– EU and euro face growing risks including trade wars, energy independence and war with Russia in Middle East

– Middle East war involving Russia may badly impact energy dependent & fragile EU

– Trade and actual wars on European doorstep show the strategic weakness of the EU

– Toxic combination due to growing anti-EU and anti-Euro sentiment in many EU nations

– Investors should diversify to hedge investment, currency and systemic risk

Source: Bloomberg

Recent economic data in the Eurozone has pointed to slowing economies. Retail sales and industrial production is down in many nations (see Bloomberg chart above – source). Germany, the prime driver of growth in the region has seen exports plunge due to the euro strengthening against the dollar and due to the risk of tariffs and a potential global trade war on the horizon.

Brexit has disappeared from the headlines, debt crises are yesterday’s news and frequent terrorist attacks in different EU nations seem to be taken in their stride. So one might think that things are on the up for the European Union.

This could not be further from the truth. The single-economic area has a major flaw: it is in a permanent state of dependence. Whether on democratically elected national leaders to tow the EU line, governments not to overspend, the rest of the world to tolerate the EU’s current account surpluses, Russia to supply energy and the powder keg that is the Middle East not to explode into a major conflagration and war.