Lisbon to Vladivostok

Some reflections on the long-term prospects for Europe, viz-a-viz the now greatly accelerating process of Eurasian integration. What will be the place of the Old Continent in the new world order?

Sint Nicolaaskerk, Amsterdam

The collective West appears to be heading towards Cold War 2.0, setting itself against a bloc taking form that consists of basically the entire Global South, with Russia and China as the twin centers of gravity. The US and UK neocons, driven by their grandiose sense exceptionalism and entitlement, are still partying like it’s 1947 — or is it 1991? But the world has moved on, and, apparently unbeknownst to them, it is now a very different place than at either of those earlier two pivotal moments.

What will this mean for Europe? Will it ever be able to shed the choking embrace of the trans-Atlantic alliance and escape from what has clearly become an abusive relationship? It what now seems like the halcyon days of the first Cold War, the US wanted strong allies, not for altruistic reasons, but out of enlightened self-interest. But that was then, this is now. We’ve entered into that late stage of imperial decay when the system begins consuming itself; first nibbling at the periphery, then gorging itself on the more substantial bits, in due time devouring the core, if allowed to follow its natural progression. The economies of Europe must now be sacrificed to satiate the beast.

Some saw this coming. Long before the Ukraine crisis erupted, economic Michael Hudson observed apropos of the Greek debt crisis of 2015 that the austerity-driven asset-stripping and plundering of that country was a harbinger of what would eventually be imposed on the rest of Europe. The process that was once euphemistically called by the IMF “Structural Adjustment” when applied to countries facing financial problems in the Global South would gradually visited upon us closer to home. For Europe, that meant starting in Greece. Now Germany appears to be on the menu.

If you believe, as I do, that the Ukraine crisis was engineered by NATO, led by the aforementioned neocons in Washington and London, its goals were twofold: first, to weaken Russian, which a massive wave of sanctions has signally failed to do, Second, to torpedo economic ties between Russia and Europe, first and foremost Germany, with which they have clearly been more successful, at least for now. When in the course of 2022 the country seemed to be wavering in their commitment to the (for the German economy) ruinous sanctions on Russian energy supplies, their minds were kindly made up for them by the audacious sabotage of the critical Nord Stream I and II pipelines, most likely by members of the NATO alliance (one can only speculate about who was involved, but cui bono).

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Let's pause here for a moment, and go back to a point in time when things might have taken a different course, and what that says about the future.

During the second term of US president Barack Obama, negotiations for several major regional trade treaties were undertaken, in particular the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. As pointed out at the time by heterodox economist Dean Baker, tariff barriers between the US and the EU were already very low, the new agreement would have had little direct impact in terms of trade flow; what was really at stake here was governance and regulation, perhaps more accurately, deregulation, in particular establishing mechanisms for bypassing national sovereignty:

There are many other areas where regulations that would not be approved by national or sub-national governments may effectively be imposed through the TTIP. This is in fact one of the main motivations of the TTIP: it provides a channel around the democratic process in both the EU and the US. Regulatory changes that may not be possible due to domestic political considerations may be imposed through a trade agreement which will be presented to elected legislatures on both sides of the Atlantic as an all or nothing proposition.

This is perhaps clearest in the case of investor-state dispute settlement (ISDS). This is a process that the United States has established as part of numerous trade deals over the last three decades. It involves the creation of special panels, outside the control of the government in question, to decide issues related to disputes with foreign investors.
[…]
In short, the TTIP is much more than a free trade agreement designed to reduce tariffs and quotas. It would create a structure of regulation and a new legal system that would remove authority in a wide variety of areas from democratically elected bodies and the existing legal structure.

Since the projected economic gains from this deal are relatively modest, there is no reason that anyone should feel an irrepressible need to grab at whatever final deal comes out of the negotiations.

(Dean Baker, “The Risks of the Transatlantic Trade and Investment Partnership”)

For the signature legislation of his first term, the Affordable Care Act, so-called “Obamacare”, Obama took a decidedly hands-off approach, preferring to leave the nuts and bolts of preparing the legislation to aides and congressional staffers, either working with or indistinguishable from insurance industry lobbyists. However, for the TTIP and its Pacific variant, Obama rolled up his sleeves and got into the fray, working the phones furiously, pushing hard to get the legislation through before the end of his final term. It was obviously important to him, not because it would have benefited his electoral base (it would not), but because his true constituency, the wealthy donor class, Big Finance and other industry moguls, clearly wanted it. As it turn out, Obama did not get it enacted before he left office, and when Donald Trump arrived in the White House, he terminated negotiations.

In the early stages of TTIP negotiations, Russian president Vladimir Putin made what was essentially a counter-offer. From 25 November 2010:

"We propose the creation of a harmonious economic community stretching from Lisbon to Vladivostok," Putin writes. "In the future, we could even consider a free trade zone or even more advanced forms of economic integration. The result would be a unified continental market with a capacity worth trillions of euros."

The proposal comes as Putin travels to Germany on Thursday for a two-day visit, including a Friday meeting with German Chancellor Angela Merkel. On Wednesday, Russia and the EU reached an important agreement on the elimination of tariffs on raw materials such as wood. The deal was an important prerequisite for the EU dropping its opposition to Russian membership in the World Trade Organization. Moscow is hoping to become a member in 2011.

Putin, though, as his Thursday proposal makes clear, envisions more. "The current state of cooperation between Russia and the EU is not consistent with the challenges that we face," he writes. "To transform the situation, we need to take advantage of the advantages which already exist and the possibilities for progress in the EU and Russia."

Putin also proposed much closer cooperation when it comes to research and high-tech projects. "European science and education must secure its leadership position," he wrote. "That is affordable through a close partnership." An important step to achieving that partnership, he continues, is eliminating the visa requirement for travel between Russia and EU member states.

"The renewed principles of our cooperation could be anchored in the partnership agreement between the EU and Russia, an accord which is currently under negotiation. We should approach this treaty from a strategic perspective. We should try to think 20, 30, even 50 years into the future."

(“Putin Envisions a Russia-EU Free Trade Zone”, Der Spiegel)

I remember this moment vividly; it seemed so obviously a better deal than the treaty on offer from Washington. At that time, forsaking it felt like a missed opportunity of historical dimensions; now in 2023, infinitely more so, given how the past year the process of Eurasian integration has accelerated with dizzying speed. For those who can see, the writing is on the wall: the center of gravity of the global economy is shifting back to the Eurasian landmass, where it had been since time immemorial until around 1800. (Adam Smith calculated that in his day, China and India were responsible for half of global GDP or thereabouts.) This realignment was as predictable as it was inevitable, and the task of our leaders in the West was to ensure that we were well prepared and positioned for the gradual arrival of this (not so new) New World Order. They failed us miserably. Vladimir Putin can think ahead twenty, thirty, fifty years, as do other highly competent statesmen (Xi Jinping comes to mind), but the motley collection of hacks, ciphers and careerists we call our leaders can only bow in obsequious servility to our corporate aristocracy, catering to their every short-term desire, all the while uttering vague and vacuous platitudes about our superior “values”. Planning, such that there is, is left to highly specialized technocrats working within narrow ideological confines, wholly divorced, it so often seems, from a changing world.

All is not lost, though. We may have done Russia a favor by liberating it from its long fixation the West, and clearly Russians no longer trust us (thank you, Angela Merkel), but Vladimir Putin doesn't seem like a vindictive man. The Russians will sell us energy again, they have no interest in having a string of failed states filled with cold and restless natives along their lengthy western border. No discounts henceforth, nor quantities sufficient enough to enable the continent to reindustrialize to the point when it can ever again become a military threat (goodbye NATO). Survival rations, you might say. If Europeans are too proud to buy oil and gas directly from Russia, we can buy our Russian energy at a hefty premium through middlemen like China, India (as we are already doing), or Turkey’s soon to be established gas hub, its true origins politely obscured to protect Europe's delicate sensibilities. That will of course put what remains of European industry at a structural disadvantage viz-a-viz industrial competitors in Asia and the US, who will be paying far less for their energy supplies.

Given geographical realities, it is inevitable that Europe will eventually turn towards the East, “Lisbon to Vladivostok” will become a reality, in one form or another. The only question is: How long it will take? One, two, five, ten, twenty years? Already we see vague murmurings from European leaders like Germany's Olaf Sholtz (who recently led a large trade delegation to China) and France's Emmanuel Macron about the need for “strategic independence”, portending at the very least a more judicious balancing act, but they have yet to display courage of their convictions — and take radical action. As the Empire weakens, it grows desperate, tightening the leash that keep its vassal-states and the comprador class firmly in tow.

Here’s the crux of the matter: when a new generation of European politicians finally realize the continent’s collective fortunes lie to the East, what will remain of the continent’s once mighty export-driven industrial economy? “Deindustrialization” is a now a thing. Headlines like this do not bode well: “BASF to downsize 'permanently' in Europe” (Financial Times, 22 October, 2022). Feckless German Greens may fantasize about a Zero Emission, service-based economy, with no more “dirty” heavy industry, but what exactly would that look like? Can tourism and the hospitality trade support a population of some 450 million? Europe reduced to little more than a petting zoo for wealthy Chinese tourists?… What a sad fate!