The new headquarters of 'La Caixa - Caixabank' Jose Jordan/Getty Images

Europe’s Return to Crisis?

The European Union – which relies on the nation-state not just for the implementation of its policies, but also for its own legitimacy – can function only as well as its member states. And, today, those member states, including but not limited to Spain, are severely weakened by internal strife.

BRUSSELS – Just four months ago, when the Europhile Emmanuel Macron was elected as France’s president, it seemed that the European Union could finally look forward to a period of calm. But calm is the last thing one can see on the streets of Barcelona, where demonstrations in favor of Catalonian independence – a referendum on which was brutally suppressed by government forces – have been met with equally potent protests against it.

As Spain’s internal conflict escalates, a return to crisis in Europe may seem all but inevitable. Yet what is happening on the ground in Spain actually indicates that the European economic recovery is strengthening, while highlighting the limits of what the EU can achieve.

The strength of the EU’s economic recovery is revealed by the absence of any significant financial-market reaction to the tumultuous scenes in Catalonia. Had a similar situation arisen a few years ago, there would have been a run on Spanish government bonds, and Spain’s stock market would have tanked. Today, however, markets are taking the country’s profound political uncertainty in stride.