Last week’s final European Union summit for 2017 did not go well. The recently hailed unity in dealing with Brexit negotiations quickly fell apart in the face of the issues on monetary union and immigration. Openly clashing heads of government and state made it appear that the much-needed monetary union which would help to make the EU stable financially longer term is at a loggerhead.
This ongoing geopolitical and financial instability in the world’s largest economic block the EU reminds why you need gold in your retirement portfolio. Gold is the world’s historically proven hedge that protects in times of political and economic crises. It is never too soon to learn how to invest in gold. You may want to review the Gold IRA rollover rules and regulations.
Tensions Existed Going Into the Summit
EU Summits are famous for addressing erupting or looming crises and this one was no different. Besides Brexit discussions, the group of 27 remaining countries needed to address several tension-filled issues including migration and monetary union progress. European Council President Donald Tusk knew that there was going to be a problem with divisions in the group as he opined heading to the summit:
“Today and tomorrow we will also deal with issues where a lack of unity is very visible and as you know I am talking about the European monetary union and migration.”
There have been significant differences concerning migration between those countries on the block’s borders like Italy. The Italians have complained about being abandoned by the other countries of the EU in dealing with the migration crisis.
Opposing remedies for resettlement requested by Italy have been resisted by the Eastern and Central European countries in particular. Donald Tusk had ignited the debate again when he labelled the prior failed policy of mandatory migrant resettlement quotas as ineffective. German Chancellor Angela Merkel weighed in on these issues as she arrived at the summit by declaring:
“We don’t just need solidarity on controlling and steering migration on our external borders. We also need internal solidarity. There cannot be selective solidarity among EU members.”
With this statement Merkel was subtly referring to the Visegrad Group of Eastern European nations.
What exactly is the Visegrad Group?
The Visegrad Group goes by several different names, including the Visegrad Four or even V4. They are the Central Eastern European nations who have pledged to work together in areas of particular common interest while within the EU. The countries comprising it are Hungary, the Czech Republic, Slovakia, and Poland. The group hails its long standing cultural ties and common Christian roots as a reason for them to fight together to protect each other.
Another thing they share is that they each wanted to join the EU to work together to transcend the old dividing lines. On May 1st of 2004, each of the four Visegrad nations realized their goal and attained this long sought after European Union membership.
Ironically, though they were eager to join the EU, they also have been its staunchest opponents on a number of dividing issues. These include further monetary union between the countries and allowing resettlement of the individuals coming in as part of the EU migration crisis. Austria with its new Prime Minister Sebastian Kurz and far-right coalition partner is aligned with them on some of the key issues including restricting migration and migrants’ rights in the country.
Pre Summit Meeting With Visegrad Group Fails to Solve Impasses
The differences between the Visegrad Four and the rest of the EU are so pronounced these days that the block sponsored a meeting before the summit with them to try to work out some of the more bitter disagreements. At this meeting last week were Italy’s Prime Minister Paolo Gentiloni, European Commission President Jean-Claude Juncker, and leaders of Hungary, Poland, the Czech Republic, and Slovakia. The meeting failed to paper over significant disputes on migration especially.
In a minor concession, the V4 nations pledged to donate $42 million (36 million euros) to the EU’s fund that aims to address migrants coming via Libya. Hungarian Prime Minister Viktor Orban called is a “considerable” amount of money.
Italy’s Gentiloni called the meeting what it was though, a severe division at the center of the block. He revealed that leaders had declared to one another that on the issue of internal borders of the EU, “we are almost at extreme opposites.” Gentiloni further expressed his position with:
“We believe that closures are wrong, walls are wrong, and that so-called obligatory resettlement quotas are the minimum for the EU. These countries legitimately have a very, very distant opinion, they are countries which close their borders.”
This most critical social issue that is roiling the European Union is no closer to being solved. It is certainly not going away any time soon.
Monetary Union Disagreement Wide Ranging
There is also a critical financial issue that the EU could not make any progress on at the weekend summit. There may be a broad agreement among members that they need to boost the Euro Zone with an improvement in the block’s economy showing encouraging signs. Yet disputes on how this is to be achieved are almost as bitter as the immigration issue.
It has stoked real concerns that the group will be able to come up with a significant and meaningful way forward over the first half of 2018. Consider what they have to navigate. Policies include creating a European Monetary Fund, finishing up the complicated banking reforms and rules, and agreeing to a new finance minister and budget for the Euro Zone. These are complex and disputed reforms at best.
EU Commission President Tusk had requested that the various leaders would arrive at the session Friday with a plan to concur on even a few of the policies by this June. Yet there were no breakthroughs as anticipated. The various disparate countries in the EU have diametrically opposed ideas to some of these positions. It makes compromise difficult.
It is not just the Visegrad group holding back progress on crucial issues. While French President Macron is out hunting for results from this and other summits, Germany itself has long refused to backstop the banks of other countries that get into financial trouble. Now the lack of a coalition government in Germany is stalling progress even further. Angela Merkel is unlikely to be in a position to make painful compromises when she finally emerges from the harrowing struggle of putting together a new and weakened government.
Divisions in Europe At Tackling Major Reforms Threaten Markets
It has been said in the EU that they can not afford to waste a good crisis. This is because the block of now 27 nations (without Britain) can never accomplish anything meaningful unless there is a crisis to motivate them to agree and act in unison. This failed summit is just the latest example of how hard it is to get countries and peoples to come together who have as many different languages, cultures, and histories that separate them. Unfortunately the next crisis in the EU will find them unprepared.
It could be triggered by something as urgent as the 114 toxic banks in Italy which have more failed loans than they do assets. The EU is a critical component of the world economy that can easily derail markets. You should not let your investment and retirement portfolios be held hostage by it and individual internal alliances like the Visegrad Four.
Now you know why to invest in gold. You need to own gold in times of financial crisis. When there is geopolitical instability even in the heart of Europe, you can rest assured that gold offers insurance and protection during market turbulence.