Will Europe be able to escape from the clutches of Washington?

MOSCOW, 21 Jun 2021, RUSSTRAT Institute.

The US-EU summit, held on June 15, 2021, was the final stage in the global preparation of the “rear” before the meeting of Presidents Joe Biden and Vladimir Putin in Geneva on June 16, at which the “collective West” plans to outline the contours of interaction with Russia for the period up to the end of this decade.

As follows from the results of the negotiations within the framework of the G7 and the NATO summit, the association of Western countries, often referred to as the” golden billion”, has started a radical reorientation of the long–term strategic line, from the confrontation with Russia in Europe (more broadly, in Eurasia, and in the world as a whole), to the development of a program to counter a new, more serious threat from China, which is officially called “systemic”. Moreover, not in the sense of a threat to any particular country, for example, the US, but to the entire Western civilisation as a whole.

To do this, Washington needed to review the strength of relations with the European Union and synchronise mutual geopolitical positions. First of all, in the field of political and economic unity. And, judging by the results, the US has successfully achieved its goal.

Domestic political aspect

The key objective of the meeting for Biden was to demonstrate two fundamental points, both of which had a close connection with the policies of the previous US President Donald Trump.

First of all, it was emphasised that America is abandoning the policy of self-isolation and returning to the former quality of the leader of the Western world. Moreover, the leader is comprehensive, i.e., the collective West is not just leading, but first of all forming new key meanings and designating collective global goals. The achievement of which will ensure the long-term dominance of the Western world on the planet.

Secondly, Washington no longer considers the alliance with Europe a burden for itself, for the sake of which Brussels is obliged to pay America “big money” (a phrase often repeated by Trump at all meetings with European leaders). On the contrary, it is collective cohesion that America considers the most important guarantee of mutually beneficial long-term prosperity.

Judging by the public reaction of the President of the European Council, Charles Michel, and the President of the European Commission, Ursula von der Leyen, both key messages were met by the EU leadership not just favourably, but even with joy, because they automatically removed the problem that is unaffordable for the EU – ensuring its own geopolitical subjectivity.

Within the framework of the concept of the collective West, Brussels does not need this, which means that the question of the principle of tough political and economic competition with the US, including in the field of the formation of civilisational meanings, is removed. This means that there is an opportunity to stretch out the process of internal organisational consolidation and the formation of the central government’s own financial sources, which is quite painful for the EU.

Until now, this has been exclusively voluntary contributions from member countries, which required a complex and contradictory procedure for agreeing on the positions of the 27 countries, which were not always exactly the same, but at least not too much contradictory to each other.

Now, especially under the guise of restoring Western collectivity and with American non-public political and corporate support, Brussels has an excellent opportunity to turn the temporary anti-crisis plan for the recovery of the European economy after the COVID-19 pandemic into a permanent mechanism for the direct collection of “pan-European” taxes throughout the EU, which decisively increases the political independence of Brussels from the position of the national governments of the EU countries.

Moreover, this indirectly indicates the interception by the “Euro-optimists” of the original Franco-German concept of a “Europe of two speeds”, which assumed the reorganisation of a Single Europe into a two-level structure with a narrow “national” union of 4-6 leading economies, endowed with the undivided right to determine and form all political aspects and economic rules of the EU, and all other “economically slower” countries that agree (or are forced) to a subordinate role to the leaders.

A return to the concept of the collective West will allow the “Brussels bureaucracy” to implement the “two-speed” project more globally, including in relation to Germany, France and Italy. And also to subordinate to it other European countries that are economically connected with the EU, but are not formally part of the European Union.

This leads to another conclusion: the “new environmental agenda” announced over the past three years will be implemented in Europe. So Russia should prepare for existence in the conditions of “environmental taxes” on mutual trade relations.

It should also be understood that in the future, the possibility of influencing European politics even through the largest “nationalist” parties and movements, for example, the “National Front” (now “National Association”) of Marine Le Pen in France, or the “Alternative for Germany” in Germany, will tend to be less effective.

Foreign policy aspect

An important outcome of the US – EU meeting is an emphatically public and comprehensive demonstration of the close unity of the EU members in terms of their determination to stand together against “Russia’s attempts to destroy European unity.”

Thus, Brussels demonstrated that all further relations with the Russian Federation, the European Union intends to build on a fundamentally unchanged arrogant position of unconditional civilisational superiority of the West (including Europe) over Russia.

In general, the EU leaders, of course, recognise that currently Russian-European relations are at the lowest level in the entire post-Soviet history, and this does not suit Brussels. Russia is a large and economically significant “eastern neighbour” with quite extensive opportunities.

Therefore, despite the “destabilising behaviour and repeated violations of international law” on the part of Russia, it is necessary to restore relations with Moscow, but Europe intends to do this exclusively on its own terms and only according to its own rules, leaving Russia with a poor choice – “either submit or be pushed to the very edge of Civilisation.”

As von der Leyen said, Brussels and Washington have formed three basic principles of mutual relations. “Stop violations of international law and human rights; resist Russia’s attempts to undermine our democracies; and to interact with Russia in areas where it is possible — in health care, contact between hotel citizens.”

In other words, the entire European agenda that emerged after the February 2014 Maidan in Ukraine will remain unchanged until at least the end of the decade. And probably even stronger.

Russia is required not only to “retreat” from all real positions (return Crimea to Ukraine; stop supporting Donbass; withdraw recognition of the statehood of Abkhazia and South Ossetia and agree to their return to Georgia), but also to admit the guilt that is simply attributed to us. In particular, for cyber attacks, for interference in democratic processes (not only in the US, but also in all Western countries), for the “downed Boeing”, for state terrorism against dissidents. Also, according to Brussels, Moscow is obliged to stop demonstrating its geopolitical subjectivity even within its own borders. For example, do not move your troops anywhere and for any reason and stop the “nuclear rhetoric”.

There is an impression of the growing aggressiveness of the European position towards Russia. However, in reality, the process has a fundamentally different meaning. The anti-Russian political and value position is necessary for the leadership of the European Commission and the European Parliament as a kind of “common banner”, for the sake of rallying under the shadow of which the remnants of nationalist political parties and movements will have to agree to recognise the supremacy of the political and bureaucratic power of Brussels over all European countries.

The obvious demonisation of Russia in the public perception of European politics will make it easy to label any politician, party or social movement that does not agree with such a statement of the question as a “traitor to the motherland”.

Moreover, the EU leadership seems to have a fairly good idea of the limitations of its ability to put pressure on Russia. However, it proceeds from the fact that Russia needs Europe economically and mentally much more than Europe needs Russia. For example, the EU’s share in Russia’s foreign trade over the past six years, although showing a downward trend, nevertheless remains quite significant, reaching 40% of the total trade turnover. Thus putting Russia in a clearly dependent position on the EU, which makes it possible to influence Moscow through targeted or sectoral economic sanctions, while formally maintaining the public desire to”restore friendship and good-neighbourliness”.

Thus, the foreign policy outcome of the US-EU meeting was the designation of the desire of the collective West to erect a new “iron curtain”, blocking Russia in Europe and the post-Soviet space for a fairly long period. At least until and including 2030.

In addition, the collective West intends to quickly neutralise the media success of Russia in the world, which it has achieved thanks to its success in developing coronavirus vaccines.

During the final press conference, the President of the European Council, Charles Michel, announced the intention of the EU and the US to create conditions for the COVID-vaccination of two-thirds of the world’s population by the end of 2022. However, any practical details of the presented idea are not available in open sources at the moment.

However, the geopolitical importance of the task allows us to conclude that in the near future we should expect some specific large-scale actions to promote Western vaccines in other countries of the world. Especially those who are now in a critical situation due to the growing scale of the pandemic.

Most likely, the first main direction of the “vaccine expansion” will be India, the rate of increase in the level of COVID-19 infection and the associated increase in mortality has reached appalling proportions. WHO experts believe that if Delhi does not manage to curb the crisis in the next 12-18 months, India risks a social explosion that threatens the foundations of its statehood.

At the same time, providing it with the necessary amount of vaccine can (and will) be used by the collective West to bind this country closely to the “Western coalition” against China.

Economic aspect

Such a sharp shift in Europe from a tough fight to the restoration of a close political “friendship” with the US is associated with Washington’s rejection of the global trade war launched by the administration of Donald Trump. In other words, Biden suggested that the European Union freeze the trade war and move to a strategy of “survival together” based on WTO rules and an open economy. The truth is “open” only within trade relations exclusively within the collective West.

Trump’s policy, although it destroyed the existing trade system between the US and the EU, generally ensured the gradual achievement of the main goal – to reduce the deficit of the foreign trade balance of the US from minus 80 to minus 60 billion dollars per month.

Biden’s rejection of the policy of economic sanctions against the EU, on the one hand, has already led to an increase in the foreign trade deficit to the “pre-Trump” level, but at the same time created for Europe the prospect of compensating for economic losses from the destruction of trade ties with Russia, Iran, a number of countries in the Middle East, Africa, and even with China, through the restoration of trade volumes with the US, which are profitable for Brussels.

The American economy suffers obvious losses from such a step. By the end of 2020, the foreign trade deficit reached $916 billion, and exports of American goods fell by 13.2% (to 1.43 trillion), which is the worst figure since 2010. Imports decreased by 6.6% (to $2.35 trillion). The only revenue area for the US remains only trade in services, which maintains a surplus of $237 billion, but this figure also decreased by 17.5% compared to 2019.

From the presented figures, it follows that the restoration of the “solidarity” of the collective West has already cost the American economy approximately 300-360 billion dollars, and further costs will only increase.

Most likely, it is supposed to stop the problem through the expansion of the scale of the issue of the dollar. As part of the plan to combat the negative economic consequences of the COVID-19 pandemic, more than $9.4 trillion was poured into the US economy during 2020, actually printed by the Federal Reserve System “out of thin air”. Although this amount is equal to 44.7% of US GDP for 2019, such a fantastic one-time rapid expansion of the money supply did not lead to an inflationary catastrophe.

According to the report on monetary policy of the US Federal Reserve, as a result of 2021, inflation growth will be only one percentage point, i.e., inflation will increase from 2.4% to 3.4%. Given the expectations for the expansion of the volume of investment capital inflows from Europe to America, in 2022, the dollar inflation should even slow down to 2.1%, although later, in 2023, it will slightly increase to 2.2%.

Thus, the current ruling elite of the US is convinced of its ability in the medium term until 2027-2030 to relatively successfully stop the problem of the growing deficit of the foreign trade balance through the expansion of the amount of money issued by the Federal Reserve.

Then the losses will be compensated by the subsequent growth of income as a result of the economic absorption of China, after its defeat to the collective West due to the collision (up to open war) at the turn of 2026-2028.

Another strategic source of large-scale revenue growth is considered to be the “green energy transition”, which the US and EU leaders confirmed their readiness to implement during the last summit.

Brussels sees in the “green agenda” the prospect of bringing geopolitical competition to new technological areas, in which it will be able to capture a sufficient degree of leadership and thereby return the “Western superiority” over China, as well as reduce dependence on imported, primarily Russian, energy sources to an absolutely insignificant level.

Conclusion

The degree of realism of the plans outlined raises serious doubts. The figures show that the American establishment has made a risky bet, which is clearly temporary. The global financial system withstood a one-time injection of more than 40% of US GDP relatively calmly. But at the same time, a third of the national debt returned to America. Namely, the possibility of shifting to external creditors more than 90% of the negative consequences of the arbitrary monetary policy of the American authorities during the 1970s was a key guarantee of the financial hegemony of the US and the stability of the American economy as a whole.

Further preservation of this trend threatens the full return of the entire American national debt to the US no later than 2027-2028. Followed by the inevitable total sovereign default of the US over the next two years.

It is on this logic that the conclusion about the inevitability of a war between China and the US (more broadly, the collective West) in the last quarter of this decade is based.

In turn, the European Union sees what is happening as a convenient prospect for implementing its own internal state and economic transformation. Not excluding the possibility of further interception of leadership within the collective West in the event that the US loses the war with China, and European countries manage to refrain from direct participation in it. For example, under the pretext of the need to continue “deterring Russia”.

Institute for International Political and Economic Strategies – RUSSTRAT

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