End of the Line for the EU? - Gainesville Coins News
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End of the Line for the EU?

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End of the Line for the EU?

The massive immigrant crisis in Europe may prove to be the final provocation that sees the EU fracture and collapse. Already suffering from high unemployment, austerity, and moribund economies, there is little ability for EU nations to accept and integrate a tidal wave of destitute foreigners. Growing Euroskeptic, anti-austerity, and anti-immigrant parties are tapping into aggravated social conditions to win seats in government.

Europe Already On The Brink

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Europe has never really recovered from the global financial crisis. The situation is particularly bad for the EU countries bordering the Mediterranean, who borrowed heavily to support large social welfare programs. The economic collapse in 2008 drove unemployment to as much as 25%, and austerity measures forced upon the insolvent governments by creditors created an "us vs them" relationship between North and South. Austerity measures led to the rise of political parties that tapped into the disenchantment of the populace, promising an end to austerity, a stop to immigration to combat high unemployment, and even leaving the EU and returning to a domestic currency to inflate away economic problems.

The most famous of these Euroskeptic parties was Syriza, which won the 2014 Greek elections. While ultimately unable to end austerity, the crisis it provoked may yet lead to some of its debt being written off.  Syriza has emboldened other parties that see the EU as more trouble than it's worth.

The Return to Authoritarianism

This disenchantment with the "EU experiment" has given rise to nationalist parties, and authoritarian governments (especially in the former Warsaw Pact nations.) The wake-up call came for the rest of Europe when the rightwing anti-immigrant "Law and Justice" party in Poland became the first party to win an outright majority of parliament seats. This is the first time a single party has governed Poland since the collapse of Communism.

These parties promise a return to the "good old days" of low unemployment and old fashioned social values. Many have a strong religious component. They are finding a ready audience in eastern and southern Europe.

Austerity As Catalyst

The imposition of austerity measures in Italy, Spain, and Portugal have fueled the rise of movements that advocate abandonment of the European Union and a return to full sovereignty. Podemos in Spain, the Five Star Movement in Italy, and the Left Bloc in Portugal owe their existence to the pain austerity measures have brought their nations.

Portugal

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Portugal had been seen as an "austerity success story," but disenchantment with the center-right government resulted in it losing its majority in recent elections. Though the leftist parties together had enough seats for a majority, the old government was given another chance to form a government. This galvanized the leftists, who put aside their differences to win a no confidence vote against the new prime minister, and form a coalition between the Socialists, Communists, Greens, and anti-austerity Left Bloc. This brings the very real possibility of Portugal leaving NATO as well as the EU.

Catalonia

Holding Hands for Catalan Independence NYC #CatalanWay #ViaCatalana #ViaCatalanaMonCatalonia, which is the most prosperous region in Spain, suffered under persecution from the fascist Franco regime. This memory, combined with a resentment of seeing their tax dollars go to support the rest of Spain, gave birth to the Catalonian independence movement. In recent elections condemned by the central government, pro-independence candidates won a majority of state parliament seats, and promptly called for the implementation of plans to secede from Spain by 2017.

Brexit

The United Kingdom has always harbored a Euroskeptic portion of its population. Even Europhile governments negotiated for special treatment within the EU. The UK Independence Party (UKip) has campaigned on a platform of leaving the EU and closing the borders to immigrants for years (known as "Brexit".) Despite disappointing results in the latest national elections, it looks to enjoy much wider support due to the current immigration crisis.

Immigrant Crisis

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The wars in Syria, Libya, and Iraq, and repressive government in Eritrea have led to an explosion of refugees and economic immigrants flooding into Europe. The Southern/Mediterranean nations and the Balkans who have the weakest economies, have been the hardest hit. Greece, which is struggling with extreme unemployment and lack of funds for social programs, has been the preferred landing spot for seaborne refugees coming from Turkey. This has overwhelmed the government in Athens, at the same time that the Troika is demanding further austerity measures.

Hungary's authoritarian government quickly moved to erect barriers at its southern borders after being hit with the tidal wave of refugees. EU law specifies that any immigrant that makes it into the interior nations, and loses their asylum bid, is deported back to the border nation that let them into the EU. Many other nations are following Hungary's lead. Even Germany, which made a big show of welcoming the refugees, has been overwhelmed had had to enact border controls.

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This return to sealed borders breaks a central tenet of European integration, the Schengen Agreement. Free movement between nations is the most visible aspect of integration, and seems now to be coming to an end. Some political observers fear that closing borders will make other unilateral actions easier to implement, and lead to the dissolution of the EU.

Another event coming out of the immigrant crisis was the abortive attempt to enforce mandatory "immigrant quotas" among EU members, so that Greece and other "gateway nations" did not have to bear most of the burden.  Denmark and other nations quickly pointed out the the European Parliament has zero ability to enforce mandatory immigration.

Too Many To Accommodate?

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Immigrant hostels and aid agencies are being burned in Germany, Finland, and Sweden, as working class anger spills over into violence. Norway has announced that any Afghans trying to cross from Russia into Norway will be put on a plane to Kabul. Many Europeans are fearful of losing their national identity to a flood of Muslim immigrants, many of whom may chose not to integrate into their host nations. Despite the outpouring of support many citizens have offered the refugees, the history of liberalism and inclusiveness that has underpinned the European Union may be overwhelmed by movements aimed at breaking away from the EU to preserve their national identity.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

About the Author

Everett Millman

Steven Cochran

Precious Metals Market Analyst
BS University of South Florida (2002)

A published writer, Steven's coverage of precious metals goes beyond the daily news to explain how ancillary factors affect the market.

Steven specializes in market analysis with an emphasis on stocks, corporate bonds, and government debt. He writes a monthly review of the precious metals markets for SurvivalBlog.com.

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