The EU needs to reform and innovate to forestall Brexit's damage to its Budget and security capabilities, and manage France's economic nationalism
LONDON • What a difference a year makes. When the British voted to leave the European Union in a referendum held exactly a year ago this week, the mood throughout the EU was one of outright dejection and despondency.
The Brexit vote, most European governments feared, was merely a harbinger of worst things to come, to be followed by an electoral victory for anti-EU, extremist politicians in the Netherlands, France and - heaven forbid - even Germany.
The end of the EU was, we were confidently told, just around the corner, and populists in capitals as far apart as Moscow, London and Washington were already dancing on the EU's grave.
Well, none of this has happened. Instead, anti-EU politicians remain marginalised everywhere, including in Britain, where the UK Independence Party was pulverised at the recent general election. A rejuvenated French government is now firmly in charge in Paris, soon to be followed by a similar electoral victory for the forces of moderation in Germany. Meanwhile, EU economies are growing, and unemployment is falling fast.
Unsurprisingly, therefore, the EU's reputation has recovered, and support for the bloc among its citizens has risen sharply. So later today, when European negotiators launch the first round of official talks about Britain's exit from the EU, there will be no question among those present that Europe is in a strong position and that Britain is the supplicant. Most ordinary Europeans now simply pity Britain and wonder how an otherwise smart nation such as Britain can indulge in so much self-inflicted harm.
Does all this suggest that the EU is now out of danger? No, it merely means that Europe has just ducked its fundamental challenges rather than addressing them.
BLOW TO BUDGET, DEFENCE
The idea that other Europeans may be tempted to follow Britain's example in seeking to leave the EU was always far-fetched. For no other nation suffered from the combination of a chronic opposition to any European project, coupled with a sense of superiority and illusions of grandeur as much as the British. Mistrust of EU institutions remains high throughout Europe, but fear of being outside the EU is always higher. Just ask the Greeks, who have suffered so much as a result of membership in the euro zone, but know only too well that they would be much worse off if they chose to run their own affairs.
To suggest, therefore, that the EU succeeded in quarantining the Brexit danger is to credit the union with tackling a largely non-existent problem. The real danger from Brexit is not that it will unravel the EU but, rather, that Britain's departure will upend all existing internal European arrangements.
Britain accounts for 16 per cent of the EU's Budget and, once the Brits are gone, the EU would either have to ask its remaining members to cough up more to maintain current spending plans, or cut its expenditure. Judging by past experience, the compromise will probably entail both measures. But who should pay more and who should expect less? Would wealthy western European farmers be content to forgo the subsidies they currently get from the EU for the privilege of producing expensive food? And would the eastern European member states accept lower transfers of funds to them, notwithstanding the fact that most of them are still poorer than Greece, which has eaten so much of the EU's credit lines?
The EU has not even begun dealing with such questions.
Instead, it has simply upped the sum of money it insists Britain should pay upon leaving the EU, in the hope that the payments from London would at least prevent the need to address the anticipated shortage of cash until the next EU Budget is decided in 2020.
A similar ostrich-like approach relates to Europe's foreign and security arrangements. No country, apart from France, can match Britain's defence and intelligence capabilities, so Britain's departure is a serious blow to Europe's security posture. The problem must be addressed by finding an innovative mechanism by which British military capabilities could still be harnessed by Europe in the future.
But nothing is being done. Instead, EU officials pretend that, with Britain on its way out, this is the moment to create new defence structure which amounts to nothing more than imaginary military commands and headquarters, initiatives which grab media headlines, make the Europeans feel good and provide revenues for the manufacturers of brass door plaques but do absolutely nothing for real military capabilities.
And instead of expanding, the ambition of the EU's foreign policy appears to be shrinking: Ms Federica Mogherini, the EU's foreign policy chief, has just delivered a speech on the continent's future foreign policy priorities in the Czech capital of Prague without mentioning the word "Russia" - Europe's biggest and most troublesome neighbour - even once. If US President Donald Trump did the same, there would have been uproar, but when the woman responsible for Europe's foreign policy coordination outlined a vision largely detached from reality, nobody batted an eyelid. The challenge of Brexit to Europe's security is not addressed or even postponed, but merely avoided.
Nor is Europe's battle with populists truly won. Sure, the election of Mr Emmanuel Macron as French President was a rebuff to all political extremists. Here was a politician who campaigned in favour of open borders, open societies, inclusion of ethnic and religious minorities and the strengthening of the EU, and won, big time.
But that's only part of the story. For in the first round of the recent French presidential elections, no less than half of the electorate cast their ballots for candidates of either the extreme left or the extreme right, an unprecedented twist in France's post-World War II political history.
Furthermore, by annihilating France's mainstream political parties, President Macron may have secured a decisive mandate, but he also made sure that the far-right National Front led by Ms Marine Le Pen is now seen as the chief opposition standard-bearer. Hardly a move that can be qualified as progress.
Nor is Mr Macron the defender of the EU as it exists today. He believes that the euro single currency should be managed with more political rather than purely fiscal considerations, and that Germany should be persuaded to offer fiscal guarantees for the debt of others, precisely what the EU rules forbid.
President Macron is also planning to introduce at an EU summit this week proposals to give the EU powers to limit foreign takeovers of "vital industries". Of course, Mr Macron denies that this amounts to protectionism; he prefers to talk instead of a "protective Europe". But that's a distinction without a difference, for the truth remains that while Europe decries President Trump's economic nationalism, the "old continent" is moving, albeit more slowly, in the same dangerous direction.
It is also noteworthy that, despite the rise in the EU's popularity among its citizens, according to opinion polls, only voters in Germany and the Netherlands want the EU to remain in charge of negotiating the continent's trade policies; the majority of people in other EU member-states want their national government to grab back that power.
And then, there is the problem of tackling immigration. Walls and barbed wire fences are regularly going up at the frontiers between southern Europe and the approaches to the Middle East, but the bureaucrats in Brussels are more content to criticise Mr Trump for planning to do the same on America's frontier with Mexico, while they hope that money provided to Turkey would encourage the Turks to perform the unpleasant work of turning away refugees attempting to come to Europe.
Many of Europe's problems defy immediate solution and almost all entail political choices, so it is premature to expect the EU to provide a speedy answer. And it is also true that, compared with the gloom and doom of a year ago, the mood in Europe is far more optimistic, a good launch pad for future action.
Still, it is not churlish to recall that this is precisely the moment when the EU should start tackling its key challenges. For if there is anything that can be learnt from the recent history of European economic recession and political crises, it is that the continent is far more resilient under pressure than commonly assumed, and far from being receptive to change.
Provided its politicians pluck up the necessary courage.
A version of this article appeared in the print edition of The Straits Times on June 19, 2017, with the headline 'Europe has cheered up but is not out of danger'. Print Edition | Subscribe
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