The fractures in the EU are showing more

This past week various leaders of the European Union have been meeting to create a structure for preventing future economic crises.  Also important was their effort to try and create a framework for how to deal with crises when they do unfold.

Most of us who were watching the proceedings of this meeting in Brussels were looking for an explicit, crystallized, concrete action plan for how to bolster the European Financial Stability Facility (EFSF).  Instead, in typical EU fashion, we get a press release indicating that the EU countries that use the euro as their currency need to come up with concrete plans for how to solidify the EFSF.

This has to be considered a disappointment and is likely an indication of a lack of agreement internally at the EU proceedings.

Further evidence of the discord is that one of the items on the agenda was how to make the bailouts for Greece and Ireland less onerous for those nations.  But what was decided was that the current course of action would be the future course of action.

One sign that something was accomplished was that in March EU members are going to be asked to sign on to a “competitiveness pact.”  But, <shockingly> no details have been released.  Instead, the details are supposed to be worked on over the next month before being put to the membership.

The microscope has been on the EU for most of the past year.  This was the moment when they could take action to prevent future crises.  But it seems that sans an immediate threat to the EU they are unable to act.  Instead, what we have agreements to discuss things later.  We have discussions tabled until later.  We have indecisiveness.  All of these things are sure signs of internal discord and fractures in the EU foundations.

You see, the EU is dominated by two countries: France and Germany.

The EU was France’s idea for how to create political and economic balance with the global hegemon, the United States, during the cold war era.  This was especially important to the French at a point when its long-term rival Germany was emasculated post-World War II.  The Germans still had manufacturing strength, but no political or military heft.  Unfortunately for France things have changed.

Under the leadership of Chancellor Angela Merkel Germany is asserting itself, not just economically, but politically, too.  Germany is the undisputed economic powerhouse in the EU.  Now that there is true economic crisis in the EU, the Germans are able to leverage their economic strength into political gains.

These political gains are something that they have been wanting to do for decades.  In short, the Germans are trading their ability to backstop the Eurozone economic crisis for a greater say so in the goings on of the EU.  The problem is that the EU isn’t currently working for most of its membership.  In fact, it predominately benefits Germany.

This is one of the reasons that I predicted the eurozone crisis would pass.  How’s that?  Because Germany, the most powerful member, cannot afford, literally, to let the eurozone fail.  It needs the eurozone in order to maintain its economic advantages over the rest of the EU membership.  But this will eventually create friction with, and possible fracturing of, the rest of the EU.

In short, I am sniffing out signs of that kind of discord.  So we have a moment where the body politic of the EU comes together to figure out how to prevent a future economic crisis and how to improve the measures that have already been put in place.  Short of warfare, if ever there was a time where the problems of the day trumped individual nations’ concerns wouldn’t this be it?  We have significantly lower gross domestic product (GDP), low economic growth, high unemployment throughout Europe, and at least 2 nearly bankrupt nations.  Yet we don’t have movement or agreement, instead we have gridlock.

It appears to me that the fractures in the EU are showing more.

Jason