The Growing Disaffection for the European Project: How to rise to the challenge?
Prof Brigid Laffan, Director, Robert Schuman Centre for Advanced Studies, European University Institute (EUI)
This is a challenging subject that needs to be unbundled. If I were delivering this talk last year, less than a month after Brexit, it would have been relatively straightforward. Brexit, the decision to leave by a large and important country, the choice of exit over voice would have been strong, compelling evidence of the growing popular disaffection with the European project. One year on, the evidence is much less categorical and requires a more nuanced discussion. The state of Europe’s Union can now be read in many different ways. I will do three things in this paper. First, a short discussion of the multiple crises that Europe faced since the end of 2008, almost a decade ago, which left politics in Europe fractured and fractious. Second, I will offer an overview of the ties and tensions that are part of the dynamic of European integration and cannot be wished away. Third, I will offer an analysis of what I call a ‘window of opportunity’ and the potential for a ‘virtuous cycle’ in the EU. I argue that the potential for this virtuous cycle stems directly from the shifts and shocks of 2016. Brexit, followed quickly by Trump’s victory, has dramatically altered the challenges facing the EU and the choices it must make. Both have acted as an external shock that so far has increased cohesion within the EU, not reduced it. My overall conclusion is that the pervasive pessimism of the last decade was excessive but so too would be a surfeit of naive optimism.
The Crisis Legacies
When the European Union welcomed its new members in May 2004 in what was the most extensive enlargement in its history, those gathered at Dublin Castle had reason to be optimistic about the Union’s future. The EU had played a central role in easing the transition from a divided continent and a divided Germany to a system that was continental in scale. The addition of 10 new states by 2008 transformed the reach of the Union and underpinned its centrality as the core European institution above the level of the state. What a difference a decade makes? On the eve of the financial crisis, the EU was a viable regional economy, underpinned by law, and a system of multilevel governance, but neither a state nor a nation, and there were very few indications of a desire by mass publics to change this state of affairs. That said, European regionalism appeared robust and resilient (Laffan 2016). Since Autumn 2009 however, almost seven years ago, the Union has been beset by multiple crises and the optimism of May 2004 morphed into deep pessimism and a weakening of confidence that the Union can address its challenges and remain a vital part of the European state system. Discussion of EU divergence, differentiation, de-stabilisation and disintegration became commonplace. During the past seven years, two core EU regimes, the Euro and Schengen, have come under extraordinary pressure and an important EU member state, the UK, is gearing up to leave. Political energy in Europe over the last decade has almost all been absorbed in crisis management and emergency politics.
The multiple crises led to deep cleavages among the member states and the Brussels institutions did not appear up to the task. The Eurozone crisis pitted creditor states against debtor states as the cost of contagion was felt in one country after another. For all states and their peoples, their mutual interdependence and vulnerability was exposed for all to see and feel. Remember the atmosphere in Ireland in the lead up to the Troika as we all watched the spreads rise and Ireland’s position become critical. The Eurozone managed to get to grips with the crisis albeit with great difficulty. New laws and financial instruments were agreed, bailouts organized and a strengthened system of economic governance established. The ECB was in the end the indispensable institutions that had the firepower to quell the acute phase of the crisis. The legacy of the Eurozone crisis lingers on, particularly in Greece that needs debt write offs to give it the possibility of getting on a better trajectory. But the problems were not just in Greece; Italy has lingering problems with its financial system and overall Eurozone growth remained poor for a very long time. If the Eurozone pitched Northern Europe against the south, the refugee crisis and the question of migration has become an East West fault line. The Syrian war and general instability in the Mena region and further south in Africa, has generated enormous pressures for outward migration and mass movement of people. This came to a head in summer 2015 when well over a million refugees arrived in Europe through Greece and to a lesser extent Italy. During the refugee crisis, it became apparent that the Dublin system of treating refugees at the point of entry had completely broken down and Schengen was effectively suspended. The apparent inability of the EU to respond to the crisis and to ensure compliance with burden sharing exposed the divisions among the member states. In Hungary, the Orban Government resorted to building walls and making it more difficult to navigate the Balkan corridor. The deep east-west fissures in Europe were exacerbated by the illiberal turn in Hungarian and Polish politics.
Perhaps the most significant impact of the multiple crises of the last decade was the impact on democratic politics in Europe both at EU and national levels. The Great Recession had a profound influence on politics in the member states and on the consequences of EU level action for domestic politics. Europe was a live political issue in crisis elections. Writing in 2000, Peter Mair concluded that ‘Europe fails to impact on national party systems because it is held at one remove by the competing political leaderships, so that, in terms of domestic politics at least, it is often depoliticised (Mair, 2000, 48). This only held true in the 2013 German election where the issue of Europe was kept off the political agenda. Germany was also distinctive in that the Chancellor was re-elected. In other member states, one crisis legacy was and remains the volatility of domestic politics and the punishment of incumbents. In the first round of crisis elections, eight incumbent governments lost power though elections and two governments were replaced with technocratic governments. Europe’s citizen’s used the electoral channel to ‘kick the rascals out’. According to Hernandez and Kriesi, ‘incumbent parties have been more severely punished as the economic conditions of their country worsened while they were in office, (2016, 210). Punishment was severe with some mainstream parties losing between 7-25% of their votes, which was historically unprecedented. In most countries, voters opted for the available traditional opposition party or parties except in Greece. Syriza, a challenger party, managed to gain power in January 2015.
The effects of the recession were felt not just in the electoral arena but in party systems. Traditional parties were not just punished in the short-term but more lasting effects may be seen in party systems. Mainstream parties both in government and opposition suffered losses to parties on the left and right. The Greek party system was transformed with the collapse of the once powerful PASOK party. In Spain, the two new entrants into the electoral arena – Podemos and Ciudadanos – had a dramatic effect on a once stable two-party system. The winners from these shifts were parties of the populist radical right and the radical left. Although challenger parties are not a new phenomenon in party competition in Europe, their vote share increased from 10% to 23% between 2004 and 2014 (Hobolt and Tilley, 2016). Both ‘identity’ and ‘left-right’ politics are at play but for different voting cohorts. Voters who defect to left wing challenger parties are concerned about redistribution.
Redistribution remains a core left-right conflict. Defection to the right however implies ‘identity politics’. Voters who defect to right wing challenger parties are much more anti-immigration and anti-EU than mainstream loyalist voters. Defection to the right points to a growing number of Europeans who combine an anti-EU and anti-migrant profile. These are the voters who object to the undermining of national political and cultural community through immigration and the undermining of national autonomy though a deepening of integration. This trend confirms Grande and Kreisi’s finding that EU politicisation was part of a deeper structural shift in European politics that is leading to a restructuration of domestic politics in Europe (Kriesi, 2009, Grande and Kreisi, 2015). Both left-right and identity dynamics and politics may re-combine in relation to questions of labour mobility and immigration in the Union. The Brexit referendum, for example, saw both left-right and identity politics at play.
Political scientists are grappling with trying to understand the drivers of the apparent volatility, unpredictability, polarisation, and the re-emergence of a politics of resentment. There appears to be a complex interaction between economic drivers and cultural drivers that has been understood as the emergence of a new cleavage based on identity politics. Trade and technology have altered labour markets in the global north as older, white and mostly male workers lost jobs in a new and emerging political economy. Their grievances have tended to meld with resentment of migrants and the emergence of multicultural societies. Questions concerning who belongs to political community, and who feels that they have adequate voice in contemporary politics, are cutting across traditional left-right distributive issues. The most pronounced marker of political behaviour in identity politics is education, with the more educated characterised by more open and inclusive political identities whereas those who are less educated are more likely to exhibit both economic and cultural grievance.
Many possible consequences flow from these developments. The mainstream parties, even those in opposition, are being squeezed both on the left and the right, which has implications for government formation. Ireland’s 2016 election produced the most fragmented Dáil in Irish electoral history and the longest process of government formation. Two elections in Spain failed to produce a government for a very long time. From an EU perspective, the limited competences of the EU in the social sphere and the size of the EU budget militates against greater European level responsiveness to those seeking further re-distribution, and EU rules in economic governance limit the capacity of national parties to expand welfare budgets and entitlements. In fact, the pressure is towards fiscal consolidation and structural reform. Moreover there is a major disjuncture between politics in the European Parliament and the domestic level. The rise of challenger parties and anti-EU mobilisation was evident at the European level in the 2014 EP elections; Eurosceptic parties amassed votes across the continent and polled over 25% of the votes in five member states – France, the UK, Italy, Greece and Denmark. The fear over the last five years was that a populist tide was spreading across Europe.
Referendums have long been associated with the politics of the EU; many member states hold either mandatory or consultative referendums on EU accession and major Treaty change. There is a widening of the use of referendums in the member states. National referendums have been deployed in 2016 on the question of exit (UK referendum June 2016), EU’s external agreements (Netherlands, April 2016) and on migrant quotas (Hungary, October 2016). These followed the 2015 referendum in Greece (July 2015) on the terms of their third bailout and the 2014 Swiss referendum on migration and free movement. All of these referendums were held within one country but by their nature created externalities for other member states and the EU as a whole. Referendums highlight the tension between the voice of one electorate and the system as a whole. The major conclusion to be drawn from developments in European politics is that the EU is now more contested and politicised than in its history and that the politicisation genie will not go back into the bottle. The future EU will be far more overtly political than in the past.
The Ties and Tensions of European Integration
The EU is destined to disappoint because it is unlikely to amass the kind of political authority and financial capacity we traditionally associate with statehood. Yes, the EU has considerable power and a wide-ranging tool-kit but it remains a heavily constrained polity. It has to be built with its member states and will not transcend them. If the benchmark for the assessment of the EU is the nation state, then it will always lag in terms of budgets, taxation power, administrative capacity, deep identity building and democratic character. It will always be thinner on all of these dimensions than the nation state. Moreover, it will by definition be subject to complex decision making processes and institutional configurations. If however the benchmark is that of international organization, then the EU is immensely more powerful than all other systems of transnational governance in the world. Bobby McDonagh captured this in a speech delivered in Rome in early July. He concluded that ‘There is only one European Union. The imperfect and extraordinary one that we have today. If this European Union were to disappear under the onslaught of scepticism or – equally dangerous – burdened by the unrealistic expectations of well-meaning perfectionists, there will be no European Union in its place’.
This one European Union has always been replete with tensions of various kinds but these tensions are now more acute than at any stage in the Union’s history.
The first tension is between the national and the European, the whole and the parts.
All member states would ideally want a Union in which they retain maximum autonomy but their partners were bound. The deal in the EU is, however, that in order to bind others, one must be open to being bound oneself. This brings with it immersion in an additional layer of law, politics and public policy. The nation state morphs into the member state and sovereignty morphs into pooling and sharing. The member states have not been transcended but transformed. They maintain and retain significant infrastructural power and capacity. The power to extract taxes remains formidable in EU states; as a ratio of GDP, in 2014 tax revenue (89% of all revenue) accounted for 40.0 % of GDP in the European Union (EU-28) and 41.5 % of GDP in the euro area (EA-19). This in turn provides the member states with the funds to re-distribute wealth though pensions, income support and health and to provide essential services to their citizens. Democratic politics are also largely bound to the nation state; national electoral competition is the route to government and local elections are the key to legitimising local power. Citizenship in Europe is dependent on citizenship of a member state and national identities continue to resonate with Europe’s publics. A succession of crises has added to the salience and purchase of national narratives; right wing parties successfully mobilize the question of migrants and the EU as the ‘other’ to the national. Let’s Take Back Control! We Want Our Country Back resonated very powerfully in the BREXIT referendum. The relationship between the whole and the parts is riven by the cleavages that have emerged through crisis, the north south cleavage in the Eurozone and the complex cleavage about migrants and refugees. The strident nature of Orban’s attack on the EU, supported by some of his colleagues in East Central Europe, points to the potential for national closure in Europe.
The second tension is between the EU as a problem-solving arena and a polity.
Since its inception, the EU has been a problem-solving arena par excellence-providing a frame from once hostile states to reach an accommodation, facilitating a breaking down of barriers to trade and exchange, assisting poorer member states join a larger entity that held the prospect of future prosperity. As the reach of the EU expanded from the end of the 1980s onwards, the Union has become an arena in which the member states addressed a very broad range of public policy issues in an incremental manner by drawing in the relevant national actors in a process of collective law making. The EU never saw itself only as just a problem solving entity. From the outset it adopted ‘polity’ like language; the member states in the Preamble to the Rome treaty were “Determined to lay the foundations of an ever closer union among the peoples of Europe’. The commitment to ‘ever closer union’ remains in the latest EU Treaty, the Lisbon Treaty 2009. That commitment was accompanied with a specification of the values that underpin Europe’s Union. The EU was and remains more ambitious in its aims, functioning and reach to the myriad of regional integration and inter-state systems of co-operation that exist in the world. It is for this reason that considerable attention has been paid to the challenge of legitimising this entity which is both above but incorporates its member states. It the EU was not regarded as a polity in its own right, considerably less attention would have been paid the impact of the EU on national democracies and the democratic quality of the EU itself as an entity.
The third tension is the classical tension between states and markets, between public and private power.
The single market has been one of the most successful projects undertaken by the EU since its inception. It has gradually but inexorably liberalised product and service markets across the member states underpinned by the so-called four freedoms-goods, capital, services and people. Because the Union has strong regulatory powers and capacities, the single market has acted as a magnet for third country economic actors wishing to avail of the advantages of this large and relatively free market space. The Union’s market power has not been accompanied by an equivalent public finance capacity. We have not witnessed the growth of the European market and the co-terminus development of a larger European budget. The social and re-distributive role of the EU is limited. The social rests on social regulation and workers’ rights and the re-distributive is limited to cohesion policy which is designed to enable countries to catch-up. There is no political commitment or policy instrument available for permanent transfers.
The fourth tension relates to the EU and its wider international environment.
The Union is part of a wider and very challenging external world. It has witnessed the revival of hard geo-politics to the east with Putin’s incursion into Ukraine. To the South, it faces a series of failing or failed states that in turn are acting as a powerful push factor for the increased movement of people across the Mediterranean. The increase in refugees seeking European protection in turn challenges domestic politics and service provision in the member states. The breakdown of the distinction between external security and internal security, graphically illustrated by the rise of European jihadism and terrorist attacks in Europe, underlines how important the neighbourhood has become to Europe. Between the disorder of the Middle East and Europe lies Turkey, a country whose relationship with the Union has been uneasy and troubled.
The fifth tension is between ‘ever closer union’ and the various forms of ‘variable geometry’ that has increasingly become part of the dynamic of integration.
The Union is characterized by a high level of differentiation across policy areas and member states. The Eurozone consists of 19 states and the Schengen area consists of 25 states, a number of which are not EU member states. The UK, Ireland and Denmark have opt outs from co-operation on in the Area of Freedom, Security and Justice (AFSJ). The Lisbon Treaty provisions on enhanced co-operation have only been used in relation to divorce law and patents. The Common Foreign and Security Policy (CFSP) is separate from other external policies and Denmark remains outside defence co-operation under the auspices of CFSP. Differentiated integration has not led to a two tier EU; rather an amalgam of opt-outs and varying levels of commitment to different areas of EU policy co-operation.
Notwithstanding these tensions that are part and parcel of the process of European co-operation and integration, 2017 has so far been a good year for the EU as it celebrated the 65th anniversary of the signing of the Rome Treaty in 1957 in Rome. The EU finds itself with a ‘window of opportunity’ and the possibility of creating a virtuous cycle to replace the vicious one of the last decade.
Why a ‘Window of Opportunity’?
A number of different factors have converged to open up a window of opportunity for the EU. These are:
What could this window of opportunity lead to in the longer term? The first thing to say is that the pervasive pessimism should not now be replaced by a naïve optimism or a sense of complacency. Populist parties have not gone away and in fact are electorally stronger than at any time in post-war European history. The instability to Europe’s south and demographic developments in Africa suggest that large numbers of people will continue to seek safety and a better life in Europe. Putin continues to try to undermine European democracies and his links to some East Central European governments are worrying. Trump may have been a fillip for the EU but if he begins to retreat from the global trading system the danger of tit for tat retaliation is potentially very dangerous for Europe which has an interest in the continuation of an open liberal trading system. Within the EU, there is the festering sore of the growth of illiberal regimes in both Hungary and Poland. The undermining of European values and institutions in both countries remains a challenge that to date the EU has failed to address with its legal and compliance instruments.
With all of these caveats the ‘doom loop’ of 2016 has been transformed into a very different set of circumstances. For the first time since President Hollande was elected in France, there is a meaningful prospect of Franco-German leadership in the EU. This would soften the weight of Germany and alter the balance of forces in the Union. Nothing will happen before the German election but once a new government is installed in Berlin, both sides will have an opportunity to work out what they might agree on. Historically the Franco-German relationship has been about managing difference between the big two. Chancellor Merkel is fully aware that the next five years are important ones for Europe. The trade-off between these two countries will resolve around France’s capacity for reform and Germany’s willingness to tackle some ‘sacred cows’. Rapprochement between them is not in any case enough for the next phase. The EU needs an easing of the north-south and east-west tensions in the Union.
The EU 27 agenda is broadly set. The first set of issues concern the Eurozone. Euro governance is still not at a stable equilibrium and Banking Union is incomplete. This is the first priority because without Banking Union the financial system remains fragile. Then there is the question of what else a more robust EMU needs. Macron wants a Euro Finance Mister but the key question is what would this Finance minister do-monitor compliance with rules or have a macro-economic role? Beyond this there is the vexed question of the Union’s public finance capacity an issue that is even more fraught because of Brexit. Should the EU budget move beyond an investment budget and how can the Union’s weakness in addressing crises be addressed? The absence of any stabilisation capacity during the Eurozone crisis impacted severally on the worst hit countries. Discussion of the future of the Eurozone is bound up with a post-Brexit financial framework. The Monti report on own resources delivered in December 2016 provides a framing of the kinds of things that need doing.
The second set of issues relate to defence and security. The strategic pivot by the US from Europe to Asia under Obama was a signal of a shift in Trans-Atlantic relations. The chaos under President Trump brings an underlying trend sharply into focus. Following the recent G7 in Italy, Chancellor Merkel boldly stated “the times in which we can fully count on others are somewhat over, as I have experienced in the past few days”. She went on to say that that “we Europeans must really take our destiny into our own hands” and she identified the others in the following way, “Of course we need to have friendly relations with the US, and with the UK, and with other neighbours, including Russia”. This was a very strong and compelling statement by a German Chancellor clearly signalling that Europe could not rely on the US or UK and bracketing them in the same sentence with Russia. This represented nothing less than a reversal of German and European sentiment towards its allies and would not have been said prior to Brexit or Trump’s election as US President. This does not translate into a coherent European pillar in NATO but there is no doubt that there will be developments in relation to European defence, security and border controls. Internal and external security is now fully intertwined. It is important to underline that what needs to be done in both Eurozone governance and defence and security are taking the Union further into the realm of core state powers and are thus clearly very challenging for the member states.
Linked to defence and security is the international role of the EU and how Europe reacts to the shifts and shocks in global politics. It has a core interest in maintaining multilateral institutions and an open and rule bound international system. Working with China and Japan the EU can continue to fight against protectionism although unfair trade practices must be addressed. Together with China and state level administrations in the US, the Union can and will promote the Paris Climate Agreement. Engagement with China, a rising power, must be strategic and smart given the capacity of the Chinese state to exert considerable long-term strategic power. The growth of Chinese economic and business interests in Europe makes China a major stakeholder in Europe but also raises some long term issues of reciprocity and control over strategic business assets.
The EU faces very challenging difficulties in its neighbourhood. For a long time the EU wish was that the world would become more like it. Political developments in Turkey and Russia in addition to the authoritarians at the EU table is a warning to Europe that it must protect and promote its interests in a more uncertain and fragile global system. It must focus on Africa to assist that continent achieve higher levels of prosperity and a demographic dividend and address the question of people-smuggling through Libya and other routes. If, as is predicted, the population of Sub-Saharan Africa doubles from 1.5 billion to 2.5 billion according to the UN, then addressing the multiple challenges of Africa must be central to EU foreign policy. A key to ensuring that Africa grows and prospers will be to empower women and educate the population. So too will be tackling the problems of bad governance and corruption.
Turning back to the internal dynamic of the EU, the single market remains a core EU asset. That market must adjust and adapt to the profound technological changes that are washing over our world. These changes affect virtually every facet of life in Europe both in the economy and the home. Are European public policy processes either at the EU or national levels ready for the fundamental shifts that are driven by technology and communication? Are there structures in place such as Chief Technological and Scientific officers to ensure that Europe can surf the wave of these fundamental changes? Is Europe ready for cyber security threats, big data, quantum computing, robotics and other forms of automation? What sort of business models prospers in this changing environment?
Let me end with three key points:
There are many repercussions and issues for Ireland in all of this. We will remain part of EU27 but must begin to grapple with what that might mean. Brexit is only one issue, and not the top issue, on the EU agenda. Ireland cannot afford to become obsessed with Brexit to the neglect of the future of EU27. Both go hand in hand and we need a twin track approach. In facing the uncertainties and contingencies of the next decade, Ireland and the Irish can be confident of our ability to adapt and adjust to those global and European trends. Given our history and size, Ireland does interdependence well. We must continue to do so.
 Ambassador Bobby McDonagh, speech delivered to ……