The End of Europe as We Know It?

T.Note n.35 (TIC series #3)

As 2017 marks the 60th anniversary of the Treaty of Rome, the very project of European integration faces challenges and uncertainties. With the United Kingdom prepared to leave, Euroscepticism on the rise, and the Mediterranean region struggling to cope with an unprecedented refugee crisis, the European Union seems to lack leadership and vision. Last April, former president of the European Commission and scientific advisor at the Torino World Affairs Institute Romano Prodi joined ThinkIN China to discuss the re-writing of the EU’s future as a 21st-century global economic and political power.

Politically, Prodi sees Brexit as the most evident symptom of a more general EU malaise. While it is true that London has been recurrently depicted as Brussel’s “reluctant” partner, the “Euro-phobic” rhetoric employed by Vote Leave campaigners in the run-up to the referendum went beyond mere expressions of reluctance, reviving ghosts of political fragmentation.
Reactions to these provocations soon followed; in March 2017, Merkel, Gentiloni, Rajoy, and Hollande endorsed the idea of a ‘multi-speed EU’, calling for the deeper integration of selected policy portfolios of their respective countries. The event marked a watershed moment particularly for Merkel who, according to Prodi, had previously voiced her unwillingness to support this ambitious project. Commenting on the event, Prodi noted that allowing certain ‘coalitions of the willing’ to form within the EU for the strengthening of cooperation in given policy areas is the sole viable path towards achieving effective integration in the European Union, especially at a time when it lacks cohesion and leadership.

Recently, the European Commission’s White Paper on the Future of Europe outlined five possible scenarios for the evolution of the EU, the success of which is contingent on decisions taken by individual member states. To Prodi, the very introduction of multiple scenarios in the White Paper and their strong dependence on the initiatives of single member states is a clear sign of the European Commission’s lack of political salience. The gradual shrinking of the supranational dimension of European decision-making, in fact, has recently coincided with a transfer of power away from the European Commission towards the intergovernmental body of the Council in general, and Germany in particular.

At the time President Prodi delivered his talk, he noted that the possibility for Emmanuel Macron to win the French elections could bring France and Germany closer together in the name of establishing an EU-level leadership. Yet, as he argued, the realization of a “multi-speed EU” (and the subsequent strengthening of Franco-German ties) would only be wishful thinking if not supported by wide international and domestic political consensus. This, coincidentally, is becoming more difficult to obtain. Democracy and its foundations, in fact, are experiencing a major structural change, as it is clear from the rise of populist parties in many European countries. As people’s disenchantment with democracy grows exponentially, it is important to note that this is a direct response to the partial inability of democratic institutions to deliver policies that can benefit the many.

There is also a particular lack of intergovernmental consensus, however, which stems from a fundamental contradiction: while being an economic and normative giant, the EU has yet to formulate a coherent foreign policy and defense posture. To Prodi, the necessity of the latter is most felt in foreign policy theatres where Brussels is most absent – Syria, the Ukraine, and the Korean peninsula, to name but a few. If the so-called “nation-community” dichotomy characteristic of the EU’s identity is strong enough to hinder prospects of greater political unity and the formulation of a coherent foreign policy stance, the extent to which it may impede EU member states to increase defense spending and establish an EU army will be even greater. To Prodi, this might certainly be a complex budgetary decision to make, but one that will enhance the EU’s efficiency.

In the meantime, “defenseless Europe” is bound to confront new and unpredictable security challenges. First, Trump’s election has raised important questions about the future of NATO. After endorsing Brexit, boasting about his ties with Putin’s Russia, and having shunned Chancellor Merkel, Trump has shown no interest in dealing with a strong and stable EU. Second, cyberwars have multiplied opportunities for countries to interfere in each other’s political and military affairs in ways that we cannot yet fully understand. Third, the refugee crisis has underlined two correlated problems affecting the EU: on the one hand, the Union’s ageing population has already taken its toll on the economy, to the point of almost transforming immigration into a resource, rather than a burden; on the other hand, the lack of interstate solidarity in formulating both a joint refugee policy and a coherent African policy that promotes development signals Europe’s inability to manage the crisis.

In the economic sphere, the ‘necessity of Europe’ is most felt in sectors where companies attempt to balance against the power of China and the United States, powerhouses of the global economy fostering the development of Apple, Google and their Chinese competitors. The Europeans are beginning to understand that they will be left out of history if they do not act in unison. However, cooperation is still stalling in many areas: reluctance to issue Eurobonds, for instance, is a clear sign of this disunity.

Europe, for its part, can still count on its remarkable industrial strength, Prodi noted. To be sure, Trump wants to defend American industries not only from China, but also from Europe; German commercial surplus as a percentage of GDP is over 8%, much greater than China’s. Italy also holds a large industrial productivity surplus, combined with a wise energy policy: adjusting public spending and reducing public debt will be key to overcoming stagnation.

In this context, the real challenge is to make the most of the strong industrial potential that is confined to the national level. Only by bridging the competitive advantages of its members will the EU boost growth and become a leader in innovation. Europe is already a leading player in many sectors, such as machinery, chemicals and pharmaceuticals. There is room for the further development of product and process innovation, however, not to mention the untapped potential of a number of per capita start-up entrepreneurs greater than that of the USA; the downside is that few companies manage to scale up and shape the global landscape of technological innovation, which continues to be led by the USA and China. Looking at the future of the global economy, Prodi pointed at unemployment as the biggest challenge ahead, as millions of manufacturing jobs worldwide will be lost to automation.

At the heart of Prodi’s argument is that the EU primarily needs to strengthen its political unity, which could in turn usher in an era of greater economic and military integration to survive the increasingly complex challenges it is bound to face. The amount of time required to bring about these changes, however, is still in question.

Rebecca Arcesati is a double MA candidate at the University of Torino and the Yenching Academy of Peking University. She is also special projects manager at ThinkIN China.

 

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