In this piece, I am trying to look ahead at Europe’s future. My dear readers, it seems very, very bleak. This is a free piece for all readers. Contact us to discuss specific countries and commercial implications by replying to this email.
Russia and Ukraine
Russia continues incremental advances all along the frontlines in Ukraine. It has successfully encircled Ukrainian troops in Kupyansk, a gateway into the Kharkiv region, and Pokrovosk, which, alongside Lyman, is one of two anchors of Ukraine’s defence in the Donbass. Lyman itself is facing an attack from three sides, while Russia is outflanking Ukraine’s two defensive lines in Zaporozhye and systematically destroying them. The Ukrainians are running out of men, and it is only their impressive drone production that is keeping them in the field. At some point, the Russians will likely launch a major offensive towards Kiev, when they think that the other Ukrainian frontlines are sufficiently enfeebled to trigger a collapse. Russian attacks on power infrastructure ahead of winter, intended to force Ukrainian civilians in the north to head West, fit perfectly with this strategy.
Europe’s fear of Russia is justified. NATO’s expansion in the 1990s and early 2000s was intended to box in Russia in the Baltic Sea and in the Black Sea, threatening key naval bases in St Petersburg, Kaliningrad, and Sevastopol in Crimea. Arming Ukraine was intended to be the final nail in Russia’s coffin. Obviously, Russia will work to roll this back after it sorts out the Ukrainian threat, placing Romania, Finland, Lithuania, Estonia, and Latvia at enormous risk.
America’s consolidation
The USA has decided to take advantage of the combination of Russian, Ukrainian, and European insistence on continuing the war: Trump made the Europeans sign an agreement to buy USD750 billion of American energy by 2028, and to invest USD600 billion in America in the same timeframe. The Americans are no longer providing aid to Ukraine. Instead, they’re making Europe buy the weapons that Ukraine needs. Essentially, Trump has decided that if Europe and Russia won’t make peace in Ukraine, he will loot Europe instead, while pressuring the EU into backing America in the trade war with China. This, as we have long argued, is imperial consolidation.
European industry
One would assume that war would be good for European manufacturing. After all, car plants could produce tanks, drones, or missiles. The reality is the opposite. Volkswagen seems to be falling apart. Energy costs, and costs in general, are too high: the company says that its German plants’ costs are 25-50% above their targets. It had to close three plants in 2024, and is closing another two this year, allegedly because China has cut off the supply of chips - that itself came because the Dutch government, under American influence, seized control of Nexperia, a Chinese-owned Dutch company that had shifted its production to China. This led to Bosch, BMW, VW and Mercedes facing production difficulties. VW, alongside Siemens (which is doing better than VW), is the engine of the German economy, which is the engine of the European economy.
European debt
And how is that European economy doing? Briefly, the four biggest EU economies are Germany, France, Italy, and Spain. The last three are all facing debt disasters, with debt to GDP ratios above 100%, while Germany is quickly piling on debt but from a considerably better position. There is no financial power in the world that can bail out any one of those three (or Britain, for that matter, which is in a similarly atrocious financial position). And it is safe to assume that a crisis in one will lead to contagion in all. With these economies in such difficulty, it is safe to assume that one of them will face a major debt and confidence crisis at some point.
Immigration
Add to that the crisis of immigration.
The Overton Window on immigration is shifting rapidly. It is increasingly understood by the working classes and lower middle classes who live next to migrants that there is zero cultural compatibility between non-European migrants and European culture. Especially when migrant numbers are large - the natural human instinct is to form ethnic and religious enclaves, rather than to integrate, and large numbers of migrants permit precisely that ghettoisation. Moreover, contrary to the mainstream narrative, immigration is a huge economic drag - cheap labour discourages automation, and the accumulated costs of benefits, education, healthcare, etc… outweigh any economic contribution. Not to mention the enormous costs from crime that naturally comes when two incompatible cultures collide in countries with weak law enforcement. Over their lifetime, Muslim, African, and Middle Eastern migrants take more out of the state than they contribute. Migrants extract resources, rather than helping pay for the elderly Europeans’ pensions.
Critically, immigration accelerates the ongoing demographic collapse: by taking low paid jobs that would have gone to native youth, first, immigration reduces the ability of native youth to get starter jobs, delaying their entry into the labour force and therefore their ability to accumulate experience and wealth. Second, it forces native youths to aim for higher end jobs, requiring more education. Both these factors delay family formation, and, therefore, reduce birth rates.
With Europe edging towards bankruptcy, the question of immigration will gain salience: when the inevitable financial crisis strikes, it will be impossible to cut state jobs and benefits while continuing to shell out cash to migrants, legal or illegal. The natives will rightly demand that they be prioritised above foreigners. (For the avoidance of doubt, obtaining a piece of paper that facilitates foreign travel does not change a foreigner into a native. Therefore, the inevitable backlash will be against legal and illegal migrants, including those with European citizenship).
America
The United States of America deserves its own lengthy piece. Here, it suffices to briefly mention two or three points. The American left is becoming more organised and has nothing to lose - changes to the census, redistricting, and deportations of illegal aliens threaten its ability to regain power at the national and even state level. Trump, so far, is not undertaking the kind of action that would guarantee the left’s defeat on the field. He is not removing the left’s ability to engage in civil unrest, judicial warfare, and obstructionism, though his designation of Antifa as a foreign terrorist organisation is a step in that direction.
If Trump wins, even though in our view, he is not being harsh enough to do so, his example will animate the European right. And the European liberal left will fight in the same way that the American left is fighting. If Trump loses, his successors will want to eradicate the threat of the populist right, in America but also in Europe. The conclusion of this is that America as a security guarantor for Europe is not to be taken for granted due to the risk of instability in America. Rather, it is more accurate to see America as a destabilising force for Europe.
System-wide collapse
Worryingly, the various potential alternative right wing leaderships in Europe are fundamentally unserious, lacking in a positive vision for the future, unprofessional, and mostly chaotic. There is no clear alternative that is capable of fixing this mess. Crucially, all the opposition parties are hesitant: they lack the courage to cut the Gordian knot, to gut the bureaucracy and the civil service, to defund the NGO complex, to discard proceduralism, to discipline the activist judiciary, and to assert sovereignty. The problem is most acute in countries with proportional representation, where the electoral system is designed to prevent the emergence of a decisive victor.
The liberal order has been gradually failing Europe for more than a generation and the democratic alternative is yet to emerge. The actual alternative may be extra-legal, nativist, and violent by necessity. We are approaching not the French Revolution - the experiment in Net Zero, proceduralism, “universal human rights”, and infinity migration eclipses that. We are approaching the moment when governments go bankrupt, regimes fall, institutions collapse, civil conflicts break out, and Caesars and Napoleons arise. Crucially, the European right is being increasingly radicalised, faith in democracy is collapsing, and the progressive liberal left is slowly willing into existence its own radical nightmare.
Scenarios
The outcome of the madness of the Eurocrats will be one of three non-mutually-exclusive scenarios, which will obviously play out differently in different European nations:
Continued gradual decline until Europe ceases to have the potential to recover. This would imply the continued collapse of European industry, of demographics, of social trust, of safety, of civil society, of all that makes the legacy of Europe worth preserving.
Reform. Peaceful reform may still be possible - after some kind of incident shocks the national conscience, or a major financial crisis, or a particularly exceptional electoral defeat for the establishment. That said, we are not optimistic about this. Bataclan, the Charlie Hebdo massacre, the Manchester Arena bombing, the rape gangs, the regular rapes and murders by migrants throughout Europe, all should have shocked the national conscience and led to change. They did not. The global financial crisis should have forced some change. It did not. And the establishment has gotten accustomed to absorbing electoral defeats and continuing regardless, even as its credibility and authority fall apart. Moreover, even if reform were attempted, the requisite changes to the welfare state, and the mass deportations of migrants, both legal and illegal, are not something that parties can campaign on, necessary as they may be; a key feature of democracy is the avoidance of inconvenient truths. Additionally, such undertakings by their very nature can lead to the third outcome.
Violence. Violence is the final arbiter of political disputes, a simple fact that the West has largely forgotten. Most major European cities now host Islamic or other migrant no-go zones, where police authority is weak, where officers cannot freely operate, where adherence to the law is optional. This Lebanonisation paves the way to Ulsterisation: low level civil conflict that ebbs and flows, with regular attacks using explosives or firearms, ethnic checkpoints, and violent riots. This would continue until either the Europeans submit - at least in certain localities - or large-scale expulsion of culturally incompatible migrants occurs - an outcome only possible under a new Napoleon.
We are in a strange period. The old regime is dead. It is evident that race blindness is non-existent, that civic nationalism does not work, and that multiculturalism is a recipe for violence and dictatorship. All politics, at core, is identity politics.
Many “children” are pointing out that the European Emperor has no clothes, but the supposed adults - the expert caste, the academics, the managerial caste, the media - are all obstinately oblivious to the obvious.
Russia forcing a surrender on Ukraine, or marching into the Baltics, may awaken these castes or force Europeans to replace them. America leaving NATO may have the same effect, as would a cataclysmic financial crisis followed by mass unrest.
Until then, the elite castes are content with managed decline. And this decline can continue for another decade, if not more.
A great commentary!
It seems the phone just rings and rings in Europe but nobody will answer the wake-up call.
Brilliant summary of the dreadful state of affairs we now face