A Possible Blueprint for Preserving Peace in Europe

 August 2, 2017

Remember Montesquieu and his “doux commerce” ? “L’effet naturel du commerce est de porter à la paix. Deux nations qui négocient ensemble, se rendent réciproquement dépendantes: si l’une a intérêt d’acheter, l’autre a intérêt de vendre; et toutes les unions sont fondées sur des besoins mutuelles. Mais si l’esprit de commerce unit les nations, il n’unit pas de même les particuliers.”

Over the past few hundred years, this belief has become an integral part of the liberal credo and it animates the economic thinking of globalists to this day. Alas, the promise of trade as a peace-promoting activity among nations has never been fulfilled to date. The recent adoption of additional sanctions against Russia by the US senate amply proves that geopolitical tensions among nations and blocks of nations can thwart the beneficial effects of trade among them. One of the problems is that Russia and the United States are essentially alike tradewise. Both countries rely heavily for their export earnings on commodities (oil & gas) and sales of military hardware to their allies…

In many ways, the European Union is caught in the current crossfire between the former cold war enemies. A new and more dangerous version of the first cold war between the Americans and the Russians has emerged, one that is commonly called cold war 2.0. It has occurred as a direct result of the relentless expansion of NATO eastwards since the turn of the millennium and it is now seriously affecting international trade.

Nevertheless, restoring peaceful relations between the EU, US and Russia is an essential precondition of resuming normal trade relationships. But how to achieve this?

First, the Western alliance should recognize that the presence of NATO in the countries bordering Russia is viewed in Moscow as a huge security threat. Thus, not only should its expansion into Ukraine, Moldova and Georgia be halted, but additional confidence-building steps should be undertaken in order to defuse the current tensions.

Second, the Baltic countries should themselves revert to a neutral status, even as they retain EU membership.

Third, a newly-formed neutral zone between NATO and Russia should be created. This would include Estonia, Latvia and Lithuania, Ukraine, Moldova and Georgia, whose security should be guaranteed by multilateral treaties between NATO powers and Russia.

Past experience has proven that in case of conflict, in all these countries with sizeable Russian minorities, their allegiance naturally tilts towards Moscow. This makes these states, at the best of times, unreliable NATO allies or candidates. Furthermore, history has also shown that states like Ukraine, Moldova and Georgia achieve a relatively higher level of internal stability when led by pro-Russian leaders.

Putting a stop to NATO’s expansion and taking a step back from the Russian borders would restore peaceful relations with Russia and improve trade ties. Just as important, it would prove that NATO is not bent on expansion at the expense of trade, but stays true to its original mandate of preserving peace on the continent.

Three Seas or Five Seas Initiative ?

 July 6, 2017

Polish President Andrzej Duda’s Three Seas Initiative project is a logical outcome of the European Union’s eastward expansion since the turn of the millennium.

To observers in the former Soviet satellite states of Central and Eastern Europe, the expansion of the EU looks very much like a “drang nach Osten” affair minus the tanks, that is. Even the French regarded this group of countries as lands to be conquered economically. Pascal Lorot, for example, one of the co-founders of geoeconomics, even wrote a book on the subject suggestively titled “La conquête de l’Est”.

Truth be told, ex-Soviet satellite states which have adhered to the European Union since 2004 have quickly become second-class countries within it. This is, by-and-large, a development I fully expected. As the Nobel-prize winning Swedish economist Gunnar Myrdal pointed out in the seventies, from the association of a group of rich countries with a group of developing or poor countries, the latter would end up as the losers.

At the time the membership of the EU was restricted to Western Europe and Germany, things had worked out rather smoothly. Most if not all of its members were economically developed, former imperial powers, institutionally compatible with each other.

The EU’s new entrants since 2004, on the other hand, have a shared history of anti-imperialist struggles in their quest for nationhood that sometimes go back centuries. Some, like Poland, had even suffered partitions at the hands of all neighbouring empires: Austria-Hungary, Prussia and Russia. The countries in this group see their economic development stifled by Brussels’ over-regulation, their national sovereignty infringed upon in ways they cannot accept, and their future within the Union as a bleak one. These are but a few reasons why a closer integration between countries like Czechia, Croatia, Hungary, Poland, Slovakia, Romania, Bulgaria and ex-Yugoslav states makes much more sense now than it did in the inter-war period.

Still, in my view, Poland would be an unlikely nucleus for promoting closer economic, military and even political links between them. To be successful, the group has to shy away from including states like the Baltic republics, Ukraine or Moldova. The latter states have millions of Russians or Russian-speaking citizens within their borders and, short of resorting to Stalinist-era eviction solutions, these countries’ eventual adherence would prove poisonous to the entire group. Needless to say, Russia would strongly oppose the formation of such a group if the Polish-inspired drive to include the largely neutral countries on its border would somehow prevail.

And last but not least, Greece should also potentially be included as a member of the TSI, which would thus become FSI (Five Seas Initiative). Greece’s adherence would give the group increased international clout, an enviable geostrategic configuration and better access to the Mediterranean. As matters now stand, there is no love lost between the Greeks and the German-led EU officialdom.

In fact, the driver of such an integration project should be Romania, for strategic and historical reasons. The inter-war Romanian foreign minister N. Titulescu had succeeded in 1934 in merging the Little Entente (made up by Czechoslovakia, Romania and Yugoslavia) with the countries from the Balkan Pact, which included Greece and Bulgaria. He was also careful not to antagonize the USSR, with which he signed a non-aggression pact.

Tragically, however, at this point in time Romania is unable to play such an essential role. Practically all the politicians we inherited from Ceausescu’s dictatorship – and Iliescu’s “original democracy” experiment – lack decency, credibility, vision, solid qualifications and political skill. Most of them are an illustration of the sociological nightmare of the worst who get on top, which makes it very difficult for the country to solve its internal woes, let alone participate in such a demanding undertaking.

The support of the United States, although not necessarily a military one, is a prerequisite for the successful completion of any of the above projects. It is no accident that President Trump gets a better reception in Poland than, say, Germany or Britain. The United States have themselves appeared on the world map after a successful war of independence, fought against imperial Britain.

If successful, the efforts of Central and Eastern Europeans to closer integrate their economies and markets and to build the needed physical infrastructure would also benefit the European continent as a whole.

Should the EU Agree to the Partition of Libya ?

 April 13, 2017

News has it that White House foreign policy aides are toying with the idea of partitioning Libya in three, roughly copying the Ottoman Empire’s former administrative entities in the region. As the “America First” political philosophy seems to have lost its appeal for the Trump team’s policymakers, there is now a flurry of initiatives on the foreign policy front. Needless to say, most such initiatives are misguided and, according to French and American experts, the grand strategy is not even decided upon in Washington, but in Israel.

The idea of partitioning Libya is yet another example of an amateurish approach to international relations which does not bode well, either for Libya or for its neighbour across the Mediterranean, the EU.

It would be useful at this point to remind readers that for at least 50 years before the September 11 attack, North Africa’s Maghreb had been the special responsibility of European powers, especially France, whereas the problems of the Middle East had for obvious reasons, for better or for worse, been handled by the United States. Since the start of GW. Bush’s “war on terror” however, the Americans have decided to enlarge their footprint in the Arab world. Consequently, a new strategic region was created to that end, commonly known as MENA (Middle East + North Africa). The Pentagon’s Africa command started to interfere in the way Maghreb countries were being run, the plan to partition Libya being only the culmination of such meddling.

European foreign policy experts and political representatives should, however, insist on adopting statecraft solutions for Tunisia, Libya and Algeria that are consistent with the region’s past and options for the future without any interference from America’s foreign policy operatives or from the Pentagon. Failing that, this region of the Arab world which has been reasonably peaceful until recently risks being engulfed in the same intractable conflicts that have characterised American leadership in the Middle East.

The Transatlantic "War of Fines"

 September 23, 2016

I’m not going to write about Bratislava’s informal September summit, for nothing of substance regarding the future of the Union has been decided there. Fact is, EU political leaders have delayed important decisions for the spring of 2017, after the results of the American elections are in.

Why does the next American president matter ? For a start, if Trump wins in November he will try to make good of the promise to squeeze more money for NATO from rich EU member states. If H. Clinton gets into the White House, pressure to do more for the common defence of the continent will somewhat be diminished and global elites from both sides of the Atlantic will get a powerful ally in Washington.

As matters now stand, transatlantic relations are deteriorating at a rapid pace. Indeed, for a few months now the “war of fines” has been well and truly underway. The EU has slapped a 13 billion-euro fine on Apple, the US’ best-performing corporation. The US retaliated with a 14 billion-dollar fine on Deutsche Bank, which – if enforced – could trigger a collapse of the entire German banking system and a full-fledged banking crisis within the EU. A few months prior to this the US had fined Volkswagen, the EU’s largest car manufacturer, 15 billion dollars. All these come on top of BNP Paribas’ 9 billion-euro fine from 2014, one of the largest ever applied to a bank outside the US.

The amount of money collected in fines by the US government is a clear indication that Uncle Sam has his coffers empty and finds it very hard to continue to provide adequate funding for Europe’s defence via NATO. The realisation of this fact might have prompted Jean-Claude Juncker to ask for the creation of an European army, albeit at the wrong time in the EU’s history.

In truth, the EU is able to provide for its own defence. The size of its member states’ armies combined, their air forces and navies could successfully deter would-be aggressors. Juncker, however, is the wrong person to undertake such a project, simply because he is a federalist. The EU does not need an “European army” as such, but rather a common NATO-like command structure in Brussels (or elsewhere) that could coordinate the militaries of member states in the event of a major conflict. That’s all.

Naturally, the new structure will in time replace NATO as a collective defence organisation and all member states will need to agree to higher levels of defence spending than it has been the case for the past sixty years. A common defence policy and collective security structures will not, however, alleviate the EU’s major crises, such as economic stagnation and migration. For those problems to be solved, the EU has to rid itself first of austeritarians and federalist-minded political leaders, who are chiefly responsible for the predicament the Union is currently in.

Secret History of the EU Project

 June 10, 2016

Pew research data released a few days ago indicates a growing dissatisfaction with the EU even in countries like France and the Netherlands, founding members of the Union.

It would be easy, of course, to blame the spread of euroscepticism on Brexit, on the 2008 financial debacle or last year’s migration crisis. In fact, as I will attempt to demonstrate further, it is the design flaws inherent in the European project that now undermine its survival.

This project – involving “an ever-closer union” of European nations – originated on the other side of the Atlantic and had started as a covert operation of the then newly-formed CIA. These essential details were hidden from the public for decades. Even I, as an historian, was made aware of them thanks to the interventions on French TV of Mrs. Marie-France Garaud, the eminence grise of presidents De Gaulle, Pompidou and Chirac.

Recently declassified CIA-OSS archives also prove beyond a shadow of a doubt that men whom we have considered for years to be the EU’s founding fathers (Jean Monnet, Robert Schuman and so on) were in fact paid to impose the CIA’s European project on an unsuspecting public opinion.

The CIA’s project was chiefly inspired by former OSS boss “Wild Bill” Donovan and by John Foster Dulles, former CIA director. Together with a small group of other lawyers, they elaborated the mad project of an “United States of Europe”. It was supposed to be realized in stages, by stealth and without European nations being fully informed about the ultimate shape or objectives of the EU institutions created in the mid-fifties.

Its original design flaws reflected the founders’ lack of grasp of European history, geography and geopolitics. Donovan and Dulles, steeped in European clandestine operations during WWII instead, had also developed an unhealthy admiration for existing Nazi blueprints to unite the continent’s countries and/or of Nazi high-ranking officials like Walther Funk. Their ideas by and large were incorporated into the CIA project, with the consequences only now made apparent by the financial and sovereign debt crises of the past decade.

However, had the initiators of the CIA project taken into consideration their own, American geopolitical scholarship concerning the organization of Europe after the war, Germany would have never been included into NATO but had been kept neutral instead, possibly undivided and under military occupation. Nicholas Spykman, the founder of American geopolitics, writing in 1941 considered that:

 

“Any proposal for the unification of Europe would tend to put them in a subordinate position to Germany (regardless of the legal provisions of the arrangement), since Germany, unless broken up into fragments, will still be the biggest nation on the continent. It is hardly conceivable that countries now fighting for their freedom would turn around and voluntarily submit to any such arrangement. It is equally improbable that the United States, after having made such tremendous sacrifices to help free these countries from the German yoke, would consent to the restoration of German domination.” (Nicholas Spykman,“The Geography of the Peace”, 1944)

 

 

 

Today when we look back at the crucial 1947-1957 decade, we can start to understand why the EU Commission and institutions are manned by an opaque bureaucracy unresponsive to public scrutiny, which is hell-bent on advancing the agenda of global corporations at the expense of the European citizen. Being a covert project inspired and financed by the CIA, the EU is indeed unable to fulfil the aspirations for progress of the European nations, although for a few decades it has seemed to function in that sense.

Towards the end, however, the central tenets of the project – the creation of the United States of Europe, Brussels’ centrally-planned economic and fiscal management, the common currency – became the foremost priorities of the subservient EU bureaucracy and of some EU political leaders alike. But this was also the point where European nations could not continue to support the project and started having serious doubts about the whole construction.

In hindsight, after two devastating world wars, the creation of NATO and the Marshall Plan would have been sufficient to keep the peace on the continent and return it to prosperity. The CIA on the other hand, which during the same period also financed the creation of the Bilderberg club, wanted to make sure that American multinationals and later global corporations can fully profit from European reconstruction and the accompanying economic development. Hence the adoption of an European union project and the creation of European institutions which were from the outset under the influence or management of people vetted and approved by the CIA/Bilderberg bosses.

The un-European nature of the entire EU project is its major flaw, although there are others, as well. No such project originating in the New World – even if elaborated with the best of intentions (which of course is not the case) – could ever be expected to work for long on the old continent. And vice-versa.

The EU’s apparent fleeting success had more to do with European reconstruction efforts and with the ubiquitous desire for peace after the two devastating wars. During the past two decades, unfortunately, CIA-sponsored politicians and intellectuals on both sides of the Atlantic have overplayed their hand and the entire edifice is crumbling as a result. While it is hard to gauge right now what alternative structures and arrangements will ultimately replace the EU, what’s for certain is that European nations should never again go to war with each other or allow outside powers and institutions to make vital decisions on their behalf concerning their collective future.

The implosion of southern EU states' political systems

 March 14, 2016

The EU’s macroeconomic indicators for 2015 – the growth rate standing at 0.3 percent, the inflation rate at 0.2 percent – paint the picture of a continent severely affected by what economists call “secular stagnation“.

Secular stagnation is afflicting not only the EU but also Japan, and in the years ahead it will most probably end up engulfing the United States as well. Until recently, the only growth engines for the global economy were the BRICS countries. The slowdown in China and the economic woes experienced by Brazil and Russia have, however, reignited fears that the world economy is about to go off the rails, as the latest IMF warning clearly states.
The dire consequences of secular stagnation for Western economies could have been mitigated, if not reversed, by higher levels of public spending on infrastructure and on health and education systems. Instead, most EU countries under German leadership opted for the implementation of harsh and totally counterproductive austerity policies, which made matters worse.

Nowhere is the destruction of social fabric and political systems more evident than in the southern half of the EU. Greece is yet to register any signs of economic recovery after five years of the harshest austerity policies ever, while Portugal, Spain and Italy show only minor signs of recovery and stubbornly high levels of unemployment and social misery. Even Ireland, until recently deemed to have benefitted from austerity, has seen its political system unravel after the latest elections.

The danger in the political implosion of the above group of countries is real, as elections in 2015 have demonstrated. Neither Greece, nor Ireland, Portugal or Spain have returned traditional parties to power – a situation that has created political deadlock and instability, risking to make these countries ungovernable. Extremist and nationalist forces thrive in such an environment, further complicating matters for Brussels and for more stable (until now) northern members of the EU.

Weighing in on the dire political situation of southern EU members like Greece, Portugal and Spain is these states’ recent political history. Until the 1980s, they had been ruled by dictatorships and subsequently made enormous efforts to democratize their political systems in order to join the EU. Nowadays, the same union that bankrolled their valiant efforts during the last decades of the 20th century is imposing austerity policies which are in fact destroying both their societies and recently democratized political systems. For a majority of southern European citizens, the EU has failed to live up to their expectations and has become the problem, instead of the solution, to their plight.

The EU in the Age of Geoolitics

 January 4, 2016

At the beginning of the year, it has become customary for ‘pundits’ to make predictions about forthcoming developments which might affect the global economy, elections in leading countries or international relations. From my part, I would like to take my readers back in time, in an attempt to make today’s armed conflicts around the world easier to understand.

This approach is all the more necessary as virtually all of today’s armed conflicts – in Ukraine, Libya, Syria, Iraq or Yemen – have geopolitics as a common denominator. Even ISIS has a clearcut geopolitical agenda of sorts, namely that of establishing an “Islamic caliphate” in territories snatched from war-torn Syria and Iraq. Taken together, these tensions and conflicts among ethnic, religious or military blocs have brought to an untimely end the era of globalization and ushered in the Age of Geopolitics. But where did it all start ?

Over the past sixty years, specialists and the European general public were led to believe that geopolitics died together with Nazi Germany and was replaced with the ideological confrontation between the capitalist and communist worlds commonly referred to as the Cold War. Yet by the 1970s, as the confrontation apparently led to a stalemate, geopolitical-type conflicts again started to prove their usefulness for policymakers intent on destabilizing their opponents’ camp.

In Europe, conflicts of a geopolitical nature were rekindled by stealth courtesy of the United States. Thus, during the seventies the Ceausescu regime, fearful of being axed by the Soviets following the Prague Spring, was encouraged to denounce the Ribbentrop-Molotov Pact and pushed some of the country’s historians into demanding the return of Bessarabia within Romanian borders. That geopolitical conflict is still very much alive today, with Romania, the EU and the Russian Federation involved in a tug-of-war confrontation over the future of the Republic of Moldova.

As it turned out, in the end the Soviets lost their post-WW II domination of Central and Eastern Europe following a decade of cooperation between the CIA and the Vatican – which led to the formation of the Solidarnosc trade union movement and the organization of free elections in Poland – and not as a result of the geopolitical, USA-backed proxy confrontation between the Ceausescu regime and Moscow.

Following the fall of the Berlin wall and the implosion of the Soviet Union, geopolitical conflicts have made a spectacular return to Europe, in Yugoslavia. The separation of Slovenia and Croatia, the two Catholic regions of the Yugoslav federation, is likely to have been requested to the Western alliance by the Vatican as a reward for its successful assistance in undermining the Soviet Union during the eighties. It is also very likely that US strategists did not in fact plan for the total destruction of the Yugoslav federation, but for a diminished one, after which Serbia could be allowed to control the remainder of the territory. As events unfolded, however, the Macedonians and Albanians also decided to secede, spelling the end of the Yugoslav state.

Since 2001, the US has openly embarked on a drive to stoke geopolitical conflicts in places around the world where it wanted to expand or consolidate its hegemony. In Europe this drive led to the 2004 colour revolutions in Ukraine, Moldova or Georgia, as well as the 2008 Georgian war, and culminated in 2014 with the toppling of the elected government of Ukraine by the CIA-backed Maidan movement.

In the Arab world, the US and some of its European allies like France and the UK gave full backing to armed groups involved in the fall of the Gaddafi regime in Libya, or in the civil war in Syria, sometimes in alliance with Saudi Arabia and/or Turkey. The Russians and the Chinese have either been largely neutral in these conflicts or have sided with the embattled Syrian regime, which for more than four years is fighting some of the most dangerous terrorist groups on the planet.

For the EU, the price to pay for the US’ post-cold war geopolitical forays in Eastern Europe and the Arab world is staggering.

Already affected by years of stagnation after the 2008 financial crisis, EU countries have lost tens of billions of euros in trade with Russia, following the Washington-dictated sanctions against this country which prompted the Russians to reply in kind. At least ten billion euros more is the likely cost for resettling the 1 million Syrian refugees within the EU, an amount that does not include the 3 billion euros promised by the European Commission to Turkey so far, in a futile effort to convince this country to stem the flow of Europe-bound refugees.

Geopolitics as a field of study can not only provide us with a better understanding of what is at stake in today’s conflicts, but also with some insights into what the future could bring.

In the Middle East, the Sunni-Shia confrontation between the region’s main powers, Saudi Arabia and Iran, is likely to continue for years to come. We are in all likelihood entitled to expect that the Alawite minority in Syria will establish its own separate state, as are the Kurds from northern Iraq and parts of today’s Syria, much to the chagrin of Turkey. The rest of the Syrian territory and possibly parts of Iraq will probably emerge as a new Sunni state entity, as sectarian conflicts will prevent the continued existence of Syria and Iraq in their current form.

For the European Union, Ukraine is poised to play the same role as Afghanistan in the demise of the Soviet Union. The unwise decision to back American neocon planners will thus backfire and hasten the EU’s own demise in the process. The main catalyst for its undoing are the nationalistic movements gaining in strength, from the UK and France in the West, to Hungary and Poland in Central and Eastern Europe. The continent is already back to barbed-wire fences not only in Ukraine, but also in Hungary, Austria and Germany – a trend that will mean the final collapse of the Schengen area in the following years, if not as early as 2016.

All these developments combined suggest one thing. Namely that, when compared to Russia, China or the United States, the European Union is the worst-equipped entity to survive in the age of geopolitics and deal with its consequences.

How NATO is Failing the EU

 December 3, 2015

The untrained observer could be forgiven for believing that NATO is still acting as a military and political organization dedicated to protecting the security of its members. Enlarging the organization with a less-than-significant member (militarily speaking) like Montenegro cannot, however, obscure NATO’s huge failure to adapt to today’s radically changed geopolitical and strategic landscape.
Headed in the past few years by Russia-obsessed officials hailing from European northern kingdoms (Rasmussen from Denmark or Stoltenberg from Norway), the alliance has failed to recognize that these days the biggest threat to the security of all NATO countries is represented by existing or emerging Islamic countries from the Middle East instead.
Nor did NATO reckon with the fact that, since 2002, the secular regime in Turkey was replaced by an Islamic one. This mega transformation of Turkish society – which is still ongoing – has ended up creating a serious security threat for the European Union as a whole, as illustrated by this year’s refugee crisis. Indeed, not only has Turkey failed to live up to its obligations as a NATO member, such as sealing its border with Syria, but over the past four years it has allowed tens of thousands of jihadi fighters from all over the world to cross the country and join ISIS. This year it has decided to allow hundreds of thousands of refugees on its territory to practically invade EU countries unhindered. One of Erdogan’s advisers, Burhan Kuzu, has even hailed Turkey’s latest exercise in extortion as a success for the AKP regime:

“The EU finally got Turkey’s message and opened its purse strings. What did we say? ‘We’ll open our borders and unleash all the Syrian refugees on you.”

For a number of years after 2002, I too believed that a moderate Islamic government in power in Turkey could make the country more politically stable and economically prosperous. Not anymore. The assistance – overt or covert – extended by the AKP regime to Islamists in Syria and elsewhere, the scandal of appointing Erdogan’s son-in-law as energy minister and his son as the head of another energy company ( as if Turkey was an oil-producing powerhouse), the savage repression of journalists, of the free press and of Turkish officials who are trying to uphold the rule of law within the country, have all finally contributed to convincing me that the AKP regime has outlived its usefulness for Turkey and for the NATO alliance, as well.
Undaunted, the current NATO leadership, with some behind the scenes assistance from American neo-cons, is trying to recycle expired Cold War policies and continue to depict Russia as the main enemy of the West. In so doing, the organization conclusively proves that it has become obsolete and useless when it comes to addressing major security threats affecting its members.
It is my belief that Turkey wouldn’t have dared shoot down a Russian aircraft – a jamais vu event in the Alliance’s history – if the country’s leaders had not been certain that anti-Russian bias at the top levels of NATO would prevail.

Still, instead of discussing Russia, NATO ministers would be well-advised to hold a special session dedicated to assessing Turkey’s continuing usefulness for the Alliance in the current strategic circumstances. In the light of this year’s developments, Turkey – NATO’s only Muslim member – has emerged as a dangerous ally and a questionable friend. In other words, instead of trying to evict Greece – Turkey’s main victim in the refugee crisis – from the Schengen area, it would definitely prove more useful to consider the suspension of Turkey from NATO command structures until such time as the AKP leadership could come clean on the issues of unchecked refugee migration to Europe, jihadi movements to and from Syria, shady oil dealings and the supply of weaponry to Islamic insurgents.

The EU and China: Geo-economic Agendas Compared

 November 22, 2015

The wave of blowback terrorism currently sweeping Western European capitals is likely to obscure a major event due to take place on November 24th and 25th in China: I am referring to the annual meeting of the leaders of 16 Central and Eastern European countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia) with the Chinese leadership in Suzhou. Following immediately after this weekend’s ASEAN summit in Malaysia, the meeting provides an extremely useful glimpse of China’s geo-economic agenda from the Balkans to Poland and Hungary.

An even more useful exercise, however, would be to compare the EU’s geo-economic agenda, with that of China and Russia in our parts of Europe.

The leading exponent of the West’s geo-economic agenda has to be considered Pascal Lorot, the founder of geo-economics. In the 1990s he published a booklet, suggestively titled “La conquête de l’Est”. The book contains the main tenets of the West’s economic expansion in the ex-Soviet bloc states from Central and Eastern Europe. Although NATO expansion has preceded that of the European Union, the main actors of the West’s geo-economic agenda in the region are the global corporations headquartered in France, the US or other participating Western countries.

While financial transfers from the EU to new member states from Central and Eastern Europe have diminished significantly over the years, having contributed only marginally to upgrading their infrastructure to EU standards, Western global corporations have taken over even the water supply or gas distribution in countries like Romania.

The results of the economic penetration in the area are, in some cases, nothing short of disastrous. Thus, companies like Vivendi or Gaz de France have succeeded in imposing to consumers at least ten tariff increases for water and gas in the last four years alone, contributing heavily to further impoverishing Romania’s population whose income levels, however, were already well below the EU average. To top it all off, Brussels is about to stunt Romania’s economic growth by imposing an EC-backed premier, unelected and undesired by the locals.

Moreover, throughout the region, Western global corporations have systematically deprived all the governments of much needed taxation income via transfer pricing and other accounting gimmicks.

Sure enough, there are a few success stories of Western economic expansion in the region, like that of German, American and French auto-makers in countries like Hungary, Slovakia, the Czech Republic and Romania, but these are the exception rather than the rule.

At the time of their EU accession in 2007, citizens of predominantly Orthodox countries like Romania and Bulgaria were hoping that this would put an end to their countries’ economic plight. The ensuing cultural shock suffered during the latest drive of Western expansionism has instead reopened old wounds. The 1204 ransacking of Constantinople by the crusaders is still alive in the collective memory of the Balkans. On that occasion, Western military “assistance” morphed into full-blown pillage and plunder, followed by the occupation of the Byzantine capital.

By contrast, since 2012 when the first China-CEE meeting took place in Warsaw, China has proven more willing than the EU to invest heavily in these countries’ infrastructure and manufacturing sector. In 2013, the first direct rail link between southwest China and the Polish city of Lodz was inaugurated, greatly facilitating two-way trade between the two countries. Nowadays, it takes only 15 days by rail for Chinese goods to reach Poland, or for Polish agricultural products to reach China. The upgrade of Baltic countries’ ports with Chinese investment is also underway, not to mention the upgrade of the port facilities in Piraeus, Greece by Cosco.

To date, the most ambitious Chinese infrastructure project in the region is the building of a very fast rail link between Piraeus and Hungary, connecting Athens and Skopje with Budapest via Belgrade. Not very far behind are the Russians, who are planning to build a gas pipeline from the Balkans to Central Europe along the same route. The Russians have also agreed to finance, to the tune of a few billion euros, the upgrade and construction of nuclear reactors in Hungary in spite of vehement EU protests.

The leaders of Central and Eastern European countries are now in a position to choose from the two geo-economic agendas the one that best suits the needs of their economies. As matters now stand, it seems that the West has largely exhausted its economic growth potential and is instead trying to exploit – colonial-style – the resources or populations of the new member states accepted after 2004. With its large cash reserves and “win-win” economic philosophy, China looks set to capitalize on local disenchantment with the EU by expanding steadily into this region.

The "New Europe" NATO Summit in Bucharest

November 6, 2015

The fact that the EU is undergoing its most profound existential crisis ever is by now an open secret. The Greek debt crisis had produced a North-South divide in Europe, whereas the migrant crisis has prompted a rebellion against the EU leadership from Eastern bloc members. Nowadays, NATO itself is contributing to the existing divisions by bringing back to life the “Old Europe – New Europe” division of the Bush Jr. era.

Thus, on the 3rd and 4th of November, NATO has organized a “ Presidents’ Summit “ which took place behind closed doors in Bucharest. The meeting was attended by nine presidents of EU member countries from Central and Eastern Europe, and resulted in a declaration which could rightly be called an anti-Juncker document. The final document stressed the need to strengthen ties with the United States and stand united against “Russian aggressiveness”.

It is an undisputed fact that the EU’s eastern and southern borders are far from secure as a result of the conflicts in Ukraine and the Middle East. Both conflicts were ignited by American covert operations or outright military intervention in those regions, which have very little to do – if at all – with EU foreign or neighbourhood policies’ objectives.

Still, the EU is paying the price for American foreign policy amateurism, which is what has prompted Juncker and Merkel’s recent overtures towards Russia and Turkey. To be sure, Juncker’s declaration concerning Russia and Merkel’s visit to Turkey are by and large part of a PR exercise meant to soothe the leadership in Moscow and Ankara and maybe pave the way for a reset of the EU’s relations with the two countries.

The summit in Bucharest went largely ignored in the international media because of the current street protests in the Romanian capital. By reviving Rumsfeld’s “New Europe” concept, however, and by trying to pitch the leaders of Central and Eastern European countries against the president of the European Commission, the Americans are contributing plenty towards aggravating the rifts that threaten the very existence of the EU. Whilst this might not be their ultimate intention, the outcome of the latest NATO strategy in Europe is going to hurt transatlantic ties more than it would stunt Juncker and Merkel’s efforts to patch up relations with Russia or Turkey.

EU: No Silver Bullet Solution for the Migrant Crisis

 

EU: no silver-bullet solution for the migrant crisis

October 25, 2015

The recent flurry of diplomatic activity by EU leaders who are trying to slow down the migrant influx has not as yet yielded any tangible results. In truth, the situation has become so complicated that there are no good moves left in order to stabilize it.

 

To illustrate this, one should consider the results of German chancellor Angela Merkel’s October 18 visit to Istanbul, during which she offered Turkish authorities a 3 billion-euro contribution and the promise to speed up the country’s accession talks with the EU. (A deal so far refused by Turkey.) If anything, the visit has frightened the Syrian migrants into crossing to Greece in even bigger numbers. From around 5,000 people a day making the perilous trip before the visit, the IOM authorities have announced that the number of migrants increased to around 9,500 a day for the whole week following Merkel’s visit.

 

The Commission also tries to convince transit countries like Macedonia, Serbia, Romania and Bulgaria to help stem the flow of migrants to Germany. So far, the efforts have generated the fear that these countries might be obliged to keep a huge number of refugees on their territory for longer than a few days. Accordingly, the Bulgarian, Serbian and Romanian premiers have announced on Saturday October 24th, in a joint press conference, that if Austria and Germany will close their borders to migrants, they would have no choice but to follow suit. After the mini-summit held in Brussels on Sunday 25th of October, the Bulgarian prime minister Boyko Borissov has complained to the press that the European Commission suggested to governments such as his to take out loans from the EBRD or BEI in order to pay for the upkeep of refugees.

 

Finally, there is a lot of bickering going on between the Commission and a number of Central and Eastern European members which flatly refuse the imposition of migrant quotas. In fact, the leaders of these countries are resisting the very idea of quotas, as they feel that their populations are totally unprepared to accept Arab migrants in their midst and that their economies might be adversely affected by the expenditure necessary for the migrants’ upkeep.

 

The only glimmer of hope to date might come from the ongoing negotiations to reach a political solution in Syria which involves the US, Russia, Saudi Arabia and Turkey. The quartet might be joined next week by Iran and is expected to ultimately reach a deal in order to bring about an end to the bloody civil war that is the root cause of the current refugee crisis.

The EU and the Migrant Crisis

 September 13, 2015

For a continent long renowned for the excellent quality of its primary and secondary education, the beginning of the school year was until recently the season’s most important event. Not anymore. From Budapest to Brussels, government and Union officials have their hands full with the migrants’ crisis, which threatens to get out of control.

TV screens and the printed European media are full of images of tens of thousands of Syrian refugees heading for Germany as if they were heading for a second Mecca. Why Germany ? Syrians know fully well that the southern members of the Union have had their economies devastated by years of austerity and therefore could not provide the social benefits that Germany alone seems able to afford. Sure, a few hundred migrants have trickled into Denmark, Sweden or the Netherlands, but the governments and population of these countries are far less willing to accept their asylum demands.

Then there are Angela Merkel’s statements to the effect that all migrants who can reach Germany will be accepted, which have aggravated the latest exodus from Turkey. The reason why she has made such an uninspired statement – when it was already clear that the Syrians do not need additional encouragement – will remain a mystery to me. As a consequence of it, the EU is experiencing another serious split between its Western European states and the newer, ex-Soviet EU members. Hungary and the Visegrad countries have flatly refused the idea of compulsory quotas of migrants to be accommodated in their countries, while their leaders are doing their darnedest to stem the flow of Syrians towards Germany.

After the euro crisis which has provoked a split between the North and the South of the continent, a second split between West and East could further endanger the very existence of the EU. Already, opinion leaders and politicians from the Visegrad countries and even Romania have accused the EU Commission of adopting the behaviour they used to know during Soviet times. If this is not ominous for the future of the EU, I don’t know what is…

Why the Berlin Consensus is Toxic for the EU

 August 31, 2015

Over the past fifteen years, quite a lot of criticism has been levelled by the “MIT gang”° against what has become known as the Washington consensus. Very little or no public discussion, however, has taken place about its close European offshoot, the Berlin consensus.

Sure, there are some differences between the neoliberal economic thinking underpinning the Washington consensus concept and the Berlin consensus. For better or for worse, the pitfalls in promoting mass privatizations, currency and capital markets liberalization around the globe are too well-known to all to insist upon here. What the Washington and the Berlin consensus have in common, on the other hand, is the “one-size-fits-all” approach to solving economic problems.

The policies shaping today’s Berlin consensus have appeared during the nineties in connection with the introduction of the common currency. The main tenets of the Berlin consensus are derived from the German economic doctrine of ordoliberalism and the project of Walther Funk, Hitler’s minister of the economy.

Alas, what works for Germany does not work for the rest of the eurozone. The Maastricht Treaty, the budgetary and public debt rules and limitations, as well as the accompanying austerity measures have been enshrined, following the sovereign debt and euro crises, into the constitutions of most eurozone member countries. The six-pack and the two-pack compacts have also become part of the financial legislation of the eurozone.

And here lies the problem. The rigidity or inflexibility of the rules and principles on which the Berlin consensus is based, whilst it might favour an export economy like Germany’s, is playing havoc with economies like France’s and Italy’s, to mention but a few. The German obsession with very low inflation, low wages and zero budget deficit targets has provoked the stagnation of most eurozone economies. In the normal order of things there are surplus countries and deficit countries, since it is not possible to transform the whole continent into a global exporting powerhouse. This is the main reason why imposing the Berlin consensus on all of the eurozone’s member states is proving not only wrong, but downright catastrophic.

Still, compliant governments from France to Greece have made huge efforts to cut government expenditure, freeze or diminish wages and transform their consumer-led economies into export champions. Some, like Portugal and Spain have temporarily succeeded in doing so, but only by repressing internal demand, cutting wages and tolerating high unemployment rates.

The German way, unfortunately, is that of adapting the economy to the needs of price stability, and not the currency to the needs of the economy. For German policymakers, the flexibility has to come from the workers, not from the rules governing the economy. The fact that the eurozone has ceased to work – following the imposition of the Berlin consensus – is by now clear for all to see.

As it always happens when the groupthink phenomenon manifests itself, however, EU leaders prefer to justify the unjustifiable and to delay needed changes in policy until it will be too late to save not only the common currency area, but the EU as a political union as well. (The Eurogroup is a textbook example of groupthink.)

Accordingly, it is time for knowledgeable insiders – such as Yanis Varoufakis, for example – to clearly and concisely explain to the European layman why the Berlin consensus is toxic for the eurozone and what can be done about it. Surely, one cannot expect such a demanding intellectual effort to be undertaken by the likes of Wolfgang Schaeuble, Jeroen Dijsselbloem or say… the German Council of Economists. And, who knows? A timely and well-written book on this subject might even become a best-seller here in Europe.

°Note: The “MIT gang” is a group of leading American and French economists, such as Paul Krugman, Ben Bernanke, Olivier Blanchard, Maurice Obstfeld, who have studied economics at MIT at about the same time and have continued to promote Keynesian macro-economic remedies, as opposed to supply-side economic remedies, in addressing economic downturns.

Dark clouds on the Eurozone Sky

 August 3, 2015

In Wolfgang Schaeuble’s Germano-centric EU, no institution is more important – apart from his Politburo-like Eurogroup and the Office of the Chancellor – than his Ministry’s Council of Economic Advisers. The most influential adviser among them is Professor Hans-Werner Sinn from Munich, a Christian missionary-manqué turned tele-economist.

Like any good German, Professor Sinn has but a few ideas, but fixed, which he peddles forcefully with evangelic zeal in the national and international media. That is, when he is not using them as ideological tonic poured regularly in his Finance Minister’s ear.

When he doesn’t appear on TV to explain to his nation why the euro-crisis is like a bottomless pit for German money, or impart advice to the lawyer-trained flock which dominates the Eurogroup, Professor Sinn presides the Ifo think tank in Munich where he benevolently enforces – according to his hapless colleagues – a virulent form of “intellectual despotism”.

One of the fixed ideas Professor Sinn has advocated in the media and to Wolfgang Schaeuble since 2012 is of course that of Grexit. He is apparently convinced that countries like Greece and Portugal would need an internal devaluation of their wages and pensions of between 30 and 40 percent in order to shore up their competitiveness, compared to a 10 to 20 percent devaluation in Spain and Italy. Such steep reductions would not possible without generating huge social strife within the European Union, therefore Greece or Portugal should temporarily exit the eurozone. Thus, instead of resorting to this internal devaluation (read drastic reductions of salaries and pensions), they would revert for a while to their national currencies, which could be devalued and used as shock-absorbers while at the same time reducing their debt load via haircuts.

This simplistic way of trying to “solve” a complex situation has been lapped up by Wolfgang Schaeuble, like he did with another incredibly stupid idea: the “schwarze null” option as the main goal of budgetary policy. (It seems that neither surpluses nor deficits are desirable in Schaeuble’s world.)

To make his ideas triumph, Hans-Werner Sinn has blown out of the water all other options, such as “dexit”, or two EU currency zones, which was put forward as early as 2011 by a much more thoughtful colleague of his from Munich, Professor Alfred Steinherr. How exactly has Sinn achieved that ? By presenting – in a 2013 Project Syndicate commentary – the dexit option as if it were just another zany brainchild belonging to George Soros, knowing full well that in European capitals the billionaire’s reputation alone would be enough to kill any further debate on dexit.

Since the 13th of July 2015 diktat from Brussels, Professor Sinn and the five “wisemen” from the German Council of Economic Experts have aggressively started a campaign aimed at arming the Eurozone with new rules and procedures that would make the eviction of financially-shaky EU members easier. As lawyer-trained politicians generally find it hard to grasp complex economic arguments, this proposal could become EU official policy tomorrow. This could only make matters worse, as the adoption of exit rules will not contribute substantially to addressing the euro’s and the eurozone’s plight.

 

Undoing Germany's "Reluctant" Hegemony

 July 30, 2015

To those in the know, the Italian peninsula was not only the cradle of the Roman Empire or Rome the centre of the Catholic faithful, but also the birthplace of capitalism and of countless statecraft innovations and institutions still widely used around the world today.

During the middle ages, the Italian city-states thus discovered and perfected what is commonly known among IR specialists as the “balance of power” mechanism. Every time one of the city-states became too powerful economically or militarily and tried to subdue the others, most of the rest of the city-states would form a coalition against the offender, thus preserving their sovereignty over their economic and political affairs.

This time-honoured tradition continued long after the development of nation-states and was successfully used to control the hegemonic designs of European powers, such as France or Germany, to give but two of the best-known examples. For the past two centuries, until some sixty years ago, balance-of-power arrangements were initiated, financed and operated by Britain, which succeeded in defeating both Napoleon and Hitler and in bringing their hegemonic designs to an end. British leadership in this field prevented the loss of sovereignty by continental nations and during the 20th century it preserved democracy and the rule of law, albeit not always by peaceful means.

It would be a mistake to believe that old hegemonic designs nurtured by economically more powerful European nations have vanished since the creation of the European Union. If anything – as demonstrated by the recent developments from the 13th of July 2015 – such hegemonic efforts which chiefly belong to Germany are played out within the existing political structures and institutions of the European Union.

Institutions such as the Eurogroup, although they do not have a legal existence, nevertheless wield enormous power over the economic and financial affairs of EU member-countries since the introduction of the euro. Within this group, Germany plays the leading role and with the help of a few satellite-states makes all the important decisions.

There are other EU institutions, such as the ECB, the ESM or the Commission, that are manned by technocrats who have more decision-power than any elected political leader of any country. Here too, Germany has succeeded in throwing its economic weight around and has used the European Union’s design imperfections to establish its de facto leadership .

Reluctant or not, German dominance within the EU is by now an established fact and should be actively resisted by the rest of the EU member-states, like any other hegemonic episode in our continent’s history.

When one country becomes economically or militarily too powerful at the expense of all other members of the group it belongs to, there are usually two standard responses to such a situation: bandwagoning or balancing.

Today, countries like Austria, the Netherlands or the Baltic states have preferred to bandwagon, becoming German satellites in the process. They have displayed a propensity to endorse Wolfgang Schaeuble’s vision of “reform” for the EU’s structures. The German Finance Minister has declared during a conference at Brookings Institute in April 2015 that even Germany’s former arch-rival France, not only Greece, needs to be “restructured” by a troika, citing however “democracy” as a temporary stumbling block…

The other response – that is balancing – is the preferred method of Italy and France, consummate operators of balance-of-power mechanisms in the past. This is how Shahin Vallée, former advisor to ex-President Van Rompuy, has recently described the current situation in The New York Times:

“This forceful attitudes and the several taboos it broke reveal that the currency union that Germany wants is probably fundamentally incompatible with the one the French elite can sell and the French public can subscribe to. The choice soon will be whether Germany can build the euro it wants with France or whether the common currency falls apart.

Germany could undoubtedly build a very successful monetary union with the Baltic countries, the Netherlands and a few other nations, but it must understand that it will never build an economically successful and politically stable monetary union with France and the rest of Europe on these terms.

Over the long run, France, Italy and Spain to name just a few, would not take part in such a union, not because they can’t but because they wouldn’t want to. The collective GDP and population of these countries is twice that of Germany; eventually, a confrontation is inevitable.”

Since the 13th of July 2015, the number one priority in most EU capitals is no longer the Greek crisis, but how to deal with Germany’s latest hegemonic offensive. Ideally, a “Dexit” followed by the formation of a two-union Europe along the lines I have described in my earlier posts could replace the current dysfunctional union. Alternatively the union might disintegrate, USSR-style, into a myriad of nation-states large and small, dominated by populist or nationalist governments. Such a development, however, would gravely affect economic life as well as the security situation on our continent.

EU: What Are Latin Countries Waiting For ?

 July 23, 2015

Very few American experts grasp the motivations behind the construction of the European Union. As a result, American specialized literature abounds with misguided comparisons, such as that between the US Civil War from the 19th century and today’s tense situation between Europe’s North and South.

Yes, the EEC was initially formed in 1957 to prevent intra-European military conflicts in the future and to create a large-enough internal market for aspiring member-states to rebuild their economies and prosper.

Nonetheless, the European Union does not and will never have the same objectives as – to use another example in US commentary columns – American colonists did against British domination at the end of the 18th century. This is so because unlike nations around the world, the countries of Europe appeared on the ruins of the Roman Empire. Whenever politicians, kings, emperors and military leaders attempted to unite the continent’s nations into larger political units, their inspiration – whether consciously or not – has always been the Roman Empire.

Before 1957, quite a few European nations had tried their luck, rather unsuccessfully, at duplicating Roman hegemony across the continent. The emperors of the Holy Roman Empire, followed by Napoleon or Hitler have all done their best, in their own way, to emulate the Romans’ success by military means. Their efforts eventually ended up in failure, as no European nation was either big enough or strong enough to impose its will on all the others except for brief periods of time.

For the first time in the continent’s history, however, the launch of the political project of the European Union aimed to achieve unification by peaceful and democratic means. The experiment has been partially successful until two decades ago, when neoliberal policies and an ill-inspired monetary union have fatally undermined it.

When it comes to monetary union, it is also useful to remember that this was largely a French-inspired project which Germany joined only grudgingly. The first monetary union on the continent was also initiated by the French under the name of Latin monetary union (LMU). It lasted from 1865 to 1927 and included at first France, Belgium, Italy and Switzerland. Interestingly enough, the LMU was joined by Greece as early as 1867. The Latin bloc’s objective for all participating countries was to impose common standards for coinage at a time when the gold standard dominated commercial transactions on the continent. More astute than Germany of late, Austro-Hungary refused to join the LMU, as it rejected the bi-metallist approach of the French to coinage.

Today’s monetary union is now clearly in danger of disintegration, but preventing such an outcome is still possible. The first step in the right direction would be for the Latin group of countries to act again as a bloc. The latter should make it clear to Germany that a Dexit solution to the current predicament is necessary in order to salvage both the euro and what remains of European political unity. As matters now stand, the political systems of the southern half of the Union are close to implosion, witness recent developments in Greece, Spain, Italy and even France. Germany, meanwhile, does not only enjoy a healthy economic growth rate, but is basking in a political stability obtained at the expense of every other country in the Union…

Again, the historical experience inherited from the Roman Empire is a very useful guide to preventing a Soviet-type implosion of the union. Naturally, Germany’s recurring hegemonic tendencies and the fact that it has benefitted handsomely from the introduction of the euro for its exports, mean that in Berlin there is at present no appetite for doing the right thing by its European partners. This fundamental lack of empathy with the difficulties experienced by economically and politically less stable members of the EU has been proved time and again, with the EU leaders’ conference held on the 13th of July 2015 being just the latest in a string of such episodes.

Still, France, Italy, Spain and Portugal need to get together to gently ease Germany out of the euro and subsequently of the EU. As I have explained elsewhere, the German departure from the current financial and political structures of the Union should not, however, be an acrimonious process. After all, a diminished but more cohesive European Union will still have to trade and live side-by-side with Germany and its satellites, and vice-versa. For the political leaders of the Latin group of countries, however, there is no better solution to the euro-crisis than asking Germany to revert to the D-mark, as it is much better able to withstand an exit from the Eurozone than countries like Greece, Spain or even Italy.

EU: Grexit or Dexit ?

 July 19, 2015

Some seventeen centuries ago, emperor Diocletian realized that the Roman empire had grown too big and too diverse to be ruled from a single centre. Diocletian therefore decided to split it in two, the west ruled from Rome by a fellow army officer and the east controlled by himself. The east-west division became more or less permanent during the reign of Constantine. It was a wise administrative decision, which saved the integrity of the empire for another hundred years.

Fast forward to the present. The European Union, built on the ruins left behind by World War II, is experiencing a similar if not identical predicament. The citizens within its 28 member-countries, are growing more and more disenchanted with the Union’s leadership by the day. Truth be told, the EU has become much too big, too culturally diverse and politically unresponsive to continue to be viable in its present form.

One of the chief characteristics of the current political arrangements in the EU is Germany’s hegemonic status over its economic and political structures. As we can all recall, the Union was formed in the wake of WWII in order to prevent yet other military conflicts on the continent, involving again mainly Germany and its neighbours. To that end, an initial nucleus of six states (France, Italy, West Germany, Belgium, the Netherlands and Luxembourg) created an economic union which helped all of them rebuild their war-shattered economies and prosper. The victorious powers led by the United States forgave Germany most of its debts, opened up their markets to German-made goods and supplied the seed capital necessary (Marshall Plan).

For six decades the European Union grew, expanding southwards and eastwards, while the German economy became a powerhouse on the continent. In the wake of the fall of communism and the implosion of the USSR, West Germany had reunited with East Germany, and started to dominate not only the continent’s economy but also its political and – since the introduction of the euro- its monetary affairs.

The latter developments have unfortunately proved to be an unmitigated disaster for all its other EU partners. In truth, events over the last decade – the financial crisis, the sovereign debt crisis, austerity policies – have conclusively proved to many specialists that Germany, with a group of northern Protestant countries, has a vastly different set of economic responses and values, which are at odds with those prevalent in the southern part of the EU.

Thus, while Germans and their allies highly value a strong currency, low or zero inflation, low or zero budget deficits, a culture of thrift and the continuous reduction of public debt, countries like Italy, France and Spain – not to mention Greece, Portugal or Ireland – would prefer a significantly weaker euro, flexible budget deficit targets, higher inflation, the resorption of public debts through economic growth instead of austerity measures, and a massive reduction in the unemployment rates affecting them.

So far, Germany has succeeded in forcing all EU members to adopt its “six-pack” and “golden rule” and to maintain inflation close to zero. The outcome of these policies on the continent has translated into economic stagnation, social strife and a never-ending obsession with austerity and public debt reduction measures.

The current Greek crisis has merely highlighted the folly of such policies, as well as the unshaking determination of the German leadership to push the entire continent towards economic ruin. To avoid this, which could only lead to an USSR-type implosion of the Union, it would be more rational for Germany to leave it, reintroduce its beloved deutschemark and form an economic and political union of its own in the north of the continent. In other words, for the European Union to be saved from impending collapse, a “Dexit” option – and not “Grexit” – is what is currently needed. (Greece would not be able to threaten the survival of the EU the way Germany does.)

A Dexit should by no means be an acrimonious affair, or a disorderly one. Angela Merkel herself had alluded to the possibility of forming a Baltic Union as early as 2008. Starting with 2012, economists such as Alfred Steinherr, Anatole Kaletsky, Michael Mross, Aleš Michl, Kenneth Griffin, Anil Kashyap, Guillermo Nielsen, Ashoka Mody , Rolf Weder and Pedro Braz Teixeira have started recommending Dexit as the solution to the EU’s current economic and political predicament. The advantages of Dexit are clearly explained in a Time article from 2012:

 

“By contrast, if Germany were the one to leave, the euro would be the currency that falls in value, relative to Germany’s new national currency and also to the dollar. The weaker European countries would get to keep the euro but still get the devaluation they need, which would reduce their labor costs far less painfully than through wage cuts. In addition, the value of their outstanding debt would decline along with the value of the euro, and they would be more likely to be able to make payments on that debt and avoid defaulting.”

 

Viewed in this light, the third Greek bailout about to be concluded is rather of secondary importance. What is now needed is to start planning for an amiable and orderly Dexit, one which would benefit all EU member states. Failing to agree with the partition of the current Union into two entities – namely, an European Union centered around France and Italy and a Baltic one centered around Germany – could only result in a violent, USSR-type disintegration, accompanied by social strife, the revival of nationalism and xenophobia on our continent. Fortunately, such a partition will not lead to military conflict between the two sides further down the track, as NATO will still be there to prevent any such developments.