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.

Brexit and a Two-Union Europe

Because of the shock of Brexit, one may be forgiven for overlooking the fact that this week could rightfully be called “the week of trade bloc summits”.

In Europe, the 27 remaining leaders of the EU have gathered for two days in Brussels to adopt a common position concerning the upcoming withdrawal of Great Britain from the union.

On the North American continent, President Obama has met with his Canadian and Mexican counterparts in a last-ditch attempt to safeguard NAFTA against the relentless attacks it is facing from the Republican presidential candidate Donald Trump.

Last but not least, the leaders of the Pacific Alliance – the newest Latin American trade bloc made up of Chile, Peru, Colombia and Mexico – have held a two-day summit of their own to further cooperation in the areas of trade and investment.

The most important summit is by far the one which took place in Brussels, where political leaders were trying hard to reach a common position concerning the terms under which would take place the departure of Britain from the bloc. The initial anger generated by Brexit is slowly giving way to the realisation that the very existence of the world’s oldest trade bloc is now under threat.

With the future of the Union in doubt, federalization plans sold to the European public under the guise of an “ever-closer union” were stopped in their tracks by British voters. The project of a “United States of Europe” – as initially conceived by the CIA in the ‘fifties and advanced by stealth by like-minded European politicians over the span of decades – will in all likelihood have to be abandoned for good.

In order for readers to grasp the folly of such a project, let’s assume that the leaders of NAFTA decided to launch a trade bloc conceived only as a stepping stone to full monetary, fiscal and ultimately political union between the US, Mexico and Canada. To push our comparison further, let’s also imagine that the initial nucleus of NAFTA countries started expanding to Central and South America with the aim of eventually becoming a pan-American economic and political bloc dominating the entire Western hemisphere.

The Germans are currently trying to convince British conservative politicians that once outside the EU, the UK should adopt the Norwegian model. In other words, a country like Britain with a population of some 65 million and a 3-trillion dollar GDP is supposed to be treated like the small members of the European Economic Area (EEA), the latter of which comprises, beside Norway, geopolitically insignificant states like Liechtenstein, Andorra or San Marino.

So far, British Brexiters have called for informal negotiations with Brussels before invoking Article 50 of the Lisbon Treaty. What in fact they should be doing is having informal talks with the leaders of like-minded EU states that are most likely to follow Britain’s lead. Once these negotiations are concluded, the formation of a brand new, competing trade bloc should be announced to the European public.

The obvious candidates for such a trade bloc would first and foremost be the Nordic kingdoms of Sweden and Denmark, with a combined population of 15 million and an aggregate GDP of some 850 billion USD. The second group that could be persuaded to join would be the Visegrad-4, made up of Poland, Czechia, Slovakia and Hungary. The combined population of the latter is about 65 million, with an aggregate GDP of 1.9 trillion USD.

Together with Britain, the new trade bloc would thus have a total population of 145 million and an aggregate GDP of close to 6 trillion USD. It would be sure to have a much better bargaining position than the UK all by itself in negotiating trade agreements with what is going to be left of the European Union. This is in fact exactly what is happening on the Latin American continent, where the 5 year-old Pacific Alliance co-exists side by side with Mercosur, the older trade bloc which comprises the bulk of the countries in the region.

Our continent could certainly accommodate a two-union Europe and two competing trade blocs that could only improve the overall economic performance of both. With political integration now behind them, the remaining members of the EU could themselves start to concentrate their efforts more on improving trade and investment and less on geographic expansion.

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.

NATO and the Baltics' Geopolitical Predicament

May 6, 2016

During the 90’s, the uncontested dean of American diplomacy, the late George Kennan, fulminated against NATO’s expansion eastwards, which he considered both unnecessary and potentially dangerous for the security of the United States. The Clinton and Bush administrations did not heed sound professional advice and now the Baltics’ inclusion into NATO is creating major headaches for the alliance’s military planners.

The planned deployment of a few NATO battalions in the Baltics has already irked the Russian military, who decided to deploy three divisions in order to counter the perceived danger on their northwestern border. Most Western military analysts have recently highlighted the fact that NATO is in no position to really protect Estonia, Latvia and Lithuania in case the Russians do decide to attack, which they obviously do not intend to at this point in time.

Objectively speaking, small coastal states – like the Baltics – cannot be defended indefinitely against a much more powerful neighbour in search of access to the sea. Here is what the founder of American geopolitics, Nicholas Spykman, had to say in 1938 about it :

“The fate of the newly-created coastal states (…), the three Baltic states of Latvia, Lithuania and Estonia is still to be determined, but to the geographer they appear as distinct anachronisms in the evolution of geographic state types, and it is hard for any student of history to study a map of Europe without a strong conviction that Russia will some day force her way to the Baltic and swallow them a second time” (“Geography and Foreign Policy II”, pp.219-220)

The size and geographical location of the Baltics, therefore, will render their defense against Russia useless in the long run. This does not mean that Vladimir Putin – or even his successor in the Kremlin – has any current invasion plans concerning these three republics. NATO military planners, however, are duty-bound to take these geopolitical realities into consideration and avoid the risk of exposing the alliance to military conflict with Russia.

Granted, over the past few decades Western politicians have chosen to ignore solid geopolitical advice and to act in the name of certain ideals that are at odds with geography and sound foreign policy principles. This ignorance of geopolitics has been the source of many a policy error in Europe and the Middle East, to mention but two geographical regions currently in turmoil.

The upheavals in the Middle East and North Africa and the shaky internal situation in Turkey, on the other hand, mean that the United States – and the West generally – needs Russia’s cooperation more than it ever did in the past. Accordingly, by making an unnecessary troop deployment decision in the Baltics, NATO risks being embroiled in facing alone the Islamist threat in the Middle East and possibly even the unraveling of the political order in Turkey. As matters currently stand, the president of Turkey has already proven his willingness to stoke up an open military conflict with Russia, which of course his country cannot hope to win.

Both the small Baltic republics and Turkey, therefore, have the potential to drag the other NATO members into direct confrontation with the Russian army, a development that no NATO commander seriously contemplates though. Still, the ugly European experience during WWI illustrates the fact that small countries, like the Baltic republics, or desperate political leaders like Erdogan are quite able to ignite a generalized military conflict, paid for with the lives of their much larger and peaceful neighbours that can be induced to sleepwalk their way into such a conflict.

Consequently, the political leaders of Latvia, Estonia and Lithuania should be well advised by NATO’s major military powers to tone down their anti-Russian rhetoric and try to find ways to cohabitate peacefully with their neighbour. ( Incidentally, this is the same type of advice I have given in 2008 to the Estonian Ambassador to France during a seminar on these matters that took place at Sciences po in Toulouse).

As for Turkey, the NATO high command should make it clear to the country’s military that shooting down Russian aircraft for minor violations of the country’s airspace will not constitute the casus belli that could automatically trigger the full involvement of NATO into conflict, as stipulated by Article 5 of the alliance’s treaty. To be sure, this provision in the treaty is activated only when one of NATO’s member states is subject to fully fledged armed intervention by a hostile power.

Terrorist Networks and the Panama Papers

 April 5, 2016

What is the connection between the terrorist attacks in Paris and Brussels and the huge size of the tax-avoidance industry, as illustrated by the recent publication of the “Panama Papers” ?

On a superficial level, none. In actual fact, the exponential proliferation of illegal activities – the drug and arms trade, the rapid multiplication of criminal networks, the smuggling of refugees and, ultimately, terrorism in the Western world – has everything to do with the financial and logistical incapacity of states to collect revenues in order to police their neighbourhoods or their internal and external borders.

For almost two decades now, conservatives have imposed on most Western economies a “small government” agenda followed by drastic budget cuts. This has had the effect of rendering formerly powerful Western states defenceless against all sorts of illegal trafficking, criminal networks and now against terrorists. Meanwhile, in order to get elected and stay in power, a good many centre-left parties have pushed a similar if not identical agenda. The consequences of such destructive policies are now clear for all to see.

The world-wide dissemination of the “Panama Papers” serves as comprehensive proof that the global business elites, political elites and nowadays even small-time investors have indulged in massive tax avoidance schemes that bleed their respective national treasuries dry. Governments in need have been forced to resort to borrowing and to reducing essential services – such as healthcare, education, police and even the military – in order to make up for the budget shortfall.

The extreme weakening of most Western states is ultimately responsible for fuelling the exponential growth of criminal and terrorist networks on a global scale. To give but a few examples, the German police is unable to defend its own population because its numbers have been reduced to a bare minimum in the past ten years; the Belgian secret services lack the manpower to keep tabs on jihadis in the country; the French legal system lacks sufficient personnel and in some cases courts have to do without photocopying paper; EU agencies such as Frontex have less than half the manpower needed to stem the flow of illegal refugees; and everywhere in Europe the number of competent tax collectors and auditors is far below the minimum required to verify compliance with existing taxation rules for corporations and individuals alike.

Little wonder, therefore, that major corporations – but also politicians, smaller firms and individuals with money – have used to their advantage the dire predicament in which Western states currently find themselves.

Not to be outdone, criminal and terrorist networks have flourished to levels unforeseen and are putting public authorities on the defensive. A global war against them, however, would be fought in vain unless the community of states takes resolute action against tax evasion and fiscal havens.

But as matters now stand, Western states are not financially able to employ the number of people needed to detect, prosecute and punish tax fraudsters. Consequently, they are not in a position to give their bureaucrats the means to hire and train more police, judges and secret service agents, or to proceed to a wholesale dismantling of existing criminal cartels and terrorist networks.

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 Migrant Crisis: Why Germany Can't Cope

 February 1, 2016

The biggest refugee crisis in Europe since WWII looks set to get worse in 2016. The country most responsible for the huge inflow of migrants from the Middle East is, as we all know, Germany.

What is less well-documented is the fact that its state apparatus simply cannot cope anymore. Chancellor Angela Merkel is quick to reassure her national and European audiences that her country can handle the challenges of integrating a million refugees, but events have proved her wrong time and again.

The New Year’s Eve disorders in Cologne are, according to German police, just the tip of the iceberg. The sheer numbers of refugees Germany has agreed to accept have led to administrative and security chaos in a country known until recently as one of the best-run and most orderly in the world.

To be sure, last year’s huge refugee influx is only partly to blame. At least as important a cause has been Germany’s adoption of tough austerity policies in recent years, which had seriously affected the budget and capabilities of the police and civil service, both on a local and federal level. After years of hugely misguided austerity, Germany nowadays has 10,000 less police than in the year 2000. Since 2014, repeated requests by the Interior Ministry for the hiring of an additional 3,000 personnel have been denied funding by Mr. Schaeuble’s ministry, the latter being bent on balancing the German budget at the expense of its citizens’ most basic security needs.

What’s worse, nobody can expect this situation to improve anytime soon. Although the creation of 3,000 new posts has recently been approved, the new police recruits will have to be trained first, becoming effective only in 2019. Meanwhile, the safety of ordinary German citizens will continue to be affected by the chaos engulfing the entire country and the lack of manpower and resources needed to deal effectively with the migrants’ influx.