Will the EU Survive? Back to First Principles

A handy round up of some of my wise and prescient thoughts from the past year on the state of the European Union.

1 18 October 2010

… Which prompts me to post this extract from my Krakow presentation, a slide entitled Will EU Diplomacy Survive? Indeed, such are the marvels of modern technology that you can see a picture of me staring aghast at my own handiwork here.

The slide asks some questions:

EU in 50,000,000 years’ time?   No

EU in 5,000,000 years’ time?     No

EU in 50,000 years’ time?         No

EU in 5000 years’ time?            No

EU in 500 years’ time?              No

EU in 50 years’ time?                Maybe

EU in five years’ time?               Probably

This is a striking idea. It reminds us that over time things just come and go.

I enjoy giving presentations featuring maps of Europe and national borders over the past 800 years, one century at a time. These maps show countries, peoples and powers waxing and waning. Now that the Polish, Holy Roman, Russian, Austrian and Turkish empires have disappeared, in some areas of Europe the map looks quite like what we had many centuries ago.

Why should not this pattern continue? In particular, is not the European Union as presently constituted Too Big to Fail – and thereby doomed to Fail in the not too distant future?

In other words, it is likely that within the lifetimes of the sassy young Poles who comprised much of the audience in Krakow last week the European Union will change into something completely different. Not necessarily worse, not necessarily better. Just different.

This change could come slowly. Or abruptly. The state of the EU’s finances because of ill-discipline within the Eurozone means that important parts of the EU financial sector across different countries are vulnerable to sudden crashes in global market confidence which, as we have seen, can come out of a clear blue sky…

2 16 May 2010

… I tend to think that he’s correct – that the EU as currently configured can not survive much longer. If only because the measures needed to make the Eurozone work will compel new levels of ‘integration’ for all EU members which will go well beyond what some countries can accept.

Things are already coming to a head, via Qualified Majority Voting.

Under EU rules decisions in many policy areas and binding on all can be taken by votes of EU member governments. Hitherto voting has not been a decisive factor, since EU member governments mull things over, look at the weight of likely opposition to see if any combination might have a blocking minority, and cut deals.

So there is voting but it in effect usually defines a different way to reach a consensus.

What we can expect soon are proposals put forward for voting which are said to be essential for Eurozone members as such, but may well have negative outcomes for non-Eurozone members. The Eurozone members may then start to push through those votes in the face of outright opposition from many of the others – but especially the UK.

If that starts to happen systematically, the implicit deal based primarily upon a sense of consensus will have been changed irrevocably in favour of majority-led power-plays. The legitimacy of that sort of decision-making and its outcomes will fall to be challenged very hard.

So there has to be a good chance that the result is the emergence of some sort of formalised new arrangements, maybe two or more smaller European unions.

In one group, those countries which are ready to stop being countries and form a new bloc phenomenon, with one currency and the inflexible fiscal, popular voting and other mechanisms needed to make that happen.

And in another, countries which are satisfied with looser and more flexible cooperative arrangements.

Anything really wrong with that, as long as the two groups live nicely together and don’t fight?

Not really. But the transaction costs and associated convulsions will be considerable. Which group Germany would now join?

Maybe those convulsions, huge as they must be, are preferable to standing in a swamp watching the slime-level inexorably head north above our knees, no-one able to move because we are all tied together?

3 17 November 2010

This national sovereignty idea is very odd when you think about it. We don’t lament the fact that Yorkshire or the west part of London or a quarter of Shanghai don’t have the freedom to run their own economic policies.

So why does it really matter if Ireland’s small population end up being told what to do by stern German bankers? 80 million Germans seem to be managing fine under that arrangement.

One answer might be that Ireland would have no say in the German decisions, so it wouldn’t be ‘fair’. True. But it is the Germans’ money bailing Ireland out.

Maybe if you decide to take a huge risk and mess up, part of the deal is that you lose your right to decide for yourself until you have been sorted out – on the terms of the people doing the sort out. A bit like a belligerent drunk being incarcerated to sober up.

The really interesting thing about the EU crisis is that as Simon Heffer says, it forces out into the open First Principles and collapses careless assumptions.

I wrote this in 2008. And gosh, it reads nicely now (emphasis added):

Trust grows in subtle unexpected ways, usually slowly and through doses of unhappy trial and error. It can not be created by European elites telling us all what is good for us. Especially when some of them look to be cheating on their expenses which our taxes have paid for.

Another former colleague recently said to me, "the trouble with you is that you reduce everything to first principles!"

He’s right. I do.

The risk for someone who does that lies in sounding like the wily but annoying Irishman who tells a lost traveller trying to get to Dublin that it is "no good starting from here".

The key advantage in looking hard and regularly at First Principles is that one is less likely to build a tall edifice on wobbly foundations. And perhaps more likely to be a better source of advice as to when something tall and imposing is in fact risking collapse.

That former colleague is a prominent LibDem EU fan. QED