Greece's expected "no" vote in today's referendum sets it up to be the first country to ever to abandon the euro. It's a big blow to the cause of European integration, perhaps the biggest in the history of the European Union.
But the European project doesn't have to be doomed. The remaining members of the euro can, and should, push for closer union. Their task is simple: Make the European Union more like the United States.
What European statehood would mean
There's a tension in the way the European Union is set up. It has a lot of the responsibilities of a state, such as managing migration and trade policy, and some of the institutions of one. But it doesn't have the power of one, and that tension is part of how the Greece debt crisis got so bad.
The vast majority of spending in Europe is done by individual countries rather than by the EU as an institution. There's a common EU policy on sales taxes, but those taxes are still collected by member states. There's a joint European defense policy and a European peacekeeping force, but no European military.
The EU also has a ways to go before becoming a true democracy. The European parliament is weak, and the union's more powerful institutions are dominated by appointed bureaucrats, not elected officials. The Greek crisis is a case in point. Greek Prime Minister Alexis Tsipras does negotiate with the president of the European Commission (who was more or less appointed to the gig because his party won the European Parliament elections), but the real action is in talks with the Eurogroup of national finance ministers, the European Central Bank, and behind them the heads of government of France and Germany.
The system as it currently exists makes the EU's role obscure to the public, undermines its claim to democratic legitimacy, and spurs widespread distrust. In Greece specifically, it meant that "Europe" as a whole is represented not by the democratically chosen representatives of the European people, but by appointed Cabinet members and bureaucrats. Greece chose its representative in negotiations. Europeans did not — and naturally feel estranged from the process.
A lot of these problems would be mitigated if the EU reformed its institutions so that it was more like a big centralized government. A sufficiently powerful European parliament could, with the mandate of the voters who elected it, adopt a Europe-wide tax policy, create Europe-wide social welfare programs, and unify its member governments' militaries into one pan-European force. This would clarify the EU's role and give it real democratic legitimacy.
The end result could look something like the United States. Some things would still be the province of national governments: France would handle its own schools, Romania would have its own police. But the big stuff — regulation, the social safety net, the military — would be controlled by the federal European government.
This obviously isn't a new idea. Les Misérables author Victor Hugo had proposed a European state as early 1849, declaring, "A day will come when you France, you Russia, you Italy, you England, you Germany, you all, nations of the continent, without losing your distinct qualities and your glorious individuality, will be merged closely within a superior unit and you will form the European brotherhood, just as Normandy, Brittany, Burgundy, Lorraine, Alsace, all our provinces are merged together in France." More recently, Italian prime minister Matteo Renzi has called for a "United States of Europe," and political theorist Glyn Morgan has made an extended argument for a superstate as a necessary geopolitical rival to the US.
But the economic wreckage the euro has wrought in Greece makes unification more pressing than ever before.
The economic case for a European superstate
A United States of Europe would go a long way to addressing the problems of today's EU. The United States is, like the eurozone, a currency union. But when the US has a recession, it doesn't have individual states falling into crises so terrible those states consider leaving the United States (not for a while, at least). The burden is shared more equally. Right now, unemployment in Greece is about 25 percent, and in Germany it's 6.4 percent. That couldn't happen in the US. You just don't see 25 percent unemployment in South Carolina at the same time you see 6.4 percent unemployment in California.
In an interview with my colleague Tim Lee, economist Joe Gagnon identified three big factors for why the US doesn't have the same sorts of problems the EU does — and they all come back to the fact that the US is much more unified:
- The United States has a unified banking system and banking regulation; among other things, banks in a given state aren't allowed to hold too much debt in that state. That reduces the risk of local bank failures.
- The United States has a federal fiscal policy; you get Social Security from the feds, not from South Carolina. That lets the whole country share in the national wealth, and redistributes funds from rich areas to poor areas to mitigate their suffering, especially in downturns.
- The United States has a unified labor market; while you can move and work wherever you want within Europe, the language and cultural barriers to doing so can be significant.
A European superstate can't un-build the tower of Babel, but it would address the first two differences. It would create a common banking system and establish redistribution at the national level. Imagine if such a system had been in place when the 2008-'09 recession hit. Greece still would have suffered more than Germany — but its banks would not face the same risk of failure, and it'd be getting billions upon billions in welfare payments from the federal European government. They'd still have a recession — all of Europe did, after all — but it wouldn't have been anywhere near as bad.
Now that Greece is likely out of the euro, this specific concern is gone. But Spain is still struggling with Depression-level unemployment, and crises that disproportionately affect some countries are likely in the future. Greece's departure doesn't fix what's fundamentally broken in the euro. A United States of Europe would.
A European superstate would have all the economic benefits of the EU now: completely free migration, the convenience of a shared currency, no trade barriers, etc. But it would greatly mitigate the economic costs the Greek crisis has exposed.
The geopolitical case for a European superstate
The European project has always been about much more than economic integration. Even since the European Coal and Steel Community, the idea was to grow closer economically so as to grow closer politically and culturally. After World War II and the generations of European wars that had preceded it, ensuring that war on that scale could never happen ever again was an absolute imperative.
European integration was a way to do that. It appears to be working. But the economic crises that have plagued the EU in the past few years are inherent to this current model of partial unification. In order to fulfill the European project of replacing the old, war-torn Europe with a new, peaceful, stable Europe, it has to complete the process of unification.
That means a political union as well as an economic one. And that's why, as German Chancellor Angela Merkel put it in 2011, during an earlier round of EU debt crises, "It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union."
The European Union has already done a fine job of preventing war. As George Washington University political scientist Henry Farrell writes, there's good reason to think the EU played a key role in securing peace in Europe in the 1990s. A study by Thomas Diez, Stephan Stetter, and Mathias Albert concluded that the EU played a role in arbitrating border disputes in a nonviolent manner. Papers by Farrell and Gregory Flynn, by Andrew Moravcsik, and by Jeffrey Checkel have argued that the union's membership requirements helped push former Soviet satellites and possessions toward democracy (and thus toward peace).
The EU has also effected a less concrete but still important change of norms. "Before 1945, European states viewed one another as security threats: When France and the UK disagreed about some issue, both sides thought of war as a live option for resolving the issue," my colleague Zack Beauchamp writes. "Now, that's simply not the case. Europe is what scholars Barry Buzan and Ole Waever call a 'security community,' a place where countries 'stop treating each other as security problems and start behaving as friends.'"
But this union, as effective as it's been, is only so stable. Greece, after all, is leaving the currency union outright, and it's at least theoretically possible that other members could, as well, which is a big part of why European institutions are going to such lengths to punish Greece. This is not a sign of an organization that has a lot of long-term staying power.
The absence of a unified political system is a big part of this instability; political union is a way to keep Europe's economies together in a way that truly benefits all. How a nation decides to gather and spend its money is, after all, one of the chief functions of its political leadership.
"Join, or Die"
It's not unheard of for a young political union to be disharmonious, and for that disharmony to be worsened by its decentralized political institutions. In 1950, just a year into the European experiment, the Norwegian foreign minister wrote an essay in Foreign Affairs comparing Europe at the moment to the early American colonies, which were in some ways even more disparate and divided than the European nations. The foreign minister didn't quote Benjamin Franklin's 1754 "Join, or Die" political cartoon, but he might as well have. The colonies unified to fight the British, and then over the next century continued to build an ever-closer union because it was more effective, and because a weak union created too many problems.
American unification was a process more than an event. Economic integration was followed by political integration (which also took a long time to complete; states have been slowly ceding power since the Revolutionary War), and the resulting United States has left all of the constituent states better off than they'd be as independent entities of their own. Rhode Islanders ceded some of their power to the more dominant states, and Carolinians feared (correctly, it turns out) that they would have anti-slavery laws imposed on them from the outside. But in the end, both were better off together than alone.
Europe has been undergoing a similar process of slow unification for half a century, and has been frequently better off for it. But, as with the early United States, the process is incomplete, and therein lies a number of the continent's problems. That is a case for pushing further toward unification, not away from it.
In 1949, when French Foreign Minister Robert Schuman first formally proposed the European Coal and Steel Union, the first step in the European project, he called his plan "a great experiment, the fulfillment of the same recurrent dream that for ten centuries has revisited the peoples of Europe: creating between them an organization putting an end to war and guaranteeing an eternal peace."
That experiment is still in process. But its successes so far show it is worth pushing closer to Schuman's dream.
Max Fisher contributed to this article.