Rising National Security Risk in Europe

Unless Europe takes a good look in the mirror and honestly acknowledges that shoveling more money into a black hole is not, ultimately, the answer to its problems, it will slip further and further into the abyss.
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Unemployment isn't often associated with national security risk, but it is increasingly becoming a concern for intelligence agencies attempting to map out the likely socioeconomic impacts of rising unemployment in Europe. We define 'national security' to mean the security and preservation of the state from internal and external risks, as well as the preservation of the character and integrity of the existing order. It is becoming increasingly clear that the continued deterioration of numerous European economies is having, and will have, growing impact on the national security of Europe as a whole.

Since the 1960s, several studies have examined the links between an increase in crime on a local or national level, and unemployment, which can serve as the catalyst for a gradual erosion of the social fabric of societies. Some have noted that in countries with no tradition of diverse ethnicity (such as Greece), a variety of collateral problems may arise from sustained high levels of unemployment, such as the alienation and discrimination of immigrants living legally in the country, the rise of extremist political groups, and a gradual loss of confidence in the political establishment.

During extended periods of recession, the legitimacy of the state itself may be questioned, since it may fail to guarantee its citizens social, economic, and physical security. In an era of stretched national budgets and dwindling financial resources, this is becoming an area of greater concern. A failure to provide basic needs to citizens may prompt them to question whether some other form of government may ultimately be preferable. In Europe's case, the alternative is likely to be either a lurch to the far right or left -- either of which would likely result in further socioeconomic dislocation, which would then likely result in even greater hardship for the average citizen.

Extremist political groups are currently on the rise in France (the National Front), Britain (the British Nationalist Party), Greece (the far-right/nationalist political party Golden Dawn), Belgium, Denmark, and the Netherlands. Given Europe's history, the rise of fringe political groups is hardly surprising, particularly in times of crisis. However, following an extended period of political moderation throughout Europe, the very idea of extremist governments ruling much of Europe in the future, and their ability to govern -- given their presumed inability to establish and maintain meaningful coalitions -- is very much in question, raising the concept of political instability to a whole new level.

In view of the worsening economic crisis in Europe, the ongoing austerity measures, the rise of previously 'fringe' political movements, and the general absence of genuine hope for the future, European security appears to be at risk. The average European citizen is becoming increasing disillusioned with the current economic, social and political systems in Europe and many Euro-citizens now question what they have collectively fought for since WWII. Rather than having a sense of calm and tranquility over a lengthy period of peace and prosperity over the past several decades, many Europeans now feel consumed by despair, uncertainty, and have little faith in the future.

The loss of belief in the economic and political system most Europeans have taken for granted has a number of consequences, including the gradual demise of the middle class, a 'brain drain,' rising unemployment, and a greater sense of insecurity which feed upon each other to create a whirlpool of downward momentum. Fringe political movements often benefit from such an environment, which at least partially explains their rise in popularity throughout Europe. But what is perhaps most concerning is an inability to see a way out of the hole Europe has dug itself into.

In April of this year, the IMF predicted that European banks were likely to cut lending back substantially over the next two years. This is already occurring, making an emerging pan-European credit crunch more likely. The ECB and IMF continue to create a larger debt bubble by lending more and more money to failing or failed states in Euroland, refusing to face the inevitable day of reckoning, and prolonging Europe's pain. Unless Europe takes a good look in the mirror and honestly acknowledges that shoveling more money into a black hole is not, ultimately, the answer to its problems, it will slip further and further into the abyss. As Europe accounts for 27 percent of global trade, its demise will inevitably impact the wider global economy.

To date, Europe has largely avoided large scale social conflagration. Street demonstrations have been limited in scope, and no pan-European social movement has yet emerged. This may well change in the near and medium-term, as general malaise rises, and average citizens feel they have little left to lose by taking to the streets. Much of Europe has a history of street demonstrations and civil commotion, which is typically triggered after reaching a tipping point. That day has not yet arrived, but it may not be too long before it does. When the European crisis hits full stride -- presumably later this year or next year -- the result could be social and political chaos. We are likely to reminisce about how peaceful the emerging Euro crisis of 2008-2012 has thus far been.

Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk consulting firm based in Connecticut (USA), and author of the new book Managing Country Risk (www.managingcountryrisk.com). Alexios Giannoulis is a CRS research analyst and a freelance diligence and political risk analyst.

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