Outlook 2017

Brexit pain in store for all of Europe

Pedestrians crossing the Millennium footbridge over the River Thames in the City of London financial district recently. The departure of Britain, home to one of the world's leading financial centres, from the EU is sure to have an impact on the conti
Pedestrians crossing the Millennium footbridge over the River Thames in the City of London financial district recently. The departure of Britain, home to one of the world's leading financial centres, from the EU is sure to have an impact on the continent.PHOTO: REUTERS

Continent also on tenterhooks with upcoming general elections in some of the biggest powers This is the third of a five-part series looking at the key events and issues facing the world next year. Today, The Straits Times looks at crisis-hit Europe and its struggle to break free from the gloom.

It is still the world's wealthiest continent. It continues to be admired for its innovation and commercial flair. It remains a magnet for tourists worldwide. And it is still the destination of choice for millions of would-be migrants.

But Europe is plagued by an all-pervasive gloom, a "trap of fatalism" as Mr Donald Tusk, one of the European Union's top leaders, recently put it. For the outgoing year confronted the continent with one crisis after another. And the coming year does not promise to be much better either.

The first crisis that began this year, which is certain to overshadow next year as well, is Britain's decision to leave the EU.

During the coming year, and especially when the separation negotiations between the EU and Britain start in earnest, the Europeans will discover that Britain's walkout will inflict deep wounds not only on Britain, but also on the entire continent.

It is hard to see how the departure of the world's fifth-largest economy and home to the world's leading financial centre can leave the rest of Europe untouched. Europeans might flatter themselves with the idea that, once rid of Britain, they can proceed to tighten integration, but the reality is that it will take decades to replace the void left by Britain.

The same applies to matters of defence and security. Next to France, Britain is Europe's biggest military power, and one of the continent's sole nations with a truly global footprint encompassing everything, from great intelligence collection and analysis capabilities to a worldwide diplomatic presence and the capability to sustain the deployment of troops in far-flung places.

Some of these assets might remain available to Europeans after Britain departs. But most will not be retained after Britain leaves, and the result will be a continent less able to project itself on the global stage, less able to be an international actor.

That will happen just when Europe has to grapple with Mr Donald Trump in the White House. He is not only the first American leader since World War II to look at Europe in purely transactional rather than shared-value terms, but he has also questioned the validity of all the pillars of transatlantic relations, from the Nato military alliance to the importance of free trade and relations with Russia.

Some Europeans comfort themselves with the hope that, once in power, President Trump will come to appreciate the importance and value of his country's longstanding alliance with Europe; to help this process along, a summit with Mr Trump has already been scheduled in Europe in a few months' time.

But even if the Europeans succeed in averting a trade war with the US, deeper and lingering strategic differences between the allies will remain. For, as Dr Robin Niblett, who heads Chatham House, a prominent British think-tank, neatly put it recently: "Trump wants to confront China and engage with Russia, while many in Europe want to engage China and confront Russia."

And Europe's capacity to attend to all these problems will be considerably diminished by the fact that some of the continent's biggest powers - Germany, France, Italy, as well as the Netherlands - will be holding general elections next year. Even in the best of times, European general elections tend to generate paralysis. But this will be much more the case in the coming year, partly because the outcomes of all European elections are now highly uncertain, and also because extremist nationalists and populists are posing a real challenge to established political elites in every single European country.

Europe is accustomed to a gentle but steadily declining role on the global stage: At the beginning of this century, its share of the world economy was 30.7 per cent, but this has fallen to 23.7 per cent now, and looks to drop below 20 per cent by the end of the decade.

Yet what bothers the Europeans most is that this year may have put an end to efforts to present their continent as a role model.

For the EU model of integration is now routinely, if often unfairly, derided. And European preaching on human rights falls on deaf ears, as the continent itself is confronted with massive problems of racial and economic integration.

There is plenty that can be said in Europe's favour.

But there will not be many European leaders still courageous enough to do so in the coming year.

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A version of this article appeared in the print edition of The Straits Times on December 29, 2016, with the headline 'Brexit pain in store for all of Europe'. Print Edition | Subscribe