A commentator on this blog noted yesterday that:
“I've always thought a federated Europe is inevitable and (in my mind) desirable… the alternative is that Europe will be carved up into vassal states of either the US or Russia.”
I understand the force of that argument, but nothing is as simple as that.
Europe is now dealing with power politics at its rawest. Trump's United States is increasingly transactional and coercive, as is very apparent from its attitude toward Denmark and Greenland, whilst Putin's Russia is openly imperial. Any European state attempting to go it alone is, in that case, inviting pressure it cannot withstand, as the UK is beginning to find.
This very clearly matters now. The old assumptions that underpinned Europe's post-war settlement are breaking down at speed, as Mark Carney noted in a speech in Davos this week, which has since been roundly condemned by Donald Trump for its temerity.
First, American protection is no longer guaranteed, and even when offered, it now comes with a very high price tag and potentially unacceptable political strings.
Second, the rules-based international order that Europe relied upon is being replaced by something closer to a marketplace for power, in which the strong (whose identities are obvious) demand tribute, and the weak are expected to comply, or suffer.
Third, the instruments of coercion are no longer only military. They are financial, technological and informational. Access to banking systems, payment networks, cloud infrastructure, semiconductors, energy supplies, rare minerals and even satellite systems is becoming conditional, as is trade itself. Small and medium-sized states do not have the leverage to resist those pressures on their own.
That is why this issue cannot be dismissed as abstract constitutional speculation. It is, instead, about whether Europe - as a continent - has the scale to defend itself both economically and politically, meaning it is also about whether democracy can survive in a world where coercion has become normalised.
But the phrase European Federation is also dangerous if it is used carelessly, because too many people will hear it and assume it means deeper EU integration as we have known it, implying centralisation, potentially technocratic rule, fiscal consolidation, and a common monetary framework that could too easily, in practice, recreate the failed logic of austerity. That is, unsurprisingly, not what I think is needed.
If the idea of a European Federation is to have real merit, it must be a loose federation of cooperating democracies, and not an over-centralised political machine. Its focus must be defence and security, including the creation of a common good that should underpin all defence strategy, including procurement, intelligence, cyber resilience, energy security, and the capacity to resist financial coercion. And it should simultaneously exist to reflect European diversity, and not to make it bureaucratically uniform.
There are, in my opinion, some preconditions to make this work. For example, any such Federation must be explicitly grounded in the UN Charter and its human rights provisions. All countries in Europe likely to sign up to the Federation will have already committed to both of these; there is no reason to spend time creating conformity on a new set of principles when agreement already exists. But, as I have noted in another post this morning, the economic foundations must also be secure. Agreement here might be harder to achieve, but it is essential.
Crucially, that also means that this must not be a fiscal or monetary union. The lesson of the euro is plain: removing monetary sovereignty without democratic fiscal unity produces stagnation and inequality, and imposes austerity by design. A European Federation that requires the surrender of fiscal capacity would, then, destroy the very social cohesion it needs to survive, and that must be avoided.
And if Europe wants a practical monetary innovation at this moment, it should not be an extension of the “one currency fits all” euro, but a new Bancor-style clearing currency, designed to manage trade imbalances and reduce dependence on the dollar system while leaving democratic control of national fiscal policy intact.
So a European Federation may be a highly relevant issue to consider at this moment, but only if it is defined in terms that protect democracy rather than override it, and only if it is understood for what it now is. This is as a response to an emerging era of coercion in which Europe will either act together in the interests of everyone in the countries of Europe, whoever they might be, or potentially be dismantled one state at a time.
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Your thoughts on this are very useful. A federation seems to have all the advantages without the disadvantages of the EU where in particular the introduction of the Euro created a series of economic and social problems. It is obvious that European countries need to stick together whether for defence or economic reasons.
You say,
‘if Europe wants a practical monetary innovation at this moment, it should not be an extension of the “one currency fits all” euro, but a new Bancor-style clearing currency’.
How would this work?
In these times it would need to be something that could be done much quicker than the usual EU timetable, but still done right, and not captured.
Could national governments reintroduce their pre-euro currencies, whilst leaving the euro and its structures intact, and somehow this makes the euro that clearing currency?
Or something. I don’t know.
I have not said abolish the euro for those who have it.
I said a Federation does not need it and no one should be forced to use it.
My view (I think redolent in your post) would be to use the federal apparatus in the background, particularly when it comes to controlling, funneling money around the zone – and this includes stuff like ownership, banking, trade etc., so that the Euro zone is restored to what it was – a peace project, preventing social breakdown and stopping wars. If that does not happen, then quite frankly, Hitler still continues to rule the European continent. I’m not joking! The Europe bequeathed by Word War 2 is less mixed, less integrated in terms of European identities than it was before that war – more unstable actually because of nationalism (and this is why the inward migration of peoples from the Levant and elsewhere is also causing problems).
Your Bancor idea is spot on. The federalization of Europe needs to be a felt, and not necessarily a seen form of defending each other (within the zone at least).
I seem to recall John Major suggested a common currency rather than single currency. Quite what he meant I don’t know but I do recall pre-euro there was a “unit of account’ which just happened to be equal to the US dollar of the time. As must be obvious I am not an economic expert. Might something like this fit what you suggest?
No, Bancor is a settlement mechanism as explained here recently.
Which is why I didn’t mention bancor. I have seen suggestions in the past of alternatives to a euro style currency for a group of countries in a confederation. Along the lines of a reverse or parallel currency. I suspect the answer is not really.
I think we need more than a loose federation. In the described form, it is a lukewarm compromise. It does not offend anybody, but neither really excites anybody. So, then who is going to protect it? Who is going to give his life for a lukewarm compromise?
What Europe needs in the first instance is thinking about itself as Europe. People need to identify themselves primarily as European. I fully understand what a challenge this is! However, in any other case, it will be just too easy to divide and conquer these extremely self-conscious but small and weak ‘nationlets’.
If the dollar can fit to many states from California through New York and Kentucky, to the Midwest, then there should be a way to make the euro work for Europe. Yes, it requires a certan level of fiscal integrity… However, how else do you want to make it work?
Also, I would welcome a certain level of ‘technocratic rule’. I want my plane to be driven by an experienced pilot and my ship by an experienced captain. Just because someone is popular, cannot drive a plane or a ship. This is utterly stupid. So common vote should only be used to set the target, where we want to get. Then let the captain/pilot (i.e. the technocrats) to get us there.
The euro is a neoiliberal constuct of destruction.
Why do you want that?
I believe Europe should move towards a political unity. It’s hard to imagine this without a single currency. Most of the problems with the euro lies with the lack of a coordinated fiscal policy. In my view, the overall balance is still positive.
I think that neoliberalism is not evil by nature. A bit is a cure, too much is a poison.
You are very deeply misguided then.
Neoliberalism is the gateway drug for fascism, division, hate and inequality. What is good about that?
Happy to discuss neoliberalism but I don’t want to go off topic.
I understand why you curse neoliberalism and agree that it is part of the current problems. I just don’t think it’s the root of all problems, the ultimate evil. Neoliberalism was nowhere when Mussolini “invented” fascism in Italy and protectionism was the catchword when the nazis emerged. Division, hate and inequality were all present… but for a different reason then neoliberalism.
So? We are niot now in the 1930s.
And neoliberalism is the root of our problems now.
How hard is that to work out?
I see I keep annoying you. I’m not sure how, but I can ensure you that this has never been my intention.
I’m happy to explain, have a conversation and also listen to your arguments. However, I can also sleep well, if there is no appetite for this. Ultimately, this is your blog, to share your ideas.
You say:
– “Its focus must be defence and security, including the creation of a common good that should underpin all defence strategy, including procurement, intelligence, cyber resilience, energy security, and the capacity to resist financial coercion. ”
– “any such Federation must be explicitly grounded in the UN Charter and its human rights provisions”
We also need to preclude other issues that encourage a ‘race to the bottom’ favoured by the neolibs.
I think there are a few other issues that should be added on day 1 to avoid the ability of ‘strong men states’ to try to ‘divide and conquer’. Essentially define the mandatory ‘shared values’ to be part of the club. We need to strengthen and make relevant the International rules of law.
So:
– Sign up to ICC, ICJ
– Something that limits access to bodies that do not sign up to the shared values (e.g. financial and tax records to the US)
– Mandatory rules for sharing financial and tax records within the group (no tax havens!)
– Equivalent of NATO’s Article 5
– Something on the need for group capability to manage independent sourcing for all essential infrastructure (including banking systems, defence, transport, energy, IT, Semiconductor, Communications, Satellite Systems)
– something that limits access to non-group members to any sensitive date (we have shared lots with US and it has not been reciprical)
– something that explicitly limits any (foreign) corporation from being able to claim any losses for democratic decisions that comply with the International Rules of the group (stop US bodies claiming “losses” like they do in S. America when corrupt regimes are kicked out)
I can see that this list could become very big — it’s essentially a list to remove the demolition of the state that has been going on for the last 40-50 years. But this seems to be a key requirement.
Agreed.
Tbis one shouild be read with the post Trump consensus one, which may be better.
Yes — I’ve now seen that one. Similar approach. Apologies – I was responding to one I was reading rather than reading all of them beforehand (but the subject matter is serious — so maybe that more serious approach is warranted).
It aint what you do its the way that you do it………………….
Steve Bannon, despite wanting a stronger, more white ethnic Europe, is vehemently opposed to a closely aligned Europe, so is Alexander Dugan, Putin’s spiritual advisor of sorts. Many on the Far Right are opposed to a united Europe in fact. It’s for this reason that the idea appeals to me. Whatever they want, I’m suspicious of, and instinctively want the opposite. Immature? Unwise? Perhaps. But if you read what those men want and believe, I’m sure you would want to oppose them in every way possible.
I can see strong arguments for a European Federation. But I don’t think they will be as obvious to the majority of European countries and population* who see themselves as already part of a confederation, with others already closely aligned with it. Similarly the benefit of creating a new clearing currency will be less clear to those who already share a common currency.
However Carney’s speech which you quote elsewhere makes the point that there is a wider desire for a “federation of cooperating democracies” as you put it. With Canada and quite possibly others, the usefulness of such a structure would become apparent to the vast majority of countries in the EU who already share those crucial values.
[*I am ignoring any claims of Russia and Belarus to be European countries].
Thanks
Looking at how Cuba has been coerced for three-quarters of a century through sanctions, sovereignty and democracy in the west have been severely compromised for decades.
In fact:
Société Générale was fined $1.34 billion for processing $5.5 billion in Cuba-related payments.
ING was fined $619 million for Cuba wire transfers.
European banks have been hit with 83% of all US sanctions fines.
They “observe” because the alternative is financial annihilation.
If a foreign bank defies OFAC (Office of Foreign Assets Control), the US Treasury can cut off their access to the US clearing system entirely.
For a global bank, losing the ability to clear dollar transactions is a corporate death sentence.
They would cease to function overnight.
That’s why they obey Washington over their own governments.
The EU has a blocking statute that makes it technically illegal for European companies to comply with US extraterritorial Cuba sanctions. They comply anyway.
Then there’s the “State Sponsor of Terrorism” designation, reinstated in 2021. This label is radioactive.
Over 100 foreign banks have terminated Cuba relationships entirely since then.
It triggers automatic “enhanced due diligence” protocols in every compliance department on earth, making a $500 remittance to someone’s aunt look like terrorist financing to the algorithm.
88% of global forex transactions touch the dollar.
Every dollar payment clears through New York. Touch the dollar, obey OFAC.
The US also weaponizes supply chain dominance.
For most countries, foreign products can contain up to 25% US content before Washington cares.
For Cuba, the threshold is 10%.
A Swedish ventilator with US microchips cannot be sold to a Havana hospital without a Commerce Department license.
Since 2019, Title III of Helms-Burton allows US citizens to sue foreign companies in American courts for operating on land nationalized 60 years ago.
A Spanish hotel chain can be dragged before a judge in Miami for running a resort in Varadero. Foreign investment freezes.
Over 160 countries vote against this blockade at the UN every year. Their banks still refuse Cuba transactions, because the compliance industry runs on fear.
The blockade works precisely because other countries don’t get a choice.
It’s an extraterritorial financial empire.
[…] Cross-posted from Richard Murphy’s blog […]
It’s interesting that there are concerns about a federated Europe, when the reality of our human situation is probably that what we actually need to survive the climate change, resource depletion/overshoot, water bankruptcy, species extinction and human population crises is probably something more akin to a global federation with the authority and power to make and enact globally binding and observed plans, restrictions and laws. We are in a state of near barbarism and political infancy as against the state of political competency and adequacy required of us as a species to make our survival a likely prospect.
I like your thinking