Business World

Monday 26 February 2018

Europe is changing - but is it doomed to disintegration?

Dan O'Brien

Dan O'Brien

The Irish economic model is based on attracting foreign companies to use this country as a base for servicing Europe's single market. No other European country's economic model is so dependent on access to the EU market. As such, Ireland has a greater stake in maintaining the integrity of the EU than most.

Worryingly, that integrity is being tested from almost every angle.

Explaining something to somebody who is less familiar with it can be a wonderful way to clarify one's own thoughts. That struck me last week when preparing a presentation on the challenges facing Europe for a visiting delegation from China. Preparing the presentation brought home not just the scale of the individual challenges facing the EU, but the sheer number of them.

The eruption of the euro crisis in 2010 was by a very long distance the most serious crisis the European integration project had ever faced. It came through that crisis by the skin of its teeth - and the structural weaknesses of the euro have yet to be fully addressed. That is just one of the serious challenges facing Europe.

Along with that truly existential crisis, many more challenges have arisen in recent times. Long-time insiders of the European system frequently say that there has never been a time of so many crises occurring simultaneously. Some are even wondering whether the EU itself could fall apart.

Below, I summarise the crises/challenges, starting with the external ones and moving to the domestic and national issues affecting the EU. I also attempt to rate Europe's capacity to deal with them with an (admittedly) crude mark out of 10 in each case.

Syria, Isil and the Middle East

Europe's capacity to influence: 1

The civil war in Syria is now five years old. It has been one of the world's bloodiest conflicts of the past 50 years. It is also one of the most complex - the number of actors involved is very large and their motives and interests very different.

With powerful countries including Iran, Saudi Arabia and Russia involved in the conflict and seeking different outcomes, there is little real prospect of peace breaking out and a durable solution being found.

Europe has next to no influence over the events in the Middle East. All it can do is attempt to deal with the symptoms and, as the migration crisis has shown, even there its actions to date have had little effect.

Libya's failing state

Europe's capacity to influence: 3

The failing of the Libyan state over the past few years has received much less attention than the conflict at the eastern end of the Mediterranean, but it has very serious implications for Europe.

North Africa is often described as the soft underbelly of our continent. Libya's unpoliced and unsecured 1,200km coastline provides a launch pad for would-be migrants to Europe. Although the central Mediterranean route has been used less since the Balkans became the favoured entry point, the closure of the Balkan route is likely to see Libya re-emerge as significant departure point.

Because Libya has a much smaller population than Syria and has fewer actors involved in its conflict, Europe has a greater capacity to influence events there.

But involvement is fraught with danger and even the European countries with real military capacity are very fearful of being drawn into a conflict from which they may not be easily able to extricate themselves.

Turkey's greater assertiveness

Europe's capacity to influence: 3

Turkey is one of the four most important countries for Europe, along with the US, Russia and China. Within a few years, it will overtake Germany to become the most populous country in Europe after Russia. It has the largest military in NATO after the United States.

The political direction the country has taken in recent years, as its president Recep Tayyip Erdogan has become increasingly autocratic, makes it an ever more difficult partner for Europe to work with.

Erdogan is a capable and canny leader who has extracted a high price from European leaders to help (on paper at least) contain the migration crisis. As he has lost interest in joining the EU, the EU has lost influence with Turkey.

The migration crisis.

Europe's capacity to influence: 7

There is a lot Europe can do to reduce the numbers of migrants it receives, but some of the possible measures involve abandoning international commitments to accepting refugees. Some countries have already abandoned those commitments and there are questions about whether the latest EU-Turkey deal has done so as well.

What seems clear is that even Germany, the country which has made the strongest case for maintaining those commitments, will not be able to take the same number of refugees this year as it took last year.

If borders end up being shut, one of the consequences will be the abandonment of the Schengen accord, one of the most visible achievements of the EU. The end of Schengen would be a significant reversal in Europe's integration process.

Russia's hyper-assertiveness

Europe's capacity to influence: 4

Europe's relations with Russia have deteriorated rapidly and radically over the past two years. Not only has the security situation in Central and Eastern Europe been transformed by Vladimir Putin's annexation of Crimea, but his involvement in a range of issues increasingly appears designed to undermine European cohesion.

These includes involvement in the Syria conflict; support for sympathetic governments, such as Hungary; and the funding of reactionary parties, including the National Front in France.

Europe has imposed sanctions on Russia and could impose more, but its capacity to deal with Putin is weakened by a wide range of positions towards the country among the 28 members of the EU.

More frequent hyper-terrorism

Europe's capacity to influence: 6

Last week's attacks on Brussels underscored how serious is the threat Europe faces from jihadis. I discuss this issue in a column in the main section of the of this newspaper, but suffice it to say that there is a lot Europe can do, even if that comes at a price of curtailing liberties.


Europe's capacity to influence: 2

As Europe's integration experiment is already being tested, a decision by the British people to leave in June would be a hammer blow and could well begin a period of disintegration.

The collective capacity to prevent a Brexit was always limited, given David Cameron's tactical mis-steps. The notion that one member state could demand fundamental reforms of the EU or be treated differently from the other 27 was never going to fly. The deal he reached last month was derided in much of the British media and opinion polls suggest that voters are evenly split.

Economic growth

Europe's capacity to influence: 3

One of the reasons Britain joined the EU, and one of the reasons that it might leave, is economic growth. In the early decades of the European integration project, the continent grew strongly, as the chart shows. During that period, Britain was the sick man of Europe.

One of the main reasons for joining the then common market was the belief that it would bring economic growth in Britain up to European rates. Now, things look very different. The European economy has been growing more slowly than Britain's for many years.

The hard truth about economic growth is that we don't understand it very well. Worse still for growth prospects, Europeans don't agree on the measures that could be taken to boost it. Debates around macroeconomic and microeconomic policies remain divisive.

Domestic politics

Europe's capacity to influence: 1

Alienation from the political mainstream across Europe is widespread. While the rise of extremist parties is often highlighted, a more important trend has been anti-incumbency - since the Great Recession, very few governments in Europe have managed to win re-election.

This makes taking difficult decisions even more difficult for politicians. The capacity for action in domestic politics has declined considerably as a result.


Europe's capacity to influence: 3

And finally. Many of the issues discussed above feed into the rise of Euroscepticism. In many countries where the EU was once viewed only as a source of stability and good governance, things have changed. That is particularly true in southern Europe. It is also true in many of the new member states who have joined the EU since 2004.

Discussion and debates on how to boost legitimacy for the EU have gone on for decades. They have rarely led to actionable and effective outcomes. The technocratic and distant nature of EU decision-making makes it very hard to generate enthusiasm for it among average voters.

So is the EU doomed? No, in short. The commitment among political elites to the EU - a continent-wide problem solving mechanism - remains deep. If it didn't exist, other co-operation mechanisms would have to be created.

The EU is far from perfect, but it is the best means of dealing with transnational issues that Europeans have. That should ensure that it survives.

Sunday Indo Business

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