British ideas of Europe: PART 3. The European Union in Crisis.

In his book, COLLAPSE : Europe after the European Union,(Biteback, 2018) Ian Kearns issues a warning to Euro-optimists to cease dreaming of a brighter future. Get real, learn about your continent’s history, and smell the coffee. The fate of the continent is hanging by a thread: from the outside, Russia is seeking to destabilize the EU, and China’s footprint in Europe keeps growing. In the south, instability in the Middle-East spills over into Europe, dividing Europeans one from another, while the US commitment to Europe is on the wane. Internally, the Eurozone crisis has destroyed trust in mainstream political leaders. The lack of solidarity between creditors and debtors has fed the growth of populists parties of left and right. They should be seen for what they are: “the representation of a European body politics in deep crisis” and of a European electorate in search of something new and different.

His themes are all present in the three books under review. All three deal with the European crisis, and all three focus on Europe’s multiple ailments. Perhaps the most sanguine is Mai’a K. Davis Cross, The Politics of Crisis in Europe, (Cambridge University Press, 2017) who argues that the crises she analyses has led to the Union’s strengthening. Luuk Van Middelaar, in Quand l’Europe improvise: dix ans de crises politiques, (Gallimard, 2017, translated from the Dutch), does not disagree but argues that the severe crises of the past ten years show  Europe in gestation from an apolitical construction, inherited from the early years of the European project, to being a more highly politicised entity. A more sobre analysis is provided in the co-edited, and multi-authored The European Union in Crisis, Palgrave 2017.  As Christian Lequesne, from Sciences Po in Paris,  writes on the cover, this brilliant book “shows the necessity of analyzing the politics of member states” and assesses how the EU’s legitimacy is being called into question. I review the books in the order presented, and focus primarily on their core arguments. I end with some comments of my own before addressing the final part of this series on UK attitudes on Europe.

The Politics of Crisis in Europe.

David Cross starts her book with the observation that the EEC/EU has been plagued by episodes of integration panic since its early years, and that they all tend to show a broad pattern: the crisis is triggered, there is a build up, then a moment of peak crisis followed by catharsis and resolution. The prime location for panic she locates in the media, which serves to amplify the frenzy, helping to solidify the lines of dispute-a theme that she elaborates in her three cases studies: Iraq; the Constitutional convention; and the Euro.

The Iraq crisis  of 2002-2003 was born, she writes,  of US priorities and actions in the Mid-East, and spawned three major narratives: member states see crises differently; they are incapable of elaborating a common position, and the differences between Eastern and Western states are deep. These discourses all seriously misrepresented what was happening. By contrast, what did emerge was the sense of a new European identity, the tone of which was sent by a joint article by the two philosophers Jürgen Habermas and Jacques Derrida, published in May 2003. [1]In the mass protests across Europe against the war, Europeans of all backgrounds had come together  in what was described later as a “European Declaration of Independence” from the United States. “The crisis narrative dissolved almost as quickly as it had appeared, and the opportunity to move forward with the European project was strongly felt”.

Much the same pattern recurred, writes our author, following the constitutional convention called in 2002 to draw up a new constitution for the EU. At a speech at the Humboldt University in May 2000, (“From Confederacy to Federation -Thoughts on the finality of European integration”, available in pdf on the internet) Germany’s Foreign Minister, Joschka Fischer proposed a constituent treaty, setting up a European federation, with a directly elected president and parliament sharing legislative and executive powers. He later represented Germany at the convention, pushed for a common European defence policy with France, supported the moves to extend the reach of qualified majority voting, and backed the clause stipulating that EU law should reign supreme over national law. The resulting Treaty was submitted to referendum, but rejected by voters in France and the Netherlands in 2005.

The result, writes David Cross, was an “overblown narrative of failure”. [2] Three arguments were advanced: the Constitutional Treaty was a treaty too far and too fast; it was not necessary; referenda were in any case a blunt tool. The crisis only developed because the media and political leaders interpreted the rejection as a crisis for Europe.True, political leaders were not particularly good at informing their electorates. But the crisis blew over, and the Constitution was rejigged but in more impenetrable form, without changing the substance.[3]“The newfound consensus that subsequently led to agreement on the Lisbon Treaty, as well as to a flourishing of the European public sphere, shows the extent to which the release of tensions, she writes, during the crisis opened up a path to move forward”. [4]

Her third crisis is the Eurozone as of 2010. Again, the Cassandras lamented that the Eurozone travails illustrated the flaws in the global financial system; that the Euro was a bad idea; and that Greece was a real problem. Markets, she records, did not appreciate the political dimension of the single currency, and she quotes former Chancellor Helmut Schmidt as saying that the  crisis was no more than hot air “emanated by journalists and politicians”. Schmidt described the mood at the time as psychopathic and emphasized that it was really the Anglo-Saxon media that was to blame. She ends her analysis with the statement that “after the crisis, northern and southern views have converged in support of prioritizing the EU as the level whioch would decide economic policy, and the overwhelming majority believes that EU member states should and must work more closely together”. [5]

Her conclusion cannot but give comfort to the likes of Valery Giscard d’Estaing and Joschka Fischer who look forward to the creation of a European federation. The EU has staying power, she writes: “the cumulative effect of integration by crisis to date provides much more reason to be optimistic about the future of Europe in world politics than one might assume …The cumulative effect of these crises has not been to slow down or to reverse the integration that has been achieved thus far”.[6]On the contrary, the record shows that Europeans routinely chose more Europe, not less.

Quand l’Europe improvise: dix ans de crises politiques.

Luuk van Middelaar’s book is much less sanguine.  The EEC/EU project always held two ideas, he argues: one is as a project of peace, involving the abolition of the nation state; the other is a power project, bringing the member states into the heart of EU politics, and standing strong on the world stage. The project of peace has been advanced by creating the EU’s apolitical space in favour of a Commission peopled by technocrats and the ECJ filled with lawyers. The parliament is there but held at bay, and with limited powers. The project of power, by contrast, is predicated on the Elysée Treaty of 1963 between France and West Germany, the subsequent creation by Giscard d’Estaing of the European Council, and the direct involvement of heads of government and state in the EU’s proceedings. This European Council forms the collective Presidency of Europe, which Middelaar considers vital as the EU inevitably becomes more politicised.

As long as Europe was divided, and the EEC project worked to  hollow out the powers of national states, the Monnet method of a gradual transfer of responsibilities to Brussels could serve its purpose to create an apolitical space, reputedly under the rule of law. But with German unification and the passage to a Union, a quite different “politics of the event” became necessary as the EU came to impinge on an ever wider range of policies withdirect effect on citizens. The politics of the event, he writes, “is accompanied by quarrels, setbacks and tensions”, and “under the pressure of successive crises…new political actors appear, new forms of executive power are deployed”. “Whether it be the Euro, Greece, Ukraine or Schengen, the public realise that governments and (EU) institutions take daily decisions that effect the whole of the European entity, and that may no longer be disguised under the veil of economic or technological discourse”.

“In this new Europe, decisions no longer are rooted in the treaties or in expertise: as common responses to the needs of the moment, they are the result of a clash of convictions-the ‘(main) reason why they have to be justified in the eyes of the public. They have to be made comprehensible”.[7]

He develops his thesis of the EU improvising its way through successive crises by examining the cases the Euro (2010 and onwards);the Ukraine (2014); migration (2015);  and what he calls the Atlantic crisis-a compound of the Brexit vote of June 23 2016, followed by Trump’s election to the US Presidency. In all these crises, the public has erupted in one form or another into the arena of public affairs. “Over the last few years, the public has been able to feel how much Europe, through its currency, via its frontiers and its neighbours, reverberates in all national institutions, and how much..all national elections echo around the whole of the Union”.[8]

“The return of history, that we are experiencing since 1989, and that  has undeniably accelerated since 2008, incubates the return of politics. Democracy is the means to make social and political conflicts visible. Opposition, discord and dissent  will assuredly give Europe a new dynamism in which the politics of the event (as contrasted to the apolitical language of the Commission or the ECJ) will be deployed”. [9]

His prediction: the EU is heading into turbulent times, and will only be held together if “there is a shared conviction that what unites us as Europeans is stronger than what divides us”. [10]

The European Union in Crisis

Thisexcellent multi-authored book [11]  focuses much more on the domestic politics, and structures of the member states.  All the chapters are of a uniform high quality.

The editors start off by emphasizing that Europe’s crises are multi-dimensional, simultaneous and interdependent, and that the flaws in the EU edifice have long been known: its lack of legitimacy, the design of the Euro, the EU’s economic under-performance, the split between the northern and southern states, the surge in the EU’s ambition along with the parallel decline in public support, Brexit, or the aspiration to extend the EU’s influence eastwards into the Ukraine, and the resulting collision with Russia’s determination to create its own sphere of influence, and by military means. They conclude that “Failure to anticipate the crisis and to then find long-lasting solutions to its various challenges has been hugely damaging to the EU”.[12]

The volume emphasizes three key features of the EU’s crisis, that are referred to in different ways in all the chapters.

The first is the crisis of governance. Echoing Middelaar’s thesis, but with considerable more reservations about its implications, the volume sates that there has been a lack of clear, accountable Treaty-based leadership, resulting in a crisis of EU governance. There are many reasons for this: the context of permanent austerity has undermined the permissive consensus that the authors see existing in earlier decades; the Euro proved a fair weather vessel, “not designed for bad times”; [13]the responses to successive crises has been to clamour for “more Europe”, and more centralization; yet as Nigel Nugent points out, EU leadership has been dispersed between EU institutions and the member states, so centralization of powers has been accompanied by greater fragmentation and no support for any federal solution, à la Joscka Fischer. Indeed, as Paterson and Bulmer point out in their chapter on  Germany, Europe’s leading power has cooled on the original Monnet design and moved in  a more inter-governmental direction. German primacy is aggravated by France’s weakness and by Brexit.

Second, the authors make the crucial point that national political systems are more resilient than the EU “because citizens have much deeper and stable loyalties to nation states”. [14]Member states differ significantly in terms of national needs and preferences. The history of the Euro is replete with such differences: northerners have tended to portray southerners as “feckless”, as reputedly contrasted to  hard-working northerners; since the Euro’s foundation, the trends have not been to convergence of performance between Europe members, but to significant divergences; as Keven Featherstone and Dimitris Papadimitriou, rightly point out the quality of domestic government institutions varies greatly across the EU.  “EU member states with low quality government institutions are far more likely to have poor records in complying with EU laws, transposing EU legislation, and absorbing EU funding, while they are also found to have inefficient tax collection systems, low economic competitiveness and higher levels of public debt”.

Third, the EU is highly interconnected into the global system, and events around the globe have considerable but varied impact on the EU. No more so than in the Mid-East, where wars in Iraq, Libya and Syria have fed growing streams of migration from the region, threatening to unravel the Schengen agreement on free movement,  offered opportunities to “far-right parties to stoke xenophobic fears for electoral gains,” and prompted “the centre-right to co-opt anti-immigration rhetoric”.  [15]Another obvious example is the deep involvement of European banks in lending in the inter-bank market, and hence their vulnerability to the financial meltdown following on the collapse of Lehmann’s  in September 2008. Yet another is the differential pull of world developments on member states: Poland and the Baltic states reliance on NATO for defence; Germany’s dependence for gas supplies on Russia; or a growing Chinese corporate  presence in eastern and central Europe.

Will the EU centre hold, the volume’s authors ask? Maybe, answers Douglas Webber in his excellent chapter on the possibility not of integration, so much as of dis-integration. In either case, there will be two determinant factors, he writes: how domestic politics develop in the member states; and the evolution of Germany’s policy towards the EU.

The most likely outcome, the authors conclude, is “thus some muddling through rather than a dramatic reinvigoration or collapse of the integration process”. Lethargy prevails, because “the elemental value of the EU to member governments is likely to triumph over all other factors”. [16]

What conclusions may be taken from our authors?

The first is that the EU has shown resilience, as  demonstrated for instance in the EU-27 negotiations with the May government in London. As David Cross has pointed out, resilience has stimulated institutional innovation. But I would argue that she understates the changes while emphasising the continuities: the continuities she identifies as the institution tinkering that has tended to follow on each crisis. The change which she misses is fundamental to the underlying structure of the EU: the rise to primacy of Germany; the weakening of France; and the apparent exit of the UK from the EU.

Second, Middelaar makes a convincing case that the EU is fast becoming politicised, as national, EU-wide and global events reverberate around the EU edifice.This question has always been present as to how much politicization can the EU sustain in such a diverse Europe. Not too much, I would argue. Middelaar, though, says we should anticipate more, not less politicisation. The problem is that as our three editors point out, national loyalties trump EU loyalties, and one may add, national loyalties may not be at all compatible one with another. There have been more than a plethora of examples to illustrate the point. Middelaar’s thesis can therefore extend to asking the question: how much excitement can the EU survive. Our first author is sanguine. There is plenty of reason not to be.

Third, our three editors rightly argue that this is not the time to imitate the ostrich, bury your head in the sand and hope that the rest of the animal kingdom does not observe. “Muddling through, they write, is likely to become akin to riding the rapids”. I mix the metaphors. Their conclusion: “The opportunity must be taken to address design weaknesses and faults (my italics)”. I will argue in the concluding article in this series that the UK view of Europe holds the key to the region’s future-and that this consideration should be, but is not, present in the ongoing shenanigans in London, in Paris, Berlin and Brussels.  We turn to this in the final section.

[1]Jürgen Habermas, Jacques Derrida “February 15 or what binds European Together: A plea for a Common Foreign Policy, Beginning in the Core of Europe”, Constellations 10 (3): 291-297.

[2]Mai’a K. Davis Cross, The Politics of Crisis in Europe, Cambridge University Press, 2017,  p..110.

[3]Valéry Giscard d’Estaing, « The EU Treaty is the same as the Constitution”, The Independent,  October 30,  2007.

[4]The Politics of Crisis, p.153.

[5]The Politics of Crisis, p.210.

[6]The Politics of Crisis,pp.234-235.

[7]Quand l’Europe improvise: dix ans de crises politiques, Gallimard, 2017, p.35.

[8]Ibid. p. 394.

[9]Ibid; p.395.

[10]Ibid .P.396.

[11]Edited by : Desmond Dinan, Neill Nugent and William E. Paterson,The European Union in Crisis, Palgrave, 2017.

[12]Ibid.p.375.

[13]Ibid. p.73.

[14]Ibid p.375.

[15]Ibid. p.124.

[16]Ibid p..374.

About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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