Why the EU is doomed

This is the transcript of a speech delivered by Rebecca Lowe. It took place at the UK edition of the Free Market Road Show 2019 hosted by 1828 and the Austrian Economics Center.

When I was asked to discuss “where the EU should go next” and “how the EU can adapt and survive”, it threw me slightly.

To be honest, I’m not really convinced the EU will go anywhere next. Or, at least, I’m not convinced that there’s any kind of reform that would work sufficiently well unless it brought about pretty substantial change, in which case it wouldn’t be “the EU” as we know it that persists, but something quite different thing.

Anyway, I’m not even really convinced that that kind of whole-scale substantial reform is ever going to happen.

So, yes, to answer the question I’ve been set, I’m not convinced that the EU can adapt and survive. And I’m certainly not convinced it will or can change in a way that will become more conducive to respect for freedom, which this event is also focused on. 

My money’s on the EU’s break-up, sooner or later. Simply put, there probably just needs to be one big catastrophe, economic or otherwise, and it could easily collapse.

An important member state or two just cannot cope, EU institutions then fail and break down, uprisings take place, and it’s all over. That said, this is a bit like predicting the fall of Berlin Wall or Brexit: you know it’s coming, but it’s hard to predict just when, or what will be the trigger. It could be tomorrow, it could be in ten years’ time. It will probably be somewhere in between.

And while, of course, such an eventuality will undeniably bring a lot of serious pain to a lot of people, I must admit I don’t see its expiration as being entirely a bad thing.

Yes, it will have many awful consequences, but fear of awful consequences is not always a good reason in itself to want something you see as bad to persist.

I won’t go through the reasons I think the EU is bad in detail, but suffice to say I’m a big believer in democracy and sovereignty. I also worry greatly about the way in which EU policies have severely harmed people within European countries, not least those countries with long-term structural economic problems, which have been exacerbated by an ideological commitment to the Euro, whose introduction was, to my mind, not only economically insane but also damaging in many other ways.

I voted to leave partly because I don’t want my country to be complicit in that. I’d rather we were on the outside ready to choose to help when necessary.

So, yes, I think the EU, as a formal structure in its current state, will probably collapse. Because I’m not a determinist, however, next I’d like to think briefly about whether there’s some form of change that might delay or even prevent this break-up. 

When considering what might be the necessary change, two key points arise: technical or analytical predictions, and the need to respond to demand from people within member states.

The first of these points relates to assessments about issues within member states, like financial crises and unemployment, and also issues across the whole EU, like security threats from outside.

The second of these points about change relates to growing frustrations within member states, shown through political discontent, polling figures, and so on. And this second point shouldn’t be underestimated as fans of the EU still seem astonishingly prone to do. 

In fact, polling from 2017 commissioned by the Tony Blair Institute (hardly the home of Brexit) showed that when asked: “which of the following is closest to your own personal position on France’s membership of the EU”, less than ten per cent of French voters answered: “I want to see us remain in the EU as it is today“.

When the respective question was asked to Germans, just over ten per cent of them wanted to remain “as it is today”. That sounds like pretty serious dissatisfaction.

Related to that, generally, there have been two standard schools of thought on the kinds of change the EU might need if it were to persist in some form: kinds of change that people within member states have called for. 

The first school, and I’m addressing this generally, outside of any particular specific current context, relates to “more EU”. This would mean increased centralised top-down political control.

For instance, the classic Piketty (et al) suggestion of mutualising EU debt and issuing “Eurobonds”, so the ECB could support countries in extremis, is an example of a reforming approach that would necessitate greater political union. 

Now, that kind of reform might be welcomed by some economically weaker countries like Greece, for instance. But probably not by so many in Germany.

Insight into a standard take on an alternative approach to reform, therefore, comes from Paul Lever’s recent book Berlin Rules. Lever, a former UK ambassador to Germany, contends that “whatever form a ‘political union’ might take, it does not mean, for Germans, raising money in Germany for the benefit of others”.

His conclusion is that the extended union Germany wants is most likely one in which a closer eye can be kept on other countries, with the aim of persuading them to approach fiscal policy along the German lines of low debt, borrowing, and deficits.

So, what can we take from these two approaches, and crucially, what might they mean for freedom within the EU?

First, we should recognise that there is a genuine need and demand for change. Second, however, that something pretty big would need to happen for people to reach consensus about the kind of change that should take place. And, third, crucially, that it’s wrong to think that all of this is focused on economics.

It’s a false dichotomy to attempt to separate economics from politics. And most of the points I’ve been making depend on the interlocking nature of these things.

Indeed, to me, the craziness of the Euro is that, as well as tying together such incredibly different economies in monetary union, it prevents countries putting in place the economic policies on which their citizens have elected politicians. 

This brings me to my final and most important point. For me, democracy is a necessary condition of a good and legitimate political society. Democracy (when enacted properly) entails that our right to political participation, and other key political rights, are upheld.

And this is essential for us as autonomous creatures who are born free and equal. It is also essential to the recognition of our freedom within organised society, and, crucially to this discussion, something that, not least for practical reasons, seems best enacted within a nation state. 

While the EU remains technocratic and actively anti-democratic, it will continue to impede our freedom and the freedom of our European friends.

And it’s unlikely that the EU will become more democratic anytime soon, or start to respect democratic processes within its member states. Those are not changes that appear to be on the horizon. Its aims now are completely otherwise, and a lack of responsiveness is inbuilt to its structures and institutions. 

So I have little hope for the EU as it stands, and particularly on any assessment related to freedom.

Written by Rebecca Lowe

Rebecca Lowe is Director of FREER, an initiative based at the Institute of Economic Affairs, where she is also a Research Fellow.
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