The EU’s dismal record in tackling its debt problems is sapping its influence on the eve of the US presidential election
Just four years after Europe happily waved farewell to a Republican president whose qualifications, policies and leadership style won few admirers and even fewer friends in Europe, it seems that we must brace ourselves for the possibility of an equally uninspiring new face in the Oval Office.
Mitt Romney’s easy triumph over President Barack Obama in the first televised debate of the presidential campaign is by no means a promise of victory in the November election, but it seems to point to a much closer fight than appeared likely before the televised confrontation. If he were to win – and the odds are still against him – Europeans would again struggle to do business with an American president whose political values and limited understanding of the world command little respect and support among them. Compared with Obama, Romney’s obsessive insistence on a minimal role for government, and his rejection of re-distributive taxation and social safety nets put him at a huge distance from the mainstream of European political thinking and values. His foreign-policy views and priorities are vague and unsettling. When he mentions the importance of allies, he does not mention the importance of Europe.
It may be the advice he is getting and, even more, it may be because of the European Union’s troubling political and economic decline. A co-chairman of a Romney working group on Europe is a former aide to Margaret Thatcher who now works for the right-wing Heritage Foundation, Nile Gardiner. In a recent article for the Washington Times, Gardiner urged the US to ditch its support for European integration, which, he argued, is no longer supported by European electorates and tends towards a supranational super-state suffocated by “socialism, debt and over-regulation”. This view of the EU is by no means limited to the Republican right and is strengthened by American perceptions of the eurozone’s handling of its financial crisis. The crisis is tarnishing Europe’s image and undermining influence at home and abroad.
Recent large street demonstrations in Greece, Spain Portugal and France speak to a deep and growing unhappiness with the destructive consequences of austerity policies. Extremists on both left and right are harvesting the benefits and exploiting the slow pace at which the EU’s political leadership examines, adopts and implements its prescriptions for solving the crisis. The European Commission of José-Manuel Barroso is fulfilling its institutional obligation to set out its policy stall with proposals for all ills, while the president of the European Council, Herman Van Rompuy, tramps dutifully around European capitals attempting to broker deals with the quiet panache of a Las Vegas croupier. But activity cannot mask the political drift and dissolution that is too dense to be dispelled even by Mario Draghi, the president of the European Central Bank (ECB). Indeed, the stench of premature decay is an unpleasant by-product of the extraordinary conflict between Draghi and the Bundesbank’s president, Jens Weidmann, over the ECB’s conditional readiness to force down high borrowing rates through unlimited bond purchases. It is bad enough for Europe’s two most senior central bankers to be publicly grappling in a knockdown policy fight. How much worse is it that one of them, Weidmann, is also throwing punches at his country’s chancellor, Angela Merkel.
The Draghi-Weidmann clash is not the only symptom of rotting governance. France and Germany cannot agree on whether and when Spain should apply for a bail-out programme, enabling Prime Minister Mariano Rajoy to deliver a masterly demonstration of indecision. Crucial details of the European Council’s 12 June agreement on banking supervision, resolution and deposit protection are proving too difficult to negotiate by the end-of-year deadline. Next week’s meeting of the heads of government will need to cut through some knots, beginning with German opposition to covering all banks big and small in a supervision scheme. Neither does Berlin want to know about pan-European deposit protection.
The EU’s endless squandering of resources and reputation through failure to resolve its debt and banking crises is making a mockery of its ambitions to be an influential and effective exponent of soft power. Its quiet performance of a range of international tasks, from peacekeeping to adjudicating elections, is masked by the smoke and fury of internal argument. And new conflicts rush towards us. The UK’s crab-like shuffle away from any meaningful role in the EU over the next three or so years could be very costly for both parties. The crusades by Prime Minister David Cameron may be driven by the exigencies of Conservative Party politics, but his battles to freeze the Union’s budget while also protecting the long-standing system of rebates to limit the UK’s contributions will drench the Union with negative media around the world.
Unlike many of their predecessors, neither a President Romney nor a President Obama will spend many waking hours worrying about the future of Europe. In the months and years to come, the Americans will be even more preoccupied and distracted by their own dysfunctional politics and the struggle to contain their monumental debt and deficits.
The threats to the international financial system that seemed so terrifying in 2008-09 may have been no more than the first tremors of a worse catastrophe triggered by political failure across two continents: the US and Europe.
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