The raft of the Europa

No one knows how this story will end. After Greece, we now see Ireland faltering under the weight of debt, negotiating the degree of national sovereignty that it will concede to its creditors tomorrow. Portugal, Spain, Italy and others may find themselves in a similar position. We know that this is the greatest crisis that the experiment of European union has faced. Many fear that the medicine of harsh austerity is poison. No one, though, can propose a way out other than more borrowing, more spending cuts and higher taxes. The only certainty is that the people of Europe, whether citizens of rich countries or over-borrowed ones, are gloomy and frightened. They see that their economies can no longer provide the benefits to which they were accustomed. What’s worse, for the first time since the end of World War II, large numbers of Europeans are expressing their dislike for other Europeans. We saw the beginning of this new bigotry a year ago, when Greece crashed, exhausted, like a drunken oarsman, onto the deck of the European raft. The exasperation of our European partners, who for years had watched the garrulous and spendthrift Greeks neglecting their oars, quickly turned to rage and vindictiveness. For many weeks, the raft drifted aimlessly as the partners debated whether to help Greece to its feet or let it slide overboard. Only when they saw the sharks of the international markets circling them, taking bites out of Portugal, Spain and other countries, did they realize that they would survive only if they pulled together. Greece was saved, but now it pulls on its oar under the unforgiving glare of its partners, chained to its place, on reduced rations. Because the Greeks readily accepted their guilt for former wastefulness, they handed over a large part of their national sovereignty without the resistance we could have expected. They endured attacks from foreign politicians and a large portion of the international media. The Greeks’ guilt allowed others to lay into them in an absurd and unfair way, without feeling guilt. A taboo was broken. Stunned as we were by our predicament, it was difficult to understand what was going on. That is why it is most enlightening to watch what is happening in today’s difficult negotiations between Ireland and the so-called «troika,» namely the European Commission, European Central Bank and International Monetary Fund. The Irish are in immediate need of tens of billions of euros in order to rescue their banks, which have jeopardized the fate of the entire country, with their debts pushing the 2010 deficit to a stunning 32 percent of gross domestic product (double that of Greece!). In exchange, Ireland’s European partners want Dublin to raise its corporate tax rate from today’s 12.5 percent, arguing that it is absurd for them to support a country that attracts foreign corporations at the expense of its EU partners. The Irish government argues that if it took measures that would send these companies elsewhere, this would lead to fewer tax revenues (as they account for 5 percent of GDP). And yet, if they don’t raise this tax, the burden of higher taxes and spending cuts will fall solely on citizens. As Ireland battles with these irreconcilable forces, its partners have found an opportunity to defang and hobble the former Celtic Tiger. It’s worth noting that in this crisis, Europe’s strongest economy, Germany, has found itself in a win-win-win situation: when the euro’s value falls, its exports outside the eurozone rise; when the euro strengthens, it helps sell German products to partners within the EU; when a country is bailed out, German banks and businesses benefit because their investments are secured. As Chancellor Angela Merkel rightly argues, Germany has no reason to apologize for success that is born of hard work and fiscal discipline. Germany lives in fear of a repeat of the economic collapse of the period between the two world wars. In a position of such power today, however, it should remember another lesson from that pregnant time: the humiliation of crushed nations will find a way out in rage and vengeance. If our era is to leave any message for the future, may it be that the crisis that first manifested itself in Greece in 2009 showed the need for greater cooperation and understanding between the European partners and did not lead to a return to primitive nationalism. For the raft of the Europa to sail toward tomorrow, it needs everyone pulling at their oar, a steady hand at the tiller and a clear eye focused on the horizon.