Declining Europe A Challenge for the Next President

After this week’s presidential debate it looks increasingly likely that Mitt Romney will win the election in November. The release today of strange-looking employment data from the Bureau of Labor Statistics does not change that impression (more on those numbers next week). Romney will make a good president, and he will be far better than the current one on economic policy.

But America needs a Romney presidency also for another reason. Obama has shown a disturbing ineptitude in dealing with radical changes on the global scene. The so called Arab spring was warmly welcomed by the Obama administration, which continues to cozy up to the extremist Muslim Brotherhood in Egypt. But as the Arab spring is turning into a political nuclear winter and North Africa sinks into the cultural quicksand of Medieval Islamism, all that is on Obama’s mind is how much money he can give to the Islamist radicals in Cairo.

Apparently afraid of fanatic radicalism, Obama tries his best to alienate democratic countries like Israel if it can help him get closer to dictators and other ruthless political leaders. This kind of reactive appeasement only emboldens dictators and weakens democracies, consequences that Obama seems to look at with frightening indifference.

This is a very important reason for questioning whether or not he should be given a second term. The turmoil in the Middle East and North Africa region (sometimes referred to as the MENA) is not the last major transformation we are going to see on the global scene. On the contrary: there is a momentum building in Europe that very likely will cause significant turbulence over the next 5-6 years. Under some circumstances this turbulence could very well result in the emergence of a new Europe, far less stable, far less prosperous and far less of a partner for America on the global scene.

Conventional wisdom says that Europe is the epitome of stability and prosperity; according to American liberals the Old World surpasses the United States in every measurable category. That is not true, of course: we still have a higher standard of living and it is still better to be poor here than in virtually any country in Europe. But that aside – the perception of Europe as a peaceful place on Earth transcends party lines and ideological boundaries.

It is time to change that. Europe is no longer a stable, prosperous corner of the world. Europe is slowly turning into a social and political hotbed, and America’s next president must be ready to change our country’s policies toward Europe – and change them radically.

There are four components to Europe’s current transformation that give rise to serious concern.

1. Austerity and the economic crisis.

As this blog reports frequently, Europe is going through a very serious economic recession. Regardless of what triggered the recession (it was the welfare state, but many people won’t believe that) the austerity policies in Greece, Spain and Portugal are only making matters worse. Austerity is not only shrinking the economies of the countries where it is put to work, but it is also causing social and political turbulence.

The probable consequence of these austerity packages is that there will be the same turn toward the left as we saw in France. This will radicalize Europe, lead to higher taxes and yet more burdens on the private, job-creating, prosperity-producing sector. The economic decline will continue and spread across the EU. Even Germany is not immune to these policies.

As the economy continues to worsen and socialist governments seize power in more EU member states, Europe will lose more and more of its ability to be a serious player on the international scene. There will be less support for international military operations, less interest from other parts of the world in considering Europe as a player in international issues, and in all likelihood a re-emergence of Russian influence. Geo-strategically, this could have far-reaching consequences over time.

2. The threat of totalitarianism.

Perhaps the most neglected side of the European crisis, the threat of totalitarianism is nevertheless a real one. As the EU has become more and more politically centralized, and the economic crisis has deepened due to austerity, more and more voters are turning their eyes to parties that only a decade ago would have been unthinkable players on the European scene:

  • The Greek Nazi party, Golden Dawn, is a case in point;
  • Hungary is now governed by an authoritarian, nationalist party;
  • nationalist radicals are advancing their agendas in Spain;
  • authoritarian-leaning, separatist movements are surging in Belgium;
  • the old Communists never went away in Germany;
  • In Greece, Hugo Chavez-style authoritarian socialists got more than a quarter of the votes in the June election;
  • former Swedish National Socialist Front, now called Party of the Swedes, is rapidly gaining ground.

If Europe continues on its current path of economic decline and rising political tensions between the EU and member states, these movements could cause a heavy shift toward totalitarianism in European politics. A shift of that nature would tear apart the European Union, cause a fragmentation of the European economy and even pockets of dictatorship and tyranny.

This may look unthinkable today. But to draw that conclusion would be very Chamberlinian, possibly with similarly devastating consequences, at least for Europe.

3. An end to the currency union.

There is growing support within the EU for the idea that some ill-performing countries should be excluded from the currency union. The euro-zone countries are generally in agreement to try and keep, e.g., Greece in the union, regardless of the consequences. But that only means that the political and economic tensions currently plaguing the euro zone will continue to rise.

But not even the European Central Bank can continue to pour money down a black hole like the Greek state budget. There will come a point when they will have to stop, and when they do, the receiving country will de facto have to leave the currency union.

If this becomes a trend, Greece will only be the leader of the exodus. Spain, Portugal and possibly Ireland or Italy would soon follow. These countries would re-introduce their national currencies, and a currency depreciation war would break out. The new currencies would serve as the storefront for the attempts of their governments to restart their economies – and continue to borrow money.

A currency war like this would spark a sharp rise in inflation that would also have spillover effects on remaining European member states. Those effects would range from swings in foreign trade to interest rate volatility. There would also be speculations as to what country would drop out next. That would seriously hurt the euro and turn it into a far weaker currency than the one that was introduced just over a decade ago.

A breakup of the euro zone would also have political consequences. There would be a crisis of leadership sweeping through the capitals of the euro zone member states, especially those that remain within the euro zone. A far weaker currency means people will turn to others in elections, and that could easily turn out to be anti-EU parties. If so, there will be a fundamental, long-term shift in the prospect of where the entire European Union is heading. This may not turn out to be a radical destabilization  of Europe, but it opens an entire frontier of uncertainty across the continent’s political and economic landscape.

4. Muslim immigration and the rise of radical Islam.

There has been a big inflow of muslims to Europe, especially over the past 20 years. With that growth in immigration has come a growth in the presence of radical islam. I am not going to discuss this at length here, but it is worth noting two things. First, the rise of radical Islam in Europe has led to a radicalization of Europe’s muslims, with demand for sharia-controlled zones in British cities and a growing tolerance toward outright misogynistic character traits of what is fundamentally a non-European religion. This advancement of radical islam will sooner or later influence legislation in European countries on a broad scale.

Secondly, the growth in radical islam has provoked a growth in radical nationalism across Europe. Combined with skepticism – sometimes outright hostility – toward the entire EU project, this criticism of islam serves as fuel for European nationalism. A rising conflict between expansionist islamism and European nationalism throws yet another gallon of gasoline on a politically increasingly unstable political scene.

Taken together these four aspects of Europe’s future should serve as a framework for the next president of the United States as he reassesses America’s relations to the Old World.