The Coming Collapse of the European Union

Guy Millière • January 3, 2012

How could so many clever people get it so wrong? The question was recently asked by the British politician Daniel Hannan in an article on the collapse of the euro; in the coming months, the same question will be asked more and more often about Europe itself.

Europe as it has been built may appear at best a huge error, and at worst a crime against the spirit of liberty that was supposed to be the initial source of inspiration for the whole edifice.

The idea that it is possible to build a society based on abstract principles -- without considering historical, social and economic realities, as if its members were infinitely malleable – has often led to disaster; this time is no different.

The formation of this error began in the aftermath of World War II. Looking at the ruins left by Nazism and Fascism, politicians from various European countries fabricated a project meant to erase all past mistakes committed on the continent. They only repeated the mistakes. Believing that nations, identities, and differences were the essential source of troubles, they decided to make a clean sweep and build an entirely new society, inhabited by new human beings modeled from the top down: Europeans.

Realizing that democracy can be dangerous -- it had brought to power the likes of Adolph Hitler -- they developed institutions to place it under close supervision. Deducing from their readings and their world view that a strong economy should be a command economy, they introduced instruments of planning in the production of coal and steel, then in agriculture.

This resulted in the creation of supranational structures that were added to each other over time, in a form of cumulative stacking, until, in 1957, a committee made up of unelected people was established in Brussels and charged with producing regulations for businesses and aspects of everyday life : the «efficient use» of water or the «appropriate shape» of waste containers, the «normal curvature» of bananas and cucumbers or the «harmonized definition of yoghurt». Meetings of Heads of States and Governments -- a group that later became the European Council -- were held out of sight to make key decisions , such as subsidies to industries, price-support mechanisms, decisions about enlargement, the reform of institutions, and the extension of powers. A European Parliament was created, but was given no power.

While the structures piled up, the edifice expanded: after the collapse of the Soviet empire, a group that had started with six countries became 27 member countries. Its name changed : formerly known as European Economic Community, it became European Union. While at first it seemed to be an economic edifice, it has proven to be a political edifice.

It might look like a State, but it is not a State. It is supposed to be composed of independent countries, but countries that are part of it have a sovereignty that more and more limited. It now has two presidents, one is the head of the Commission, the other is the head of the Union, but neither is the holder of any executive office. As the parliament essentially has an « advisory » role, the real power is exercised by the members of the Commission, a bureaucracy of technocrats, and by the European Council, a small political elite.

People still vote in each country, preserving the illusion that national governments have a voice, but 70% of the laws and guidelines in today's Europe are issued at levels that are unattainable for national governments. When elections are held on «Europe», voters are entirely free to voice their opinions, but only on the strict condition that their final answer is Yes.

The introduction of the single currency was designed to move towards a fuller political, fiscal and social unity, and a more complete abolition of the last vestiges of democracy. The unity in question has not emerged. The euro was supposed to be the currency of all Europe ; it is the currency of only 17 countries.

Rather than becoming closer, these countries have gradually moved away from each other, and divisions and disparities have intensified, leading to increasing dysfunctions. Neither Greece, Italy, Spain, Portugal, Ireland, nor even France, has seen their economies and societies come to resemble German or Scandinavian economies and societies. Differences in productivity have only widened. Interest rates appropriate for some economies have proven inadequate for other economies. The exchange rate of the euro became too high for some countries, and if devaluation was impossible, the only remaining variables able to be adjusted were unemployment, budget deficits, and debts. On behalf of the construction of the new society, massive financial transfers were conducted from richer countries to poorer countries, while people living in the poorer countries enjoyed for a time the illusion of becoming wealthier without having either to work harder or become more efficient and disciplined.

Other factors played their part: The countries of Europe created welfare states that claimed to support people from the cradle to the grave; they developed economic systems of redistribution that have created in people an appetite for passivity and dependence, leading to a growing number of people who think the government owes them a means of subsistence. As welfare rolls and subsidies have increased, the number of those who contribute to them financially has steadily declined. European nations' borrowing power has gradually diminished, and the redistribution systems have been left unfunded. As the birthrate of native Europeans has fallen sharply, its aging population increases even further the financial burden on those who pay out to it. Immigrants from poor countries have flowed in, most of whom are Muslims who have not integrated, and have ended up living in separate enclaves of lawlessness and resentment. These conditions, coupled with economic decline, have created ghettos ever ready to riot and explode.

A collapse is near. Some EU countries are already in a state of bankruptcy, even if it is kept under wraps. Doubts hang over the medium-term strength of the nations who seem in better shape: the interdependencies that have developed appear difficult to break without causing even greater financial problems, and the health of healthier countries is merely relative. Germany's debt is 83% of its gross domestic product, and it has the lowest birthrate in Europe,1.36 children per woman. Italy, by comparison, has a debt of 118% and a birthrate of 1.40.

The agreement of December 9, described as the "Last Chance Agreement," will hold for a few months, but probably not more. Its goal is to give the high European authorities the power to ratify all countries' budgets in the eurozone, an approach that means guardianship by the unelected bureaucracy of technocrats and the political elite. The same causes will produce the same effects: the countries already in bankruptcy will continue to sink because their economies are not viable with, and often without, the current exchange-rate of the euro. The unelected bureaucracy of technocrats and the political elite will ask for sacrifices. The standard of living will continue to fall throughout the entire eurozone, and deficits will continue to widen. The recession in the countries already in bankruptcy will become permanent. As Germany is unable to bail out these countries indefinitely, they will be doomed sooner or later actually to file for bankruptcy. Germany no longer finding a buyer for its debt. Who will purchase Greek or Italian debt? The Financial Stability Mechanism will be fed for some time by the IMF and its main contributors. What country could be expected to continue endless assistance, given that difficulties appear more and more serious and will not stop?

The stated aim of the agreement is political, fiscal and social unity. The real aim is to give the unelected bureaucracy and the political elite the authority to implement this unity, at all costs. The argument used is always the same: the union of Europe is the only guarantee of peace and prosperity ; without it there will be chaos.

The reality may be very different. There could be chaos precisely because of the European union as it was implemented.

In a book published a few years ago, the former dissident Vladimir Bukovsky compared the former Soviet Union, or USSR, to the European Union, which he called the EUSSR. Immediately prior to the Soviet Union's falling apart, its leaders were trying to clog the holes and persuade themselves that the Union would last. Although the European leaders are also now clogging the holes and trying to persuade themselves that the European Union will last, these measures will not prevent it from falling apart.

No one can know, of course, what Europe will look like in ten years. The only prediction that seems assured is that it will be poorer, more divided, more confrontational, more violent, and that the European Union will look like a shattered dream.

The «European dream,» as Jeremy Rifkin called it seems to have called it, seems to have crumbled, ironically just at the time when its US followers -- and the very politicians who want the United States to resemble Europe -- are in power.