The EU Is Sleepwalking to Disaster

Jean Claude Juncker's final 'State of the Union' address ignored his own legitimacy crisis and the rise of the populist right.

by Gavin Haynes
17 September 2018, 11:04am

5th Sept 2018. Pro and Anti Brexit protesters face off outside Parliament (Alex Cavendish/Alamy Live News)

In September 2018, future historians will write, Jean Claude Juncker, President of the European Commission, found himself issuing the kind of delusional, impossible orders last seen in Hitler’s bunker. Europe was not, he insisted, bedridden, shitting blood, tumours popping out of its spine. The populist could be defeated through one, simple, ingenious mechanism. One so elementary he seemed amazed he’d not thought of it before: more Europe.

Juncker took over the EU’s top job in 2014. He retires next year, when fresh elections take place. Last week, he was in Strasbourg to give his final "State Of The Union" address to the EU Parliament. His term has seen Britain leave, Greece enter as deep a depression as the continent has known since the Black Death, anaemic growth, and the capture of at least four major nations by anti-EU populists.

Would there be any nods towards that? A little mea culpa from the man who reminded Brits on the eve of the referendum that “out means out”?

Quite the opposite. Rather than accept that the time for grand schemes dissolving the nation state had passed, Juncker’s speech simply, rather blandly, doubled down.

For such a messianic vision, it was a curiously tedious speech: plodding along in his thick Luxembourgeois French, barely raising his eyeline from his notes, Juncker suddenly announced plans for the Euro to become a rival to the Dollar.

Sorry what? For 70 years, the US dollar has been the global currency of reserve. It’s the bedrock of the international financial system the Great Powers all agreed upon at Bretton Woods in 1944. We peg everything around dollars because the 1930s were a bloodbath of currency wars, artificially-inflated reserves and consequent crashes, and exchange deficits that lead to big slumps.

But as Juncker pointed out – why are European planes, built in Europe, sold to European airlines, paid for in dollars? Why is 80 percent of the continent’s energy paid for in US Dollars? Why couldn’t Europe throw its own weight around? The bureaucrats have been pondering the idea for years – it was one of the key tenets of the creation of the Euro. But by next year, he announced, they will have a formal plan of action.

It won’t work: the daily global value of Euros traded is 800 million. Dollars is 2.2 trillion.

That maths again: 2,750 times more dollars are traded than Euros.

China will leapfrog it shortly, and besides. With a decade of anaemic growth to show for its trajectory, the Eurozone has a snowball’s chance.

No matter. As if overturning 70 years of economic world order weren’t enough for one address, Juncker soon turned his attention to foreign affairs. In future it would be necessary to overrule individual nations on matters of foreign affairs, he said.

In other words, the veto principle on which the EU was founded would end. The EU’s foreign ministry would finally take on real power. A qualified majority, rather than unanimity, would be all it took to create an EU position on events. This is the holy grail of a United States of Europe – the moment at which the nation-states become provinces, in the same way that American states have independence for most of their internal affairs but cede all international ones to the Federal Government. But there it was – plated-up like so-much mashed potato.

Not content with geopolitics and global economics, Juncker then took on migration. There would be a much expanded EU border force. But on internal issues – the failing quota system, he appealed only to their sense of the “social union”. “Play nice”, in other words. JC’s solution was simply to imagine a world in which the nice migrant-deluged Germans don’t resent the not-nice migrant-phobic Austrians, the Hungarians aren’t on lockdown, the Poles don’t point-blank refuse all quotas? Perhaps he should have said “be extra nice”.

Right diagnosis. Terrible solutions. As he stumbled off the international stage, Jean-Claude correctly identified the three key challenges for the EU in the next five years: an increasingly mercenary, mercantilist financial world, where Donald Trump’s trade wars lead to beggar-thy-neighbour competition and deadweight tariffs. A crisis of global migration that makes nativist-vs-globalist the most seismic axis for political upheaval. And the foreign policy vacuum created by a rising China and militaristic Russia being given free-reign by an isolationist America.

He missed the fourth. The crisis of legitimacy of his own Parliament. Either the Union starts to work economically for the southern states and culturally for the northern ones, or it is strangled by the populists. It has taken a decade for the discontent in the likes of Italy to gather steam; all the while, the Eurocrats ignored a phenomenon, hoping a few more mantras about la solidarité would make it all go away. Now, its foes have the momentum, and are spoiling for a showdown. One other thing Juncker announced: the Greeks have now paid off their final bailout – they will not be spoken down to quite so easily in future. Sweden, Denmark, Lithuania, Finland: the populist wack-a-mole never ends.

Instead, all we got was a legacy-writing exercise – a tired speech, from the sick man of Europe himself. In truth it wasn’t even Hitler in the bunker, meth-ed up, black eyes blazing. It was Raymond Poincare, twiddling his moustache in the Elysee Palace, September 1914. It was a sleepwalk to disaster.