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AB 2000 studies

Alain Boublil Blog


Europe got in a stranglehold

In an unstable world, we could hope that Europe would be able to constitute a pocket of stability and even to contribute to cool tensions. American diplomacy is disturbing with the threats uttered to North Korea and the breaking off with Iran. The denunciation of multilateral trade agreements and the projects about the taxation of imports coming from neighbors, Mexico and Canada, from European Union and China are creating an unprecedented situation and a danger for world trade and growth. The denunciation of the nuclear agreement with Iran and the threats which are going along, the war in the Middle East and in Yemen and the unrests generated by the Islamic state in Africa and now in Indonesia are keeping alive this stressed environment. The toughening of the British and American sanctions toward Russia and there extraterritorial character are adding another factor of unrest and even of destabilization. Europe seems to be saved. It is not at all true. The continent is among the targets and the institution is confronted, inside of its borders, to a growing dissent. It could be the hotbed of the next major economic and political crisis.

The first sign has been the Brexit. It was revealing the powerful rejection of a people against the European construction. It is a paradox since the “liberal turnaround” which is not without relationship with this rejection came from Great Britain. Even if the country staid out of the Schengen agreements and the eurozone, the most criticized provisions like the liberalization of public services, the privatizations and the restrictive rules regarding State interventions and the directives about detached workers have been highly approved if not inspired by the successive United Kingdom governments. It still hosts in London the real financial capital of the Union. The current divorce procedure is also, by itself, a crisis factor due, notably, to the Irish issue. It will certainly last much more than it is today thought, which will increase instability. How to conciliate the lack of any physical border, regarding both goods and persons, between the two parts of the island with an eventual stay in the Customs Union and London will to recover its full sovereignty on the negotiation of trade agreements? It seems to be impossible.

The weakening caused by the Brexit is not the only threat. United States attitude consisting in deciding unilateral customs taxes regarding some European exports would constitute an unprecedented hostile action between historic allied countries. Even if the real economic consequences are not important, except for the German car industry, the gesture is symbolic and disturbing. European companies and banks would also be hurt if the sanctions proposed against Iran were put in practice with their consequences in the eyes of the American Department of Justice which has won the right to condemn foreign nationals which would not comply with the decisions of its administration. Europe never thought to similar measures, notably when the American bank Goldman Sachs advised successive Greek governments. At last, the U.S. is reviving the principle, adopted in the past by Bush father and son administrations, according to which a dear oil price is in the country interest. It is again a topical question, with the shale oilfields which need high prices to be profitable. That policy favors in the same time Saudi Arabia when Iran will have difficulties to export its resources due to the sanctions. But Europe has less and less oil and will have to pay a higher price for what it will buy, which will increase its production costs and affect households  purchasing power.

China is also contributing, but through a more subtle way, to the weakening of the continent, and not only because of its trade surplus. An initiative, which went completely unnoticed during these previous years, has created a breach. A group of countries, known as the 16+1 has been constituted gathering sixteen European countries and China to study investment programs under the Belt and Road Initiative. Are participating to it eleven members of the European Union without Brussels being associated to it. The choice to bypass traditional institutions may have not been intentional by Beijing but the result is there: issues carrying communal stakes are going to be decided outside of official instances by some State members. It is a dangerous precedent.

But the most serious threat is not coming from outside but from the growing skepticism and sometimes from the hostility the European project is arousing from populations, whose vote in favor of the Brexit was the most spectacular expression and the forewarning. There are no more elections without a rise of the “anti-European populism” (France, Germany) or of a nationalism few compatible with the project (Poland, Hungary, Austria) or both as what has just happened in Italy. Europe will not survive to these two pressures, external and internal, especially if that last one was going to intensify. The most preoccupying issue is that Brussels is doing exactly as if all that did not exist and as if that double threat had no reality.

The major reason for that is coming from the poor management of the enlargement after the fall of the communist regimes. New members became either the place for relocations or providers of detached workers, weighting on the job markets of other members. This situation has been aggravated by the massive arrival of migrants in Germany and in Italy. It would be necessary to adjourn any discussions about new adhesions. Before accepting new members, it is necessary to know where we want to go. A pause is also indispensable in the massive production of rules which are arousing everywhere the hostility of concerned population and of enterprises. The States are then enjoying in rejecting the responsibility to Europe without being aware of the consequences of their attitude. That, also, must stop. But the most urgent task, and which not affect only the members of the eurozone, is a real reform of the financial relationship between the States.

The rules adopted 25 years ago, and notably the Maastricht criteria and the excessive deficit procedure, are obsoletes. Inflation, the supreme fear of the German people, has disappeared and European citizen savings are financing without any difficulties public deficits since the continent current account exceeds every year 300 billion euros. Germany, and the countries which are backing up its uncompromising position, would at last understand that they would be the first victims of a major European crisis due to their demographic situation and to their dependence to exports. Instead of trying to find a compromise for the show with Berlin, France must do all it can to convince its partner that time has come to change its approach and that the fears of its people are unfounded. The main risk does not lie in eventual transfers which would harm its taxpayers but really in a collapse of the European project itself.

The excesses of the American diplomacy as China growing influence show that alone, Germany and France have not any more enough weight to protect their own interest on the world economic scene. It is why it is necessary to take the European project out of that stranglehold which everyday affects it and to save Europe.     




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