EU at the Crossroads: Integration or Disintegration

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Written and produced by SF Team: J.Hawk, Daniel Deiss, Edwin Watson; Voiceover by Dermot Arrigan

While the European Union is theoretically the world’s biggest economy using the world’s second most popular currency in international transactions, it remains to be seen whether in the future it will evolve into a genuine component of a multi-polar international system or become a satellite in someone else’s—most likely US—orbit. There still remain many obstacles toward achieving a certain “critical mass” of power and unity. While individual EU member states, most notably Germany and France, are capable of independent action in the international system, individually they are too weak to influence the actions of the United States or China or even Russia. In the past, individual European powers relied on overseas colonial empires to achieve great power status. In the 21^st century, European greatness can only be achieved through eliminating not just economic but also political barriers on the continent. At present, European leaders are presented with both incentives and obstacles to such integration, though one may readily discern a number of potential future paths toward future integration.

United Europe or Fourth Reich?

The greatest obstacle toward further European integration is the dominant position of Germany within the Union, and it remains to be seen whether a unified German state is compatible with a united Europe. The most recent two attempts to establish a pan-European empire were done by the dominant European actors at the time, namely France in the early 19^th century and Germany in the early 20^th, and failed because the imposition of rules beneficial to the hegemon provoked resistance—though going to war with Russia in both cases proved to be the fatal mistake.

Today, Germany once again dominates the continent, though it does so using a velvet glove of the Eurozone and the European Central Bank rather than the iron fist of the Wehrmacht. While the German media are full of self-serving praise of their country’s economic prowess, it is unlikely in the extreme German economy would be enjoying export successes had its key trading partners, namely other European countries, not been prevented from engaging in self-defensive economic measures such as devaluations by the existence of the single currency. Consequently there is a strong anti-German sentiment within the EU which provides much of the fuel to the Euroskeptics. After all, many of the unpopular EU policies, starting with fiscal austerity, are backed by Germany whose economy benefits from a strong, low-inflation Euro.

Moreover, the current crop of German leaders, starting with Angela Merkel herself, view themselves as Germans first and Europeans second. Angela Merkel  is an “alumna” of the German Democratic Republic where she never experienced European integration, and where revanchist nationalist sentiments re-emerged after reunification. Her political success had a lot to do with her desire to quietly promote “Germany First” policies under the guise of European integration. But what is good for a German is lethal to a European. If European integration is to have a future, it will have to start with an attitude change in Berlin. Fortunately, there are a number of factors encouraging Germany’s leaders to do so.

The US Factor

Aside from the contradictions inherent in the EU’s economic and political structures, the greatest threat to the European Union emanates from the least anticipated direction: the United States of America. At no point did European leaders, with possible exception of Charles de Gaulle, consider the European project as a challenge to the US power. Rather, they viewed United States as a benevolent hegemon without whose good offices European integration or, for that matter, postwar reconstruction, would not be possible. They also never considered the possibility the United States might change its own attitude toward Europe, which it viewed as a comfortable political backwater permanently in America’s shadow, a quaint theme park of cheeses, chocolates, wines, and luxury automobiles, but not a challenger or even a rival to the US.

When the era of post-Cold War globalization began, United States still behaved in a benign and condescending manner toward potential rivals. It was still the Ronald Reagan’s self-confident “Morning in America” superpower. The 1970s stagflation and Jimmy Carter’s sense of “malaise” were a distant memory, it has just seen off the USSR as a political and military rival and Japan as an economic one, so what could possibly go wrong? Who could ever question America’s military, economic, and scientific supremacy? Russia was in the throes of severe crisis which was sure, according to most US pundits’ predictions, to render it a US satellite, China was only beginning its economic transformation, and the EU was still in America’s shadow.

It may have remained this way indefinitely had America’s political economy remained inherently viable and sustainable. Four decades of neoliberal reforms, alas, greatly sapped the strength of America’s middle class whose buying power was the backbone of the US economy as well as that of many economies around the world. But as US consumers’ purchasing power has waned, successive US administrations try to preserve the illusion of prosperity by expanding consumer credit and promoting policies leading to massive asset “bubbles” of a magnitude not seen since 1929 in the hopes of creating a “wealth effect” to keep Americans spending. After two financial crashes and faced with the prospect of a third, inflated during the Obama Administration, the Trump Administration decided Americans’ prosperity would be preserved by destroying economic competitors. Russia, a major exporter of natural gas and oil, was the first to be targeted in order to reduce its share of the global market by the Obama Administration. Economic warfare against China followed a few years later, and the next targets on the list are America’s “allies” running major trade surpluses with the United States such as Japan, the Republic of Korea, and the countries of the EU.

The Mental Barrier

Europe has to decide for itself whether it is mentally prepared for a confrontation with the United States. So far there are nearly no indications it has the ability. Irrespective of US tariffs (de-facto sanctions) on European steel and aluminum, the ban on dealings with Iran following the peremptory US withdrawal from the JCPOA to which the EU was a party, the looming sanctions against North Stream 2, the demands to spend more on US weapons and desist from developing an independent European security and foreign policy identity, the pressure to ban Huawei, and the likely tariffs on car imports from Europe, EU officials are still treating it as a big misunderstanding. Or, at most, as a product of Trump’s generally erratic personality, forgetting these policies are being both initiated and implemented by an army of bureaucrats left over from the Obama Administration. Few things testify to the level of self-delusion than Angela Merkel, whose personal cell phone was listened to by the NSA and whose North Stream 2 pipeline to Russia is facing the threat of US sanctions against German entities engaged in its construction and maintenance, and Turkey, which is facing similar US pressure, drop its plans to procure the S-400 air defense system from Russia.

On the other hand, the increasingly harsh US treatment of its allies is helping Europe overcome that mental barrier. Even Merkel was forced to conclude that the United States could no longer be trusted and that Europe would have to forge its own path. Much depends on what the post-Trump US foreign and trade policies will look like, but there are few indicators Washington is willing to end to the new cold war against China and Russia. After all, the original Cold War created the huge US national security bureaucracy and defense industry which form an irresistible pro-conflict lobby. But if the US persists on that path, the heavy-handed treatment of the EU will persist as well, since the US will need to bend Europe to its will in order to improve its chances in the conflict against the great powers of the East.

Eurasia Calling

While the attraction of Atlanticist orientation is fading, the attraction of a Eurasian one is increasing thanks to the growth of China and Russia and their more restrained foreign policies. Most European countries, particularly Germany and even France, have resisted US pressure to blacklist China’s Huawei. While Emmanuel Macron dismissed US national security threat claims by labeling Huawei a commercial entity that can be regulated using normal industrial standards, his statements should be taken in context of European experts sounding alarm at the “digital colonization” of Europe by US high tech firms. That vulnerability can be offset by cultivating alternatives in the event the US-EU conflict escalates.

By the same token, Germany has been steadfast in its insistence on the construction of North Stream 2 and has managed to obtain France’s support for the venture. Europe’s independence of the United States is taking the form of expanding ties with countries the US views as adversaries. Moreover, it does not hurt that both Russia and China prefer to see the EU as an independent actor, capable of developing its own foreign policy and defending own interests. While the United States has been promoting  the idea of the “Russian threat”, in practice very few politicians in Western Europe seem to believe such a threat exists, and the absence of that threat also facilitates Europe’s distancing itself from the US.

Fewer, but better, Europeans?

At the same time, the importance of the “Russian threat” cannot be dismissed. The North Stream 2, in particular, became a litmus test on pro-Eurasian vs. pro-Atlanticist attitudes, with the Atlanticists holding sway in countries like Sweden, Poland, Baltic States. But even here it is not clear whether the Swedish or Polish politicians believe Russia is planning to invade or whether they are cynically using the “Russian treat” card to obtain US support against Germany in their intra-EU power struggles. Worse, the political fault line demonstrated by the North Stream 2 debate is only one of many running through the EU which cannot achieve greater unity unless it deals with them in one of two ways: forcing peripheral EU countries to toe the line, or, more plausibly, by the “core” EU countries turning inward and developing new institutions without the participation of the more recalcitrant members.

One of the quotes attributed to Joseph Stalin, in the context of the 1930s-era purges of the Communist Party was that, in the future, there would be “fewer, but better, Communists.” Whether or not this quote is apocryphal, it describes the dilemma the European Union is facing. The expansion of the common market was beneficial to the core countries of the EU since it gave them privileged access to the “emerging markets” of Eastern Europe. On the debit side, the presence of less competitive eastern and southern European economies within the EU (and, in the case of Greece and Spain, even within the Eurozone) has spawned problems preventing the EU from continuing its integration. Open borders between poor and rich countries meant flows of economic migrants from the former to the latter. The presence of economic migrants has made itself felt in European politics on several occasions, fanning anti-EU sentiments. Thus the so-called “EU Constitution” failed after it was rejected by French voters following a publicity campaign about the dangers of “Polish plumbers”, and likewise the Brexit movement has drawn support from those segments of the UK’s population who find themselves competing for jobs with Eastern Europe’s economic migrants. At the elite level, the evolution of the EU into a patchwork quilt of countries representing a far wider range of economic development has meant bifurcation of the EU into “permanent donors” and “permanent recipients” of EU funding. The prospect of ad infinitum subsidizing states which do little more than send economic migrants as a sign of thanks no longer sits well with Western European polities. While the Euroskeptic parties still remain in the minority, their improved showing in recent elections meant that even the mainstream parties are embracing parts of their agendas such as curbs on migration and reductions in the so-called solidarity spending that was intended to blunt the effects of globalization and Eurointegration on the less well developed economies. Brexit would deliver a further blow to these adjustment funds, since Great Britain has been one of the major “donors” to the EU’s common budget.

How the drying up of the EU’s largesse to the less prosperous states will affect EU’s integrity remains to be seen, but it is bound to test pro-Europe sentiments. Since their accession to the EU, the rival political parties in the “EU funding sponge” countries have sought to outdo one another in describing themselves as the more effective magnets for EU funds. Reducing access to these funds will damage their political standing. Consequently, there is a revival of interest in reparations claims against Germany in countries like Greece and Poland for damage wrought by the German occupation during World War 2. This suggests a certain level of desperation as well as of conditionality of Eastern Europe’s commitment to the EU.

Two-Speed Europe

One should expect an effort to solidify the EU “core” even if it means loosening the ties connecting the poorer EU states to the “core”. US experience may serve as a guide, since it represents a relatively successful effort at economic and political integration. The success of the US approach is due to its integration went “deep” before it went “wide”. The US Constitution was ratified only by the 13 original states. The adoption of the US Constitution meant that individual states ceded their sovereignty to the federal government through the Commerce and Supremacy clauses. When territories applied to join the Union, they had to adapt themselves to the demands of the US Constitution wholesale. By contrast, the European Union went “wide” in seeking to attract as many members as possible, then made feeble attempts to go “deep”. So far these attempts have been unsuccessful and there is no reason to expect they will succeed in the future.

In its  current form, the European Union is not even as well integrated as the US was under the unworkable Articles of Confederation, yet it has accepted a far larger number of states that are considerably more heterogeneous in terms of their population size, economic development level, and not to mention the sheer linguistic and cultural diversity, while allowing each member-state to partake of only as much of the Union as they see fit at the moment. It’s as if individual US states had the ability to decide whether the Commerce or Full Faith and Credit clause should apply to them, or even whether or not to use the US dollar as their sole legal tender.

Continued European integration would demand an agreement on how to transfer national sovereignty to some as yet undefined and untested set of European political institutions that would not only guarantee individual rights but, more importantly from the point of view of national elites, preserve the relative influence of individual EU member states even after they gave up their sovereignty. Even if the Euroskeptics were not such a powerful presence in EU’s politics, it would still be an insurmountable task for even the most visionary and driven group of political leaders. Such a leap is only possible if the number of EU states making it is small, and their level of mutual integration is already high.

The post-2008 Eurozone crisis does appear to have communicated the unsustainability of the current EU integration approach, hence the recent appearance of “two-speeds Europe” concept which actually originated as a warning against the threat of EU bifurcation into well integrated “core “ and a less integrated “periphery”. In practical terms it would mean “core” countries definitely including Germany and France and possibly Benelux, would abandon the current policy of throwing money at the less well developed EU member states and instead focus on forging “a more perfect Union” consisting of this far more homogeneous and smaller set of countries occupying territories that, over a thousand years ago, formed what used to be known the Carolingian Empire. Like the US territories in the 19^th century, EU states outside of the core would have to “pull themselves up by their bootstraps” to earn membership in the core, which would require them to wholesale adopt the core’s political institutions.

The Clarifying Event

At the moment, of course, neither EU’s collapse or further integration in full or truncated form appear likely. As it has done for the past several decades, the European project continues to muddle through by adopting policies just good enough to cope with whatever crisis has just appeared. But what if the next economic crisis approaches the pain levels inflicted by the Great Depression of the 1930s? An event of this magnitude could not be effectively dealt with using half-measures the European Union is so fond of. It would pose the Union with a stark choice of integration, even in truncated form, or collapse into constituent states and becoming an arena for struggle among the real major powers of the day.  Certainly there are enough politicians in Germany and France, and even in smaller European countries, who remember a time their countries or at any rate the continent as a whole ruled the world. If that choice ever has to be made by Europe’s leaders, one should not automatically assume the seemingly decaying Old World would not rediscover its “will to power” yet again.