The EU in the doldrums: we need to hit the right nails

In a response to José Ignacio Torreblanca's recent article, 'Five reasons why Europe is cracking', Francois Godement argues that Europeans do have a chance to tackle the current malaise, but only if they search hard and identify the real causes of the continent's woes.  

ECFR Alumni · Director, Asia and China Programme
Senior Policy Fellow

This article is a response to 'Five reasons why Europe is cracking', by the head of ECFR's Madrid office, José Ignacio Torreblanca.

At this particularly difficult time for Europe, it is easy to let the self-criticism and pessimism lead to a wholesale writing off of the EU. After all, this has been done with the US repeatedly – at the end of the Vietnam war, in the years of flagging competition with Japan, and again of course since 2008. One could also list (and in fact it has been done) a checklist of cracks and faults that are supposedly bound to derail China’s growth and implode its political structure. But how desperate is the situation in which the EU finds itself?

True, the EU is not a nation-state, but a quasi-federation. Mr. Putin, who has reasons to know about the issue, once said about the EU that all empires and federations come to pass. The complacency of many Eurocrats, who rely on process alone (“la methode européenne”) to save us from any disaster, and the extraordinary political correctness that has placed at the core of the EU an ideological, value-free void – from non-descript license plates to abstract landscapes on the banknotes,  international aid as a substitute for foreign policy – invites a backlash.

So is it a backlash that we are seeing at present, with popular opinion turning against the European project?  We should look closer. Firstly, note that almost all multilateral governance projects are under threat on various fronts: are the G8 and the G20 really doing so well? Has the UN or any regional organisation leapt forward in the recent decade? Nor are nation states intact. Within Europe, not only have some national constructions broken apart in the east, but they also threaten to do so in the west. Scotland is a national block of voters within the United Kingdom. Catalonia has displayed increasingly centrifugal forces in Spain. And it’s spinning out of control: irresponsible and hidden borrowing behavior by Spain’s regions is probably the next subprime crisis. Even in federal Germany, we overlook too easily that voters from one region (say Baden-Wurtemberg) would avoid paying for others (Berlin) whom they accuse of profligacy.

The crisis of the new European institutions happens in this context – where it is wrong to single out nationalism or populism in the framework of nation states.  An observer from Persia – or as it is today, from Asia – would note that post-1989 Europe has, to this day, absorbed an ever-increasing quantity of immigrants – and pretty much integrated them (despite continuing social problems). This is true of countries as diverse as Spain, France, Germany and Denmark. Areas with huge looming demographic deficits – say, Berlin – are now being repopulated with large-scale immigration from Russia that will only increase.

The populist reactions we see are in part corrections of mistakes made in process, and in part a kind of antibody reaction to the absorption of a new population. The mistake has now been admitted: Germany’s Merkel and the UK’s Cameron have come down against the pro-communitarian policies of their predecessors, beginning to align themselves with France’s more integrative strategy. Who realises that the intermarriage rate between communities is probably ten times higher in France than in the US?  Do we have anything as brutal as Arizona’s anti-immigration laws?

Generally, Europe’s centre-left trend has been replaced over the years by a centre-right trend. This shows up on immigration, and it shows up in fiscal conservatism. The correction was overdue, and the extent to which European public opinion understands this ought to be a source of wonderment. Greek and Portuguese demonstrations have been minimal. The same is true in the UK – save for an impressive youth revolt against an increase in higher education fees – despite budget cuts that are historically unprecedented outside of a world war. French public opinion is often described as anti-European (after all, it rejected the Treaty in 2005, before the Dutch). However this overlooks the fact that there has never been as much popular support for the euro as presently in France – if wallets could vote, France would be at the forefront of European integration.

It is perfectly all right to denounce the selfishness of Mittel-Germany, which like Japan has forsaken its demographic future in favor of the present, and in many ways pursues a policy that could suit no other society. But the German economy and a few others generate the growth that we all need to exit from the banking and public debt crisis. Is that “Protestant”? And conversely was it “Catholic” to bet the farm on real estate (Spain and Ireland) or to cheat on public accounts for decades (Greece)? Did anyone force Spain to forego education and R&D investment – or the French to arbiter political competition with social subsidies? Can we persuade the Germans to spend more as good Keynesians if they are already contributing to stem the twin financial crises (banking and public budget) and essentially consolidating, with other Europeans, the debts which were most startlingly high at the periphery, including some new member states? The real debate today in Europe is whether public budgets and the taxpayer will carry through the burden from the crisis, or whether there will be a massive debt restructuring with huge collateral effects on private assets. Jumpstarting economic growth might just do the trick – but a stagflation trap would indicate on the contrary that a massive shrinking of loan values – and therefore of assets – is necessary.

Rather than imply a moral or historical crisis, we should look for the right political targets. For even the ghost of an impending debt and finance crisis is a political one – it stems from expectations by the market that Europeans will hang separately rather than stick together. And the need by member state politicians (typically: Merkel, not to mention UK politicians of the “give me my money back” variety) to posture to their voters has increased the speculation – it's a dangerous high-wire act that is being played.

There is also a crisis of political leadership for which national leaders can  blame themselves.  For fear of competition, they duplicated European institutions, then pushed forward  the Barroso-Rompoy-Ashton trio, who were not obvious candidates in the first place (even Mr Barroso, a skillful navigator, had no clear majority in Parliament until the big countries lobbied for him). That means that beyond the question of their own merits these three do not possess the authority or the moral suasion to prevail – against one another if needed, and in general.  The process since Maastricht incorporates  major institutional deficiencies, some of which have been aggravated by Lisbon. Duplication of institutions, fragmentation, negative coalitions prevailing over positive leadership, and the well-known half-achieved euro (since a currency cannot coexist without a budgetary authority). The Europeanists of the Delors school knew as much from the beginning,; even though they have been too ambitious in also pointing to social programs which could not prevail, much less in a 500 million Europe.

In some areas there have been wonderful surprises. In an era of receding defence budgets, Europeans – and that includes a long list of countries – have stepped up to the plate in Libya. True, it hasn’t been a showcase for Europe’s CFSP – but then again, the balance of CFSP was always in favor of soft power and neighborhood policies. In Kosovo we had used the veil of European defence, as there was no UN backing for the operations and the situation developed slowly over time. In Libya the situation exploded in our face – and the UN came through, while former theological disputes about NATO have been set aside. What matters is that Europeans acted – with tangible result and without the trap of an occupation.

One could go on, but the point is to identify the crises we can do something about, and the right action points. Streamlining and empowering European institutions seems necessary once again. Completing the budgetary construction (with transfers from “Protestants” to “Catholics” as they have always existed within single countries!) appears evident. Stopping the wishful thinking on Europe as a solution to the world’s problems would also appear necessary.  Generosity comes from strength, and a weakening Europe would kid no one on its potential either to shape global rules or to give to others. It’s a hard fight that coincides with the coming end of the post-war generation.  But it is only on those premises that Europe can move forward.

 

 

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of its individual authors.

Author

ECFR Alumni · Director, Asia and China Programme
Senior Policy Fellow