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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5 Responses to “Europe should not let Russia distract it from corruption in the west”

  1. swat

    Lets face it, it was a mistake to take E Europe in the EU fold; they’ve been nothing but trouble ever since, and they’ve managed to sour relations with the Great Russian Bear which deserves some respect..
    The minor states are nothing more than tax havens and should be abolished by incorporation into their more powerful neighbouring States.

  2. steroflex

    Alessio, you are one of the very first people on here to criticise the EU. Nobody is going to read this comment because Labour is terrified of the EU which is splitting the Conservatives in half – again.

    Roger Helmer is Ukip which, of course, is tearing into Labour in the North.
    It comes from Roger Helmer’s blog.
    “But there is a much broader issue of the willingness of the European Commission to listen to large companies. Multinationals keep hundreds – perhaps thousands – of lobbyists in Brussels, and they wouldn’t carry that cost if they didn’t think it would deliver. There is a curious symbiosis between large corporations and the EU. The corporations need to influence the Commission, and to do this effectively, they have to sing the Commission’s tune – especially in two key areas. This is why big companies support (publicly at least) EU integration, and oppose Brexit. And this is why they support the orthodoxy on climate change. More than once I’ve heard spokesmen for big-name companies talking publicly about the importance of fighting climate change. But catch them afterwards over a beer, and it’s “Well Roger, you understand why we have to toe the corporate line in public, but my own view is quite different….”.
    Why does Labour actually support these tax dodging organisations?

  3. swat

    …. the E Europeans should have set up their own Common Market with Russia, like the Comecom previously.
    And none of them should be admitted to NATO.
    And Russia should take back its nuclear weapons which are at present on Ukrainian soil.

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