Letting Eastern Europe Sink

If all you read was the NY Times, you’d probably have the idea that the EU is on the verge of an East-West schism. Wishful thinking, perhaps. As Art Goldhammer points out, the (French-language) view from Europe is a bit more nuanced. According to this version, the EU’s refusal to float an “Eastern European” bailout is based on a broader sense of solidarity that rejects the idea of internal boundaries, whether East-West or North-South. There’s also the fact, as Angela Merkel made clear, that no monolithic bailout could respond to the distinct needs of the various countries.

But here’s the thing. I’ve thought for a while that historically speaking, the EU’s biggest failure originated not in Brussels, but in Moscow: the Soviet Union collapsed ten years too early. Had the EU had those extra ten years, the former Soviet bloc would have been absorbed into an institutionally more integrated Union on a “take it or leave it” basis. Instead, the diluted EU has struggled to define its long-term political identity.

Ironically, the need to rapidly stabilize post-Soviet Eastern Europe forced the EU’s hand. Now the need to rapidly stabilize post-accession Eastern Europe is doing the same. At the same time, this crisis offers Western Europe the opportunity to cut loose the political ballast of Eastern Europe that has weighed down the integration process.

So although the Eurozone banking system is very exposed in Eastern Europe, my hunch is that the Times is on to something. There are probably at least some influential people in Western European capitals wondering which would hurt more: bailing out the east, or letting it sink. The question being, can Old Europe afford to let this crisis go to waste?