Letter from Amsterdam

Jan. 13, 2016 The immigration crisis highlights the European Union’s growing irrelevance in Europe.

|January 13, 2016

reality check-headerbar

By George Friedman

I am in Amsterdam, and yesterday I spoke to a group of senior business executives and a few diplomats about the state of the world, or at least my view of it. I made three arguments. First, Eurasia is in increasing turmoil, and since Eurasia is home to 5 billion of the 7 billion people on Earth, this is an extremely disruptive reality. Second, these regional instabilities are starting to interact: Europe and the Middle East, Russia and the Middle East, and Russia and Europe. In addition, the current crisis in China is likely to intersect with each of these areas. I described it as a storm gathering.

The third point I made was that the future of the European Union is untenable. The European Union is based on a treaty—it is not a federation. It is torn between member states on any question. Germany demonizes Greece and Greece demonizes Germany—a cycle that repeats itself over and over again. It is not just that there are disagreements within the EU, but that the disagreements are bitter. The EU faces problems that it can only solve if its member states stay together—a situation that has become impossible. In my talk, I used the example of Muslim migration, which, even if it eventually totals 3 million people still would equal only half of one percent of Europe’s population. Surely there are solutions to be had, ranging from blocking the migrants to fully integrating them into society. The problem is not insoluble, but no one can can agree on a solution, and lacking a consensus, nothing can be done.

What was remarkable in this meeting was that most of the audience took no exception, save a few mild souls who said there was some hope of a solution to Europe’s problem. This contrasted dramatically with previous such presentations to similar audiences. The people to whom I spoke were not a gathering of some radical anti-European party, but rather represented the center of gravity of the European establishment. A couple of years ago I made a similar presentation in Mexico, and the European Commissioner there (the equivalent of an ambassador) called my remarks scandalous. In Poland, a similar speech caused an EU staffer from Brussels to loudly condemn me for implying the EU was failing. He said that Europe had many solutions to its problems, and he personally was working on solutions right at that very moment. I urged him to hurry up, as the problems had needed solving for years, and it was time to see the solution.

None of that happened in this bastion of the European elite. There was no question that the majority there wanted the EU to survive, but part of the group seemed to agree that it could only survive with major adjustments, while another part seemed to feel that it was untenable. They accepted my argument that Europe can be divided into Mediterranean Europe, Eastern Europe (the eastern frontier of the EU), Germanic Europe and Maritime Europe (the United Kingdom and Scandinavia). And when I said these regions have few common interests and many oppose the others’ interests, there was no disagreement.

I was asked how I thought this would end—my questioner said he couldn’t imagine the EU abolishing itself. My answer was that it would simply become more irrelevant over time. Member states will pay less and less attention to EU edicts on problems. Regulations will simply be ignored, except when it suits the nation in question. States will construct barriers, from their borders to their banking systems. In Europe, old institutions are not abolished. They are stored in a museum. There used to be an entity called the European Free Trade Association, a British led alternative to the European Community in the late 1950s and 1960s. You don’t hear much about it now because it has little impact on reality. Nevertheless, it still has offices and staff in Switzerland.

The lack of animus toward these views is in my mind a tremendous indicator of the state of Europe. German and other European politicians recently hurled insults at Poland when its new government replaced the leadership of the government-owned media and enacted reforms of the Constitutional Court. The politicians essentially accused the Polish government of fascism. This is similar to concerns regarding the Hungarian government, which has been criticized in the past for adopting measures to take control of the media, judiciary and other independent institutions, and most recently for building a fence to keep out immigrants.

The political rage against Hungary and Poland has been little reflected in the business community, and it was even less so today. The politicians in the EU can sling rhetorical barbs, but as was seen in the case of Hungary, the Hungarians didn’t back down, and there were no consequences. The Poles will not back down either. One of the reasons was apparent at my meeting. This group had many issues to discuss. Polish internal politics was not among them. When I said to a group that charges of fascism were overwrought—that if the gold standards of fascism are Hitler and Mussolini, Hungary and Poland aren’t even close—no one jumped at the bait. Instead, one member of the audience said that I had pointed out the difference between Eastern and Central Europe, so why not expect differences?

It seems to me that the political elite are isolated. They are fighting their battles in a vacuum without consequences. Consider the immigration crisis. Various countries have condemned various other countries. These condemnations were without consequence. My audience was adamant that it is a crisis that threatens Europe. But like businessmen everywhere, they did not expect a solution from the politicians, knowing full well that Europe’s politicians aren’t capable of one. The businessmen seemed comfortable with that.

The politicians remain resolute, and the marginal parties become stronger and less marginal. The broader society is torn between supporting the EU or scrapping it, but no one really knows how to make it work anymore and no one will go to the trouble of scrapping it. As with Poland, Hungary and immigration, oratory thunderbolts will be thrown, without any real expectation of success.

The people I spoke to represent one of the core constituencies of the EU. My sense is that they are conducting their business now without any real expectation that the EU will be able to serve the purposes for which it was created and without a real sense of a definitive end to the EU. It will go on and on, and matter less and less. It will impose friction and inefficiencies on Europe and hamper Mediterranean Europe’s ability to recover. It will be unable to address the fear of the Russians in Eastern Europe and generally helpless to deal with the crucial issue—Germany’s acute dependence on exports.

That said, the EU will survive, and one day you will be able to visit a dusty office in Brussels, much like the European Free Trade Association’s offices in Switzerland, where it still exists. I am sure the staff will be doing something, writing directives that no one will follow, or even care to object to. I once expected Götterdämmerung, the Twilight of the Gods, to move the EU. Today I became convinced, not that the EU couldn’t continue this way, but that it really isn’t continuing in any significant way. The immigration crisis turned out to be important. It was something that Europe could have solved, but didn’t, and no one was surprised by its failure. My audience moved on to issues they could deal with: their businesses.