Three paths to European disintegration
LONDON – For once, Marine Le Pen, the leader of France’s
far-right National Front, may be correct. She has called the United Kingdom’s
vote to leave the European Union the biggest political event in Europe since
the fall of the Berlin Wall. That may turn out to be true: Brexit has
destabilized the UK and could end up destroying the EU.
Old-fashioned federalists say the answer to Brexit should be
further EU integration. But that response is both far-fetched and dangerous.
Germany and France are often at odds, and both have weak leaders facing
re-election next year who could scarcely muster support for an “ever-closer
union.” And anti-EU sentiment is too widespread and too deep to hand more power
to unelected EU officials and impose additional constraints on national
decision-making without poisoning the pot further.
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True, the immediate post-Brexit turmoil appears to have
boosted support for mainstream politicians and the EU; but this is unlikely to
last. The Brexit fallout is likely to sap eurozone economic performance and
further polarize European politics as voters become more insecure. German
dominance of the EU will increase, and so, too, will the anti-German backlash
in many countries. With a weak and divided EU unable to resolve Europe’s many
crises, and with nationalism resurgent, we can expect further disintegration in
different forms.
The most extreme form would be further exits by member
states. Leaving the EU once seemed outlandish: no country had ever done it, and
only extremists even proposed it. Brexit now makes leaving seem feasible and,
to some, reasonable. Already, Geert Wilders, whose far-right Freedom Party is
leading in the polls ahead of the Netherlands’ general election next March, is
demanding a referendum on EU membership. So, too, is the Danish People’s Party,
which is the biggest party in the Danish parliament, but remains out of
government.
In France, where opposition to the EU is even greater than
in the UK, Le Pen is campaigning on the promise of a “Frexit” plebiscite. She
currently leads in polls for the first round of the presidential election next
April. And while those polls suggest she would be defeated in the second-round
runoff by a more moderate conservative challenger, center-left voters who are
fed up with austerity, the political establishment, and German dominance may
yet rally behind her. Moreover, the growing sense of insecurity after the Nice
attack on July 14 – the third major terrorist massacre in France in 18 months –
plays into Le Pen’s hands.
Disintegration could also take a less extreme but more
insidious form if governments choose to ignore EU rules with impunity. In
Italy, Prime Minister Matteo Renzi sought to take advantage of post-Brexit
instability to use public funds to recapitalize Italy’s zombie banks, without
imposing losses on their creditors, thereby bypassing the EU’s new “bail-in”
rules for banks. In France, Prime Minister Manuel Valls threatened to ignore
the EU’s posted-workers directive unless it was modified to prevent employers
from hiring workers from other EU countries on worse terms than locals.
Germany claims that France is also bending the eurozone’s
fiscal rules, with no objection from the European Commission. And while the
Commission threatened Spain and Portugal with fines for their borrowing
overruns, it ultimately pulled back. It has also rubber-stamped many
governments’ unilateral imposition of border controls in the supposedly
border-free Schengen Area.
Worse, the Commission has turned a blind eye to Hungary’s
illiberal prime minister, Viktor Orbán, despite his government’s repeated
flouting of EU requirements concerning the rule of law and democratic norms.
The governments of Hungary and other countries also refuse to comply with the
EU’s program to relocate refugees across the Union, which in any case has
scarcely been implemented; Orbán is holding a referendum in October to bolster
his position.
A third threat to EU integration is the further capture of
governments by nationalist anti-establishment parties. As the European Council
on Foreign Relations has pointed out, insurgent parties already play a direct
role in the governance of eight of the EU’s 28 countries.
In Austria, the far-right candidate Norbert Hofer leads
polls in a re-run of the country’s presidential election, set for October. The
same month, Italy will hold a constitutional referendum to reform the Senate,
and Renzi has vowed to resign if it doesn’t pass. This would open the door for
the anti-establishment Five Star Movement, which recently won local elections
in Rome and Turin, and has called for a referendum on Italy’s eurozone (but not
EU) membership.
Even when populist parties don’t win, establishment
politicians still make concessions to their supporters. For example, Alain
Juppé, the presidential frontrunner for the Republicans in France, muses about
limiting labor mobility in the EU, as does his main rival, former President
Nicolas Sarkozy.
To counter these forces of disintegration, the EU must do
less and do it better. Economically, plans for new institutions can wait; the
eurozone should focus instead on policies to raise living standards for all.
These should include looser fiscal constraints; more investment; an end to
beggar-thy-neighbor wage cuts; and lower taxes on labor.
Europe’s leaders also need to restore trust. For starters,
they should use the EU’s new bail-in rules to clean up banks’ balance sheets,
imposing losses on creditors and compensating any small investors who were sold
a false bill of goods.
Politically, the EU should emphasize effective cooperation
in combating terrorism. And, rather than trying to force recalcitrant
governments to accept unwanted refugees, EU authorities should pursue an
orderly and safe resettlement program with willing governments. This is
particularly important in view of the uncertain fate of the EU’s deal with
Turkey to curb refugee inflows, which is looking increasingly precarious in the
wake of last month’s failed coup.
The EU’s leaders need to wake up. With disintegration
looming, they urgently need to demonstrate to anxious Europeans that the
benefits of the EU outweigh its costs.
Philippe
Legrain, a former economic adviser to the president of the European Commission,
is a visiting senior fellow at the London School of Economics’ European
Institute and the author of European Spring: Why Our Economies and Politics are
in a Mess – and How to Put Them Right.
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