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Analysis
Europe in repeat mode over Ukraine

Europe in repeat mode over Ukraine

Lack of foresight over the euro on display – again

by David Marsh

Mon 17 Mar 2014

Former German Chancellor Helmut Kohl, who with a mixture of cunning intelligence and good fortune led unification with Communist East Germany, used to say that you should never enter a room without knowing how to get out.

Europe’s dilemma over how to treat Russia after the weekend Crimea referendum reminds us that the post-Kohl leadership of the European Union has been singularly deficient in learning this kind of strategic deftness.

In urging Ukraine a little too eagerly last year towards a strategic association with the west, the EU should have been prepared for a weighty Russian response. Plainly it wasn’t, and it isn’t.

The EU baiting of the Russian bear has been tantamount to a small boy in a schoolyard taunting the playground bully by threatening to take away his favourite box of marbles. What has not been in place for repelling the inevitable escalation of menace is an adequate fallback strategy – such as alerting the head teacher about possible security alerts.

The trouble for Europe is that, in betraying these shortcomings, it’s been here before. In apparently neglecting Russia’s visceral fears, vulnerabilities and ambitions over Ukraine, Europe’s leadership has demonstrated the same basic pattern displayed in previous episodes.

At the beginning of the 1990s, Europe (and Kohl and the Germans this time bore a large part of the blame) did all too little to recognise and then assuage the tensions that led to the last outbreak of war in Europe, over the break-up of Yugoslavia.

More recently, and more spectacularly from a financial market point of view, the Europeans failed to spot the sources of difficulty that would bring the euro to near breaking point only a little more than a decade after it was launched in 1999.

The European Central Bank (ECB), for example, now acknowledges that it was a major strategic mistake to have looked at the euro area in its first dozen years almost exclusively as an overall aggregated currency bloc. The ECB (and others) showed far too little interest in delving into the individual country imbalances that were fast becoming evident factors behind the fracturing we have seen since 2010, now only slowly and painfully being repaired.

Over the issue of German unification, Kohl was neither conceptual genius nor all-knowing mastermind. In February 1989, only nine months before the fall of the Berlin Wall, he berated me for asking him too many questions about reunification and insisted that a new link-up with East Germany, if it came, would arrive through European integration and not through the eastern part of the country simply joining the Federal Republic.

When the unexpected happened, Kohl profited from the lack of a master plan, forged the necessary alliances, weaved his way through the shoals of European adversaries and did a deal with the Americans, Nato and Mikhail Gorbachev. He was immeasurably helped by an oil price of only $10 a barrel. Had it been higher, the Soviet Union (as it then was) would not have been inclined effectively to sell the old German Democratic Republic to the west with so little reward.

By failing to strengthen and diversify its economy over the last 20 years, Russia is now vulnerable to US and European sanctions. But many of these problems will be felt more in the longer rather than shorter term. Tension over Ukraine will support energy prices, at least for the moment. Despite efforts to diversify energy sources towards more stable areas of the world, Europe (particularly Germany) probably has more to lose from sanctions in the short-term than Russia, showing how difficult it will be for the west to present a united front.

At this juncture of history, President Vladimir Putin may be an impossible person for the west to deal with. In confronting a man who sees his mission as repairing the stigma of Soviet collapse and rebuilding a Greater Russia, Kohl, too, may well have found himself out of his depth.

But at least, before wading into the deep end, Kohl would have been more aware that he was moving into turbulent and treacherous waters – and would have been slightly more adept in arranging lifeboats and rescue mechanisms to deal with the danger of drowning.

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