Ray Kinsella
Economist Ray Kinsella is Professor of Banking and Financial Services, and Healthcare at UCD
Mixed response: German Chancellor Angela Merkel with her Finance Minister Wolfgang Schauble. Photo: Hannibal Hanschke
The most searching challenge that the EU faces is not the fallout from Brexit - it's from the militarisation of Europe and the US-led Nato encirclement of Russia, endorsed by the Nato Summit in Warsaw last weekend.
It is as misconceived as austerity and authoritarianism, which are at the heart of the European crisis. But it is infinitely more dangerous. If the Chilcot Report on the war in Iraq proves anything, it is that the momentum towards armed conflict, once started, becomes difficult to contain.
Militarisation will make it much more difficult to deal with the EU's migration crisis, itself largely a consequence of the catastrophic effects of Western military intervention. A conflagration between US-led Nato and Russia would increase the numbers of refugees in Europe by an order of magnitude. As for the impact of such a conflagration on the European and global economy - well, all bets are off. We could not begin to model the impact - but we can look at post-war Europe and Iraq and Syria and Libya... Only what are euphemistically termed 'Defence' industries do (exceedingly) well out of war.
In April, I suggested in these pages that Europe was in denial. It was mired in an identity crisis largely brought on by itself - a crisis of values, democracy - as well as macroeconomic instability marked by inequality, youth unemployment and long-term indebtedness among peripheral countries. There was no trust in Europe. "The governance of the eurozone is characterised by self-interest, subservience among weaker indebted members and, also, tenacity beyond all reason, in persisting with failed policies."
In June, prior to the Brexit Referendum, I pointed out that "while it was not the job of UK voters to resolve this mess - Brexit can force these same Euro elite to see reality. The EU is incapable of understanding that the dissenting voices across Europe - which they like to dismiss as 'populism' - are not the problem: the real issue is the underlying causes that have precipitated opposition to what the EU has become."
This perspective was vindicated by the EU's initial response to Brexit - denial, anger and a blame game.
Then, more positively, the first stirrings of a change in attitude by the EU 'Top Table' - notably Dr Wolfgang Schäuble - including a decision not to respond to Brexit by pressing ahead with 'union' and not to overly pressurise the UK in implementing Article 50.
Militarism threatens this. The process of rebalancing and reform, including greater democratisation across the EU, is now in jeopardy from the increased militarisation of the EU over the last two years, which is set to increase in the wake of the Warsaw summit. It is an appalling prospect.
Why do 'leaders' never see these things coming down the track? Every Leaving Cert student knows 'The Causes of World War I' - knowledge didn't prevent it happening. Why did the 'leaders', with the notable example of Churchill, not see what was unfolding in Germany in the short few years from 1935 to 1939?
Why did the US not understand the malign dynamic of the Vietnam War during the 1960s - and its consequences for Asia and the global financial system?
Why did 'leaders' not envisage the catastrophic impact of the Iraq invasion?
Now, consider this recent statement by Nato: "Since 2014 Allies have implemented the biggest increase in collective defence since the Cold War… Four robust multinational battalions to Estonia, Latvia, Lithuania and Poland ... a brigade in Romania … further steps to improve cyber-defences, civil-preparedness and to defend against ballistic missile attack … extend Nato's training mission in Iraq and to broaden (its) role in the Central Mediterranean … deploy Nato's Awac surveillance aircraft to support the Global Coalition to counter Isil…"
Now read the Nato Communique issued after last weekend. This is in just two years. The scale and scope of this process has largely gone unremarked. So too have the ironies: of more "training" in Iraq, of support for a "Global Coalition to counter Isil" when we know that it was the military invasion of Iraq that largely created Isil, of "defensive missile systems" ostensibly operated by Nato, which as a recent article in the 'Wall Street Journal' points out, "are essentially American initiatives" - and can be redeployed in hours as a long-range offensive system.
The purported justification for this new militarisation of Europe is the intervention of Russia in Ukraine, culminating in the annexation of the Crimean peninsula and its re-integration into Russia.
What is inferred by Nato from this is that 'a resurgent Russia' poses an existential threat to Europe. It doesn't stand up. It also puts fundamental reform of the EU - and peace - in jeopardy. The sensitivities of Poland and the Baltic states to a military threat from Russia are understandable. But that does not mean the argument driving militarisation is robust. Nor does it mean that their interests, and the interests of peace and stability in Europe, are well served by this militarisation of Europe.
Russia is not the USSR. The rebuilding of its economy and infrastructure, including the modernisation of its defence capability, under President Putin does not remotely equate to a threat to its neighbours.
The military capability of the US dwarfs that of Russia, in terms of assets and the number of bases from which to project those assets. Russia's defence budget is a fraction of that of the US.
Moreover, the track record, and legacy, of Western military intervention in recent decades demonstrably poses a much greater threat to global peace and stability compared with Russia. But indeed any such comparisons are pitiless and, everywhere, add up to incalculable suffering. The decision by the EU to facilitate accession to the EU by Ukraine and, before that Georgia, was foolish and provocative beyond belief. It was foolish because the expansion of the EU has created a 'Union' so unwieldy and overextended in its governance as to pose a threat - now all too evident - to its very existence.
Reflect, for a moment, on a 'Union' that also included Ukraine and Georgia. To compound that by facilitating accession to the EU - and, by extension, participation in Nato-led security arrangements - of nations bonded to Russia geographically, historically and in terms of language and culture, went way beyond provocation.
It has kick-started a vicious circle of ratcheting-up 'defence' spending. The deployment by Nato of men, heavy equipment and missile systems effectively encircling Russia will inevitably elicit a response.
We have seen this kind of dynamic before - it is taking Europe to a bleak place.
The militarisation of the EU has been rapid, largely invisible and facilitated by self-serving propaganda. Diplomacy provides a better basis for engaging with Russia as a European power, with shared interests at a time of global uncertainty.
Militarisation, now unleashed, threatens Europe.
Irish Independent