Bad things come in threes

Misfortune never comes alone. And that is especially true for Europe. With all eyes on the economic problems of the South, other diseases are festering on the continent, infecting the very founding principles that have made Europe prosperous. The EU institutions are overwhelmed with managing the economic crisis, they cannot cope with other issues. Considering the energy that is being consumed to keep the economic union from falling apart, you would assume that an even greater threat to the stability of the region would be forcefully dealt with. But that is not the case. In fact, the EU is treating the democratic crisis of Hungary, Romania and Serbia with very little interest. The authoritarian  trend that has started in Hungary has now spread to three countries in the region, three countries that have very complicated ties and a complex history that needs to be managed in a pro-European mindset in order to avoid conflict, the very reason the EU was founded in the first place.

After a few steps back from the Orban government, Hungary has managed to get away with some very important legislative changes that violate democratic principles and install a Putin-like style of politics. Viktor Orban's recent declarations that he hopes the government would not need to change the political system of the country from democracy to 'something else' have been largely ignored by the media and, as far as I could find, have provoked no official reaction from any of the EU officials. Furthermore, he has started a media campaign to portray himself as the defender of Hungarian interests against the greed of foreign lenders as he prepares to enter though negotiations with the IMF. Helped by the system that he has already put in place, he is very effective at creating a Soviet-style leader image  for himself. His measures go far beyond those proposed by populist forces in Western Europe, firmly directing the country to the far-right. And this is just the beginning. As the radical nationalistic party, Jobbik (whose neo-fascist paramilitary group has only recently been outlawed), seems to be falling apart, the danger that factions would form an even more radical movement is rapidly increasing. 

As Viktor Orban tightened his grips on Hungarian governance, another Victor came to power in Romania. Victor Ponta, the leader of the leftist PSD, became the Prime Minister of Romania in May and shortly after that he proceeded to dismantle many of the checks and balances of the public institutions and to tighten control over them.  In a one week blitzkrieg operation, he changed the heads of both houses of Parliament (through illegal procedures), he replaced the ombudsman with one of his party members and he took away the Constitutional Court's power to judge on Parliamentary decisions. He then impeached the President and replaced him, on an interim basis (for how long exactly it is now unclear), with his political ally, the leader of the centrist PNL. The rapid pace of the moves (which one respected Romanian journalists described as a 'brutal group rape of democracy') has attracted dire warnings from the EU and the US. Although the PM has tried to convince his EU and US partners that he will repair any steps that have broken democratic principles, he has backed his words with little action. Furthermore, the interim President, Crin Antonescu, has used some very strong language to condemn any interference from the outside, calling into doubt the US's and EU's power and declaring the sovereignty of Romania against foreign 'ex-powers'. Some important steps from Romania in August and September will show exactly to what extent are Mr. Ponta and Mr. Antonescu prepared to breach the democratic principles that they swore to protect.

(Permit me a personal opinion on the Romanian situation: the country is run by muppets, amateur politicians who do not understand the weight of their words and think that doing politics is nothing more than a small scale power game that they can play for fun. They simply do not understand the consequences of their actions or of their words, or the impact that they have on society, managing to create a very dangerous rift based on political affiliation.)

And then there is Serbia. A non-EU country but an EU candidate, Serbia has recently elected a nationalistic president that denies that the Srebenica massacre. He appointed Ivica Dacic as Prime Minister, the former spokesman of Slobodan Milosevic. It is in Serbia, ironically, where the weakness of the EU is most obvious. The EU used to have the most influence in candidate countries, steering them towards reform and state-building, working with them to chain nationalism and promote freedom. It now looks weak and strange, giving lessons to Serbia on issues that itself badly mismanaged. It is to no surprise then than Serbia chose to ignore the EU's recommendations on banking reform and went on to put the National Bank under the control of the Parliament, move that mirrors Hungary's recent actions.

The political discourse of the three countries is now dominated by populism and nationalism. The media fuels a state of panic continuously revealing imaginary threats, from outside and from within, to create an almost Dali-like view of society. Threats towards ethnical minorities and even towards each other  (see the referendum spat between Romania and Hungary) point to an escalating crisis that the EU chooses to ignore. Badly affected by the economic crisis, the people of Hungary, Romania and Serbia are looking to fresh policies to help them out of poverty. With a second wave of the crisis soon to hit the region, things can spiral out of control very fast. The EU's biggest threat might not be the economic bankruptcy of a southern state, but the democratic failure of an eastern one. 

The make or break moment - The globalisation of politics.

We are living through some very interesting times. Change is the word of the day. June will be remembered as the month which intensified a process that will last the summer and when it will end, in the autumn, the world will function in a different way. It is a rearranging process with power being transferred from one side to another. It is still unclear how it will all look like when it ends but it is almost sure that the world's power balance will be quite different compared to what we have today.

The never ending eurocrisis needs to end 

One of the most important elements of this rearranging of power will be the result of the eurocrisis. In my view, the crisis in Europe has entered its final stage. It is still unclear what the result will look like but it is clear to me that the current situation can't last for long.

The outcome of the eurocrisis will be mostly decided in two countries: Germany and Greece. The Greek election and Germany's reaction to the result of this election will be decisive for the fate of the European Union. It is not just the euro that is at stake, the entire EU can fall if the crisis is not carefully handled. And looking at how the politicians have handled it so far, the outlook is not rosy. I do believe that the political class will eventually make the right decisions; when faced with disaster, even Angela Merkel will blink.

 Greece's membership of the eurozone is no longer the focus of the situation. With a third bailout probably needed (though it needs to be mentioned that the macroeconomic situation of the country is improving- the social situation, on the other hand, is poised to worsen for months to come), the electorate might as well vote for a renegotiation of the bailout and , effectively, a Greek exit from the euro. Without wanting to sound cynical, in the bigger picture, Greece does not matter anymore. But the contagion that Greece will cause will be more than decisive. If  Greece votes to leave the euro, a bank run around Europe will be inevitable. Italy will have no choice but to ask for a bailout. It is hard to describe how bad the situation could quickly become. The entire European system, in its entire complexity, might fall apart. There is only one thing that can prevent this. A fiscal, banking and political union. A federal Europe. But how can you create a superpower in less than a week?

Considering that a suspension of the Schengen Agreement, the suspension of the free movement of capital and goods and even a suspension of the bailout funds and the EU budget as a whole, have all been considered as potential responses to a Greek exit, a federal Europe would be a less drastic response. At the end of the day, no politician will want to be blamed for causing the fall of the European Union, especially considering what the socio-economic consequences of such a disintegration would be.

My bet continues to be that Europe will agree on deeper integration, with or without Greece. It will be Germany who will play all the shots but Angela Merkel will need to improve her communication with both the German and the European public. She will have to explain why she demands certain things and she will need to start thinking in European parameters, not just German (I would go as far as saying that a full scale pro-EU propaganda/education campaign will be needed).


Tired of waiting on Europe, the world moves on

The process of integration will not be exclusive to the EU. Increasingly, the G20 will act like a proto-government of the world. Not necessarily a  government that is able to govern in an efficient way but a forum of discussion that will sometimes produce decisions for the entire world. This will be the case especially if Greece leaves the euro. The shock will have to be dealt with by the entire world, not just the EU. 


But after almost three years of crisis, the EU has lost most of its clout. Even a federal Europe will find it hard to impose itself in the G20. This has been increasingly clear in recent days. Brazil is now demanding more power for developing countries in exchange for higher contributions to the IMF. China is threatening a full out trade war on the CO2 issue, with its air transport companies being ordered to refuse to respect the EU rules that will become law at the beginning of next month. Russia is also refusing to cooperate on any major international issue, pursuing its own agenda (Putin has pretty much frozen relations with the West since his reinstauration and has recently been accused by the US of sending fighter helicopters to support Assad). The only other country that seems to support the EU (not for free of course, but its demands are not as stringent) is India. India, however, is failing to fulfill its potential and does not seem to be much interested in tackling the problems that are preventing its development.


A special factor in this framework is the US. America is searching for a new role on the world stage. It is time it recognizes that it can no longer afford to be the world's police force. It needs to start seeking alliances and act like a multilateral power. However, its economic  rhetoric is bothering many in Europe which correctly argue that it is in no position to lecture others on economic matters. Its decision to increase its military presence in Asia will probably bother China. It is probable to see the US increasingly isolated in the world, with formally warm relations with the EU, Japan and Korea but no 'special relations' (the UK being the exception as it will probably continue to obey its ally on any issue), especially if Germany becomes the leader of a federal Europe.


The process taking place this months and for the rest of the summer is very important for the future framework of power. As I see it, it is necessary for European states to start transferring power to Europe. Europe, however, will start transferring power to other world forums. It is a new stage of globalization, it is the globalization of politics, and like all the other important transitions in world history, it is a dangerous phase. Many things can go wrong. The system is already tense and a spark would be enough to start a fire. Syria, the fall of the EU, Iran, a trade war, the elections in the US, the transfer of power in China, populist forces taking control of European governments, these are all factors that can make the whole process a lot more complicated.  Lets hope that the summer will be one of progress, not conflict.

The left strikes back

The three elections taking place in Europe this week will most likely signal the revival of the left in the political arena dominated lately by right wing, conservative forces. As recent as six months ago, most EU governments (all with the exception of one or two countries) were led by conservative parties, allowing Germany to impose an austerity pact with virtually no debate on whether growth measures should be part of any such program. But Germany is now finding itself cornered into discussing ideas as grand as a new 'Marshal Plan' for Europe, with most of its allies either directly challenging the German austerity program or just diplomatically admitting that the focus needs to change towards how to encourage growth.

And this is all because of unemployment. The high unemployment figures (today reaching the highest number in the EU in 15 years) point to the fact that most European countries are facing an imminent social explosion. Particularly bad are the youth unemployment rates, reaching an incredible 51.2% in Greece and 51.1% in Spain (where one in four working age adults are officially out of work - I do need to mention that I believe that the actual figure is lower due to unreported workers avoiding taxes). Voters are starting to see unemployment as the biggest problem the economy is facing, mostly because it went up even when the headlines were saying that the economy is getting better. The fact that bonus payments were in the headlines again, next to titles saying that big companies are reporting higher productivity on lower wages, did not help either. 

So it shouldn't be surprising that the left is hitting back hard. The right of the center parties have discredited themselves around Europe (with the notable exception of Germany- which still owes its success to the Agenda 2010 program of a social democrat chancellor) by not managing to keep the economy under control or have lost the support of their voters by imposing thought austerity measures to keep the economy afloat.


First test for Miliband

The local elections in the UK will be the first ones to signal the swing to the left. Labour will win back many of the mayoral seats that they have lost to the Conservatives at the previous elections but will fail to win the most important of them all, London. Boris Johnson's probable win in London underlines a deeper problem for the Labour leadership. The party has so far failed to impose a figure that can inspire the voters. David Miliband polls worse than David Cameron even though he is in opposition while Cameron is leading an austerity government.

The explanation for this is simple. Labour has not yet broken the compromise of the Blair period. They have not come up with new ideas since the mid 1990s. Ideologically, they are a party stuck in the last decade and politically they can not pull themselves together to present a proper leftist image for the future. Labour will win tomorrow's elections but not because they have triumphed in the electoral campaign, they will win because they are not in government.


Hollande to lead a quiet revolution

The most important election result will come from France. The presidential elections there are really the place where the dices will be rolled. A socialist victory will be a strong signal for the future of European politics. Hollande is right when he says that, if he wins, he will have a mandate to renegotiate the austerity package. He build his campaign on this and when he wins (because if he doesn't do something really stupid in the next two days, he will win) he will have to face Merkel on many issues (important thing to mention, he wants to introduce eurobonds, clashes with Berlin will be unavoidable).

Unlike the UK, the left will win in France because it deserves to. Hollande has run a very good campaign, focused on the right issues and refused to compromise in order to get the votes of Le Pen. He did not change his personal style and refused to enter a popularity contest, focusing on words and ideas and not gestures and emotions. I do not usually support leftist candidates but I do hope he wins. Sarkozy has acted like a fool during this campaign (I really don't think I am using harsh words here) and his flirting with the far right needs to cost him dearly. You don't play with fire in politics. He broke that rule.




Greece decides its own fate

The most unclear election result will come from Greece. It really will be a Greek tragedy because nobody will win. The two big parties will look like shadows of their former selfs, a third far left party might be asked to form the government according to ridiculous constitutional rules and a non-apologetic Nazi party will enter the Parliament. How they believe that the country will manage to be stable enough to implement the needed measures to restore growth, I simply don't know. To be honest, this election in Greece is like one in which they decide on their own suicide method.


The far right waits for its opportunity

As this election cycle has already shown, the populist  far right  has become an important political force in most European countries. It is not their time yet, the danger for a far right government to take control in an EU country is still very low. But if the left manages a comeback and take over enough governments to implement leftist ideas on the continent, it better make sure that they work. If they don't, the only credible option will be the far right groups. If the economy gets worse (and there will be a clash between the markets and left leaning governments), then the best opportunity for the far right forces would have arisen. Marine Le Pen's perfect political campaign (and I must admit she is a great campaigner, genius use of symbolistic, tone, message) would make her a real potential president. Greece's Golden Dawn is another group to keep our eyes on.

We are now entering the second part of the crisis. The financial crisis will turn political and social. And most of the austerity measures have not been yet implemented. It is important for politicians to realize the gravity of the situation and fix the problem. My view is that the answer is deeper integration, the idea of a centralized EU (not eurozone, but EU) government needs to be seriously debated. Solidarity also needs to become a central value as well, even if that means transferring German money to Greece (will not start rant about how much profit Germany is making in Greece on things that Greece doesn't really need, like weapons - Greece used to be the fourth largest importer of weapons in the world until 2006 and still is the biggest export market for German weapons in Europe, but the EU is not asking Greece to cut its army budget, its health budget seems to be less important in their eyes). Things like these make the Greeks mad, and mad voters vote for extremist parties.

Kony is a symptom, not the disease

There’s a storm brewing on the internet and the latest sign of this storm is coming from a group called Invisible Children. Their Kony 2012 campaign has gone massively viral and the video promoting it has  been shared and commented by an impressive number of people, including myself and I don’t usually get involved in things like this. But this is different. This manipulates you in such a way that you simply can not ignore it. You feel that you HAVE to get involved. And that’s how it should be.

Joseph Kony is not a new name on the list of terrible people that live on this planet. I remember how, as a kid, I would watch documentaries on Discovery Channel about what he was doing and I would consider myself lucky for not having to deal with anything like that. But as the video rightly claims, most people had no idea who Kony is. Even people who knew who he is didn’t really think that he is a priority on the ‘to do list’ of those who are responsible for bringing justice to the world. I am grateful to those who organised this campaign for making people aware of his crimes.

The other element of the campaign that is making me very excited about the future is its extraordinary power of making people come together and demand action. It is building on previous campaigns like the 'occupy movement' and it adds a humanitarian component that will make people feel better about themselves. If the occupy movement was formed mostly by angry young people, this one adds the feel good factor which will mobilize a different group of people as well. And this is where the problems start. This group of people is not directly affected by the person that they are campaigning against so they will get involved in different ways than those in the occupy movement. They will most likely participate in events from time to time, they will spread the word and they will donate money.

But the organisers behind this campaign are not aid workers, they are lobbyist. Yes, they are part of that group that was getting blamed for the erosion of democracy during the previous internet protests (this only comes to show how easy it is to manipulate people). Their intention is not to help directly the people affected by Kony's actions but to put pressure on governments to do so. And it doesn’t matter how truly humanistic the idea is, when politics are added to the mix the effect is not the one that people had hoped for.  There is no point in sending more soldiers in the area and there will be no change if Kony is captured and/or killed.

The situation is a lot more complicated than the video shows. Of course, it would have been hard to present a clear image in a 30 minutes video, and people would not have joined the campaign if they knew that the situation is a lot harder to fix, but there is one crucial element that should have been emphasised. Joseph Kony is NOT the problem, he is only a symptom of a deeper disease that affects not just northern Uganda but the entire sub-Saharan Africa. Furthermore, Kony is not alone. He is not the only leader of the terrorist organization and the LRA is not the only terrorist group in the area. If Kony is captured, he will just be replaced. Cut one head, and two or three more will grow and probably fight each other. The local governments are not to be trusted either. Most of them have a terrible record of treating their own people. We first need to understand that we are talking about an extremely underdeveloped region in which notions such as the state, institutions, society have a completely different meaning than that which we are used with.

But we should not ignore the problem. What we should do is treat the disease, not just the symptoms. We need to help rebuild those countries. If we are really talking about creating a world in which all children have the right to a childhood then we must invest in people, not in some campaign to put pressure on the government to send more soldiers. Put pressure on the government to invest in schools and hospitals, infrastructure to encourage growth, aid programs for development. And not just handing aid money to the local corrupted government. Democratic, free societies can only grow from inside of a country. Helping those people help themselves is the only good thing that we can do. The rest is just talk.

But this is not to dismiss the Kony 2012 campaign. Its aim was to attract attention to these problems and that it has succeeded. It only comes to show how powerful that storm brewing on the internet will be. Because this is not the storm itself. This is just one wind gusts that it has sent, just like the occupy movement and the anti SOPA/ACTA campaign. It shows how internet can unite a huge number of people from different countries to achieve a common goal. It also shows how easy it is to manipulate people. The storm that will eventually come will change our societies and the whole idea of democracy will be redesigned. I don’t know how this will happen or what will trigger it but it will happen and I don’t have a doubt about that.

PS: If you really want to help, here are some useful websites:
http://www.cpa-uganda.org/index.html
http://www.one.org/c/international/actnow/3835/
http://www.saveafricaschildren.org/
http://africanchildrenschoir.com/

The wealth of nations

Greece has been bailed out again. Yaay!! goes the financial world. Yaayy!! Go the rest of the EU countries which will see their banking sector survive another day. They all congratulate themselves, they pose for front page pictures, they exchange kisses on both their cheeks (except for the British, they don’t kiss. And the Belgians, they kiss 3 times) and handshakes, they hug each other and promise to see each other for drinks at a later date. They saved the world, they think. Prevented an economic Armageddon, they say. They are happy.

14 hours of negotiations have ended with an agreement to save Greece again. 130 billion Euros will be given to Greece so that Greece can then give it to other parties. Greece will not actually be able to use this money to fix its own economy. But yaaay!! go the markets so who cares what actually happens to the money as long as the panic is (briefly) over.

As I write this, details are starting to appear about last night’s deal. It is clear, onece again, that this bailout will not work. The scenario presented in the report on which the deal was based reads more like a fairy tale than the nightmare that it actually is. They still believe the Greek GDP will bounce upwards even with more austerity introduced (well, there is the option of EU structural funds that the Greeks can use but they have no efficient structures in place for that  and it’s very unlikely for them to be able to build them up in a few weeks).  The general consensus is that the deal will not work. But who cares? We are happy because the markets are happy.

At the beginning of the crisis, Merkel was adamant in urging the primacy of politics over the markets. She said the political system comes before the market requests. Democracy was more important than yields and people came before banks. Then the system started falling apart. Merkel’s mistake was that she didn’t see how interconnected the banks and the people had become. Politics and economics were now connected at all levels and while politicians could not control bankers, bankers could control the economy, hence the people, hence the politicians. Who would vote for a moral, principled politician that protected democracy but brought bankruptcy?

And when Merkel realised that she needs to start playing politics in the economical field, the entire game changed. Wealth was no longer a measure of living standards but it became a simple formula in calculating the debt levels of public institutions. As long as the numbers looked good, it didn’t matter if the people behind the numbers were smiling. They would smile if they have a job, they said. They would smile if the banks keep lending, they said. It didn’t matter if the jobs that people had were paying crappy salaries or that the banks only lent to people who didn’t actually need more money.

At some point about 3 to 4 years ago, the wealth of nations started being measured in cold numbers. Happiness, development, culture, freedom and democracy, they were all dashed in the background. We are now happy if the markets are happy. That is basically what Lagarde is telling us.

But what about the people of Greece? Are they happy? Their country has been saved from economic hell; you would assume that they would take to the streets to celebrate. Well, they are taking to the streets but there is no celebration planned. Instead they will protest. They will protest because they believe that the humiliation that they have been put through and will be made to suffer many, many years from now is not a price worth paying for their wealth.  They want their wealth to be measured by other standards. Cold, neutral numbers are not enough.

Well they deserve it, you might say. They spent more than they had, you might argue. They stamped on the EU budget rules! Yes, but so did Germany and France and most of the other euro-members.  Greece was a bubble because foreign banks allowed it to become a bubble. The EU in its entire composition decided that borrowing is a right, not a privilege. And Greece now has to pay more than it can because of mistakes made by Germany and other EU countries in handling the crisis. Don’t blame the Greeks, blame everybody.

The ideal solution would have been for the EU to stand behind Greece in renegotiating its debt burden. Iceland has done that, putting people before the banks (mainly because the Icelanders attacked their leaders. Literally.) and is now doing great. But who could have expected the EU countries to actually agree on something like that?

Don’t get me wrong, I am not a leftist. Not even close. But I do believe that the people are more important than their debt. I do believe that wealth is not only defined by how much money you have. Freedom and democracy are more important than access to financial markets. I do believe that Greece should have defaulted inside the EU and then get support to rebuild its economy. They would have gone through hardship but they would have retained their pride.

As it stands right now, the crisis will continue. And probably get worse. Maybe not economically. The economy might start growing again (not in the South). But socially it will get worse. Because people don’t care about the numbers.  They care about their living standards. And though they might accept lower living standards, they will only do so if they see that it benefits them and not some abstract market. We will get poor in so many ways that when the numbers will finally say that we have regained our wealth, we won’t care anymore. Respect for the individual and its needs will have become a thing of the past and the primacy of politics over economics will be completely over. But what did we expect? We laugh at people who dare to share ideas and we call them idealists like it’s a bad thing. Socially, politics, in its pure form of debating ideas and values, has lost its preferred position over economics long ago. We are now just institutionalising this reality.

Welcome to the age where electronic impulses in bank computers have become the way by which we measure wealth! Hope you left such ideas as democracy and sovereignty at the door. You won’t need them here. And now that you finished reading this, could you please go back to work? We need to add another percent to that growth figure so that the markets stay happy and we can all smile.

Foget about the euro crisis! Hungary - EU's supercrisis

Not as bad as you might think

Regardless of what you read in the economic news, 2011 has been a very good year for the EU. It is ironic that it is a crisis threatening the foundations of the Union that has propelled the EU at the top of the news and has made obvious its status of economic superpower. There is no doubt now that the EU can hold the world economy hostage to the same extent as the US. Events inside the EU economy have an impact around the world to an extent far greater than previously thought. But as bleak news about the economic performance became the daily norm, so did summits and meetings between EU leaders. The markets have pushed the EU to integrate at a record speed. Many have been disappointed by the inconclusive summits that have made only marginal progress but judging by normal EU standards what has been achieved in 2011 exceeded even the wildest predictions of 5 years ago. We are now openly talking about eurobonds. A stability compact has been decided (yes, the details have not yet been put forward but the idea of further coordination across the continent is now taken as a given). And most importantly, elite socialization at the various meetings has formed what can be regarded as a proto government of the EU. Don't get me wrong, I am not satisfied with the lack of leadership and the squabbles of EU leaders but we mustn’t forget that we are talking here about binding together 27 (soon to be 28) countries that have a very strong and varied cultural legacy and that at various points in the not so distant past have been at war with each other. The spillover effects can already be seen with the EU states working together on other important issues as well. An oil ban on Iran has just been decided and it is remarkable that such coordination in foreign policy has been achieved.

But as the EU accelerated integration, it has also sacrificed the basic value of democracy. We now have 2 governments that have been imposed on Italy and Greece without consulting the population. While the Greek prime minister has a grand coalition in his government, giving him some basic legitimacy, Italy's Monti is leading a government of technocrats (which, leaving naivety aside, had to be first agreed by Berlin and not by Italy itself). The Irish budget has first been circulated in the Bundestag and not in Ireland. Many budgetary decisions in Spain had to be discussed with the other EU members first. I do not necessarily condemn any of these developments but a higher degree of transparency is needed to make the process more democratic.

Russia's clone inside the EU

All these events are somehow related to the eurocrisis. But another development is now threatening the EU. It is not just about certain countries leaving the euro or about recessions wiping out trillions from the market. It is about something more fundamental than that. It is about the instauration of a new undemocratic regime in an EU member state. Hungary has made a giant step towards putinism and away from democracy with the introduction of a new Constitution at the beginning of the year. Essentially, a mild form of one party rule has been imposed on the country. I say ‘mild’ because it has the potential to grow into something much bigger and frightening. The nationalistic government of Viktor Orban, supported by over 2/3 of the Parliament has imposed rules that trample basic human rights. Freedom of speech is no longer guaranteed in Hungary. The press is anything but free. Many religions (including the Muslims and Hindu) are now discriminated against and changes have been made to the legal framework to make it impossible for sexual minorities to ask for equal rights. The Constitution and the laws of December 2011 reintroduce God and the Christian values as basic pillars of the country’s policies.

Equally disturbing, the heads of cultural establishments around the country are being replaced by party officials or even far right extremists. The National Bank and many other financial institutions will fall under the control of the party as well. An electoral reform also seems to ensure that Fidesz, the governing party, will be able to secure a greater share of the Parliament with fewer votes. Worryingly, Hungarian officials are making declarations insisting that they are proud of the changes (with even more to come) and that observers should make no mistake, this is not just a state reform but a full change of regime.

The Hungarian PM has essentially adopted a Le Pen-like view of what his country should be like and has enshrined this view in the fundamental law with very little chances for a different party to change them even if Fidesz will lose control of the Parliament. He has rebuffed any criticism coming from outside, snubbing both Hilary Clinton and Jose Barosso. When the American ambassador wrote an article criticizing the changes, she was politely invited to keep her views for herself. When another former US ambassador has warned that Hungary might end up suspended from the EU, he was ignored. Negotiations on a new loan have been suspended after the IMF and the EU pleas for an independent central bank went unheard in Budapest. Meanwhile, the country is heading fast towards bankruptcy and the people are being hit hard by the 'unorthodox' economic policy of the government (they now have to pay the highest VAT in the EU, among other taxes and plunging national currency).

The clouds on the horizon

The worst part is that the EU can do nothing about this. It can warn and express preferences but these can all be ignored by the national government. The EU is not prepared for this kind of crisis as it takes for granted that all its member states are democracies and will remain that way. What will happen if Hungary becomes Europe's Russia and other central and eastern European countries follow in installing nationalist/populist governments? Even if the eurocrisis is resolved, the EU will be broken. I can see a number of ways in which the situation could lead to war. All you need is a nationalistic government in a neighboring country and all the talk about solidarity and brotherhood will be forgotten. The ugly faces of last century will be back.

Even more important, the actual aim of EU enlargement would become a failure. There is no guarantee that Hungary’s example will not radicalize the entire region. This is a far greater threat than the eurocrisis because it can easily undermine the entire philosophy behind the EU. It is a sign that nationalism is alive and kicking on a continent that saw two devastating world wars. The entire eastern flank of the EU can become a ticking time bomb if Orban continues with his nationalistic tone.

It is remarkable how similar the circumstances of today are to those that preceded World War II. Far right and populist forces growing across a continent going through one of the worst economic periods ever experienced with even more austerity to come. Growing mistrust of other countries and nationalistic views are replacing the pro-European discourse. The EU used to be there to eliminate the risk of any spark that could ignite the entire region but now seems unable to prevent a member state from straying.

The chances for the worst case scenario are still slim. A full break-up of the EU followed by war in Europe is still unlikely but clouds of the perfect storm are gathering in the right places. To simply ignore the threat and dismiss it would be the worst thing to do. The EU needs to force Hungary back into line by any means possible. I am sure the Hungarian citizens would rather be European than isolated within their own country. It is just a matter of forcing the government to listen to those citizens and not to the few radical voices that have not learned anything from the previous century.

The end of the European Dream

 

To say that the European Union is in a crisis would be an understatement. The EU has went through numerous crises in the past and its doom has been predicted over and over again without ever materialising. The answer to difficult problems has always come after lengthy discussions and it has always been more integration. But this time is different. For EU standards, the current developments are answered at an impressing speed. After so many rounds of negotiations, political socialisation has taken its told at all the levels, EU leaders honestly starting to see each other as colleagues and being more inclined to accept deeper integration. Crisis hit countries are willing to cease even more sovereignty in return for help, not just in the Eurozone but in other member states as well. All these developments have happened in less than two years and are bound to be followed by more. But nobody is impressed. While solutions might have come at a record speed they have still not come fast enough. Coordination/Integration might have gone to levels unimaginable just 5 years ago but it needs to go much much further than this if there is to have any chance of reigniting the idea of transforming the EU into a superpower. But that will not happen and the rest of the world knows it. The public is not ready to put the EU before the country and it will not change being Greek or Finish in order to be European. Failing to convince the rest of the world that solidarity is indeed a basic value of the EU, the Union has lost any claim of leadership in world affairs. The EU's power is given not by an equation of adding up member countries capabilities but also by multiplying this sum by a factor representing the willingness of these states to work together. And at the present, that factor is close to zero.   


How did we get here?

It is hard to put the blame for this situation on one factor alone. The origins of this are complicated and go long back in time. The Euro was created with a fundamental flaw and everybody knew this was the case. A monetary union cannot survive for long without a fiscal union and strong political coordination (preferably a full fledged political union). But, at the introduction of the currency the hope was that these will come at a later stage, once the public understands the benefits of a common currency and is willing to give up even more sovereignty so it can enjoy these benefits. In the meantime, it was up to the politicians to ensure stability. But power corrupts and it was impossible for many politicians not to take advantage of the opportunity to borrow at low cost and give the public more than it deserved so they could be voted in power again and again. When leaders become entertainers any plan for progress is rapidly put aside.

Without progress and growth, there are no benefits for a common currency. How would Italy export more in the eurozone when it actually produces less than it used to do when it was using the lira? Differences between the North and the South were not supposed to happen. Politicians were expected to coordinate their policies until a fiscal union would become possible but a top-down change cannot happen if the top does not actually start to change.

But whatever happened before the first wave of the economic crisis could have been easily solved. A European plan of reforms would have helped the EU come out of the crisis stronger, not weaker. The crisis was, in a way, a golden opportunity for the EU to impose itself as a world leader but it became a missed opportunity (by a very long shot). It was an opportunity that transformed itself into a curse as the response to the problems was uncoordinated, chaotic, without any clear vision for the future and it ended up sinking the EU's prestige.

The lack of a coherent European response can be blamed on Germany. Chancellor Merkel's refusal to guarantee bank stability at an EU level opened the way for the market to attack weaker states. She failed to see how connected the financial system was and when this became obvious she preferred to play down the risk of contagion. When the mistake became clear, it was already too late. The moves needed to fix the situation were so politically toxic that none of the politicians even dared to mention them. Eurobonds and full fiscal union were dismissed as soon as they proposed and every compromise reached was so insignificant that it actually scared investors even more and aggravated the crisis.  Contradicting statements only made matters worse. There was nobody in charge and the 'giant with many heads' seemed to be committing suicide by banging its own heads together. As a pro-European I have to say that the whole performance was grotesque and shameful. It became clear that there was no coherent vision about what to do, there was no complete and realistic programme put forward and, as the rest of the world was looking at the developments with horror, the EU leaders continued to fight each other.

Confidence betrayed in the Euro family

But it would be a mistake to point the finger at politicians only. The public is equally at fault because the politicians only did what the public opinion was demanding from them. Nationalistic views became the norm and no pro-European view was pushed forward. As the crisis started to be felt, people expected to have priority in receiving help from their own government not realising that in order for their situation to get better, they would have to accept helping others. The spiral went down and World War II was mentioned a couple of times as claims of forgotten unpaid past loans became arguments and discussions shifted from how to save the Euro to who deserved to be it the Euro (forgetting that one of the founding creeds was that we would all eventually use the Euro).

While all these were happening, the European Dream had died. The Union started looking less like a happy, rich and educated family and more like a fight-ridden, vicious familly on the brink of a divorce. The EU lost its credibility both outside and inside of its borders. Philosophical promises of peace and wealth are now so emptied of their meaning that they tend to be contra productive when they are used.



Where do we go from here?

There are no easy solutions to end this crisis. Realistically speaking, we have gone past the point where the worst outcome would be to have a small country defaulting and leaving the EU. The chances for a full disintegration followed by social instability and economic depression are no longer zero. As France prepares to have its rating downgraded, the EU is running out of time to prevent the crisis from becoming its end.

As I see it, there are only two ways in which this could end. The positive (if you could claim that any outcome might still be positive) solution would be reached only if the Nordic countries accept some sort of sharing the debt as the Southern states push further with reform. It is not enough for the Northern block to share the burden or for the Southerners to implement strict austerity, both have to happen if there is to be a long term solution that could lead to further crises being avoided. For this to happen we need strong politicians that can convince the public of the necessity of these changes. A clear vision for how the EU will look like in the future and how it plans to get there needs to be put forward. Crucially, this must be a vision that all its members adhere to, those who do not accept it should be free to leave the Union (and yes, this is a direct reference to the UK). I don't see anything wrong in German fiscal discipline becoming the norm across the continent, it is a price that all of us should be willing to pay if we actually want a future that could deliver growth. If that means that we have to make sacrifices today, then so be it. These sacrifices should, however, be fair. The is no point in punishing the Greeks or any other people and make them go through humiliating poverty, graduate steps and moderate changes will be more easily accepted. The money to solve all the problems are already there, the investors have them, the EU only needs to convince them that it is credible as an investing opportunity.

Or, we can just give up on the EU and try to save what we can on a national basis. Stopping the free flow of labour and money (because if the Euro goes, so will the EU; the social impact of breaking up the eurozone would be too great to handle within a free border area, what would stop the Greeks from just leaving the country and move to Germany?) would have dire consequences on the continent. The problems would be so complex that there will be no one ready to take a risk and invest in a new business, the economy will sink as tariffs and regulations would take the place of the free market. But worse, socially, the public will blame all its problems on the EU and on other EU members. There will be a dangerous level of resentment and we will face the same dangers that we faced in the 1930s. And we all know how well that worked out. This scenario might seem too extreme but I am afraid that it is not as improbable as it sounds. Even the slightest chance of this happening needs to be treated seriously and actions to avoid such a situation need to be taken as soon as possible.