A Not Quite United Europe

During my time in the Army in Europe (we’re talking the 1950s), I had a chance to visit the High Authority of the European Coal and Steel Community in Luxembourg (ECSC—also called, and remembered by me as, the Montanunion).

The ECSC was the forerunner of the European Union. It had been founded in April of 1951 by the then French foreign minister, Robert Schuman as a means to prevent further war in Europe. The idea was to place coal and steel—vital in defence activities—under a single and transnational High Authority, the two old enemies, France and Germany, both participating in what was originally a six-country arrangements; others were Belgium, Italy, Luxembourg, and the Netherlands. The institution, however, was, from the very beginning, also seen as the first step to a European federation of states, and those of us visiting Luxembourg circa 1956 were mostly presented with a glowing picture of that future.

Indeed, the concept was most seductive. That’s where I first heard the word Grossraumwirtschaft, produced by one of those linguistic maneuvers so common in German that weld multiple nouns into a new one, this one literally meaning large area economy. Here the word had been, as it were, cleansed of its origins in the Nazi era—where it meant that the conquests of Poland, France, Russia, etc., would create such a thing. (I discovered later, by the way, that if you aspired to standing in economics, you did not deign to translate that word. All those in the clan were supposed to know it.) Anyway, back then, in Luxembourg, we were told that the exemplary Grossraumwirschaft in the world was the United States of America, and our presenters had maps and statistics showing that if Europe’s states all got together, joined the Montanunion, extended its reach beyond coal and steel to encompass the totality of the economies, Europe would become an economic power at least equal to the United States and, in some particular categories, greater!

And, listening to the enthusiastic presentations, looking at vividly colored posters put on stands one after the other, it all seemed entirely doable, indeed excitingly inevitable.

Sometimes we get to watch history. Slowly but surely, the EU was formed (1993) and a single currency introduced (1999). The EU is certainly an economic union and entirely comparable to, indeed in some categories greater than, the United States. It has 500 million people (the U.S. has 312 million), its GDP is $15.2 trillion (ours $14.8 trillion); but it has less territory, 1.7 million square miles versus our 3.8 million. The significant difference is that the EU is not really a political union (although it labels itself as such). Its states retain genuine sovereignty. They can withdraw from the EU—as Texas cannot quit the United States. They can declare war on others, as California certainly cannot. The European Union as a legislative and executive body has severely limited capacities. Its equivalent of a legislature is not like our Congress; its executive is not like ours.

To make this plain, the U.S. Congress could vote $1.5 billion to bail out the state of Nevada, to pick the state with the worst projected deficit in FY 2012. If the votes are there and the President doesn’t veto the bill, or Congress overrides the veto, Nevada would get its dollars. Such a process is impossible in the EU. There every bailout—say of Greece or Spain, for instance—would require member countries’ legislatures to vote the money, e.g., Germany, France, others. This would be equivalent to saying that Nevada would only get its funds if the Texas and California legislatures would vote the money and their governors would sign the bills.

In Europe we’re looking at a union all right, but it has limited scope. In the European Monetary Union (those using the Euro) we’re looking at an international monetary union. It functions just like our own national monetary union, but there is a nation here, no nation there.

The consequences of this I’ll cover in the next post.