This seems to me a complete non sequitur. Desperate opponents with deadly weapons will surely lead us to become less rather than more law-bound in our response. You can’t stop Saddam Hussein from using anthrax by brandishing a copy of the European Convention on Human Rights.

All this being said, there is a lot of good, serious, balanced reporting in Europe Adrift, and Newhouse makes two arguments that deserve closer attention. The first, and most distinctive, is that Europe’s regions may become as important as its states. The second is that the project of European monetary union may be leading the European Union to what he calls a “collective nervous breakdown.” I think the first is interesting but wrong; the second is less original but unfortunately right.

“Regionalism,” writes Newhouse, “whether within or across national borders, appears to be Europe’s current and future dynamic.” Talking to potent figures such as Jordi Pujol of Catalonia and Kurt Biedenkopf of Saxony, he reports that “the question many Europeans are asking is whether regions are gradually supplanting central states as sources of political authority and custodians of public policy.” He subsequently quotes a startling statement by the German defense minister that “the nation-state is dead,” and himself avers that France and Britain are the only members of the EU with “serious traditions of nation-statehood to protect”-which seems a bit hard on Italy, Spain, or Holland. On the other hand, our cautious author thinks that “the nation-state isn’t going anywhere, not anytime soon”—by which he means that “its writ will continue to cover taxation and defense. And,” he adds, “it remains the only proven instrument for protecting justice, tolerance, and other human values.” (This is a slightly fuzzy version of a point made more sharply by Ralf Dahrendorf.) However, he concludes the whole book by suggesting the importance of regions.

The “Europe of regions” is a fashionable idea. Power, identity, and authority, it is argued, are ebbing away from the nation-state at once upward to Europe and downward to regions. The Maastricht Treaty actually established a Committee of the Regions. Meanwhile, so-called “Euro-regions” deliberately link regions across national frontiers. And some regions have miniature foreign policies. German federal states have their own representations in Brussels. Bavaria, as Newhouse notes, can point to separate agreements with Ukraine, Quebec, and a province of China.

Historical regions certainly are an important part of the rich political tapestry of contemporary Europe. But this argument for regions supplanting nation-states is vastly overdrawn. After writing enthusiastically about the “Four Motors Association,” founded in 1988 to link four major West European regions, Baden-Württemberg, Catalonia, the Rhône-Alpes, and Lombardy, Newhouse himself comments that “not much is clear about what the group has actually accomplished”-apart from a more coordinated approach to regional policy in Brussels. Strong though German regional identities are, it is simply not true that people find it easier to say “I’m a Swabian” or “I’m a Saxon” rather than “I’m a German.” And it is extraordinary to write of “the decline of the German state,” just because only 40 percent of public spending is federal while 60 percent goes through the federal states (Länder) or municipalities. For the central historical fact about Germany over the last decade is that it is once again united as a single, sovereign nation-state, with Berlin as a mighty capital that is already (albeit slowly) drawing into one center things that in the old Bonn republic were spread among several cities. Far from being more decentralized and regional than the Bonn republic, the Berlin republic will be more like the classic, highly centralized nation-states, France and Britain.

But, you may say, what about the current devolution of power to Scotland and Wales? What about Catalonia and the half-invented “region” of Northern Italy that Umberto Bossi’s Northern League calls Padania? Well, these examples are suggestive. For Scotland and Wales are historic nations (though Welsh nationhood is more attenuated), and some of the pressure for devolution came from people calling themselves Scottish or Welsh nationalists. Jordi Pujol, who was imprisoned under Franco for “Catalan nationalism,” has said that Catalonia is no less a nation than Slovenia is, and he wishes to make it “the Holland of the south.” Meanwhile he has, according to one source quoted by Newhouse, “created a state within a state.” Bossi, for his part, leads tens of thousands of people in a mass oath of allegiance to a new state of Padania, and declares, “It’s time to choose the Czechoslovakian way…. Let us divide up the country.”

So some of the most prominent regionalisms are hard to distinguish from nationalisms. Certainly, regions are an important level of European governance and identity, and devolution and federalism are important constitutional devices for accommodating them. But regions will not supplant states as the main focus of political authority in Europe for the simple reason that, if they do, they will themselves become states.

Newhouse’s critique of European Monetary Union (EMU), by contrast, seems to me convincing. In a rare departure from conventional wisdom, he describes the EU’s Maastricht summit of December 1991, which set us on a forced march to monetary union by 1999, as “not what it seems but instead…a low point-perhaps the low point-in the fortunes of the EU.” Yet his “the” still seems optimistic, for reasons he goes on to give. “Creating EMU without first creating a parallel political authority,” he writes, “appeared to be putting the cart before the horse. Or, to change the metaphor, a monetary union unaccompanied by political union of some sort would begin life with a serious birth defect.” Josef Joffe has recently explained in these pages, and I myself suggest in the latest issue of Foreign Affairs, exactly why this is so.^* To mention just a few salient points: the likely participating economies do not have what Kurt Biedenkopf, prime minister of Saxony, professor of economics, and formidable critic of the project, calls the “structural convergences” to make it work. Nor do they have the labor mobility and wage and price flexibility that make monetary union work in the United States. Nor does the EU yet provide for the fiscal transfers between member states necessary to compensate regions or states adversely affected by what economists call “asymmetric shocks,” as adversely affected states do receive automatic transfers in the United States.

German taxpayers, who already resent Germany being much the largest contributor to the EU, and have also had to finance huge transfers to eastern Germany, are hardly going to look kindly on any suggestion that they should dig still deeper into their pockets in order to help the French or the Spanish unemployed. In opinion polls, a majority of Germans anyway do not want to give up the D-mark for the Euro. Newhouse quotes a government propaganda brochure handed out to Germans going on holiday, entitled “The Euro: Strong as the Mark.” But it is now clear that the monetary union to be agreed on at a crucial summit in Brussels on May 2, with eleven initial participants, will produce a currency that is softer than the mark. Moreover, if the French have anything to do with it, it will also be a politically managed currency rather than one managed by a European Central Bank, which is, in its independence and ethos, a copy of the Bundesbank.

As I write, some of the last major hurdles are being taken before monetary union happens, as planned, on January 1, 1999. They include a special report from the Bundesbank and a judgment from the German Constitutional Court-in other words, the vote of the two most respected institutions in Germany. The Bundesbank has now delivered a report which says drily that introducing a single currency next year “appears justifiable,” but expresses grave reservations about the medium- and long-term prospects. It points particularly to the level of public debt in Italy and Belgium (more than double the Maastricht target of 60 percent of gross domestic product), and doubts whether what it calls a “culture of stability” has truly been secured in many of the participating countries. This will hardly reassure German public opinion.

Meanwhile, the Constitutional Court has rejected an appeal by several leading economists questioning the constitutionality of Germany joining a union in which the Maastricht criteria are not strictly met. There remains the possibility of destructive speculation against participating currencies between the decision of May 2, 1998, and the implementation on January 1, 1999. But so much has now been invested in the project, so fearful are Europe’s leaders of the fallout from abandoning it, and so forceful is the determination of Helmut Kohl to make it happen that happen it probably will.

I took time off from writing this review to see Helmut Kohl receive the Honorary Freedom of the City of London, in a splendid ceremony at the Guildhall, and the force of his insistence that monetary union will start on time and will be a success was still overwhelming. He may not have begun to convince the Germans that monetary union is a good thing, but he has begun to convince them that monetary union will happen whether they like it or not. To recall Hegel’s description of Napoleon, he appears as history on horseback.

The question is, what happens then? The strains that will inevitably arise within the single currency area, as well as among the initial participants and those, like Britain, who are not (or not yet) in, will of course be mediated through the institutions of the EU. But they will also be mediated through national politics. One can all too easily imagine populist politicians blaming the troubles of their region or their country on EMU-and they will sometimes be right. One can all too easily imagine the backlash in Germany against a project which most people do not support, and which has been sold to them either with false promises (“as strong as the mark”), or not at all, or through the imposition of a taboo which implicitly says “to be against the Euro is to be against Europe, and to be against Europe is to be a fascist.”

Historically, no previous monetary union has lasted without a political union to secure it. One must hope against hope that this will be the first to establish a new pattern-since, despite the fond wishes of some of the proponents of monetary union, there is no majority in any major European state for such a political union. But a sober analysis suggests that Europe—or, to be more precise, EU-rope-is not, as Newhouse suggests in his title, “adrift,” but rather is sailing full steam ahead toward some quite nasty-looking rocks, while old Admiral Kohl stands on the bridge, practicing the Nelson touch (telescope to blind eye) and repeating, with magnificent but flawed resolution, “I see no rocks.”

–April 15, 1998