There have been waves of threats by Eurozone politicians to bully people into accepting “whatever it takes” to keep the shaky construct of the monetary union glued together. These threats peaked last year with disorderly default, and when that wasn’t enough, with the collapse of the Eurozone. But now, the ultimate threat has been pronounced: war.
It wasn’t an idle thought by a wayward parliamentarian on the radical fringe but a well-articulated statement by Luxembourg Prime Minister Jean-Claude Juncker who was, until January, the President of the Eurogroup that manages the political aspects of the euro. And he’d picked Europe’s largest magazine, Der Spiegel, to make it (excerpts here, rest behind pay wall; update March 11: Der Spiegel’s own translation into English just came out here).
He’d alluded to it before. Last August, as he was jabbering about Greece’s potential exit from the Eurozone, he lamented that “many Germans and the German media” talked about Greece as if it were “a people you couldn’t respect,” and that Greeks depicted Chancellor Angela Merkel as if she were “the heiress of the Nazis.” And then his big threat, albeit in veiled form: “What we thought had been buried long ago, very quickly rises again.”
His problem: the halting integration of Europe. European countries were small, but there was a solution. “We must show the world something giant, and that’s the euro,” he said. He wanted Europeans to integrate more closely. And not just within the EU, but “the total continent, with extensions”—so maybe Turkey. They’d all eventually use the euro. And if it didn’t work out….
That was last year. Now, given the Italian election, he made it explicit. “For my generation, the common currency has always been a policy of peace,” he said. He was worried that people were getting lost in national naval gazing. “Those who believe that the eternal question of war and peace in Europe would never reappear could be seriously mistaken,” he said. “The demons aren’t gone; they’re only sleeping, as the wars in Bosnia and Kosovo have shown.”
The possibility of war—unless the euro survived and became the currency of the entire EU.
He was struck by the realization how much the European conditions resembled those of 1913, on the eve of World War I. But then, after having thrown “war” on the table, he backed off; he didn’t believe that Europe was facing armed conflicts, but he saw “conspicuous parallels.” In 1913, the prevailing wisdom was that there could never be another war in Europe because the powers on the continent were economically so interwoven that they couldn’t afford it, he said. “Particularly in Western and Northern Europe, there reigned a complacency that assumed that peace had been secured forever.”
By 2050, Europe would have about 7% of the world population, he said. In order to remain relevant, it would have to be united. The heads of the governments in Germany, France, and Great Britain knew that their voices were heard internationally only because they were speaking through the “megaphone” of the EU.
And the EU’s destiny was the euro. He listed proudly the “serious reforms” that had been carried out, like keeping Greece in the Eurozone—regardless of what that did to the Greeks whose belts had been tightened by five notches, or what it did to their economy that would be downgraded to “developing nation” effective June 2013. He praised the bailout funds and the European banking union—regardless of how they’d use taxpayers in some countries to bail out banks and their investors in others.
But hadn’t the elections in Italy shown that Southern Europeans weren’t all that enthusiastic about his glorious plans? Hadn’t Italian voters just demolished Prime Minister Mario Monti and his pro-euro course of reforms and austerity? It didn’t matter. Abandoning the austerity policies “would be a big mistake,” he explained. Politicians shouldn’t promote the “wrong policies” just because they were afraid they’d lose the next election. “If you want to govern, you must take responsibility for your country and Europe overall. And that means: you must implement the correct policies even if many voters find them wrong.”
A curious understanding of democracy. One fraught with peril. But one that has become all too common in the Eurozone where the will of the people has consistently been trampled into the ground. To make his message more persuasive, to get politicians to toe the line, to get taxpayers in financially stable countries to give up resisting the transnational wealth transfers, and to get the people in crisis countries to swallow without demur the bitter pills of his reform programs, he’d added what has become the ultimate threat in the euro bailout and austerity racket—the possibility of war.
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.