Power-Elite Dream

Following the July 5 “no” vote in Greece against the terms of the negotiated bailout, European elites swore they would no longer negotiate:

[E]urozone officials shot down any prospect of a quick resumption of talks, even though finance ministers were planning to meet during the week to discuss the fallout from the vote. German Chancellor Angela Merkel and French President Francois Hollande immediately scheduled a bilateral meeting.

“Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness,” Germany’s Economy Minister Sigmar Gabriel told the Tagesspiegel daily. He said negotiations with Athens now were “barely conceivable.”

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The Big, Rich Member States Present the Real Risk

But Greece is just a small country with a small economy. Were it to leave the euro, it would hardly spell the end of the eurozone.

So, the real threat to European unity comes not from a Greek or Portuguese exit, but from a wealthy, net-payer state. Imagine, for example, that Mississippi seceded from the United States. As a net tax-receiver state, such a secession would hardly be noticed in the national economy or at the US Treasury. But imagine if New York, with it’s huge financial sector and immense income-tax revenues wished to secede. Obviously, that would be viewed by the national government as a grave economic threat.

And so it is for Europe. Greece could be lost without much economic threat to the whole. The exit of a country like the United Kingdom or Germany, on the other hand, would be another matter entirely.

And it’s this possibility of exit for these larger countries that has the IMF and other advocates for centralization most worried. The centralizers want the ability to easily compel transfer payments from wealthy countries to poorer countries. But, they know that this would generate opposition in the richer countries. The solution to this, of course, is to make sure and already have in place the coercive machinery that would prevent secession or resistance from the richer countries should they ever want out.

Without the means of directly coercing member states in this new unified Europe, the central government will have to engage in the slow, tiring business of negotiations and give-and-take among members. That is, the central government would have to actually care about what voters and taxpayers in the member states think. But once they get their “proper federal union” (likely to include a prohibition on secession), the power of individual member states will be eviscerated, and the goal of a politically unified Europe — complete with a strong central government and weak member-state governments — will be at hand.

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