Europe should not let Russia distract it from corruption in the west

Brussels’ focus on this side of Europe is drifting

 

Biting off more than you can chew can hurt. The EU’s ambitious plans to extend its soft-touch influence beyond Poland and Romania – and the Black Sea – have proved difficult to implement. It’s called failure, and no doubt it’s pricking Brussels’ ego.

Pushing ideological boundaries on the eastern front meant the EU got distracted. Before moving eastwards at such break-neck speed, it would have been better to take a deeper look at flawed western Europe.

Reducing corporate tax evasion is of paramount importance, although not all experts would agree. A 2009 post on the Economist’s ‘Free exchange’ blog claimed that the existence of tax havens is not ideal, but not a priority either:

“Cracking down on them increases transparency and will help pay for looming budget deficits. But do they deserve to be given such high billing as domestic financial regulation, redefining the IMF, fighting protectionism, and co-ordinated fiscal policy?”

So, in the aftermath of the financial crash, an attempt to play down the devastating impact of international tax evasion. Has the EU embraced a similar attitude?

On 21 and 22 May the EU Riga summit was meant to define strategies relating to Russian expansionism, which no doubt needs discussing in depth – even the musty project of an EU army was dug up again. Looking west though, the rifts in the EU ground are now visible: the fiscal drought is alarming, and it’s starving the welfare soil like never before.

Things have been taken for granted and Brussels’ focus on this side of Europe is drifting. A fiscal agreement is yet to be envisaged, while microstates who embrace tax evasion and fiscal dumping still exist happily at the continent’s core.

Liechtenstein’s 2008 scandal, for instance, seems a thing of the past. Hardly anybody talks about it these days. Tax evasion schemes – LuxLeaks is another one – grab the headlines for a few days, maybe a couple of weeks, and then get buried again. A waste of excellent investigative journalism, in some cases.

A few days ago, however, the progressive politicians Sigmar Gabriel (Germany’s vice-chancellor) and Emmanuel Macron (France’s economics minister) got various newspapers to publish their vision for a new Europe, offering a glimmer of hope that reform may be possible.

It contained refreshing budget, fiscal and cultural (the extension of the Erasmus project to teenagers) approaches that could challenge the uselessness of draconian austerity by creating crucial safety nets.

Guardian Brussels correspondent Ian Traynor expanded on Gabriel and Macron’s proposals:

“The Eurozone would be able to borrow on the markets against its budget, which would be financed from a kind of Tobin tax on financial transactions and also from part of the revenue from the new business tax regime.”

Welcome news, right?

Luckily no words were wasted on expanding the EU beyond its natural reach; but strangely no calls on clamping down on tax evasion, fiscal dumping and money laundering could be heard either.

That said, it’s good to acknowledge that going east is the wrong way. If there is any room for the EU to grow, perhaps it is to be found in just a few square kilometres, mostly on mountainous terrain: Andorra, San Marino, Liechtenstein, perhaps Switzerland; or by the sea in Monaco and a couple of state-like islands (you know which).

But even that is perhaps too much to tackle; after getting involved with the eastern front, the EU is now wary of taking on the too powerful, or the too big-to-fail. Combined, such microstates could be tougher even than the big Kremlin bear.

Alessio Colonnelli also contributes to openDemocracy, Shifting Grounds and Euro Crisis/LSE. He holds a combined B.A./M.A. in languages and literary translation from Padua University

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