(Bloomberg Opinion) -- Any instance of political turmoil in one of Europe’s bigger economics triggers predictions of the imminent collapse of the European Union or the euro area. The latest prophet of doom is George Soros, who recently proclaimed that “everything that could go wrong has gone wrong” for Europe. But at such moments, I’m with James Gorman, Morgan Stanley’s chief executive officer, who said the billionaire’s analysis was “ridiculous.”
Soros’s warnings are typical of the “Europe is in danger” school of thought. In a speech to the European Council on Foreign Relations in Paris on May 29, he said the path to oblivion started with the euro zone’s “fiscal retrenchment” after the financial crisis of 2008, which turned a once-equal alliance of nations into a union of creditors and debtors. That led to a surge in populism, which was exacerbated by the mishandled refugee crisis of 2015.
More recently, Soros said, President Donald Trump’s “destruction of the Transatlantic alliance” put new pressure on Europe after events such as Brexit and political instability in major nations, including Italy. For Soros, this amounts to an “existential crisis” that should force Europe to “reinvent itself” as a more limited, a la carte association that “countries like Britain would want to join.”
Soros and other horsemen of the apocalypse believe Europe needs to take urgent action to avert the impending cataclysm. Gorman argues that the political troubles in Italy and Spain are no more than the day’s news. Political processes such as the ongoing struggle between populist and mainstream liberal parties aren’t huge obstacles to economic growth, which continues in Europe as elsewhere in the world. “You don’t react to 24 hour news -- you can’t respond as an investor,” Gorman said.
That is a more rational perspective, if only because such calls calls for urgent action are at least as old as the European Union’s earliest prototype, the Coal and Steel Community of six Western European countries. Soros echoed one of that project’s founding fathers, the French politician Jean Monnet, who said: “If we do not act until we know the answers to all possible questions, we shall never act, we shall never achieve the certainty for which we have been waiting, and we shall be swept along by events which we have forfeited the power to control.”
Monnet spoke those words 66 years ago, though. His predictions were 40 years old when the European Union came together with the Maastricht Treaty. Some of the features of the United States of Europe that Monnet envisioned, such as a European military, are still in the early stages of development. And yet the European project is not a failure by any means. Most Europeans say their countries have benefited from EU membership; most, unlike Soros, are optimistic about the future, and residents of countries that have adopted the euro like the single currency.
To borrow from Aesop’s fable, the European project is the tortoise, not the hare. Hasty decisions like the attempts to force refugee quotas on member states end in failure. When the union moves slowly and deliberately, it succeeds; it took 12 years to abolish mobile roaming charges, a welcome change that only worked because a multitude of stakeholders went through a painstaking process of shaping the regulation.
This mode of operation, of course, means lots of missed opportunities. The victories of centrist forces in the Netherlands, France and Germany in 2017 were often described as a great chance to push the EU forward. Now, it’s unlikely that any serious reforms, such as steps toward a fiscal union, will happen: The sometimes unfocused enthusiasm of President Emmanuel Macron of France is reined in by the caution of Angela Merkel, the German chancellor, as she struggles to maintain her party’s appeal to voters during what is likely to be her last term in power.
EU states also could have used Brexit to draw closer, streamline the bloc’s governance and make the budgetary system more effective. This opportunity is going to waste because new crises have diverted European leaders’ focus: The resistance of Eastern European countries to common policy proposals, political change in Italy, where two essentially anti-euro parties have come to power, along with Trump’s trade war.
There are two opposite ways to react to these kinds of challenges: The first is to exercise what Americans call “leadership,” or to act quickly and decisively. The other is to recognize when a forceful response isn’t timely and could even be counterproductive.
Take the Greek crisis of 2015. If Europe had wanted to show leadership, it would have written off Greece’s debts. But that decision would have empowered the rogue far-left government, pushed the bankrupt country out of the euro zone or something equally rash. Instead, the Europeans chose to kick the can down the road and patiently try to re-educate the Greek government to the reality of running a country that is broke and hugely indebted. This approach has generally worked: Greece is on track to exit its bailout program later this year.
The EU is criticized for its endless committee meetings, delaying tactics and pauses for countries to deal with domestic troubles. Yet it’s strategy has allowed the union to expand to most of the continent and keep most of its population happy. The EU will still be there when the novices in the Italian government realize they don’t have unlimited policy options. It’ll still be there when voters in country after country get used to the idea of larger, but controlled, immigration flows. It’ll still be there when the U.S. stops alienating its allies.
Slow action can be frustrating, but “leadership” can create more problems than it solves. Merkel learned this the hard way in 2015, when she impulsively decided to allow more than one million immigrants to come to Germany. After such moves, it’s natural to take a time out for a discussion that will eventually lead to a point of balance. This deliberative phase can last years, and new problems will arise along the way. But so far, despite moving slowly and often clumsily, the European project hasn’t had any truly life-threatening setbacks. Even Brexit isn’t one: the U.K. wasn’t an enthusiastic EU member in the first place.
Gorman is right to take the long view. While EU leaders don’t rush to action, we shouldn’t rush to judgment.
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