European Disunity

7 Mar

A couple of readers asked why I don’t comment on current European affairs and BREXIT. It’s a valid question – right now, I’m waiting to see how things shape up in the next few months before trying to make any predictions. A hard BREXIT is likely to be more painful – and have nastier unintended consequences – than a soft BREXIT. Are politicians in Brussels (and Berlin, Paris, etc) prepared to be rational? Are British politicians any better?

I tend to think of it as a divorce. Some separations are reasonably amiable, where the couple put the good of their children (and themselves) ahead of anything else. Others are nasty, with partners lashing out at their former lovers with all the accuracy of someone who knows just where to land the nastiest barbs. Such relationships leave bad feelings that linger for years, casting a doleful shadow over the children and anyone else forced to choose sides. Which one will Europe choose?

There is a strong incentive for both parties to try to reach an acceptable settlement. The EU can cause problems for Britain – that is indisputable. On the other hand, Britain can cause problems for the EU too. A flat refusal to share banking information alone would cause a capital flight from the EU, as wealthy Europeans look for a place to hide their money; Britain could also meddle in EU affairs, particularly as President Trump grows into his role and other anti-EU parties rise across the continent. While a strong and independent Britain may turn into a role model for Poland, Greece and the other smaller states, a weaker and embittered Britain may have other – dangerously unpredictable – effects.

Best case – the UK/EU economies wobble a little, but remain fairly stable. Middle case – the economies take a dive, but either level out or start to return to pre-BREXIT levels. Worst case – the mutual economies collapse completely.

It’s difficult to say what will happen. Britain leaving the EU will probably lower the EU’s funding for a decade, depending on which set of figures you use. (The alternate reading is that Britain will no longer be a drain on the EU’s finances, but I don’t think anyone could make that argument stand up in court.) If handled properly – with a sensible audit and a careful look at just where the money is going – the EU might actually survive BREXIT and come out ahead. But, if handled badly, the yawning black hole within the EU’s banking sector might well tear the EU apart.

The crux of the problem is two-fold. First, Europeans are not Americans. The beer-swilling Texan redneck and the cappuccino-sipping New York liberal might detest one another with the passion of a million white-hot burning suns, but they would both acknowledge that the other is American too. This is not true of Europe. Frenchmen are not Germans, Germans are not Poles, Poles are not Greeks … etc, etc. Nor, for that matter, are immigrants to Europe automatically considered European. Relatively few immigrants are granted such inclusiveness (a problem made worse by their tendency to cluster.) In short, Europe is still an immensely tribal society … and the tribes feel no particular incentive to assist other tribes.

Second, trust in government and society has declined sharply. On one hand, the EU is isolated from the people – the bureaucrats don’t understand what drives their populations, while the elites push policies that look good instead of being good. Their lack of concern for the civilians – when they’re not showing outright contempt – is easy to see. On the other hand, the EU is simply incapable of governing well. It is very much a ‘one size fits all’ system – and in Europe, one size does not fit all. There is very little loyalty to the EU within Europe, outside those who benefit from its existence.

In a sense, you can take everything said about the RNC and the DNC in 2016 and apply it to the EU. Out of touch? Check. Manipulation of the nomination process to try to produce the desired result? Check. Losing the race to outsiders because the elite nominees are not appealing? Check. Etc, etc.

The EU, in a sense, is rather akin to the Austro-Hungarian Empire and the Holy Roman Empire. It is composed of a number of states that are more than willing to put their own interests firsts, with leaders who have to account to their (voting) populations rather than the EU as a whole. (The cynic in me suspects that the bureaucrats consider that rather a disadvantage.) The tangled web of political, bureaucratic and financial obligations makes it difficult for a smaller country to assert itself, let alone allow for any sort of independent (and public) oversight. One can argue, quite reasonably, that Greece is both victim and victimiser: on one hand, the Greeks were bullied relentlessly by the EU; on the other, their government got them into an economic black hole by lying to the EU about their economic state, not bothering with any reforms until pushed and spending more money than they could possibly repay.

(The simple fact that the EU didn’t bother to do any due diligence, as I have mentioned before, is yet another reason to discard it into history’s waste bin.)

Right now, the EU is steadily fragmenting.

The optimist in me says that the EU will draw back from its attempt to become a super-state and evolve into a loose association of European nations, that it will change to become more responsive to the will of its populations. But even this sows the seeds of discontent and disintegration. The Germans, for example, will want the Greeks to pay back every Euro they borrowed (an impossible goal) while the Greeks will want debt forgiveness (another impossible goal.) They won’t be the only ones, either. Squaring this particular circle will be impossible.

The pessimist in me says that the EU has failed, that it has lost the trust of its populations completely (and thus needs to be discarded as quickly as possible.) This may not be wholly accurate, but there is a strong element of truth in it. Certain aspects of the bloc – free movement, for example – have caused significant problems, leading inevitable to a ‘baby and the bathwater’ situation, where the ‘good’ is thrown out with the ‘bad.’ The EU governments have not only sacrificed trust, they have also sacrificed credibility. This hampers their ability to come to terms with the ongoing crisis.

I don’t pretend to know how this will end. In many ways, we are gliding towards a situation comparable to 1914; in others, we are entering uncharted territory. Greece may still bail out of the EU (in some ways, they might be better off if they did), along with other states that owe incredible sums of money: Spain and Italy in particular. Economic stagnation will lead to a steady series of job losses, followed by more and more bitterness on the streets, accompanied by tax hikes that will see the rich fleeing in all directions. The prospect of ethnic conflict, too, cannot be understated. They too are tribes.

The avalanche has already started. It may be too late for the pebbles to vote.

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19 Responses to “European Disunity”

  1. Don March 8, 2017 at 1:43 am #

    Well I hope that UK and EU are willing to make a good deal but domestic politics of both UK and EU don’t seem to give much hope for it.

    One side, the Daily Mail politics of UK does not allow for anything else but total pull out of EU and its single market and CCT with zero further payments into EU.

    While EU is fighting for its basic survival. Thus many EU leaders said that UK will not be allow to have better or even same access to the single market as full member. Banks already announced plans of moving some of their operation from London into EU.

    As Chris said if this is a divorce then first things that is discussed is money and access to the children. 34 to 66 Billion Euro is been said around EU and I don’t see UK willing to pay even close to that amount. Also access to children will be limited then when both parents was living in the same house. Now it would be EU who has most say in how much access to children the UK as EU will be living with the children. As one day a week or would be every 2 week or monthly.

    But as you said EU seem to be failing so some of UK politicians say so don’t even need FTA with EU. But as you also said if EU benefit the each member state then it will continue. So 3 EU country elections will be telling if it will go on, become a super state or break up. So for EU then bad deal for UK can be used to show that it is bad idea to leave EU.

    But May government has already indicated where they stand and EU leaders already shown some of their cards as well so hard Brexit is coming. Daily Mail of UK politics will not allow extension of the 2 years exit with and with out a deal. The Brexit team and government has dug into their position so much they can’t change it anymore. Calling any debate about the form of Brexit other then hard as from moaners and form of campaign fear thus dismissing them outright.

    Well hope most of your income is in dollars as your living standard will be good because of the exchange rate till inflation catch up with you then same as before.

  2. BobStewartatHome March 8, 2017 at 1:46 am #

    Europe can never repay England for the services she has rendered since the time of Elizabeth I. Which isn’t to say that everything England has done has been beneficial. It is just better than the alternative. And in the process, she has done much to educate and enlighten those who wonder about theories of governance and the balance between individual rights and a centralized tyranny. The latter has become an ever growing problem with the advent of modern technology, as every Sci-Fi reader appreciates. This is also demonstrated by the curious power of the little men in Brussels. They have never done a thing for Europe, but with their control of the levers of government, they have become gods. So the question of how the future will evolve is very timely and interesting.

    Certainly, England (by which I mean the Anglo-Saxon world) has shown it doesn’t need to bow to Europe. Goering and Doenitz couldn’t compel England to surrender even with the rest of Europe lying prostrate under their boots. And with the help of her friends, who shared a common language and a belief in the primacy of the individual, England flushed the first set of modern-day European totalitarians down the drain. The surviving thugs collapsed four decades later under the economic pressures of Reagan and Thatcher.

    The tribalists of Europe have never embraced individualism. That is their weakness. Free markets and free men continue to be a novelty. England has also dabbled in this fever swamp of special interests under the guise of unions, and America just escaped from what is called “community organizing”, which is nothing but tribalism wearing lipstick. Hopefully these siren calls of entropy will be rejected as we go forward. Even in our darkest hours, when the privileged scions of England were prancing about renouncing their responsibilities before WWII, there remained a core of decent men and women who knew better. It is the individual who matters, even when they are hopelessly wrong, as long as others continue to have rights and are willing to act.

    England would do well to ignore Europe. Nothing but mayhem and slaughter lie down that path. Champion the rights of free men and insist that their governments place these rights foremost in their priorities, and eventually the ship will right itself.

    • shrekgrinch March 8, 2017 at 4:21 am #

      “America just escaped from what is called “community organizing”, which is nothing but tribalism wearing lipstick”

      Actually, we haven’t. We are still trucking full speed for a Yugoslavia-type civil war and break up unless way more drastic changes than electing Trump is done. Way more.

      • Andrew Jones March 8, 2017 at 6:05 am #

        I don’t know about civil war, but it’s as popular as ever to judge people by identity rather than behavior here. We may be at “peak tribalism”, but it’s not something I’d bet on.

    • Antonio Lito April 29, 2017 at 4:08 pm #

      …Europe will do even better by ignoring Britain, Britain will become disunited. …and economically the EU is exporting just 3% of the Eu GDP to Britain, whilst Britain exports nearly 50% of their GDP to the EU.
      If Britain wants to become a financial paradise, well, there will be issues for Britain as well as the people moving money there. Look what happens to the Swiss, Lichtenstein and so on…people have grudges or they would do anything for money …even selling information about tax evaders or money laundering. I would like mention something favourite that Chris says quite often..War is a democracy, the enemy has a vote too.

      I am not rich and I am not getting welfare handouts, but I like the EU and I am part of the majority of the EU population with the same feeling. Chris mentions about tribality…well Britain is full of it too, if they have a common enemy they unite…like everyone else if they don’t they will spend their time in breaking the country.
      Just like they are trying to do it to the EU. Personally I am happy that Britain leaves the EU, it was never really part of it, if you want to change things you should get to work from the inside and not sitting on the fence criticizing, but then Britain is famous for this attitude. I like the British, but they are too xenophobic for my taste. I lived and worked in Britain and I never forgotten the continuous comments about non British nationals.

      What Chris has written about the EU can be said about the UK generally. Once the EU kicks out Poland and Hungary it will be much better financially as it will not have to subsidise two back stabbing countries.

      Chris is British, he has his opinion which is of course biased against the EU. I’m from the EU and very happy, nothing is perfect but most people in the EU are much happier than others. They remember the post war, Americans they were never really bombed and therefore they have no clue what it was like.
      The EU will survive either as a federation or a confederation, but will not divide unless some moronic Trumper or Farager or a Le Penner causes the problem.
      The euro is faulty but can be resolved and frankly it’s a pleasure to have a single currency across most of Europe. …and the freedom to travel without passports or id checks at the border is awesome. Europeans have many differences, but none will give up the freedom that the EU has given to its citizen just to become nationalist again. We’ll see, but I lived across the EU…literally…and I have heard and hear not many people wanting to get out…after all they all know what that would mean. putting up barriers.

  3. French Reader March 8, 2017 at 3:27 am #

    Sure, when you look 50 or even an 100 years down the road the situation between UK and EU will have resolved itself, but who will have suffer in the meantime ?

    Bob you seem to say that it will be only the EU because there is no solidarity betweenn states but me i don’t think so. I think the UK will suffer as much as the EU and even then, i think it will be the people of both regions who will have to pay the harsher price.

    I accept that the UK has the right to exit the EU. There are dissatisfied with the EU’s politics and probably felt uneard by brussel. BUT i would like to hightlight a few points to feed your thought.
    1. UK has “vetoed’ many propositions that would have made all the EU stronger. It was clear that the UK wanted to have one foot in and one foot out, never really commited to the EU.

    2. The UK chose to exit the EU and it is a process that will, at best, last 10 years. So why should the UK reaps the benefice of EU’s membership and have the right to vote at EU’s parlement in the meantime?

    3. One of the main issue of the EU is that it’s more an economic entity than a real political entity. Where have anyone seen 28 states agreed on anything unanimously ?! Every decison taken would be weaken by that. Therefore the EU is too big.

    4. The EU has no army. If it had one there would be a true unity between states.

    5. The BREXIT campaign was based (and won because of it) on, at least, half-true informations, and at most, lies (view from France).

    6. The EU was created to resist the russian block during the cold war. But when you think about it, are we not in an another cold war? Maybe not with the same blocks. Is it really a good time to show division when countries fight each others in proxy conflicts (see the ukraine).

    With everythings said, i still hope that the UK and the EU will remain true allies because, with what is happening in the world today, they will need it to weather the storm of terrorism and isolationism.

    • BobStewartatHome March 8, 2017 at 6:21 pm #

      I think the notion that the EU needs to be unified is a double edged sword. There’s little proof that they were willing to do this during NATO. The U. S. carried the load, and even today it is U. S. troops who deploy to Baltic countries to demonstrate a commitment to defense of the community. So if they couldn’t cooperate while the U. S. was there, what would change that could make cooperation more likely when the U. S. is gone. It is possible that one or two large countries would field the main elements of the armed forces, and this would serve to thwart eastern aggression. But these forces would then control all of Europe should they wish. The bureaucrats in Brussels would be nothing but enablers for such a take over. The argument that the UK should stay in the EU to prevent this is not logical. Would the UK be willing to field a prominent part of the ground forces? Historically, that has not been the case. And if not, what would UK opposition to a massive power grab by the most powerful powers in the alliance amount to?

      A federation of states that preserved individual rights within those states would seem to be the best option. Especially if the little states are willing to pay for their own military forces in a large enough measure to be significant. But individual rights do not align with tribalism, and the little states have traditionally sought to avoid responsibility for their own defense, choosing instead to reap the benefits of peace will it lasts.

      The existence of nuclear weapons changes the old views of war, but a country that allows foreign troops onto their soil in large numbers is taking a huge risk. There is almost no historical precedent for the U. S. involvement in NATO. Few countries would have been so disinclined to exploit their power is such situations.

      • shrekgrinch March 8, 2017 at 7:47 pm #

        There is already an existing model of what you propose.

        It’s called The Swiss Confederation.

  4. Andrew Jones March 8, 2017 at 3:51 am #

    Most of what I’ve read from responsible sources indicates the EU is pretty much on the way out. The North/South divide is a core economic difference, East/West is a security difference. The cultural stuff sits on top of all that.

  5. shrekgrinch March 8, 2017 at 4:14 am #

    “(The simple fact that the EU didn’t bother to do any due diligence, as I have mentioned before, is yet another reason to discard it into history’s waste bin.)”

    The US federal government doesn’t stop the states from racking up the massive pension unfunded liabilities that they have. Then again, when it all goes tits up the Feds won’t have to bail them out either.

    • Andrew Jones March 8, 2017 at 5:29 am #

      If they were willing to bail out GM, they’ll bail out California.

      • shrekgrinch March 8, 2017 at 5:27 pm #

        1) The GM bailout wasn’t about saving GM. It was bailout for the unions involved.
        2) It only occurred because both houses of Congress and the White House were under Democrat control. Even then, creditors had to take a hair cut via bankruptcy process — a process where bankruptcy laws were broken (Obama’s executive branch THREATENED creditors who didn’t agree to the deal). That would not be possible for the Feds to do with state debt. The state itself can stop paying just like Greece can stop paying, as it is a sovereign entity that has no bankruptcy recourse unlike GM did.
        In fact, that is what several cities in California have already done — simply stopped paying their pension premiums to CALPers.
        3) The differences in money involved is like comparing a pebble to Mount Everest.
        4) Even if they did have enough to bail out California and was able to get it through the Senate (more about that in point #5 below), they wouldn’t have enough to bail out Illinois and New York and other states (some of the even red states) who are also in trouble. So, no go.
        5) Guess you never heard of the ABC lobby. Anything But California. Formed decades ago in response to California having the largest voting block in the House of Representatives. It is particularly strong in the Senate.

      • Andrew Jones March 8, 2017 at 6:22 pm #

        TARP seems to argue against this being a D problem.

        It’ll be CalPers that will necessitate a bail out, and depending on party control, they might get the keys and the cash, like with GM.

        Getting things past the Senate is a problem, but I don’t see the Senate letting grandmas starve, policemen go without pay or letting elderly teachers go without their hard earned retirement. Anyone who objects hates orphans, kicks puppies and wants to murder hard working people. They’ll do it, you know, for the children.

        When the bailout comes, it’ll likely be in the form of federal pension security. It won’t be just for CA. It’ll either give fed protection, or outright federalize, the pension plans, relieving CA, IL etc of their burdens.

        As for paying for it…they’ll print money. The GOP congress is getting ready to pay for people’s health insurance. They’ll do at least that much to pay the pensions of fire fighters and cops.

  6. philippeO March 8, 2017 at 4:39 am #

    I think you have very Optimistic outlook on UK importance to EU. I see UK is heading toward Hard Brexit with very damaging aftermath. And i don’t see how EU can accomodate UK, UK already had a lot of ‘special treatment’, now with Brexit, i see EU taking hard line, not just because malice, but because other member states wouldn’t tolerate anymore ‘special treatment’ to UK. UK simply cannot be allowed to have EU benefit without its obligations.

    I agree with your analysis on EU twofold-problem. I disagree with your analysis that put fault in EU bureaucrats/politician however, I think the first problem is cause of second problem, it simple impossible for EU bureaucrats/politician to satisfy ‘european people’ when such things did not exist. comparison with Austria-Hungary is very good, the fault is not entirely in the hand of AH nobles, its because various people(Czechs, Magyars, Yugoslavs) itself didn’t want to accept AH elite or existence of AH people, they see themselves as member of ‘their’ nation and didn’t acknowledge existence of ‘AH nation’ or even ‘other’ nations.

    for future, my view is very bleak, i don’t think EU could get any ‘better’, i see it will degrade year after year, become more ineffectual, but no alternative become available. For Europe itself, combination of rise of toxic nationalism, lower birth rate, and authoratitarian populism, would only cause economic and societal decline. a Japanese lost decade, with dozens of states trapped under Berlusconi/Jobik/Le Pen leaderships. at least lack of young male would make war unlikely.

    • Andrew Jones March 8, 2017 at 6:03 am #

      I think it’s a lot more likely that the EU will split up, and each country, or block, will make agreements with its peers. Those deals might well be protectionist, but that’s not a new thing in the world.

      It’s possible that trading partners inside the EU will refuse to deal one on one with their former Unionists, but doing so out of spite doesn’t seem likely. Nations may want to reclaim control over some of their affairs, but I don’t see France rejecting UK goods, or even placing extraordinary tariffs on them.

      Besides, if I were Germany, I’d be less concerned about the UK negotiating good deals, than the southern Europeans deciding to default and leave the currency union.

  7. Don March 8, 2017 at 9:13 am #

    There is lot of thinking that EU is going to break up in this comments.

    All the countries will be looking at what happen to UK before they go for any, if ever referendum for exit of EU. Thus that is what EU will deliver as their survival is at stake. Even German Auto companies that UK Brexit campaign said will prevent a bad deal for UK are saying that they will be not lobbying for a good deal for UK so they can make money. May’s speech that are seen to be threatening EU is not well received by the EU.

    If Russia threat and US downsizing their commitment to NATO will drive EU to form EU army that UK could of prevented but can’t now. That would mean increase EU budget and reduction of national military budgets. Then as above writer said, next step is forming of Federal state.

    Also backlash against the break up and survival instincts will lead to forming of EU super state by the elites and don’t forget in UK there is 48% still support EU maybe more if you count the young people.

    It will be slow sale but that elite can point to much more hostile world and that it is better to hang together then be hanged individually. Either way UK was there to prevent the EU army and federal states of Europe but Brexit make those dreams possible now.

  8. Anarchymedes March 8, 2017 at 11:44 am #

    IMHO, the UK’s good luck is that the EU as such is doomed. The UK has an economy roughly equal to any other single Europian country, and it’s a bit harder for Mr Putin to bully it into submission. And if the EU falls apart, then neither Scotland nor Northern Ireland will have any reason to head for Splitsville again.
    However, if by some miracle the EU survives and prospers, I pity the UK: separatism, plus Revenge of the Sith for Brexit…
    Such is the harsh reality: of the two, only one can remain truly united.

  9. Drowe March 8, 2017 at 5:20 pm #

    It may or may not be that the EU should never have been created, or the euro should never have happened, but they did. Getting rid of it now would do more harm than good, especially if it happens without a good planning. If Brexit starts a chain reaction of nations leaving the EU without much of a plan other than getting out, and at the time of the Brexit referendum there wasn’t any sort of plan in place, it will be a disaster. The divorce between Britain and the EU, even if it’s relatively amicable, will hurt both sides but may be beneficial in the long run. But if another big nation leaves the same way as Britain does, the EU as a whole will collapse, which will crash the global economy in a similar but worse fashion than the great depression.

    As of now the EU is the largest economy in the world, as interconnected as the world is today, no country that relies on imports or exports will remain unscathed. The effect would be just as bad as if the US economy were to collapse.

    That’s not to say the EU couldn’t be dismantled if the political will to do so existed, it would take a very careful step by step approach over multiple decades though, a repeat of the hardly thought through Brexit referendum would be a terrible mistake, especially for a country in the Euro zone.

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