Great Britain’s potential exit from the European Union is the greatest challenge to the unified governance of Europe, but the so-called Brexit is only a symptom of the EU’s far deeper problems. Fed on debt-funded “development” the EU is an economic bubble built for times of prosperity. Due to the uncertainty and struggles of today, the EU is little more than a weight on the largely prosperous economies of Germany, Britain, and France. No longer providing cash and opportunities for growth, the high-valued Euro currency only improvises poor countries by inflating costs while offering little more than added responsibilities.
The economic woes of China, Russia, and Brazil have stolen the international spotlight, but European nations continue to face the same struggles. After years of dealing with the protracted Greek Debt Crisis in the wake of the Great Recession and the near-collapse of the PIIGS economies, the Ukraine Crisis, the Syrian Refugee Crisis, terrorism, and growing nationalist movements continue to strain the ties that hold the EU together. Fearing the fallout of a Eurozone breakup, business and political leaders desperately search for answers at forums like Davos when they need to look beyond economics.
Economic theory alone is not enough to understand the economy. Wise investors understand human psychology drives the daily ups and downs of the markets while insightful entrepreneurs recognize their consumers do not solely make buying decisions based on rational, cost-benefit analyses. Although the economic activities of people and countries will reflect what they perceive are rational decisions over time, people are not solely motivated by their economic interests. It is, therefore, necessary to examine the influence of cultural and political interests on public policy separate from the influence of economic interests.
Just as financial struggles stress personal relationships, they stress the diplomatic relationships between nations. As stressors, economic issues enflame inherent differences and conflicts of interests. In other words, Europe’s economic woes are stressing social weaknesses in the Eurozone and the overall European Union, but they are not the cause of Europe’s division as those divisions have existed for centuries. The European Union and Eurozone may have unified the governments and economies of Europe, but the EU never socially unified the cultures of Europe.
To understand the breakdown of the European Union, it is necessary to recognize their ethnic, cultural, and political diversity of the continent. In good times, Europeans were able to ignore their differences and deeply-entrenched historic grievances with each other to support international institutions that would supposedly guarantee their diplomatic, national security, and economic interests. Now that it is clear that their common interests are no longer being served by the Eurozone and European Union, members of the European family can no longer accept the intrusions of foreign cultures.
To address, this reality and to avoid the fallout of a Eurozone collapse, business and political leaders must learn to treat Europe’s business dealings separate from its governance. The problem with the Eurozone and European Union as a whole is that they seek to govern all of aspects of European life. In doing so, the diverse interests of the European Peoples are not being addressed. More importantly, the European Peoples no longer feel their interests are being represented by their governments, which appear more and more subjugated to the international governing institutions of the European Union.
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