For years, I was a guest commentator on a business-news show whose host was surprisingly literate. We covered global affairs and shared useful exchanges. But this well-schooled, worldly man had a massive blind spot he shared with a significant number of conservatives: He detested the European Union (EU) obsessively and leapt on every shred of negative data from Brussels as proof that the EU was, finally, this time, at last, truly and belatedly doomed.
In the early days of Brexit, the host declared that the EU would never survive the United Kingdom’s departure since other member states would soon follow suit. When I countered that, whatever the ultimate outcome for Britain, the EU would outlive us both, he put on an I-know-better mask and changed the topic.
Now the EU is behaving better during a pandemic than the United States, with the former’s member states conducting themselves more responsibly and their societies more dutifully.
There are many reasons why the EU will survive and, generally, thrive. First, it does more good than harm for its populations and, populist grumping aside, EU citizens know it. Argument and ingratitude are part of the human condition, but so is clinging to attained advantage. Besides, no beast is harder to slay than an entrenched bureaucracy, and the EU is a bureaucracy so sprawling it has become a continent-wide constituency of its own. Pre-Brexit, that bureaucracy had, indeed, become overweening, and Britain’s departure, however inept, inspired a soul-searching of the soulless in Brussels. The EU apparatus remembered that it had to please national capitals more often than it annoyed them. And unity mattered. Thus, in the pandemic’s depths, we have seen more cooperation and breakthrough fiscal compromises within the EU than would have been achievable pre-Brexit. The Brexit bogeyman rescued, at least for the moment, the sick-unto-death economies of southern Europe.
London’s limping departure also functioned as a deterrent to other states, rather than becoming an inspiration. If the American dream mythologizes freedom, the European vision worships stability (and with good historical reasons).
Certainly, myriad points of contention remain within the EU. No multinational organization of such scope and ambition will ever be problem free. National gripes are as inevitable as they are, often, petty, but the benefits of EU membership are such that, not only has there been no rush to the exit doors, additional states seek to join the greatest economic union in history, an organization of 27 diverse member states with a total population of almost 450 million whose leaders overturned millennia of precedent to join together to enrich, advance, and pacify the continent that has generated—and often exported—more violence and destruction than any other.
From its origins seven decades ago amid postwar devastation as the six-member European Coal and Steel Community, the EU has proven not only successful and enduring, but, in tandem with the North Atlantic Treaty Organization (NATO), has been an unprecedented force for peace and prosperity. Within the Schengen sub-zone, there has been free passage across borders once drawn in blood. In the Euro currency sub-zone, trade has grown even more vigorous (although problems with the Euro remain unresolved in the EU’s southern tier).
The COVID-19 emergency has interrupted trade and travel, but has not seriously threatened EU unity: After a bit of requisite squabbling over an economic rescue package, German chancellor Angela Merkel, traditionally a pinch-penny Prussian, prevailed over tight-fisted northern tier governments to provide almost a trillion Euros in broadly backed soft-term loans and outright grants for the EU member states hardest hit by COVID-19.
Witnessing this, Americans should be cheering. The EU isn’t an enemy, it’s a customer and, in normal times, a premier ally. And sending the occasional U.S. delegation to Brussels to quibble about Camembert beats another landing on Omaha Beach.
American critics obsess on individual points of contention between us, whether subsidies to Europe’s aviation industry or attempts to bridle U.S. tech giants, but the irrefutable fact is that the “Western world” collectively has grown incredibly wealthy with remarkable speed because of relatively free trade and cooperation between North America and the EU—while sustaining the longest period of peace in Europe’s history. Yes, some industries have suffered and shenanigans abound on both sides, but we routinely (if sometimes perfunctorily) exalt competition for its creative force. It’s hypocritical to do so only when it profits us. Besides, it’s the tech-powerhouse U.S. that stands to dominate trade in the next decades. We should focus on sales not snits.
It’s politically incorrect to say it, but the U.S. and the EU are family, joined by elevated values and the shared heritage of Western civilization—humanity’s unchallenged apogee (even if we now must pretend that tribal masks are the equal of Michelangelo’s sculptures). We must not let family squabbles open the back door to would-be assassins.
The pandemic recovery challenge
Of course, the EU faces serious economic and unanticipated ideological challenges. European economies will contract painfully this year, with an average decline approaching ten per cent, a stunning blow. Despite the slovenly and suicidal American response to the pandemic, the U.S. is far better positioned for a rebound, due to its pioneering economy. Every nation around the globe will feel pain and face a degree of hardship, but the American lead in information technology (of which the EU is impotently envious) and offshoot services, plus greater U.S. structural flexibility, position the U.S. for a dynamic, though not instantaneous, recovery.
Europe’s lag in information technology (expect more legal monkey business from Brussels on that front) is only the most-salient manifestation of the EU’s inability to foster a culture of entrepreneurship, perhaps its greatest failing in the twenty-first century. This is where over-regulation truly wounds, compounding cultural inhibitions against risk. Add in baroque and stifling labor laws, and even EU-based tech companies that achieve limited success ultimately falter.
The problem is particularly difficult for Germany’s economy, the engine that drives the EU. Germany remains in helpless thrall to “bending metal,” to manufacturing superb machines for yesteryear’s needs. This is true not only of automotive products but, especially, of the precision tools-to-make-tools that are the core offerings of the German Mittelstand, the mid-sized, family-controlled enterprises that comprised the heart of the country’s fabled economic boom. The German economy relies on exports of expensive physical goods, many of which might be replicated elsewhere (as China seeks to do). Meanwhile, German exports travel at the speed of a container ship. America’s prime exports move at the speed of a keystroke.
Nor have government efforts, as in France, to decree a culture of entrepreneurship succeeded (apart from providing a distinctly Gallic non sequitur). In the postmodern environment, those who are more terrified of failure than lured by the chance of success cannot compete.
Other challenges for EU convalescence post-pandemic will include national debts that were problematic even before the advent of COVID-19. Now debts are soaring in the southern tier and beyond. Even with EU grants and loans, Italy’s debt threatens to reach an unsustainable 165% of GDP. Southern Europe’s heavy reliance on tourism revenues adds to the deficit—especially, since economically desirable American tourists remain excluded from the market (Germans bring their own sandwiches; Americans bring platinum credit cards).
As for suffocating labor laws, if the pandemic cannot spark the political courage to sponsor reform on a broad scale, recovery will stumble along, at best. The conundrum is that Europeans will take to the streets—notably in France—to ensure that the young remain jobless to protect the benefits of their fading elders (Europe’s new lost generations lack the romance of Hemingway and Gertrude Stein).
Add on political misbehavior in Hungary and Poland, where rule-of-law, democracy, and “European values” are eroding, and it can appear that the EU is nearly hopeless.
But on the worst days, member states and their populations recognize that the benefits of membership vastly outweigh the bossiness, frustrations, and slights. Even would-be strong men, such as Viktor Orban in Hungary, are careful not to transgress to the point that would endanger EU membership and its benefits. Local nationalist demagogues across Europe find the EU a convenient villain to rally their base supporters, but other than the ever-anomalous Brits, no one has made a serious move to give up their subsidies, protections, continent-wide markets, and collective strength. The paradox is that all of the EU’s labyrinthine regulations and palliative programs thrive because of greed, not altruism.
Which makes a hash of the bizarre conviction among some U.S. conservatives that the EU is a Socialist Trojan Horse. The EU member states that had a four-decade taste of “real existing Socialism” courtesy of the eleven-time-zone vodka dispenser aren’t clamoring for a return to dreary poverty. As for the un-killable myth that the Scandinavian countries (EU members and not) are “Socialist,” it’s always been nonsense. Ikea is hardly an example of the state controlling the means of production. While generous social programs were initially fashionable up north—along with sourpuss tax rates—the free-stuff ambitions have long been restrained and taxes reduced in the interests of competition. Four of the richest individuals in Scandinavia, members of the crime-against-humanity pop group Abba, sang about “Money, Money, Money,” not the leading role of the proletariat.
So what if the various societies that compose the EU prefer universal health care, free higher education, and structural stagnation? Have we no confidence in our own system’s superiority? Or are we just grumpy elders upset that the kids have chosen to live their own lives?
Malevolent China steps in…
China is the common enemy of the U.S. and the EU, and the threat is immediate and merciless. A common front is essential, but vital years have been lost after the current U.S. administration chose to attack the EU while postponing coherent action against China. Beijing menaces the U.S. through intellectual property theft on a massive scale and through industrial dependence, while menacing the EU with intellectual property theft, as well, but, more perniciously still, with economic occupation. Holding the U.S. at bay with relative ease, China is buying its way into Europe—and COVID-19 creates fire-sale conditions in Italy, Spain, Greece, and even France.
The Europeans are aware of the danger, but translating awareness into action is another matter entirely. Intra-EU meetings discuss blocking Chinese investment in strategic industries, but little is done. Southern Europe will need massive investment to recover, while northern Europe fears a pinch in its lifestyle from a trade spat.
Angela Merkel, the greatest European leader since Margaret Thatcher and Germany’s greatest chancellor since Konrad Adenauer, long has championed the oppressed, standing against dictators and leading the Western response to Russian aggression after the current U.S. administration embraced Vladimir Putin. Yet, when it comes to China’s atrocious treatment of millions of Uighurs and its treaty-busting clamp-down on Hong Kong or imperialism in the South China Sea, Merkel has been largely silent…unwilling even to address the security threat posed by Huawei’s looming dominance of Germany’s 5G infrastructure. High-ranking German officials have spoken out—sometimes fiercely—but not “Mutti.”
Merkel dreads Chinese revenge on the German economy. While exports to China are only eight per cent of Germany’s total shipments, they support key industries. And German businesses are broadly present on the ground in China, with great, if naïve, hopes for future gains. Merkel understands (as do all Europeans) that Beijing bears great and grave responsibility for the pandemic spread of COVID-19 and the savaging of EU economies. Yet, neither Merkel nor any other top EU leader forcefully castigates the Chinese Communist leadership in public.
That should worry us far more than EU tantrums over Facebook. It tells us how powerful China already has become in European affairs and presages an even broader strategic role for Beijing in the future.
Italy, for example, will desperately need foreign investment for years to come. Rome knows full well how Chinese masking of COVID-19 early on enabled the devastating spread of the plague in il bel paese. Nor did ostentatious Chinese airlifts of non-functioning ventilators and defective masks win hearts and minds between the Brenner Pass and Lampedusa. But with its economy crushed, Italy will have to take financial assistance where it can find it—and China will strive to be apparent benefactor number one.
In China itself, economic conditions are fraught, statistics are fudged, and there’s not just lipstick but layers of cracking greasepaint on the pig. Foreign corporations are newly wary and offshore investors are pulling back: The gold rush is over. No longer the world’s low-wage darling, China is overbuilt and yet underdeveloped. Abroad, President Xi’s globally ambitious Belt and Road Initiative has struck one obstacle after another, not least as “partner” countries found themselves trapped in usurious loans that paid for ill-conceived, wretchedly built projects. And its mishandling of COVID-19 has put China in the doghouse.
But that dog is savage and potentially rabid. Despite some bluster, no one has been bold enough to try to put a leash on it.
China, which gave the world COVID-19, will sacrifice at home to profit amid the pandemic’s aftermath abroad.
China is the number one strategic threat to the EU. And Europeans feel their hands are tied.
EU-US reconciliation?
If the current U.S. administration is returned to office and does not seek a reconciliation with the EU (and renew our support for NATO), China will be able to play us off against one another, exploiting fissures, creating rivalries, buying presence, and accelerating its bid for strategic preeminence. We will have let Europe go from being our steadfast ally when it counted, to being subverted economically—and thus politically—by China. A de facto Chinese veto in consensus-bound Brussels would mark a strategic shift crippling for European autonomy and confining for U.S. power and interests. In the strategic arena, wantonly making foes of vital friends (while chumming with mortal enemies) is a folly of immeasurable dimensions.
If, however, a foreign-policy-traditionalist administration comes to power next January, we will see a rapid, humbled U.S. initiative to rebuild ties with allies, particularly with the EU and NATO. Ironically, current U.S. policies have had the collateral effect of chastening Europe by revealing its weakness in the absence of U.S. leadership and support. In the wake of a change in administrations in Washington, the U.S. would find more-than-willing partners eager to repair the recent damage to the most important strategic relationship in modern history. In old Broadway terms, the United States would go, overnight, from “Damn Yankees” to “Hello Dolly!”
Even so, the risks to the EU, and thus to us, will remain grave. We cannot sacrifice our populations; China can and will. The EU is going to be the battleground for a new struggle for hegemony. Beijing’s Belt and Road Initiative has aimed at girdling the West with client states in deep thrall to China. Now, in the wake of a pandemic Beijing fostered, China sees the opportunity to leap directly into the West’s heartland—and President Xi is willing to pay dearly to establish an unassailable presence in key EU states: These are the new Opium Wars, with the role of aggressor reversed.
We must not lose.
Ralph Peters is a bestselling, prize-winning author and a former U.S. Army intelligence officer.
