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Commentaries

The Winds of Change in Europe

posted by eucentresg

The Winds of Change in Europe

The views expressed in this commentary are those of the author and do not necessarily reflect the views of the European Union or the EU Centre in Singapore.

A printable version of the commentary is available HERE.

 

Introduction
After almost a decade since the great financial crisis hit the European Union (EU), leading to a spiral of events that dented the confidence of the EU, things maybe looking a little brighter. Economic recovery is finally gaining strength and European businesses surveyed by McKinsey Global Institute expect the EU to grow by 2% over the next five years. Chinese and American companies are even more upbeat than their European counterparts on the growth trajectory of the EU expecting GDP to grow between 2.3% to 3%.

Politically, the election of Emmanuel Macron as France’s youngest president since Napoleon has given not only France but the EU a whiff of hope for the future. Running on a clearly pro-EU platform, his victory seemed to put a brake to the rising tides of euroskepticism. More importantly, the election of a Europhile brought the hope that the Franco-German engine will once again be the force that drives Europe’s destiny.

Besides this positive outlook, perhaps two major negative factors which initially seemed to threaten to derail the EU had unexpectedly focused the minds of EU leaders. Brexit and boorish Trump are perhaps the greatest catalysts that force the EU to rethink its values, principles and modus operandi. Fighting against possible disintegration and challenged to stand on its own feet without the US, the EU is finally finding some common ground to begin their reflections on the way forward. Members of the EU still disagreed on a number of policy issues – the most divisive probably being over migration, but also in areas of economic governance – but most agreed on the need to stand united in its negotiations with the EU over the terms of Brexit, and that Trump is bringing great uncertainties to the transatlantic ties. Merkel’s fiery speech in Bavaria on Sunday (28 May), a day after G7 and NATO meetings with Trump, called on Europeans to “take destiny in their own hands” as the traditional western alliance is now under threat with the Trump presidency.

How would this confluence of internal dynamics and external forces shape the destiny of the EU? As the EU celebrates the 60th anniversary of the signing of the Treaties of Rome this year, is the EU finally gaining the confidence and political will needed to move ahead with the European project? While the EU has displayed remarkable resilience in the midst of an onslaught of crises, a lack of a dynamic vision has hampered its recovery. It is not enough to remember and consolidate the past achievements in building peace and prosperity. The EU now needs a new narrative in finding a path towards a resilient and dynamic Europe.

A turning point for Europe
In politics, sometimes, perception is more important than reality. The sovereign debt crisis and the recession in 2012-2013, the migrant crisis and a series of terrorist attacks in the last few years have brought fears and despair. Fears rather than hopes have dominated the political discourse in Europe, leading to the rise of far right, xenophobic and euroskeptic parties, obfuscating the EU’s enduring strengths and achievements. Many of the challenges faced by the EU remain. Yet, the first few months of 2017 “have given Europeans new cause for hope”. A confluence of factors have led to this shift in mood from gloom and doom to a more positive and hopeful one.

First, economically, growth, albeit still weak, has returned to the EU. EU businesses are also more upbeat about the economic prospects and majority of the European business leaders continued to see benefits from EU membership. Unemployment has begun to drop. According to analysts writing for the European Policy Center, five million jobs were created between 2014 – 2017.

Second, politically, despite the sound and fury of the far right parties, and the impact they have on some of the political agenda, politics seemed to have swung “back to the center in continental Europe”. The revelations on potential Russian interference into European elections may have contributed to some extent to the halt of the far right. The failure of anti-EU populist Geert Wilders of The Netherlands and Marine Le Pen of France to make headways into the corridors of power gave Europeans room for “reset”. The election of Macron as French president, a Europhile who ran on a clearly pro-EU platform, gave pro-European forces something to cheer about.

Third, the incompetence and unpredictability of the Trump administration, have perhaps also given pause to the gains made by populist parties in Europe. More crucially, the debut visit by Trump to Brussels for meetings with EU and NATO leaders – his lack of endorsement of Article 5, the collective defence clause of NATO, and reluctance to honour the US commitment to the Paris climate agreement during the G7 meeting had led to the most clarion call by Angela Merkel, to the Europeans to take destiny in its own hands. Doubts about the trans-atlantic alliance have been openly raised, and it looked likely that Germany and France will give renewed focus on the European defence project. The ambition of achieving “strategic autonomy” for the European Union would likely become a priority in the near future.

Challenges Remain
Obviously, the myriad challenges that the EU faced have not disappeared – terrorism as manifested more recently by the attacks in Manchester, a long term, sustainable policy towards migration and refugees/ asylum seekers, etc. Governance in the Eurozone, and the long term sustainability of the Euro under current framework remain in question. Yet once the mood shifts and confidence returns, challenges that look insurmountable may not look as indomitable. Indeed, on the refugees’ crisis, temporary border controls, working with the source countries and the EU-Turkey deal have helped stop the chaotic scenes widely witnessed in 2015. This has given the EU some breathing space to come up with some sustainable, long term solutions.

On the Eurozone, the good news is that except for Greece, the other members (Ireland, Portugal, Spain and Cyprus) that have received bailout funds have all graduated from the EU bailout programmes and return to the financial markets. Economic growth has also returned to these countries. However, there are still concerns that without significant changes to the current framework governing the Eurozone, Economic and Monetary Union (EMU) may not be truly sustainable. The economic recovery in both the Eurozone and the EU remains sluggish. Investments into the EU while returning remain low. This could of course change if the EU takes on a more robust and proactive role in looking into synergies with China’s Belt and Road Initiative that connects Asia and Europe.

One of the more unpredictable challenges would be the Brexit negotiations. As lamented by many analysts, including some EU officials, “Brexit is a lose-lose process that will leave both Britain and the other EU countries weaker than they would have been otherwise”. What is needed for the Brexit negotiations not to become too acrimonious are “cool heads” that will make concerted efforts “to lower the emotional temperature and to concentrate on identifying workable arrangements” so as to limit the damage. Many issues from the Brexit divorce bill, to the sensitive question of the border between Northern Ireland and Republic of Ireland, the status of Gibraltar, and the future of EU-UK relations, have already raised tensions even before the negotiations started. The 8th June British elections added another layer of uncertainty.

German Chancellor Angela Merkel in her speech in Munich told the crowd that while “Germany and Europe would naturally strive to remain on good terms with the US, Britain and other countries”, she made it clear that “We have to know that we must fight for our future on our own”. In this fight for the EU’s future, the EU27 has already shown its unity on 29 April 2017 when they came together in Brussels to approve unanimously in less than five minutes the guidelines for the Brexit negotiations.

Conclusion
In the last few years, the European Union has been shaken to its core because of a series of crises. From the debt crisis to the refugee crisis, many of the EU’s principles and beliefs have been undermined. The 2016 vote by the British to leave the EU was seen as a catastrophic moment. Yet, Brexit in some way, together with the election of Trump had a silver lining for the EU. Instead of the disintegration of the EU that was feared, there is now a new found resolve that the EU will have to reform and regroup in order to survive. Nothing says that the search for a path forward would be easy. But from the Commission’s “White Paper on the Future of Europe” to the many policy papers and reports that have been generated to imagine Europe’s future and pinpoint the necessary reforms to make the EU more responsive, the debates have intensified. And what is different in 2017 in contrast to the earlier years is the return in confidence and self-belief. It is the latter that will determine whether the EU will indeed succeed in its struggle to survive and thrive for another 60 years.

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