The Fall of Europe #369
Masochistic sanctions on Russia, impending destruction of industries, falling productive populations, and immigrant crisis. Europe is not facing doom, it is hurtling ever faster off the cliff!
Power never goes to the person who has more money. It goes to one who knows how to use that money.
If we look at the plunder and the loot of the colonial era by Europe collectively and individually by its constituent countries, we will be compelled to say that their riches were built on the destruction of other continents.
That such imperialist enterprise made them rich in a situation where waste, imperfection, and unproductivity did not make much difference is now being tested.
When the real crisis is facing them square in the face.
And, it has, as of now, found the European leaders and thinkers wanting.
It is not only that impending doom is facing Europe.
In fact, worse than that.
Europe, in its masochistic wisdom, has decided to hurtle itself at ever greater speed off the cliff!
What is Europe?
In what is called the Bruges Speech, UK's Prime Minister Margaret Thatcher shared her idea of what Europe and the UK's fundamental values and history are.
The shared civilizational ethos was always there as was the truth of intense rivalry via wars.
France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg signed a treaty in Rome on March 25th, 1957 to create the European Economic Community (EEC). This was also known as the Common Market.
It was the precursor to today's European Union. The idea was to join together huge geography with a common economic policy. If the national markets could be merged, it would eliminate a lot of wastage. (Source)
Really speaking it was a "customs union". It resulted in the adoption of a common external tariff. As the trade flows increased and supply chains became easier, the cost of finished goods would decrease.
In 1993, an Organization of European countries was created by the Maastricht Treaty and ratified by all members of the European Community (EC). It is called the European Union. It currently has 27 member states.
The objective was to promote peace, prosperity, and stability across the continent that had been ravaged by World War II.
The European Union was meant to be a "Single Market". There are differences between a Single Market and a Customs Market. The relationships within the EU come in different shapes and forms. So let us understand the difference. Here is a very interesting and informative differentiation between the two types of "unions".
With these basics in place, let us go ahead in looking at where European Union is today and where it is headed?
Why Europe became wealthy and remains to be so even today?
Germany's colonial empire comprised parts of several countries in Africa - like those from Burundi, Rwanda, Tanzania, Namibia, Cameroon, Gabon, Congo, Central African Republic, Chad, Nigeria, Togo, Ghana, as well as northeastern New Guinea, Samoa, and numerous Micronesian islands. (Source: Oxford)
And like Germany, most European powers colonized and plundered Africa.
That plunder never ended.
Even today, $40 billion more goes out of Africa than the amount that comes in. The resources in Africa are being plundered as well.
Let us understand how the European powers continued their colonization of Europe even after the African countries supposedly got their independence.
France gave "freedom" to its former colonies but only in name. It created a misleadingly called "Cooperation Agreement" with those countries and created a bunch of CFA countries.
Just before France conceded to African demands for independence in the 1960s, it carefully organised its former colonies (CFA countries) in a system of “compulsory solidarity” which consisted of obliging the 14 African states to put 65% of their foreign currency reserves into the French Treasury, plus another 20% for financial liabilities. This means these 14 African countries only ever have access to 15% of their own money! If they need more they have to borrow their own money from the French at commercial rates! And this has been the case since the 1960s. (Source: "How France loots its former colonies" / This is Africa)
This gave France the first right to buy or reject any natural resources ever found in "Francophone countries".
If any contract is given out by the governments of these countries, France has to be considered first. Even when these countries can get a better value for money outside.
Check this excellent video for more details.
We have discussed the reason why the West in general and Europe, in particular, became and remains a rich set of the population in our earlier newsletter.
This is how it became rich.
But can it remain so in the future?
Energy Crisis and the Christmas of Discontent
The wealthiest of the countries who have built their empire on plunder, loot, and colonial riches are under pressure.
High energy prices and sky-rocketing costs of living are leading to a huge risk of civil unrest in these countries.
The UK and Europe are being gripped by a wave of industrial action as spiralling inflation and sky-high energy prices hit worker’s pockets. In the UK, staff at Border Force have become the latest workers to announce walk-outs in December. They have joined a growing list of staff preparing to take strike action in some of the country’s most vital sectors, including NHS staff, teachers, postal and rail workers. (Source: How does UK’s ‘Christmas of discontent’ compare with the rest of Europe? / The Week)
France, Germany, Norway, Britain, the Netherlands, and Switzerland are facing a major risk of civil unrest within the next year or so.
Verisk Maplecroft, a risk consultancy firm has projected this risk going forward.
Strikes and protests are plaguing the continent currently.
Here is a list:
- British Royal Mail's largest labor union - Communication Workers Union (CWA) conducted will strike in the run-up to Christmas (Source)
- Stagecoach Group gave workers in a union a 10% pay hike (Source), while logistics company GXO gave it's delivery drivers a 12.5% pay hike because of strike threats (Source).
- 100 security staff members working for Eurostar who are part of the British RMT are planning to stage walkouts in December. This could halt rail travel on the Eurostar train. (Source)
- The Public and Commercial Services (PCS) union announced that 100,000 civil servants in Britain will strike in December running into January. The PCS claims that there is "solidarity" amongst their workers. (Source)
- 45% Oil Refining capacity in France is offline. Strikes over pay started in September at Exxon Mobile and TotalEnergies plants. 740,000 bpd refining capacity went offline because of the walkouts. (Source)
- France's electricity company EDF has signed a wage agreement with its workers. (Source)
- The trade union IG Metal Kueste has called on its workers to strike at 15 factories, including Airbus in Hamburg.
- Lufthansa's 19,000 cabin crew in Germany will get a pay hike. The company reached an agreement in the first week of November. (Source)
- Audi is giving one-off tax-free payments as opposed to permanent wage hikes to its employees. (Source)
- Belgium: Workers are protesting high inflation in Brussels as their salaries cannot keep pace. (Source)
- Greece: in the country's Greece's largest port boats and ferries remained docked after unions staged a 24-hour strike. They are protesting the impact of inflation. (Source)
Travel Disruptions in December
- TAP Air cabin crew strikes in Portugal, in Spain USO and SITCPLA union members from Ryanair cabin crew have been on strike for 5 months now.
- Rail strikes are hitting across Europe. It is the hardest in UK. 40,000 members of The Rail, Maritime, and Transport workers union (RMT) will stage walkouts in December. (Source)
- Baggage handlers at Heathrow are going to strike from December 16th. This will impact flights by 10 major airlines (Source)
Quite simply we are looking at - at least! - a "Christmas of Discontent" in Europe.
As a junior doctor at Oxford University Hospital told CNN. (Source)
“It’s quite demoralizing, because the current inflation rate is expected to go very high next year,”
More than that, this is creating a situation of wider civil strife that seems to be unprecedented in Europe.
This pessimism is being reflected in the way the public in Europe is viewing the future of the European Union as well.
But there was something even more disturbing in this survey conducted by the European Council on Foreign Relations (ECFR) and YouGov.
Even though many of those who believe a war is coming between EU members are across mainstream parties, the percentage is higher in supporters of right-wing parties like Rassemblement National in France, the Freedom Party of Austria, the Party for Freedom in the Netherlands, Jobbik in Hungary, and Golden Dawn in Greece.
That is why it is no surprise that in the last few years, the far right-wing parties are now becoming mainstream ruling parties in most European countries. (Source: "How the far right is surging in Europe" / CNN)
The Rapidly Sliding Economy
This winter of 2022-23 will be a landmark season for the future of Europe. It will go down in history as the time when Europe broke down and its fall started.
As we speak, the energy prices one year ahead have soared to an all-time high.
What does this mean? It means that industrial production across the board, specifically in Germany, has taken a hit because of the lack of gas and oil.
All this started when Europe and US put sanctions on Russia for its war against Ukraine.
It is not as if Europe did not know this before it slapped sanctions against Russia and hardened its stance over Putin's attack on Ukraine. After all, 4-50% of the European Union's natural gas was supplied by Russia! Did the Europeans think well about the consequences of their actions against Russia?
Energy prices soaring and reducing industrial production is one thing, but the sanctions against Russia and lack of energy options will impact Europe in something that no government can ignore.
An Existential Crisis!
Traditionally deaths across Europe are higher in the Winter. And, this is correlated to energy prices.
When the deaths to energy prices were modeled in light of the current scenario while factoring in the severity of the winter, the results are damning!
Mild winter: 32,000 deaths above the historical average. Harsh winter: 335,000 deaths above the historical average!
This week an Arctic Blast is heading for Europe. And it is likely to deliver the coldest air of the season.
In the latest forecasts, the temperatures are expected to plunge lower in the Nordics than average.
The winds, or rather lack of them, are going to deal another blow to the energy needs.
Falling wind speeds in Europe are pushing power and gas prices higher, underscoring the heightened vulnerability of the continent’s energy system to weather conditions this winter. Amid a sharp pivot from its reliance on Russian natural gas, Europe has built up large reserves of stored gas ahead of this year’s heating season. That has helped ease power and gas prices recently. A particularly mild spell of weather across the continent also helped by pushing back gas withdrawals and keeping stockpiles topped off. (Source: "Lack of Wind Pushes Europe’s Power Prices Higher, Just as Cold Sets In" / Wall Street Journal)
This week, it has become more acute specifically in the UK. Wind speeds have reduced to almost zero this week! It is expected to pick up again though.
With consumer confidence at a record low (Source), IMF is predicting a recession and shrinking output in Europe.
This winter, more than half of the countries in the euro area will experience technical recessions, with at least two consecutive quarters of shrinking output; among these countries, output will fall, on an average, by about 1.5 percent from its peak. Croatia, Poland and Romania will experience technical recessions as well, with an average peak-to-trough output decline of more than 3 percent. Next year, Europe’s output and income will be nearly half a trillion euros lower as compared to the IMF’s pre-war forecasts—a stark illustration of the continent’s severe economic losses from the war. (Source: "Europe Must Address a Toxic Mix of High Inflation and Flagging Growth" / IMF)
Now, economists are predicting a deep recession!
The euro zone is expected to plunge into recession in the coming months with economists warning “it will not be shallow.” (Source: Euro zone predicted to have a deep recession and a difficult, slow recovery / CNBC)
Such a stark situation has not stopped the traditional European media to spin things in ways that reek of its disconnect from reality and shows a throwback to its rich days.
Those are brave words. Because factories have started closing across Europe. They are making plans to remain closed for a significant time in the future as of now.
Companies across Europe are going into sleep mode. Gas-heavy fertilizer makers have all but halted production. Steelmaker ArcelorMittal has temporarily shuttered mills in France, Spain, Germany and Poland. (Source: "Europe fears its industries will jet to the U.S. as energy costs force plant closures" / NPR)
The scenario with the Aluminum and Zinc capacities in Europe has become worse in the last year. Remember one ton of aluminum takes about 14-megawatt hours of power to produce which could power an average UK home for more than three years (Source)!
Over the last year, Europe has lost half of its metal smelting capacity!
Europe has lost about half of its zinc and aluminum smelting capacity within the past year, and a further surge in power prices could knock more plants offline over winter, the region’s biggest metal producers warned. (Source: "Europe’s Power Crunch Cuts Zinc and Aluminum Capacity in Half" / Bloomberg)
The EU leaders are now calling it an "existential threat" to EU metal production. More so, because Europe currently depends for its solar energy equipment on China.
A massive and rapid deployment of renewable energy is central to Europe's drive to end its dependency on Russian fossil fuels. Solar energy will be "the kingpin of this effort", according to the European Commission. The only problem is that the global solar supply chain is currently dominated by China, a dependency that will only grow if Europe continues losing industrial metals production capacity at current rates. High power prices have already forced the closure of aluminium and zinc smelters and pose an "existential threat" to the entire European metals supply chain, warned industry group Eurometaux earlier this month. (Source: Can Europe save its industrial metals production sector?/ Reuters)
Just pause here for some.
For solar power systems, aluminum, Copper, and Zinc are the most critical metals.
“Base metals are an integral component of solar power systems. A typical solar panel installation requires aluminum for the front frame and a combination of aluminum and galvanized steel (zinc) for structural parts. Copper is used in high and low voltage transmission cables and thermal solar collectors,” Kamil Wlazly, Wood Mackenzie’s senior research analyst, wrote in the report. (Source: Mining.com)
If the lack of energy - due to the situation with Russia - forces the closure of Aluminum and Zinc factories leading to the destruction of 50% or more of Europe's production capacity - then it directly impacts Europe's ability to manufacture solar power equipment. Which keeps its dependence on fossil fuels intact. With winds varying in their intensity based on the weather, the situation is quite bad!
The fossilized mindsets in Europe against the use of Nuclear Energy is also not helping it in this mixture of truly devastating energy crisis.
“We’re not talking about a nuclear renaissance, as such,” Nicolas Berghmans, an energy and climate expert at the France-based Institute for Sustainable Development and International Relations (IDDRI), told Al Jazeera, “but maybe more of a change of tide.” “A real nuclear renaissance would be if Europe decides to invest in more nuclear power plants.” (Source: No nuclear power ‘renaissance’ as Europe wrestles energy crisis" / Al Jazeera)
So look at the current crisis:
- Russia squeezing gas and oil into Europe
- Lack of fossil fuel closing industries and plants. Specifically Aluminum and Zinc
- Dwindling Aluminum and Zinc capacity leads a devastating blow to Solar power as China struggles as well
- Lack of Political will for the Nuclear power alternative
Some are willing to look at the "crazy ideas" for saving Europe. Crazy in the European lingo based on where they stand today, that is.
We’re reaching the point of ‘no idea is too crazy’: keeping nuclear power plants running, wholesale energy price caps, suspension of markets, removal of CO2 costs and limits, burning more coal, re-starting domestic gas production even if that triggers local earthquakes in the Netherlands. Everything has to be backed up with multi-billion-euro loans from governments to key sectors. (Source: Many Winters Are Coming. Start Saving Energy Now. / Bloomberg)
With such a potent mix of variables stacked against it, Europe is now heading towards one of the largest contractions since World War II.
Building on a model of the European energy market and economy, the Bloomberg Economics base case is now a one per cent drop in gross domestic product, with the downturn starting in the fourth quarter. If the coming months turn especially icy and the 27 members of the European Union fail to efficiently share scarce fuel supplies, the contraction could be as much as five per cent. That’s about as deep as the recession of 2009. And even if that fate is avoided, the euro-area economy is still on track to spend 2023 suffering its third biggest contraction since the Second World War — with Germany among those suffering the most. (Source: "Energy crunch could drag Europe into recession as deep as 2009 crash" / Financial Post)
An economic decline is staring at Europe.
But is it all that Europe is afflicted with?
Falling Population and changing demography
As per the Eurostat’s Demography of Europe 2022 report, new births have been falling tremendously. From 10.2 live births out of every 1,000 population in 2001 to 9.1 in 2020!
In terms of age, over 30% of the EU population is expected to be 65 or older by 2100. (Source: Weforum)
What does this mean?
The EU’s population has decreased for the second year running, reflecting the devastating impacts of the coronavirus, according to Eurostat. The bloc’s population had been increasing year on year, hitting a pre-pandemic peak of 447,485,231 people on January 1, 2020. Where there were 447,000,548 people registered across the 27-country bloc in 2021, the number dropped to 446,828,803 by the start of this year. (Source: Statista)
How is Europe trying to overcome its declining population?
And how is that turning out?
In 2021, 183,600 people seeking asylum were under 18 years old – nearly 13% of them (23,300) were unaccompanied children. Most of unaccompanied children came from Afghanistan, Syria and Bangladesh. In the first half of 2022, 405,500 asylum applications (from which 365,400 first time applications) were lodged in the EU. This is 63% more than in the same period of 2021, and also 21% higher compared to pre-COVID times (same period of 2019). In March 2022, the number of applications exceeded 80,000, the highest monthly level since 2016. (Source: European Commission)
This chart shares it better.
The problem is that most European countries are welfare states. Immigrants from poor Islamic countries are a major drain on taxpayers.
They are not educated, take low-income jobs compared to EU citizens, and are severely under-represented in high-end professions.
The EU natives are not giving births to more children, while the Muslim population within these countries is predicted to increase rapidly.
Looking at it another way, 50% of all European Muslims are under the age of 30, compared with 32% of non-Muslims in Europe. In addition, the average Muslim woman in Europe is expected to have 2.6 children, a full child more than the average non-Muslim woman (1.6 children). (Source: 5 facts about the Muslim population in Europe / Pew)
The differences are telling!
What does this tell you?
With native European fertility and population falling rapidly and the gap being compensated by immigrants who are heavily oriented towards lower income jobs with a low economic impact to the overall economic growth, Europe is looking at a future where the next generation of its citizens will not be innovating or creating the next global leader in technology or science.
They may be fighting a civil war based on religion!
Look at the results of a study down in Germany in 2013.
In December 2013, Professor Ruud Koopmans of the Berlin Social Science Center published a study on “Fundamentalism and out-group hostility,” in which he compared hostility among Muslim immigrants with hostility among Christian natives in Western Europe. He writes: “Almost 60 percent agree that Muslims should return to the roots of Islam, 75 percent think there is only one interpretation of the Quran possible to which every Muslim should stick and 65 percent say that religious rules are more important to them than the laws of the country in which they live.” In regards to Christian citizens he concludes: “Less than 4 percent can be characterized as consistent fundamentalists.” On hatred of Jews and homosexuals among Europe’s Muslim population, Koopmans finds: “Almost 60 percent reject homosexuals as friends and 45 percent think that Jews cannot be trusted. While about one in five natives can be considered as Islamophobic, the level of phobia against the West among Muslims — for which oddly enough there is no word; one might call it ‘Occidentophobia’ — is much higher still, with 54 percent believing that the West is out to destroy Islam.” Recorded rates of Christian hate toward Muslims hover around 10 percent. (Source: "Europe’s Muslims hate the West" / Politico)
Many, like author Douglas Murray (writer of "The Death of Europe") are already discussing the impending demise of Europe itself.
Given the headwinds and the impending challenges Europe faces anyway, one can see a recipe for disaster.
Add in the economic destruction due to the incredibly masochistic Russian sanctions, and you can sense that the Europeans are in a hurry to drive off the cliff!
Here are the documentation and links that I saved as part of my research for an article. Many of these links I may have shared in my article and many I would have used in understanding the topics at hand. Beyond this newsletter, I tend to collate all my research even in the future into these sub-pages. So bookmark them for future reference. Please feel free to dive in and use it for your own analysis.
Video Corner: 'Oumuamua, the first visitor from another star system
We recently had a 'visitor' from another star system to our own solar system. It made the scientists sit back and notice. They were shocked and excited!
Here is what astrobiologist Karen J. Meech has to discuss about this visitor. Fascinating!
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