Everybody understands that the euro crisis is about much more than the survival of the euro. But I am doubtful about how many understand what German chancellor Angela Merkel meant when she said that the issue is «the future of Europe».
If the euro breaks down, the European Union would lose much of its momentum. Collapse would be the biggest setback ever, and it would take years to recover. A smaller and more integrated euro core and a looser periphery could theoretically be better than the current arrangement. But that is a risky, second best solution. The collateral damage would be great, not least on the world economy. A collapse would most likely bolster the nationalist forces that are waxing in Europe now. It would be a serious setback for democratic, supranational integration, perhaps the most important political idea today.
At the same time a unique historical opportunity to use the crisis to relaunch Europe/the EU on a more dyamic path by strengthening its supranational elements would be lost. Europe as a whole has great potential if acting together (confer e.g. that athletes from the EU won more medals at the London Olympics, and European scientists far more Nobel prizes, than the U.S., China and Russia put together), but risks falling further behind if not. Even member states with strong economies, like Germany, would profit greatly from a «good» crisis.
If handled well, the crisis could spur reform and restructuring and thus the leveraging of Europe’s joint resources to become both more globally competitive and more socially just. The German/Nordic (Protestant) model should serve as inspiration. Jobs would be created, social and political polarisation prevented and Europe be revived.
More generally, successful crisis management could demonstrate the positive-sum rewards of supranational integration. It could also highlight the continued relevance of Europe’s unique heritage of compassionate rationalism, pointing out a sustainable middle way between American libertarianism and Chinese authoritarianism. Europe would have a future, and not just a past.