Is Europe really on the brink?
Europe's biggest crisis in the postwar era is not just about the economy. It's about a search for identity – and a rationale for staying unified.
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The psychological effect of Verdun lasted well into the 20th century. Only in 1984 did Germany's Helmut Kohl and France's François Mitterrand shake hands here in what has become a famous photo of the era. The humiliation of the peace terms at Versailles in 1919 led to Nazism and the second installment of Armageddon on the Continent.Skip to next paragraph
In Pictures The debt crisis: Europe's fragile union
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Those wars now exist mostly as movie reels in Europe's imagination. French and Germans no longer hate each other; despite, or because of, all that happened, there was a reconciliation.
Now the EU will have to surmount its economic and political "wars," which pivot mainly on two centers of power – Berlin, foremost, but also Paris. In the past year, EU officials in crisis meetings have described Angela Merkel and Nicolas Sarkozy leaving the room, huddling, and coming back to prescribe the final decision. (This has not been repeated with Mr. Hollande.)
Germany's size and clout allow it to dictate the pace and direction of the eurozone. In interviews in which experts offer quick resolutions to the crisis, the comments usually center on the political will and winds in Berlin. The German people remain worried about inflation, about losing their competitive edge, and about being mired in debt. Yet, on the whole, Germans have not accepted that their legendary export success, while tied strongly to sales in Asia, also benefits from European buyers.
"There is no conviction yet that Germany is willing to commit to the kind of mutualization of debt that is fundamental to the survival of the euro," says Dr. Niblett at Chatham House. "They define Europe's collective responsibility rather than solidarity. That means: 'We are all in this together; therefore, we must all be responsible,' not, 'We are all in this together, so we need to help each other out.' Making that transition from the former to the latter has not yet happened in Germany."
American billionaire George Soros, in a recent New York Review of Books piece, "The Tragedy of the European Union and How to Resolve It," says that Germany must either "lead or leave" Europe. The current German-led approach of solving the crisis piecemeal and by applying rules meant to reform countries' behavior and finances in the long term is not sustainable.
Yet the idea of Germany "leaving" the eurozone is so fraught, is such a denial of its postwar identity, that few analysts believe this can or will happen. Opinion is also divided over whether Berlin really wants to see Greece stay in the eurozone. While Greece represents less than 2 percent of Europe's GDP, its status is seen as central to the future of the Union. A Greek departure would likely have a catastrophic effect on financial markets because of what it portends for Spain and Italy, two nations whose stability Europe can't do without.
Some analysts believe that Germany will let Greece leave in return for accepting mutualized debt. Yet Western diplomats familiar with Chancellor Merkel say she has resolved to keep Greece in the Union. At some point in the summer of 2011, according to a diplomat in Berlin, Merkel saw that Europe had to stay intact and decided she would not be blamed or preside over the undoing of Europe after 60 years.
"She's alone right now at the top. She knows she is the Adenauer of this hour," says the diplomat, referring to the leader who helped rebuild postwar Germany, "and she knows she is a historical figure. She wants to keep Greece in, and she wants to keep Europe together."