realclearworld Newsletters: Europe Memo

A Week to Eye the European Storm
A Week to Eye the European Storm
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Last September, as newly installed European Commission President Jean-Claude Juncker prepared to deliver his inaugural EU State of the Union addressed, I wrote the following:

“The questions before Europeans now are as simple as the politics are intractable: Does this moment of generalized crisis call for more integration, or less?”

Fast forward one year, and the picture is different, and for the European Union, more dire. The politics are as ever intractable, but the questions are more complex and generalized crisis has turned into visible disintegration. Juncker will deliver his State of the Union address tomorrow, and the EU leaders will meet for their first major post-Brexit summit this weekend. We caught up today with Mark Leonard, founder and director of the European Council on Foreign Relations, to talk about the situation facing Europe.

Below is part one of the interview. In it, Leonard addresses the political counter-revolution at hand across Europe; the disruptive effect of interdependence on national politics; and why the European Union really finds itself in so much trouble.

The following interview has been slightly edited for clarity and brevity.

RCW: What will you be looking for from Juncker tomorrow? And from the summit?

Mark Leonard: I think the biggest challenge for Juncker is showing that he gets the depth of the crisis which the EU is in and that showing that he understands why there’s so much anger and pushback against the European project in different capitals. I think we’re going through a counter-revolution at the moment. After several decades where the European project was tearing down barriers and walls between countries, removing borders, trade restrictions, and where the European project created a huge degree of interdependence between people in different places, now there is a sense in most capitals that many of the things which made people anxious and unhappy are a result of these very forces.

There’s this almost Marxist idea that if you create an economic base where everyone’s bound together and you have a single economy and a single currency, that there will be a political superstructure that follows and people will feel that they are in a community of fate -- there will be what Robert Schuman called a de-facto solidarity in the Schuman declaration that led to the formation of the European Union. Instead what’s happened is that the things which scare people the most are in fact different features of that interdependence. The eurocrisis was the first big shock. It scared debtor countries because they found their sovereignty emasculated. But it also scared the creditors who didn’t like the fact that they were exposed to debts that they didn’t have any way of controlling. 

That was followed by the Russian annexation of Crimea, which had foreign policy responses which also left a lot of countries uncomfortable. For the Eastern Europan countries it was seen as an existential threat. But for a lot of other countries it was seen as a distraction, and they felt they were being dragged into a conflict with Russia that they didn’t want to have. And then the refugee crisis is the most dramatic thing. It has hit people in a different way, but like the Ukraine crisis has split Europe between east and west in a very dramatic way. And then terrorism comes on top of that. 

So you’ve got these different levels of interdependence. The flow of people, capital, and finance, and then the movement of people, and the EU is seen as a force for globalization, rather than protection from globalization.

The one thing Juncker needs to do is to show that he gets that there is a major problem, and that Europe is scaring people rather than protecting them. His response has to be about trying to make interdependence safe again. There are a lot of different ways into that, but it’s quite a big challenge. Particularly to do from Brussels, where you’re seen as the culprit of a lot of things people don’t like.

RCW: How can Juncker try to push back against that perceived danger? 

One of the reasons it’s so difficult is that all of those crises have had a very asymmetrical impact. The eurocrisis affects debtor countries in one way, creditor countries in another way, and countries not in the euro in a completely different way. The same is true of other crises. Therefore you need a lot of different responses that key into the anxieties of people. But some of it is also to acknowledge that there have been losers as well as winners from the last few years, and to think about how you make things better for those left out. So, free movement of labor, for example, which was a massive feature of the British referendum — it is maybe emblematic of the problem. On the one hand there is a big aggregate benefit for the UK. The economy has grown, you can see that on an aggregate level, free movement has had a fiscal surplus, that people who live here pay more taxes than they get from benefits. But at the same time, the benefits have not been shared equally. There are a lot of people in Britain who live in areas where large numbers of people come in, which has put extra pressure on public services, and has depressed wages in certain sectors of the economy.

Where there are winners and losers, you have to try to mitigate losses. In the UK people feel threatened by free movement. It’s too late now because Britain has left the EU, but having some limits on free movement [would have helped] -- firstly, having more control over it, so you know where people are moving, and you can then redistribute resources. So if you have large numbers of people going to a particular area, there is a fund where local authorities can go to get resources to invest in school, hospitals, so the indigenous population doesn’t lose out. Also, having much tougher restrictions on things that depress wages in certain areas.

I think in each area you need to think about a set of policies. On free trade for instance, there’s a lot of opposition to TTIP and to other things, based on the idea that the EU goes one way: It liberalizes and doesn’t protect. It’s obviously difficult because the protections that people want have to be delivered at the national level. 

But changing the framing, the language, and dropping some of the things that will upset people is a sensible response. Terrorism is another area where there’s a huge amount of things that can be done that have been talked about for a long time. Giving the sense that the borders are well governed, and that information is being properly shared.

RCW: How important is it tomorrow for Juncker to deliver a message that can connect? How important is it to get the message right, right now?

Mark Leonard: I don’t think it’s about a single speech or summit. I do think you need a clear idea firstly that the next phase of European integration is about de-risking interdependence, so you have a clearer idea of what the risks are. Then you have a policy response aimed at individual people and their everyday lives. Secondly, [communicate] that the highest purpose of the EU institutions in Brussels is about protecting and saving and empowering national governments that are really struggling to deal with great changes in the world. That would be another really powerful message. That Juncker sees his role as making national governments able to deliver basic things for their citizens. I think that would be another powerful message. That’s one of the things that was true about the European project at the beginning. There is this really famous book by Alan Milward about the European rescue of the nation-state. I think one of the reasons why the European project is in so much trouble right now, is because national governments are in so much trouble. 

RCW: In the aftermath of the Brexit vote, we’ve seen a lot of smaller gatherings and EU forums - a reinvigoration of the Visegrad Group, the so-called EuroMed gathering. Is this helpful or hurtful for the European Union right now?

Mark Leonard: I think we’re in the middle of a period where a lot of things that might have looked like ways of pulling together, now look more like disintegration. Disintegration can take a thousand different forms. The most dramatic thing is countries voting by referendum to leave the European Union. But other symptoms are countries just not implementing EU decisions, whether it’s Italy ignoring capital requirements for banks, or Spain or Portugal breaking the fiscal rules, or France saying it won’t implement the Posted Workers Directive. There are countries calling referendums on specific policies, like Hungary calling a referendum on refugee reallocation or the Netherlands having a referendum on the association agreement with Ukraine. 

I think it’s in that kind of basket that you have these subgroups of the EU, meeting and increasingly trying to pull it in different directions. You had this attempt with [German Chancellor Angela] Merkel, [Italian Prime Minister Matteo] Renzi and [French President Francois] Hollande meeting, and then the Visegrad countries pulling in another direction. The EU is a big and complicated place, and it’s perfectly good practice for little groups of countries to come together and to push things they’re particularly interested in, because there are not that many issues that interest all 28 member states. But if it comes at a time where people can’t seem to agree with anything at the EU level, then it can lead to a further Balkanization of the EU. And I think that’s a particular danger between Eastern and Western Europe. They’re much more divided than they‘ve been at any time since the Iraq War, and the idea of [Hungarian Prime Minister Viktor] Orban and [Polish political leader Jaroslaw] Kaczynski running what they’ve called a cultural counter-revolution is something which is very damaging to the basic idea of Europe. And I think the challenge for Merkel and the institutions, [European Council President] Donald Tusk and Juncker, is to see if they can reach out and deliver something useful to these members states. And also to be more flexible on things like the refugee quotas, or the capital requirements for Italy, or the fiscal rules for Spain and Portugal, to try and avoid doing things which will encourage people to mobilize against Brussels, because Brussels is the perfect enemy on any domestic topic.