Geopolitics and Globalization Endanger Project Europe

Should optimistic views about globalization like those of Michael Mandelbaum hold true, Europe may manage to defuse the crisis as new markets open, economic ties strengthen, and member states realize they have a common goal. Namely, to increase prosperity and profit from the ongoing technological innovation.

In the eye of a perfect political-economic storm

European markets have been in a good mood for some years. However, the list of political-economic and geopolitical challenges that Europe has to contend with is long and daunting. Opinions differ about the monetary policy the ECB should pursue. Some claim the central bank has done little more than put an artificial and fragile safety net under the Eurozone. Furthermore, there is substantial discord on the degree of fiscal consolidation that will be required to restore Europe to health. On top of that doubts about the robustness of the banking sector have not gone away and there are misgivings about the underlying vigor of quite a few economies. Also, it is feared that a paralyzing anti-European storm of protests will sweep Europe at the same time as Cold War 2.0 is about to break out.

Globalization as the redeemer?

Should optimistic views about globalization like those of Michael Mandelbaum hold true, Europe may manage to defuse the crisis as new markets open, economic ties strengthen, and member states realize they have a common goal. Namely, to increase prosperity and profit from the ongoing technological innovation.

This unfettered positivism may be too upbeat. Technological advancement is not always a blessing. Increasingly, people find that the "Big Brother is watching you" nightmare is still there when they wake up. Mandelbaum (and others) seems overly optimistic and eager to turn a blind eye to the human talent of turning gold into lead.

The believe that there is a global consensus that a market economy is a prerequisite for the creation of prosperity may be partially true, but the concept is viewed in a variety of ways. Moreover, the credit crisis has highlighted the vulnerabilities of capitalism while soaring inequality undermines societies as people like Thomas Piketty argue.

The final argument that underpins the unfettered faith in globalization states that politicians are now solely judged on how prosperous the economy is on their watch with GDP almost as if being the new god. That geopolitics is rearing its head again shows that economics is not the whole story. The problem is that, so far, politicians have mostly used economic arguments to sell Europe to voters. But now leaders seem unable to deliver in terms of growth and prosperity. Simultaneously, they are maneuvered into a corner by an agressive leader like Putin.

It's power politics, stupid

Putin has used the Ukraine crisis to return to old-fashioned power politics. EU leaders are unnerved and alarmed. "This is no longer the way we interact," they say. Well, apparently it still is. We are witnessing a faltering and fatigued superpower, competing emerging great powers, social unrest, geopolitical tensions, and Russian imperialism. It would be naive to rule out large-scale conflicts on the basis of economic interdependence. This mistake has been made before. Namely, on the eve of the Great War.

So far, the Ukraine crisis has done little to bring the Europeans to their senses. It has exposed the chinks in Europe's armor. This is not surprising if we look at the evolution of the European integration project: geopolitics and power games were never absent.

In 1945, SS leader Himmler wrote a letter to French leader De Gaulle in which the German laid out the options for France: "So you have won. Now what do you do? Join the Anglo-Saxons? They will treat you as a satellite. The Soviets? They will subjugate France and liquidate you. The only road for you is an entente with vanquished Germany." De Gaulle saw that, to some degree, this message rung true. He saw the EU as "Greater France".

The Dutch historian Mathieu Segers cites a Dutch official: "The six without the UK [= the nations that founded the ECSC, the precursor of the EEC] mainly mirror French egocentric politics.... Germany will follow France's lead but think to itself: Later on, Berlin will call the shots in European politics."

Margaret Thatcher also feared that German reunification and embedding Germany in Europe would provide Germans with the opportunity to grow into the dominant country on the continent.

Yawning political abyss

That brings us back to 2014: Berlin calls the shots as the euro is still going strong and markets appear cheerful. However, social-economic repercussions of the crisis continue to cause suffering. Politicians, lawmakers and central bankers have their work cut out. They need to come up with credible monetary policy, healthy public finances, a resilient banking system, and sound economic foundations. Simultaneously, Europe is under pressure of geopolitical power games and anti-European populist nationalism, partly because of concerns over the degeneration of the welfare state, plus anxiety triggered by globalization.

Socio-economic disparity widens into a yawning political abyss and it will be an uphill struggle to implement structural reforms. The cozy get-togethers and intrigues in Brussels has been good for Europe, which has been peaceful and prosperous for decades. However, now growing affluence is no longer a given and geopolitics has returned to the continent, European citizens are no longer inclined to swallow the rhetoric. A new climate is on the rise: less technocratic, more political and thus also less rational and predictable, more intuitive and emotional. The wind is freshening and storms may be about to pounce.

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