Europe has become divided into two classes – depressed debtors like Greece and controlling creditors like Germany. To reverse this, Europe must recapture its spirit of solidarity. A good place to start is where suffering is greatest, in Greece, among thousands of mistreated migrants.
The European Union used to be what psychologists call a “fantastic object,” a desirable goal that fires people’s imagination. I saw it as the embodiment of an open society – an association of nations that gave up part of their sovereignty for the common good and formed a union in which no nation would have a dominant position.
The euro crisis is now threatening to turn the European Union into something fundamentally different. The member countries are divided into two classes – creditors and debtors – with the creditors in charge. Germany, as the largest and most creditworthy country, occupies a dominant position. As a result of current policies, debtor countries pay substantial risk premiums for financing their debt, and this is reflected in their cost of financing in general. This has pushed the debtor countries into depression and put them at a substantial competitive disadvantage that threatens to become permanent.
This is the result not of a deliberate plan but of a series of policy mistakes. Germany did not seek to occupy a dominant position and is reluctant to accept the obligations and liabilities that it entails. I have called this the tragedy of the European Union.
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