Europe won the Cold War.
Not long after the Berlin Wall fell a quarter of a century ago, the Soviet Union collapsed, the United States squandered its peace dividend in an attempt to maintain global dominance, and Europe quietly became more prosperous, more integrated, and more of a player in international affairs. Between 1989 and 2014, the European Union (EU) practically doubled its membership and catapulted into third place in population behind China and India. It currently boasts the world's largest economy and also heads the list of global trading powers. In 2012, the EU won the Nobel Peace Prize for transforming Europe "from a continent of war to a continent of peace."
In the competition for "world's true superpower," China loses points for still having so many impoverished peasants in its rural hinterlands and a corrupt, illiberal bureaucracy in its cities; the United States, for its crumbling infrastructure and a hypertrophied military-industrial complex that threatens to bankrupt the economy. As the only equitably prosperous, politically sound, and rule-of-law-respecting superpower, Europe comes out on top, even if -- or perhaps because -- it doesn't have the military muscle to play global policeman.
And yet, for all this success, the European project is currently teetering on the edge of failure. Growth is anemic at best and socio-economic inequality is on the rise. The countries of Eastern and Central Europe, even relatively successful Poland, have failed to bridge the income gap with the richer half of the continent. And the highly indebted periphery is in revolt.
Politically, the center may not hold and things seem to be falling apart. From the left, parties like Syriza in Greece are challenging the EU's prescriptions of austerity. From the right, Euroskeptic parties are taking aim at the entire quasi-federal model. Racism and xenophobia are gaining ever more adherents, even in previously placid regions like Scandinavia.
Perhaps the primary social challenge facing Europe at the moment, however, is the surging popularity of Islamophobia, the latest "socialism of fools." From the killings at the Munich Olympics in 1972 to the recent attacks at Charlie Hebdo and a kosher supermarket in Paris, wars in the Middle East have long inspired proxy battles in Europe. Today, however, the continent finds itself ever more divided between a handful of would-be combatants who claim the mantle of true Islam and an ever-growing contingent who believe Islam -- all of Islam -- has no place in Europe.
The fracturing European Union of 2015 is not the Europe that political scientist Frances Fukuyama imagined when, in 1989, he so famously predicted "the end of history," as well as the ultimate triumph of liberal democracy and the bureaucracy in Brussels, the EU's headquarters, that now oversees continental affairs. Nor is it the Europe that British Prime Minister Margaret Thatcher imagined when, in the 1980s, she spoke of the global triumph of TINA ("there is no alternative") and of her brand of market liberalism. Instead, today's Europe increasingly harkens back to the period between the two world wars when politicians of the far right and left polarized public debate, economies went into a financial tailspin, anti-Semitism surged out of the sewer, and storm clouds gathered on the horizon.
Another continent-wide war may not be in the offing, but Europe does face the potential for regime collapse: that is, the end of the Eurozone and the unraveling of regional integration. Its possible dystopian future can be glimpsed in what has happened in its eastern borderlands. There, federal structures binding together culturally diverse people have had a lousy track record over the last quarter-century. After all, the Soviet Union imploded in 1991; Czechoslovakia divorced in 1993; and Yugoslavia was torn asunder in a series of wars later in the 1990s.
If its economic, political, and social structures succumb to fractiousness, the European Union could well follow the Soviet Union and Yugoslavia into the waste bin of failed federalisms. Europe as a continent will remain, its nation-states will continue to enjoy varying degrees of prosperity, but Europe as an idea will be over. Worse yet, if, in the end, the EU snatches defeat from the jaws of its Cold War victory, it will have no one to blame but itself.
The Rise and Fall of TINA
The Cold War was an era of alternatives. The United States offered its version of freewheeling capitalism, while the Soviet Union peddled its brand of centralized planning. In the middle, continental Europe offered the compromise of a social market: capitalism with a touch of planning and a deepening concern for the welfare of all members of society.
Cooperation, not competition, was the byword of the European alternative. Americans could have their dog-eat-dog, frontier capitalism. Europeans would instead stress greater coordination between labor and management, and the European Community (the precursor to the EU) would put genuine effort into bringing its new members up to the economic and political level of its core countries.
Then, at a point in the 1980s when the Soviet model had ceased to exert any influence at all globally, along came TINA.
At the time, British Prime Minister Margaret Thatcher and American President Ronald Reagan were ramping up their campaigns to shrink government, while what later became known as globalization -- knocking down trade walls and opening up new opportunities for the financial sector -- began to be felt everywhere. Thatcher summed up this brave new world with her TINA acronym: the planet no longer had any alternative to globalized market democracy.
Not surprisingly, then, in the post-Cold War era, European integration shifted its focus toward removing barriers to the flow of capital. As a result, the expansion of Europe no longer came with an implied guarantee of eventual equality. The deals that Ireland (1973) and Portugal (1986) had received on accession were now, like the post-World War II Marshall Plan, artifacts of another era. The sheer number of potential new members knocking on Europe's door put a strain on the EU's coffers, particularly since the economic performance of countries like Romania and Bulgaria was so far below the European average. But even if the EU had been overflowing with funds, it might not have mattered, since the new "neoliberal" spirit of capitalism now animated its headquarters in Brussels where the order of the day had become: cut government, unleash the market.
At the heart of Europe, as well as of this new orthodoxy, lies Germany, the exemplar of continental fiscal rectitude. Yet in the 1990s, that newly reunified nation engaged in enormous deficit spending, even if packaged under a different name, to bring the former East Germany up to the level of the rest of the country. It did not, however, care to apply this "reunification exception" to other former members of the Soviet bloc. Acting as the effective central bank for the European Union, Germany instead demanded balanced budgets and austerity from all newcomers (and some old timers as well) as the only effective answer to debt and fears of a future depression.
The rest of the old Warsaw Pact has had access to some EU funds for infrastructure development, but nothing on the order of the East German deal. As such, they remain in a kind of economic halfway house. The standard of living in Hungary, 25 years after the fall of Communism, remains approximately half that of neighboring Austria. Similarly, it took Romania 14 years just to regain the gross national product (GDP) it had in 1989 and it remains stuck at the bottom of the European Union. People who visit only the capital cities of Eastern and Central Europe come away with a distorted view of the economic situation there, since Warsaw and Bratislava are wealthier than Vienna, and Budapest nearly on a par with it, even though Poland, Slovakia, and Hungary all remain economically far behind Austria.
What those countries experienced after 1989 -- one course of "shock therapy" after another -- became the medicine of choice for all EU members at risk of default following the financial crisis of 2007 and then the sovereign debt crisis of 2009. Forget deficit spending to enable countries to grow their way out of economic crisis. Forget debt renegotiation. The unemployment rate in Greece and Spain now hovers around 25%, with youth unemployment over 50%, and all the EU members subjected to heavy doses of austerity have witnessed a steep rise in the number of people living below the poverty line. The recent European Central Bank announcement of "quantitative easing" -- a monetary sleight-of-hand to pump money into the Eurozone -- is too little, too late.
The major principle of European integration has been reversed. Instead of Eastern and Central Europe catching up to the rest of the EU, pockets of the "west" have begun to fall behind the "east." The GDP per capita of Greece, for example, has slipped below that of Slovenia and, when measured in terms of purchasing power, even Slovakia, both former Communist countries.
The Axis of Illiberalism
Europeans are beginning to realize that Margaret Thatcher was wrong and there are alternatives -- to liberalism and European integration. The most notorious example of this new illiberalism is Hungary.
On July 26, 2014, in a speech to his party faithful, Prime Minister Viktor Orban confided that he intended a thorough reorganization of the country. The reform model Orban had in mind, however, had nothing to do with the United States, Britain, or France. Rather, he aspired to create what he bluntly called an "illiberal state" in the very heart of Europe, one strong on Christian values and light on the libertine ways of the West. More precisely, what he wanted was to turn Hungary into a mini-Russia or mini-China.
