Nietzsche was right. Stare into the abyss long enough and the abyss will stare into you.
Europe is there, on the brink, staring down. It's by no means the first crisis Europe has faced in the past century. But its different from all the others: This time the United States will not – indeed, cannot – save Europe from itself. And in an ironic twist, the fate of the US now demands on Europe. Here's the gist of what many commentators are saying:
If Europe fails, stock markets will be thrown into turmoil and Wall Street will go dark.
If Europe fails, the global economy will seize up and protectionist sentiments will surge.
If Europe fails, today's doomsayers will become tomorrow's prophets and markets will dry up.
The New Europe, not unlike the old one, has three Great Powers: Germany, France, and the United Kingdom. The last best hope of getting together on a grand plan to save the euro, desired by Germany and France, failed on Thursday when the UK in effect vetoed a proposed treaty change. All the others – that's right, 26 of the 27 EU members – are reportedly open to signing a new treaty if that's what it takes to save Europe.
Who cares if the UK doesn't sign on? Germany, for starters. Germany will have to bear the main burden of the bailout. France will also have to step up to the plate. The UK is the other big economy capable of playing a stabilizing role – that is, putting money in the pot. Instead, the UK is now totally isolated in Europe, stigmatized as the spoiler, as though Greece, Italy, Spain, Portugal, and Ireland aren't doing a good enough job of it already. And as though the City of London doesn't need access to Europe's financial markets.
In a day of historic, seemingly tectonic shifts in the architecture of Europe, all 17 members of the European Union that use the euro agreed to the new treaty, along with nine other EU countries not currently in the euro zone. Twenty years after the Maastricht Treaty, which was designed not just to integrate Europe but to contain the new and enlarged Germany, all eyes are on Berlin because London has opted out.
That's the bad news. The good news (if there's any) is that an intergovernmental pact can be ratified more expeditiously by parliaments than a treaty amendment.
“It is a very good outcome for euro area members and it’s going to be the basis for a good fiscal compact and more disciplined economic policy in euro area countries,” said Mario Draghi the new head of the European Central Bank (ECB) early Friday morning. For troubled countries like Italy and Spain, the support of the ECB is crucial to buy time.
But there's not enough currently money on the table to buy enough time to save the euro. To save Europe. That's the problem.
French President Nicolas Sarkozy said “David Cameron requested something we all considered unacceptable, a protocol in the treaty allowing the U.K. to be exempted for a certain number of financial regulations.” Cameron replied, “What was on offer wasn’t in British interests, so I didn’t agree to it.” He added, “We will insist that the E.U. institutions, the court and the Commission work for all 27 nations of the E.U.”
That sounds like a thinly veiled threat. Like the British PM is saying in essence, "We won't help you but we will obstruct if we don't like the kind of self-help you get up to." Like London expects Berlin to save the euro single-handedly. And with one hand tied behind its back.
Anglophiles like Andrew Sullivan leap to Cameron's defense. Why would the British be so stupid as to jump onto a sinking ship? Problem is, that ship sailed a long time ago, back in 1973 when the British came aboard. Now when the ship called Europe finds itself in the worst troubled waters ever, the UK seems bent on sinking it. And what, going down with it?
When French President Charles de Gaulle repeatedly vetoed British membership for more than a decade, critics denounced him as arrogant and imperious. Perhaps de Gaulle was right. Perhaps London's latest act of mutiny has vindicated him – again.
The EU is not mere window dressing designed to make Europe look attractive to the outside world; the EU is Europe and Europe is the EU. Who can forget that the old Europe ignited two world wars in a period of three decades?
Without the EU, the new and improved Europe – the one that has been at peace for the last 66 years – ceases to exist. Is it really "in British interests" to impede efforts in Brussels, Paris, and Berlin to save Europe?
Here then is where things stand at the moment:
1. For the first time since World War II in a major crisis, the US is a spectator, not the prime mover, not even a player.
2. Europe is the stage for this drama; the denouement will decide the fate of the global economy.
3. Berlin and London hold the keys. Not just Germany. The UK cannot escape moral and political responsibility for the outcome.
The economy of the 17 countries in the euro currency union is almost stagnant, growing just 0.2 percent in the third quarter, with unemployment at 10.3 percent. Economists expect the euro zone economy to slip into recession early next year if it has not happened already. Declining output makes the debt crisis even worse by cutting tax receipts.
EU leaders also agreed to provide an additional 200 billion euros to the International Monetary Fund as a part of a “firewall” of bailout funds to help cover Italy and Spain. In addition, ECB President Draghi said a permanent 500 billion euro European Stability Mechanism would be put into effect a year early, by July 2012. Policy analysts agree these steps, however important, are not nearly enough to stop Europe from going off the rails in 2012.
Europe is staring into the abyss. The UK appears determined to push it over the edge.