Buffeted by debt crisis, EU wins Nobel Peace Prize

BRUSSELS -- The European Commission president had no reason to expect anything but another bad day. Then, out of the blue, after three years of back-biting and seemingly daily financial crisis, the European Union won the Nobel Peace Prize for fostering peace on a continent long ravaged by war.

It was a badly needed morale-boost for a 60-year-old union in the midst of a mid-life crisis.

Even as it announced the award Friday, the Norwegian prize jury warned that the financial crisis challenging the 27-nation bloc's unity could lead to a return to "extremism and nationalism." It urged Europeans to remember the EU's role in building peace and reconciliation among enemies who fought Europe's bloodiest wars, even as they tackle the economic crisis that threatens its future.

The award was hailed at EU headquarters in Brussels and by pro-EU leaders across Europe, but derided by "euroskeptics" who consider the EU an elitist super-state that erodes national identities.

Emerging for a brief encounter with reporters, European Commission President Jose Manuel Barroso was beaming as he declared: "Ladies and gentlemen, I have to say that when I woke up this morning, I did not expect it to be such a good day."

"The Nobel Peace Prize committee and the international community are now sending a very important message to Europe that the European Union is something very precious, that we should cherish it for the good of Europeans and for the good of the entire world," he said.

The announcement was met with negative reactions in debt-ridden countries like Spain and Greece, where many blame Germany and other northern EU neighbors for the painful austerity measures like higher taxes and job cuts they have endured in a so-far failed effort to salvage their floundering economies.

As the EU grinds toward the three-year mark in its withering financial crisis, problems abound, progress is slow and 25 million people are out of work. The prize will do nothing to balance out-of-kilter national budgets or spur economic growth in Greece or bring down the borrowing costs of some of the weaker countries that use the euro, such as Spain.

Nor will it provide solace to the unemployed.

"For them, people may even think that this is cynical," said Paul De Grauwe, an economist with the London School of Economics. "If I were living in Portugal or Spain or Greece, I would be upset about it: `They are giving this prize to these people in Brussels, and they are the source of my misery."'

Still, there seems little doubt that the European Union has played a major role in bringing peace to a continent that had known precious little of it.

Growing out of the devastation of World War II, the premise of the project was that closer economic interdependence would ensure that centuries-old enemies never again turn on each other. The EU is now made up of 500 million people in 27 nations, with others lined up to join.

"If we ask Europeans anywhere, in any country, of any age, including the youngest ones, they can't imagine that there could be war in Europe today. It's over," said former French President Valerie Giscard d'Estaing, who was born in Germany, fought in World War II and drafted the first version of the EU constitution.

Jacques Delors, often dubbed Mr. Europe for his efforts as European Commission president to push toward greater unity in the 1980s and `90s, said the prize was "a great satisfaction for the founding fathers of Europe, and all the activists for the European cause over the years who tried to make progress on what was for them, at the outset, a dream."

"The European construction is a work of peace. It was meant to reconcile people," Delors said.

But if economic ties once brought peace, they are now putting European unity at risk. The economic crisis has stirred tensions between north and south, caused unemployment to soar and sent hundreds of thousands of people into the streets to protest tax hikes and job cuts.

The bloc's financial disarray is threatening the euro -- the common currency used by 17 of its members -- and fueling the rise of extremist movements such as Golden Dawn in Greece. The party, branded as neo-Nazi by opponents, has soared in popularity as Greece sinks deeper into a debt-fueled morass.

Marine Le Pen, head of the far-right National Front in France, told AP Television News that the EU is "massively rejected by Europeans" and doesn't deserve the prize.

"This is practically a provocation considering the suffering of millions of Europeans who today see themselves led by the European Union to a veritable economic and social war," she said. "Three years ago, it was Barack Obama who won it while he was engaged in military wars. So this Nobel Peace Prize has actually become a Nobel prize of war."

Nobel committee chairman Thorbjoern Jagland said the committee had no position on how to solve the continent's economic crisis.

"But we send a very strong message that we should keep in mind why we got this Europe after World War II," he said. "We should do everything we can to safeguard it, not let it disintegrate and let the extremism and nationalism grow again."

The road ahead remains difficult.

European leaders enjoyed a period of relative calm over the summer, when it seemed they had built the more centralized institutions that many economists believe are necessary to the stability of the common currency.

But now there are what the economist De Grauwe called "rear guard battles" in which some EU states, notably Germany, appear to be trying to undo or dilute some of those accomplishments, including a proposed banking union and the ability of the European Central Bank to reduce countries' borrowing costs by buying sovereign bonds.

And perhaps the biggest challenge of all is restoring growth to a region where the economies of many are shrinking. That is unlikely to happen, De Grauwe said, unless EU leaders relax their unrelenting drive for austerity, through which they are creating what he called "a recession that could have been avoided."

Those hit by this recession were not impressed by the prize.

"The peace prize?" asked Giorgos Dertilis, who works at an insurance company in Athens. "The way things are going, what will happen in the immediate future? Peace is the one thing we might not have."

George Tzogopoulos, a political analyst from the Hellenic Foundation for European and Foreign Policy, said the prize might help people understand the role the EU has played in preserving peace. But it could also be viewed as "a hypocritical gesture, because the European Union has so far completely failed to deal with the social dimension of the crisis and problems like poverty and unemployment."

Still, German Chancellor Angela Merkel said the Nobel committee had made a "wonderful decision," and linked it to efforts to salvage the euro, even though the judges didn't mention the common currency.

"I often say the euro is more than a currency. We shouldn't forget this in these weeks and months in which we work for the strengthening of the euro," Merkel told reporters at the Chancellery in Berlin. The euro "has always primarily been about the original idea of Europe as a community of peace and values."

Strong reactions to the choice for the $1.2 million award crackled Friday over social media.

"The EU is a unique project that replaced war with peace, hate with solidarity. Overwhelming emotion for awarding of (hash)Nobel prize to EU," Martin Schulz, president of the European Parliament, wrote on Twitter.

"Nobel prize for the EU. At a time Brussels and all of Europe is collapsing in misery. What next? An Oscar for Van Rompuy?" said Dutch euro-skeptic lawmaker Geert Wilders, referring to Herman Van Rompuy, president of the European Council.

Normally, the prize committee either honors lifetime achievement or promotes a work in progress.

This year's award does both, Jagland said, noting it "looks backward as well as forward" by recognizing the EU's historic role in building peace, even as nationalist forces that once tore the continent apart are again on the rise.

The citation noted the democratic reforms the EU demands of nations who join. It referred to Greece, Spain and Portugal, which joined in the 1980s after emerging from dictatorships, and to the talks with Balkan nations seeking membership following bloody wars in the 1990s.

Europe's stumbling economy is making it harder for economies around the world to recover and international policymakers are urging more decisive action from the region's governments to deal with the crippling debt crisis to restore confidence to the global economy.

The region is the United States' largest export customer and any fall-off in demand will hurt U.S. businesses -- as well as Obama's election prospects.

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Ritter reported from Stockholm. Gronnevet reported from Oslo. AP reporters Louise Nordstrom in Stockholm, David Rising in Berlin, Elena Becatoros in Athens and Angela Charlton in Paris contributed to this report. Don Melvin can be reached at http://twitter.com/Don--Melvin .