THE GROWING DISAFFECTION FOR THE EUROPEAN PROJECT: HOW TO RISE TO THE CHALLENGE?  

Bill Emmott, Editor-in-chief of The Economist 1993-2006, author of ‘The Fate of the West: The battle to save the world’s most valuable political idea’

 

It is remarkable how rapidly sentiment changes. A year ago, in the wake of my country’s Brexit vote and in anticipation of a strong showing by Marine Le Pen’s Front National in the French elections this May and June, the consensus was that “Europe” posed the biggest threat to what is often described as the “liberal international order” – the open system for the exchange of trade, capital, people and ideas that we have built and enjoyed for the past 70 years or so.

 

A NEW SPIRIT OF OPTIMISM AND SELF-RELIANCE
Now, with a tall, handsome, youthful Emmanuel Macron in the Elysee Palace and with Donald Trump in the White House, Europe has suddenly become to be seen as liberalism’s greatest hope.

We have an economic upswing in the Eurozone at last, we have the likelihood of Chancellor Angela Merkel being re-elected in Germany’s September elections, and we have that same Chancellor Merkel declaring that “Europe must take its fate in its own hands”.

A new spirit of both optimism and self-reliance is in the air. Public opinion polls assign higher approval ratings for the EU than at any time since the 2008 financial crisis. Brexit is an irrelevant sideshow, an act of political self-indulgence and self-harm by Perfidious Albion, a country which is in a state of quite monumental political confusion. Italy remains a concern, with elections due by next spring, the anti-euro party the Five Star Movement leading the opinion polls and Italian banks having to be rescued by the state, but it is assumed that some sort of stable centrist coalition will prevail, muddling through in a typically Italian way. Hungary and Poland are being rather beastly and illiberal, but they lack the ability to bring the whole EU show down. The flow of migrants across the Mediterranean continues, but in somewhat more manageable numbers than before.

It is all very heart-warming from a European point of view. But our question today must be: what does this really amount to? Can things really have changed so radically in just a few months, largely thanks to one election in one country?

 

EUROPE’S UNDERLYING PROBLEMS
The answer of course is no. As a media veteran, I am the first to say that media moods and the way politicians interact with them is often very short term and short sighted. Europe’s problems have not gone away. All that has really happened is that thanks to Macron’s election both France and the EU have dodged a bullet, for a Le Pen presidency could certainly have transpired had one or two more political accidents and scandals occurred.

So there is now a chance for something positive to be done instead. But what?

We need to reflect on Europe’s underlying problems. One important point is that since at least the Dutch and French referendums on the EU constitutional treaty in 2005, whenever EU citizens have been asked to deliver a verdict on the EU they have mostly given it in the form of a loud raspberry. The Brexit referendum was just the latest, if most consequential, example.

We also need to reflect on the impact of the euro sovereign debt crisis since 2010. For most of its history, European integration and collective action has been seen as a solution to national problems. During the euro crisis, in many countries, especially in southern Europe, EU integration came to be seen as a problem in its own right. The fiscal pact agreed in 2012 turned the main impression of the euro into one of a debtor’s prison, from which there can be no escape. It is a far cry from the hopes at the launch of the single currency in 1999-2001, when it was seen as a cure for beggar-my-neighbour devaluations and a beneficial pressure for liberalisation and new economic dynamism.

For it was seen as the latest answer to a long-term problem of European competitiveness. Stated broadly, the fact is that until the mid 1980s, unemployment in Western Europe had always since 1950 been lower than that in the US; since then it has always been higher, except for briefly in 2009. And until the early 1990s, West European productivity had always, since 1950, been catching up with that in the US; after then, it began to slip behind once again.

So we have a long-term problem of economic performance, a medium-term problem of grievances towards the euro and the management of sovereign debts, and a short-term problem of populist politics of both right and left. Oh, and we ought to add the issues of Russia’s flouting of international law in Ukraine and Georgia, of the pressures of terrorism in many European cities, and the difficulty of finding a collective approach to that most shared of problems, the flow of migrants from south and east. So, finally to address the question: How to rise to the challenge?

 

WE NEED OPENNESS AND EQUALITY
I am a firm believer that only openness – liberalisations and reinforcements of competition through national reforms and the extension of the single market – can in the long term improve Europe’s economic performance and create hope for its new generations. But not openness alone, and not only at national level.

Liberalising reforms – Lisbon agendas, deregulation, the digital single market, a full single market for services – are necessary but not sufficient.

The changes they bring need to be made acceptable to voters by simultaneously investing in and extending the sense of equality, of opportunity and justice and rights and security, that has in the past bound us all together. And they need to be reinforced by projects of European collaboration that are sufficiently ambitious and creative that they stand a credible chance of convincing voters that better times lie ahead and that Europe is a positive contributor to those better prospects.

At times of social crisis and political grievance in the past, our countries have responded by making ambitious moves towards greater equality of citizenship and participation – extending the franchise, for example, building free public education, creating a university system for the masses and not just a privileged few, creating national health services, building systems of welfare to provide a sense of security.

That is what all of us need to do today, in our national politics – in France, in Britain, in Italy, in Germany, and no doubt in Ireland too.

As we have proved in the past, without openness, we cannot thrive. But without equality we cannot survive. This is the trick President Macron needs to pull off during the next five years if the Front National is not to have a second chance at government in 2022. But it also needs a major European dimension. For what the European Union has achieved above all has been to make openness a safer and more constructive goal, removing or deterring destructive national competition while also providing the room and the mechanism for collaboration on projects that are too big for any one of our countries to do them on their own.

Now, the re-emergence of a Franco-German partnership can, and should, make possible the transformation of the EU from being an entity that principally says “NO” into one that says “YES and let’s do it together”. What might that mean? It means principally two big things: first, a more generous approach by Germany to the management of the Eurozone, in particular in terms of sovereign debt; and, perhaps as a precursor, a major collaborative initiative of public investment in infrastructure, infrastructure which of course crosses national borders.

The public investment project known as the Juncker Plan is small and depends chiefly on private funds and hence private sentiment. What is needed however is a change in that sentiment. And only public funds, exploiting historically low borrowing costs, can achieve that. The economic upswing needs a big boost to allow it to have a real impact on jobs and incomes, and the best way to do that would be through public investment in capital projects. A super-smart electricity grid is one example. But there are many others.

Could this be done, given political resistance in Germany? Yes, it could. If she is re-elected, Chancellor Merkel would surely be beginning her final term, after 12 years in office, which is a chance to take risks. But also the election may well move Germany away from the current grand coalition and to a new coalition that would include the liberal Free Democrats, offering changes of ministers and of mood.

Faster economic growth will be the best way to reduce sovereign debt burdens. But also it will be the best way to turn public opinion pro-European and pro-liberal again, in a sustainable way.

The opportunity is there. It needs to be seized.

__________

 

 

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