The European Union at 60: How Many More Birthdays?

20.03.2017

On March 25, European Union heads of state and government will join Commission President Jean-Claude Juncker and Council President Donald Tusk on the Capitoline Hill in Rome to commemorate the 60th anniversary of the signing of the Treaty of Rome.   British Prime Minister Theresa May declined an invitation.  She was reportedly asked not to invoke Article 50 of the Lisbon Treaty, the Union’s “divorce paper,” less than one week before the celebration so as not to dampen the festive spirit.

As they gaze down upon the ancient imperial ruins the leaders will be wondering how any more birthdays their own empire will celebrate. Brexit will deprive the EU of the world’s 5th largest economy and second largest net contributor to its budget, but the unprecedented decision of such a powerful country to leave is hardly the least of the bloc’s challenges. When the Treaty of Rome was signed the present member states accounted for 12% of the world’s population; the figure is now 6% and set to decline to 4% by 2060.  The EU’s share of global GDP is projected to decline to less than 20% by 2030.

The commemoration takes place amid a deep structural crisis of the world economy, manifested in Europe in prolonged stagnation, austerity, and uneven development. Europe’s national leaders are divided among themselves and they are facing growing popular revolts. EU officials know that a massive “democratic deficit” separates them from the European people. 

Right-wing populist parties have consolidated power in Hungary and Poland.  Emboldened by a cruel and dysfunctional monetary union and surge in immigration, they are strengthening in much of Europe’s core. A victory for Marine Le Pen in France’s presidential election on May 3, unlikely but not impossible, could accelerate the process of gradual decomposition.  By contrast, the European Left is weak almost everywhere, discredited by years of complicity in neoliberal austerity policies and unable to provide a convincing alternative. 

The United States, the EU’s patron saint, has threatened to reduce its support for the EU, calling for bilateral negotiations with Germany to reduce its current account surplus with the United States and pressuring NATO allies to increase military spending at a time of harsh budgetary constraints.  

On March 1st Juncker unveiled the Commission’s “White Paper on the Future of Europe.” The White Paper is meant to serve as the basis for a common vision for the post-Brexit Union-- the “Rome Agenda”-- to be endorsed by the heads of state on March 25th.   It outlines five options for the future of the EU, ranging from “business as usual” to an integrated federal state.  While dismissing the latter, which has no support anywhere and would require significant amendments to the Lisbon Treaty, Juncker rejects the notion that the EU should be reduced to a single market, favoring instead a vision in which smaller groups of states voluntarily cooperate on specific issues such as the defense union, banking supervision, and common migration policy. The White Paper is conspicuously silent on the UK and its decision to leave the Union. 

Subsequent discussions reflect the deepening divisions among blocs of member states.   Meeting in the Palace of Versailles on March 6 and 7, the  “Big 4” core states—France, Germany, Spain, and Italy—adopted a common vision of “variable speeds” under which member states would be granted flexibility on future integration but also permitted to roll back or freeze integration in other areas.  This might, for example, involve halting EU-level coordination in regional development and social policy, but also allow member states to move forward in areas such as the mooted banking union and defense policy.  Belgium, Netherlands, and Luxembourg endorsed this vision. German Chancellor Angela Merkel proclaimed that “A Europe of different speeds is necessary.”  “Otherwise,” warned French President Francois Hollande more darkly, “Europe explodes.”

However, at a parallel meeting in Warsaw, the Prime Ministers of the four Visegrad states—Hungary, Poland, Czech Republic, Slovakia— condemned  the concept of variable speeds as a both disintegrative and as a power play that would allow the stronger Western states to impose policies concerning structural funds, migration, taxation, and rule of law on weaker states.  Strongly pro-NATO and pro-American, the Visegrad bloc is also suspicious of even modest efforts to increase EU military cooperation.

Europe’s malaise was painfully evident at the European Summit meeting in Brussels on March 9 and 10.  Enraged by the re-election of Poland’s own Donald Tusk, a political opponent, to a second term as Council President, Polish Foreign Minister Witold Waszczykowski declared the EU to be under “German diktat”and announced that henceforth Poland would pursue a “negative policy” towards the EU.” The “Big 4” responded by agreeing to abandon language of “multi-speed” in favor of existing Treaty language allowing for “enhanced cooperation.”  However, Merkel pointedly insisted that “each member in the family has access to such projects but not every member has to accept.” 

The concept of “multi-speed Europe” is not novel:  For many years it has informed EU policies, including the monetary union and Schengen.  However, use of the concept in the present context implies a fundamental transformation of the purpose of the Union:  the long-range goal of convergence and supranationalism –an “ever closer union”-- has been abandoned.

While the preparations for the Rome commemoration illustrate the deep underlying conflicts between east and west in the EU, the European core is itself experiencing a crisis that, like Brexit, will be ignored amid the pomp and circumstance on the Capitoline Hill.  There is a fundamental contradiction between the interests of German capital—and the export mercantilist model it has imposed-- and the developmental needs of the Eurozone as a whole.  At the present time this reveals itself most vividly in the negotiations over a further installment of EU bailout funds in order to allow Greece to make its next loan payment.   Draconian austerity measures demanded by the Eurogroup have been condemned even by the IMF, as Greece is driven ever more deeply into poverty, with 50% youth unemployment and 427,000 mostly young educated Greeks having emigrated since 2008.

However, austerity policies are also taking their toll throughout much of the Eurozone's western and southern core. Youth unemployment exceeds 26% in France and more than 40% in Spain and Italy.  Italy has registered virtually zero growth ever since the inception of the single currency; the situation for France and Spain is not much better. 

The Eurozone appears destined to fragment, possibly into a “northern” and “southern” euro. The Franco-German tandem has been a key stabilizing factor in European politics ever since the Treaty of Rome.  However, France has fallen behind Germany, and now occupies a position of ambiguity in relation to north and south.  The implications of a break-up of the Eurozone for the long-range survival of the EU are
unclear.  A break-up could resolve some of the problems that are tormenting Europe even as it creates new potential dangers for the continent.   
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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