A “dark day” in which “an alliance of three peoples…resigned themselves to submission”. A quote from the dark days of the Second World War, perhaps? No, the words of the French Prime Minister after seeing the trade agreement concluded between the European Union and the United States of America. But if Europe wants to blame someone, they should start with themselves.
President Trump initially threatened tariffs of 30 per cent, which negotiations brought down to 15 per cent on around 70 per cent of goods. This remains a significant increase though, and critical industries like steel face a tariff of 50 per cent. In addition, the European Union is committed to buy $750 billion in energy from the USA, and to invest $600 billion. In return, there will be a reduction on tariffs for US cars, something which is largely irrelevant to Europeans who have access to better European vehicles or cheaper Asian ones. European goods will become more expensive in the USA, hitting cars, pharmaceuticals, and machinery exports badly.
Ursula von der Leyen might hail this as a great deal, but everyone can see that the EU has been out-negotiated. These tariffs will hit Germany’s export-orientated model badly, at a time when it is already suffering. That, in turn, will also hurt those Central and Eastern European nations tied into German industrial supply chains. With Germany at the core of the European economy, and the largest single contributor to the EU budget, the shock waves will ripple across the Continent.
As Thucydides said of the siege of Melos in his history of the Peloponnesian War, “the strong do what they will, and the weak suffer what they must”. The EU has made itself increasingly weak and now it reaps the rewards of its own bad choices. Although the GDP represented by the EU has grown, other nations have had much greater growth, which has led the EU’s share of the world’s economy to shrink. In particular, the rise of China directly challenges the German industrial machine at the heart of the EU.
China’s strategic focus on industries, and their suppression of domestic consumption, allows them to systematically dominate certain sectors. Now, not only can they replace imports with domestic goods, they can also compete more with European goods in other global markets. That is a particular problem for Germany, which exports more to China than most other EU nations, although it will also affect other big European industrial nations like Italy. Dreams of a green economy are revealing themselves to be a nightmare: in Germany it led to higher energy prices, further reducing competitiveness. The result could be deindustrialisation in Europe.
That is also the fault of European leaders. The first decades of the 20th century have been marked by mass migration of people from the third world to Europe. This accelerated with Chancellor Angela Merkel’s decision to open the borders to supposed refugees in 2015. The numbers coming have never reduced to the level they were at before that, and Europe now suffers from an endless stream of supposed asylum seekers which its own human rights laws make it all but impossible to prevent.
Combined with an assumption among the elite classes that mass migration was a great way to boost the economy with more workers, the result has been a social transformation of the Continent. That has led to widespread cultural change across Europe, most controversially when it comes to Islam, terrorism, and crime. Mass immigration has also strained the welfare state, as it becomes increasingly clear that many migrants are coming for the easy life, such as the Afghan family who were recently exposed as claiming nearly 7,000 Euros a month in benefits, while helping run a chain of supermarkets and flaunting their wealth online. This isn’t a one-off: nearly half of all those on Germany’s main benefit are foreign nationals.
If Europe’s leaders want to avoid more dark days like the signing of the trade agreement, then they need to stop indulging themselves
At the same time that the welfare bill is exploding and increased regulation is hobbling their economies, European nations have taken the period since the end of the Cold War to cut on their military spending. It’s telling that even NATO’s recent demand that its members, most of them European, increase their spending to 5 per cent of GDP still only insisted that 3.5 per cent of it be on hard military power. Italy, which is one of the most militarily capable nations, is including a multi-billion Euro bridge project in its 5 per cent, on the grounds that it is “strategic”.
If Europe’s leaders want to avoid more dark days like the signing of the trade agreement, then they need to stop indulging themselves. You can’t sit on the sofa of statesmanship, stuffing yourself with junk food, and then complain that the other runners in the race are able to outpace you. Europe should take a hard look at itself and do what is necessary: end the green madness and over-regulation, prune back the welfare state and end mass migration, and use some of the wealth unlocked to invest in the military strength needed for an increasingly uncertain world.
