Europe's Dream: Escaping Tragedy
The Euro manifests the hope of ending war on the European continent. It is the promise of peace and prosperity for the peoples of Europe.
Globalization and modernity as we know it originates in Europe.
The invention of deepwater navigation by Portuguese, Spanish, and Italian sailors revolutionized humanity’s understanding of the world. With the Age of Exploration came the promise of a truly global human civilization. While this promise would quickly become marred by the ravages of colonial conquest and disease, the possibility remained.
Whether dominated by the Portuguese, the Spanish, the Dutch, the French, or the British, control of the world’s sea lanes by a single power resulted in the inexorable integration of global commerce, politics, and culture with Western Europe at its center. Yet all would change in the 20th Century.
The conflagrations of World War I and World War II didn’t just destroy Europe physically, they destroyed Europe psychologically. Germany, Europe’s most scientifically and economically advanced nation, is the author of industrialized murder factories. The entirety of the Northern European Plain, stretching from Normandy through the heart of Central Europe to the Ural Mountains, is in ruins.
The consequence of these conflicts is Europe no longer controls the world’s sea lanes. That mantle of responsibility now falls to the Americans. To make matters worse for Europeans, the United States is the world’s manufacturing superpower. Europe’s once great foundries are a smoldering wreck. Globalization and modernity are an American-led initiative.
Caught up in the American-led, post-World War II anti-Soviet alliance system, Europe bristles. After ruling the world for 500 years, it is now stuck between Washington and Moscow. Europe no longer controls its own destiny. So Western Europeans, spearheaded by the French, begin hatching a plan to reduce their dependency on the Americans and protect themselves from the Soviets all while mitigating the risk of renewed warfare on the Continent. It’s a dream of escaping the tragedy of great power politics.
The first attempt, in 1952, takes the form of the European Coal & Steel Community, a loose trading community comprised of Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. To the surprise of Western Europeans, the Americans wholeheartedly support this venture. Washington believes that anything encouraging greater economic and political cooperation among Europeans reduces the chance of the anti-Soviet alliance fragmenting.
Over the subsequent decades, European integration progresses in various forms. The European Economic Community is launched in 1957 to further streamline trade. Over the subsequent decades, new members are added, most notably the United Kingdom in 1973. Yet, this is not enough for Europeans. For Europe to truly regain some of its lost glory on the world stage, it must unify into a sovereign entity.
One key aspect of sovereignty is currency. Indeed, each great national civilization throughout the 500 years of European supremacy is known for its currency. The Spanish Doubloon. The English Pound Sterling. The French Livre and Franc. The German Deutschmark. But now the American Dollar reigns supreme.
The European Monetary System is created in 1979 as a fixed-currency regime designed to better stabilize European monetary policy and promote trade. This also serves the purpose of better aligning Europe’s monetary affairs among member states. National sovereignty is slowly be given up in favor of a greater European collective.
Everything changes after the collapse of the Berlin Wall in 1989. Upon reunifying in 1990, the hegemonic potential of a reunified Germany once again haunts the conscious of Europeans and Americans alike. It is at this moment that full European integration appears to be the best prospect at securing peace and prosperity for the Continent.
In 1992, the Maastricht Treaty is signed. Like its predecessors, the European Union (EU), seeks to create a common European market and foster greater political integration. But the Maastricht Treaty goes even farther, creating multinational, institutional bodies to write regulations for EU members and even lays the foundation for further political and economic integration via a currency union, the Eurozone.
The leading driver of this quest for European integration is reducing the chance of war. During negotiations, German Chancellor Helmut Kohl is adamant about the Eurozone as he sees this as a mechanism of thoroughly binding Germany’s fate with the rest of Europe. By linking currencies and economies, European nations would be so interdependent that violent conflict becomes an impossibility.
France, continental Europe’s other great power, is also adamant about moving forward with a currency union. Reunification makes Germany the unquestionable dominant economic and monetary power. The French, wary of German power, seek to use the Eurozone to end Germany’s economic and monetary hegemony.
Despite the Euro’s political underpinnings, there is also an economic impetus. For Germany, currency union means a devaluation of its currency and institutionalization its export advantage. For France and other Eurozone members, currency union means benefiting from the low inflation and low interest rates stemming from Germany’s fiscal discipline.
With the alignment of political and economic interests, it appears that the currency union is poised to be an unrivaled success. The Euro would be the key to creating a perpetually stable, peaceful, and prosperous Europe. Launched in 1999, it soon becomes one of the leading reserve currencies alongside the American Dollar and British Pound Sterling.
The Euro is unquestionably one of the greatest triumphs of globalization and modernity. For neoliberalism, it showcases the superiority of supranational institutions over individual nation-states. But for Europeans themselves, the Euro is something greater: it is a dream come true. The Euro manifests the hope of ending war on the European continent. It is the promise of peace and prosperity for the peoples of Europe.
That is not to say the Euro does not face serious obstacles. Indeed, the immediate aftermath of the 2008 Financial Crisis witnessed some of the greatest dangers to the continuity of the Eurozone as countries such as Greece, Italy, Spain, and Portugal faced systemic financial, economic, and political crises. Yet, despite these grave challenges, the Euro survived. And so, it would seem that the Euro is a permanent fixture of modernity.
Or is it?
The Eurozone doesn’t form an optimal currency area. Without serious structural reform, the issues that plagued the Euro in the 2010s will inevitably return. Furthermore, the linchpin of the Eurozone, Germany, is overly dependent on exports and its population is rapidly aging. In fact, all of Europe is aging rapidly. Demographics are destiny and Europe is dying. So what does this mean for Europe’s dream of peace through prosperity? What we know about Europe’s economic vitality is about to change.