If Europe cannot bend it will break - Financial Times

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June 8, 2015 2:15 pm
If Europe cannot bend it will break
Gideon RachmanGideon Rachman

Neither man would appreciate the comparison, but Alexis Tsipras and David Cameron are in remarkably similar situations.
The Greek and British prime ministers both say that they have secured a democratic mandate at home to demand changes in their national relationship with the EU. Both leaders have calculated that the other Europeans will meet their demands rather than risk seeing Greece leave the euro or Britain leave the EU. But both Mr Tsipras and Mr Cameron are encountering a wall of opposition in Europe that could lead them to the destinations that they are keen to avoid — Grexit and Brexit.

Both the Greeks and the Brits have found that an argument based on the results of their own national elections can go only so far in an EU of 28 member-states. When Mr Tsipras claimed that he had a democratic mandate to demand change in Europe, Wolfgang Schäuble, the German finance minister, is said to have responded: “I have also been elected.”
But the difficulties of changing Europe go well beyond a clash of national democratic mandates. They are rooted in the size and legal complexity of the EU — an organisation that is now so large and unwieldy that it finds radical change almost impossible to contemplate.
The British say that securing the changes they want in Europe, on issues such as immigration and the rights of national parliaments, will require treaty change — that is changes to the EU’s basic legal documents. But treaty change requires the agreement of all EU countries, some of which will also hold referendums. The very process of renegotiation also invites every member of the EU to come forward with their own clashing demands. Rather than contemplate that nightmarish prospect, it is easier for the EU simply to refuse to shift — other than in small or symbolic ways.
It is important to realise that this aversion to change is largely divorced from the merits of the reforms that are being requested. Different EU governments have different views on whether Greek or British demands are reasonable. There is some sympathy in France and Italy for Greek arguments that the country’s debts are unpayable and that further deep austerity would be counterproductive. There is some sympathy in northern Europe for British arguments on welfare and increasing the role of national parliaments. But, regardless of the merits of the Greek and British cases, there is a deep reluctance to open the Pandora’s box of profound reform.
Regardless of the merits of the Greek and British cases, there is a deep reluctance to open the Pandora’s box
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The problems involved are not simply legal, they are also political. The worry is that concessions made to the Greeks or British would generate a backlash, with German or Dutch voters resenting a write-off of Greek debt, or Polish voters outraged by restrictions on the rights of EU migrants. Elsewhere, the sight of a radical left party such as Syriza or Eurosceptic conservatives, such as Britain’s Tories, extracting concessions from the rest of Europe could boost similar parties across the continent, making the EU even harder to manage.
As a result key governments in Europe, in particular Germany, are more willing to contemplate Grexit and Brexit than the Greeks and British may have realised.
The German government has been saying for some time that the eurozone can withstand a Greek exit from the euro. While Angela Merkel, the German chancellor, still seems keen to keep Greece inside for geopolitical reasons, the German finance ministry, led by Mr Schäuble, now seems inclined to let Greece go, believing that this could actually have a salutary effect on the other members of the eurozone. Whether or not Grexit happens, the German consensus is that the lesson of the whole Greek crisis is that Europe needs to be even less flexible, with the eurozone requiring tougher rules and stricter enforcement, including tighter supervision of national budgets from Brussels.
The British problem is less urgent than the Greek one and involves less money, but a similar German approach is already emerging. I spent part of last week in Germany at the Konigswinter conference, which has been bringing British and German decision makers together for 65 years.
The Konigswinter atmosphere was, as ever, friendly and frank. Markus Ederer, the head of the German foreign ministry, told the British visitors: “Germany will go to great lengths to support London, even help London, but it cannot go to any lengths.” Allowing EU countries to choose which of its principles to follow would “curb the union’s strength, maybe even more than continuing in a smaller but punchier union.” That looked like a quietly-stated, but direct, warning to the British that Berlin is prepared to see the UK leave the EU, rather than risk the union’s internal coherence.
Germany’s tough approach is based on a realistic assessment of how hard it will be to get reforms through a 28-member EU — as well as a profound aversion to rolling back the process of EU integration. But it is also an alarming commentary on Europe’s inability to respond to changed circumstances, whether it is a 25 per cent shrinkage in the Greek economy, or the unanticipated migration of millions of people across the EU. That failure to be flexible about change is dangerous. A Europe that cannot bend is much more likely to break.
gideon.rachman@ft.com