1929 or 1989?

PARIS – As the economic crisis deepens and widens, the world has been searching for historical analogies to help us understand what has been happening. At the start of the crisis, many people likened it to 1982 or 1973, which was reassuring, because both dates refer to classical cyclical downturns.

Today, the mood is much grimmer, with references to 1929 and 1931 beginning to abound, even if some governments continue to behave as if the crisis was more classical than exceptional. The tendency is either excessive restraint (Europe) or a diffusion of the effort (the United States). Europe is being cautious in the name of avoiding debt and defending the euro, whereas the US has moved on many fronts in order not to waste an ideal opportunity to implement badly needed structural reforms.

For geo-strategists, however, the year that naturally comes to mind, in both politics and economics, is 1989. Of course, the fall of the house of Lehman Brothers has nothing to do with the fall of the Berlin Wall. Indeed, on the surface it seems to be its perfect antithesis: the collapse of a wall symbolizing oppression and artificial divisions versus the collapse of a seemingly indestructible and reassuring institution of financial capitalism.

Yet 2008-2009, like 1989, may very well correspond to an epochal change, whose unfolding consequences will be felt for decades. The end of the East-West ideological divide and the end of absolute faith in markets are historical turning points. And what happens in 2009 may jeopardize some of the positive results of 1989, including the peaceful reunification of Europe and the triumph of democratic principles over nationalist, if not xenophobic, tendencies.