Penn State Behrend professor takes measure of austerity talks between Greece, EU

To fully understand the high stakes of the economic standoff between Greece and the European Union, imagine you are Jean Monnet, a 57-year-old Frenchman, standing at the base of the Eiffel Tower on Aug. 15, 1945, the day Japan surrendered and World War II officially ended. In some ways, Monnet’s life experiences were similar to those of many Europeans of his generation. In July 1914, when Monnet was 26, World War I erupted in Europe. Many remember World War I as the war to end all wars; a better descriptor is an accidental war that could have been avoided. Monnet witnessed firsthand the boom of the roaring 20s and the bust of the Great Depression. In September 1939, he saw World War II begin in Europe with Hitler’s invasion of Poland. What was he thinking on Aug. 15, 1945? Probably, “Mon Dieu, I am in my 50s and, as an adult, I have witnessed two world wars, starting in Europe, killing more than 100 million people, about 5 percent of the world’s population.”  

Millions of people, while elated about the end of World War II, were asking themselves how the human species had become so crazy and destructive. What set Monnet apart was his ability and willingness to do something about it. Monnet was born into a rich family of cognac merchants. Instead of attending a university, as was expected of him, he travelled the world, including Britain, the United States, Russia and China. When the Second World War began and France fell early to the Nazis, Monnet worked tirelessly and at the highest levels in Britain, the United States and elsewhere. Today we would say he was a superb networker. He personally assisted Churchill, de Gaulle, Eisenhower, Roosevelt and Marshall, not to mention hundreds of mid-level officials who would become world leaders by the 1950s.

In late summer 1945, much of Europe was in ruins with tens of millions facing starvation. As soon as the immediate, critical problems were addressed, the issue of how to create peace and prosperity came to the fore. Monnet was a prime mover in one of the most significant transformations in human history. First, the German and French coal and steel industries were integrated. Then, in 1952, the European Coal and Steel Community (ECSC) was created with six members -- Belgium, France, West Germany, Italy, Luxembourg and the Netherlands. This was the genesis of a breathtaking transformation that is the European Union of 2015, a supra-national organization of 28 nations.

Changes in the EU often are referred to as broadening (more members) and deepening (doing more things). Today’s EU has 28 members, 19 of which have adopted a single currency, the Euro. EU members must relinquish important elements of national sovereignty. For example, the European Court of Justice has the power to overrule decisions of supreme courts of member countries (a power it uses, but carefully). The EU’s power is greatest in economic areas, where it operates almost as if it were one country. The size of the EU’s economy and its population both are about one-third greater than that of the United States.

Changes like those seen in the evolution of the EU are so profound they have not always come quickly or smoothly. Greece has been more problematic than most members. It is a small country (11 million people) on the southeast periphery of the EU. It has been reluctant to make many of the economic reforms thought essential to remaining in the Euro zone. Greece has received significant financial assistance from EU institutions, including the Central Bank and European Commission as well as a UN institution, the IMF, all of which seem to feel Greece is not upholding its end of the bargain.

Where do we stand in light of the July 5, 2015, referendum in Greece, where 60 percent voted against accepting more austerity measures, which lenders say are essential to rescuing the Greek economy? Frantic negotiations are going on, both within Greece and in different divisions of the huge EU bureaucracy. Before overreacting, we should consider two things: The EU has a long history of walking up to the edge of a cliff and not falling off. It has created a set of institutions that, on balance, have been enormously successful. Sometimes the EU goes too far, too fast. The worst probable case is Greece leaving the Euro zone --  this does not mean leaving the EU. The EU is not the United States of Europe; it has been called an economic giant and a military midget. In spite of the current “Greek crisis,” Jean Monnet would be delighted and amazed at the maturation of his brain-child. 

 

JOHN GAMBLE is Distinguished Professor of Political Science and International Law and director of the honors programs at Penn State Erie, The Behrend College.

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