'Is Europe Over?': A Look At The Region's Fate
LINDA WERTHEIMER, HOST:
Europe's economy, the world's largest, is in the midst of economic turmoil. A growing debt crisis has already forced the resignations of Greek Prime Minister George Papandreou as well as Italian Premier Silvio Berlusconi. And forecasts from the European Union suggest the 17-nation Eurozone could be facing possible recession next year. Some analysts are considering the possible collapse of the Eurozone. The Institute for Policy Studies recently published an article titled "Is Europe Over?"
John Feffer, co-director of the Institute's foreign policy in-focus project wrote the article. He joins me now in our Washington studio. Thanks for coming in.
JOHN FEFFER: Thanks for having me on your show.
WERTHEIMER: Well, now, obviously the continent is not going to sink into the sea, so what do you mean by the title "Europe is Over"?
FEFFER: Mm-hmm. What I meant here is the conception of the European Union. This was a space that was designed to of course take advantage of economies of scale to compete favorably in the world economy, but who was also formed around a concept that it was important to have a strong social safety net, to raise the bar for countries in Western Europe, to kind of harmonize up to the highest possible regulatory levels, and to of course ensure a great deal of social equality and economic equality. This is the concept I think that's being challenged today during the debt crisis.
WERTHEIMER: So the - it's not Europe, it's the unity of Europe, but in your article you quote the U.S. Treasury Secretary Tim Geithner saying we are all directly affected by the crisis in Europe and that the head of the IMF, Christine Lagarde, raising the possibility of a lost decade for the world economy. What do you think?
FEFFER: Well, I think there are two levels at which the United States is affected. Of course, we're affected because we have a global economy and all of our economies are connected to one another, but perhaps the more important issue, and this I think lies beneath Geithner's anxiety, is the amount of money that U.S. banks have invested in Europe, how connected they are to European banks, and if European banks go under, I'm afraid our banks are going to be very much exposed as well.
And so the threat of a double-dip in recession for Europe, well, that's the threat of a double-dip recession for the United States as well.
WERTHEIMER: You surprised me in your article by suggesting that one solution to the crisis might be an even tighter Union, with European countries giving up more than their currency, actually giving up elements of their sovereignty, back to the days of the Holy Roman Empire? I mean, what are we talking here?
FEFFER: Well, European countries have already given up a measure of sovereignty. They gave up that sovereignty because of a threat during the Cold War, a perception of a threat from the Soviet Union and communism in general, but also because there were economic advantages to giving up a measure of sovereignty. When the Soviet Union collapsed, there no longer was that threat, and I think one of the compelling reasons to give up sovereignty disappeared, and this whole movement of Euro skepticism I think has grown.
It was at one point just on the left and on the right, but now it's moved into the mainstream. I think it will be challenging to push for a greater union, but this is something that Angela Merkel and some other have said is indispensible. In other words, if the European Union doesn't move to the next level, then everything that it has achieved to date will fall apart.
The next level in this case, I mean, if we're looking at the next couple of years is to compliment a monetary union with a fiscal union. In other words, it just would be currencies...
WERTHEIMER: It would be budgets.
FEFFER: ...it would be budgets.
WERTHEIMER: Are you at all optimistic that any of those things might come to pass?
FEFFER: When I was saying that the European concept might be over, it was a really a call to action in some sense for Europeans to take another look at what were the reasons behind the creation of the European Union, and how to move forward from that in the spirit of that initial conception. Can Europe pivot out of this crisis? Absolutely. I think that right now, restraining the financial sector, but even perhaps some more radical suggestions, for instance, bringing Turkey into the European Union. Turkey is an enormously dynamic economy. Whether Turkey is still interested in joining the EU at this point is another question. But those are some of the options that are on the table to take advantage of what Europe still has, and to bring it to the next level.
WERTHEIMER: John Feffer is co-director of the Institute for Policy Studies' Foreign Policy and Focus Project. Mr. Feffer, thank you very much.
FEFFER: Thank you for having me on the show.
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