EU Wobbles Amid Conflicting Priorities

Exclusive: The 28-nation European Union was always a tenuous affair, pulling together historic enemies and nations with conflicting economic priorities, but now those stresses a triple-dip recession and differences over Ukraine and immigration are threatening to splinter the EU, writes Andrés Cala.

By Andrés Cala

The European Union views itself as the defender of much that is right in the world standing for human rights, embracing international law, generous with developing nations, protective of the environment, insisting on fiscal probity in economics while maintaining a sturdy social safety net at home. But this self-image of righteousness often conflicts with reality while also spurring divisions among the EU’s 28 nations about which moral imperative should take precedence.

Indeed, one could argue that the EU’s conflicting concepts of righteousness are undermining Europe’s ability to resolve the most serious problems at home and abroad, especially because the Continent’s de facto leader, Germany, is increasingly at odds with its neighbors.

President Barack Obama and British Prime Minister David Cameron talk at the G8 Summit in Lough Erne, Northern Ireland, June 17, 2013. (Official White House Photo by Pete Souza)

For instance, Germany takes a moralistic stance in insisting on fiscal austerity even in the face of high unemployment and human suffering in several EU nations that instead want deficit spending and public investments to spur growth and avert (or minimize) the EU’s third recession since the financial crash of 2008. France, Spain and Italy have been leading this anti-austerity drive, also citing moral arguments about saving Europeans from poverty and despair.

Meanwhile, the United Kingdom, with the EU’s most powerful military, favors “humanitarian” interventions supposedly on behalf of democracy and human rights in places such as Syria and Ukraine. Yet, while boasting about its commitment to human rights, the UK bristles at the EU’s liberal policies allowing the free flow of EU citizens across traditional national borders, a dispute that has led to speculation about the UK possibly going its own way.

“Britain will always step up,” British Prime Minister David Cameron said recently about the need to address global injustices, “not just because it is morally right, but also because it is the best way of protecting our people and dealing with the instability that threatens our long-term [economic] prosperity.”

But some in Europe question the wisdom and legality of the UK’s interventions in other nations’ affairs, especially given the bloodshed and disorder surrounding the British military’s role in the U.S.-led Afghan and Iraq wars. To the UK’s critics inside the EU, it’s also unclear if Cameron’s hard-line against the Syrian regime of President Bashar al-Assad while couched in moral terms might not lead to even worse violence if Sunni extremists from Al-Qaeda or the Islamic State end up the winners in Damascus.

Similarly, the UK’s stern anti-Russian stance over the crisis in Ukraine shared by some other countries in both Europe’s west and east has the prospect of causing more pain for the peoples of Ukraine, Russia and even Europe than any good that might result from prying Ukraine from Russia’s sphere of influence and pulling it into the EU’s orbit.

Concern over the consequences of possibly overplaying the West’s hand in its showdown with Russia on Ukraine is strongly felt in Germany where Chancellor Angela Merkel has tried to walk a middle line, harshly critical of Russia in rhetoric but hesitant to engage in a full-scale economic war with a major trading partner that supplies much of the EU’s natural gas.

“I can’t see how [sanctions against Russia] would help us move forward economically,” German Vice Chancellor and Economy Minister Sigmar Gabriel said this month. “It’s right that Angela Merkel [is] focusing on dialogue – and not confrontation as others are. I think it’s totally wrong to react with permanent NATO saber-rattling on the Russian border.”

Moreover, the moral issue of Ukraine is not clear-cut since Germany and the EU contributed to the crisis by giving Ukrainians, especially those in the western provinces, unrealistic expectations about the prospects for easy prosperity if they signed an association agreement with the EU and possibly joined NATO.

Those dangled hopes, in a country of crushing poverty and corrupt politics, spurred on mass demonstrations that destabilized the elected government of President Viktor Yanukovych and ousted him in a coup d’etat in February. That split Ukraine between west and east and opened a chasm that led to secession demands from ethnic Russians, followed by a nasty civil war. Ukraine became the scene of a proxy struggle in a new Cold War between Russia and the U.S./EU.

The possible encroachment of NATO into Ukraine on Russia’s border also crossed a red line drawn long ago by Russian President Vladimir Putin. Soon, the sides were posturing over Crimea’s secession from Ukraine and annexation by Russia as well as arguing about an uprising in Ukraine’s eastern Russian-speaking provinces where Yanukovych had his political base.

“If the West is honest with itself, it has to admit that there were mistakes on its side,” said former Secretary of State Henry Kissinger in a recent interview with Germany’s Der Spiegel.

When asked whether the West shared responsibility in escalating the conflict, he said “Europe and America did not understand the impact of these events, starting with the negotiations about Ukraine’s economic relations with the European Union and culminating in the demonstrations in Kiev. All these, and their impact, should have been the subject of a dialogue with Russia. This does not mean the Russian response was appropriate.”

Russia can live with the fragile status quo of a pro-Western government in Kiev and autonomous ethnic Russian provinces in the east, but the crisis could quickly deteriorate if a shaky cease-fire completely breaks down and the civil war resumes in full. Merkel has warned that if Russia’s military openly intervenes, that would provoke an escalation of sanctions to punish Moscow even if the sanctions would also punish Germany and the EU.

In the event of a full-scale civil war in Ukraine, the U.S. and UK would likely push Germany aside and organize a more hawkish military response, further disrupting the economic situation inside the EU.

These divisions over geopolitics  among countries that historically have pursued sharply different foreign policies have left the EU unable to speak with anything like a single voice, essentially making Europe an indecisive and stagnant player in global affairs.

Germany also is facing a strong EU backlash against its orthodox economic policies which were imposed on the EU to rein in European government debt especially in Mediterranean nations. This strategy initially helped restore faith in the EU’s ability to recover from the financial crisis, but now those policies are being blamed for the region’s economic stagnation.

Many Europeans even blame Merkel’s austerity recipe for tipping Europe back into yet another recession, which is made potentially more dangerous by the prospect of deflation, the decline in consumer prices that can result from weak demand or an insufficient money supply. A similar debt trap hobbled Japan’s once vibrant economy and left it limping for the past two decades.

If deflation is not countered by raising demand or expanding the money supply it can begin a downward spiral of falling profits, declining investments, stunted consumer spending, debt delinquency, unemployment and bankruptcies. Such a crisis could spread quickly through the EU backbone, the 18-member eurozone which shares the euro as a common currency and limits what individual countries can do to address their own economic problems.

But Germany remains strongly opposed to any form of monetary easing, mindful of its catastrophic experience with hyperinflation throughout its history.

Amid this economic malaise, the EU is alarmed by the rise of radical parties, from the left and right, and by a nationalist and euroskeptic resurgence which is blamed on the austerity policies demanded by Germany. France especially has been jolted by the gains of the extreme-right National Front, even if that surge represents more a protest against the traditional parties than a popular commitment to the National Front’s platform.

Further adding to the EU’s uncertainty, Cameron has proposed a 2017 referendum in UK on whether to quit the EU. At this point, Cameron seems to be facing a likely reelection defeat in 2015 after years of economic pain, but his biggest threat may come from the growing anti-European movement within his own Conservative constituency which he is seeking to placate with the promise for a get-out-of-the-EU referendum.

In any case, the future EU looks likely to have a more diverse approach to leadership with Germany’s role diminished by the greater assertiveness from France, Spain, Italy, the UK and other major European countries. And, the European nations will surely continue to express their differences over what the Continent’s moral priorities ought to be.

Andrés Cala is an award-winning Colombian journalist, columnist and analyst specializing in geopolitics and energy. He is the lead author of America’s Blind Spot: Chávez, Energy, and US Security.