The Financial Times’ Martin Wolf Worries About Europe’s Future

The Financial Times’ Martin Wolf Worries About Europe’s Future 1

The Financial Times’ long-standing chief economics editor, Martin Wolf, has weighed in with a new piece, The EU’s future in a world of deep disorder.1

While Wolf raises some useful and important questions, he also unwitting reveals the depth of cognitive capture in the West ex the US about America’s conduct. Henry Kissinger gave the geopolitical version of a black-box warning when he said, “To be an enemy of America can be dangerous, but to be a friend is fatal.” Even with the danger of being close to the US more apparent than ever, Wolf seems unable to recognize how its desperate efforts to preserve its unipolar status are increasing instability.

Wolf’s organizing theme is that Europe needs to decide whether to be an ally, a bridge, or a power. But for starters, what is this “Europe” of which we speak? Is it the European Union or the Eurozone? Wolf does acknowledge:

The British diplomat Robert Cooper argued that “what came to an end in 1989 was not just the cold war or even, in a formal sense, the second world war . . . What came to an end in Europe (but perhaps only in Europe) were the political systems of three centuries: the balance of power and the imperial urge.”

Nobody acquainted with the history of Europe should be in the least surprised by the desire for a different way for states to behave and relate to one another. Indeed, one would have to be an imbecile not to understand it.

Some of the problems the EU faces derive from the fact that it is a confederation of states, not a state. The difficulties of managing divergent economies within a monetary union are an inevitable result.

At the risk of disagreeing with Cooper when I have not read his full argument, I have trouble with his balance of power claim. Europe was devastated after World War II. European countries lost significant sovereignity via the US creation of international institutions and the establishment of NATO. There were some instance of forceful efforts to shore up national independence, notably with DeGaulle. But starting with the establishment in 1951 of the European Coal and Steel Community, the trend in Europe was towards economic integration. At a minimum, the hope was that joint prosperity would promote peace and could foster political integration.

Remember that the US taking on much of Europe’s security costs was also a subsidy to their economies. Recall Trump caused a furor when he said it was time European countries that they needed to shoulder their 2% of GDP defense commitments, as agreed by NATO defense ministers in 2006. A knowledgable colleague says that only the UK has looked like it is meeting that spending level, and even then, that’s with funny accounting.

A big problem with “Europe” is financial, that it is not fiscally integrated and therefore lacks meaningful federal-level spending to reduce economic difference across the continent and some commonality of programs. But another issue is cultural divergence. Europe has at least three or four cultural clusters: Southern European/Latin, Northern European/German, Easter European, and Nordic. These do not seem to have assimilated during their time under the EU banner. Wolf makes a passing mention of nationalism, as if that’s an external threat by among other things reducing openness of markets, which hurts the EU. But he ignores the centrifugal force of nationalism within the EU, with Poland’s rebellion against the EU judiciary temporarily ignored as the Poland plays yapping chihuahua against Russia, while Hungary’s stroopiness is held even more against it for not falling in line with all matters Ukraine.

But the striking part of Wolf’s piece, at least for careful readers, is the blindness to the degree to which the US has made the Europe’s woes worse. Wolf talks about Europe being an ally, by implication with the US and US stalwarts in the Pacific. But allies operate with each party’s interest in mind, even if there is a lot of push and pull. Wolf does point out that Europe was not on board with America’s adventurism in Iraq. But it fell in with the idea of US economic sanction against Russia (recall Ursuala von der Leyen stating they’d been in the works months before the war). The initial salvo was arguably rational since no one knew then that they’d backfire. But EU leaders have kept piling on more even as the cost of the loss of cheap Russia energy does lasting damage to their competitive positions. And they resort to the canard that Russia has victimized them when they pulled the sanctions trigger, and could roll them back.

Similarly, the US is even more openly exploiting Europe than Michael Hudson warned via its Inflation Reduction Act that includes subsidies for European businesses to decamp to the US. Emmanuel Macron did bleat about that and the US selling its pricey LNG as a replacement for cheap Russian gas, but that didn’t go anywhere.

Wolf lists the threats to Europe as “economic crises, pandemics, deglobalisation and great power conflict.” He does not acknowledge that economic crises remaining a threat is to a significant degree due to the failure to enact markedly more strict regulation. Even though the US did only a so-so job on this front, Europe was far more remiss in neither meaningfully strengthening bank regulation nor addressing chronic internal trade imbalances which then lead to debt overhangs. So for Wolf to depict the risk of economic crises as some sort of act of God, as opposed to a substantially internally generated problem, is pretty rich.

As for pandemics, I am not sure how they threaten European cohesion save by stressing national budgets. Perhaps I missed it, but I don’t see Europe having the big splits that the US has had over vaccines. These seem to be more pronounced in the US and UK, which also have bigger and louder libertarian contingents than on the continent.

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