Made in USA: The Coming Collapse of the European Union

by | Aug 16, 2022


The Ukraine war is becoming the EU’s death knell as its leadership, accepting jointly with Europe’s main governing parties the US instructions on confronting Russia, has bet the house on a Russian military defeat in Ukraine and a political-economic collapse leading to regime change in the Kremlin. The EU leaders have dangerously and increasingly tied the fate of the European integration project to their belief (based on gross miscalculation or misled by Anglo-American intelligence) in an Ukraine victory and a Russian loss.

As this is unlikely to happen, and as a major crisis unfolds this coming winter due to growing population discontent with raising energy costs, food disruption and general economic malaise, serious political changes will affect the EU and Europe’s political leadership. At best, the EU will severely lose momentum towards further political integration and will become entangled in paralysis and institutional marasmus.  At worst, growing dissatisfaction will prompt radical political changes and bring to power politicians with alternative views on the usefulness and relevance of the EU. 

The US-led economic war against Russia as response to the Ukraine military operation has exposed and worsened the deep structural faults of the European Union (EU) architecture. In fairness these cracks manifested before, for instance during the Greek crisis starting in 2009, the Brexit process since 2016 and the growing disputes of Poland and Hungary with the EU administration. At the root of the EU’s problems is a governance structure run by non-elected officials which over decades has not only expanded but also developed its own survival logic at the expense of the bread-and-butter issues that do matter to the average European. The EU morphed itself from an economic alliance into a self-perpetuating, political juggernaut driven by ideology and bureaucratic inertia and, in the process, has lost touch with reality. Matters have worsened with the ongoing incompetence shown by the current EU heads, European Commission President von der Leyen and EU Foreign Affairs Representative Borrell, illustrated by the about-face on Russian energy supplies by the former and the flat dismissal of diplomacy to end the Ukraine war by the latter.

Initially the European integration project was a US led initiative, covertly funded by the CIA in the late 1940s, to make Europe a consumer receptacle for the production of US multinationals. As Europe’s industrial capability recovered and subsequently the US lost its manufacturing clout through outsourcing to China (who also took over as Europe’s main trading partner), the original rationale of the EU lost meaning and relevance for the US vis-a-vis the Indo-Pacific region. For the US, the EU is nowadays just a geopolitical tool at its disposal for its own ends.

The Ukraine crisis has brought to surface within the EU deep centrifugal forces and created new ones. During the Greek crisis, Chancellor Merkel’s Germany led a policy of regional financial discipline and austerity with zeal, and some would say arrogance, that defused a time bomb but caused lasting resentment in southern Europe.

Poland, a nation with strong geopolitical ambitions frustrated over centuries, is now the main destabilizing force, initially through its clash with the EU on the primacy of so-called European rule of law over national sovereignty and nowadays by exposing its ancient rivalries with Germany – resurfacing for instance the issue of World War II reparations – and expressing fears of a potential Franco-German accommodation for a diplomatic solution in Ukraine.

The United Kingdom, in search of a post Brexit destiny and unhinged from its former EU shackles, is showing one more time its old and deep Anglo-Saxon and pro-Atlantic instincts as it becomes the spearhead on the G7-Russia confrontation and, in this process, dabbles with geopolitical alternative arrangements for Europe like a US-Britain-Poland-Baltics axis. Germany, for its part, will soon need to make existential choices on future energy supplies and take a hard look on whether it wants to stop all meaningful economic relationships with Russia.

In Hungary, Prime Minister Orban has skillfully mastered its population’s deep historical sense of identity at the heart of central Europe and become the leading dissenting voice suggesting a U-turn on anti-Russian sanctions and a negotiated solution to the Ukraine crisis, a bold and courageous proposal that has rattled the EU establishment.

Finally Lithuania, consistent with its long-term path of provocation against Russia, recently opened a new frontline by blocking goods transit from Russia to Kaliningrad, a reckless action in violation of international agreements and clearly against EU sanctions.

In the last years, the areas of EU contention have extended and deepened, including fiscal policy, financial discipline, immigration, human rights, governance, and energy. The recent EU reform attempts to strengthen its decision-making process at the expense of national jurisdictions, including an initiative to abolish the unanimity rule, is a last-minute desperate effort to save the alliance but likely will heighten opposition and resistance, particularly in Austria, Hungary, and Poland.

Notwithstanding the ongoing EU debacle, European unification is irreversible as we look back to the fall of the Western Roman Empire and the process of nation building unleashed since then. Sadly, the bimillennial European project has mainly being led by conflict and warfare and much less by bureaucracies. Europe’s self-serving politicians have not learned from history and their unpardonable fault is their inability to find an independent path for the continent away from the confrontation between the US, Russia, and China. Victoria Nuland’s infamous expletive during the 2014 Maidan crisis epitomizes the US government real feelings about the EU and should have been a wakeup call and realization that Europe’s future is far too important to be placed in the hands of non-Europeans.

Oscar Silva-Valladares is a former investment banker that has lived and worked in North and Latin America, Western & Eastern Europe, Saudi Arabia, Japan, the Philippines, and Western Africa. He currently provides strategic consulting advisory on financial matters across emerging markets.