Forget A United States of Europe – Here Comes the Union of Socialist European Republics

A popular meme circulating today postulates Europe as becoming the United States of Europe. The play on words suggests that Europe is moving towards an American-style brand of federalism. However, what Europe is getting out of a collapse of the European Union is a Soviet collapse in reverse – that is, instead of a collapse from a totalitarian one-party state into a privatized,  market and trade liberalized state, the European Union will shift from social democracy  to a totalitarian state a la the Soviet Union. Call it the Union of Socialist European Republics, or USER.

The European core is feeling risky, looking to shuffle the deck.  Angela Merkel, leading symbol of the euro-core, has far-reaching political reforms to the EU on her mind, such as tighter controls on spending by euro-zone national governments and, eventually, the introduction of Eurobonds. Quentin Peel, FT correspondent Berlin, writes:

For Ms Merkel it is a question of the democratic legitimacy of the entire integration process. She sees a dangerous disconnection between national politics, and national parliaments, and the European parliament. Her party wants to see the Commission president directly elected.

The chancellor knows perfectly well that these are profoundly important political issues, and hugely controversial. But she has decided that only with such fundamental reforms can European monetary union survive.

Tension between the European core and the European periphery provide insight into the social tensions arisen from a cracking economic society. In an interview with Greek leftist leader Alexis Tsipras, the magazine Spiegel seemingly taunts the Greek leader.

SPIEGEL: Which “others” do you mean? The Greek economy is already in a shambles.

Tsipras: What I mean by that is if our economic foundation is completely destroyed and the decisions of an elected Greek government are not responsible for it but, rather, certain political forces in Europe. Then they too will be guilty, for example Angela Merkel.

SPIEGEL: Are you seriously claiming that the reforms which Europe is demanding as a precondition for loan assistance are the reason for Greece’s miserable situation?

Tsipras: If we are once again pushed and blackmailed into an austerity program that has so obviously failed, then it won’t be long before Greece is in fact no longer capable of paying its creditors. The result will be a halt in payments, one into which we were practically forced. This would not only be dangerous for Greece, but for the entire European economy. These days, the financial systems of all countries are so closely intertwined with each other that one can’t limit the crisis geographically. It’s a problem of all countries and of all national economies.

SPIEGEL: If Greece ultimately exits the euro, you will also bear some of the blame. You promised your voters the impossible: retaining the euro while breaking Greece’s agreements with the rest of Europe. How can such a plan find success?

Tsipras: I don’t see any contradiction in that. We simply don’t want the money of European citizens to vanish into a bottomless pit. The fact that there is financial assistance is the principle of European solidarity and a mark of being part of a community. That’s good. But we think these resources should also be put to sensible use: for investments that can also generate prosperity. Only then will we in fact be able to pay back our debts.

Europe’s economic and social problems will be solved politically, as the Union’s monetary system is not singular enough so as to, on its own, proceed on a program of restructuring. The politics will have to get the ball rolling, nudging the European economic sphere towards a level of sophistication where further economic integration (tighter controls) occurs naturally.

The eurozone does not enjoy the exorbitant privilege that the U.S. does in the world reserve currency.  The U.S. taxpayer, sitting on the world reserve, functions as a lender to Europeans.  The question is, do international interests dependent upon the world policeman policies of the United States want to jeopardize that role?

We do not believe so. We believe that a crisis in Europe will present the conditions necessary to further homogenize the continent and bring in a central authority, but this will be amidst a temporary collapse of the monetary union before elites can bring in an updated superstate-enterprise. The United States will not outright bailout the monetary union in Europe, but will assist militarily and through intelligence services to maintain order.  The blowback will be monumental, as an era of civil disobedience conflagrates across Europe.

EUROPOL will have to serve as the state security police and play an important role in USER politics, just like the KGB and its predecessor agencies in the Soviet Union. Whereas, in the Soviet Union, the KGB was key to the Stalinist terror in which mass murder eliminated millions of “terrorists” and “hooligans,” perhaps EUROPOL will play a central role in clearing-the-board of political dissidents.

UBS soberly warned of this in their Investment Research release, in which the Swiss bank submits that if member states begin to defect from the euro, leading towards a collapse of the single currency union, “some form of authoritarian or military government” would likely ensue.

In such an unfolding, we do not expect the response by international institutions to be friendlier to Europe than the Soviet Union based solely on the fact that these institutions are largely run by U.S. and European interests. And so that means Europe can expect radical changes via “shock therapy” recommended by the World Bank and the International Monetary Fund, which will mean the sudden escalation of price and currency controls, withdrawal of state subsidies, and immediate trade liberalization dominated by a united front of  demise-of-the-nation-state transnational corporations that monopolize national resources wholesale.

It will be in their interest to consolidate the European System into a more unified whole so that business can be conducted again in an orderly manner. Investor George Soros has said repeatedly that Europe  needs “a crisis to create the political will for Europe to create an [central] authority.”

Similar to that which transpired in the wake of the Soviet collapse, the collapse of the Euro will be characterized by 50% decline of both GDP and industrial output over a two-and-a-half to five year period.

In the latest issue of Diplomaatia, the Estonian foreign-affairs journal, Ivan Krastev, head of the Centre for Liberal Strategies, a Bulgarian think-tank, reminds people why there is little reason to rule out a disintegration of the Eurozone:

The Soviet collapse teaches us that just because the economic costs of disintegration would be very high, this is not a reason for it not to happen. To believe that the EU cannot disintegrate simply because it would be too costly offers only weak reassurance that the Union will continue to be stable.

Paradoxically, the belief that the Union cannot disintegrate, backed by the economists and shared by Europe’s political class, is one of the risks of disintegration. The last years of the Soviet Union are a classical manifestation of this dynamic. The perception that disintegration is ‘unthinkable’ could encourage policy makers to try to push dangerous policies under the assumption that ‘nothing really bad can happen’ in the long term, and foster the idea that anti-EU policies or rhetoric might even be helpful in the short term.

The Soviet collapse is the most powerful demonstration that the disintegration of the EU need not be the result of a victory of anti-EU forces over pro-EU forces. More likely, it will be the unintended consequence of the growing dysfunction of the system and the elites’ misreading of the political dynamics in their own societies. Reflecting on the Soviet collapse, the eminent historian Stephen Kotkin is convinced that the real question to be asked is, “why the Soviet elite destroyed its own system?” The Soviet collapse is the best demonstration that the rise of anti-integration forces can be the outcome, rather than the cause of collapse.

Austerity measures within months will cause panic in the streets if  people lose access to food and medicines. Police action will have to be swift and forceful so as to prevent escalation into rebellion.  With the euro at 11-month lows currently, rhetoric will at this point further work to divide the continent. Just as the colonized world of the nineteenth and twentieth centuries, there is a periphery and a core in Europe now, and the splintering will lead to authoritarianism akin not to the United States system, with the waning pomp and elation of a young, yet tired country, but the cold brute of a neo-soviet superstate.