Europe is sleepwalking to decline. We need a Churchill to wake it up

Timothy Garton Ash
The Guardian

Our leaders are peddling delusions. The eurozone has not been saved, the EU has no foreign policy, and others are making history

Can anyone save me from Europessimism? I feel more depressed about the state of the European project than I have for decades. The eurozone is in mortal danger. European foreign policy is advancing at the pace of a drunken snail. Power shifts to Asia. The historical motors of European integration are either lost or spluttering. European leaders rearrange the deckchairs on the Titanic while lecturing the rest of the world on ocean navigation.

The crisis of the eurozone has only just begun. The bond markets have not been convinced even by last week's giant "shock and awe" bailout of Greece. The one thing that moved them was the European Central Bank's readiness to start buying eurozone government bonds, but it still costs multiples more for the Greek or Portuguese government to borrow than it does for the German government. A leading bond strategist tells me he now sees two alternatives: either the eurozone moves towards a fiscal union, with a further loss of sovereignty by member states and drastic deficit reduction imposed by this external constraint, or some of the weaker member states default, either inside the eurozone or by leaving it altogether. At which point capital flees, even more than it has already, from the weak to the strong: that is, from the eurozone to elsewhere and, within today's eurozone, to Germany.

The domestic and international politics of both these paths are bloody. (In Greece, already literally so.) The tensions within European societies will rise, but so will those between European states. In particular, resentments within and towards Germany, the continent's central power, are bound to increase either way: if Germany imposes tough terms for a fiscal union while at the same time underwriting other governments' risk, or if it lets a Greece or Portugal go to the wall, resulting in further capital flight to Germany. In the very best case, if the old "challenge and response" pattern of integration through crisis works once again, Europe will be preoccupied with resolving its internal economic and financial problems for years to come.

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