Europe, Not the Euro, May Split Apart

By Joergen Oerstroem Moeller

The fear about the euro's collapse has receded, but Europe as forged after the industrial revolution is fracturing, reverting to traditional regional entities with cultural traditions, languages and animosity against nation-states that swallowed them without their consent.

There's Scotland in Britain, Catalonia and Basque Country in Spain, Flanders in Belgium, Lombardy or Padania in Italy. Soon maybe Wales in Britain, Bavaria in Germany, Brittany and Occitania in France. On top of this litany, there's also growing concern about Britain exiting from the European Union.

The Holy Roman Empire dominating Central Europe before industrialization counted 1800 states ruled by kings, knights and bishops. The states were too small to reap the fruits of industrialization. Fragmented markets prevented transnational supply chains and were incapable of shaping the logistics; transport infrastructure; and, most important of all, the political system necessary for transition from feudal and agricultural states to manufacturing. So the European nation-state emerged. Admittedly Britain, France and Spain could trace their roots back 100 or 200 years earlier, but were not solidly secure until around 1800. Italy and Germany were born between 1860 and 1871.

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The nation-states masterminded regional economic integration, but never completely succeeded in shaping a national culture. Yes, a national language gradually took over, but the regions preserved distinct cultural identities. They acquiesced with the nation-state and obeyed respective capitals in London, Paris, Berlin, Rome or Madrid because force compelled them to do so and the economic advantages were evident. The standard of living rose as industrialization conquered the regions, and prosperity followed. The end result: The increasing standard of living was sufficiently higher to compensate for attacks on cultural identity to ensure the nation-state's prerogative. The people in the regions traded in some but not all cultural identity.

This became even more manifest as industrialization went into the next phase: Economic globalization. International treaties strengthened the capitals' hold over regions. The regions could not access global markets without the capitals' consent as laid out in international rules negotiated among nation-states. Scotland could not on its own strike a deal with the United States or Argentina for export of ships from the shipyards at the Clyde. Only London could. And over the first half of the 20th century, Europe showed little support for regionalism or cultural identity. Few Scots genuinely felt as Scots or saw Scotland in any other way than as part of the United Kingdom.

The role of the nation-states as imperial powers solidified this view. For the Scots, being part of the United Kingdom provided a platform for a central role in running the empire and profiting by doing so.

Conditions favoring the nation-state are disappearing - and rapidly. The empires are gone. Industrialization is giving way to an economic age shaped by information and communication technology, ICT, opening access to the world outside the nation-state framework. Manufacturing used to be the cornerstone of European economic activity, but except for Germany, no longer. The burden of transition has been unevenly distributed aggravating the skepticism among regions about the virtue of the nation-state. Over the last four years national political systems have lost legitimacy because of impotence in dealing with the crisis. A feeling of unfair distribution of hardship and burdens when capitals cut welfare and increased taxes fuels the idea among regions that more fairness may be found if they handled these questions on their own while relying on the EU despite its shortcomings for economic policy.

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Joergen Oerstroem Moeller is a senior visiting research fellow, the Institute of Southeast Asian Studies, Singapore Management University He is also adjunct professor for Singapore Management University and Copenhagen Business School.

Copyright © 2012 Yale Center for the Study of Globalization. Yale Global

(AP Photo)


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