Only the rapid integration of the EU can deprive him of a victory!

The interpretation of the latest diatribes by Putin (and his acolytes), reaffirming the pursuit of his original war goals with increased intensity, is the subject of heated debate in the media, revolving mainly around Russia’s ability to achieve them.

Militarily (excluding the nuclear option), the Russian threat to the Atlantic Alliance seems limited in the short term given Russia’s need to replenish its forces in terms of equipment and personnel after suffering considerable losses on the ground. On the other hand, the possibility for Ukraine to mount a successful offensive seems low; it is totally dependent on the quantity and speed of arms deliveries by NATO countries and on training in their use. The outcome, which will necessarily take time, depends on the speed with which arms production can be accelerated, knowing that stocks, especially of ammunition, are more abundant on the Russian side, giving it the capacity to maintain a continuous destructive and demoralizing pressure in the meantime.

In terms of sanctions, it is becoming clear that while their continuation will have very painful consequences for the Russian population and economy in the long run, in the short term, as Putin claims, it is mainly Europe that will suffer an economic shock. In particular, the suspension of gas supplies will lead to a significant weakening of the German economy, which will spread to the entire Single Market and inevitably lead to a recession. This will come at the worst possible time when inflation, rising interest rates, excessive public debt, the resurgence of the pandemic, etc., (phenomena for which Putin is not responsible) will impose sacrifices on the EU population that could lead to social and political tensions and unrest.

Putin, whose population is used to mandatory restrictions, can wait and let the inevitable tensions develop between EU Member States. Their public opinions, after an initial burst of admirable solidarity with Ukraine, are likely to be divided – especially within those countries that escaped the Soviet yoke after the war – over the need to endure painful sacrifices (purchasing power, mobility, heating, etc.) for the benefit of a distant non-NATO member country.

Populist and Eurosceptic movements capitalize on these feelings to push their agendas of untenable promises advocating a return to “national sovereignty”. The recent results of the French parliamentary elections are a perfect illustration of this trend despite the war in Ukraine.

The reality is that Ukraine is fighting for our European values and our freedom on our behalf (which has been implicitly recognized by granting it EU candidate-country status), avoiding thereby, for the time being, a direct confrontation between nuclear powers.

On the economic and financial front, tensions within the Eurozone are rising, reflected in the weakening of the € which – I expect – will break parity with the dollar in the coming days, as the FED announces another significant rate hike and the ECB only cautiously begins its own credit tightening cycle; the latter’s plan to control spreads between the sovereign debt of the most indebted Eurozone countries is already being challenged by some Members and may not see the light of day.

Thus, completely independently of the war in Ukraine – but obviously without ignoring its induced and magnifying effects – the question of the sustainability of the € is posed in a context even more vulnerable than during the sovereign debt crisis in 2010-12. Indeed, the concomitance of other crises (geopolitical, Ukraine, inflation, climate, pandemic, food, debt, etc.) reveals the weakness of the unfinished architecture of the single currency, in the same way that our dependence on vital supplies was revealed during the pandemic and more recently following the Russian aggression in Ukraine. In the same vein, we can cite the culpable disarmament of the European military, the disinvestment in the German nuclear industry and the neglect in the maintenance of the French nuclear park.  

The collapse of the € and of the EU and the ensuing global economic crisis would offer Putin the opportunity to achieve his goals at little cost. He could then focus on the political destabilization of his vulnerable closest neighbors, re-establishing Russian influence over the territories lost in the fall of the Soviet empire and maybe extending it progressively to the entire European continent.

The need for Member States to strengthen the integration of the EU at a rapid pace is however no longer sufficient to protect the West: by integrating its currency (extended to the 27), its foreign policy, defense, energy, etc., the EU as such must constitute a single united second pillar within NATO as a counterweight to the US. Together, the US and the EU with the other developed countries, can then form an alliance capable of taking up the challenge clearly posed by Putin and opposing the Beijing-Moscow axis that is seeking to establish a new world order.

The Western alliance benefits from significant trump cards at the start of this deadly competition: its wealth, education, democratic values and last but not least the US dollar which dominates the world financial market. This latter weapon of mass destruction surprised Putin when the EU, the UK, Switzerland, Japan, Canada, Singapore and Australia joined the latest sanctions, freezing over 400 billion dollar equivalent of Russian currency and gold reserves. In this context, the € should play – as in NATO – the role of a second pillar, reinforcing the control of international financial, investment and commercial flows, a role to which the Chinese renminbi will not be able to lay claim for a long time, given the authoritarian character of its regime which does not inspire the necessary confidence of independent players.

In conclusion, we are now at a crossroads: the terms of the challenge have been clearly defined. If we want to meet it successfully and preserve our values of democracy and freedom – without imposing them other than by example and economic and institutional support (in line with our own best interests) – we have no choice but to form an alliance of democratic developed countries in which the United States and an integrated European Union will jointly provide the necessary leadership.

Lorgues, July 9, 2022