The West’s economic prosperity following the end of the first cold war in 1991 was built on a neoliberal capitalist economic model that was only made possible due to the extraction of wealth from China and Russia, the European Union’s top foreign-policy official, Josep Borrell, has confessed.
“Our prosperity was based on China and Russia – energy and market,” Borrell said.
China provided the US and EU with a massive market, low-paid labor, and cheap consumer goods. And after the Soviet Union was overthrown, mass privatizations in Russia and steps at integrating it into the West helped Europe secure huge amounts of inexpensive energy.
But the significant rise in workers’ living standards in China, as well as the proxy war in Ukraine and the EU’s corresponding pledge to boycott Russian gas and oil, have greatly increased the cost of living and doing business in Europe, making its products uncompetitive in global markets.
This has plunged the trans-Atlantic capitalist system into a deep crisis, motivating the neoliberal West to wage a new cold war on Beijing and Moscow in hopes of reasserting control over China’s market and labor and Russia’s natural resources.
The EU’s foreign-policy chief acknowledged these facts in a speech at the 2022 Ambassadors Conference in Brussels on October 10.
Borrell’s remarks were reminiscent of comments made in August by French President Emmanuel Macron, warning of the end of a neoliberal “era of abundance.”
‘Our prosperity was based on China and Russia – energy and market’
Borrell explained, “Our prosperity has been based on cheap energy coming from Russia. Russian gas – cheap and supposedly affordable, secure, and stable.”
“And the access to the big China market, for exports and imports, for technological transfers, for investments, for having cheap goods,” he added.
The EU foreign-policy chief observed, “I think that the Chinese workers with their low salaries have done much better and much more to contain inflation than all the central banks together.”
Borrell then summarized, “So, our prosperity was based on China and Russia – energy and market.”
The EU's top foreign-policy official, Josep Borrell:
“Our prosperity was based on China and Russia – [Russia's] energy and [China's] market.”
"China and Russia provided the basis of our prosperity. This is a world that is no longer there."
— Ben Norton (@BenjaminNorton) October 20, 2022
That prosperity is now slipping away.
By imposing devastating sanctions on Moscow over the proxy war in Ukraine, and by pledging to boycott Russian energy, Europe has lost its larger supplier of gas and oil.
The EU is now looking for new sources of energy, and is importing much more expensive liquified natural gas (LNG) from the United States, which has caused electricity bills to skyrocket for European citizens and businesses.
Now that China and Russia have become the EU’s geopolitical adversaries, Borrell argued that Europe “will require a strong restructuring of our economy.”
“The adjustment will be tough, and this will create political problems,” he said.
“I think that we Europeans are facing a situation in which we suffer the consequences of a process that has been lasting for years in which we have decoupled the sources of our prosperity from the sources of our security,” he conceded.
EU foreign-policy chief acknowledges the US is not reliable for security
The EU’s neoliberal economic model adopted in the 1990s relied on cheap energy from Russia and China’s consumer goods, labor, and market.
On the other hand, Europe’s security policy was based on the United States and NATO.
But the US is not a reliable security partner, Borrell acknowledged.
At the current moment, the US and EU are closer than ever, he said. However, that alliance is not ironclad, and it could shift in the near future.
On the other hand, we delegated our security to the United States. While the cooperation with the Biden Administration is excellent, and the transatlantic relationship has never been as good as it is today – [including] our cooperation with the United States and my friend Tony [Antony] Blinken [US Secretary of State]: we are in a fantastic relationship and cooperating a lot; who knows what will happen two years from now, or even in November?
What would have happened if, instead of [Joe] Biden, it would have been [Donald] Trump or someone like him in the White House? What would have been the answer of the United States to the war in Ukraine? What would have been our answer in a different situation? These are some questions that we have to ask ourselves.
And the answer for me is clear: we need to shoulder more responsibilities ourselves. We have to take a bigger part of our responsibility in securing security.
You – the United States – take care of our security. You – China and Russia – provided the basis of our prosperity. This is a world that is no longer there.
Borrell also conceded that the EU’s security problems are not just external. Internally, Europe is facing a threat from the “radical right.”
“There is a radical shift, and the radical right is increasing in our democracies, democratically,” he said. Instead of trying to blame this on a foreign bogeyman, Borrell admitted that this far-right shift “is not an imposition from any power.”
“The radical right is increasing their grasp in European politics,” he added. The EU’s “internal cohesion is under threat.”
EU is becoming dependent on US energy
The EU foreign-policy chief likewise acknowledged that, while Europe is no longer dependent on Russian energy, it is becoming dependent on US liquified natural gas exports.
This poses its own, new security problem, Borrell warned:
The other day, at the Prague [European] Council, President [of France, Emmanuel] Macron said that very clearly: we cannot substitute one dependency by another.
We are happy that we are importing a lot of Liquefied Natural Gas (LNG) from the United States – at a high price, by the way – and substituting Russian gas by American and Norwegian gas, or Azerbaijani gas – well, from Azerbaijan it’s a small quantity.
But what would happen tomorrow if the United States, with a new president, decided not to be so friendly with the Europeans? Why not? You can imagine the situation in which our critical dependency from LNG coming from the United States could also be in crisis.
Or that, tomorrow we do not have the cobalt, we do not have the rare materials that [come from] the DRC, South America, Afghanistan – they are [as] critical for us as oil and gas.
World is in chaos due to Ukraine proxy war, US-China competition, food and energy crises, economic recession
Borrell warned that the world is in chaos, and he named several main causes: the NATO proxy war with Russia in Ukraine, the “deep US-China competition,” food and energy crises, and an impending economic recession.
It is not just the proxy war in Ukraine that has destabilized Europe, Borrell said, but also the “deep US-China competition.”
He acknowledged that the US government bears responsibility for pushing up to the brink of war.
“The escalation of tension in Taiwan,” Borrell said, “was triggered by an individual travel of a personality that brought the Taiwan Strait at the edge of – I would not say a war, but – a lot of war games.”
He was referencing the trip taken by Nancy Pelosi, the Democratic speaker of the House of Representatives, the third-most senior official in the US government.
These conflicts, compounded by rising inflation and “food and energy crises,” has created a “perfect storm,” Borrell said. This will inevitably lead to an economic recession:
This is a perfect storm. First, the prices increasing. Second, the reaction of the central banks raising interest rates in the United States. Everybody has to follow, because otherwise their currency will be devaluated. Everybody is running to raise interest rates. This will bring us to a world recession.
The world following the Fed [the US Federal Reserve], the world implementing the same monetary policy – because there is no other way, otherwise the capital will flow – reminds me of what was happening in Europe before the euro when everybody had to follow the monetary policy dictated by Germany.
Because if you did not do the same thing, the capital was flowing, and you had to do it even if it was not the right policy for your internal reasons. What was happening among us before the euro is happening today on the world stage.