Cole Altom: Hello everyone, thank you for joining us for another Geopolitical Futures podcast, I am Cole Altom. With me is Jacob Shapiro, Jacob how are ya?
Jacob L. Shapiro: Experiencing a little bit of déjà vu, Cole.
CA: Why’s that?
JLS: Because we tried to do this yesterday and realized it would be a better idea to do this today.
CA: Yeah that’s true. It was a nice dry run though. We kind of figured out what we actually do want to say about Italian elections. But again, better to say that when there are some actual results to talk about, no?
JLS: Yeah actually, it turns out it helps when you have election results to talk about.
CA: Alright, well let’s put a pin on that, we’ll get to that in just a few minutes but like every week, give me a week ahead. What do you got?
JLS: Alright, so what we’re looking at in the week ahead, number one you know last week Russian President Vladimir Putin had his big state of the Russian Federation speech and in it, he had a bunch of prototypes for new weapons like hypersonic missiles that he said Russia was making and making vast technological progress in.
What we’re interested in is we want to know how much that cost because if you can put a price tag on how much it costs, maybe you can get a sense of how much Russia has been spending in its defense budget, which is not clear to anyone except Putin himself. And then you might actually be able to see how much the Russian economy has been suffering in the last couple of years with the decline of oil prices.
CA: Yeah and especially in the lead up to an election which is coming March 18 if I am not mistaken.
JLS: It is and this is was sort of Putin’s first salvo forgive the, is that a minor pun? I don’t know is that even a pun? Salvo, I was just talking about missiles.
CA: It’s not funny.
JLS: Alright, this is why we keep Cole around to make sure that I don’t make a fool of myself. But yeah so this was sort of Putin’s first real hey the Presidential election is coming and I am showing you why I am the best.
CA: Sort of rallying the troops, right?
JLS: But you know it’s going to be hard to put a price tag on that but what we’ve been saying for a long time is that Russia is sort of caught between having to provide for the country and having to redistribute wealth to the different parts of the country that don’t have oil in them. And then also building up its weapons and modernizing its military.
So is this Putin just you know banging on his chest and saying oh we’re great and we have missiles? Or has Russia sunk a lot of money into its hypersonic missile program and other weapons programs and does that take money away from things like pensions and schools and all that other kind of stuff.
CA: Well and especially in light of the fact that he probably doesn’t, we don’t like to call elections. I’m not going to do it here. But Putin is not really, he’s not really seriously challenged for his post, correct?
JLS: Well he’s not challenged by let’s say an oppositional person, but he’s challenged in
CA: As any leader has challenges they must face really.
JLS: And as any new leader of Russia has massive challenges to deal with and he has to work through those in a way that, he has to come out of this election with legitimacy, even if the outcome’s not necessarily in doubt. If he just sort of installs himself and doesn’t have any legitimacy to go on, that’s also not good. The Russian political system actually somewhat depends on being able to trust in that person who is sitting on top of it, you know yeah.
CA: Alright and we’ve got some time to think about that. What else you got?
JLS: The second that we have going on is there’s just a slew of meetings in China right now. You have the Third Plenum last week. You’ve got the, it’s the NPC is the acronym, it’s the National People’s Congress, National Party, I can’t, sometimes I can’t…
CA: There are a lot of acronyms out there.
JLS: There are a lot of acronyms but there are two other big meetings coming up. You’re going to see them rubber stamp probably the move to get rid of term limits. You’re going to see a lot of China setting its priorities in the next year. I know we’ve sort of been tracking that for a long time but this is sort of yet another one of those things so you know just watching the news out of China, watching as China emerges out of the new year holiday and seeing what things its gonna do, that’s also on our radar.
And then last but not least and this is also tied to China, you know U.S. President Donald Trump said that he was going to be some scary tariffs on steel and aluminum. I say scary for those countries that depend on the U.S. market for steel and aluminum sales so that is China but also countries like Canada, Japan, Germany, Mexico, a lot of these countries are gonna…
CA: And Europe as well and almost all of them have sort of spoken out against it.
JLS: Yes but the thing to note here is that the Trump administration actually hasn’t done anything yet. They said they were gonna you know announce them on Thursday, that sort of got pushed back but then it leaked out and you know the latest thing has been ok we’re gonna officially put them in at the end of the week and nobody’s going to be exempt.
Anyway so we need to watch first of all if the Trump administration goes through with it or if this is just sort of they put up a flare doing some kind of weird negotiating trick and then after that, the fall along responses. So that will be one thing that we keep an eye on as the week goes on.
CA: Yeah and for all Europe’s problems and we’ll get to that in just a second, you have to kind of appreciate the audacity of Jean-Claude Juncker who responded with very direct “threats” where he said Europe’s gonna threaten the Harley Davidson industry, the Kentucky bourbon industry and the Levi industry which again sends a pretty clear message.
JLS: Yes although you know he will have to go through the EU and the EC and the WTO and any other acronyms that I’ve forgotten. I mean we forget that the Trump administration has been setting up these steel and aluminum tariffs for months. They had to initiate an investigation in the Commerce Department. The Commerce Department had to make certain recommendations. Then Trump has to, you know so the U.S. can’t actually just do this in any class of assets. There’s a whole process to it so.
CA: And this is discounting the WTO and we don’t need to get into that right now but that’s a whole another thing too.
JLS: Yeah so there’s a lot of stuff here to look and a lot of people making a lot of grandiose statements from Juncker to Trump to this that and the other thing. The thing is we don’t even have this deal on aluminum tariffs yet. So let’s see if the U.S. follows through and then let’s see what the retaliation is. It would be a little strange to you know I don’t think you want to keep bourbon out of…, but you know I am sure there are other things to drink so.
CA: Well so we brought it up and I guess now it really is time to talk about Europe. We’ve kind of, we’ve alluded to it in a couple of the past weeks on the podcast so now it’s probably time to give it it’s due. You know the big headlines very obviously are the Italian elections. Italy is a very important country in Europe. It’s the third largest economy, not counting the U.K. which has voted to leave the European Union or yeah excuse me yeah the European Union. You’ve also got the formation of a government finally in Germany after months of not having one. So these are big issues.
And when we spoke about this yesterday, we were kind of picking each other’s brains about this, I had kind of, I had formed a handful of questions I wanted to talk to you about and then I realized that those questions, they don’t even really matter because some of them were a lot of the questions you were seeing in the mainstream right now, like well does this election matter? What does it mean for Italy? And of course they kind of matter, of course it matters, this is why we pay attention to these types of things because they necessarily matter.
But it’s not such a black and white issue and so I think to really give it its due, we need to go back a little bit first and talk about the EU and talk about why it was formed to begin with because that kind of leads directly to the situation we’re in right now that kind of stymied the development of a German government and these not altogether unsurprising election results out of Italy, right?
So take me back, well let’s skip the wars, there was this thing called World War I, it was bad or World War II, it was bad. And then apparently Europe decided they didn’t want to do that ever again. So they started very slowly forming this thing that we know now is the European Union, correct?
JLS: Yes so they’re really two levels at which to look at this. The primary strategic reason why what began as the European Coal and Steel Community eventually becomes the European Union many decades later. The strategic reason was to integrate West Germany into a European Order that was led by the French. That was really the thing. It was to really make sure the French were strong and also to make sure that West Germany was never gonna militarize again and was never going to be the most powerful country on the continent again and was really to Europe’s fate and France was sort of going to be the guarantor of that. The U.K. didn’t join at first but the U.K. comes in later and all this other stuff.
It came to have an ideological purpose too though and I would say the strategic purpose is more important but the ideological purpose in some ways is what has caused the European Union to stumble because if it has just stayed as a free trade agreement it would be something like NAFTA where you didn’t have all these competing claims of politics and this that or the other thing. Over time as the decades went on, people began to think that well you know what the real thing was nationalism and we’re going to use this free trade entity to get rid of nationalism because if we can get rid of nationalism then we’re going to get rid of the prospects of war.
So on the one hand, you have the strategic thing which was I don’t want to say keep Germany weak, well maybe I do want to say keep Germany weak. It was supposed to keep Germany from doing what it had done before. It was supposed to integrate Germany into the European whole. And it becomes this ideological thing to where we’re creating something called Europeanness which in some places took hold and in a lot of places didn’t take hold.
CA: Yeah but you think about any other sort of analog to that and it’s kind of, I don’t want to say laughable, but I mean you brought up NAFTA as an example, like what if people starting touting that as a Pan-North American national identity, you’d get laughed out of the room, right? It’s like the Québécois and people down in Chiapas state and people in east Texas are all spouting the same nationality, that’s kind of far-fetched.
JLS: Well yes but context does matter here because I mean as you alluded to, it was the horrors of World War I and World War II that led to people considering this if you know the United States and Mexico and Canada had fought two conflicts like World War I and World War II which completely decimated the entire not just you know population and stuff like that but I mean Europe was destroyed by World War I and World War II. You know coming out of that, Europe was completely exhausted. It just wanted to rebuild itself and get back to peace and prosperity.
So in that sense you could see why getting to some kind of post-national idea might be kind of good. But you know this is where you know ideology and strategy, you really have to separate them. Ideology comes on top of something to cement a strategic reality.
CA: Well and history matters too right so you have a giant place like Canada and a giant place like the United States and a giant place like Mexico and that kind of means the comparison sort of died because they’re younger but the borders are a little bit more clearly defined. They’re really just isn’t as much nationalism in North America as there is in Europe. There are however many different nationalities there are right now. There are secession movements, there are local regions. I mean it’s just a hyper regionalized place. So again that’s where the comparison sort of dies.
But I guess to bring it back to Germany, Germany has sort of succeeded where it couldn’t in the wars and it is sort of “taken over” Europe. It is the beating heart of the EU even if it was not the driving force behind its creation. It is now like it is the EU.
JLS: Well this is where it becomes important to forget about the ideological for awhile and think about the strategic because what happens when the Soviet Union falls is that East Germany and West Germany are reunited and in the original conception of what the European Union was, and I’m using the word European Union, it had different names at different times, I’m just saying European Union because that’s the easiest thing. Don’t email in and say that I am saying the wrong thing on the right name, whatever.
But West and East Germany integrate and a lot of people thought well it’s going to take decades for Germany to integrate and East Germany back into the Germany hole and it didn’t take that long. On the one hand it didn’t take that long – it proceeded much faster and all of a sudden Germany’s economy was pumping again and it was the dominant economic power in Europe. It wasn’t perfect because part of the thing that we’re seeing in Germany today is that East Germany is still lagging in terms of development. Germany has record low employment, it’s something like 3.8 percent, that’s still up around 9 or 10 percent in some parts of East Germany and those are the really voter strongholds for the alternative for Germany party and what led to such a problem with the German coalition solved. But I am putting the cart in front of the horse there.
The answer to your question is, a lot of this goes back to there was a strategic purpose for the European Union, when East and West Germany combined and integrate and create another dominant German economic power on the continent, suddenly France is relegated to sort of a number two role. Suddenly the European Union is about a free trade zone for German goods and not an entity that the allies formed in order to integrate you know West Germany into a whole and I think that’s where a lot of the friction comes.
CA: Right so you fast forward a couple of years and everything you said is true and right but then everybody sort of prospers after a while. It ends up working, people start making money and the EU develops and they adopt a common currency and all these different things. And all that was good and well, it papered over a lot of the structural problems that the EU actually had.
But really when everybody was rich and making money it really didn’t matter to anybody. Then all of the sudden 2008 happens, global financial crisis which turned into a political crisis which kind of leads us to now. People rightly are angry. They want somebody or something to blame and a lot of them have turned their ire to the EU itself. Some of them have turned it to immigrants.
So you start to see some of these nationalist parties forming basically everywhere really, it’s hard to think of a country that doesn’t have one. But you know the more notable ones came as the national front in France, had some success and then got kind of trounced in the runoff election against Emmanuel Macron, the current President of France. You mentioned AFD in Germany, do you want to talk about them a little bit too? Do you want to talk about this trend and talk about it a little bit better than I have?
JLS: Sure, we can talk about all of them but I would also just point out that you know the national front really begins in France around the time of the Algerian War.
CA: Yeah, that’s true.
JLS: That’s when it’s born. The U.K. didn’t initially want to join the EU and then it sort of was pro joining the EU and then you had UKIP pop up. I’m just saying that these things have been a part of Europe for a long time and they ebb and flow. What’s happening right now though is you have a broad overreaction against the European Union like you said because the European Union has failed to solve basic problems about the economy, about migration, stuff like that.
You know like I said, I don’t want to repeat myself too much but if the EU were just a free trade zone that would be one thing. But the idea that some entity in Brussels is going to create some economic policy that is good for both Berlin and Athens at the same time doesn’t really work. Especially when Berlin comes the one that is driving those policies.
You’ll remember that around 2008 and Greece was defaulting, why did Greece default? Well Greece defaulted because people were giving the Greeks loans that they shouldn’t have so that Greeks could buy German goods. And then when Greece defaulted and said ok we’re part of the EU, the EU has to bail us out and the Germans said no we don’t have to bail you out. We’re gonna keep our trade surplus and our savings and you just need some austerity and you need to have that.
CA: But Germany still needs these economies strong enough to buy their stuff though, right? So it’s in their interest to keep them healthy and strong.
JLS: It does but it didn’t also want to encourage profligate spending and you know as we’ve seen you know Germany also has internal political issues and Angela Merkel who was Chancellor then in 2008 was very wise to the fact that the German population wasn’t going to look kindly on you know funding a Greek bailout. She made a misstep when the migration issue started up because she thought that Germany was just going to be able to lead by saying ok well everybody needs to take their share.
And that was really the moment, well I don’t want to say that was really the moment, that was yet another episode in the story, right? Because Brexit you can really trace back the rise of support for Brexit to when Merkel was trying to tell the U.K. to listen to Germany about numbers of migrants that it was supposed to take in. Eastern Europe really starts to say hey we don’t want these migrant quotas. You get you know Hungary and Poland both objecting to that.
So you know every step along the way, you see that ok Germany became this dominant power. The EU sort of starts to revolve around the German economy. And then Germany starts making calls. And at first, it’s just Greece, it’s easy to laugh about it. Oh it’s the Greeks spending too much. And then it’s well Germany is saying we have to take migrants and then Germany is doing… Then it sort of becomes a problem and like you say you get these national reactions which is to say if the EU is not going to bail us out and if the EU is just going to say we have to take migrants, what is the EU doing for us?
Just to complicate it even more though and I know that our listeners love it when I complicate things and just layer on things. I will just say though at a basic level, people are doing good because of the EU. If you’re holding your savings in Euros, that’s better than holding your savings in whatever became before. So it’s not just that everything is bad and that the entire economic situation has not done well, it’s just to say that there are still regions in these countries that have sort of left behind. And when an economic crisis happens or when a political crisis happens, they get sort of forgotten and pushed aside or told they need to do austerity or told they need to do this that and the other thing. And that’s when you get this kind of you know support for these nationalist parties coming up.
CA: And especially these other countries, they probably have to be, they have to think Germany’s being a little bit hypocritical because they’re mandating all these things and they’re like, you can’t even form a government, right? You’ve got your own nationalist problems, don’t dictate towards us but that’s neither here nor there.
JLS: Well that just makes Germany an example sort of everything that’s going on across the spectrum because the mainstream political, and this is true in the United States and in a number of places around the world, the mainstream political parties didn’t see 2008 coming and have not responded to 2008 in a way that has satisfied some of the people that were hardest hit by the 2008 financial crisis. A lot of the elites have recovered. A lot of the upper classes have recovered. The lower income classes, they still haven’t recovered from 2008.
And you know we’re supposed to be talking about Italian elections. I saw the Five Star Movement had about what 32, 33% of the vote and that was a little bigger than polls said. Well you know what is Donald Trump’s base of support in the United States? How much, you know when you start to look at these sort of things you see that about a third of these different countries are getting these nationalist parties that are maybe smaller than the whole but these people are passionate, they’re agitated, they feel like they’ve been left behind and they are expressing themselves at the ballot box.
Whereas the mainstream parties are just kind of looking around and going well we’re not them, we’re not nationalists, we just need to keep doing the thing that we’re doing. And when you have these parties that are nationalist and they have this seductive you know idea of what policies should be enacted and you have a center well let’s just all of us band together so these crazies don’t come in, that just makes the problem even worse.
CA: Well especially when you make a strong argument that what you’ve been doing led to the catastrophe in the first place. So why would anybody want to swallow that pill? To bring it back to Italy though, I think when you mentioned Greece it’s kind of interesting. I mean you remember how much people freaked out over Greece and rightly so when there was a possibility they could “Grexit” (and that got really obnoxious really quickly). But that was Greece and Greece is not Italy. Italy is a bigger, richer, arguably more critical country to the EU. So now’s a good a time as any to really get into those elections.
Now you mentioned The Five Star Movement and then sort of it’s a nationalist party and then there’s another one, The Northern League, which is more anti-EU and they both fared very well here. Not so well that they can form a government on their own. But they did fare well enough to really gum up the works a little bit. Most people are predicting a hung Parliament. There’s going to be a lot of horse-trading and things like that. So it’s going to be a lot of stalemate most likely.
And that really matters only in so far as Italy behaves with Brussels, right? Can you talk about that relationship a little bit?
JLS: Well yeah I mean Italy and Brussels have been going back and forth on lot different things. Italy’s, it’s actually done a little bit better with repairing its non-performing loan problems. But it still has a high rate of non-performing loans relative to other European countries and the EU has views on what a legal bailout looks like. I believe the EU wants it to be something of a bail-in, we don’t need to get into that arcane financial discussions here.
Italy wants to be able to, again though it goes back to this thing where you know well how much control does Italy have over its own economy versus when does it need to listen to Brussels? And you know Italy has been ignoring some of those regulations. Just as France ignored regulations on you know budget deficits and spending. And as Hungary have been ignoring regulations too.
So Italy has already been having these problems, what’s gonna happen now though is that whatever government is going to come up is maybe not gonna do what was coming before. But this goes back to your original point, this is the thing to look at here, it’s not that the Five Star Movement got the most votes or this that and the other thing, it’s look at the proliferation of political parties. It’s easy to see this in Italy and explain it away because Italy has so many different regions and so many different regional interests.
But across the board in Europe, you have a proliferation of parties, each with radically different ideas about what needs to be done and that creates this political gridlock. Because you can’t get any one party that has enough popular support to come in and maybe actually try and move the ball forward with policy. So no matter who comes in, they’re constrained by their own domestic forces. They’re constrained by how they much they need the EU or how much they need their bilateral relationships with other countries in the EU and it always complicates it.
CA: Well it’s probably worth noting here too that during the election campaign none of the Italian parties or coalitions vowed to hold a yes/no referendum on EU membership. That hasn’t actually happened so there is no reason to expect that just quite yet. So it’s not as if once a government does form and suppose that Five Star comes out ahead on those, there’s no reason to think that Italy is just going to all of a sudden abandon ship so we don’t want to sound the alarms or anything like that right now.
But as you said stalemate is almost just as bad as outright antagonism as we saw taking you back to Germany where if Germany is the de facto leader and Germany doesn’t actually have a government, you’ve got people like Emanuel Macron who’s this EU reform champion kind of twiddling his thumbs like, what are we going to do right now? We need to get this ball rolling. We can’t do it without you. So this, it gets really, it gets really complicated.
JLS: It does get really complicated and again, you know do we think that Italy is going to have a referendum on EU membership? Probably not but you know if a government gets in there that is strongly anti-EU and doesn’t like some of the things that are coming down from Brussels or doesn’t like some of the things that you know Macron and Merkel decide they want to push forward on reforms. I mean thinking that Germany and France would agree on this is sort of also a minor miracle. But it opens the door to all of these things.
Right now the election cycle in Italy focused a lot on migration just because that was the particular issue right now. But Euroskepticism has been increasing in Italy. And southern Italy has always kind of a basket case but southern Italy is still really bad. When people talk about European growth rates and unemployment’s down, go tell that to people in southern Italy, they’re not experiencing it. That’s where a lot of support for these parties is coming from and it’s getting more animated. So you know, it opens the door to a lot of different things.
CA: And there’s also some potential foreign policy implications that are worth touching on very, very briefly. I mean it was more of a concern ahead of the election when people thought, excuse me, Silvio Berlusconi’s coalition might come to power and he’s a little bit, he’s always been seen a little bit more pro-Russia than some of the other people in Italian politics. And so to be honest, I’m not exactly sure where the leaders of say Five Star and The Northern League fall on that.
But if you do have people who maybe are a little bit more friendly with Russia for one reason or another and that breaks the EU’s unanimity on say Russian sanctions, that does have some implications and that frees up a little money maybe for Putin to go forward with his weapons overhaul we were talking about earlier. So this is a lot of maybes and a lot of perhapses I know that but there are some foreign policy implications here.
JLS: But the very insightful point in that is that you really can’t speak about the European Union as a monolith. And at this point, the main action in Europe is happening at the bilateral level between, or not the bilateral level, but between nations where two countries are talking obviously at the bilateral level. But all these different countries are interacting with each other as nation-states, in pursuit of their national interests.
You know a lot of attention is paid to every single leak that comes to Brexit, less attention was paid to the fact that you know the U.K. signed a new defense agreement with Poland shortly thereafter. Which if you know, you’re a student of history and you’re thinking about geopolitics and you see the U.K. is signing some kind of new defense deal with Poland, it’s like, what decade are we in? Are we back in the 1930’s? This is one of the flashpoints.
We have you know Germany and France are gonna get together and talk about what the future of this European Union looks like. Again though, those are decisions that are going to be decided in Paris, in Berlin, in Rome. The Balkans? The Balkans are sort of sitting on the outside looking in and on the one hand it’s got the EU saying come in, please come in. On the other hand, it looks at the EU and sees kind of a mess, a dysfunctional thing that hasn’t been able to solve some of the member states problems let alone some of the Balkan states’ problems.
So when you are thinking about Europe now, it’s easy to just sort of write well oh European Union fragmentation this, that or the other thing. One of the things that we try to write about on a daily, weekly basis is look, what’s moving the needle here is relations between nation states.
So if you want to understand what’s going on in Europe, understand the historical rivalry between France and Germany. Understand where Italy has always sort of fit in here as one of the major economies but also beset with its own problems also on the outside looking in. Think about the U.K. as you know sort of across the English Channel and thinking about how to move the pawns on Europe so that nobody gets too strong to cross the English Channel. All of these old European geopolitical forces are now active again because the EU is just not able to quell them.
So you know it’s very easy for people to say oh well there are elections on this date and there are elections on this date and oh my God, it’s another Brexit or another this that or the other thing. This is really part of a really slow process that began I think when German unified quicker than everybody expected and sort of undermined the main strategic aspect of the EU. People will explain it in ideological terms and of course, it’s expressed in ideological terms because people are political and that’s how it gets expressed. But if you wanna understand what’s going on here, Germany’s unification again in 1991 as it was in 1871 as in all these other times is moving politics in Europe.
CA: Well I think that’s as good as any place to stop.
JLS: Yeah I think that’s good for now.
CA: It’s a lot of Europe.
JLS: It’s a lot of Europe and you know…
CA: We could talk so long about Europe, there’s so many different countries jampacked into a small area. And we didn’t even touch on the Baltics, we didn’t touch on Eastern Europe, whatever Eastern Europe is and essentially it’s… you briefly touched on the Balkans, like all of this can just go to hell really quickly if there’s instability in the Balkans as we’ve seen time and again throughout history. So there’s just so much to get into and it’s probably just wise of us to not get into every nook and cranny of this continent but…
JLS: No but I think it’s important to sort of tell the story of Europe as the chapters unfold as it’s going. I will say that it’s nice because so many of our recent podcasts have been about the Middle East or China because there’s just so much happening in both the Middle East and China. And shout out to a reader who was like, hey I want you to talk about South America on the podcast.
CA: Love to.
JLS: We try to use the podcast to talk about things that are you know on people’s minds that allows us to speak about things that we haven’t necessarily written about yet but you will certainly see some of these thoughts come out in writing. But you know, today is Europe and because of the Italian elections, we get to take a step back and talk about Europe. As other things happen in different parts of the world, we’ll talk about them too. But yeah.
CA: Well you said this is, and this is the last question I’ll ask you, but this is just another chapter in the European story and I like that, that’s a really great way to frame it. If I can be so bold, how do you see this story going? Where do you see it going?
JLS: Yeah this is, you know this is one of those difficult questions to ask someone because your first impulse is to give a wishy-washy answer that doesn’t actually say anything. But I try not to do that so. I think that the way that the European Union is trending is that people are just going to start ignoring it. And I think that you are already seeing that happening. You know we mentioned it a little bit with Hungary, Poland, France, Italy, those are all countries that have ignored you know EU directives before. You’ve got the U.K. splitting off. You’ve got a lot of different things going on.
You know maybe in twenty years time, there will still be an office in Brussels that is releasing statements and stuff like that. But I think that what has to happen here is that the EU is going to have to change if it’s going to survive in any way that is politically meaningful, it’s going to have to change itself to be more aligned with the strategic situation on the ground. And that means Germany and France coming to some kind of agreement on what the European Union is going to look like and also getting buy-in from the rest of EU countries.
So I think that if you know if this is going to track in terms of interest, you would see the EU try to move away from politics and try to become more of just a free trade agreement. The problem now is that ideology and politics is so enmeshed in this that you might see the EU try and go for more power and try and impose power on people in the bloc. I think that would backfire and I think that would create a bigger backlash.
CA: I think that all the evidence suggests that it probably will. But we’ll see.
JLS: But the thing to keep in mind though is, you know Germany needs a free trade zone to send its exports to. And a lot of these countries in Europe, especially you know countries like Poland or the Czech Republic, these countries are all part of the German supply chain. They all have an interest in the German economy continuing to do well. They don’t have an interest in the free trade zone collapsing.
So I think that you’re going to have a lot of arguments about the politics and this, that and the other thing. You know the moment at which this would really all collapse down is if the free trade zone collapses and nobody has an interest in the free trade zone collapsing. So I think you know if I was going to….
CA: Or anybody outside of Europe for that matter too, yeah?
JLS: Or outside, yeah that’s true. But you know if you’re going to think about what the future of Europe looks like, I think it’s the future of European nation states emerging and figuring these things out for themselves and figuring out how to preserve this free trade zone without causing the kind of backlash that we’re seeing.
The problem is that and this is what we’ve alluded to and this is what the Italian elections shows, this what Germany having a problem forming its government showing, there’s just not one viewpoint here and the viewpoints have proliferated to such an extent and power has become so diffuse and they’re leaving it up to national referendums that you’re gonna be kind of wind to the mob at some point, you know? There’s the real chance that you might have a nationalist party that comes out that just wants to jettison the whole thing and will go towards that. So I hope that wasn’t too much of a copout answer but I think that’s what it looks like.
CA: No it was not a copout, it was a cop-in. And if anything it was more comprehensive than I thought it was going to be. I thought it was going to be a nice little valediction – we’ll see you next week. But you gave an actual answer of substance which is probably a good thing.
JLS: I try.
CA: Yeah, it’s probably what we’re going for here. But for real, we’re done.
JLS: We’re done.
CA: We’re finished talking.
JLS: Yeah, we’ll see you out there.
CA: Thanks very much for taking the time everybody. That’s Jacob, I’m Cole. We’ll see you next time.