If 2016 has taught us anything, it’s to pay heed to previously outlandish possibilities because those possibilities are itching to stand and be counted. One such outcome, which now seems frighteningly close to reality, is the sudden collapse of the European Union.
Following the United Kingdom’s exit from the EU and the election of Donald Trump in the United States, it’s clear the rising tide of nationalism, anti-globalism, and sheer discontent is actually a rather monstrous wave which may yet prove to be a tsunami. All eyes have landed on the French presidential election where the hard-right Francois Fillon clinched the Republican party nomination, while the perennial challenge from the National Front’s even-further-right-wing Marine Le Pen remains a Francophile Black Swan. Le Pen and the National Front have long dabbled on the borders of outright racism, and let’s just say her kindler, gentler platform includes immigration controls, a fight against Islamism, a rebuff of “savage globalization,” and a promise for a referendum on EU membership should she win. Sound familiar?
Forces of moderation have long kept Le Pen’s father and political predecessor Jean-Marie Le Pen and the National Front at bay. Because France requires presidential candidates to win an outright majority in a run-off and there’s no version of the Electoral College to throw the race to a candidate for whom the majority of people have not voted, Le Pen is still seen as a long shot by most conventional analysts, but in the current climate all bets are off. Even if Fillon wins, it’s not unreasonable to think that he’ll face pressure from his right flank to hold an EU referendum, a la David Cameron. Even prominent figures on the French left like former economy minister Arnaud Montebourg and candidate of the left-wing Parti de Gauche have described their displeasure with the EU’s economic prescriptions. This ennui could leach into non-National Front voters. A “Frexit” within the next two to three years is a very real possibility.
Without France, the Eurozone would be down to Germany and a host of economically weaker satellite countries. How long would German voters go on supporting this crumbling edifice? The over-under begins on the date of the next German election.
Meanwhile in Italy, the defeat of a constitutional referendum has thrown the government into a tailspin and marked the rise of Beppo Grille and the Five Star Movement. Grille, an entertainer who came to fame on Italian TV in the 1970s and 80s has “capitalized on his showbiz bravado” to spearhead Italy’s eurosceptic movement (again, see anything recognizable?). His party and the far-right Northern League, which still aligns itself with fascist leader Benito Mussolini, are seen as likely to make gains when the next general election is held.
In many ways this crisis is one of the EU and member states’ own making. It pursued a continent-wide program of austerity following one of the greatest financial crises since the Great Depression. While the United States fought the 2008 downturn with a counter-cyclical Keynesian package (and still ended up with a backlash and austerity), many European governments (especially the UK) as well as the European Commission and European Central Bank pursued deficit reduction, cutbacks to social services, and tax increases, creating enmity towards Brussels on both sides of the political spectrum. Austerity was a total disaster. The migrant crisis and terrorist attacks in France have taken their tolls as well.
This momentum has a danger in and of itself. It would be one thing if the 28 EU member nations spent five to ten years carefully negotiating a series of decisions that would lead to the dissolution of the project of post-war European integration, a dissolve in which everyone carefully considered the outcomes this would have on trade, mutual defense, currency, migration, travel, regulation, and every other sector of European society. However, what is becoming clear is that if and when the crack-up occurs it will be abrupt, startling, and no one will have control over the results, let alone any idea about the unintended consequences that lie ahead.
It’s important to stress that one not need be a defender of the EU’s every practice or claim that its foundation did not contain follies (for instance a single currency without true political union and uniform monetary policies) to fear the implications of its sudden collapse. There’s a strain of thinking that goes, “Well, the EU is run by unelected neoliberal elites jamming economic liberalization down the throats of member nations. Let it burn.”
But this attitude ignores a rather glaring problem: no one knows what the hell would happen in the event of an EU collapse. When I say no one, I don’t just mean the average British, French, German, Italian, Irish, or Latvian voter. I mean no economist, no politician, no banker, no one in Brussels, London, Paris, or Berlin has any clue what the consequences of a “Eurexit” might be. Suffice it to say, a best-case scenario makes the uncertainty surrounding the 2007-2008 financial crisis look like a common cold. At least in that case, the ruling elite at least understood what it could do to prevent a panic and subsequent global depression.
Take the example of the French. If France were to leave the safety of the German economy, it would land on its own with a highly devalued Franc and a national debt that equals 96% of the country’s GDP. Even France, however, is in far better shape than the smaller economies of the Eurozone. Former Prime Minister of Ireland, John Bruton, penned an op-ed in 2015 during the height of the Greek mess and in anticipation of the coming Brexit vote, which outlined some of the more dangerous possibilities of a Eurozone collapse. It’s worth quoting at length:
New currencies would have to be established. The relative value of these currencies would be unknown and unknowable. Some would lose value very quickly and others would shoot up in value. Exports would become dramatically uncompetitive in some cases, and in others they would become so cheap that there would be accusations of dumping, currency manipulation, and calls for immediate reintroduction of import duties to level the playing field… In some countries the banking system would break down, and people would have no access to credit for even the most basic transactions. In others, people would cease to trust the value of their own money, and money, after all, is based on a promise and if people can no longer trust the states standing behind the promise, the basis for money is gone.
As Bruton points out, this has happened before. Following the break-up of the Soviet Union, the rouble zone collapsed in the 1990s, halving incomes in both exporter nations like Russia and importer countries like Estonia. Everyone suffered, no one was spared. Yes, smaller countries would find themselves suffering particularly hard, but the economic chaos would spread to the sturdier economies and almost certainly leak outside of Europe’s borders.
Nationalists currently point to Brexit and say, “See? The sky hasn’t fallen! Stop the fear-mongering” even as Brexit continues along as a slow-rolling disaster. Theresa May and the British political class seem to have laughably little clue or control, as complex issues gather like slag at their feet. Take the headache the country will have over low-skilled workers. As an aging population increasingly needs elderly care, the UK will have no choice but to allow in the same low-skill, low-wage foreign workers that so enraged Brexit voters in the first place. It can either allow this immigration or face a crisis with its senior care.
Or take the example of major banks already eyeing the door and the likely possibility that London will no longer be Europe’s main financial center. Or the fact that Europe accounts for roughly half of the UK’s exports, and in order to maintain that lifeblood of trade, its leaders will almost certainly have to join the European Economic Area (enjoyed by such countries as Iceland and Norway). In other words, it will have to agree to all the laws relevant to the European single market and contribute to the budget of the European Union but without having any vote, voice, or say in EU decisions. The UK’s economy will continue to flounder, slip once again into recession, and the forces of nationalism will likely gain from it as they bludgeon citizens with the same insipid propaganda that led to the Brexit vote.
This is why during the past eight years of muddling through the Greek crisis, some European leaders kept saying the only way forward is through increased European integration and democratic governance. Bruton suggests one key reform necessary to creating a sense of European identity, which would be to hold European-wide elections for its president. Rather than having 27 different elections in 27 discreet countries, the institution should have EU-wide party lists and an EU-wide vote for the presidents of the European Union Commission and Council (currently, these are selected in closed-door meetings by the heads of government). Such reforms are not complicated, especially given the alternative of an EU break-up.
For many Americans reading this, there is no doubt a sense of remove from the relevance of the European project. Think of it this way: for centuries Europe was the Middle East of the world. It was a war-hungry, dysfunctional, violent, chaotic piece of the globe that could barely go a decade without a barbaric, usually pointless blood-letting conflict. Since World War II and the economic and political integration that brought former nation-state rivals into mutually beneficial coexistence, the continent has been a region of remarkable prosperity and stability. Keep in mind, this has never happened before in human history: a set of political leaders and their constituents voluntarily chose to cede elements of sovereignty in order to form a better, stronger union. The United States and Great Britain, often mentioned as democratic ideals, were two empires won by violent conquest in which wealthy elites only begrudgingly allowed democracy to sift down to the most impoverished and brutalized citizens.
The parochial movements of the last five to ten years—from the EU’s troubles to the Scottish independence vote to the surge of American nationalism that brought us such phenomenon as the go-it-alone war in Iraq and now Donald Trump—have different roots and causes but they do share a common thread. We live in an increasingly complex and interdependent world where the greatest threats to peace, individual well-being, and human flourishing are largely transnational. Climate change, infectious disease, nuclear proliferation, financial crisis, cyber insecurity—these are all borderless phenomenon that do not care if their victims are French, British, American, or Syrian. Their worst consequences do not care about our flags, languages, religions, or skin colors. And yet at a time when transnational peril necessitates a greater need for cooperation, tolerance, and unity, Western liberal democracies are taking a hard turn into fragmentation, arrogance, self-pity, and denial. The break-up of the European Union brought on by a wave of selfish, quasi-authoritarian nationalism would be a staggering blow to the economic and political security of what remains of the increasingly precarious free world.