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What would happen if the EU fell apart?

Written By: - Date published: 10:13 am, December 8th, 2016 - 22 comments
Categories: Europe, International - Tags:

Lots of bad news continues for the EU this year. Let’s polish the ball of the future.

Some might agree that the EU was only necessary in order to cement a post-World War 2 reconciliation of Germany and France. So perhaps the post-WW2 thing has kinds run its course.

Maybe it’s still useful for mutual economic security, or security generally. That’s why the Baltic states and Poland joined. The Balkan states would love to as well. Greece has long favoured Turkey joining. Few other supra-nationorganisal groups have a major waiting list right now.

The EU is certainly the most advanced effort in the world to introduce a measure of democratic supervision into pan-regional governance. Unlike the UN or WTO, the EU has a directly elected parliament. Often decisions are made by majority, not unanimity. Non-democratic organisations like the WTO and UN can do much less, and do it more slowly and behind closed doors, than is the case with the EU.

The EU is a strong model for democratic rule at a supra-national level.

But it has vulnerabilities that have been exposed by the Euro crisis and Brexit. I’m just going to sketch a couple.

The whole EU edifice rests on law. The EU has no police force to enforce its will. The exit of a country from the Euro would be a breach of their Treaty obligations – and they have the force of law. The Euro was established on the basis that it was irreversible. One country exiting the Euro would lead to constant speculation in the markets as to who would be next. As speculation increased, so too would the size of the funds or guarantees needed to check it. That in turn would lead to heightened risks that some of the creditor countries faced massive internal pressure when putting up these funds and guarantees, and could then decide the cost and risks of staying in the Euro as no longer worth it, and re-establish their own currencies.

That would be the end of the Euro.

22 comments on “What would happen if the EU fell apart? ”

  1. ianmac 1

    If the Euro was well founded and long term it would challenge the American dollar as a World Standard. The USA would hate that. (I am not an economist 🙂

    • Draco T Bastard 1.1

      The USA would hate that but, in fact, with all currencies now floating and not being attached to the US$ as they were under the Bretton Woods agreement (which the US unilaterally broke BTW) then there’s no such thing as a Reserve Currency. It simply doesn’t fit and the sooner that people realise that the better.

      • ropata 1.1.1

        It is still a “reserve” currency in that oil is sold in USD.
        The Yanks have done some pretty underhanded shit to keep it that way.

      • CoroDale 1.1.2

        “all currencies now floating…” floating in what? An ocean of propaganda perhaps? If they aren’t floating in an ocean of commodities, then they are still floating in a ocean of USDs. Mixes to the currency basket may have began, but lets remain real about the volume of US Dollars and Bonds that remain on the market.

  2. McFlock 2

    The main strength of the EU is that it is a gradual process – being a full member with MEPs is one thing, but there are also levels of participation in trade, research (CERN), law enforcement and military cooperation.

    At the moment Germany is in the ascendency, fifty years ago it was Britatin and France, in fifty years time it might be Norway. As other nations feel disempowered and lower their level of participation, in twenty years the door is open for them to join back in again. This is the key difference between the EU and a superpower hegemony.

    Immediate threats still remain from Russia, maybe if the African Union grows along the same model the future stresses for Europe will come from the South, especially if Russia overplays its hand as the post-superpower. Or has a dodgy regime succession when Putin goes (FSB infighting maybe?). So I think there will always be practical reasons for european centricism, beyond naive diplomatic idealism (lolz at that term).

    Brexit I think is a blip – the big change will be Trump, in my opinion. If he sticks to his demands for greater European defense spending by other NATO nations, it won’t all go to Lockheed. It’ll also go to Rolls Royce Aero, Marconi, SAAB, and BMW, amongst others. That will serve to force greater integration of military R&D in Europe, and concomitant increases in organisational cooperation. It might even make the US a junior partner (or at least minority leading partner) in NATO.

    • Siobhan 2.1

      If America-NATO stopped trying to encircle Russia with military buildup I suspect the “threat’ of Russia would be considerably decreased.

      You read this sort of report..

      “NATO is seeking to station more troops in eastern Europe in what Reuters reports could be the biggest military buildup on Russia’s borders since the Cold War. As part of a U.S.-backed plan, NATO is planning to send battle groups to Poland, Lithuania, Estonia and Latvia with forces ranging from armored infantry to drones. This comes as tension mounts between Russia and the United States over the crisis in Syria. On Tuesday, U.S. National Intelligence Director James Clapper said he fears Russia could shoot down a U.S. aircraft if a no-fly zone were imposed over Syria.”

      (and I love Clappers ironic little touch at the end) and you have to wonder what exactly America wants.

      • McFlock 2.1.1

        It is of the nature of things for two powers to apply pressure to each other’s borders and spheres of influence.

        Russia is outside, but adjacent to, the EU, so applies this pressure with conventional geopolitical means: trade restrictions (e.g. GAZPROM) and military posturing. EU and Nato do the same.

        Within the EU, the pressure is more legalistic and political but still applies if one has a certain cynical perspective.

        America views its sphere of influence as being global. Russia is trying (after a few years of being a regional power with a strong legacy) to reassert itself as a global power. China has become a global power. These three posturing against each other is normal. Europe is a regional power that is becoming more independent of its historical and current global bosses, but even without US it will still butt against Russia and vice versa.

        The question is whether US isolationism will strengthen European cohesion, or simply return central/eastern European nations like the Baltics and Balkans to russian dominance.

        • garibaldi

          It will be interesting to see what US isolationism actually means. Do we seriously believe the Yanks will take their sticky beaks out of anything, and will they abandon any of their hundreds of military bases? I doubt it …. they’re too busy thinking they are “exceptional” and indispensable.

    • CoroDale 2.2

      Yeah, Norway music has some world leading death metal bands. Though Australasia is also becoming an attractive power base, much like Argentina at the end or WW2.

      Real threats from East? Or just threat of reduction in military spending?

      Do you mean demands of Trump or demands of Dunford? With military spending at such levels, would it not be more accurate to call these super-state “democracies” military dictatorships? The fog of war hides most detail, but it’s still clear to those on the ground that NATO is a fallen porn ring.

  3. Tory 3

    The EU is fucked; successive socialist policy has seen numerous countries loan billions to stay in power by placating the voters with generous social policy and payments. This has destroyed the economic base of many countries. Boarders need to be closed, migration halted, soverignship reestablished and foreign policy reviewed.

    • { ‘ The EU is fucked’ }

      And so is TISA.

      But I don’t think the ( per capita ) most wealthy country’s in the world who also happen to be socialists ie: the Scandinavian states had much of a hand in that somehow, Tory…

      • Tory 3.1.1

        So if that’s the case, why so much venom towards National and JK as NZ is listed in the top 10 of Socialist Governments in the world?


        • WILD KATIPO

          Because despite what some would say , Key and the National govt were nothing like a social democratic govt. Nothing at all. They ( like previous govt’s ) only played around with a few minor concessions to appease their detractors to appear ‘social democratic’.

          What they are is what we’ve had since 1984 . A neo liberal govt.

          I do take it you understand the huge differences between neo liberal economics and Keynesian economics for a start , I hope?

          And the the diametrically opposed differences thereof ?

          But don’t feel bad – even the Labour party have played the same game for the last 32 years. And for that reason I criticize them both as being equally worthless.

    • millsy 3.2

      The very same EU that imposed austerity and privatisation on Greece?

  4. KJT 4

    Hopefully we will see the end of austerity, other countries borrowing to provide economic stimulus to Germany, dominance by bankers and an upsurge in local democracy.

    Individuals in the EU see themselves as totally powerless over their lives.

  5. wellfedweta 5

    Hopefully we will see the end of the EU soon. This has been a disastrous experiment, that has reduced the sovereignty of member nations, and led t the introduction of some of the most stupid rules known to man. A European trade zone, as the EE originally existed, will work fine. Cut the political union and get back to free trade.

    • fustercluck 5.1


      The main reason I felt Brexit was a good thing is that it will devolve sovereignty back to a more local, albeit national, level.

      • GregJ 5.1.1

        So in practical terms what does having a part of it’s sovereignty mean “back” mean for the United Kingdom? And how does this outweigh the advantages (economically, politically, culturally & socially) from being within the EU?

        • wellfedweta

          I’m not sure there were any cultural or social advantages to the UK being in the EU. As to the economic benefits, they will be not be lost, at least not entirely. The UK is a huge market for the EU car industry. The EU will not bite off it’s nose to spite its face.

  6. CoroDale 6

    It’s the cultural unit that will survive.

    With the same death metal music being played in thirty languages, there is a good case for dissolving the currency union.

    But techno dance parties will continue to attract big cross board audiences, and artists who speak the language of permaculture will still be able to pay for car-pooling with heritage seeds and little bags of green and white.

  7. millsy 7

    The EU has allowed Germany to gain effective control of Europe without firing a single shot or dropping a teaspoon of blood.

    Fiscal and monetary and economic policy is under EU control, and once you have control of those areas, then a country is yours.

    Merkel has done more for German power than Frederick the Great, Bismarck, or that Viennese corporal.

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