Hoppe - Strategia.Politica. Media.

EU – a fleeting moment in time?

The EU is hogging the headlines – not because it is such an amazing construct with a strong and stable foothold in the global political framework, but paradoxically in connection with national and nationalistic ways of thinking. Diversified rather than united…

People may think that the blame for this trend can also be laid at the feet of the “refugee”. It is true that the refugee issue has presented a far bigger problem to the European Union than the financial crisis ever did. While the financial crisis and attempts to find solutions to it seemed a pragmatic, dry and not entirely comprehensible strategy to most ordinary citizens, the refugee question is very much an emotional issue, which is fuelling the fire of populism and national entities. Such nationalistic tendencies, however, are hardly new. They have been practised within the European Union and by its direct and indirect neighbours for quite some time now. National interests always come before those of the EU. Let me attempt a quick overview of how things currently stand:

Financial sector
Have you ever wondered who the mastermind of EU financial policy is? Well, the answer is clear: the Italians. Mario Draghi is President of the European Central Bank, frequently dubbed the covert “real” government of the EU, and also a former investment banker. What’s more, he is also co-author of the 5 Presidents’ Plan for the EU.
Andrea Enria, Director-General of the European Banking Authority or EBA, is also a former investment banker and close confidant of Draghi. The Chairman of the Economic and Monetary Affairs Committee within the European Parliament, Roberto Gualtieri, is a member of the executive of Partito Democratico, the Social Democratic party of Italy. He is seen in Brussels circles as a close confidant of Prime Minister Matteo Renzi and a willing executor of his finance policies. A current example of this would be the debate over the European Deposit Guarantee Scheme. While most members, (including those from other Mediterranean countries), advocate minimisation of sovereign risk on bank balance sheets, so that national deposit guarantee funds do not become liable for the possible failure of European banks, the Italian representative sees no connection between the two things. It is obvious why. Four Italian banks were recently rescued by an Italian government bailout. This is all the more critical, given a report by the ECB (!) that 200 billion euros of a total 900 billion euros of bad loans are to be found on the books of Italian banks. A potential European Deposit Guarantee Scheme would have relieved the burden of the Italian government, without any requirement for banks to dispense with the sovereign risk components of their own balance sheets.

The aim of the European Union must remain the same as ever: to have a common currency. Yet this is not reflected in their current activities. The EU Commission is increasingly focusing on the economic policy of the Eurozone to the exclusion of non-euro countries like Poland. Multi-lateral consultation on matters of economic policy is occurring without the input of nations like Poland or Hungary, who interpret this as evidence of their treatment as second-class member states. What is emerging is a two-speed Europe. The consequence of this is blindingly obvious. Nationalism has soared in significance in both countries. This is particularly apparent in the debate over solutions to the refugee crisis. The same two countries are the key culprits when it comes to not meeting or refusing to accept the refugee quotas. And their negative attitude – after some initial fascination with the European idea and the prospect of a common currency – is shaking the long-term foundations of the EU construct. This situation is exacerbated by NATO. Poland in particular views it as a trusty protective shield, due to its old animosity towards Russia, and thus has no appetite for talks about an EU army.

Refugee crisis
This is a particularly difficult challenge. If Europe were to secure its external borders, it would breach all kinds of national sovereignty. Most countries do not want this – for underlying historic reasons amongst other things. For instance, although Greece has the second biggest military budget in the EU (and, as we know, France and Germany have earned well from it), the army is not being deployed to secure the country’s borders. Since the military dictatorship in the 1970s, the Greek army is only permitted to defend foreign enemies. And refugees cannot be considered enemies in a human rights’ sense. This means that, although the Greek army would be ideally equipped to stem the tide of refugees by securing its external borders, it is taking no such action. Instead, it is demanding European financial aid – which again raises the familiar sovereignty question.

At the same time, refugees in neighbouring countries are being used as a strategic means of pursuing individual, national-political goals:

1 Morocco and its fishing rights: Ever since West Saharan off-shore fishing rights were transferred to the EU, the stream of refugees from Morocco has markedly increased. Their “moving on” to Europe is the Moroccan government’s way of exerting political pressure. The fact is that, according to the UNHCR, most refugees in Morocco come from the Sahel zone and want to remain in North Africa.

2  Iran: 40% of Afghani refugees who move to Europe were born in Iran. This stream of refugees is apparently being heavily driven by Rouhani in order to destabilise arch-rival Turkey (Shiites versus Sunnis). At the same time, the Iranian President is touring the EU to forge new financial contacts with the EU following the lifting of sanctions against Iran. Turkey meanwhile has signed an agreement with Greece for the bi-lateral right to return refugees. The number of repatriated refugees is so low as to be almost imperceptible. Why Greece is not exploiting this opportunity more is another mystery.

3 And finally, there are nearly 4 million refugees in Libya. The UN High Commission for Refugees fears the next big wave of refugees into Europe will come from there – and via the Mediterranean again too, now that most refugees are aware of the increasing difficulty of reaching Europe via the Balkan route.

The European Union is in danger of falling apart. What it needs is a representative on the International Monetary Fund. What it needs is a European Insolvency Law, a European Ratings Agency and a European Army. It needs to form a European Digital Holding to rival Silicon Valley et al. The issue of capital market union is an even clearer indication of the need for a European Venture Capital Fund.

As Goethe would say: “Stay awhile Europe, you are so beautiful.”

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