Shards of Europe

June 07, 2012, Thursday/ 13:35:00

PRINCETON – As European leaders struggle after another failed summit, they should think hard about what their continent – and the world – might look like if they continue to produce unsatisfactory solutions to Europe's financial and economic problems. What would follow the disintegration of the eurozone and – almost certainly with it – that of the European Union?

The best place to consider that question would not be Brussels, but Tiraspol, the capital of the entity that calls itself the Pridnestrovian Moldavian Republic, or Trans-Dniestr. This territorial sliver with a population of a half-million emerged in the early 1990's, after the dissolution of the Soviet Union (population almost 300 million), when it broke away from the Republic of Moldova (population four million), which had separated in the 1940's from Ukraine (population 50 million).

Trans-Dniestr has its own government and parliament, army, constitution, flag, and a rousing Soviet-style national anthem; of course, its nationhood would be incomplete without its own currency. This political entity is a precise counterpart in the political world to a well-known physical phenomenon of splintering or fissuring. When stressed, a big surface bifurcates in big chunks, but then the disintegration continues into smaller and smaller fragments.

Of the six larger EU states, only France has a really well-defined centralized political system.  Poland's centralism comes close, but strong regional differences persist – a legacy of the three large and quite different imperial systems that encompassed today's Poland in the nineteenth century.

Italy and Germany were nineteenth-century amalgamations of a colorful variety of small and medium-size political units. The United Kingdom looks older and more stable, but Scotland today is controlled by a political party that wants to repeal the 1707 Act of Union, with the future to be determined by a Scottish referendum in 2014. Spain after the Franco dictatorship stabilized itself by granting autonomy to its regions, which in many ways now behave like independent units.

In these fragmented political areas, the logic of integration in the past depended on areas that were dissatisfied with political outcomes appealing to new allies in larger units. Franconians in southern Germany disliked the fact that the Napoleonic Wars subjected them to Bavarian rule; they saw German nationalism as a way to use Prussia and Berlin as a counterweight to Munich's hegemony. But, once Germany was united, Bavarians did not like the outcome, and then thought of a united Europe as a counterweight to the German state. Indeed, Bavaria became adept at using European Community resources to bolster its own political system.

Integration had its own historical momentum; if and when it goes into reverse, that process will have a counter-momentum. The argument against European structures depends on hostility to a transfer union that might lead to some redistribution of resources. Why should our money be taken away and given to people in a very different area? What sort of claim do those people have?

Germans thinking about the likelihood of transfers to southern Europe doubtless recall their country's reunification after the collapse of communist East Germany in 1989-1990. There were massive transfers, and national resources were devoted to gigantic infrastructure projects. That was not enough to halt the hollowing out of the eastern Länder, as many of the ablest and most entrepreneurial people left – an experience that put enormous strain on national solidarity.

Problems of transfers in a large political unit are at the heart of federalism. The United States' early history was dominated by a passionate debate about the issue of solidarity. In 1790, when Alexander Hamilton argued that the new federal government should assume the states' debts from the War of Independence, he encountered fierce hostility. The only way to sustain such a new political order, James Madison argued in The Federalist Papers, was to ensure that federal powers were few and limited.

Europe is confronting a similar moment of destiny. It is now mired in an existential crisis more profound than at any point since 1945. And, while muddling through is a characteristic response of complex political systems, it is deeply destructive.

If Europe's political center is widely perceived to be arbitrary and overweening, its authority will be rejected and resisted. While adopting a new treaty may look like an unwieldy process, ill-suited to managing a fast-moving modern financial crisis, it is the only way to generate legitimacy for the institutions that are needed to address that crisis – in particular to provide reassurance that transfers will not be indefinite and unlimited.

If European integration shifts into reverse, the outcome will not be a series of happy and prosperous nation-states, living in a sort of replica of the 1950's or 1960's. Southern Germans would wonder whether they were not transferring too much to the north's old industrial rustbelt; northern Italians who support the anti-EU Lega Nord in the self-styled unit of “Padania” would want to escape from the rule of Rome and the south.

Setting the clock back would thus not simply return Europe to the mid-twentieth century. The small states of the mid-nineteenth century, with no fiscal transfers out of a relatively limited area, might be recreated. But the dynamic might go further: the German territories had around 350 independent political entities in the mid-eighteenth century, and more than 3,000 before the middle of the seventeenth century. Watch out, Trans-Dniestr.

Harold James is Professor of History and International Affairs at Princeton University and Professor of History at the European University Institute, Florence. He is the author of The Creation and Destruction of Value: The Globalization Cycle. Copyright: Project Syndicate, 2012.