Tuesday, November 15, 2011

The political crisis in Europe

George Friedman of Stratfor points out that the economic crisis of Europe is really underpinned by a political crisis.  The European elite have dedicated themselves to a united and peaceful Europe ever since WWI and WWII's terrible devastation.  They concluded that the way to a peaceful Europe was to create a prosperity zone of Europe, where all of the nations had it in their own economic interests to be intertwined and dependent upon each other for their own prosperity.  They adopted a Europeanist ideology.

The Europeanist ideology promised prosperity and peace.  There has not been some form of unifying identity to Europe beyond these two promises made by the elite leadership of Europe.  

But, the financial crisis looks like it it ending both prosperity and peace.  The financial crisis has shown the structural inadequacies of the Eurozone and the common Euro - one currency - but many governments and many fiscal policies.  So, when Greece and Italy owe huge debts that they can't pay, the solution offered by Germany is deep cuts and dramatic austerities for the Southern European countries.  

There goes the prosperity for Southern Europe.

And, there goes the peace as well between Southern Europe and Northern Europe.  The North blames the South for their prodigal irresponsibility, and the South blames the North for setting up a financial system that created huge exports into the rest of Europe by creating a free trade zone and a relatively inexpensive Euro.

The question that arises is what happens to the leadership in Europe?  Do the people continue to elect the same kind of elites who are committed to a united Europe, even if it means drastic cuts in their governments?  Or do they go for more populist and more angry leaders who want to overturn the existing political and financial system that seems to see solutions to the debt crisis in terms of austerity and pain for the people, while leaving the elites quite comfortable, thank you very much.

Big changes are likely to be coming in Europe.