EU doomed without the Hamiltonian moment
I have long suspected that the endless undoubtedly boring European summit meetings are so turgid for a reason. It is easy to get lost in the byzantine complexities of false agreements that actually solve nothing. And that is how the EU likes it: For us to have little idea that it is a paper tiger, so much less than meets the eye in terms of its geostrategic power.
But crises clarify. And there is absolutely no doubt that the coronavirus has made crystal clear that the old model governing the EU has finally, after a brilliant 70-year run, entirely run out of steam. The supposed deal over emergency European coronavirus funds pledged last week to the plague-ravaged south, far from being a concord, has exposed the EU’s haplessness for all to see.
First, if you are brave enough to wade through the actual agreement reached, it becomes palpably clear that it is full of policy holes. The Eurogroup of finance ministers has recommended using the European Stability Mechanism (ESM), established in the wake of the 2008 Great Recession, to meet the southerners’ needs.
A basic problem with this is that the ESM was set up in the wake of an asymmetric shock — the particular economic follies of Greece and possibly other southern economies — rather than the symmetric shock of a global pandemic. In other words, there can be no doubt that Greece was largely to blame for its own parlous situation. The same cannot now be said of the Southern European states ravaged by a global pandemic. The basic issue of fairness is in real question.
Italian Prime Minister Giuseppe Conte rightly calls the proposed €540 billion ($587 billion) rescue plan “a trap.” The accord is there to only deal with the immediate impact of the virus. However, over the much larger rescue efforts necessary to revive the Italian and other southern economies necessitated by the debilitating lockdown, normal conditionality will be imposed.
This is understandably politically toxic in Italy, where it is seen as surrendering basic sovereignty to the uncertain mercies of economic overlords the EU, the International Monetary Fund and the European Central Bank. No Italian leader could accept such colonization and survive. In true Kafkaesque fashion, no country in the south that truly needs the ESM can politically accept it. These design flaws have become so obvious that the deal has unraveled almost immediately upon delivery.
This amounts to more than Europe’s glaring inability to behave as a union when it truly counts; it also illustrates the limits of the guiding philosophy of the EU. The “Monnet method” — functionalism — is a policy strategy based on the advocacy of small, technocratic, apolitical agreements being agreed to precisely because they seemed secondary, or technical, eventually amounting to decisive movement toward a confederated European state.
In the 1950s, rather than talking about grand visions of European union (a Valhalla that had far less than majority support), it was better to discuss seemingly inoffensive coal and steel union, even as the latter led to further economic union, and then to a degree of political union. Large political questions were to be purposefully avoided in favor of getting to large political answers (always in the direction of ever closer union) through the backdoor of technical, apolitical initiatives. Over decades, functionalism met with the greatest of success, as a broadly united Europe emerged, all without ever answering the basic question of what sort of political construct was truly being created.
While this seemed clever and it worked for a long while, in actuality, functionalism has stored up a great deal of trouble for Europe, which has come home to roost since the Great Recession of 2008. The founders of the EU wanted a powerful Hamiltonian Brussels without ever having their Hamiltonian moment.
A political union that no one really believes in and whose members are not willing to make the basic sacrifice is a union only in name.
Dr. John C. Hulsman
This means they were broadly advocates of a federated (or confederated), centralized European state, without ever having the necessary political debate that raged in the US in the 1790s between the advocates of centralism (Alexander Hamilton) and decentralization (Thomas Jefferson). In the end, the federalist administration of George Washington opted for Hamilton’s centralizing vision, won overwhelming re-election and a popular mandate for the national government to assume state debt, while at the same time establishing a powerful national Treasury, brilliantly headed by Hamilton himself.
Due to an overly clever functionalism, present European leaders (with the honorable exception of President Emmanuel Macron of France) shied away from this difficult argument in the happier times that preceded the coronavirus. But the failure of functionalism over the past 70 years to decisively answer the question of what sort of union Europe was to become is now fatally handicapping basic and necessary efforts to combat the coronavirus — the political risk event of our generation.
The result is an EU built only for sunny weather, which trundles along nicely in good times, but is fatally overmatched in bad ones. A political union that no one really believes in and whose members are not willing to make the basic sacrifice of blood and treasure for is a union only in name. And, without the Hamiltonian moment in these times of crisis, Europe will be increasingly unfit for purpose.
- Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via www.chartwellspeakers.com.