In its long history, Europe has rarely been as united as it has been during the current Ukraine war. Nearly all European countries support Ukraine, as do their mainstream media. Dissenting views are rare, as are anti-war protests of the kind we saw during the wars in Vietnam, Afghanistan and Iraq.
Equally notable, European policies toward the Ukraine conflict are fully aligned with US policies. Both use the same narrative and terminology: Russia’s unprovoked aggression against Ukraine is part of President Vladimir Putin’s attempt to resurrect the glory of the former Soviet Empire.
Just a decade ago, few could have predicted that Europe would see a war between a country that is not ashamed of soldiers with Nazi symbols tattooed on their bodies and a former communist nation, a war ostensibly about energy that got the support of the European Union’s political left as well as the “Greens.”
The Harvard Boys
In 1992, Russia and its EU partners built the first pipeline carrying Russian gas to Europe. The 4,100-kilometer Yamal-Europe pipeline connected Russian gas fields in the Yamal Peninsula and Western Siberia with Poland, Belarus and Germany.
The “peace dividend” following the end of the Cold War was beginning to pay off. The fall of the Berlin Wall attracted Western energy giants to Russia. Shell, BP and ExxonMobil along with Japanese trading houses invested billions in Russia’s energy sector, which needed both capital and technical know-how to modernize and ramp up production.
Enter the Harvard Boys, a group of economists from the Harvard Institute for International Development. The Russian economy had imploded under Mikhail Gorbachov’s successor Boris Yeltsin, and Harvard economists, with the blessing of then-US president Bill Clinton, were sent to Russia to help reform its economy.
The prescription they came up with was in line with the neoliberal economic policies initiated by Ronald Reagan and Margaret Thatcher and solidified by Clinton and Tony Blair – “shock therapy” of privatization, liberalization, and free-market capitalism.
The “reform” pushed millions of Russians into poverty. Elderly women were selling their medicine in the streets of Moscow to buy food while a small group of well-connected businessmen made off with billions of dollars’ worth of state assets, including former state-owned Russian energy firms.
The newly minted billionaires would soon show up in Europe, buying English soccer clubs, Dutch super-yachts, and estates on the French Riviera. Little did they know that Europe would confiscate their riches for the sin of having profited from the free-market capitalism introduced to Russia by the Harvard Boys.
Neoliberalism was a reaction to the growing role of government in the economy and society. It favors economic liberalization, privatization, deregulation, globalization, free trade, monetarism, reductions in government, and a greater role for the private sector in the economy and in society.
Reagan saw neoliberalism as the solution to what he claimed was the failure of the welfare state. (The government isn’t the solution, it is the problem, he said.) Neoliberals framed collapse of the Soviet Union as the triumph and validation of the neoliberalist ideology.
In the 1990s, the neoliberal wave hit European shores (neoliberalism had first emerged in Europe during the aftermath of the Great Depression). Despite considerable resistance, most European countries enacted neoliberal policies like privatization and slimmed down the welfare state.
Atlanticists
American and European neoliberals found each other in an “Atlanticist consensus.” They championed free markets to varying degrees, but they shared the belief that it is imperative for Western values to set the global agenda.
By the turn of the century, nearly the entire political elite in Europe had Atlanticist credentials. They pushed their agenda using transnational organizations like the International Monetary Fund (IMF), the World Economic Forum (WEF), the Trilateral Commission, the Bilderberg Conference, and the Council on Foreign Relations.
Neoliberal policies led to growing inequality, stagnating wages and other social ills and caused a widespread feeling of unease. This in turn created fertile ground for conspiracy theorists who were convinced that the proverbial one percent was driving the population into poverty and even technological enslavement.
The nemesis of the conspiracy theorists is the WEF, suspected of planning a “Great Reset” that will lead to a dystopian world with Orwellian features. They take their cue from a WEF paper on the impact of technology that includes the phrase “You’ll own nothing and be happy,” which became a popular meme on the Internet.
The fear of a Great Reset originated in a 2016 essay by Danish lawmaker Ida Auken that was included in a WEF paper titled “8 Predictions for the World in 2030.” The paper discussed the potential impact of artificial intelligence and other (Industry 4.0) technologies and suggested that we will be happy to own nothing for the simple reason that all products become services.
Poor Europe
The ideology of European and American Atlanticists aligned perfectly, but the same cannot be said about their vital economic interests. The US is rich in natural resources, it is less reliant on international trade, and it has the “exorbitant privilege” of issuing the world’s reserve currency.
Lack of resources prompted Germany to turn to Russia. Using low-cost energy from Russia enabled Germany to add about a trillion dollars to its annual gross domestic product. Russia benefited from a steady stream of billions of dollars flowing in from Europe every year, obviously a win-win deal.
Between the 1990s and the 2020s, Europe and Russia built a massive network of pipelines from central Russia that carried gas and oil to Northern, Central and Southern Europe. It was by far the largest energy infrastructure project in the world.
Starting in the 1990s, EU-Russian trade grew from a few billion dollars a year to $270 billion in 2021. In 2020, the EU was Russia’s No 1 trade partner, accounting for 37.3% of the country’s total trade in goods with the world. Some 36.5% of Russia’s imports came from the EU and 37.9% of its exports went to the EU.
Successive US administrations sounded the alarm that Europe was becoming too reliant on Russian energy, especially its natural gas. Then-German chancellor Angela Merkel had no such concerns, nor did other many European countries that became part of the pipeline network. Ukraine and Poland, major transit countries, earned billion in transit fees.
Russia dissolved the Warsaw Pact after the fall of the Berlin Wall. Yet The North Atlantic Treaty Organization, rather than disbanding, expanded eastward. The Europeans didn’t see the contradiction of developing mutually beneficial relations with Russia while at the same time stationing a large army on its border.
The cost of losing Russia is incalculable. The pessimistic scenarios see Europe facing deindustrialization, the loss of trillions in investment capital, and a drastic reduction in living standards. Add to all this the fragile financial position of many EU countries and yet-to-be-tamed inflation, and the bleak scenarios are warranted.
By the time Europe takes stock of its condition – and wonders why its political elite killed a ceasefire agreement between Russia and Ukraine – it will find itself alone. Russia will have turned to the East. The US is likely to turn inward to deal with its own problems. Europe will have little choice but to do the same, which may be the only positive outcome of the Ukraine tragedy.
As Confucius argued 2,500 years ago: “If there is harmony in the home, there will be order in the nations. When there is order in the nations, there will be peace in the world.”
This is the concluding article of a two-part series on the global crisis centered on Ukraine. The first part is here.