Saturday, August 23, 2014

The EU Has Become A Destabilizing Force

About six months ago, German Chancellor Angela Merkel spoke before the British Parliament. During her speech, she praised the European Union (EU) for bringing reconciliation, peace and prosperity to Europe. She referred to it as a "miracle" and proceeded to give credit to "policies by far sighted and responsible statesmen such as Winston Churchill, Charles De Gaulle and Konrad Adenauer." No mention of the role the United States played in rebuilding and maintaining the peace in Western Europe after the end of World War II.

This is typical of Europeans. For years they have bragged about their superior social safety net and looked down on America for not doing the same for its citizens completely oblivious of the fact that if it weren't for the United States underwriting their security they could not have been so generous with their people. Had the United States chosen to follow the same path it did after the First World War, it is very likely that war would have returned to Western Europe. But Europeans will go on congratulating themselves for maintaining a peace they could never achieve on their own for centuries. They even gave themselves a Nobel Peace Prize for it.

As tensions continue to escalate over the Ukraine, most of the focus has been on the latest round of sanctions announced by each side, the tit for tat between Putin and Obama. Very little attention has been paid to the origins and the EU contribution to the crisis. While commentators speculate about whether Putin wants re-establish the old Soviet Empire, what is being ignored is perhaps the most consequential development in Europe in recent years; that is, the EU has become a destabilizing force endangering the very peace and prosperity that Chancellor Merkel celebrated in her speech.

The EU traces its origins to the Schuman Declaration of 1950 which called for the creation of the European Coal and Steel Community (ECSC) to pool coal and steel production of its founding members: France, West Germany, Italy, the Netherlands, Belgium and Luxembourg. It was believed that by placing under common management heavy industries and merging economic interests of historical adversaries France and Germany would make future wars "not merely unthinkable, but materially impossible."

In 1957, the  economic cooperation was expanded to include other economic sectors with the Treaty of Rome which created the European Economic Community (EEC). The EEC or "Common Market" provided for the free movement of people, goods and services across borders with the objective to march towards "an ever closer union among the peoples of Europe". The Maastricht Treaty (or Treaty on European Union) of 1992 replaced the Common Market with the current European Union. It established guidelines for a single currency, a common foreign and security policy and closer cooperation in justice and internal affairs.

What began as an effort to ensure peace on the European continent by fostering cooperation between France and German has turned into an expansionist project or what former EU Commissioner José Manuel Barroso called an "non-imperial empire". Since the 1950s the membership has grown from six to twenty-eight nations including former Soviet Republics. In May, EU Council President Herman Van Rompuy reiterated the dream of tying “the whole of European territory outside Russia” in some way to the EU irrespective of the wishes of the peoples of Europe.

It was precisely Ukraine forming a closer relationship with the EU that sparked the current conflict. The crisis began in November 2013 when mass demonstrations were held to protest Ukrainian president Viktor Yanucovych refusing to sign an association agreement with the EU. Eventually, Yanucovych was forced out of office and a new government was installed that was EU friendly. Russia deemed the new government a coup d'etat and invaded Crimea.

Putin's response to Ukraine moving closer to the West was wholly predictable. Historically, Russia has sought buffer states along its Western border as protection from a possible invasion. The port of Sevastopol in Crimea has been a strategically important base for the Russian navy since 1783. Putin has made no secret that he viewed former communist countries joining NATO and the EU as an encroachment on Russia's sphere of influence.  As Henry Kissinger wrote a decade ago in his book Diplomacy:
"[Russia] Thwarted, it nursed its grievances and bided its time for revenge - against Great Britain through much of the nineteenth century, against Austria after the Crimean War, against Germany after the Congress of Berlin, and against the United States during the Cold War."
This is not to suggest that nations bordering Russia should be held hostage to Russian security fears or wishes. It is not to justify or excuse Putin's behavior in any way. It is to simply raise the question of whether history was taken into consideration or ignored. As the EU and Ukraine moved closer, was any consideration given to potential reaction from Russia or did policy advisers just assumed Putin would not mind? Is EU policy being carefully planned or are they so caught up in Van Rumpoy's dream to unify Europe that they are charging forward recklessly?

This is not the first time the EU pursued its expansionist policy without giving much thought to potential consequences. In 2004 and 2006, ten Eastern European countries joined the EU despite concerns they were less developed economically than Western countries. As long as the various member states had comparable levels of economic development and social safety net, the free movement of people did not have much of an impact. Once former communist countries were admitted, a significant migration from the East to West has taken place. The unexpected level of migration has put stress on the infrastructure, social welfare system of Western countries causing a backlash and calls to end the free movement of people.

Another area where the EU recklessly charged forward was in forming a monetary union before establishing a fiscal union. Additionally, countries like Italy and Greece that did not meet the requirements for joining the Euro were, nevertheless, admitted. Concerns raised by distinguished economist such as Martin Feldstein were dismissed as attempts by Americans to keep Europe from becoming a counterweight to American hegemony.

Today, Spain, Portugal and Greece are in deflation and Italy, in all likelihood, will soon join them. The economic growth of the Eurozone is at a standstill. Even Germany, the European economic powerhouse, is contracting. Mediterranean countries are experiencing unemployment rates of 25% and youth unemployment rates of 40% or more. Such dire economic numbers are not sustainable in the long run and could lead to social unrest.

Sixty four years from the Schuman Declaration and nationalism is on the rise again in Europe. Last December, gunfire hit the residence of the German ambassador in Greece. Far right parties made strong gains in the recent European elections. The tougher sanctions against Russia will only exacerbate the economic misery of the Eurozone. The EU is on track to undo all the prosperity and peace that America helped achieved after the Second World War. The United States needs to recognize what the EU project has become and adjust its foreign policy towards Europe accordingly.