LONDON – As Europe celebrates the 25th anniversary of the fall of the Berlin Wall, dark clouds are again descending on the continent. Just as there was nothing inevitable about the momentous changes that followed the end of the Cold War, the economic and political convergence in Europe to which we have since grown accustomed was not preordained. The impetus toward integration remains strong; but, especially since the 2008 global financial crisis, countervailing forces have emerged, threatening to undo much of the progress that has been made.
Recalling what prompted the events of 1989 may help Europe find a way out of its current malaise. As Yegor Gaidar, Russia’s first post-Soviet prime minister, has convincingly shown in his compelling book Collapse of an Empire, it was the fall in oil prices that determined the timing of the collapse. But what set the stage was a combination of internal moral breakdown in the Soviet Union and the high costs of external military armament.
Once again, we must redraw our mental maps to fit distorted historical landscapes. The “peace dividend” – lower defense expenditures and freer trade and investment – brought about by the end of the Cold War has now turned into a “geopolitical tax” – a loss to global welfare.
In Europe’s search for a road back to normality, its leaders must look for new bargains where all parties stand to gain. Ironically, we might find this common ground in the very place from which the current tension in Europe emanates: Ukraine. Precisely because Ukraine is the source of conflict, it may also provide a foothold for efforts to change course. Just as in Soviet times, we will have to take incremental steps, restoring elements of normality and rebuilding confidence.