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A crisis of leadership

The challenge for Europe is to find its own Ambedkar

Written by Sanjaya Baru |
June 18, 2012 3:10:31 am

The challenge for Europe is to find its own Ambedkar

At the core of the financial crisis in Europe there is a leadership crisis. Over the weekend,policymakers and pundits,businessmen and bankers,investors and the lay public waited to see what Greek voters would say about remaining in the eurozone. The very fact that crisis management has to take note of referendums and public opinion where populist rhetoric and base national sentiment rather than cool reasoning would shape perceptions and verdicts makes the world nervous about Europe’s leadership vacuum.

Europe is clearly adrift in this gathering storm. At a meeting of risk analysts in London this week,analysts from the United States were shocked to encounter what one called a “dangerous mix of complacency and make-believe”. The decision of eurozone finance ministers to offer a 100 billion euros bailout package to Spain is viewed as an act of both desperation and bravado. While the Greeks wonder why Spain gets so much money so easily,French and Italian leaders are expressing solidarity against an assertive Germany,and a miffed and hurt German chancellor says her nation cannot bear too much more of the burden of the eurozone’s failure.

It all began in Greece. Few in Europe imagined the incompetence and dishonesty of Greek economic managers would bring the entire European project into question. A mixture of German hubris and southern European intransigence has snowballed into a crisis of historical proportions. Few now know what to do. A senior European leader,presently heading an international institution,told this writer that what was most frightening was the absence of a shared “narrative” in Europe about the crisis it finds itself in. There is no shared story about why Europe is where it is. Consequently,there is no possibility of a shared vision of not just how to move,but which direction to go in.

Those who still believe in the European project are viewed either as dreamers or plain crazy. A latter day Adenauer or De Gaulle may still rescue the Union,but today’s leaders are no match and despite her wisdom and her patience,Chancellor Angela Merkel does not have a pan-European following. What gives?

Continent-wide nations require continent-wide leaders whenever they are in crisis. The “idea of Europe”,much like the “idea of India” was the construction of such continental leaders. So far,whenever India has faced an existential crisis it has had the good fortune of having a leadership in place that was able to take a pan-Indian,national view and preserve the unity of the whole. India’s emotional unity also helped in facilitating a pan-Indian response to different types of crises — social,economic or military in origin.

For today’s India,the European situation is an early warning. When “national” policy becomes hostage to “regional” interests,the “federal” government becomes paralysed and would be unable to act in the larger national interest. Something like this is happening in Europe. The interests of individual member states have become impediments to a continent-wide response.

In other words,Europe’s crisis of confidence has occurred before the “idea of Europe” has been able to strike adequately deep emotional roots. During the Cold War,there was emotional cement holding the idea of a “European Union” together — namely the fear of the Soviet Union. As the Soviet threat weakened,a new,albeit economic,threat emerged to keep Europe united — namely the challenge posed by a resurgent Japan. It is often forgotten that the EU “single market” project was essentially a response to the economic threat from Japan in the 1980s.

One would imagine that a similar threat from China would keep Europe together. However,as in the Asian financial crisis so too in the European debt crisis China has arrived as the benefactor,not the threat. China holds up the euro and offers financial help to Greece and whoever else wants it. At a gathering of senior business leaders in a European capital last week,this writer heard CEO after CEO refer to China in benign terms,as being still an “opportunity” rather than a “threat”. Most still see the problem in financial and fiscal terms. Few are as yet willing to confront the core — namely,Europe’s loss of global competitiveness.

So then,is the European Union history? Not yet. Despite its inability to act,in time,competently and with authority,the EU will continue to seek a solution to its current economic woes within the framework of a union. However,it has to get its sequencing right. Last week’s initiative of seeking a banking union amounts to placing the cart before the horse. Without a fiscal union and an EU-wide bailout strategy,just a banking union will have no takers.

The challenge for the EU is to find its Ambedkar. It needs a constitution that will enable a continental political leadership to offer continent-wide solutions to a continent-wide problem. Europe needs emotional unity as much as it needs a new strategy for generating employment in a globally competitive way. If this sounds daunting and impossible,then the EU should return to what many in Britain prefer — a normal single market,like the South Asian Free Trade Area (SAFTA)! A single market with multiple currencies and sovereign member nations. Britain’s Eurosceptics in fact advocate this course. That the EU should give up the idea of a fiscal and monetary union and remain just a single market. But that would also imply the decline of Europe as a geopolitical power.

However,the Euro-enthusiasts,or whoever is left,still believe that a Greek exit is not going to be such a major problem,and that the crisis can be contained if Spain and Italy are not allowed to succumb. Europe’s geopolitical enthusiasts will not as yet surrender to the logic of its geo-economic decline. Hence,a Plan B,that includes a Greek exit and a move towards a fiscal union that is limited to a smaller core membership is viewed as a necessary and credible option. The problem,however,is that Europe would still desperately need a leadership that would carry conviction and secure support for such a Plan B.

The writer is director for geo-economics and strategy,International Institute for Strategic Studies,London; and honorary senior fellow,Centre for Policy Research,New Delhi,

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