Stability May Mean Tradeoffs For Some EU Members

Guests

Timothy Garton Ash, professor of European Studies, Oxford University
Thomas Kleine-Brockhoff, senior fellow, The German Marshall Fund of the United States

As the Euro crisis continues, Germany and France have proposed giving European Union leaders more power to demand fiscal discipline from member states. The crisis has raised difficult questions about national sovereignty for many E.U. member states.

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NEAL CONAN, HOST:

This is TALK OF THE NATION. I'm Neal Conan in Washington. Today and tomorrow, European leaders meet again in yet another attempt to resolve what some describe as the world's most boring crisis. But if we step back out of the weeds, there are a couple of pretty compelling story lines.

One centers on Germany, which tried to dominate Europe by force of arms twice in the past 100 years and now finds itself both a reluctant leader and a deeply resented one. The other revolves around a dilemma Americans know well, the relative power of sovereign states and a central government. We held a constitutional convention and fought a civil war.

In Brussels today, German Chancellor Angela Merkel and French President Nicolas Sarkozy hope to persuade proud countries with thousands of years of distinct history and culture to cede power to save both the euro and the European idea.

If you describe yourself with a European dash - Polish-American, say, or Italian-American - how much sovereignty should your old country surrender to Brussels? Give us a call, 800-989-8255. Email talk@npr.org. You can also join the conversation at our website. That's at npr.org. Click on TALK OF THE NATION.

Later in the program, Kyra Sedgwick on closing "The Closer," but first the future of sovereignty in Europe. We begin with Timothy Garton Ash, professor of European history at Oxford and author of "Facts Are Subversive: Political Writing from a Decade Without a Name." He joins us from his home office in Oxford. Nice to have you with us.

TIMOTHY GARTON ASH: Hello, good evening.

CONAN: And it's going to be hard enough to convince these 17 members of the eurozone to surrender power over their budgets. What's in it for the other 10 members of the EU, like Britain, who still use their own currency?

ASH: Well, listen, it is the most dramatic moment in the whole story of European unification because in monetary union we put the cart before the horse. We had a monetary union without the kind of political union you have in the United States, and now the politics have to catch up.

And the question is: Will even those 17 states be ready to do what's necessary to make a kind of political union?

CONAN: And we've heard that, up until now, there have been half-measures, Band-Aids, something to paper over the crisis. But we heard that the can has been kicked down to the end of the road.

ASH: You know, we've also heard the - we heard - we've been at the end of the road, and then somehow another stretch of road has appeared. I don't think that it will be solved tomorrow. But to your point of sovereignty, the question for this, so a country like Britain or a country like Poland, proud independent countries with long histories for fighting for freedom, is the tradeoff between your formal sovereignty, the legal position, and your effective sovereignty, your actual power.

And Britain is tending to say we want more sovereignty even if that means less effective power. Interestingly, Poland, a country which has fought even harder for its freedom in recent years, is saying the precise opposite. They want to be in the eurozone. They want to be in there with Germany because they think their effective power, their effective freedom, will be greater.

CONAN: It's interesting. Polish foreign minister Radosław Sikorski, who has described the situation as the edge of a precipice, said the other day I fear German power less than I am beginning to fear German inactivity...

ASH: What an extraordinary moment. What an extraordinary moment when the Poles are calling for more German leadership.

CONAN: And let's bring another voice into the conversation, Thomas Kleine-Brockhoff, senior fellow at the German Marshall Fund of the United States. And he joins us from New Jersey. Nice to have you with us today.

THOMAS KLEINE-BROCKHOFF: Good afternoon.

CONAN: And I borrowed that quote from a recent piece you wrote in the Washington Post: Why isn't Germany stepping up to save the eurozone? And you've described this as - well, perhaps the last moment for the European leaders to reach an agreement.

KLEINE-BROCKHOFF: It's certainly a very important moment, and the question of German leadership is in the room here. This country - for Germany it's a historic moment as well. As you've alluded to, for a couple of times in the last 100 years there was a unilateral moment for Germany, and it was unilateral in the sense that arms and tanks were involved.

Now, this is a moment where nothing can happen if Germany doesn't move. So this is a test of German leadership, whether it can exercise leadership responsibly and in conjunction and in agreement with its neighbors.

CONAN: And that's going to be difficult to do. There may be a majority in Germany convinced of the European idea and the future of the euro, but many of them are not in the party of Chancellor Angela Merkel.

KLEINE-BROCKHOFF: She has the opposition within her own group, the conservatives. They are most concerned about sovereignty and the transfer of sovereignty. The euro, in fact, has never had - when it was introduced in '99 - never had a majority at that moment in the German population. However, Germans did understand the deal, that Chancellor Kohl, in 1992, when this was all decided, had struck with President Mitterrand of France.

France was very reluctant to see German unification, and actually even - so in 1990 the two had agreed that Germany would accept the euro while France would accept German unification. So for Germany that was the moment to regain national sovereignty while at the same time sharing sovereignty, losing a piece of sovereignty, in exchange.

And I think we're approaching a similar moment now that sharing sovereignty as a means to regain freedom of maneuvering and freedom of action and effective power in a world of globalization and Europeanization is the challenge that leaders need to convince their people of, that in a multi-polar world in which Europe is only a small piece, is the way to go to retain influence.

CONAN: And Timothy Garton Ash, Germany, whether it decides to take decisive action or not, at least is in commend of its own future. There are plenty of countries in Europe, like Greece and Portugal and Ireland, who fear that they've already lost their sovereignty.

ASH: Yeah, sure, but let's spend another moment on Germany, 'cause it's absolutely crucial, and Thomas is completely right. You know, the joke at the time, in the early 1990s, was half the deutschemark for Mitterrand, the whole of Deutschland for Kohl. And that was the deal. And the great irony of that deal is that for Mitterrand, for France, the whole idea of the euro was to bind this new big united Germany more closely into Europe, to bind Germany in.

And 20 years later, it's precisely the European Monetary Union which compels Germany to step forward into a leadership role that it absolutely has not sought. I mean, most of the Germans would rather be a greater Switzerland. Leave us alone to get rich and be free and to live our lives. They're not seeking to dominate anyone.

But because they are the central economic power and because the euro is in this crisis and because it's they who will have to bail other people out, they are compelled to step into a leadership role, and like Radek Sikorski, my problem is that Chancellor Merkel has not yet done what it takes, has not yet done what it takes to convince the market.

So the great irony is that suddenly at this moment, you know, almost 100 years on from 1914, Germany's neighbors are looking for more German leadership, but of course of a different kind.

CONAN: We're talking with Timothy Garton Ash, a professor of European studies at Oxford University, and Thomas Kleine-Brockhoff, senior fellow at the German Marshall Fund of the United States. We'd like to hear from those of you who identify yourselves with a European dash - Irish-American, Polish-American - what powers should your country cede to Brussels, if any? 800-989-8255. Email talk@npr.org. We'll begin with Bob(ph), and Bob's with us from Winnemucca in Nevada.

BOB: Hello. Yeah. Hello?

CONAN: Yes, you're on the air, Bob, go ahead.

BOB: Yeah, I'm actually a German-American, and I've also been a citizen of Germany, and I'm also half Polish-American. And the fact that they should – the whole - as a sovereignty they should go back to their original currencies, each of the countries, and at the same time be able to use the euro so that the banks and the people have a better way of building up the economy both individually and as a sovereign unified Europe.

CONAN: Bob, I'm not sure you can have your cake and eat it too. Thomas Kleine-Brockhoff, excuse me, the Germans would love to go back to the deutschemark, but you can't have one and the other at the same time.

KLEINE-BROCKHOFF: I think fear is reigning at this time. And people do understand that the consequences of going back to the deutschemark would be disastrous because it would come with a huge appreciation of the currency, and an export-oriented economy like Germany's will be unable to export goods. So going back to the original currency would probably produce mass unemployment, while the euro has now produced the highest level of employment in post-war German history.

CONAN: Bob, thanks very much for the call.

BOB: Since Willy Brandt?

CONAN: Since Willy Brandt? I'm sorry?

BOB: Yeah.

ASH: Is that Bob talking about Will Brandt?

CONAN: I think it's Bob talking about Willy Brandt, yes. Well, I mean that's one former German leader. There was another one, Helmut Kohl, who of course brokered reunification and brokered the deal with the euro as well. We mentioned him before. A stark choice: Abandon economic orthodoxy, you say, Thomas Kleine-Brockhoff, or give up the - break up the euro, which would be a disaster.

KLEINE-BROCKHOFF: Yes, so there is something that I would call a residual nationalism or economic nationalism in the country. As in post-war Germany, nationalism was a no-go area, in post-war Germany. I was a basketball player, I played for the national team myself in the late '90s, and we used to roll down our socks because they had the national flag down there. So we weren't proud of displaying the national colors.

But what was acceptable in that time was the pride for the post-war economic model, and that pride was symbolized through the currency. So currency in the German post-war history is a way to express national pride and nationalism. That is one reason why it's so hard for Germans to give up that currency.

Now that they have given it up, it is hard to explain to them why they should enter into something that they call - that is called a transfer union, in which funds from the rich countries would be transferred to the poorer countries to bail them out.

Now, the reality is that we already are in a system of a joined (unintelligible) liability...

CONAN: And I'm afraid we're in a situation where a lot of countries worry about Germans metaphorically rolling up those socks again. Stay with us. We're talking about European sovereignty. You're listening to TALK OF THE NATION from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. European leaders met today to determine the fate of the euro and the shape of the European Union itself. At stake: the stability of Europe's economies and much of the world's for that matter and the balance of power across the EU.

The question hanging over the summit: Will member countries agree to give up even more power to EU leaders in Brussels or make decisions about budgets and spending themselves? If you describe yourself with a European dash - German-American, say, or Polish-American - how much sovereignty should your old country surrender to Brussels? 800-989-8255. Email talk@npr.org.

Our guests are Timothy Garton Ash, professor of European studies at Oxford University. His book, "Facts are Subversive: Political Writing from a Decade Without a Name," I should say his most recent book. Also with us, Thomas Kleine-Brockhoff, senior fellow at the German Marshall Fund, previously Washington bureau chief for the German newspaper Die Zeit.

Let's see if we can go next to - this is Alex(ph), Alex calling from Detroit.

ALEX: Hi, Neal, always - thank you, I always love your topics. I'm a Romanian immigrant, and for a country that won its independence or, if you will, had such a bloody struggle to achieve its current national identity, I think it will be tough to give up any sort of national rights in order to support a European Union that's at the very least ill-defined.

CONAN: Timothy Garton Ash, countries like Romania, they are relatively recent adherents to the EU, and he describes their dilemma accurately, I think.

ASH: Well, you know, I might say half-seriously that Romania had a fair amount of perverse independence under Nicolae Ceausescu. Look, the slogan of 1989, of the velvet revolutions, was the return to Europe. And the post-communist democracies saw their future, their independence, their freedom - economic, political, also military - secured in the European Union and in NATO. And that's why a country like Poland wants to be at the very heart of the European Union.

So we come back to this essential point: What is sovereignty? Is it simply what's on the paper, that you're in theory a totally independent country? Or is it the practical ability to secure the freedom and the prosperity of your own people, in other words effective sovereignty?

And I think that the right choice - and this is a choice, by the way, most East European leaders are still making - is to secure the effective sovereignty for your own people.

CONAN: Alex, thanks very much. Let's go next to - this is Collin(ph), Collin with us from San Francisco.

COLLIN: Hello. I am an Irish-American, and my opinion with respect to what Ireland would need to concede as part of any new treaty, is - would basically be give whatever the Germans or the other creditor countries are demanding. Case in point would be Ireland's extraordinarily low corporate income tax rate. He who pays the piper calls the tune.

Germany and a number of other countries have expressed their irritation with the lower corporate income tax that Ireland has had over the years. I think that would be something that would be fair for Ireland to give up under a new treaty.

CONAN: And we're talking in the economic realm, Tim Garton Ash, because that's where concessions are being asked for. But these are budgetary controls. And you're talking about paper sovereignty. These are powers that are fundamental to the definition of a state, no?

ASH: Yeah, but first of all, Ireland has never had it so good as it did since it joined the European Union. And it was that EU membership that really - and I would say this to Collin - which secured Ireland's independence and its pride. And suddenly it was richer than Britain, or appeared to be richer than Britain and, you know, looked Britain in the face as an equal and so on. So that it's a classic example of where you do get more effective sovereignty.

Now, where you're right is now it's in a very, very hard place. And the truth is that for Germany, a collapse of the eurozone would be an absolute disaster because they're the great exporters, and they're - you know, if you went back to the Deutsche mark, its value would go through the roof, and it would be very difficult to continue to export so much.

For Ireland, the calculus is actually more difficult because if you don't have the possibility of devaluing your own currency, and you're not getting the kind of transfers that a state inside the U.S. gets from the federal budget if it's doing badly, you're in a very tough place.

So the quid pro quo is, okay, you've got this really tough, if you like, German-style budget discipline, but in return, you get major transfers from the richer, from the better-off members of the eurozone. And that would be the deal that I think Ireland should take.

CONAN: Collin, thanks very much for the call. And Tim Garton Ash, we've got to let you go in a few minutes, but I wanted to ask you: You pointed out in a recent piece that, well, obviously these changes to the European charter, even if they're agreed to, will take months at best, much more likely years to be approved by each individual parliament.

That's a long process, and there are many other obstacles coming up in the very near future.

ASH: Notably the fact that a number of the weaker eurozone countries have to go to the bond markets to borrow many billions of euros for their government borrowing. And there is still the possibility that the bond markets will say, for example to Italy early next year, no, sorry, we're just not going to buy, it's not secure enough.

And so there's a huge problem of the difference between the time scale, the pace of the bond markets, which are measured in nanoseconds, instant reactions, vast swings, and the pace of the politics of the European Union, which as you say if you have to change a treaty is a matter of months and years. And it's that gap between the speed of bond markets and the speed of European politics which could still bring the euro down, I'm afraid.

CONAN: And that lack of agility, Thomas Kleine-Brockhoff, that is something that is going to make it difficult for any German leader to position him- or herself in this case to take advantage or to try to position him- or herself to take that decisive measure and yet face those short-term problems that are going to demand quicker action.

KLEINE-BROCKHOFF: What we're seeing is the attempt of a two-speed solution to the crises. There have got to be crises resolution measures in any of these European summits that are now perpetually - in Brussels, the next one today and tomorrow - and the long-term fixes.

And treaty change, certainly, is such a long-term fix, which completes the idea of a currency union and adds the fiscal component with it that was missing, and indeed that will be - it'll take a long time in a process that is fraught with political risk to ratify it.

On the other hand, the markets that are the drivers and the short-term actors in this game will need something to satisfy them, to show that it's actually safe to buy Southern European bonds. And there are a few of these measures being discussed right now.

But it is - we've come to learn over these past months of this slow-moving euro crisis that the politics can never, certainly not European politics, can never in one step deliver the big solutions that the markets demand, and this weekend won't be any different.

CONAN: And Tim Garton Ash, in your piece in The Guardian, you wrote that just as the euro was once seen as a rival to the dollar that Europe was once seen as a big player in the balance of power between the United States and China and Russia and now not so much.

ASH: If you talk to the Chinese, who 10 years ago loved the European Union actually as a counterbalance to George W. Bush's unilateralist United States - you know, they had this idea of a multi-polar world, and Europe would be one of the great poles - and now they're almost contemptuous of Europe, and that really is the bigger historical picture.

As power shifts from West to East, as it shifts to the emerging powers like China, India, Brazil, where will Europe, the old continent, be in that world of giants? Will it manage to remain a giant itself, or if it fall aparts(ph), will it be a quarreling family of 27-and-more dwarves? That's what's really at stake in this crisis.

CONAN: Timothy Garton Ash, thanks very much for your time today, and appreciate it.

ASH: A real pleasure.

CONAN: Timothy Garton Ash, professor of European studies at Oxford University, also the author of "Facts are Subversive: Political Writing from a Decade Without a Name." Let's go to another caller, and this is Kevin(ph), Kevin with us from Ann Arbor.

KEVIN: Yes, hello. I was an exchange student back in the '80s and then studied overseas in college in the '90s. And in '92, they were adopting the euro form, and so there's a lot of politics back and forth as to whether they approve. One of the T-shirts that you can buy in Germany at the time said ich bin ein euro, sort of playing on the words of JFK when he said ich bin ein Berliner. Now, I would argue that the main issue really is ultimately does Germany want to be a part of a larger spiritual Europe, and the economics simply ties into that.

So I kind of wonder really at the core what does Germany see itself as - seeing and spreading that overall thought of a unified Europe, and really, they do need to step up the leadership but, as a part of that, defer some of their autonomy to Brussels in a larger context.

CONAN: Thomas Kleine-Brockhoff, this idea of Germany and the larger spiritual Europe, this is something that's fraught with, well, emotional problems and historical problems.

KLEINE-BROCKHOFF: I think that's the key question that you've asked. And Germany has seen European unification as a part of a national goal because the Germans understood that German unification could only be achieved in unifying Europe. However, in 1990, when unification was achieved, that connection with the overall European aspiration was gone. So the rationale and the link between a national narrative and a European narrative has grown weaker over time.

And with the generational shift, the idea that Europe is a question of war and peace is also not resonating with the younger generation because they take for granted visa-free, border-free travel and that there would be never be a war again in Europe. I wouldn't be so sure. If we see a succession of defaults, of depression, of disintegration and, finally, of decline, we're on the road back to a multi-polar Europe, as what Tim Garton Ash described, as a quarreling family, and then all bets are off.

So it is clearly on the Germans to define for themselves what their European aspiration is and whether the idea that a unified Europe can actually play a role in this larger multi-polar construction of the world with rising powers led by the Chinese, whether they are willing to cede sovereignty to that larger European body and the idea of Europe.

CONAN: Kevin, thanks very much for the call.

KEVIN: Thank you.

CONAN: We're talking about European sovereignty as European leaders meet in Brussels to shape the future of their continent. You're listening to TALK OF THE NATION from NPR News. Julie(ph) is on the line joining us from Miami.

JULIE: Yes. Great topic. I am an Italian citizen. I've been living in the United States for about 15 years. My comment is that a more unified Europe, a more respected Europe will be able to push through some of the very tough reforms that are so much needed in countries like Italy and Spain. I just don't see those countries being able to change from within.

CONAN: And, Thomas Kleine-Brockhoff, you've seen after the new prime minister in Rome, Mr. Monti, submitted a budget, people swallowing very hard as they looked at measures that some say are not even, as harsh as they are, adequate.

KLEINE-BROCKHOFF: Some people say that Italy is the endgame of the crisis because it's the third largest economy in Europe and the third largest bond market in the world. The new prime minister, Monti, is certainly trying to do his best to restore the credibility of the country and also give markets and his fellow European leaders a sense that this country is heading into the right direction and trying to undertake the tough reforms that are necessary. And your caller, Julie's sentiment that the European Union can actually help lend a helping hand to this is probably shared in large parts of Italy because of the disappointment in their own elite that measures of discipline as well as economic reform and liberalization of the labor market particularly can be helped by pressure from Brussels especially and the European Central Bank now led by an Italian.

CONAN: Julie, thanks very much for the call. Finally, I wanted to ask you how democracy plays in all of this because not only would countries be giving up much more sovereignty to the European Union central government in Brussels, a lot of those officials are unelected. They did elect their governments, their sovereign governments to make decisions for their future, and now, those governments are giving up that power.

KLEINE-BROCKHOFF: Certainly, that's a big problem of intergovernmentalism, which is what we're seeing at the European level these days. So the democracy deficit of the European Union has been a topic for years. They've been addressing it - trying to address it in several ways. But in this crises where you need fast-crisis resolution measures, it's come to the forefront again that people want to have a say, which is why in the end, a referenda about treaty changes as well as about these far-reaching measures that are asked of certainly southern European countries and eventually northern European countries as well to put them up to a vote.

Now, that might be inconvenient, but the longer this crisis takes, people do understand what is at stake. And if politicians make the case to population and show that type of leadership, there need not be a democracy deficit and there need not be an outcome that these elites don't like in the end. So in the end, I think there is a democratic process will need to be restored, but the question is can it be done immediately in a crises situation, and we're seeing that Europe is turning to technocrats and to technocratic solutions for this interim to bridge this time.

CONAN: Thomas Kleine-Brockhoff, thank you very much for your time today. We appreciate it.

KLEINE-BROCKHOFF: Thank you, sir.

CONAN: Thomas Kleine-Brockhoff, senior fellow at The German Marshall Fund of the United States and former Washington bureau chief for Die Zeit, the German newspaper, joined us on the phone from New Jersey.

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