“Not all EU civil servants are overpaid, some (for instance some contractors) are not, and many work hard.”
– The Open Europe think tank
Hello again [%= :subscriberName(D,Reader) %], Boaz Shoshan here.
I hope you’ve been finding Kit Winder’s editorial interesting while I was away – I’m just back from a short trip to Brussels.
I hadn’t been to capital of the EU before (I was there for a relative’s wedding), but my, was it an enlightening visit.
The EU’s ambition for Brussels is for it to become the European equivalent of Washington DC. To hear some officials speak of it, they believe it already is.
But DC is not what comes to mind when you walk around the EU area of Brussels. The infrastructure is exceedingly poor for what is supposedly ‘the new capital of the free world’ – basic things like paving stones are laid unevenly, with loose concrete sprayed over them.
This was surprising considering the huge amount of taxes the poor Belgians have to pay. On income tax alone, Belgians have to hand over 25% of all income up to €13k, 40% on all income over €13k, and 50% of all earnings over €40k, not to mention regional taxes which go on top.
But of course, if you work for the EU, you don’t have to pay national taxes like the peasants. One senior bureaucrat I’ve met earns a 7 figure compensation package and yet pays only 18% in tax. What’s more, if you work for the EU in a country different from your birth (as many in Brussels do), you get a 16% annual bonus… every year.
How the native Brusseleers don’t realise that they’re getting rinsed is beyond me.
The EU parlamentarium building itself is massive in scale relative to the number of people who go in and out, and mill around it. It is huge, but silent. I felt like I was looking at a grand Soviet building in Eastern Europe that had since been converted into a town hall. Heaven knows how much empty desk space is in there.
These excesses would not be so stark, were Brussels really like Washington DC. But what it shares with the US capital are some less glamorous statistics. There’s an estimated 25,000 lobbyists living there, all vying to sway policy and regulation in their favour. There are also 5000 diplomats from non-EU countries in the city alone – many of whom will be spies.
But the EU is not a superpower like the US. To begin with, it has no hard (military) power to back up its soft power (social, economic, cultural influence) abroad. Not that they don’t aspire to.
Ursula von der Leyen is the current nominee to become the head of the EU’s executive branch, the European Commission. This is the closest the EU has to a president/prime minister in the US/UK sense, and has declared that what she wants is a ‘United States of Europe’, with a European Army.
But the biggest stakeholder of the European project is Germany. And the German military is a joke. German soldiers are showing up to NATO exercises carrying broom handles painted black because they don’t have any guns. Not a single one of the submarines in the German Navy is seaworthy. Their Tornado jets can’t even fly at night-time.
Who oversaw this colossal military decline of Europe’s largest economy? Why, Ursula Ursula von der Leyen of course, who was defence minister of Germany at the time!
You couldn’t make this stuff up.
The European Central Bank has managed to keep the Eurozone afloat with its incredible money printing program. But you can’t print a military. Militaries cost money for sure, but they also take decades to develop and train, as do the engineering projects required to make cutting edge military equipment. And time is not something the EU has. Cold War II is on folks, and the EU is at best totally incoherent on the matter, and at worst totally oblivious to the fact that the US and China are poised to rip it in half.
And that’s if the union makes it without the Euro exploding. I got the opportunity to speak to a couple of senior eurocrats on my trip, and outlined some of the problems we’ve highlighted here in Capital & Conflict (). Though their understanding of the underlying problems of the Euro (such as TARGET2 balances) was often limited, they simply assumed that any problems with the currency could simply be fixed through greater economic integration (fiscal and banking union).
Importantly, they believed that political objections to such integration would fall by the wayside in the fullness of time. But this is delusional, for time is something the EU does not have, for the global political and economic order it has coasted upon for the last two decades is falling apart.
The nomination of von der Leyen to lead the entire European project, who was the architect of Germany’s military collapse, does not bode well.
If the eurocrats want to survive in their cosy and lucrative jobs, they’re gonna need to start playing for keeps sooner rather than later – it’s empire or bust now.
All the best,
Boaz Shoshan
Editor, Capital & Conflict
PS
At least the beer in Brussels was good. I had a long awaited reunion with Malheur 12, an exceptional quadrupel I’ve been unable to acquire in the UK for several years. If you’re in Belgium any time soon, I highly recommend it.
Category: Market updates