European Economic Security at the Expense of Sovereignty

As we all may well be aware, the economies of Europe are more shrouded in doubt, loss, and anger than they are filled with prosperity, strength, or hope. Even though now is supposed to be the time for recovery, constant struggles and setbacks have become the norm. New doubts surround the economic bailout plan drafted to keep Greece from entering unfixable chaos (Barkin). Ireland prepares to lay down a plan to avoid becoming dependent on the rest of Europe (Quinn). All eyes turn to Italy as recent reports state that Italy may very well be the site of the next economic collapse. The overall wellness of the European continent is no closer to recovery than it was since the global market crash of 2008 (Barkin).

Other than bailouts, spending cuts, and budget freezes, the European Union (EU) has been forced to consider measures to secure the economic survival and strength of its twenty-seven nations in the long term. The Encyclopedia Britannica defines the EU as an “international organization comprising 27 European countries and governing common economic, social, and security policies.” Politically, they are sovereign states with distinct borders and populations (Gabel). However, economically the string that is the EU joins them together in a way that has been said to be merely symbolic. The distinct role of the EU has been placed under scrutiny in recent years as the world ponders the extent to which the EU can go to save the economies of member-states, especially Greece and Ireland (Story, Saltmarsh). The unrest that has nearly toppled those two countries has now spread. Spain continues to fight a massive national debt and legislative promises that have failed to create the economic prosperity that they were designed to produce (Tedesco). Italy is desperately trying to rebuke claims that their economy may be the next to collapse; the proverbial straw on the EU’s back.

As more and more desperate ideas find their way into discussions of survival, it is no surprise that some of the nation-states represented in the EU have begun raising fears of how some of these solutions will affect their sovereignty (Story, Quinn). Former German Chancellor Gerhard Schröder is often the man accredited with introducing the concept that many deem as the most plausible reality, a plan that would transform the continent into something of a “United States of Europe. (Mascolo)” A much tighter economic string would tie these twenty-seven nations together, particularly the seventeen nations who share the Euro as the common currency, the group known as the Euro zone. Indeed, a very recent article in the New York Times shared the story of a European central bank representative visiting a financial official in Washington, D.C. According to the article, the official brought a copy of the Articles of Confederation to his meeting with the European banker. The Articles of Confederation, being our founding fathers’ first attempt at a written government, proved to be too weak to hold the states together as a country. The message to a Europe that eerily resembles our country under the Articles of Confederation: “Join together in a stronger union, or risk collapse. (Story, Saltmarsh)”

Schröder’s idea of a stricter bond between the seventeen-nation Eurozone is controversial. Countries who perhaps have not experienced the extent of economic difficulty that Greece or Ireland have are not willing to pool their resources in order to correct the mistakes made by those struggling nations (Story, Saltmarsh). Ireland fears progression into what they call a “straight-jacket” of dependency on the rest of the European economies. In fact, they fear this result so much that the Irish budget minister is laying down plans of austerity, or spending and deficit cutting, in order to avoid becoming overly dependent on the rest of Europe bailing them out, as Greece has. Ireland is taking these steps to, as the budget minister states, “restore [Ireland’s] sovereignty. (Quinn)” On the opposite side of the spectrum, Germany fears having to spread its wealth to cover the debt-creating habits of countries like Greece, Ireland, and Spain (Story, Saltmarsh). If few countries support the development of a central economic system in Europe, why does the concept remain a plausible plan?

Many economists agree that a centralized economic system is the only way for Europe to overcome its debt crises and prevent such struggles in the future. Garry J. Schinasi, who uses his experience working with the International Monetary Fund to advise private companies in Europe, says that a central system comparable to the US Treasury Department would have been able to merge the Eurozone’s seventeen conflicting objectives into one common goal, thus avoiding the disaster that often accompanies complacency (Story, Saltmarsh). However, even if a centralized economic system in Europe would provide advantages over the current system, would those advantages be appropriate compensation for the loss of sovereignty that European countries are fearful of?

Seeing as though any answer to this question lies within the future, calculated guesswork is the only means of predicting the outcome. From the information gathered, it’s possible to infer what may be the best outcome of this struggle between economic security and individual sovereignty. All countries would have something to lose and something to gain. It fully depends on whether the nation in question values their sovereign right to manage their own finances over the economic security that cannot be present while seventeen differing interests are competing.

If the Eurozone happened to choose the option of centralizing their economies, their response time in confronting economic issues would be drastically quicker, as Mr. Schinasi had proposed (Story, Saltmarsh). While each of the seventeen countries may share some common goal, such as limiting debt or avoiding crisis, the manners in which they attempt to find solutions often leave gaping discrepancies between the nations. Such is the case currently. The difference in governing between, lets say, Germany and Greece leave one experiencing minor difficulties (compared to other countries) and the other on the brink of catastrophe.

However, if the Eurozone countries were to centralize their economic system, a loss in sovereignty would be the necessary price to pay for economic security. As sovereign nations, those European countries have every right to manage their own financial prospects. Centralizing the system would remove the right of individual nations to make drastic decisions or make decisions that cause destabilizing effects such as large national debts. Indeed, proponents of the “United States of Europe” plan often use economic discipline as a validating argument.

The most plausible analysis may lie somewhere in the middle. Nations like Greece and Ireland are guilty of violating the sovereignty of other European nations by placing the other countries in the difficult position of deciding whether or not to bail them out in the attempt to avoid larger catastrophe. Therefore, the nations who have more to lose are the countries that aren’t in such dire straights. However, a more secure system also means that every single nation is offered the advantage of security. Although Germany might not be facing as monumental of problems as Greece or Ireland, they are going to be less likely to suffer from poor decisions that could possibly be made by future administrations.

António Borges, director of the International Monetary Fund’s European unit, predicts efficiently that such “integration is inevitable (Story, Saltmarsh)”. It’s possible that facing the recent challenges of debt crises in Europe will prompt the Eurozone to take measures to ensure that such situations don’t arise in the future. Furthermore, will the extent of sacrificed sovereignty in Europe end at economic security? Or will a more centralized Euro zone choose to further erode the sovereignty of individual nations in the attempt to function as a more efficient whole? The steps taken to guarantee economic security may very well lead to even further centralization and even more erosion of those nations’ sovereign capabilities.

Sources Cited

Barkin, Noah. "Italy and Greece Backsliding Shakes Euro Zone | Reuters." Business & Financial News, Breaking US & International News | Reuters.com. Reuters, 06 Sept. 2011. Web. 06 Sept. 2011. .

Gabel, Matthew J. "European Union (EU) (European Organization) -- Britannica Online Encyclopedia." Encyclopedia - Britannica Online Encyclopedia. Brtiannica Online Encyclopedia. Web. 05 Sept. 2011. .

Mascolo, Georg, and Christoph Schwennicke. "SPIEGEL Interview with Gerhard Schröder: 'Europe Needs to Wake Up' - SPIEGEL ONLINE - News - International." SPIEGEL ONLINE - Nachrichten. Trans. Christopher Sultan. SPIEGAL, 05 Sept. 2011. Web. 05 Sept. 2011. .

Quinn, Eamon. "Ireland To Restore Sovereignty Through Austerity -Minister - WSJ.com." Business News & Financial News - The Wall Street Journal - Wsj.com. Dow Jones Newswires, 05 Sept. 2011. Web. 05 Sept. 2011. .

Story, Louise, and Matthew Saltmarsh. "Europeans Talk of Sharp Change in Fiscal Affairs." NewYorkTimes.com. New York Times, 5 Sept. 2011. Web. 5 Sept. 2011. .

Tedesco, Enza. "Spain May Be Headed Towards Economic Recession -Report - WSJ.com." Business News & Financial News - The Wall Street Journal - Wsj.com. Wall Street Journal, 04 Sept. 2011. Web. 06 Sept. 2011. .