Insightview has long argued that the European Union is in a challenging political situation. The recent developments in Eastern Europe and the United States underscore the severity of the problem. Ukraine will likely be the first casualty, followed by the EU, as resistance to Russia crumbles with increasing economic woes in several European countries. 

In the United States, public opposition to military aid for Ukraine has come to the forefront. This became evident during the provisional averting of a government shutdown [read the article, US Congress avoids government shutdown in last-minute deal - BBC News]. This means that no additional funds will be available for Ukraine until a final budget agreement has been reached. While President Biden and Republican leaders seem to have agreed on a temporary special deal, this only postpones the issue, leaving Ukraine vulnerable in the longer term [read the article, Biden vows to stand by Ukraine, despite budget fiasco - BBC News].

This development will force the EU and the United Kingdom to step in and fill the gap in military supplies for Ukraine [read the article, British troops could deploy to Ukraine for first time to train soldiers, says Grant Shapps | The Guardian]. However, political support within the EU is waning, particularly in some Eastern European countries where politicians sympathetic to Russia are gaining ground. This trend was evident in this weekend's parliamentary elections in Slovakia, an EU, EMU, and NATO member. The left-nationalist SMER party [Socialdemocratic] led by Robert Fico, won, although unable to govern without a coalition partner. Fico's sympathies towards President Putin complicate the EU’s efforts to maintain a unified stance against Russia.
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Furthermore, Fico has shown sympathies towards Serbia, which is on the brink of a potential military conflict with Kosovo [read the article, Kosovo: Police surround 30 gunmen in a monastery following death of officer | Euronews]. Russia, a key ally of Serbia, could fuel this conflict, further complicating EU unity [read the article, NATO bolsters forces in Kosovo as US urges Serbia to withdraw from border - POLITICO]. The upcoming Polish parliamentary election is also set to cement the far-right Law and Justice Party's [PiS] grip on power, contributing to the rise of European "authoritarian" regimes [read the article, Poland's opposition hopes huge rally in Warsaw will swing election - The Guardian].

To put it mildly, the EU is in a disastrous situation, finding it increasingly challenging to speak with one voice in the Ukrainian conflict. The problem is further complicated by growing voter dissatisfaction in Germany, the 'engine of the EU,' which benefits the Russian and Chinese-friendly AfD party, thereby creating additional headwinds for Ukraine [read the article, Das China-Gate des AfD-Spitzenkandidaten].
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The deteriorating political situation in the European Union will amplify uncertainties, potentially undermining investment appetite in an already fragile EU economy. Legislative measures such as the Inflation Reduction Act and CHIPS Act in the United States also put the EU under added pressure [read the article, Biden's IRA plan pushes battery-maker Northvolt to plan new factory in Canada]. The primary beneficiary of this tumult, aside from Russia, appears to be China, which, despite its economic imbalances, increasingly "looks like" a more stable investment option. This is, of course, far from the truth. Still, this could become the "relative perception". The spreading of such a narrative is in the interest of many European companies with significant interests in China [to avoid de-risking].
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The "Danish Case"
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‌In Europe, a deteriorating political environment will have significant ramifications. Tight fiscal policies will find little acceptance among the voters, especially when juxtaposed with massive financial commitments towards the Ukrainian conflict. The European continent is essentially a ticking political time bomb. However, this will not change the attitude of the European Central Bank, which means "higher policy rates for longer". Indeed, the costs of irresponsible fiscal behaviour will still be significant - at least until politics also change the independence of the European Central Bank [read the Insightview article, Inflation: Why the focus should shift 'permanently' from inflation to real bond yields].
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‌Therefore, the political centre is forced to innovate and exert unprecedented efforts to keep extremists at bay. Part of the solution to the economic woes of EU countries could be 'smart immigration,' akin to the Canadian model. The Danish "solution", the so-called "unity government" [three-party government], has opted for intelligent immigration from Africa and the Philippines. The Danish government, specifically Foreign Minister Lars Løkke Rasmussen, has advocated for increased immigration as a solution to demographic headwinds. However, the proposal seems to have quietened down after immigration-related unrest in Sweden filled the Danish media [read the articles, Swedish prime minister seeks military help to crack down on gangs - The Local]. This serves as a reminder to many Danish voters about the different approaches in Sweden and Denmark to the refugee crisis of 2015.
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‌According to the latest opinion polls, the Danish "unity government" has not proved to be a solution. This is in contrast to the business elite, which sees the "unity government" as the apparent model [several commentators argue that this was the idea of the business elite]. Today, many Danish voters view the unity government as undemocratic and beholden to business interests [read the Berlingske article, Documents reveal: Arla feared boycott during Quran burnings. A few weeks later, the government put its foot down: "Very impressed with Lars' effort"]. Whether this assessment is fair is up to the readers of Insightview to decide. But the fact remains that many "moderate voters" also see signs of undemocratic tendencies, and in the absence of better options, they may resort, in protest, to voting for parties on the far right or left.

This phenomenon is gaining traction in multiple EU countries, especially when decisions are made without adequate public consultation. Current European turmoil stems partly from how experts, including a Russian-speaking German chancellor and her advisors, misjudged Russia [read the article, Merkel's policies left Germany too reliant on Russian gas, adviser admits | Financial Times]. Many poor decisions have been taken over the past decade, eroding respect for the political centre and setting the stage for a more complex period ahead.

While the above may appear pessimistic, no one can complain that Insightview has not been "consistently pessimistic" about geopolitics and the political future of Europe. If anyone can argue that the opposite has occurred over the past ten years, Insightview is, of course, open to other narratives. Europe's political centre is this time up against unprecedented undemocratic forces, which are increasingly receiving overt support from businesspeople who are progressively influencing global opinion [read the article, Elon Musk mischt sich in deutsche Politik ein - ZDFheute].
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‌Anyhow, Insightview’s primary aim is still to provide an analytical outlook on likely future events rather than recommend what politicians should do.
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‌29. September 2023 - The public sector debt crisis: Not just America's problem, but the West's looming headache
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