This blog, as regular readers know, is constantly critical of the attitudes of the EU and NATO to Russia. Post Soviet Russia should have been brought into both the EU and NATO. The failure to do so made Russia feel threatened, especially after the eastward expansion of the union and the alliance. The ridiculous support and encouragement for largely far right anti-Russian elements in the Ukraine, encouraging mob rule which overthrew the legitimate, democratically elected government, forced the return of the 90% Russian Crimea back into the Russian Federation. The eastern half of the Ukraine remains in rebel hands and guarded by Russia. The EU shrieks aggression by Moscow, but good strategists can identify defence in the face of an actual threat.
Such is the detachment of the EU political class from all manner of realities about economic management and international relations, that it has allowed a combination of circumstances which do actually threaten its own survival. The strategic threat comes not from Moscow, but from Berlin. Of course Berlin is not an aggressor nor does it mean the EU ill. At the heart of the issue is this question, posed by Helmut Kohl shortly after the reunification of the two halves of Germany. Does Germany become part of Europe, or does Europe become part of Germany?
Europe saw the former was best, especially France, which in order to create a Europe into which Germany would be absorbed, proposed the single currency and led the complex negotiations which created the European Constitution, which France, perversely voted down in a referendum, killing it. This left the euro project in the air. Then came the deeply flawed decision to press ahead with it, while having no common government and no common economic policy. This meant that in effect the Euro became a de-valued Deutschmark, notionally controlled by the European Central Bank. However the ECB was headquartered in Frankfurt not far from the Bundesbank, which was heavily represented on its governing board. Either consciously or subconsciously Europe has been managed in Germany’s interests, especially the euro.
The new currency was generally at a much lower level than the d-mark would have been, making German goods relatively cheaper, but higher than the lire or franc, making Italian and French goods more expensive. Meanwhile because the currency was backed by Germany, the likes of Ireland, Greece and Portugal were able to borrow and spend at cheap rates on a binge that lasted until they all went bust. However Germany would not agree to default or serious haircuts (grade one) so these economies tottered forward in an austerity programme of monastic severity.
This blog has said on countless occasions that the euro cannot succeed, because it has no government. But it carries on against the odds because actually it does have one; in Berlin. Germany decides and, because the world knows that Germany decides, it is happy to use and trade euros. But it is also true that you cannot have a sovereign government without a currency, since without control of your own currency, you are unable to control the economic fundamentals, which would enable your policies on all the critical social issues, to take effect. In other words whoever is master of the currency has sovereignty. Thus Germany has sovereignty over the Eurozone and with it de-facto the EU. This is the opposite of what was intended. Because of Germany’s success, Europe has become part of Germany.
In the old world this might have passed unnoticed. It is easy to forget that in Europe, before the world wars, democracy was in meagre supply and that the EU represents the first democratic unification of a continent which has spent most of its post Roman history at war. But in democracy you have power vested with the people. So although the political class is comfortable with German leadership, there is increasing evidence that the populations at least of France and Italy, are not. If the far right win the Austrian presidency in ten days time, which is possible, there may be an Auxit referendum. Certainly if Le Pen wins in France there will be one for Frexit.
This is all because Brexit changed everything. It showed that the political class, the bankers and the rich could be defied and the aspirations of ordinary people had to be brought back centre stage. It is likely that without Brexit, there would have been no Trump. In ordinary EU homesteads as opposed to EU political offices, Brussels is seen as a burden not a blessing and far too many have suffered either stagnation or a fall in their standard of living. But not in Germany. Suddenly it is beginning to dawn that there is a way out. If France and Austria were to exit, Italy would follow. The EU would become fundamentally different. It would be likely to regroup on a less prescriptive model, providing a looser more relaxed confederation with which GB could build fair trade. The alternative is a federal government democratically elected controlling the euro and running an economic policy which works across the union. But it is probably too late for that because there is no longer a reliable majority to see the project through.
Whatever happens Berlin will be blamed. Berlin will blame London. That might be right, because history will judge that it was from the island capital that the fatal blow, Brexit, was struck. Moscow never came into it. On the other hand, the Green candidate may secure the Austrian presidency, Le Penn may be defeated in France, Merkel and Renzi may be returned to power, Germany may ease its economic policy to accept that if the EU is to survive intact, account must be taken of the needs and aspirations of all the countries in the EU, so that restive populations fall into line and settle down. The only thing which is certain is that there are now, so to speak, so many balls in the European air, anything can happen.
Including, even, No Brexit.
Perhaps we could call it Noxit?