Europe’s Demons

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There is an interesting interview in 'Der Spiegel' with Luxembourg's prime minister and ex-euro-group chief J.C. Juncker. What is so remarkable about it is that Juncker seems to have realized that the one of the intentions that motivated the introduction of the euro has completely backfired, as usually happens with statist programs involving social and economic engineering.

The decisive points mentioned by Juncker are the following:

Juncker: For my generation, the monetary union has always been about forging peace. Today, I notice with a certain sense of regret that far too many Europeans are returning to a regional and national mindset.

SPIEGEL: What do you mean by that?

Juncker: The way some German politicians have lashed out at Greece when the country fell into the crisis has left deep wounds there. I was just as shocked by the banners of protesters in Athens that showed the German chancellor in a Nazi uniform. Sentiments suddenly surfaced that we thought had been finally relegated to the past. The Italian election was also excessively anti-German and thus un-European.”

SPIEGEL: You're exaggerating. No one today seriously doubts peace and friendship in Europe.

Juncker: That's true. But anyone who believes that the eternal issue of war and peace in Europe has been permanently laid to rest could be making a monumental error. The demons haven't been banished; they are merely sleeping, as the wars in Bosnia and Kosovo have shown us. I am chilled by the realization of how similar circumstances in Europe in 2013 are to those of 100 years ago.

SPIEGEL: 1913 was the year before the outbreak of World War I. Do you seriously believe that there will be armed conflict in Europe?

Juncker: No, but I see obvious parallels with regard to people's complacency. In 1913, many people believed that they would never again be a war in Europe. The great powers of the Continent were economically so strongly intermeshed that there was the widespread opinion that they could simply no longer afford to engage in military conflicts. Primarily in Western and Northern Europe, there was a complete sense of complacency based on the assumption that peace had been secured forever.”

(emphasis added)

This reminded us of a lengthy post we once published on Europe in the run-up to World War 1. It appeared to us at the time an interesting topic for precisely the same reason Juncker mentions above: the pre-war period was one of growing prosperity, trade and economic interdependence and it was generally believed that there could not possibly ever be war again. In other words, the 'complacency' Juncker bemoans above was well-entrenched. This is a striking similarity to today; of course it is true that even in the worst case, no war seems imminent, but the idea that European nations are united forever in friendship may be put to a severe test if the economic downturn continues or intensifies.

Demons Merely Asleep

Opponents of the euro argue precisely that the bonds that have developed in Europe after the horrors of WW2 are in danger not in spite, but because of the euro. However, we think a more nuanced view is probably appropriate.

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