“The Specter of a Break-up Is Haunting Europe”

Internal Strife and Divisions Blossom in Euro Land.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Since the Eurozone’s sovereign debt crisis began, in 2010, Europe’s leaders have faced a Herculean task: keeping the rickety European edifice intact. Now, five years later, there are much more ominous signs of wear and tear. Everyone is focused on the dire threat posed by a vote later this month for British exit from the Union, but Brexit is just one of a dizzying constellation of threats and challenges the EU faces.

The sovereign debt of many nations on the EU periphery has reached wholly unsustainable levels. Some of the continent’s biggest banks look increasingly shaky. And core nations are witnessing an intensifying public backlash against further bailouts and the EU’s mishandling of the immigration crisis.

Things have gotten so bad that even the staunchest of eurocrats are beginning to express doubts. Many people have lost trust in “entire institutions, whether national or European,” lamented European Parliament Chief Martin Schulz. He warned over a possible “implosion of the EU” due to the blossoming Euroskeptic movements in member states.

Now, the eurocrats are not just falling into despondency and despair, they’re beginning to turn on each other.

European Commission President Jean Claude Juncker tried to convince a hall packed with French mayors of the need for austerity à la carte in France. The linchpin of his argument was that France has been allowed by the Commission to repeatedly break Eurozone fiscal rules, not just due to its size and influence over EU policy but also its “reflexes, its internal reactions, its multiple facets” — an oblique reference to the tendency of its workers to bring the national economy to a halt whenever the government introduces measures that are not to their liking, as is happening right now.

The irony is that Juncker — who is famous for saying that when things get tough, “you have to lie” — is right on this point. Since 1999 France has broken the Eurozone’s 3% deficit limit during non-recessionary years 11 out of 16 times. That’s one more time than Greece and Portugal, three more times than Italy, and seven more times than Spain (which has broken the limit eight times but four of which were during years of recession, with the Commission’s blessing).

But that’s beside the point. What matters is that he broke a cardinal EU rule: never criticize the European Commission, even if you are its president.

“If the Commission President says that things apply differently for France, then this really damages the credibility of the Commission as guardian of the pact,” retorted Eurogroup President Jeroen Dijsselbloem in an interview with German daily Süddeutsche Zeitung and six other European newspapers.

“It would be wise for the Commission to pay a little more attention to its credibility,” said Dijsselbloem, adding that member states needed an “objective arbitrator” who upholds the budget rules manifested in the Stability and Growth Pact.

In direct contrast to Dijsselbloem’s words, recent weeks have seen the Commission offer greater budgetary flexibility to Italy, Spain and Portugal, at least until after Spain’s second round of general elections, on June 26, which are no less likely to produce a functional government than the first one.

A couple of weeks ago the European Commissioner for Economic and Financial Affairs (and former French Minister of Finance), Pierre Moscovici, even went so far as to suggest that Europe has more or less put its debt crisis behind it. “The time of high public deficits is over,” he said. “In 2017 I hope that all countries will have come out of their excessive deficit procedures.”

Such blind optimism is not shared by everyone. Donald Tusk, the president of the European Council, this week warned EU leaders that their “utopian” illusions of a completely federated Europe risk tearing the old continent apart, and that any attempt to seize on Brexit to force through yet more integration — as Spain’s foreign minister, José Manuel García-Margallo, urged on Thursday — would be a grave mistake.

Concerned by the revival of nationalist sentiment in his native Poland, Tusk launched a scathing attack on the EU establishment — in particular the Commission — for pushing “a utopia of Europe without nation states” that goes against the grain of European history and has produced a deep cultural backlash that cannot be dismissed as illegitimate far-right populism.

“The specter of a break-up is haunting Europe and a vision of a federation doesn’t seem to me like the best answer,” he said. “We need to understand the necessity of the historical moment.”

The biggest dilemma the eurocrats face is that the only way their cherished Union can actually succeed is if it is taken to its logical conclusion: fiscal and political union. But as the Daily Telegraph points out, that is looking less and less likely, especially amidst mounting signs that “the Dutch, Scandinavians, and many Eastern European states may not be willing to back any push by Brussels for a ‘Plan B’ of deeper political union – with an ‘EU army’, and joint foreign, security, and border policies – once the British are out of the way.”

The main reason for these governments’ dwindling enthusiasm for the European project is that they can no longer sell it to a majority of their voters, who have lost patience with the failure of European institutions to function effectively.

As such, Brexit — if successful — could be the first act in a gathering rejection of multinationalism as a whole. Given this development’s potentially fatal ramifications for institutions like the EU and trade pacts like TPP, TTIP, CETA and TiSA, it’s perhaps no surprise that senior eurocrats are falling into despondency, despair, and internal bickering. By Don Quijones, Raging Bull-Shit

Money for nothing, for everyone: This is supposedly the next treatment for today’s debt-addicted economic system. Milton Friedman’s hypothetical scenario of giving every citizen direct money transfers in a desperate bid to stoke inflation is gaining traction. And the ECB is on to it. Read…  Helicopter Money Drops on Europe, But Not for ‘Normal’ Folks and Not for Small Companies either

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  28 comments for ““The Specter of a Break-up Is Haunting Europe”

  1. BradK says:

    …deep cultural backlash that cannot be dismissed as illegitimate far-right populism

    That strikes me as an interesting turn of phrase. While populist sentiment can be — and often is — ill-informed, what exactly defines or precludes its legitimacy? Or is there an implied differentiation between far-right and far-left populism?

    • Jonathan says:

      Considering how much politically correct crap the European left spews out on a constant basis “far right” could be anybody wanting stricter immigration policies for good reasons to actual fascists wanting the next coming of Hitler.

    • Robert says:

      Very well said. This error by the author diminishes the popularity of the masses.

  2. Mr Reality says:

    Not surprised at all. The EU was destined to fail from the start.

    Mr R

  3. Michael Gorback says:

    What makes this the perfect storm is that due to terrorism Europe is going to take a hit on tourism, which is 9% of GDP. This will hit at the worst possible time, not only in terms of GDP but unemployment in the tourism related businesses.

  4. Chip Javert says:

    European Commission President Jean Claude Juncke was recently shown in some pretty funny videos as being seriously drunk at a public function. The accompanying article implied (well, actually, it flat said) Claude has been a varsity team drinker for quite a while.

    Maybe that caused him to “…[break] a cardinal EU rule…] and actually, you know, well, like, TELL THE TRUTH.

    Jeeze! And these guys wonder why nobody believes them.

  5. Sound of the Suburbs says:

    Dismissing popular opinion as populist opinion was always a dangerous game to play in a democracy.

  6. Nicko says:

    UK will vote to stay in (as polls indicate), and the EU will withstand the latest threat to its existence (particularly from the disturbing rise of ultra-nationalist far right wing parties). The simple reason is that existing outside the union would be far worse than the current situation.

    • Stavros H says:

      Nobody can tell for sure. Yes, all the MSM as well as the EU-subsidized classes of “intellectuals” are for the EU, but Brexit is polling dangerously high.

      Even if Remain wins by hook or crook (as in the recent Austrian elections) the real problems for the EU have not really hit home yet. Public debt has exploded since the 2008 crisis as the EU regimes threw all caution to the wind in their efforts to keep their pet and corrupt project afloat. The EU’s energy policy (designed to harm and blackmail Russia) is an utter and complete disaster with all sorts of inefficiencies that have rendered EU industry largely noncompetitive due to high costs (importing expensive LNG, subsidizing useless “renewable energy”) It is highly indicative that EU industrial production is still 10% down in relation to the pre-crisis peak. Something like this has not happened EVER in the long history of capitalism. Moreover, friction between the member states themselves and within the states are at breaking point. Economic differences as well as the immigration fiasco are rapidly stripping the EU out of any kind of legitimacy.

    • marty says:

      What utter nonsense. The Brexit won’t happen but not because the alternative is worse, but because of the propaganda that the alternative is worse. To call it ultra nationalist, far right is waving away people’s valid complaints. This is left-wing, brainwashed clap trap.

      Tptb will simply rig the voting machines, and push the EU demise out to the future.

    • You are a little out of date on Brexit polls, I think. Leave has now the advantage according to the latest couple of polls. And leave already has my postal vote!

  7. michael says:

    Sorry Nick,

    You should not pay attention to polls they are red herrings for the masses. In fact I would suspect that the UK native population has had their fill of forced immigration. That’s one of the same reasons Donald Trump is now the Republican nominee. The sideshow in San Jose is just another reason to support the guy. The EU is destine for the trash heap.

    • Mary says:

      That “sideshow in San Jose” as you put it is 100% Trump’s doing. He has openly encouraged violence at his rallies, the excuse being “people are angry”. Violent rhetoric has consequences. Dissenters beaten up inside the tent, rocks and bottles thrown outside. What’s the difference?

  8. NotSoSure says:

    LOL. Not sure who’s playing a joke on who. “The Euro is destined for the trash heap, etc, etc”. And here we are years later and the Euro is still here.
    These politicians as usual overestimate the muppets’ so called desire to leave the Euro. Just witness Greece. Repeated kickings in the behind, and they still prefer the Euro.

    Put not your hope on the population of Europe, for they are muppets. The refugees + Erdogan will be the ones who will settle the issue.

  9. Silly Me says:

    Politicians and their cronies can steal a certain amount from public funds. By leaving the EU, most English interest groups, with the exception of the financial sector perhaps, would be better off. The question is whether the US can still intimidate the English into participating in their pet project.

    • frederick says:

      Doubt it “silly me” most brits that İ meet would never buy into it Government(tories) now thats another story altogether

  10. Mark says:

    Im reading that the EXIT side is gaining traction FAST

  11. Cameron888 says:

    Good article again by Don. I always enjoy reading his take on events.

    As for the future vote on the UK exit from the EU, if the vote comes down on the side of an exit I have no doubt it will simply be ignored by the Government of the day no matter which side is in power. Numerous reasons will be offered for retaining the status quo. It is certainly not hard to come up with them.

    The vote is not legally binding on any Government and the politicians will end up doing what they always do which is what they want.

    The UK had the good sense to stay out of the Euro currency group and, as it has transpired, that was a good decision despite much of the hand wringing that went on when others were jumping on board the Euro currency back in Jan 1999.

    • Julian says:

      Yes, they might try and do this, but if they do the Conservative Party will split, the likes of Boris Johnson will lead a schism and unite with UKIP and at the next UK General Election opprobrium will be heaped on Davey Cameron & Little Georgey Osborne.

      And when will that election be?

      Well, it might be later this year if the Conservatives lose their governing majority – which is certainly not impossible if they split.

      At that point, you will end up with a chaotic election result as well. The liars Cameron & Osborne asking for re-election after holding a useless referendum?

      They would get pantsed in such a situation.

  12. Dave Mac says:

    The EU was supposed to have had a written “understanding” with Ukraine that it would defend it if Russia invaded.

    Russia invaded and the EU did very little indeed.

    Poland could be next and, again, the EU will do very little.

    I also doubt that President Hillary will do much to help them either…

    • Julian says:

      You have your history very wrong.

      The EU/US engineered a coup to remove the democratically elected Government of Ukraine in February 2014.

      US Under Secretary of State for Eurasia Victoria Nuland – NeoCon who worked as Dick Cheney’s Foreign Policy Adviser and was subsequently hired by Obama to co-ordinate US strategy in Eurasia, was recorded talking about installing Yats as Ukrainian Prime Minister after the coup in January 2014!

      Surely you know this?

      It was the US/EU that invaded Ukraine with that coup. It was not Russia that started any of the Ukraine conflict.

      Get your history right before you comment mate.

      • d says:

        “Get your history right before you comment mate.”

        Yes you better.

        We dont need your anti America conspiracy theories, and pro Russian propaganda here.

        O bummer proved he was weak, when he failed to act on his stupid red line in Syria.

        Since then, china and Russia have Stolen and Bullied as they wish, Crimea, Ukraine, Western Philippine sea. The Iranian and DPRK nuclear weapons program advancement.

        All under O bummer the weak.

        Even Murano Laughs at America. Under O bummer.

        Russia has bullied and stolen in Crimea Ukraine, establishing facts on the ground that will be havd for the next POTUS to shake off.

        Simple Russian opportunism. A Stalinist Policy. That is a continuation of the AGRESSIVE Russian expansion. That has been National Policy Occouring since Catherine The Great.

        Stop Trying to demonize America and the West by putting a halo, on the Russia servant of the Devil.

    • JerryBear says:

      Half the population of the Ukrainians are ethnic Russians and the other half for the most part are as closely related to the Russians as the Lowland Scots are to the English and so is their language. Considering that the Ukraine had been part of Russian territory for quite a long time until recently there was a certain amount of justification for Russian intervention in a situation, largely engineered by the U.S. , that was threatening to turn into an all out civil war between ethnic Russians and Ukrainians. The Belorussians are equally closely related to the Russians but there has been no real problem between them and the Russians. Poland has a very different historical tradition and sense of ethnicity than the Russians and their language is more different and unintelligible to Russian speakers. I doubt very much if the Russians have any interest at all in invading Poland or any where else in Europe. The claim that they are a threat is a paranoid pseudo threat conjured up by the Americans to justify their making trouble for Russia and putting a wedge between Russia and Europe.

      • d says:

        Latvia, Lithuanian, Estonia.

        All Scenes like Poland, of huge Russian oppression, Racism, and Genocide, all under threat from Moscow.

        • Julian says:

          Yep, but not the current Russian leaders. For more than a generation Russia has not been oppressing these countries in any way shape or form.

          In fact, in the 1990s Russia was a basketcase.

          Good luck to these countries, their Russophobia will only end up crimping their economic competitiveness in the end anyway if for instance they refuse cheaper Russian energy to send more money to the likes of Qatar to buy LNG (which I believe is already happening in Poland & Lithuania).

          Good luck to them supplying the supporters and funders of ISIS with the cash and means to continue that support. And good luck to them paying far more for energy than they need to.

          Interestingly, the major country in Europe that seems most committed to buying Russian energy is Germany – via Nordstream – despite whatever crap their leaders spout – they can see the value in cheap Russian gas to their economic performance.

          Turns out the German economy is doing pretty well over the last decade compared to many of their neighbours!

        • d says:

          “Yep, but not the current Russian leaders. For more than a generation Russia has not been oppressing these countries in any way shape or form.”

          Russia is still intimidating and attempting to dominate all of those country’s BY FORCE. It regularly accuses Estonia of abusing the Russian speaking Ethnically Russian immigrants. It placed in Estonia Illegally. by not using Russian as the main language in Schools.

          Russia Kept the Kaliningrad Enclave by force, so they can threaten Poland on 2 fronts, or pull off a Baltic pincer movement, any time they wish.

          If you believe Mafia State Russia under Putin, is the benevolent little red riding hood, you claim.

          I have a Bridge in Brooklyn for you to buy.

  13. Kevin Beck says:

    I have four important words for those buttholes that control the European Union: Bring on the Brexit!

    This would be the greatest, most forward-thinking positive event that could happen for the continent this year. It will be comparable to when the American Revolution set us free from foreign rulers over 225 years ago.

Comments are closed.