Europe has been seriously traumatized by the 2008–2009 financial crisis, which turned into a sovereign debt crisis and then into a recession. In addition, the policies adopted to overcome it have not been particularly effective. The economic consequences for the weaker countries have been dire, and the political consequences are seen in the rise of populism and extremist parties. Signs of economic and political implosion are evident in many member countries, even in large and powerful ones. Is there a way out? Has the European project failed, at least in terms of delivering the goods promised? Can one provide serious arguments in defense of Europe?
Loukas Tsoukalis, in his masterful analysis, attempts precisely the latter. He starts with questions related to how the crisis started, why it deteriorated to a nightmare for many countries, and why Europe has still not recovered. At the end of the book, he provides important suggestions about the necessary direction of political dialogue on the future of Europe. He focuses specifically on the need for flexibility, so that the European project can emerge from its economic straitjacket. Of course, no detailed solutions can be provided, since they will have to come as the product of extensive negotiations or a "grand bargain" (209), as he calls it.
The book is divided into seven chapters and starts with a tour d'horizon of the last half century. Here Tsoukalis attempts to explore the early success of the European project and then proceeds to identify the factors that began to undermine it. "Was it hubris, bad design or bad luck?" (14), he asks about the creation of the euro. Or perhaps, he wonders, was it a fatal combination of all three? Could the creation of the single currency—an ambitious but rather incomplete design and a product of an elite consensus without much public awareness—be the "straw that breaks the camel's back" (14)? On the other hand, the European project, he argues, might be collateral damage in this latest phase of globalization. Increasing political fragmentation and rising inequality between and within countries are key characteristics of our times. [End Page 605]
The basic question of Tsoukalis's analysis is how a crisis of globalized financial capitalism was transformed into an almost existential crisis for Europe. Why has it been so difficult to relieve the crisis for so long? Is it the "dysfunctional triangle of national politics, European policies and global markets" (177) that has caused the ever expanding and overstretched model to stagger? As for the euro area, it seems that "political institutions and democratic legitimacy were conveniently forgotten or ignored" (194), which was perhaps inevitable in such an emergency. But this particular emergency has been going on for years, and the decisions taken were neither quick nor particularly successful. How will this lack of democratic accountability affect political developments? The public debate has been lively recently, which is a good sign. On the other hand, the unwelcome rise of populism, which is offering simplistic if not naïve and dangerous recommendations, is evident even in the rich core countries, not to mention the poor periphery. And what is worse, according to Tsoukalis, is that populism's public approval is increasing. Europe cannot continue along these lines. "Europe needs a game changer" (208), Tsoukalis states, a significant initiative that will create win-win solutions. He argues convincingly for such a new "historical compromise" (17), although he is not particularly optimistic about the outcome.
Until recently, muddling through and doing too little, too late have been the favorite tactics following an obscure strategy based on fear of divorce and punishment for "sinners" (116). Well-defined teams of creditors and debtors were formed within the euro area, where creditors gave the troika, consisting of the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB), the power to decide and impose conditions expressed in detailed programs written and signed by governments with no alternatives (but to default perhaps). Debtor countries had already lost access to the markets and did not have...