Following the summit of the EU heads of state last week, European governments and markets heaved an audible sigh of relief. Armageddon is postponed - at least until the next summit. Like many such moments of relief in the past two years, this could be a temporary reprieve.
German Chancellor Angela Merkel appears not to have steadfastly held on to the famous standard of the Iron Lady, aka Margaret Thatcher: "The lady is not for turning." The media heralded the outcome as a defeat for Germany hence a victory for Italy and Spain.
"IF," and it is a big "if," the eurozone were eventually to emerge as a solid, sustainable and credible grouping, the summit of June 2012 will be seen as a step-change. It was the first summit that exceeded expectations rather than failing to meet them. It must be said, though, that expectations were very low. Still, the near-term apocalypse of a banking collapse in Spain has been averted for the time being. The decision was also made to provide assistance to Italy. Perhaps one of the most important features of this summit is the appearance of some degree of consensus, which, in turn, could have been borne out of a greater sense of solidarity among the political leaders, even if still tenuous and hesitant.
The underlying existential question at the summit was, Will there be a European Union or does the future entail a return to a motley collection of states? The EU stands at the proverbial fork in the road - one direction is more Europe, the other is no more Europe. Europe's leaders on 29th June 2012 seem to have opted for the path of more Europe. Down this road will be more integration, more federalism, more supervision and more control. The "more Europe" road is one that clearly heralds supranational governance based on EU collective interests as opposed to national sovereignty based on narrow domestic interests. The alleged "defeat" of Germany at the summit notwithstanding, the road is in fact more German, one that Berlin has advocated for some time, one that imposes greater discipline and austerity.
Yet doubts about the long-term sustainability of the euro have much to do with the nature of the euro-edifice itself. The experience of the past four years has shown that the foundations are weak: Adding erections on weak foundations makes the edifice more not less fragile.
The story of the euro stands in stark contrast to the story of the origins of the European Economic Community, or the EEC. The solid foundation of the EEC lay in the establishment of the European Coal and Steel Community in 1950, only five years after the end of World War II. Initiated by France and Germany, it was joined by the other four states that together eventually formed the initial membership of the EEC: Italy, Belgium, the Netherlands and Luxembourg. In the course of succeeding years and decades, the establishment of the European Union with the Treaty of Maastricht in 1992 proceeded on an incremental basis combining idealism, vision, leadership and pragmatism. The EEC house was built on rock. Of course, there were occasional challenges - notably following the unexpected breakup of the Soviet bloc and German reunification - but the house stood. The house also got bigger. Whereas in 1950 the number of democratic European countries were few, today Europe represents a huge democratic space encompassing the EU and beyond.