Since the death of Trudeau’s “Third Option” (a proposal to reduce Canada’s trade dependence on the United States and increase Canadian trade with Europe), Canadians have paid scant attention to Europe. But with the European Union facing an existential crisis, Canadians would gain from heeding events taking place across the Atlantic.
As The Globe and Mail’s Brian Milner tells the CIC, “the global financial system and global markets are at least as closely intertwined today as they were in 2008,” when Lehman’s collapse triggered a global financial crisis. Were the euro to founder, the effects on Canada could be greater than they were three years ago.
The outcome of the crisis in Europe will largely depend, as economic historian Niall Ferguson has argued, on the German voter. The European Council on Foreign Relations (ECFR) recently released a report titled, What does Germany Think about Europe?, which suggests that Germany is deeply divided about the ongoing crisis, with some blaming the “lack of stability culture” and others the flawed architecture of the single-currency system.
While some see Germany returning to an era of “Wilhelmine pomposity,” in its approach to Europe, others are perplexed by Germany’s isolationist stances on global issues, such as the military intervention in Libya.
The CIC interviews the ECFR’s Hans Kundnani, whose recent article in The Washington Quarterly attempted to reconcile the apparent contradiction between the harder edge of Germany’s pursuit of its national interest within Europe and its reluctance to project power internationally. Placing Germany’s current dilemma within a historical context, Kundnani, echoing Milner, suggests that Germany in fact benefits from a weak euro.
Answering the same set of questions as Milner, another Canadian, University of Toronto economist Lou Pauly, makes the case that German and French banks are so tied up in the euro crisis that they have “no breaking point.” As the 2008 crisis demonstrated, Europe will not allow any “too big to fail” institution to fail.
Will 2011 be like 2008, or will the German voter kill Europe?
Photo Courtesy Reuters.