Europe’s disastrous passiveness is a huge economic risk

After 20 years of toiling in the vineyard of European political risk analysis, I have come to an unorthodox conclusion. The continent’s basic problem — beyond the hard indices of gross domestic product (GDP), military spending, and parliamentary majorities — is rooted in something far more intangible, but of the greatest importance. Europe’s basic problem is a political culture of passivity, of watching the world going by, drily commenting on it from the safety of a cafe, but not feeling bound to act in it, or to be responsible for its own destiny.

I remember angrily snapping at one defense meeting — where I was wearily told (without much thought) for the twentieth time that nothing could be done — that Europe had better stop watching the world as a person would a movie — passively rating it, but feeling no obligation to make it, or their situation, better.

To put it mildly, nothing has happened in the prevailing decades to change my mind. Now, confronted with the greatest economic crisis of our lives — brought about by the lockdowns forced upon the world by the coronavirus — Europe’s leaders have sadly reverted to form, meekly drifting on the surface of the ocean, rather than developing a plan to actively swim for the shore. The certain result will be the drowning of the continental economy.

Worse, the artificial good news of the third quarter GDP numbers buys the continent’s leaders some time to avert calamity, which based on past performance they will surely fritter away. Overall, the eurozone economy grew by 12.7 percent, with the Spanish expanding by 16.7 percent, the French by 18.2 percent, the Germans by 8.2 percent, and the beleaguered Italians by a seemingly impressive 16.1 percent.

So far, so good.

However, given the pace of the pandemic crisis, these numbers were obsolete even as they appeared. They represent the golden interlude that came to Europe following the end of the first wave of the virus, when after many months of slumber Europe finally got back to work. Even then, the continent’s economy has not returned to where it was before the virus struck, still being a significant 4.3 percent smaller than it was a year ago. To put this back into our nautical analogy, the upturn is surely not the result of anything positive effected by Europe’s leaders, but is merely the natural result of the tide swelling upward, of passively benefitting from the virus’s summertime respite.

And now the tide of coronavirus cases is moving the continent back out to sea. The template for all the major European countries,

Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via

chartwellspeakers.com. bereft as they are of any form of active leadership, is depressingly the same, as it is dependent on the virus alone and not any acts of man. The common story is that the booming rebound in the third quarter comes after the historical lows of the second when the pandemic first struck.

Worse still, due to the new lockdown measures being instituted now, as the cold weather has predictably seen the coronavirus (COVID-19) spring back to life, mean a further contraction in the fourth quarter is unavoidable, pushing the year’s already calamitous economic numbers ever closer to economic depression. For example, French Finance Minister Bruno Le Maire predicted the French economy is set to fall by 11 percent in 2020, which is nothing less than a disaster.

Even worse, there is a real limit to how long the continent can sit entombed in lockdown, as the economic costs corrode its already fragile economy. Southern Europe is particularly vulnerable as lockdown weeks have morphed into months. Unemployment has risen to 8.3 percent, its highest level since 2018, and a number heavily padded by not counting the millions artificially kept off the rolls by expensive furloughs.

Likewise, the lack of dynamism in the continent’s economy predates the virus. While America was being remade by

Steve Jobs and Bill Gates, Europe continued to subsidize mediocre state champions such as the perpetually broke Italian state airline, Alitalia. Now trapped in Japan-style deflationary sclerosis, the eurozone inflation rate descended to a negative 0.3 percent in October, year-onyear. With European Central Bank interest rates already at zero, the only hope for the continent is on the fiscal side, meaning national governments must come up with some sort of economic plan if the eurozone is not to slip into perpetual decay at best and calamitous ruin at worst.

Their utterly passive economic response to the pandemic crisis has been far from encouraging. President Franklin D. Roosevelt, who came to power in the 1930s amid the American banking system collapse and the Great Depression, put it so well, “But above all, try something.” His activist New Deal saved both American capitalism and democracy, more for its energetic nature than for any of the specifics of the myriad economic plans he put forward. The country felt like it was moving again, having a leader determined to act until he found the right combination of programs to save the

US from ruin.

Passive Europe must learn from FDR’s historical example if it is to save itself. Not acting is the greatest danger of all.