It has been obvious for more than 20 years what the systemic institutional flaw of the European Union is: the euro itself, designed to lay the foundations of a federal state. As economists and politicians warned at the time – and were ignored – a single currency on a continent marked by deep economic, cultural and political differences would be a source of constant tension, enriching some regions and impoverishing others.
As with the old gold standard, underperforming regions will simply have to tighten their belts and work harder. Even outside of times of crisis, this meant rising inequality and migration, especially of unemployed young people from southern Europe. A German think tank estimated in 2019 that since the introduction of the euro, the average German has gained €23,000, the average French has lost €56,000 and the average Italian has lost €74,000. Italy’s economy has been stagnant for a generation. All of these countries have run up massive government debts, while Germany has amassed the largest trade surpluses in the world.
Unsurprisingly, the latest challenge to the EU comes from Italy, where the leader of Italy’s nationalist Brotherhood looks likely to head a new government to replace that of Mario Draghi, the EU man. Parties critical of EU policies are growing in Eastern and Southern Europe. Emmanuel Macron, the EU’s remaining champion, has lost control of parliament. Yet the eurozone’s straitjacket has so far rendered protests fruitless, as the Greeks discovered when the European Central Bank (ECB) threatened them with financial collapse.
Since then, southern European countries, above all Italy, have become dependent on the ECB, which buys government bonds and thus supplies them with cash. These are astronomical sums, and no one knows how long this may last or who may end up footing the bill. After the resignation of Draghi – former president of the ECB and guarantor of orthodoxy – the yield on Italian debt rose. Faced with soaring inflation in the eurozone, the ECB has delayed raising interest rates because it would increase the debt burden on member countries. But now it had to do so and also announce more compensatory bond purchases.
How long can he keep the plates spinning? A new crisis is coming in the Eurozone. On top of this chronic problem came the sudden energy crisis following Russia’s invasion of Ukraine. Germany’s choice to rely on Russian gas enabled Putin’s aggression and gave him a devastating economic weapon. The EU is considering a forced cut in gas consumption for all its members by more than 10 percent, including those that are not dependent on Russia and those that are fairly indifferent to Ukraine. will it work Will it cause new political upheavals? Will the EU give in to Putin?
Europe’s fragile economy rests on the shifting foundations of its “green” energy policy, in which Britain is supposed to be a leader. Germany ended nuclear power production. France and Great Britain allowed theirs to wither. So we made ourselves partially dependent on wind and solar energy, but mostly on imported gas.
Despite promises that wind power will usher in a new era of cheap sustainable energy, the basic facts won’t go away: a gas turbine generator small enough to ride on the back of a truck will produce the same electricity, faster and more – reliably from 10 offshore wind turbines the size of the Eiffel Tower. For some time, Europe has been deindustrializing and becoming dependent on Asia, and especially China, for most of its wind turbines and panels. The promised green energy jobs haven’t materialized—except in China, of course, where “green” energy equipment is manufactured using cheap coal power, so not even the planet gets any benefit. (I optimistically expect Extinction Rebellion to stick to the Chinese embassy.) On its current trajectory, Europe will at best jump from the Russian frying pan into the Chinese fire. Then our present problems may seem insignificant in comparison.
What should Britain do in the near future, faced with rising inflation, especially in energy and food, increasingly dependent on two aggressive dictatorships and threatened by the knock-on effects of possible turmoil in the eurozone? To ask the question is practically to answer it. Rapidly increasing our domestic energy resources and storage capacity. Create a task force to accelerate modular nuclear energy as was done with Covid vaccines. To diversify our food supply which is currently highly dependent on the EU and road and ferry links. (Why are we still imposing tariffs and quotas on non-EU food imports?) To ensure that our financial institutions are as resilient as possible and as far removed from the euro as possible.
There are signs that some of this is slowly starting. But there are still many voices in politics and the media who want us to go back to the EU. The Fear Project is reborn. The Guardian recently showed remarkable ingenuity in turning the good news that manufacturing exports to the EU are increasing into a scare story about our ‘dependency’. Current magazines such as the New Statesman and Prospect have published lengthy articles on the supposed disasters of Brexit.
Do they not notice what is happening in the EU?
I never believed that the EU would collapse suddenly. But I thought it likely that it would gradually exhaust its political capacity due to a lack of popular legitimacy. Many, like myself, have drawn comparisons to the Austro-Hungarian Empire: divided, weak but unreformable, aiming at best to maintain (as one of its rulers put it) a “steady level of discontent” among a resigned populace. Now that seems optimistic. Not only is it not clear that the EU can carry out its policies, it is not clear that it has any policies or that there are any that could solve its problems. Member States are following increasingly different paths. The ECB is vacillating between unpleasant alternatives. Support for Ukraine is ambiguous at best. As a diplomatic player in world affairs, the EU has effectively disappeared.
So why are there still left or merged? This week I read two new books attacking Brexit which provide insight. What they have in common is that they say nothing about Europe or the EU. All their considerable enthusiasm is expended in attacking what they see as pathological features of Britishness.
This has been typical of the discourse of the Remainers since 2016. Those communist enthusiasts of the 1930s who visited the Soviet Union returned with descriptions of a workers’ paradise. True, they were blind to hunger, repression, and fear, but they had an idea of what they wanted, however illusory. But I’ve never read a Remainer book (and I have quite a collection) describing how wonderful the EU is: the talents of its Commission, the friendly atmosphere of Parliament, the spacious motorways built with regional funds.
I have read a lot about how contemptible Great Britain (or rather England) is, how weak, how isolated, how ridiculed by the foreign press. But there is not much sign of familiarity or interest in Europe.
Their real aim is to discredit the Brexiteers by any means available. Right now, that even includes support for raising taxes at a time of pressure on modest incomes and a likely recession. Would even the collapse of the EU change their minds? No, they would blame it on their great bête noire, Boris Johnson.
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