George Kerevan: Europe finally says au revoir to entente cordial

Published on Wednesday 20 July 2011 15:20

The euro crisis has succeeded in finally unpinning the post-war solidarity on which the European Union was based

I READ the papers this week with a distinct sense of deja vu. Had I just dreamed the past 60 years of European integration or were we back in the dismal 1930s?

The euro crisis is only a symptom of Europe's return to systemic instability and fragmentation. On Tuesday, Germany and Russia signed the Merkel-Putin Pact that effectively leaves Berlin free to pursue its economic and political aims without worrying about Paris or the rest of us. At the same time, the French 5th Republic is wobbling. Meanwhile, Italy, Spain, and Greece are headed - no hyperbole intended - towards bankruptcy.

In offshore Britain, no-one seems to care because we are obsessed with a tabloid newspaper listening to the phone messages of footballers and movie stars. And in isolationist America, they think the President is a communist. Plus a change, as they didn't say in 1939.

To cut to the chase: the post-war political settlement that saw the creation of the European Union (which provides our economic sustenance) and Nato (which provides our security) has fractured in the wake of the 2008 credit crunch. And Humpty Dumpty is not going to go back together again easily.

The heart of the European project was a Franco-German alliance that has kept the peace in Europe since World War Two. But the reunification of Germany and the fall of the Iron Curtain changed all that. A grown-up, economically powerful Germany does not need Paris as its mentor. Nor does it need to feel inferior on the world stage. Above all, Berlin's economic future lies with China and Russia.

This crucial historic watershed was masked by the events following 9/11. It has been revealed in all its starkness by the 2008 recession and Germany's quick economic recovery - while the EU and America have languished economically. Hence Berlin's reluctance to bail out Greece or support France in overthrowing Gaddafi. Tea Party Washington is not around to pressure Berlin, and won't be ever again, given America's own economic problems and fixation with China.

As a by-product, France is returning to its dangerous pre-Gaullist instability, and Europe with it. The country has not been governed through a traditional political party since General de Gaulle's military coup of 1958. Instead a series of Bonapartist leaders of both right and (ostensibly) left kept France's explosive class and regional forces in check through a combination of strongman rule, a generous welfare state and republican values. The EU project - in which Germany traditionally deferred to France - gave Paris clout. This, in turn, gave the rulers in the Elysee (many of whom were tawdry) the cloak of Napoleonic "la gloire" that legitimised the 5th Republic. But this delicate political mechanism is falling apart with the Franco-German alliance.The current occupant of the Elysee, Nicolas Sarkozy, is its least effective. Sarkozy has a date with the French electorate next April. On current form, he will come a poor second to the Socialist candidate - assuming the factious left can agree on a standard bearer. Or conceivably Sarkozy might be eliminated in the first round by Marie Le Pen, the leader of the racist National Front.

In a desperate bid to wrap himself in the tricolore, Sarzoky has launched a war in Libya despite having welcomed the clinically mad Colonel Gaddafi on a state visit to Paris only three years ago. Why, despite the clear opposition of Berlin to this adventure? Answer: Sarkozy needs to isolate Marie Le Pen or he is political toast.

It will be to no avail. For after Sarkozy, in the absence of a traditional party structure, the mainstream French right will shatter. Into the vacuum will come the racists, the Trotskyists and a French Socialist Party that hates the market. That will seal the end of the Franco-German alliance and any political coherence in the EU.

The centrifugal forces undermining the EU are active on the bloc's soft, Mediterranean underbelly - Italy, Greece and Spain. A key element of the original Common Market was agricultural subsidies for peasant farmers. These were designed to undermine the political hegemony of the Communist Party in rural France and Italy and avert revolution.

However, in Italy, joining the Common Market and isolating the communists meant that the traditional political elite could avoid the necessity to reform the state and create a modern democracy. The old Bourbon clientleism, corruption, and nepotism stayed in place, guaranteed by gold from Brussels.

Even when the Iron Curtain fell and popular discontent swept Italy's overtly corrupt Christian Democrat and Socialist politicians into jail, nothing changed.

Like Mussolini before him, Berlusconi has filled the resulting vacuum using demagogy and a pliant media to protect the Old Corruption. The Italian middle classes feel embarrassed, but not embarrassed enough to do anything, because massive public borrowing is funding their pensions.

Last week, history caught up on Italy's time warp. The markets began to sense that there was no money in the EU kitty to bail out a state with a septuagenarian sex maniac as leader and 115 per cent debt to GDP ratio. Forget Greece. The fate of Europe (and the euro) will be decided, as ever, in Rome. Don't bet on the hedge fund barbarians losing.

Whatever short-term deal is cobbled over Greece, the EU lacks the will or the structures to impose fiscal discipline on the members of the eurozone. That means the eurozone itself will fracture.

But the unravelling of the euro is only a symptom of the unravelling of the EU itself. Britain might add its weight to a new European project and tip the balance towards sensible reform - more a free trade area than unwieldy political confederation. More likely, we are coasting towards a return to big power diplomacy and a divided, surly continent. We've been here before.