] The real European crisis is not the Greek economy but the evolving regionalization of the Continent. By Marko Papic Europe continues to be engulfed by economic crisis. The global focus returns to Athens [link



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Confederation of Europe

 

The European Union is a confederation of states that outsources day-to-day management of many policy spheres to a bureaucratic arm (the European Commission) and monetary policy to the European Central Bank. The really important policy issues, such as defense, foreign policy and taxation, remain the sole prerogatives of the states. The states still meet in various formats to deal with these really important problems. Solutions to the Greek, Irish and Portuguese fiscal problems are agreed upon by all Eurozone states on an ad-hoc basis, as is participation in the Libyan military campaign within the EU context. Every important decision requires that the states meet and reach a mutually acceptable solution, often producing non-optimal outcomes that are products of compromise.



 

The best analogy for the contemporary European Union is found not in European history but in American history. This is the period between the successful Revolutionary War in 1783 and the ratification of the U.S. Constitution in 1788. Within that five-year period, the United States was governed by a set of laws drawn up in the Articles of the Confederation. The country had no executive, no government, no real army and no foreign policy. States retained their own armies and many had minor coastal navies. They conducted foreign and trade policy independent of the wishes of the Continental Congress, a supranational body that had less power than even the European Parliament of today (this despite Article VI of the Articles of Confederation, which stipulated that states would not be able to conduct independent foreign policy without the consent of Congress). Congress was supposed to raise funds from the states to fund such things as a Continental Army, pay benefits to the veterans of the Revolutionary War and pay back loans that European powers gave Americans during the war against the British. States, however, refused to give Congress money, and there was nothing anybody could do about it. Congress was forced to print money, causing the Confederation's currency to become worthless.


With such a loose confederation set-up, the costs of the Revolutionary War were ultimately unbearable for the fledgling nation. The ideals of states' independence and limited government were smacked down by the reality of the international system, which pitted the new nation against aggressive European powers looking to subvert America's independence. Social, economic and security burdens proved too great for individual states to contain and a powerless Congress to address.

 

Nothing brought this reality home more than a rebellion in Western Massachusetts led by Daniel Shays in 1787. Shays’ Rebellion was, at its heart, an economic crisis. Burdened by European lenders calling for repayment of America's war debt, the states' economies collapsed and with them the livelihood of many rural farmers, many of whom were veterans of the Revolutionary War who had been promised benefits. Austerity measures


-- often in the form of land confiscation -- were imposed on the rural poor to pay off the European creditors. Shay's Rebellion was put down without the help of the Continental Congress essentially by a local Massachusetts militia acting without any real federal oversight. The rebellion was defeated, but America's impotence was apparent for all to see, both foreign and domestic.    

 

Economic crisis, domestic insecurity and constant fear of a British counterattack -- Britain had not demobilized forts it held on the U.S. side of the Great Lakes -- impressed upon the independent-minded states that a "more perfect union" was necessary. Thus the United States of America, as we know it today, was formed. States gave up their rights to conduct foreign policy, to set trade policies independent of each other and to withhold funds from the federal government. The United States set up an executive branch with powers to wage war and conduct foreign policy, as well as a legislature that could no longer be ignored. In 1794, the government's response to the so-called Whiskey Rebellion in western Pennsylvania showed the strength of the federal arrangement, in stark contrast to the Continental Congress' handling of Shay's Rebellion, Washington dispatched an army of over 10,000 men to suppress a few hundred distillers refusing to pay a new whiskey tax to fund the national debt, thereby sending a clear message of the new government's overwhelming fiscal, political and military power. 



 

When examining the evolution of the American Confederation into the United States of America, one can find many parallels with the European Union, among others a weak center, independent states, economic crisis and over-indebtedness. The most substantial difference between the United States in the late 18th century and Europe in the 21st century is the level of external threat. In 1787, Shay's Rebellion impressed upon many Americans -- particularly George Washington, who was irked by the crisis -- just how weak the country was. If a band of farmers could threaten one of the strongest states in the union, what would the British forces still garrisoned on American soil and in Quebec to the north be able to do?  States could independently muddle through the economic crisis, but they could not prevent a British counterattack or protect their merchant fleet against Barbary Pirates. America could not survive another such mishap and such a wonton display of military and political impotence.

 

To America's advantage, the states all shared similar geography as well as similar culture and language. Although they had different economic policies and interests, all of them ultimately depended upon seaborne Atlantic trade. The threat that such trade would be choked off by a superior naval force -- or even by North African pirates -- was a clear and present danger. The threat of British counterattack from the north may not have been an existential threat to the southern states, but they realized that if New York, Massachusetts and Pennsylvania were lost, the South may preserve some nominal independence but would quickly revert to de facto colonial status.


In Europe, there is no such clarity of what constitutes a threat. Even though there is a general sense -- at least among the governing elites -- that Europeans share economic interests, it is very clear that their security interests are not complementary. There is no agreed-upon perception of an external threat. For Central European states that only recently became EU and NATO members, Russia still poses a threat. They have asked NATO (and even the EU) to refocus on the European continent and for the alliance to reassure them of its commitment to their security. In return, they have seen France selling advanced helicopter carriers to Russia and Germany building an advanced military training center in Russia.

 




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