A tired Mrs Merkel this week had to fly beyond the eastern borders of the Union she leads to deal with the revolt of Ukraine, and then fly back to the heart of her Europe to deal with the revolt of the Greeks. In a way they are the same problem. In Ukraine the people of Donbas do not wish their country to join the European Union and have rebelled against the pro EU government in Kiev. In Greece the electorate have rejected the usual parties that accept EU control and leadership, and have chosen a new challenger party which rejects the authority of the troika and wishes to renounce EU monetary and economic policy. The European Union looks overstretched.
It is true that the Ukraine problem is exacerbated by Russia. I will repeat again I in agreement with most western commentators condemn any arming of rebels or military intervention by the European Union’s neighbour to the east. The European Union is deluding itself, however, if it thinks the entire Ukrainian revolt is a put up job by Russia. There are many local people in the east of Ukraine who so dislike their government they will take up arms against it. The European Union, as Mrs Merkel showed this week, has to find a way of living with Russia to the east, as Russia will stay there as a geographical certainty and a well armed power that could be friend but might become a worse foe.
Mrs Merkel has rightly decided that a peaceful settlement in Ukraine is the best option. I wish her peace initiative well. The trouble is that for whatever reason the Ukrainian government finds itself in the position where a significant minority of its people will not accept its authority and have taken up arms against it. Now that the Kiev regime in its turn has shelled and bombed those it wishes to be its obedient citizens in the east it will find it very difficult to reassure and resettle the country. Without control of its borders it cannot be sure there are no military personnel and equipment coming in from outside. Without offering guarantees and home rule to its eastern citizens, it will be difficult to control its eastern borders. Meanwhile the European Union has to answer critics who ask why has it given so much support to the Kiev government, without condemning its excessive use of violence?
The Greek financial problems are but the most extreme of a set of problems that have emerged in much of the Eurozone. Ignoring those of us who warned that a single currency could not work well without first creating a single state to back it, Germany with her inner circle of supporting countries rushed into an arrangement which was bound to break. There has to be a transfer union, an agreed system of sending money from rich to poor, from more successful to less successful, in any flourishing currency union. There has to be a banking union where all stand behind the banks of all. Places in deficit have to be easily financed by places in surplus. We do not have cities or counties in England unable to finance their public deficits or their balance of payments deficits with the rest of the country. Nor should they have such problems in Greece or Spain or Ireland.
Could this be mended? Yes it could. The European Union could call a halt to expansion beyond its current borders. It could let the odd country leave as it moves towards political union, with trade and association agreements replacing membership. A smaller Union would have more chance of success. For the core in the currency has to embark rapidly and decisively on moves to full banking and social union, where each country is submerged in the greater whole and each part of the union pays according to its means and receives according to its needs. Germany wants to lead Europe on the cheap. Modern advanced states expect complex and expensive welfare systems, and economic policies which deliver growth and prosperity. The Euro area does neither at the moment.