BERLIN
– I am on a two-week European tour at a time that could make one either
very pessimistic or constructively optimistic about Europe’s prospects.
First the bad news:
Paris is somber, if not depressed, after the appalling terrorist attacks
earlier this month. France’s economic growth remains anemic, the
unemployed and many Muslims are disaffected, and Marine Le Pen’s
far-right National Front is likely to do well in the upcoming regional
elections. In Brussels, which was semi-deserted and in lockdown, owing
to the risk of terrorist attacks, the European Union institutions have
yet to devise a unified strategy to manage the influx of migrants and
refugees, much less address the instability and violence in the EU’s
immediate neighborhood.
Outside the eurozone,
in London, there is concern about negative financial and economic
spillover effects from the monetary union. And the migration crisis and
recent terrorist attacks mean that a referendum on continued EU
membership – likely to be held next year – could lead the United Kingdom
to withdraw. This would probably be followed by the breakup of the UK
itself, as “Brexit” would lead the Scots to declare independence.
In Berlin, meanwhile,
German Chancellor Angela Merkel’s leadership is coming under growing
pressure. Her decision to keep Greece in the eurozone, her courageous
but unpopular choice to allow in a million refugees, the Volkswagen
scandal, and flagging economic growth (owing to the slowdown of China
and emerging markets) have exposed her to criticism even from her own
party.
Frankfurt is a
divided city, policy-wise: the Bundesbank opposes quantitative easing
and negative policy rates, while the European Central Bank is ready to
do more. But Germany’s thrifty savers – households, banks, and insurance
companies – are furious about ECB policies that tax them (and others in
the eurozone core) to subsidize the eurozone periphery’s alleged
reckless spenders and debtors.
In this environment,
the full economic, banking, fiscal, and political union that a stable
monetary union eventually requires is not viable: The eurozone core
opposes more risk sharing, solidarity, and faster integration. And
populist parties of the right and left – anti-EU, anti-euro,
anti-migrant, anti-trade, and anti-market – are becoming stronger throughout Europe.
Read more at https://www.project-syndicate.org/commentary/european-union-lack-of-unity-by-nouriel-roubini-2015-11#WxHHCY44e5EHZ0PM.99
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
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