THE shuttered banks of Greece represent a profound failure for the EU. The current crisis is not just a reflection of the failings of the modern Greek state, it is also about the failure of a European dream of unity, peace and prosperity.

Over the past 30 years Europe has embraced its own version of the ‘end of history’. It became known as the European Union. The idea was that European nations could consign the tragedies of war, fascism and occupation to the past. By joining the EU, they could jointly embrace a better future based on democracy, the rule of law and the repudiation of nationalism.

As Lord Patten, a former EU commissioner, once boasted, the success of the union ensured that Europeans now spent their time ‘arguing about fish quotas or budgets, rather than murdering one another’.

When the Greek colonels were overthrown in 1974, Greece became the pioneer of a new model for Europe — in which the restoration of democracy at a national level was secured by a simultaneous application to join the European Economic Community (as it then was).

Greece became the 10th member of the European club in 1981. Its early membership of an EU that now numbers 28 countries is a rebuke to those who now claim it has always been a peripheral member.

The model first established in Greece — democratic consolidation, secured by European integration — was rolled out across the continent over the next three decades. Spain and Portugal, which had also cast off authoritarian regimes in the 1970s, joined the EEC in 1986. After the fall of the Berlin Wall, almost all the countries of the former Soviet bloc followed the Greek model of linking democratic change at home to a successful application to join the EU.

For the EU itself, Greek-style enlargement became its most powerful tool for spreading stability and democracy across the continent. As one Polish politician put it to me shortly before his country joined the EU: “Imagine there is a big river running through Europe. On one side is Moscow. On the other side is Brussels. We know which side of the river we need to be on.”

That powerful idea — that the EU represented good government and secure democracy — has continued to resonate in modern Europe. It is why Ukrainian demonstrators were waving the EU flag when they overthrew the corrupt government of Viktor Yanukovich in 2014.

The danger now is that, just as Greece was once a trailblazer in linking a democratic transition to the European project, so it may become an emblem of a new and dangerous process: the disintegration of the EU. The current crisis could easily lead to the country leaving the euro and eventually the union itself. That would undermine the fundamental EU proposition: that joining the European club is the best guarantee of future prosperity and stability.

Even if an angry and impoverished Greece ultimately remains inside the tent, the link between the EU and prosperity will have been ruptured. For the horrible truth is dawning that it is not just that the EU has failed to deliver on its promises of prosperity and unity. By locking Greece and other EU countries into a failed economic experiment — the euro — it is now actively destroying wealth, stability and European solidarity.

The dangers of that process are all the more pronounced because Greece is in a highly strategic location. To the south lies the chaos and bloodshed of Libya; to the north lies the instability of the Balkans; to the east, an angry and resurgent Russia.

Knowing all this, the administration of Barack Obama is increasingly incredulous about the EU’s apparent willingness to let Greece fail. To some in Washington, it seems as if the Europeans have forgotten all the strategic lessons learnt during the cold war about the country’s importance.

That, however, is unfair to the Europeans. Their response to the criticism from Washington is that the EU works only because it is a community of laws and mutual obligations. If you allow a country such as Greece to flout those laws and obligations — by, for example, reneging on its debts — then the club will begin to disintegrate anyway. If, by contrast, you kick Greece out there is still a chance of confining the damage to one country.

The crisis also has profound implications for democracy, the original rallying point that drew Greece into the EU more than three decades ago. Alexis Tsipras, the prime minister, now argues that far from securing Greek democracy, the EU has become its enemy, trampling on the will of the people.

In reality, of course, this is a clash of democratic mandates — pitting Greek voters’ desire to ditch austerity against the voters (and taxpayers) of other EU countries, who want to see their loans repaid and are loath to let an unreformed Greece continue to benefit from EU money.

It may be that those two democratic wills can be painfully reconciled in coming Sunday’s referendum. If the Greek people vote to accept the demands of their EU creditors — demands that their government has just rejected — Greece may yet stay inside both the euro and the EU. But it will be a decision by a cowed and sullen nation. Greece would still be a member of the EU. But its European dream will have died.

gideon.rachman@ft.com

Published in Dawn, Economic & Business, July 6th, 2015

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