Letter from Vienna

There’s a T-shirt you can buy at Vienna airport which eccentrically proclaims “Austria has no kangaroos”. Er, no, I guess it doesn’t. But I couldn’t help but reflect on this. Austria, once the heart of the great Austro-Hungarian Empire which was one of the most dominant forces in Europe for around 600 years now worries that it is being confused with Australia!

Vienna itself still has the air of a great imperial capital. It is dominated by the gigantic Hofburg Palace, the one time home of the Emperors. The old war ministry building built before the First World War is vast. That reflects an era when Austria had a large army and a navy which included battleships and submarines. These days it’s hard to imagine an Austrian navy. The Austrian defence force is very modest. Austria is one of the smaller members of the European Union, absorbed into the euro currency system.

So there we have it. A once great empire whose mobilisation against Russian-backed Serbia was the first ugly act of the catastrophe we call the First World War is reduced to T-shirts telling everyone it isn’t Australia!

In a sense, Austria is at the very heart of the modern European story. Once a bellicose nation committed to holding its imperial lands in Europe, these days the European Union, for all its imperfections, has created a totally new European paradigm. It is inconceivable that Austria and Italy could go to war with each other. Less than a hundred years ago that’s exactly what they did.

The problem with the European Union isn’t its supra-national vision but the structure of its institutions. If there ever was an Anglo-Saxon way of doing things it is this. Institutions are changed when circumstances require them to change. They are not torn down, they just evolve. The European model is more revolutionary. The Europeans design a social model, build institutions to accommodate that model and get the public to accept it. It’s a top-down approach. The Anglo-Saxon model is more bottom-up.

So the Franco-German architects of modern Europe did just that. They built a complex of new institutions to run the European Union: a Council of Ministers, a European Commission, a Parliament with limited powers, a Court of Justice, a central bank and so on. The idea was that these institutions would bind Europe together.

Then most recently, the architects of the EU created the euro. The seventeen members of the euro could hardly be more diverse. Some are rich, others relatively poor, some run cautious fiscal policies, others not; some have extensive outside trade with Latin America, some trade more with Russia and Eastern Europe and so on. Obviously the founders of the euro were very conscious of this. Their argument was simple: the need to preserve the euro would force greater integration.

Well, it was a high risk strategy. And it’s not one which has been particularly popular with the punters. In many European countries they’ve started voting for nationalist populists who denounce these top-down European institutions as undemocratic. This nationalist populist movement started in Austria when Jorge Haider’s Freedom Party won 27 percent of the vote in 1999. The EU establishment was outraged. They threatened to suspend Austria from the EU institutions. Why? Because they didn’t like the way a quarter of Austrians voted in a general election. This was the high water mark of EU arrogance towards the public.

Since then other nationalist and anti-EU parties have had some limited political success. In Finland there has been True Finns, in France the Le Pen family led Front National, in the UK there is the UK Independence Party and so on. Indeed, in last month’s Austrian general elections the Austrian Freedom Party won around 22 percent of the vote.

These parties are protest parties. People vote for them because the EU establishment won’t listen to them and its institutions have arrogantly disregarded ordinary people.

So there’s a simple message in all of this for EU political leaders. It’s not, as some claim, to abandon the European project. The memories of the slaughter, bitterness and subsequent poverty and deprivation of the first half of the 20th century are too recent for Europeans to undo the achievements of European unity.

The message is that Europe needs to develop from the bottom up, not the top down. Free trade and investment throughout Europe makes perfect sense. That requires an institutional structure to manage and even police. But the more the EU leadership tries to force the pace for European integration beyond a level of public comfort, the more resistance they will get. And, ironically, the more they will risk the viability of the European project.