Brexit: Death of the European dream

Migrants making the long journey from the Middle East to Europe.

“There can be no democratic choice against the European treaties.” — Jean Claude Juncker, President of the European Commission.

“More and more, the destiny of the European Union resembles the destiny of the Soviet Union, which died from its own contradictions.” — Marine LePen, leader of France’s National Front.

“At stake is the break up, pure and simple, of the European Union.” – Manuuel Vals, French Prime Minister.

The dramatic and unexpected decision by the British to vote, in their biggest single vote for anything in their history, to leave the European Union could be the most important decision they have taken since World War II.

But here is another question: apart from what this vote means for Britain, what does it mean for Europe?

Of course, the European Union is not Europe.

There are now no end of predictions of the death of the EU.

History teaches us that if something is unsustainable, ultimately it will not be sustained.

The judgment of Charles Grant, the director of the Centre for European Reform, was widely quoted: “Brexit is a momentous event in the history of Europe and from now on the narrative will be one of disintegration, not integration.”

Henry Kissinger, in the wake of Brexit, declared that the European vision had developed a “sclerotic character”.

He urged the EU and Britain to find amicable terms for a new relationship, so that Britain and the EU could return to their historical role as shapers of the international order.

But here even the great sage of American strategic calculation may be making a characteristic error.

The EU is in crisis. More importantly, Europe itself is in crisis. There is even talk of the death of Europe.

Yet hope may lie in the very fact that Europe is not the EU, and the EU is not Europe.

The salvation of Europe, the reassertion of Europe, may eventually lie, if not in the death of the EU, at least in the heavy reform of the EU, so that it becomes a much more modest project with much less power.

Here is another paradox. An EU with less power would most likely produce a Europe with more power.

Europe is a region beset by crisis and stagnation. It is in trouble on multiple fronts. All of its troubles are exacerbated by the EU. If the EU could be diminished in an orderly way, Europe could prosper, and lead, again.

Nothing is harder in international relations than arranging an amicable divorce.

The only thing harder is perhaps reforming an organisation, which has become overweening and counterproductive, towards more modest aims and functions. And hardest of all is putting a terminal organisation to sleep.

Consider the two great European counter-models. Czechoslovakia decided it wanted to be what it always really was, two nations. So it became the Czech Republic and Slovakia.

The bust-up had its elements of bitterness and many tense negotiations over resources, reciprocal obligations and the like. But it was well handled and the two nations have both prospered.

By contrast, at the end of the Cold War no fiction was more widely held than the idea that Yugoslavia should remain a single nation. The result was the Balkan Wars and all the death and misery they entailed.

The EU, of course, was completely impotent in this crisis, which was solved eventually by American power.

So will Brexit look metaphorically (hopefully there will be no bullets anywhere) more like the velvet divorce of Czechoslovakia or the economic equivalent of the Balkan wars?

While all attention naturally focuses on Britain, it is important to see the wider European crisis.

Unemployment in Spain, one of Europe’s biggest economies, is running at 20 per cent. Youth unemployment is 45 per cent.

The Italian economy is not yet the size it was before the Global Financial Crisis.

Across the eurozone area, those 19 nations which use the euro as their common currency, unemployment averages 10 per cent, though this is a disguised figure which understates the problem and the corrosive social reality of long-term idleness. Europe has built an economic model, with its rigid labour laws, that guarantees chronic high unemployment.

That is feeding directly into political instability.

Indeed youth unemployment is 40 per cent or thereabouts in Greece, Spain, Croatia, and Italy, 30 per cent in Cyprus and Portugal and nearly 25 per cent in France.

How can this be when the EU is supposed to embody the best that Western Enlightenment and technocratic economic management can produce?

One way that the EU has made a bad situation worse is by imposing a good measure of a single, ineffective economic model across Europe. The EU is inherently statist in two separate ways. It is trying to turn itself into a supra-national state which erases much of the power of its constituent national governments.

And within its national governments it reinforces a huge bias for a big, overweening state.

So by 2013 government spending as a proportion of GDP was 57 per cent in France, 55 per cent in Belgium and more than 50 per cent in Italy, with commensurate punishing tax rates.

The late head of the Department of Foreign Affairs and Trade, Ashton Calvert, as sharp a policy mind as DFAT has known, once explained at length to me why the EU was so damaging to Australia.

It imposes enormous costs of regulation on its own economies, and then tries to make sure the rest of the world pays similar costs by attempting to get similar regulations imposed internationally through the treaty process, which it is very good at manipulating.

A classic case is climate change, especially but not only the fiasco of the European emissions trading scheme, where Europe has chased many of its industries away from its own continent and into lower cost, less regulated economies, and put enormous political pressure on countries like Australia to burden themselves with similar measures.

Dynamic Asian economies generally won’t have a bar of the ultra-regulatory EU approach.

Countries like Australia, more affluent than most European nations, and with a public debate dominated by American and British tropes with little real policy regard for Asia, are uniquely susceptible to falling for this kind of stuff.

According to a report last year, Why Europe Failed, by the economist Oliver Hartwich, the EU accounts for a staggering 54 per cent of global welfare spending. Yet there is hardly a European nation which can claim to have its budget under control.

Europe’s broad economic crisis feeds into its second and third crises.

The second crisis is demographic.

The Europe-wide birthrate is a little over 1.5, whereas replacement level is 2.1.

Europe is ageing rapidly and in a way that means the productive economy will be unable to pay the welfare bill long term.

This could be relieved by intelligent immigration policies.

Instead, Europe’s third great crisis is the ongoing, uncontrolled and generally illegal immigration into Europe from the Middle East and North Africa.

The great historic success of immigration occurred in the US in the 19th century.

There was no welfare state but there was abundant land and opportunity.

Millions of Irish, Germans, Swedes, Italians and many other Europeans went to the US because they could work and earn a living there. Even then, the US had a brilliant ideology of settlement. You could become an American, as good as any other American, by signing up, seriously and with conviction, to the American creed.

It may be that mass immigration only works in a free market economy, where barriers to entry in economic life are low and the economy is expanding. Instead, for decades now, Europe has had mass immigration, attracted to its welfare system. Many North Africans and Arabs make wonderful European citizens. But many are attracted by Europe’s high welfare payments and the ability to lead African and Middle Eastern lives in Europe at the expense of the European taxpayer. High taxes, restrictive labour laws and extensive welfare mean there are nowhere near enough unskilled, entry-level jobs.

The multi-generational failure of integration among these populations — in contradiction, as the Czech President recently pointed out, to the experience of Asian immigrants in Europe — is another burgeoning crisis for Europe. This syndrome long predated the Syrian civil war.

The European asylum system was massively and systematically rorted.

Then, in perhaps the decisive move for Brexit, German Chancellor Angela Merkel ordained that anyone who could get from the Middle East or North Africa to Germany was welcome to stay there forever. At least a million people answered her call. She then demanded that all the other nations of the EU must permanently settle a proportionate share of such arrivals.

For a moment, she basked in international adulation. But after five minutes of the chaos she created, she had to reverse her position and the EU is now trying to fortify and regulate its external borders.

The collapse of the EU’s external borders, while the EU enforces the erasure of internal national borders, is one of the many contradictions blighting Europe today. Merkel’s gesture has fuelled anti-EU feeling all over Europe. Hungary’s government plans to hold a referendum to reject the EU requirement that it take an assigned quota for resettlement.

In France the EU now has a disapproval rating of 60 per cent, substantially higher than its disapproval rating in Britain before the Brexit vote. In France, Italy, The Netherlands and other European nations, powerful political parties are now demanding their own exit votes.

The EU truly hates referendums, and its visceral hostility to democracy is the fourth crisis of Europe. When the EU first tried to radically alter the terms of its internal governance and centralise vast power in Brussels, it had the honesty to do so through a proposed European constitution. This constitution was emphatically rejected by national referendums in France and The Netherlands in 2005. At the time, both sides of British politics had promised a referendum to the British people if a new European constitution was to be adopted.

There is now a great fashion for demonising referendums and plebiscites because the Brexit vote gave the result the elites hate. But it is entirely proper, indeed widespread, for nations to submit fundamental constitutional changes to a popular vote.

David Cameron himself said to his European interlocutors in the wake of Brexit that you cannot keep changing the fundamental terms under which the British people are governed and not seek their approval for such changes.

So a democratic EU in 2005 would have withdrawn from the over-ambitious centralisation involved in the proposed European constitution.

Instead it simply rewrote all the constitution’s provisions as a treaty — the Lisbon Treaty — and neither France nor The Netherlands nor Britain held a referendum on it.

The fifth crisis is the postmodern Left-liberal political ideology which infuses the Brussels class.

This is not just the idle foolishness of contemporary Western pedagogy; it is accentuated by the deep sense of irresponsibility in Brussels, where the European parliament’s debates are never reported and have no consequences and no electorate can ever throw an administration out, where the Brussels class lives in permanent office, forever affluent and forever unaffected by the madness of their decisions.

A single contrast makes the case. Last week Nigel Farage, the leader of the United Kingdom Independence Party, made a reasonably rough and ready speech to the European parliament.

It was perhaps a bit crass but nothing more robust than you’d hear in the Australian House of Representatives any day of the week.

He was repeatedly booed.

The previous week, the president of Palestinian Authority, Mahmoud Abbas, addressed the EU parliament. He said that Jewish rabbis planned to poison the water of the occupied territories in order to kill Palestinians. This is a baseless and contemptible anti-Semitic slur almost beyond parody and certainly far beyond decency. He received a standing ovation from the European parliament.

Who would want to be associated with that obnoxious political culture? What deficiency is there in British courts that institutions like the European courts should overrule British judicial decisions?

The final crisis for Europe is the euro itself. It is the most disastrous economic innovation since the North Korean policy of “juche” or self reliance.

In short, it means that Germany has a chronically undervalued currency, which allows it to create vast trading surpluses, and the rest of Europe, especially the southern European states, have a chronically overvalued currency from which they can never escape.

That is the EU overall. It confers almost no benefits, but escape is perilous.

EU policymakers have to decide whether to try to make the cost of escape for Britain punitive, a move which will certainly damage all Europeans.

Then again, damaging all Europeans has never deterred the EU from destructive policy in the past.