Challenges for Europe Within and Beyond Its Borders

By Ding Yuanhong

Europe has been shocked by the British who voted in the referendum to leave the European Union and, to make things worse, the new US President Donald Trump who supports Brexit and seeks to talk down the EU. Jean-Claud Junker, President of the European Commission, openly admitted that the EU is locked in a “survival crisis”. The European elites who have pushed for integration fear that other EU members may follow the footsteps of the UK andthat “black swan” incidents may happen. The last thing they wanted to see would bethe victory of anti-immigration and anti-integration populists in the Dutch and French parliamentary elections this year. Such a complicated environment dampens the enthusiasm of the Europeans to celebrate the 60th anniversary of the integration process. 

To people’s relief, the “black swan” incidents didn’t happen. The far-right candidates lost the elections in Austria and the Netherlands. In the French election which the Europeans had followed with utmost interest, Macron, the anti-establishment yet pro-European integration candidate, claimed the victory, releasing the Europeans from anxieties and rekindling their hope for integration. At the same time, Theresa May, the British Prime Minister who insisted on a hard Brexit, suffered an unexpected failure in the early election she had called, costing the Conservative Party its majority in the House of Commons and further dividing her party and the UK over Brexit. President Trump of the United States, who had put European leaders off, was bogged down in the internal strife that had been growing intense at home. These developments, complemented by the notable economic recovery, have cheered up EU leaders who believed the time to reshape the EU had come. Led by President Macron and Chancellor Merkel, French, German, Italian and Spanish leaders will soon convene a summit to plan the way forward to advance European integration “at different paces and intensity”, as decided by EU leaders at a summit in March to mark the 60th anniversary of the Treaty of Rome. 

Europe has now restored temporary calm like the ocean after a storm. Under the seemingly peaceful surface, there are still undercurrents within and beyond EU borders that may turn into powerful waves, setting back the European integration. 

Within its borders, the EU is grappling with three challenges: rising nationalism, declining international competitiveness and an unclear direction for the future. On the external front, it has to make prompt responses to Brexit negotiations, deteriorating trans-Atlantic relations and policy differences with Russia. None of these issues, which are closely interconnected, can be resolved easily. 

Let me turn to what is happening within the EU. First, nationalism is rising. Academics abroad share the view that nationalism is resurging after many years of globalization, as evidenced by Brexit, the “America First” policy pursued by President Trump, and the US exit from the TTIP and the Paris Agreement on Climate Change. Nationalism and globalism are at loggerheads worldwide, which is particularly prominent in Europe. 

The resurgence of nationalism is largely a result of the setbacks in globalization which has been promoted and led by Western capitalist countries, or the social division and the frustration of the grassroots who have benefitted unfairly from globalization and suffered from the widening wealth gap. This is best represented by Brexit and the election of Donald Trump as an anti-establishment figure. Ian Bremmer, a renowned American expert on international issues, said in a recent article that nationalism has resurfaced because the problems that globalization was supposed to tackle are still with us. In other words, more and more people in the richest countries in the world believe that globalization only benefits the elites, who don’t care about nation states and their boundaries.  As such, supporters of nationalism are characteristically anti-immigration and anti-globalization. A case in point is President Trump’s recent statement that he would go ahead with his plan to build a wall along the US-Mexico border, even if the expenses incurred may send the Federal government to a standstill. 

Following Macron’s election as French President, Antonio Tajani, President of the European Parliament, concluded that the resurgence of populism (which should be known as nationalism) has come to an end. Bremmer countered in his article that Macron faces stiff opposition from both the far right and the far left. Hungary and Poland have become increasingly rebellious. The Brexit negotiations have stalled. The aversion and anger towards the EU continues to grow across Europe. An election is never the end but the beginning. This is proved by what is happening in Europe. In final analysis, Brexit and the opposition of Central European countries such as Hungary and Poland to the allocation of refugees by the EU testify to the shift from integration back to nation states. This will also hold back France and Germany as they are pushing for European integration. 

Second, EU’s international competitiveness is on the decline. Devastated by the 2008 global financial crisis, the EU tumbled into a severe economic crisis, with anemic recovery. It was a major factor that weighed down the global economy. Statistics show that the Eurozone grew slower than non-Eurozone countries in the EU for several years, while EU countries grew slower than non-EU countries such as the United States, Canada and Australia, and still less than emerging economies and some developing countries. Such an abnormal phenomenon underlines the declining international competitiveness of the EU, which presents a severe challenge for it. 

In the early days, integration was instrumental for the economic growth of EU members. As international competition gets intense, the downside of integration manifests itself. With expanding membership and diversifying interests, it is increasingly difficult for the EU mechanism of “shared sovereignty and consensus” to adjust to the fast evolving international landscape. On the contrary, it becomes hardened to change or reform and even grows into bureaucracy. When meeting with the press early this year, Junker admitted that populism that had gained traction in some European countries is largely a mistake made by the EU itself. The EU and the European Commission gives people the impression that we are taking charge of everything. We try to exert influence on things that should better be done by member states, local governments and regional authorities. In other words, the EU institutions based on the principle of shared sovereignty have evolved into centralism which goes against the vision for integration. 

Belgian Prime Minister Charles Michel said that when we talked about Europe in the past 10 and 15 years, we only mentioned crises: refugee crisis, budget crisis and financial crisis. We must now realize the new European dream, said Michel. What is the new European dream? Even the Europeans may not know the answer. The old European Dream, or a Federated Europe, which is the vision of those who advocate European integration, proves to be not workable. As Tusk said, the Utopian attempt to build a Federated Europe is speeding up the disintegration of the EU. 

The EU is stuck in a dilemma. If it continues on the current path, the prospect is bleak. If it does not reform, it cannot survive. However, it is not able to pursue necessary reforms. Not only member states are haunted by the curse “anyone who makes reform loses votes”. (A case in point is the plummeting support for Macron after he took office.) What is worse, it is all the more difficult to reach consensus on reform among the 27 member states. 

Third, it remains unclear where the EU should be heading. Member states didn’t reach a common understanding on this even in the early days when the European integration started. France and Germany, the two locomotive countries that drive integration, have different calculations. The French wanted an integrated Europe in the hope to contain the rise of Germany, the country which had wrought havoc on Europe. Germany, on the other hand, had no other choice but to accept integration so as to improve its tattered image after the Second World War. Yet, Germany never abandons its strategic goal to turn Europe into Germany’s Europe. The accession of the UK and Central and Eastern European countries, which joined the EU after the Soviet Union collapsed in the 1990s, resulted in more diversified interests. Divisions also grow over the future of the EU.

The shifting international dynamics over the past 10 years and the inherent problems of the EU further divide the bloc. There are both economic disparity between the North and the South, and differences on values between the West and the East. The EU is yet to embark on a new path toward deeper integration. When the new Treaty of Rome was signed in March, Junker said the challenges we are confronted with at the moment can by no means compare with those facing the founders of the EU. Things have changed. EU leaders, however, fail to adopt a new thinking. They still get along with the idea of a closely united Europe. 

In the five plans announced by the European Commission concerning the future of the EU, France and Germany, in collaboration with Italy and Spain, set the vision for a multi-speed Europe. Core countries and other members are encouraged to pursue integration at different paces. Central and Eastern European countries fear that they may be regarded as second-class countries and, therefore, have reservations on this idea. In the Rome Declaration adopted at the EU Summit in March, the statement was changed from “Some countries could work more closely and deepen integration at a faster pace.” to “We will act together at different paces and intensity where necessary.”Even so, the Polish prime minister still voiced his dissatisfaction over the declaration. It, therefore, can be expected that the EU plan for a multi-speed Europe will not proceed smoothly. The question still lingers as to where the EU is heading. 

It is worth noting that the European Commission recently prepared to invoke Article 7 of the Treaty of Maastricht to sanction Poland on the ground that Poland’s judicial reform goes against the EU principle on the rule of law. The European Commission also sued Poland, Hungary and the Czech Republic at the European Court of Justice for refusing to accept refugees. The French President made preparations for the France-Germany-Italy-Spain Summit to plan the future of the European integration. He visited Austria, Romania and Bulgaria, but refused to go to Poland, Hungary and the Czech Republic. Sanctioning member states and bringing them to the court seldom happens in the history of the EU. What has happened shows that the differences and disagreements between East and West Europe can no longer be glossed over. And this surely bodes ill for the EU to advance integration. 

On the external front. First, the Brexit negotiations.The negotiations started in late June, and two rounds have taken place (once every month). So far, the negotiations haven’t produced any agreement. First, Brexit is unprecedented in EU’s history. It will hurt both sides. As both sides want to minimize the damage and protect their own interests to the greatest possible extent, it is difficult for them to make compromises.  Second, the EU wants to use the negotiations as an opportunity to deter others from following the UK’s example and promote solidarity that is most needed by the EU at such a time of crisis. The EU, therefore, has asked for a high price in the negotiations and delayed talking about the future of UK-EU relations. The UK does not back down either. It first produced a hard exit plan and made it clear that it was prepared for any result, whether the negotiations succeed or fail. At the same time, the UK uses its advantage in terrorist intelligence, security and finance against the EU. It is extremely difficult to conclude the negotiations as scheduled within two years after the UK applied for exit from the EU, i.e. by March 29, 2019. During this process, Brexit negotiations will be the biggest uncertainty that has an impact on the entire Europe. 

Second, trans-Atlantic relations are deteriorating. The US and EU are turning from allies into adversaries, who are now in an open face-off. At the deeper level, things have come to where they are now because the US has been the only super power following the disintegration of the Soviet Union and it seeks dominance in the world. With the unification of Germany and the deepened and expanded integration of Europe, the gap between the EU and the US is narrowing. The EU does not want to be subordinate to the US on the world stage and hopes to be on a par with it. This strategic objective has exacerbated EU-US differences. 

Hillary Clinton, who had strong backing of EU countries, lost the US election, while Donald Trump at whom they openly expressed displeasure unexpectedly won the election. To make it worse, Trump, upon taking office, supported Brexit, criticized Germany and made negative statements on the EU. All these have further offended the EU which is dominated by Germany. As a result, President Tusk of the European Council openly said Trump’s election as US President is an external threat to the EU. Chancellor Merkel of Germany said that days when we fully rely on others are, to some extent, over, and that we Europeans must have our fate firmly in our own hands. 

That said, it is still far-fetched to say that Europe has embarked on a “path toward independence”. The US-Europe alliance built after the Second World War is the cornerstone of the diplomacy of both sides. It also underpins their growing strength over the past decades. The US and Europe are already closely interconnected and interdependent. Though the two sides have increasingly sharp differences amid frictions and quarrels, they still have to maintain trans-Atlantic relations for the sake of their fundamental interests. Yet both of them put their own interests first. Such a change has no small implications for Europe and the whole world. 

Third, divergence on Russia policies. Such division arises because countries find themselves in different contexts with diverging strategic interests. In a nutshell, the US as the only super power does not want to see a resurgent Russia. Therefore, it has used NATO’s eastward expansion as a major way to squeeze Russia’s strategic space and continue to tear Russia apart following Soviet Union’s disintegration. After the end of the Cold War, the successive US presidents have never abandoned this strategic agenda. After taking office, Trump has made goodwill gestures to Russia. It is no coincidence that those who are opposed to Trump in the US accused him of colluding with Russia and make big stories out of it. This speaks to the entrenched anti-Russia sentiments in America. EU countries, especially Germany, France and Western European countries, also expand their spheres of influence through NATO expansion. However, they believe in putting pressure on Russia as appropriate and pursue mutually beneficial cooperation with Russia out of geopolitical and economic considerations.  This is in stark contrast with the US. In May when US-Russia relations became increasingly intense, Chancellor Merkel met President Putin in Sochi, though she had proclaimed that she would not visit Russia if there were no de-escalation of the situation in East Ukraine. President Macron of France also welcomed Putin in Paris soon after he took office. What the two European leaders did shows that Western European powers are reluctant to follow the US with regard to their Russia policies. 

It is also worth noting that Central and Eastern European countries are also at loggerheads with Western European powers on their Russia policies. The former are more worried about security threats from Russia and, therefore, stand for sanctions on Russia even if their economic interests are at stake. While France and Germany underscore the importance to build Europe’s own defense forces to reshape European integration, Poland and other countries are firmly against it for fear that this weakens the security protection provided by the US-led NATO. In the US, both Obama and Trump seek to exploit such East-West division to weaken Europe. US Defense Secretary Mattis promised military assistance to Ukraine during his visit to the country. At the same time, the US administration sent a special envoy to Russia to consult on the US involvement in the Minsk Agreement process concerning Ukraine. In fact, the sudden interest of the US in Ukraine, a non-NATO country, underscores its intention to force its way into the Minsk Agreement process that has been dominated by Germany, France and other EU countries, and exert its own influence. Such division among various stakeholders on their Russia policy has made the situation in Europe all the more complex. 

At the moment, the world order is undergoing momentous changes. The order dominated by the US and Europe is hard to sustain, while a new one is yet to emerge. In the global landscape, the European situation, under the impact of internal and external factors, is the most fluid and exerts the most visible impact on the whole world. It, therefore, calls for more attention and research. 

Ding Yuanhong is Former Head of the Chinese Mission to the European Union.