Europe must wake up or be crushed between superpowers

The Trump v Zelensky face off at the Whitehouse ended in debacle and antipathy. It is a seismic moment in world affairs. It changes the Geopolitical look of Europe. The drums of war are rolling. What does this mean for Europe?

Bismarck once remarked that if you control Bohemia then you can control the world. That was the nineteenth century and during an era of nation state assertion, when the fledgling nations of Europe cast off the yoke of the Austro-Hungarian Empire. That was an age of Europe as a hegemonic force: of expansionist nations and colonial wealth. The emerging nature of Geoeconomics and the Trumpian creation of a 'New World Hegemon' in the Americas sees the world shifting on its axis; multipolarity and what Carl Schmitt called the 'Grossraum', that is polarity of strategic areas of interest. The ghost in the machine for European dreams is changing economic fortunes, particularly Geoeconomics. The threat for Europe, and particularly the Visegrad grouping, is a massive one.

Trump's territorial ambitions in Canada, Greenland and the Panama Canal gives credence to the reassertion of the Monroe Doctrine of 1823. The US issued notice of its hegemony within the Western Hemisphere. The US would not allow interference in its area of influence. The major players of China, Russia and the US are dealing out the Geopolitical cake. Europe hasn't been invited to the table.

The think tank Chatham House described Geoeconomics as 'the interplay of international economics, geopolitics and strategy'. The central question in Geoeconomics is the extent to which economy itself leads to political conflict and war. The economist Paul Samuelson famously gave the title for WW2 as 'the economists war'. The nineteenth century liberal view of 'Non Zero Sum' 'quid pro quo' was that the benefits of trade led to economic and political advantages for all concerned. However, the increasing mobilisation of resources (both natural and human) led to the idea, put forward by Hirschmann in 1945, of the 'Zero Sum' concept of winners and losers.

The trajectory of events of WW2 made liberal free trade rhetoric obsolete. The prevailing tendency was what economists call 'Mercantilism'. This was the idea that increases in wealth means greater power- to the detriment of the other. Therefore, geopolitics and geoeconomics became intertwined. The aggressive pursuit of 'Grossraum' could have economic and political benefits. The emphasis in Mercantilism is the feature of one or two 'hegemonic' powers. Therefore, in the twentieth century this was assured for the US, through the suspension of the Bretton Woods agreement in 1972. The abolition of the convertibility of gold to dollars, set in motion a 'hegemony' for the US. The world had changed for a few dollars more. The fiat currency of the dollar had replaced gold. Hence the picture of 'globalisation' as mutually benefitting is true on one side but exists within a macro system of hegemony. Hegemony is policed through, for example, global payment systems, sanctions etc. Mercantilism is back in vogue and we can see it in Trump's protectionism and China's soft loans in the world of 'Tianxia' (all under heaven), the spiritual moniker for Chinese assertion.

The downside to mercantilism is that the 'Hegemon' will use trade blocs and military force to maintain its position which is solely transactional. Consequently, the era of 'Globalisation' (post WW2 onwards) coincided with the dominion of the one US hegemon and dollar supremacy. Unipolar hegemony best suits the US for it sets out the rules and procedures of trade. Satellite states and trading partners benefit if they are within the 'super bloc'. The corollary of linked trade also draws in partners to the governing political ethos of the Hegemon. In Trump's case this means a conservative reassertion which is decidedly not neo-liberal.

The phase we have entered now is one of 'deglobalisation' and polarity which began as the 20st Century consensus began to unravel. The hegemon of the Americas will be echoed by China. China is now the largest lender worldwide due to the 'Belt and Road Initiative'; its Bond market is now open to foreign investors and challenges the IMF as a lender of last resort to struggling countries (150 Billion USD in the last ten years). Chinese lending is overtly Geoeconomic. It contains attractive interest rates for military investment. The Kiel study shows the correlation between official state lending and the rise of the 'Hegemonic' powers in nineteenth century Europe, the US post WW2 and the emergence of the Chinese. There is also an inverse relationship to private lending; when private capital recedes then the hegemonic power leverages geopolitical possibilities. This was illustrated by the US lending to Britain and Europe during and post WW2. The conclusion is that politics and geoeconomics have significant instability, however, and to be sandwiched in between the new blocs, as in the case of Europe, is existential. Mercantilism therefore carries inherent geopolitical instability.

The new Hemispheric reality, unveiled in the Trump-Zelensky meeting extraordinaire, means that Europe needs to determine its strategy between the two Leviathans of China and the US. Within this conundrum is the identity of the central European region which is politically divided. The central European states such as Poland and the Czech Republic look west. However, the leanings of Hungary and Slovakia are undecided. There is the added threat of Russian dominion and Putin's harking back to a Russian Empire of unlimited horizon. There is, however a window of opportunity for Europe. Europe can hedge its bets. That means reaffirming links with the Chinese as leverage against the dark arts of Washington. The question remains whether we have the unity or the leadership for this. The European Union is in no fit state with inefficient bureaucracy and declining GDP. Yet Europe can leverage Chinese access to key technologies. Export controls on strategic technologies can make the transatlantic relationship more transactional, as the US is loathe to allow the Chinese access to tech futures. The Chinese are likely to play ball since the increasing 'entente terrible' between the US and Russia will mean a weakening of China ties with Russian cheap oil etc. Consequently, it could be a strategic opportunity for Europe. Leverage will need to be used to keep Ukraine independent; here too leverage over the Chinese with tech can be used to pressure China to loosen support for the war.

Europe needs to solidify ties with a stronger single market Europe, but it needs to jettison bureaucracy and inefficient EU rules on trade. A new independence, both militarily and economically, means that Europe must become a hegemon in these areas, for strategic security. A new world of realpolitik harkens and Europe must step up to the mark. The Visegrad 4, however, are disunited. Hungary's support for Ukraine has been derisory. The Kiel Institute for the World Economy, showed that support is unequal : between Poland (3 billion Euros), the Czech Republic (1.1 billion Euros), and Slovakia (700 million Euros) in military support to Ukraine. Hungary did not figure in the top thirty donors. The group, to be relevant, needs to unify and see the existential threat to Europe unless it recalibrates, embraces reform and beefs up its military.