Collapse: Europe After the European Union – 1

In this and the next post we review a book which postulates possible outcomes should the EU collapse, by an author who views the project as indispensable, based on his belief that the EU is in a crisis that it may not be able to resolve.

  • by Ian Kearns (Biteback Publishing Ltd, 2018)

A book review (Part 1)


CollapseThe author states clearly that he is an academic but has not applied cautious academic standards in the book. This helps makes it a briefer and clearer exposition of the issues he addresses than it might otherwise have been but means fact and opinion are intermixed. Despite that it is usually obvious which is which.

He wrote the book as “a deeply felt gesture of concern for an indispensable European integration project. A project that has delivered the best seven decades of peace and progress in European history …” Why indispensable; can’t its supposed aims be delivered with far less integration? How can it be shown that it is the EU project that has delivered peace? “Without the EU it is hard to see how Europe avoids a return to the balance-of-power system that so troubled its nineteenth- and twentieth-century past.” There were other factors such as the Iron Curtain divide and the dissolution of competing empires that may have been overwhelmingly more important for peace (not to mention growth in trade and tourism). Indeed the EU may not have mattered at all but there is no counter-factual to indicate which causes were crucial; his opinion is based on a feeling or assumption and therefore can’t be taken as fact. [1] Also, isn’t the Enlightenment period a serious contender for best decades of European progress?

The path to a better life runs through European unity. To head in the other direction is to flirt with hell.” Disunity would be bad though the extent depends on what the differences were about. Which is the ‘best national football team’ would scarcely matter and could be settled by trial, unless supporters wanted to settle it by fights in and around the stadium. Also “unity” does not necessarily imply unification; we might agree the best team by trial or player ratings rather than avoid the question by arguing for a single EU football team and abolishing the others. This may seem a trivial counter-example but the logic is the same, although the conclusion doesn’t appear so inevitable. This exposes false reasoning: the conclusion follows from a hidden assumption, that ‘conflict is avoided by unification’. If that is the genuine desire of the large majority it may be true, however, if it is by force or deception evidence suggests the very opposite, as shown by Yugoslavia, Cyprus, Ireland and many more terrible examples outside Europe; and even Czechoslovakia split, if not into war-torn pieces. Although some accept the premise that unification will drive peace and progress others feel that identity should not be sacrificed. Belief in EU-generated economic progress may dull the latter feeling but the evidence is weakening and for the UK in particular it can be argued that it has been false from the start.

Part 1 The European Union in crisis

Kearns admits to a lack of solidarity in the face of external threats: from the West by Trump through trade war and by undermining NATO; from the East by Putin through military manoeuvres, crypto-war, subverting elections and undermining infrastructure projects with corruption; and from the South because of migration and its association with terrorism and hence populism. Debt is another area where solidarity is lacking.

After outlining why he believes in European integration, Kearns turns to some of the failures of the EU’s leadership and policy. He describes how the common currency faced immense difficulties in tackling the world financial crisis that started in America. The EU had handed control to a centralised authority, the European Central Bank (ECB), which prioritised institutions (especially banks) over citizens. Or rather the banks in the creditor countries were protected from bad lending in the troubled ones so that the citizens of the latter had to bear the costs. [2] The solidarity that Kearns treasures for the peace it promises has to be between the peoples or they will choose aggressive governments, unless of course they live under repressive ones. In what follows Kearns implicitly shows that this is rather the case where the EU has control: unelected technocrats determine the conditions of people who can’t then dismiss the proto-government for its mistakes or deliberate deprivations.

In any case everyone was promised at Maastricht and in subsequent treaties that there would not be bailouts; of course there have been but in the form of loans that may never be repaid and under the most oppressive and often counter-productive terms. The euro project was a giant step towards union by sharing sovereignty, or rather by abandoning it. Meanwhile a deceit was propagated that the Union institutions were helping, whereas they were successively forcing Greece, Ireland, Portugal, Spain and Italy to take remedies that made matters harder for them.

Iceland took a different approach, it defaulted on foreign debt and protected its own citizens who suffered no more than those in the eurozone but had a path to recovery that the latter have still not found. Outside the eurozone Denmark was also able to protect smaller creditors from bank failure. Kearns doesn’t mention the UK but here the Government acted to protect ordinary savers too but by spreading the burden to all by nationalisation rather than by default to investors.

The drastic ‘cures’ imposed on Greece, Italy, Spain and even Ireland to overcome their difficulties plunged them into deep and prolonged recessions with very high unemployment levels and severe reductions in social security. The burdens fell disproportionately on the poorest. It seems astonishing that the UK Labour Party and other socialists largely remain enthusiastic about the EU; perhaps Labour represents the special interests of Trade Unions rather than “the many” as its slogan suggests. Kearns himself has left the Party.

Eventually a softer approach was taken when the ECB under Mario ‘whatever-it-takes’ Draghi lowered interest rates and created a flood of new money (QE). This will come to an end sometime but the underlying problems have not been remedied. The banks may have been recapitalised but they have hoarded rather than invested. Also government debt to GDP has risen dramatically.

The result of mismanagement has been the rise of left- and right-wing ‘populism’ with demands for protection against foreign competition, reversal of social security cuts and an end to austerity at the forefront, all common to both wings. Unfortunately, as this is now from a position of financial precariousness, the state may no longer have the power to deliver on such promises. The main populist parties across the EU want an end to the EU’s supra-nationalist agenda and a return to a trading arrangement but with protection for their national industries, so far only UKIP (UK) and PVV (Netherlands) want to exit the EU altogether.

The author’s use of the term ‘populism’ implies policies that appeal to popular anger at the elites who have created the problems plus impracticable or unaffordable solutions to the deprivations of those who have suffered the effects. He lists some of the most significant of the populist parties across the EU, including: UKIP (UK), Front National (France), Syriza (Greece), Party for Freedom (Netherlands), Danish People’s Party, Freedom Party (Austria), Five Star Movement (Italy), Jobbik (Hungary), Alternative for Germany, Sweden Democrats. Practically every country of the 28 has significant support for parties that oppose the EU or its principal policies – including in Finland, Poland, Portugal and Spain – most especially within the eurozone.

Kearns notes that Ireland hasn’t thrown up a new populist party but its traditional ones have taken on similar policies. He could have added that UK Labour has also adopted what are, in his terms, populist ideas, such as nationalising industries at great cost (unaffordable) or at confiscatory valuations that its Parliamentary majority would decide plus extreme taxation of “the few” to end “Tory austerity” (elite bashing). As Kearns puts it, “… the populists have been able to thrive by focusing on, and claiming to have solutions for, the real and deep seated problems that Europe faces … The populists’ apparent solutions may be dubious, and in some cases they are almost certainly a cruel form of political fantasy. On the far right especially they are downright dangerous. But it is the approach of much of the incumbent leadership in Europe and alongside the mainstream parties’ failure to acknowledge for most of the last decade the scale of the crisis being inflicted on people that forms the platform for their [the populists] success.

When the book turns to Brexit it begins by looking at who was to blame: Blair, Johnson, Farage, Cameron? For the last man he notes, “His political instincts were to demand more radical change from other EU leaders, but he allowed himself to be reined in by civil service advisors, sometimes against the wishes of members of his own senior political team.” ‘Déjà vu‘ then, or ‘plus ça change’ – from Sir Humphrey to Oliver Robbins, things never change. But it wasn’t any individuals or British insularity that caused the fracture with the European Union, Brexit was “Made in Europe” according to the book. Continental recession, depression and migration (bailouts and the camps at Calais especially) all boosted Leave support.

Kearns at several points describes British opposition to the EU as ideological because of its wish to be free to set its own agenda for the country. He doesn’t appear to think that the ‘idea’ that unification (which he calls unity) leads to harmony and progress is also ideological. [3]

Steps have been taken by the eurozone to tackle a recurrence of the 2008–12 crisis (the Fiscal Compact, the European Stability Mechanism and the Banking Union plus efforts towards a Capital Markets Union and European Deposit Insurance Scheme) but it is doubtful they would be sufficient; “… the will to face a crisis collectively does not exist.” The EU/ECB only controls some of the factors required to create financial stability for the eurozone “the euro is only as strong as its weakest link when it comes to prudential management of irresponsible financial behaviour”. The next crisis may hit well before enough has been done to address it. “’Here we are’, Macron said,with a Europe more fragile than ever‘” when he called in 2017 for a European Budget, controlled by a European Finance Minister, answerable to the European Parliament.

In security, anti-terrorism and defence the EU’s cooperative achievements have been underwhelming. It isn’t helping that it threatens to exclude Britain, Europe’s strongest contributor, just because it’s no longer ‘one of us’ – that is surely ideology gone mad. The response to Russian aggression has been varied and generally timid, nor has jointly tackling illegal migration made much headway. For the eurozone problems France favours Keynesianism while Germany favours strict controls, and those outside the zone are suspicious that their interests will be overlooked. So much for unity then.

It may be an honest and devastating analysis but by this point in our reading (the end of Part 1) we suspect the author’s view is not that Union isn’t working but that it’s never been tried. Will his answer be “more Europe”? It seems unlikely to be what the large majority of Britons would want but it’s what Brexiteers fear. If that is his conclusion we think Kearns starts from the wrong premise and so reaches the wrong conclusion. We think Europe needs more cooperation, not more unification.

(…continued in next post)

[1]       Keeping the Peace

[2]       Italy Missing the Target

[3]       Attitudes and Ideology


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