Three Scenarios

As the U.S. recalibrates its relationship with the EU in the second Obama administration, it behooves observers to contemplate different trajectories for the EU’s future. The three possible scenarios of Disintegrating Europe, Diffident Europe, and Decisive Europe range from a pessimistic outlook to an optimistic one.

In Disintegrating Europe, current differences over the euro zone crisis magnify and no resolution to the crisis is reached. A so-called “Grexit” (Greek departure from the euro zone) occurs and the single market is irreparably harmed. As economic and political conditions further deteriorate,  countries threaten to leave the EU, thus creating a self-fulfilling downward spiral.

In Diffident Europe, piece-meal, limited agreements continue – otherwise referred to as the ‘kicking the can down the road’ approach. Europe is a confused actor internally and externally, stymied by lack of purpose and incomplete institutions.

In the Decisive Europe scenario, the EU assumes a more (not complete) federal structure. Under this new structure, the EU projects greater institutional rationalization and efficiency, resulting in a more purposeful and efficacious international presence.

Disintegrating Europe

In recent weeks, the extensive concern about a Greek exit from the euro zone has weakened somewhat. The German Finance Minister Wolfgang Schaueble and Chancellor Merkel are being a little more supportive of Greece publicly, and the German Foreign Minister Guido Westerwelle is warning his fellow politicians of the harm they are doing by calling for or assuming a Greek departure. At the end of November, the euro zone finance ministers and the IMF reached an agreement with Greece on debt reduction, such that Greece can receive the next installment of funds.

However, we are certainly not out of the woods. A lot still depends on whether Greek leaders can make deals that are acceptable to the EU and to Greek citizenry amidst the rise of nationalist forces. Whether they can also actively sell the EU by depicting the chaos and instability of the alternative to the euro will remain an uphill battle.

The other factor that severely clouds the EU future is the British attitude toward the community.  There is a telling anecdote that David Cameron recalled at the Tory Party Convention earlier in October. According to news reports, “Cameron reminded his listeners of the negotiations with other European Union member states over the fiscal pact last December: ‘There were 25 people in the room, urging me to sign’ he said proudly. ‘And I still said no.’”

At the end of June, Cameron indicated a referendum on UK membership of the EU might be possible. In October, and repeated recently, Cameron said he didn’t want an in-or-out referendum, but insisted people in the UK “want a new settlement put to fresh consent.” He did say he would not be happy if the UK left the EU, but also stated that he was not happy with the status quo.

Many of his Conservative Party colleagues in the House of Commons have been much clearer. Last year, 81 of his own MPs voted for a referendum, and in June 100 signed a petition calling for a referendum (about a third of Conservative MPs).

What about public opinion? In a December 2011 poll, when asked if the euro crisis provided an ideal opportunity for the UK to leave the EU altogether, 52% agreed, only 26% disagreed, and a large 22% said they didn’t know. A June 2012 poll about support for the EU in general yielded a more dramatic result when the EU received only a 35% approval rating in the UK, the second lowest figure of the EU countries canvassed by 1 percentage point. In June 2012, 82% of those polled said they wanted a referendum on UK membership, and in a November 2012 survey, 54% supported the UK’s exit from the EU..

In addition to British sentiments, developments will also hinge on how other EU member states view the UK and its constant search for exceptional treatment and special arrangements. Opinion seems divided over whether the UK provides any concrete or ideological benefits for the EU. Certainly, both Germany and France are increasingly frustrated with British obstructionism. The British are considered “spectators in the gallery,” which harkens back to the comment of Prime Minister Anthony Eden in the 1950s when Britain decided against joining the Common Market. He said Britain liked to watch how others did things. And if projects worked, then the British would join. The attitude today of wanting to leave when things are not going well is part of the same mind-set.

Diffident Europe

Internally, the EU as a whole has taken only reactive, incremental, contentious, and spaced-out steps to fix the crisis: the temporary bailout, the European Stability Mechanism, the fiscal compact, the ECB bond-buying program, the incipient moves for a banking union, and Merkel’s discussion of a possible debt reduction plan for Greece (“haircut”). There does not seem to be an overall design or pro-active thinking.

Externally, a recent report from Jacques Delors’ institute, “European Influence: the Need for a Paradigm Shift,” offers a recitation of the diffident approach and the lack of assertiveness. It cites the fragmentation of foreign policy that occurs from several commissioners dealing with different aspects of foreign relations; the passivity of the EU where the world’s problems demand action; the multi-voiced approach on issues like climate change, meaning the EU has no leverage on countries like the U.S. and China; the inability to respond proactively to the BRICS (Brazil, Russia, India, China, South Africa). Even in areas where the EU is the biggest player, development aid, there will likely be a pattern of decreased funding due to the euro crisis.

And, we have to consider how the EU is seen by the rest of the world. Apparently, the EU’s global influence rating has decreased in 2012, standing at 48% in 2011-2012, 8 points lower than in the previous year.

This diffidence and lack of assertiveness internally and externally is not to suggest collapse, but it does mean muddling through and a lowest common denominator politics. The Delors institute report calls for a paradigm shift towards assertiveness and influence, which leads to the third scenario.

Decisive Europe

There is some evidence that the EU can move forward more decisively, albeit as a two-speed Europe, not an EU-27/28. The main proposals come from the September final report of the Future of Europe Group, made up of the 11foreign ministers of Austria, Belgium, Denmark, France, Italy, Germany, Luxembourg, the Netherlands, Poland, Portugal, and Spain.

Their recommendations can be summed up in four main areas: strengthening economic and monetary union; the EU’s international role; institutional reform; and the EU as a community of values. It represents a vision for Europe.

On Economic and Monetary Union, the priority, the report calls for greater economic governance to bring about greater coordination as a way to enhance employment and growth; for a single supervisory mechanism, engaging the ECB, banks in the Euro and other member states who want to participate; for full democratic legitimacy and accountability through greater participation of the European Parliament and the creation of a permanent joint committee between the European Parliament and national parliaments.

The EU’s international role must not be neglected. Here the report calls for improved influence and efficiency of External Action; improved capacities of Common Security and Defense Policy; majority decisions for Common Foreign and Security Policy; joint representation in international organizations; and a European defense policy, including the possibility of a European army.

Institutional reform entails strengthening the Commission, including having clusters of senior and junior commissioners; giving the General Affairs Council the coordinating role assigned to it in the Treaty; providing the European Parliament with the power to initiate legislation and creating a second chamber of the member states; and direct election of the Commission president, who would then appoint members of a European government.

The final area of recommendations concerning values relates to promoting dignity, freedom, equality, respect for human rights (including minorities), tolerance, the rule of law, and peace, as articulated in the Treaty on European Union. It also suggests creating a mechanism to deal with countries that violate these values.

Many of these proposals have been suggested before with little movement, but it constitutes a sign of hope in these fragile times that visions can still be revived. The fact that the 11 countries represent a cross section of the EU is also a good sign: old and new members; healthy and ailing; North and South; big and small.

Conclusion

How do we prevent disintegrating Europe, move beyond diffident Europe and begin to embrace decisive Europe? There are at least 3 requirements: leadership that can combine moral vision with pragmatic interests; engaging the public in the enterprise both by articulating clearly the costs of non-Europe and by stating quite passionately what Europe stands for; and a relatively stable international system.

Judging by a recent trip to Germany, where I participated in the beginning of the Franco-German year for the 50th anniversary of the Elysée treaty (organized by the Deutsch-Französisches Institut in Ludwigsburg), I would not rule out some movement in the second requirement. I was most impressed by the engagement of young people, between ages 15 and 18, from 8 countries, who had spent months exchanging via the internet on key issues facing Europe – euro crisis, demographic challenges, climate change and immigration – and then came together for 3 days to generate recommendations. These ideas were presented to the French and German ministers for Europe, and a French and a German member of the European parliament.

The young people were enthusiastic about Europe, future-oriented while also thinking about intergenerational solutions, in no way naïve, and very practical. Among other thoughtful suggestions, they stressed the need for many more programs in schools and beyond to educate young citizens about the European Union in general and its significance in the daily lives of citizens.

If these young people are representative of European youth, then we have some glimmer of hope for a more optimistic future of the European Union.

For the text of the Ludwigsburg Initiative of these young European citizens, see:

Europäisches Jugendforum: Die Zukunft der Demokratie in Europa

Angela Merkel und François Hollande in Ludwigsburg, dfi aktuell.