Sat, Jun 16, 2012 - Page 9 News List

‘In Europe We Distrust’ is now eurozone’s motto

By Ana Palacio

For decades, critics of the EU have spoken about a democratic deficit. This reproach of the EU and its institutions was unwarranted, but there is a new and dangerous deficit within the Union — a trust deficit, both among governments and among the citizens of various member countries.

Indeed, if today’s euro banknotes included a motto, as dollars do, it could well be: “In Europe We Distrust.”

This lack of trust has brought the eurozone to the cusp of implosion, and is calling into question the very future of European unity. The arc of EU history seems to be bending to catastrophe — the sort of periodic European disaster that integration was intended to prevent. Grandiloquent as it might sound, the disintegration of the euro and the disarray that would engulf the European project, not to speak of the global repercussions, would unleash comparable devastation.

However, few official pronouncements, let alone policies, are addressing Europe’s deficit of trust and credibility. The current crisis has exposed the original lacunae and widening cracks in the compact between Europe’s citizens and EU institutions, between Europe’s north and south, and between its peoples and its elites.

Indeed, a dangerous emotional discourse has emerged, reflecting — and feeding — the worst stereotypes of the “lazy South” and the “despotic North.” It is indicative that the latest Pew Research Survey late last month reveals unanimity about who the least hardworking Europeans are: southerners, especially Greeks. Likewise, polls and elections signal the ascent of populists across Europe, while financial markets’ vulture-like behavior stems from the cynical calculation that the EU lacks the wherewithal to restore its credibility.

That, after all, is the point of Europe’s straightjacket of austerity, which hampers its growth prospects and thus makes little sense in economic terms. The ultimate aim of austerity is precisely the restoration of trust — among northern Europeans that the money transferred to troubled economies will not be squandered, and among the peoples affected by painful spending cuts that their efforts are recognized and supported.

In the heartland of the troubled South, the need for austerity has been the leitmotif of Spanish Prime Minister Mariano Rajoy’s government, a course that gained explicit popular support in the recent elections. Reforming Spains’s cajas (savings banks), labor market, welfare provisions and how its autonomous regions function top the national agenda (though unfortunately only at the insistence of the European Commission and Germany).

However, restoring trust and credibility requires more than southern discipline. Northern Europe must hold up its side of the bargain. Germany, in particular, must acknowledge that, far from being an innocent victim, its economy is the eurozone’s biggest beneficiary — and has been since the euro’s inception.

Because of that, and because of the economic calamity that would therefore befall Germany following a collapse of the euro, Germany has a unique obligation to maintain it.

German Chancellor Angela Merkel has been a favorite target of opponents of austerity for some time now, and it is understandable that, after months of being a bystander to the EU’s painful inability to govern, Germany has reluctantly — indeed, insufficiently — taken charge. Looking ahead, as the threat of disintegration looms larger, the need for German leadership will be even greater. However, once the crisis has passed, EU institutional reform will be a critical element in restoring trust.

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