By Rodney Johnson, Economy & Markets
The European Community is a stultified, lumbering mass of bureaucracy. It’s fitting that the organization operates from Belgium, a country frozen in time because of political infighting.
The European Community, which aims to bring economic integration among its member states, is also something else – a resounding success.
It started in 1957 with founding members Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany, and eventually 12 nations were incorporated into the European Union in 1993.
They stopped killing each other, live under common rules, and many share a currency. This was Napoleon’s dream about a century and a half earlier, even though he couldn’t make it happen.
But now the weak links in the chain, like Spain, Italy, and Greece, are starting to give way. Eventually they will fail, even as member nations and the transnational organization spend time and treasure to keep the group intact.
As that happens, the euro will lose some of its luster, driving investors back to the buck.
The Napoleonic Wars began in 1803 and lasted more than a decade, drawing in many European nations on both sides. While the Americans were busy establishing their new country and fending off the British in the War of 1812, the Europeans played unwinnable war games that left everyone damaged and in debt.
There were so many large-scale wars during this period that historians don’t name them all. They simply refer to them as successive versions with different coalitions. The years of continental war ended with the seventh coalition at the battle of Waterloo, which led to the Treaty of Paris in 1815.
But for a brief moment in time, Napoleon ruled most of Europe. He de-emphasized the Catholic Church and fiefdoms, enforced the rule of law, and increased trade. He brought ideas of individual rights to areas of Eastern Europe. But he still did it through force, and was still a foreigner, so it was bound to end.
After the Napoleonic Wars, Europeans continued to squabble. Using Wikipedia, I counted 21 different wars involving at least two European nations from 1815 through 1899. Even though they’d begun to consider individual rights and liberties, they were still killing each other.
And that’s before the World Wars.
Cooler heads prevailed in 1951 when the next Treaty of Paris was signed. It created the European Coal and Steel Community, providing a multi-country framework for trade involving two of the main resources needed for reconstruction. The treaty also tied together the economic fortunes of France and Germany, greatly reducing the chances of war.
The next step in European cooperation was the Treaty for European Economic Community in 1957, which put the region on the path to where it is today, a conglomeration of 28 countries that allow for the free flow of people, capital, and goods, where most also share a common currency.
The drums of war are faint. No one thinks the Germans are entertaining ideas of taking territory from France, and the Italians aren’t looking to pick a fight, either.
Today the arguments come down to one thing – money.
The Germans think they share too much of the economic burden of the group, while the Greeks believe they have good reason to repudiate their debts. The Italians and the Spaniards are hoping no one looks too closely while their banks lumber along with bad debts that arguably outstrip their capital.
And that’s just on the international level.
Internally, as has come to the fore recently, the Catalans want to leave the Spanish fold and the Lombards and Venetos want greater autonomy from the Italian central government.
The common cry is that these wealthy regions pay more into the federal system than they get in return. Even the Flanders are getting feisty in Northern Europe.
The current calls for greater independence show just how far the Continent has come.
Small regions have no fear of invasion or oppression if they gain true autonomy.
Their government officials only seem concerned with trade and capital, implying we’ve reached a point where divisions are reduced to matters of commerce.
Maybe, maybe not.
There’s still security in large numbers, and combining forces with those of similar (although not identical) cultural norms and views remains the best way for preserving our different ways of life.
But back to the Europeans…
As they travel farther down their different roads, ever diverging from the singular path, they erode some of the power amassed by joining together. Trade and travel arrangements will become more cumbersome, and they will chip away at their international standing.
The biggest potential loser is the euro, which was conceived to fight the dollar. As nations in the economic bloc pull away from the center, fracture internally, or both, the common currency will lose some cache.
The greenback will be there to pick up the slack.
In a way, the incredible security felt across Europe, which feeds demands for greater independence and local control, will eventually lead to weaker ties and a diminished economic standing, complete with a tarnished currency, compared to the dollar.
Courtesy of Rodney Johnson, Economy and Markets
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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