The year 2017 – the election year in many important EU countries - may be fateful. Instead of ‘more Europe’, the principles of subsidiarity and decentralization should apply, for some Eurozone countries a return to national currencies could be in the long run preferable, though painful in the short term. A multi-speed or a smaller Union should not be off the table either.

       Looking at the European Union from a wide perspective it is possible distinguish, on the condition that one is leaving behind politically correct double speak that has done quick a lot of damage for Europe and the West (being earlier one of the methods used by the Soviet leadership to discipline the people), four kinds of challenges. First, there is an institutional crisis of the Union. Those peoples on whose behalf in 1957 the leaders of the then six European states pledged to create an “ever closer union among the peoples of Europe” have revolted against a new Leviathan rising. Secondly, the crises of the common currency – the Euro – is not only a financial aspect of the loss of sovereignty by states of the Eurozone but it also reveals the difficulties, both economic and political, of having a common currency within an entity including societies with very different levels of economic development and traditions and ways of life. The more relaxed and laid-back South cannot, and even does not want, to become like the more austere protestant North. The heavy-handed treatment of Greece by European institutions that are following the German line has made many in Europe, not only in Greece, uncomfortable. If the homeland of European democracy can be brutally put on her knees what about other nations that do not sing in tune with ‘her master’s voice’? It is not inadvertent that these are some Eastern or Central European countries that had not so long ago shred off the Soviet tutelage and eagerly jumped into the fold of prosperous Europe that are today most loudly voicing their discontent. It was in 2009 at a European Parliament plenary session that Czech President Vaclav Klaus was booed by members of the European Parliament because he dared to question this “ever closer union” principle enshrined in the EU treaties. Besides these two EU-specific challenges there are two more general difficulties that negatively affect the EU. One of them demoralizes the Union from inside while the other one creates an uncomfortable and unexpected external environment for restoring coherence within the Union. These are the crisis of liberal democracy and the changing balance of power in the world.

       The gist of the crisis of liberal democracy is in an intrinsic dialectical controversy between liberalism and democracy. Their relationship may be characterized as one of friend/enemy. Free markets and liberal democracy, phenomena that have facilitated one another, are also increasingly in a state of rivalry and competition. The freer the market, the greater the economic inequality; the greater the economic inequality, the lesser there is democracy. Cambridge economist Ha-Joon Chang even wrote some years ago that ‘free market and democracy are not natural partners’, though one must note that Professor Chang was not speaking of ‘market economy’ as such, but rather of ‘unbridled markets’, as advocated, for example, by Milton Friedman and his followers, and as exemplified by the policies of Ronald Reagan and Margaret Thatcher, as well as those of today’s neo-liberals. Economic inequality both de facto and inevitably increases political inequality, while political equality applies brakes to widening economic inequality. Strong democracy attained by curbing inequality almost inevitably bridles market freedoms. Democracy seeks to make a society more equal, while unbridled markets increase inequality. The result of such constant balancing is that in Western European liberal democracies (more accurately in social democracies), these two phenomena through constant balancing have tempered each other’s excesses. However, this controversial relationship has recently become less friendly and more inimical. Already for decades, liberal elites in most Western countries, including the mainstream media, have started labelling those democrats whose policies (or/and personalities) they do not like as populists (let us, however, recall that Ralf Dahrendorf has noted that, ‘ one man's populism is another's democracy, and vice versa’, though he has also claimed that ‘while populism is simple, democracy is complicated’). At the same time, democrats (populists) consider liberals to be arrogant elitists who have become alienated from the people, from their needs and ways of thinking, who look down at them as at losers and ill-informed mob (recall Hillary Clinton’s characterization, though later hypocritically retracted, of Trump’s supporters). And there is quite a lot of truth in both accusations. In a way and simplifying a bit, both Brexit and Trump’s victory are triumphs of populism over elitism (or if you like, democracy over liberalism). And one should remember that both the practice and the concepts of democracy emerged and evolved in the frame of relatively homogeneous nation-states. Therefore, it is not accidental that democracy deficit has been one of the constant criticisms of EU institutions, especially the most powerful and efficient ones. In my opinion, the application of the very concept of democracy to international relations is rather questionable. What comes closest to it in world affairs is the concept and practice of balance of power. Therefore, the EU could become more democratic if it were to become a federal state; yet this is exactly what the European peoples, contrary to political elites, reject.

       However, the balance of power in the world has been already for some time in radical transformation: from the bi-power balance of the Cold War via the unipolarity of the 1990s to the world where multipolarity is becoming more and more visible. The unipolarity, seen by Western leaders as a geopolitical guarantor of the movement towards the end of history, had an ideological parallel in the form of liberal democracy. The uniform world governed from one centre. This crazy idea ignored the obvious – the world is not only too big but also too diverse and heterogeneous. However, not only in America of Bill Clinton, George W. Bush and Barack Obama but also in Europe political, economic and intellectual elites believed that history had only one right side. Yet, the rise of China and the resurrection of Russia, combined with tragic results of failed attempts of the West to spread democracy in most improbable places, returned the sense of history. However, instead of sobering effect of the return of history too many European leaders still feel hangover after the recent triumphalism. For them it is hard to recognize the inevitability of multipolarity and they accept diversity only in the frame of liberal democracies, not within the world at large.

       Yet, these very serious challenges, and even the current inability of European political elites to find adequate responses to them, do not necessarily mean that the European project is doomed to fail. But this would not happen by way of mindless repetition of slogans like ‘we need more Europe, not less’ or playing a role of post-modern soft power for NATO’s hardware by helping move the ‘Berlin wall’ to Russian borders. If NATO is a dangerous hang-over from the Cold War world whose very raison d’être had been the containment of an enemy who has since disappeared, and could be considered, slightly paraphrasing President Putin (who had called the dissolution of the USSR to be ‘the greatest geopolitical tragedy of the 20th century'), the greatest geopolitical nonsense of the twenty-first century, the European Union suffers from the vertigo from its achievements many of which have been very real. One thing is clear, it is necessary to leave behind intellectually and politically debilitating political correctness and notwithstanding whether Europeans are, or consider ourselves to be, populist democrats or elitist liberals, they should address these challenges together and with an open mind. As most current European leaders seem not to understand that business as usual approach may indeed destroy the Union, a leadership change is on the cards since the urgency dictates that the old Russian proverb ‘never swap horses while crossing a stream’ becomes inapplicable and traditional way of ‘muddling through’ is not an option any more. In that respect, the year 2017 – the election year in many important EU countries - may be fateful. Instead of ‘more Europe’, the principles of subsidiarity and decentralization should apply, for some Eurozone countries a return to national currencies could be in the long run preferable, tough painful in the short term. A multi-speed or a smaller Union should not be off the table either. Openness to, and cooperation with, the outside world, especially with its biggest neighbour Russia, will be in the interest of the Union and will make all us safer. And I will finish with a quote from the old wise man Mahathir Mohamad that I read a few days back in an interview he gave to Le Figaro: ‘The breakdown of the European Union has been on the cards for long time. I closely studied the EU when we had an idea of creating something like that in Asia. The main problem is that Europe went too fast, unifying countries that were at different stages of development. The Euro became a trading currency, not a national currency. Had the Greeks retained their drachm, the integration would have been slower but much more solid. However, they wanted to live like rich without having enough resources for that’ (Le Figaro, 13 February, 2017). To step back and critically review what and when went wrong in order to save the project that has many achievements and also potential.

       Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.