Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Nationalism funded by the EU

The proposed EU budget for 2021-2027 includes more spending in southern countries (eg, Italy) and less in eastern countries (eg, Hungary, Poland). Total spending would increase by 10% to 1.1 trillion euros despite the budget shortfall following the UK’s departure. Source: FTReuters.

Net contributors like Germany and Netherlands have said that it was not acceptable that the EU did not propose decreasing its budget despite missing the UK’s net contribution. Hungary and Poland are complaining about losing EU subsidies. Italy just got its newest – eurosceptic – government of left-wing and right-wing nationalists (eg, NYT, PoliticoWaPo).

No European country has seriously considered following Brexit, despite British common belief they would. Moreover, even a net contributor like the UK is now feeling the hidden benefits and thus future cost of Brexit. Given the vast amount of EU subsidies to net receivers (eg, Hungary, Italy, Poland), it’s (very) unlikely that these countries would ever follow Brexit. Hence, the title of this blog: Nationalism funded by the EU.

A 10 May 2018 Economist article points to the same: “Subsidising babies has bolstered Poland’s ruling party—so far”. It’s tempting to argue that receiving substantial EU subsidies allows for these Polish subsidies and that these EU subsidies are ultimately funding Polish nationalism.

On 28 May 2018, the Guardian published the opinion of the former Greek Finance minister, Yanis Varoufakis, on the Italian political crisis. He argues that the Italian “president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.” The prospect of new Italian elections shocked the markets and the Italian President backtracked.

The Italian left-wing and right-wing nationalists have proposed plans that would challenge (i) the EU budget rules through increased spending and borrowing (FTNYTReuters), and also challenge (ii) the Euro by introducing a parallel currency (Reuters). Latter might suggest a plan for future currency substitution and a possible Italian exit from the EU (Reuters).

I think, feel and believe that Brexit has already shown the (financial) daftness of leaving the EU. For countries like Hungary, Italy and Poland, it’s much smarter to hold the EU as a hostage through their domestic plans. The EU has shown that it will not let EU countries go bankrupt (eg, Greek bailout). The Italian nationalists may thus be plotting a Greek copycat: spend, borrow, and receive a future bailout by threatening to leave the EU.

The 2021-2027 EU budget introduces a penalty/reward system for bad/good behaviour of member states. Contrary to the USA, the EU member states are the approving shareholders. The absence of a Federal Republic of Europe is a short-term benefit and a long-term pitfall. The eastbound expansion of the EU will cause further political instability among the member states, and (thus) more informal power to unelected EU politicians. 

“Divide and rule, the politician cries; Unite and lead, is watchword of the wise.” A quote from Gedichte by Johann Wolfgang von Goethe (1749-1832), German writer and statesman.

Una Storia Importante (1985) by Eros Ramazzotti – artist, lyrics, video, Wiki-1, Wiki-2

Note: all markings (bold, italic, underlining) by LO unless stated otherwise

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