03 July 2012

Europe's Point of Political Bifurcation: Independence Day or Interdependence Day?

Europe seems to be at a point of bifurcation. It can either raise to a higher level of complexity and political interdependence or spin off a few countries from inclusion in the euro, into simpler political and economic relationships.

Bifurcation is a point at which a system can either collapse into something simpler or cohere into something with greater complexity.

One route that lies before Europe is less economic cohesion. Certain countries might stop using the euro, reverting to their own currency as a means to allow currency devaluation and economic adjustment. This would give the countries sovereignty but would represent, for Europe, a simpler, less interdependent state.

Another route that lies before Europe is more political cohesion. Germany might actually send more funds to Greece and Italy in ways akin to New York sending funds to Louisiana. Not just budget targets but actual budgets for countries would begin to merge and become similar. This suggests greater political interdependence, a higher level of complexity.

In the words of UK Prime Minister David Cameron, Europe has a choice between sovereign nation-states or a European super-state. Put in terms of the 4th of July, they have a choice between independence day or interdependence day. 

At the point of bifurcation, you face great uncertainty. One thing that is certain, though, is that the status quo has become untenable. Soon, Europe will have to choose either greater political interdependence or less economic interdependence.

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