Finance: Research, Policy and Anecdotes

Putin’s invasion of Ukraine has redrawn geopolitical frontiers in Europe and beyond, but also within Western democracies. What according to an US intelligence report from 2011 was only the first step in restoring the old Soviet Union and Soviet bloc in Europe has finally revealed the true face of Putin and his imperialist ambitions.  It is also, as described by the courageous Carole Cadwalladr part of a 8-year long Great Information War that Putin has unleashed against the West, including misinformation campaigns through Russian media outlets and political interference, as in the Brexit campaign and the US elections of 2016. I will not dwell on Brexit here, but if anyone still doubts it, Putin certainly celebrated on 24 June 2016 when he saw the win of the Leave campaign not just as a personal win in the Great Information War but also as start of the decline of the European Union. Little did he know…

The European Union has taken a clear stance against Putin!  There are only two groups left that currently openly argue against such a clear stance. On the one hand, the intellectual children of the 1980s peace movement who think one can stop autocrats with roses and kind words.  Part of this group are also those who still think one can come to an agreement with Putin, like Chamberlain thought in 1938 in Munich. As described above, it is very naïve to think that Putin would be satisfied for long with any agreement in the Ukraine. It would not be before long that he would push further; next stop: Baltics!

On the other hand, there are the Putin apologists, like Nigel Farage and Yannis Varoufakis in Europe and Jair Bolsonaro and Donald Trump in the Americas. It is thus far more than a geopolitical conflict we are seeing emerge, it is a struggle between democratic liberalism and autocratic populism. What unites extreme left and right parties in Europe is their distaste for representative democracy and their love of autocratic populism a la Putin. And given that one of the two main parties in the US is still clearly aligned with autocratic populism, Europe certainly can no longer rely on assistance from the US, even with NATO links being strengthened.

And this is where the positive news comes in; Putin’s invasion has reinvigorated the European project. Rather than agreeing on the smallest common denominator, the 27 EU governments ultimately agreed on a rather strong package of sanctions, at least much stronger than initially expected by most observers. Even more surprising was the complete U-turn of the German government, which for the past 73 years has refused to play any leading role in European defence (even as part of NATO), had reduced their defence spending rather dramatically over the past 30 years and were (rightly) ridiculed for sending nothing but 5000 helmets to Ukraine. This U-turn towards substantially higher defence spending and modernisation of the German army (under a social democratic chancellor, in coalition with the Green party, child of the 1980s peace movement) is nothing but historic and will by itself change the geopolitical structure of Europe. For those who are afraid of a strong German military in the heart of Europe, one can only point to the close political and economic integration of Germany into Europe, courtesy of the peace project European Union.

As the former Finish PM (and my EUI colleague) Alex Stubb noted, this could be the 1989 moment for this generation. Back then, we all thought that democracy and the market-based societal order had won, there was a spirit of optimism across Europe.  Over the past decade, this has deteriorated significantly, with the rise of Orban in Hungary, the rise of Five-Star Movement and Lega in Italy, the rise of Marie Le Pen in France, and Brexit and Johnson in the UK; and all these movements funded and supported (with misinformation campaigns) by the Kremlin.  The courageous fight of the Ukrainians has shown us what is at stake. We can no longer take democracy as granted; it is not something assured for eternity but has to be defended by each generation. If we want to prolong the 75 years of peace, prosperity and freedom in the heart of Europe, we have to take a clear stance, both towards outside and inside threats!

2. Mar, 2022