Europe's Failures: A Few Thoughts

In the 2020s the prospects of the European Union (EU) seem a long way from what its advocates and sympathizers and even its opponents thought it was a generation ago (when, for example, the anti-EU crowd in Britain hated the entity, but thought anything like Brexit just a fantasy, however much they longed for it). The change arguably comes down to three ways in which the EU's foundations proved wholly inadequate for the ambitions held for it, namely

1. The building up of the institution on the basis of short-term elite interest, and even that rather unevenly, the elites of the more powerful countries advantaged against those from poorer countries. Thus the EU produced a trade, fiscal and currency regime which gave German exporters access to the vast European market, the benefit of the cheaper labor just over their border in Eastern Europe, and the help of (in relation to their products) an undervalued currency that made for that much more competitiveness in the global market, producing Germany the export giant, and indeed the way a "greater Germany" in the economic sense has come to be the core of the Union. Other members of the Union, however, have not done nearly so well, Germany's gain often their loss (Germany is a champion exporter in part because it outcompetes them, while Germany does that in part because the German government has sacrificed the social rights of the German worker on the altar of "competitiveness" in the Hartz reforms and other policy changes, and with them their share in any gains, as the rising inequality in the country testifies. Meanwhile, looking even beyond the distribution of immediate costs and benefits, what about when just keeping the arrangement some found so congenial going required more than what German industrialists have found congenial in the short term? The European Union was not prepared for that.

2. The practical limits to Europe's expansion in the resulting conditions. Especially in light of that stress on short-term elite interests, with some elites more elite than others, one could expect expansion to stop where really big, deep, long-term thinking was required to make it happen—with one result the failure to incorporate the great bulk of the old "East bloc" and especially the former Soviet Union, with only Lithuania, Latvia and Estonia (6 million people altogether) in the EU, and Belarus, Moldova, Ukraine and especially Russia (almost 200 million people) outside it. The result is that in spite of the fall of the Iron Curtain and three decades of existence what is called the "European Union" actually encompasses a mere two-fifths of the territory of the European continent, containing a mere three-fifths of that continent's people, with little prospect of its being extended any time soon.

3. The economic outlook of Europe along with the rest of the world in an era of profound global downturn, with which European elites were ill-equipped to deal. It can seem symbolic that the European Economic Community's first round of expansion came in 1973, the year widely associated with the end of the post-war boom, and the epoch of weaker growth that followed; that the European Community became the European Union in 1993, amid a deep global recession; that, barring the entry of Croatia, the EU reached its limits with the inductions of Bulgaria and Romania in 2007, the year in which a long-developing financial crisis came to a head and plunged the world into a recession from which it never truly recovered, such that it can seem as if Japan's "lost decades" became the norm for the industrialized world, with all that meant for Europe's own prospects.

One may question whether in anything like the world we live in the European Union could have developed in any other way. The relevant negotiations were between countries very different in development and interests, very unequal in size and power, and just as unequal internally with all that meant for the line they took. Reflecting this economic integration ranked at the top of the list of priorities of the elites of the participating countries, rather than democracy, equality or social concern, with many not at all sorry to see economic decisions about such fundamental matters as government spending or monetary policy made by bodies less accountable to their electorates, and imposing limits on what national governments could do--while as they went about it they proved no more "enlightened" in their understanding of their self-interest than their counterparts elsewhere (the delusions of their silly admirers just that). Subsequently, whether one attributes the fact to the weakness of those countries' economies under their pre-1989 regimes, or the chaotic and destructive character of the reform process their leaders undertook afterward, Eastern Europe was in a far weaker state than many of those who had hoped for really continent-wide union had thought it would be in the 1990s, with all that meant for their integration into Europe, and what they would add to it if they were integrated. (There was, too, the sheer size and potential power of the Russian Federation even when taken as a single state, and as those familiar at all with geopolitics know full well, the implications of a Russo-German combination in any form for those anxious about the balance of power in the world.) Meanwhile the period generally saw slow growth, and frequent crisis, which Europe's neoliberalism-minded elite met with, again, orthodoxy, most notoriously in the post-Great Recession sovereign debt crisis. (Indeed, if Europe has done less poorly in relative terms than the sneering of committed Europe-bashers about "Eurosclerosis" implies it has still quite sufficed to pose no end of troubles from the standpoint of profits, employment, taxes, budgets and debt--all as Europe has abided by the neoliberal trend rather than trying to "buck" it, arguably to its disadvantage, both where its economic performance and its political attractiveness have been concerned.)

All of this meant that the EU was institutionally underdeveloped--as in its having a currency union without also having a "transfer union," with all the inherent instability of such a combination. It meant that Europe had a far narrower base of power, quantitatively and qualitatively (compare the EU that exists now with one that had managed to integrate the European members of the former Soviet Union, with their 200 million people, their natural resource wealth, and in particular Russia's technological specialties and military capacities), while rather than its tensions being dissolved, or sublimated, within a Europe concerned with getting on rather than nationalistic feuds and power politics, the EU's eastern frontier was that much more a scene of potential conflict (with far and away the most dramatic instance the conflicts that now have Russia and Ukraine fighting the biggest conventional war on European soil since 1945). It meant that if German business did well, at least for a time, deindustrialized, on the whole West European states got poorer and the East European states which had been allowed into the club saw their aspirations to solidly First World productivity and living standards disappointed amid shock that tested the institution's viability, and proved as unflattering to its independence as it had been unflattering toward the independence of its members (the U.S. Federal Reserve bailing out the EU's banks with $10 trillion in loans amid the Great Recession). And especially with Europe identified with elite interests and policies which hurt working people, and ruled out those policies that might help them (for instance, a freer hand in the fiscal arena), that the European project failed to acquire a popular base--all as those looking to play what is often euphemistically called the "populist" card very easily pointed to Europe as the cause of their discontents, and won election after election by it in circumstances promising little but the continuation of the EU's stagnation and slow unraveling that has characterized its recent history. In fairness, ruptures like what we saw with Britain seem unlikely to recur any time soon. (Britain's long aloofness from the continent and physical insularity, and the way its size, financialization and apparent other options for association seemed to give it alternatives, are not shared by any other EU member, all as even then it has been a close-run, rancorous, widely regretted thing, unlikely to encourage imitation.) Still, it is highly plausible that the situation will still prevent further expansion and consolidation, while complicating any attempts at national or EU-wide solutions to the continent's larger and more pressing problems--all as my guess is that in spite of visions of a peace-and-prosperity-minded EU coming together for the sake of security in the wake of the war in Ukraine, the fact that the conflict has been hugely unpopular with many of the EU's various publics, and produced significant divergences in policy between its member governments, will only add to Europe's difficulties in forming a "more perfect union," not facilitate its surmounting them.