Will the 'European dream' continue?

When you arrive in a new place, you register everything with new eyes – the color of buildings in the late afternoon, how the air smells, the local accents.

On Jan. 1, 2007, when the Monitor's Robert Marquand arrived in Paris from Beijing at the start of a 5-1/2-year assignment, he found a continent settling into a self-confident optimism. Long rived by war and rivalry, Europe was quietly cementing itself together with a common currency. That New Year’s Day, Slovenia became the latest member of the eurozone, and the European Union welcomed its 26th and 27th members, Romania and Bulgaria. 

France, Bob recalls, seemed sure of itself, its merchants and citizens happy to have surrendered the franc for the euro. Germany had emerged from its long east-west reintegration project with a productive, export-oriented economy. Europe and its cities did not have the brimming energy of urban Asia, but to many of its people, Europe still felt like the future.

And don’t forget where Bob had landed – incomparable Paris, where, as he puts it, “the Europe of the American imagination is corporealized before your eyes.” But like the optimism felt in the first year of Nicolas Sarkozy, elected in the spring of 2007, the romantic vistas of the Old World were just the surface of things. Somewhere below, tectonic plates were shifting.

Just as scientists go looking for early warning signs after an earthquake, economic historians now can point to signs of danger preceding the near-global meltdown of 2008. One of them can be traced to Paris: Throughout 2007, a financial trader named Jerome Kerviel had made huge, unauthorized investments with the assets of his employer, Société Générale. Like most scandals in the world of high finance, what he did was complicated. He may have made millions in profit for his company, but no one at Société Générale grasped what he was up to. By 2008, it was clear that he had bet the company without the company’s permission.

Versions of the Kerviel affair recurred throughout that fateful year. At Bear Stearns, Lehman Brothers, and AIG, trading had become so big, fast, and risky that no one knew what was at stake or what would happen if the unexpected occurred. On both sides of the Atlantic, as a US Senate investigation later observed, there were “high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself.”

In Europe, as in much of the world, 2008 ended an era. But in Europe, the shift wasn’t just from good times to bad, from greed to fear. The European project itself came into question. Should productive Germans bail out financially undisciplined Greeks? Can the EU’s southern members be trusted to get their houses in order if the north lends them money? Should the EU become bigger and stronger – or go away? Nationalism and separatism are stirring. Regional stereotypes are reviving. Doubts have arisen about further European integration. 

Bob explores the European moment in this week’s cover story. At a time of profound soul-searching, Europeans are unsure they want to go forward but are rightly concerned about going back. Back is familiar and safe, but haunted by history’s nightmares. Forward is the European dream, uncharted, elusive, not always pleasant. Europe can simply be a landmass on which several dozen nations live. Or it can once again be the future.

John Yemma is editor of the Monitor. He can be reached at editor@CSMonitor.com.