Why the EU Has Failed

It has all gone belly up if we look at the EU and we are honest. Yes, they might be trying to paper of the cracks and yes they might be shoving some super strong glue in their to stop everyone pulling in different directions, but if they are really truthful about it, the EU28 (now that Croatia has become a member since July 1st 2013) is just about as dead as a goldfish that has floated to the surface, belly up. We all know what we do with dead goldfish, too! The EU has hardly grasped the nettle and come to a quick decision over some of the failing states that are just dragging them further and further into the red, have they?

EU: belly up?

EU: belly up?

But, when the EU was set up it wasn’t what was meant to be. With the signing of the Treaty of Rome on March 25th 1957 between Belgium, France, Italy, Luxembourg, the Netherlands and West Germany, there was meant to be a reduction in customs duties, the setting up of a customs union, a common market, common workers, common services and a common transport system and agricultural inter-linking. That all went wrong even back then when the EU just produced butter mountains and milk lakes and little all else, through over-production and bad management of funding. Those surpluses returned in 2009, when the EU had enormous stocks of wine (2.3 million-hectoliter wine lake), cereals (717, 810 tons) and milk, to name but a few. The EU’s Common Agricultural Policy already keeps prices artificially high in the market due to high import tariffs (18-28% according to estimates). Thus competition is limited in the EU from non-EU producers, and the prices within the EU remain relatively higher than they should be.

But, the CAP is not the only thorn in the side of the EU’s already weary body. What are the reasons why the EU is floating belly-up like a dead fish that nobody wants to feed off?

Reasons Why

1. Numbers



The EU has just expanded and expanded and we know what happens to bubbles at they get blown up more. Inflated, hot air and nothing more. The EU finds its origins in a founding group of 6 nations. That quickly expanded and went up and up and up. The more the merrier? Hardly! Today they are still adding to the number. It would seem far from reasonable to throw tindersticks onto a fire that is already ablaze and roaring away, would it?  You think they would have held back and postponed the entry of Croatia to make the EU27 notch up one more. You think they would have told Latvia to hold its horses until the horizon looked somewhat better than it does at the moment before wanting to go full steam ahead crashing into the Eurozone in January next year! It’s numbers that are the biggest downfall of the EU. They just keep on adding in the hope that they will unite the world.

2. Growth

EU: growth?

EU: growth?

It would seem to be a bit of a no-brainer to suggest that the success of the EU could be based upon its growth. That’s what the EU was created for, to break down barriers and increase trade between the member states. In the beginning the united countries of Europe had a combined growth of 4% on average in the 1950s. That lasted right through into the 1960s too. But, by the 1970s it had started to slide and growth stood at 2.8%. It was at 2.1% by the 1980s and even lower at 1.7% in the 1990s. It then hit zero and has declined even further still, going into negative figures. The EU contracted in 2012 by 0.6%. This year it is predicted that it will contract by 0.1% again. When will successful growth poke through?

3. Politics

EU: Politics?

EU: Politics?

Governments in member states have over-ridden the desires of their populations. When a referendum is taken on some matter regarding how the EU operates or some treaty that is going to come into effect, the people might vote against it. But, that’s not a problem. The EU has removed legitimacy from successive governments further and further. When the governments get the wrong answer to the referendum, they just hold another one until they get it right. The Danes voted against (50.7%) the Treaty of Maastricht in 1992. A second referendum (admittedly with four opt-outs) was held in 1993 and passed. In 2001 53.9% of voters in Ireland rejected the Treaty of Nice. Another referendum was held in 2002 on the same treaty and it passed with 62.9% in favor of it. Perseverance is the order of the day. Will David Cameron do the self-same thing when it’s his turn? Beware people!

Portugal has a predicted contraction this year of 2.3%. The Portuguese Constitutional Court voted against certain austerity measures that were in line with the European Commission. But, the EU forced Portugal to accept by threatening to withdraw precious funding in the event of not complying. They listened up and voted for the austerity.

4. Rich Myth

EU: Get rich quick?

EU: Get rich quick?

Why are countries so dead set on joining the inner circle? Simply because they believe that they will strike it rich and be pulled up to the same level as the richest nations in the EU. They will suddenly transform themselves into the luxurious French, the industrial Germans or the financial Brits. It simply hasn’t happened. That’s a closed club. But analysts agree that countries that are poor and lagging behind will still be trailing it in the next few decades. The rich will grow richer and the poor will either remain where they are or they will advance at a snail’s pace. Judging by the Greek situation they will never be in a position to pay back their mounting debts.

5. Too Old

EU: old?

EU: old?

European citizens are ageing faster than they’d like. By 2060, there will be 12% of the population that is over 80 years old. Younger generations today will have not only the burden of paying back the sovereign-debt crisis, but they will also have the added burden on their shoulders of financing the growing ageing population. They’ll be working for next to nothing anyhow.


Apparently the banks in the world that we had built were “too big to fail”. The EU is exactly the same and we all believe that it too is too big to fail. But, if we look back at what the banks did to change their situation after we granted them the money to show them that they were indeed too big, we can see that they did nothing more than carry on doing what they had always done: investing, making money, making money hand over fist and telling the taxpayers that bailed them out that they wouldn’t be getting any more loans as they were not a good investment.

The EU will do exactly the same. The troika of the European Union, the European Central Bank and the International Monetary Fund has just decided yet again to bail out Greece as it is too big to fail (although decidedly smaller than it once was, admittedly). A tidy sum of $8.7 billion will be winging its way to the men in Athens to finance what (let’s hope it doesn’t go missing on the way)? Austerity, probably! That’s about all it will be good for. But, afterwards, what will happen, once they get the money? Just like the Goldman Sachs and the Citigroup Inc.’s of this world, the EU-member states that get bailed out will just carry on doing what they wanted all along. Maybe they should take a leaf out of the books of some of those banks that got bailed out, like Citigroup Inc. and the Bank of America Corp. The first spent $3 million and the second $1 million on lobbying the US, which was more than any other bank. They ended up with a bigger share of the pie that was worth the princely sum of $700 billion.

It’s kind of a case of the louder you shout, the more you will get. So, carry on shouting guys, you will probably end up with more than the rest. Then, you can carry on doing what you have always done best. You’re far too big to fail! But, if the EU is far too big to fail, then maybe it should be broken up. Being too big is not good for anyone (and certainly not the taxpayer) except the gigantic monster that is the beneficiary of the financial aid being doled out willy-nilly. It’s really no wonder that Latvia has gone against its polls (only 22% of Latvians actually want to join the Euro) and said that it will enter the Eurozone in January 2014. What the people in Latvia can’t see, is that they might well be brought down by the Club Medders of Portugal, Italy, Greece and Spain, but they will be bailed out if they go under by the troika. But, there are some out there that think that joining the sun-baskers on the beach when the tide has gone out already will mean they are doomed to failure. The EU has failed dismally, and nobody is prepared to admit that, least of all the ones that are in the driving seats today.

But, there are 56% of the British that would vote to leave the EU when (and still if, despite David Cameron’s declarations) the referendum actually happens. That might not surprise anyone given the euroscepticism for which the British excel. In the spring of 2012 a poll was carried out by TNS Opinion and Social for the European Commission.

  • Only 42% of all EU citizens believe that their own interests are being looked after by Brussels.
  • 31% of those polled believed that there was a positive image of the EU.
  • 60% of EU citizens do not trust Europe.
  • There is a growing feeling of mistrust of the EU today and every country from Bulgaria to Luxembourg has an anti-European political party waging war on the ‘leave-the-EU-now’ front.

The EU looks as if it could certainly make do with some image-enhanced marketing techniques to get their act together and make it look as if they are doing some good. When it comes down it might just come down in a cloud of dust and leave everyone in a massive heap on the floor.

Anyone want the job as EU marketing guru? 

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Professional team of writers/analysts analyzing the financial markets.

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