All Quiet on the Western Front

March 27, 2017

"European nations began World War I with a glamorous vision of war, only to be psychologically shattered by the realities of the trenches. The experience changed the way people referred to the glamour of battle; they treated it no longer as a positive quality but as a dangerous illusion."
-Virginia Postrel
. . . . .
Perhaps reports of the EU's demise have been premature.
The populist Freedom Party fared worse than expected in Dutch elections. And while France's far-right candidate Marine La Pen still has a chance in the Spring elections, her nomination remains improbable.

Is Europe eschewing the populist wave that's rolled across Britain and the United States?
That remains to be seen. While the Dutch chose the status quo, the larger elections lay ahead. With France, Germany and Italy hitting ballot boxes yet this year.
Most of us consider the European political machinations as having everything to do with economic, tax and immigration policies. Yet, there are darker, more profound narratives at work.
Those who do not learn from history are, tragically, doomed to repeat it. Which is why many Europeans remain so enamored with their fragile union.
100 years ago, Europe remained embroiled in the biggest, bloodiest land war ever known. An epochal event that slaughtered two percent of the world's population. Sending 16 percent of Serbia to the grave. Eight percent of Romania. Fifteen percent of the Ottoman Empire (modern-day Turkey). And four percent of Germany.
Leading up to the war, the European continent resembled a line of dominoes stacked on a hillside in a wind storm. So precariously arranged were the innumerable alliances between the various empires and nation states. Europe was more tinderbox than community. All that was missing was the match.
The Prussian and German statesman Otto von Bismarck, recognized the risks. Having remarked in 1888, "One day the great European War will come out of some damned foolish thing in the Balkans ."
Prescient enough.
Franz Ferdinand, archduke of the Austro-Hungarian Empire, was assassinated in Serbia some 26 years hence. At which point the dominoes fell. And the world was set ablaze.
World War One lasted four terrible years. 1914 to 1918. Concluding with Treaty of Versailles. And then, a wretched 21 years later, Hitler militarized the Rhineland. And the next great conflagration ensued. Once again drawing in much of the world as combatants. Killing over 60 million. Or more than three percent of the global citizenry.
Your best teacher is often your last mistake. So it is with little wonder that Europe, still within a century of two all-consuming wars, finds itself so hesitant to dissolve its union.
Wars are politics by another means. And when the EU was founded in 1993, it gave hope to those across the continent that a united Europe could never again turn in on itself. As binding political and economic ties would form a brotherhood of nation states. One promoting growth, prosperity and peace.
We understand the populist sentiments sweeping the greater European continent. Supported Britain's decision to exit. For who could abide by tax and immigration policies being set for one country by bureaucrats in another? Having faced a similar choice 250 years ago, Americans revolted. Sloughed off the rains of our British overlords.
Unsurprisingly, the Brits did the same.
But Britain was always a distant cousin. Attuned to the family's affairs without being driven by them. Separated, as it was, by the English channel. And the detached sovereign pride that comes from being an island unto itself.
While Italy appears as if it could lean towards the populist candidate, we don't expect France nor Germany to go that route. As either's decision to exit would signify the beginning of the end.
For all of the negative news, Europe has become an increasingly attractive investment opportunity. If one can ignore the headlines and consider the data.
Eurozone PMI reveals that manufacturing activity is growing at the fastest pace in six years. European stocks can be purchased at low valuations and offer juicy dividends for those patiently awaiting a return to growth. And we believe that Brexit will have less of an impact on Eurozone markets than many of our gloomier peers believe.
Finally, the Syrian refugee crisis, though still a human catastrophe, is emphatically over so much as Britain and Western Europe will continue to see refugee inflows.
All of which is to say that Europe, like any large family, continues to navigate its growing pains. Though all members value their sovereignty, many of the more historically minded recognize that the Union, for all of its flaws, may represent the best chance to forever avoid another global war emanating from Europe.
We may not wholly agree with those fighting so hard to keep the EU intact. But, given the historical significance against which they operate, we understand their passion.
Travel, trade and treaties have always been effective antidotes to war. Just as the economic sun begins to rise over the European continent, it's little wonder that the pro-EU crowd is doing everything in its power to maintain all quiet on the western front.

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