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Doug Saunders Headshot for calling cards (Randy Quan)
Doug Saunders Headshot for calling cards (Randy Quan)

Doug Saunders

Super-Europe no more Add to ...

There are few better ways to see the contrast between the Europe of 20 years ago and the Europe of today than by voyaging westward from Istanbul, on the northern Mediterranean coast, along the flanks of the continent's soft underbelly.

That is exactly what I am doing this week with a group of Globe and Mail readers and writers on the paper's Mediterranean cruise. It is a voyage from a chaotic old world of tariffs, visas, international borders, clashing currencies, anti-migration walls and inward-looking national politics, and into the stable, peaceful, borderless, homogenized sphere of a unified Europe.

Or so it appears at first.

This is a propitious moment to be gazing across a glass-calm sea at a mass of 500 million people taking their August break. Here on the continent's economically scarred southern edge, you can feel the fissures beginning to form, the sharp rips in the fabric of unity.

This will be Europe's decisive season. The weeks and months ahead will determine the continent's future direction in a number of important ways. This is a continent whose unity, 20 years in the making, is being tested.

After the fall of communism in 1989, Europe formed the most close-knit federation the world has ever seen, and then expanded at an extraordinary rate until in 2007 it came to incorporate 27 states.

Much of that expansion was built on an assumption of continuing economic growth - very poor ex-Soviet colonies like Romania, Bulgaria and the Baltic states were added to the club on the assumption that they had become more successful, more able to contribute and more European politically and fiscally than before. For a while, it worked.

In the past few months, this harmony has decayed into shrieking dissonance. So far this year Latvia, Hungary, Romania, Iceland and Ukraine have all gone bankrupt and received full-scale bailouts from the International Monetary Fund, a last-ditch rescue usually reserved for developing countries. Lithuania may well receive one soon. The huge economies of Ireland and Spain are both in deep trouble. Italy has government debt 120 per cent of the size of its entire economy.

Yet not everyone is hurting badly. This month France and Germany declared themselves free from recession, and Germany may have avoided any serious unemployment. Britain is beginning to worry about the prospect of inflation.

There could come a point, possibly by the end of next year, where major Western European economies like Germany are begging the European Central Bank to cool down the economy by raising interest rates even as the precise opposite is being demanded by countries like Spain, which has seen its economy shrink 15 per cent and faces double-digit unemployment.

It's a little like the decision being faced by the Bank of Canada, which can print money and ease the dollar's value downward to please Ontario's manufacturers, or let it rise to please Alberta's petroleum exporters - but not both. In Europe, the "two-direction" problem is far more dramatic, and it involves powerful sovereign nations.

Those 27 nations are quickly learning that their loyalties, when crunch time arrives, are not always in the common interest of their shared federation.

The key event this autumn will be the vote in Ireland, on Oct. 2, on a referendum to ratify the Lisbon Treaty, popularly known as the European constitution. It would give Europe an elected president, a parliament with real powers and the beginnings of a set of institutions that could lead to a Europe-wide foreign policy and military.

Hotly desired by Germans and eastern Europeans, the constitution needs to be ratified by all 27 members. Last year Ireland, the only country to bring it to a referendum, rejected it; now, Quebec-style, they're holding the vote again, hoping the right answer will emerge.

Who knows if it will succeed. Even if it does, there is a palpable sense that leaders and people alike now feel they have quite enough Europe, thank you very much. The euro currency remains popular - in fact, Iceland, Denmark and Sweden are eagerly trying to adopt it, their small currencies having been hammered in the crunch.

But nobody wants Europe to expand further. Last week I spoke with Turkey's EU-membership negotiator, Egeman Bagis, and he spoke pessimistically of a Europe driven inward this season by the pull of domestic politics, dumping important future members such as Turkey into limbo.

Five days before the Irish referendum, Germans will go to the polls in a vote that is very likely to give Angela Merkel's conservative Christian Democrats, who have campaigned against Turkish membership, full control of the government.

Within the next year, a British election will almost certainly bring David Cameron's anti-Europe and anti-expansion Conservatives to power. This will create a solid wall of conservative blue across almost all of Europe - almost the opposite of the wall of social democracy that faced George W. Bush five years ago.

A fear of expansion and outsiders is not the only force tearing at Europe. Even more dramatic is the fear of the cold. This summer, Turkey agreed to the building of the Nabucco pipeline, which will carry gas 3,300 kilometres from the Caspian Sea into Europe - the first major energy source, for many the continent's central and Western members, that is not owned and controlled by Russia. Turkey, for this privilege, will get 15 per cent of the gas - and a foot in the EU door, should things ever thaw.

Russia, in turn, is building two huge pipelines across the Baltic and Black seas, bypassing any hostile or rent-seeking countries on the way to Europe. Which is just as well, as Russia's relations with Georgia and Ukraine, two of those pathway countries, have reached an all-time low this summer.

Yet this is not a unanimous direction. Partly for energy reasons, countries like Germany are trying to forge better relations with Moscow. This infuriates the new EU countries of eastern Europe - the same ones that are now receiving IMF bailouts - who want Russia to be sanctioned.

Given all that, it is hard to imagine Europe becoming anything like a unified "new superpower" in the immediate future.

Follow on Twitter: @dougsaunders

 

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