Why The European Union Is Doomed To Fail

Authored by Marian Tupy via The Foundation for Economic Education,

Have you ever heard of Deutsch Jahrndorf? No? I don’t blame you. The tiny Austrian village, which is situated four miles from the Danube, is utterly unremarkable, except for the fact that it sits on the border of three countries. To the east is Slovakia. To the south lies Hungary. As such, within shouting distance of one another, live three peoples speaking completely unintelligible languages. Austria belongs to the West Germanic language group, Hungary to Finno-Ugric and Slovakia to West Slavic.

I thought about the exquisitely rich tapestry of European languages, cultures, customs, and nationalities as I watched the sad spectacle of Spanish riot police and Catalan separatists confronting one another on the streets of Barcelona. How on earth can the European Union unite that which history forced asunder?

The Folly of the EU

The European Union, French President Emmanuel Macron has recently declared to almost universal acclaim, needs more unity, including the creation of “a eurozone budget managed by a eurozone parliament and a eurozone finance minister”.

The need for the centralization of power in Brussels is, apparently, the lesson that the EU establishment has learned from the outcome of the British referendum on EU membership. Meanwhile, in Catalonia, millions of people have set their sights on independence from Spain. Foremost among their complaints is that the Catalan budget is influenced by Madrid.

Independence, the Catalans feel, will rectify a grave injustice occasioned by the French capture of Barcelona in 1714. The conqueror, Duke of Anjou, became the first Bourbon king of Spain under the name of Philip V. His descendant, Philip VI, is on the throne today. In Europe, ancient lineages last as long as ancient resentments.

Therein lies the conundrum of European unification.

On the one hand, people throughout much of Europe desire greater autonomy. Madrid has the vexing problem of the Basque Country to worry about as well as Catalonia. In Italy, Padania and South Tyrol in the North don’t feel like they have very much in common with the Mezzogiorno in the South. Corsica does not want to be French and Britain has only recently revisited a territorial arrangement that dates back to 1707.

 

On the other hand, every separatist movement in Europe declares its support for the project of European unification. But, how likely is it that people annoyed by Madrid, Rome, Paris, and London will be happy to have their affairs decided upon in Brussels? Will the Catalans, resentful of subsidizing farmers in Andalusia, quietly have no problem with subsidizing Polish peasants in Lower Silesia?

How Did It Go So Wrong?

Speaking of Brussels, it is both the seat of the increasingly dysfunctional EU and the capital of Flanders, which wants to separate from Belgium. It’s complicated.

Years from now, when the EU is either reformed beyond recognition or gone, historians will debate what went wrong and when. The Maastricht Treaty of 1992, which reinvigorated the British Eurosceptic movement that ultimately delivered Brexit, will be one of the obvious culprits. But I think that the problems of European integration are of an older vintage. Perhaps because it was signed by none other than Margaret Thatcher, the Single European Act of 1986 does not get the attention it deserves. Yet it was SEA that eliminated the national veto in a number of crucial policy areas and replaced it with qualified majority voting (QMV). Thatcher acceded to this new arrangement, for it was meant to break down intra-European trade barriers and transform the fledgling “common market” into a freer “single market”. Unfortunately, the introduction of QMV also meant that, occasionally, individual nation states got outvoted on issues they cared deeply about. Accusations of “meddling from Brussels” grew.

To make matters worse, the SEA engorged the powers of the Commission. That proved to be a double-edged sword. On the one hand, the Commission went after the anti-competitive practices of nation states with gusto. On the other hand, it used its new powers to start over-regulating economic activity. The regulatory and protectionist impulses of the nation states, in other words, were replaced by regulatory and protectionist impulses at the pan-European level and Europe became less competitive vis-รก-vis the rest of the world. Maastricht and the Lisbon Treaty sped up the excessive centralization of power in Brussels that was already underway and transformed the European Economic Community into the EU with its own flag, anthem, and currency.

To those symbols of statehood, President Macron now wishes to add a financial transfer union, which, he feels, is necessary to make a success of the single currency. On a continent inhabited by a multitude of diverse peoples with no shared identity, Macron’s proposal, if implemented, will surely prove to be the EU’s undoing.