Foreign Affairs Focus: R. Daniel Kelemen on Fixing Europe

Despite all the grim predictions, the European Union is not on the verge of collapse. Quite the contrary: if European leaders act with resolve and persistence, the union could experience a rebirth. Professor R. Daniel Kelemen discusses his recent article "Europe Reborn" with Foreign Affairs Editor Gideon Rose.

This interview has been edited and condensed. A transcript is below:

ROSE: Now Dan, pretty much -- pretty much everybody is pessimistic and bearish on Europe; you guys are bullish and optimistic. How come?

KELEMEN: Well, we recognize that the E.U. is facing big challenges. So we're not trying to give a naïve sort of a Panglossian view that everything's wonderful in Europe. But what we're really saying is that, even in the midst of these challenges, the E.U. has real opportunities to launch a bold new agenda and really bring the project back from, you know, the brink, so to speak.

And we've seen -- part of that optimism is that we've seen this before in the E.U. If you go back, historically, in the early '80s, people wrote off the E.U. as dead, right? And the project just seemed like it wasn't going anywhere, had no energy. It was mired in many of the same sorts of issues that it is today, and yet, with new leadership and a bold new agenda, they re-launched the project and took it to sort of new heights back then. And I think the same thing could be done today if the leadership makes the right choices.

ROSE: So what are the right choices? What are the keys to that bold new agenda that you're talking about?

KELEMEN: one thing is on economic policy, they do need to move away from the sort of very one-sided austerity that they have been focused on and to move to a more pro-growth agenda, doing things like taking this big investment initiative they've launched and getting that on the ground and running. They need to not sort of put all the onus on the ECB to be keeping the economy going but do more with stimulus in the core countries, those who can afford to do it, like Germany. And they need to basically show people that the E.U. is focused on creating jobs and growth. So that's on the economic side.

ROSE: For outsiders, it seems like there's a pretty obvious and easy solution; German economic support in return for other people's structural reforms. Why can't the countries of the union come together on that kind of agenda?

KELEMEN: Well, in a broad sense, if you look over the long term, that is sort of what's at the core of the E.U. in the sense that the Germans have bankrolled much of the E.U. budget for decades, right? And that budget has delivered a lot of economic support to the weaker peripheral countries. If you look at infrastructure investment in the peripheral countries of Europe, all the way from Portugal into Eastern Europe, the E.U. is funding roads and most of the infrastructure spending, or at least co-financing that in many of these countries. So the E.U. does that and, in exchange for that, as you say, they have demanded reform.

The E.U. is what's driven the liberalization of the European economy, you know, over the past two decades, three decades, really since the single market project. But yes, they could do more. And I think part of what we're up against now is that some of the next steps in the kind of structural reform you talk about are very painful for countries come up against powerful vested interest .

ROSE: Merkel has seemed to always want to just enough to keep things from falling apart but not so much as to annoy the German public, which doesn't want to do too much. Can she keep that balancing act going forward?

KELEMEN: That's a terrific question and I'm not sure that she can. And you're exactly right, that the pattern -- and this is one of the real ironies in this crisis because it's been a pattern of sort of doing the minimum necessary, as you said, to avert an implosion of the Eurozone or of other institutions, and then, you know, putting that in place to keep things going and waiting for the next crisis and then repeat. So it's sort of crisis, minimal reform, repeat.

ROSE: Is Draghi, at the ECB, an example of the kind of bold new continental leadership you're -- you want to see?

KELEMEN: Well, yes, I think he has provided that. But we should keep in mind that I think the political leaders have basically leaned on Draghi, right? In terms of steps needed to save the euro and to bolster the European economy, they've let Draghi do all the heavy lifting

ROSE: So he can't do it alone?

KELEMEN: No, he can't. You know, he provides one leg, so to speak -- we talk about this in the article -- of the kind of new economic agenda you need, but you need other legs. You need both a kind of fiscal stimulus and you need some structural reform.

ROSE: So bottom line, you're saying that it can have a brighter future but Europe doesn't necessarily have one. Are you actually optimistic going forward?

KELEMEN: I am optimistic. And in part, I'm optimistic because, you know, because of the sort of lessons of the E.U.'s own history and that we've seen that when push came to shove the leaders of Europe have consistently chosen deeper integration over disintegration.

ROSE: As they say, from your lips to God's ears.

Dan Kelemen, welcome to another edition of "Foreign Affairs Focus." We hope you'll join us in the future.

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