EUROPEAN UNION – 60 YEARS AFTER ITS BIRTH*
At its 60th birthday the European Union is in a deep crisis. Its successes are without any doubts and the attacks from Trump and Putin against the very existence of the EU are a clear sign of these successes. These attacks should also invite the Europeans to defend its European Union. But many of them do not feel any ownership for „their“ Europe. The big question is therefore, how to convince Europeans that it is their Europe they should care about. It is their security, their economic interest and well being which is at stake.
What is important is that the EU is seen as an organization, which is supporting the different communities inside the EU and that nobody is left out and is primarily a victim of economic forces from within or outside the EU. Of course due to the different, sometimes even antagonistic, wishes and aims of different people it is not easy to give all of them protection and support. But to find some interesting and vital issues for every community – where EU engagement is beneficial – is the major obligation of the EU today.
Flexibility as a solution?
One magic word used in today’s debates about the future of the EU is „flexibility“. Many expect a stronger identification with the EU when it acts in a flexible way, that means that not all member states have to participate in all areas and concerning all policies. Others fear that more flexibility means more danger for the cohesion and may prepare the path towards dissolution. So, let’s be realistic and cautious but also innovative in designing a new EU which looks for common policies where it is necessary but also for diversity where it is possible. Even flexibility and diversity today and tomorrow may lead to more unity and common policies after tomorrow when citizens are convinced to go forward.
Important is that all these new cooperative forms inside the EU are really resilient also in times of crisis. The Euro and the Eurozone but also Schengen have not been designed to withstand crises and major challenges. They would be resilient only in ’sunny‘ times. But that is not enough.
Of course we have to recognize that already today Europe is very diverse and that different European communities do exist. There is the EU of the 28 and soon after Brexit of the 27 member countries. Then we have the Euro area of the 19, an area which many see as the core of the future EU and of the strength of the EU in global economic affairs.
Then we have the Schengen area of 26 in which not all EU countries participate but which includes some non-EU countries. Concerning defence we have to mention NATO which includes Turkey as does also the Customs Union. And still we have the European Economic Area. De facto Europe is not a unified and clearly defined Continent – not to speak about Russia which is in many respect also a European country.
Reform of Euro Area is paramount
But also the core of the EU at least in economic terms is not a very unified and streamlined community. The economic and social conditions including the historical influences are quite different. You could recognize the more Anglosaxian model influencing countries like the Netherlands and also some Nordic countries with a very strict and Calvinist budgetary policy. A recent and controversial interview of the chairman of the Eurogroup Jerven Dijsselbloem made that very clear. But these countries have also a well established and elaborated model of compromising on important economic and social issues. This attitude you can also see in Germany’s position mixed with elements of the Rhinean – soft/social – capitalistic model.
The southern model is different with a stronger antagonism between the social „partners“ and less readiness for compromise. The policies forced on Spain, Portugal but especially on Greece neglected these vital differences. It was always thought, that these countries are principally like those in the North – only they spend too much and need cuts in their public expenditures. France is mixing the southern and northern models. The Eastern European countries on the other hand mix old bureaucracies with neo-liberal economic policies. Trade unions play a very minor part on economic decision making.
In constructing the Euro with its Maastricht and additional budgetary criteria all these socio-economic differences which are structural and not only characteristics of the particular governments have been neglected. To look to the development of the Euro and its member countries only from a monetary and fiscal perspective and only through the prism of the rich and more developed countries was wrong from the beginning. Not that the establishment of the common currency should forget about common rules. But they have to be established in a more long-term and sophisticated manner.
Structural reforms would be more important than just cutting social expenditures and raising taxes. You cannot start by following the examples of German export surpluses and budget restraints. You should create the conditions and adequate framework for a modern industrial and service economy which can – in the long run – realize balances concerning trade and budget.
Public and private investment
In this respect investments in all countries should have much more attention than just the fiscal balances. There is a huge investment gap in relation to the past but also to some emerging economies. It is very sad that Europe as a whole (public and private companies) did not take full advantage of the historic low interest rate to close the investment gap. A common European capital market may certainly help to increase European investment.
These investments should enhance the growth potential of the individual member countries – inside and beyond the Euroarea. These public and private investments should also connect the different member countries concerning transport, energy, high speed communication etc. And these connections should go beyond the EU and connect our neighbours to the EU.
The modernization of the material and immaterial infrastructure of our continent is a vital task which should define not only the policies inside the EU but also our neighborhood and enlargement policies. Modernization does include the respect for human rights including minority rights. But we should not forget the economic and social side of the coin. When the EU is only seen as an organization which is teaching the „European“ values to the outside world without being able to implement it inside of some member countries it will be accused of hypocrisy – rightly so. Very often the economic and social dimension in preparing for membership or even for Association agreements have been neglected. This deficiency must be corrected. Economic and social issues must have a greater importance before and after joining the EU.
Where has the inclusion got lost?
The European Union always has pledged that it would promote cohesion and inclusiveness. While for some time at least regional cohesion did take place, the promotion of inclusiveness has been forgotten or left to the individual member countries. Inclusion or exclusion is not only a statistical question. It is predominantly a question of feeling being accepted, including the participation in the economic and social progress. The rise of the extreme right, the election of Donald Trump and the strength of authoritarian leaders like Erdogan are strongly connected to the neglect by the modern and mostly cosmopolitan elite in the respective countries.
The right-wing gains signify a backlash against many values promoted by that „elite“ by those who feel themselves excluded from the economic and social progress. And that gives an advantage to those elites that want to win elections by promising of „nationalizing“ policies which would always ask for the – short-term – benefits for oneself and do not care for political correctness. So it’s not about elites against the people or vice-versa. It is a fight about the hegemony of different elites, the national/nationalistic oriented one against the European/cosmopolitan one. And the second one must take into account the cleavages and inequalities promoted by international trade and development in order to mitigate them.
In this respect we have to have a second look at the freedom of movement inside the EU. The principle must be upheld. But there must be a common (!) policy by all member countries to prevent the destruction of social norms and patterns which have been fought for and gained by Trade Unions and other socially minded forces in different member countries. Whatever one can find and agree upon must stopp the misuse of foreign labour – also from other EU countries – for undermining social standards. Brexit and the main arguments of those fighting for Brexit should trigger a learning process and give all member countries an impetus to find ways to find a compromise on the freedom of labour as long as growth is not creating enough jobs for all.
How to regain public hegemony by ideas of a common Europe
There are principally two ways of pushing back the attacks of the extreme right political forces. The one is to accept the proposed policies of the right wing and implementing them in a more moderate form with less verbal extreme utterances. One has to confess, that this strategy seems to have won for example in the Netherlands. A more national and domestic oriented policy has taken over the public debate for some time already. One example is the public referendum against the Association agreement of the EU with Ukraine.
At the end one may ask if the differences of policies of the extreme right and of the nationalistic moderate -right or left- forces will not disappear in time. So it may be that this is a good strategy for the parties in opposition to the extreme parties. But it my not be a good strategy for saving the values of Europe which we are so proud of and which are the basis of European cooperation and unification.
The alternative strategy would be to address the concerns of all the citizens and of course specially of those who feel themselves excluded. I can understand that sometimes or better very often many citizens had the feeling, that politics and media are only concerned about refugees and minorities and their well being. But to design and promote an anti-refugee and anti-minority policy is no way out of this dilemma, especially from a European perspective. Because such a policy would be automatically turn itself against the European Union with its liberal values and openness and would finally work against the economic and social interests of the citizens for whom these policies would be designed.
The refugee/migration issue
A policy of humanity and solidarity should avoid to use the one group (national citizens) against the other (foreigners, refugees, migrants etc). On the contrary, a common EU policy would be necessary: from common asylum standards via common control of the Schengen border to financial support of those countries who do take a bigger share of refugees. In this respect a „solidarity fund“ payed by all members according to their economic capacity should be established. It would support the member countries who take refugees and care for them. That would also positively influence the public opinion in these countries. It would also in the end convince some countries who are not yet ready to take refugees to overthink their position.
But definitely the refugee and migration issue cannot be solved inside Europe or the European Union. And it cannot be solved by militarizing the Schengen borders either. Financial support for all organizations who care for refugees in countries adjacent to the crisis areas or emigration countries has to be stepped up.
The EU must continue the dialogue with the countries of origin and transit of migrants to Europe. We must help them in establishing policies of economic growth and integration, especially of the young and better educated. But even if for us the question to prevent immigration from Africa for example is dominant we have to recognize the huge burden of „internal“ migration from one poor country to another one. And the migration question should be seen as an issue for a joint policy of European and non-European countries in their common interest.
A new strategy of globalization
Also globalization is under attack from many right wing political forces. But also many NGOs working in the social and environmental field criticize globalization and international trade policies. They do not see or do not want to see the benefits of international trade.
But many defenders of globalization do not see, that not everybody is benefitting or benefitting in the same way. And the strong consumer orientation inside the EU saw the lower prices but not the – possible – job losses. The counterargument to globalization as job killer is the reference to technology as driving force in enhancing unemployment. But often they go hand in hand and it is difficult to differentiate between the two causes.
But neither technological progress including digitalization and automatization nor globalization as such can and should be attacked and prevented. They are elements of progress but neither of them is only beneficial for mankind or for all groups in different countries. Anyway it seems that global inequality was reduced by these factors but at the same time national inequalities were rising. And this is of major concern for citizens and has to be addressed – not only by words but by mitigating public policies and instruments.
Again it is not so much a matter of facts but of perception. The argument against TTIP in Europe as being a danger for European standards is continuing in spite of President Trump arguing that TTIP is dangerous for jobs in the US and beneficial for European countries. It can be hardly envisaged that a bilateral trade agreement is negative for both sides. The lack of reasonable arguments without exaggerations of the benefits of bilateral agreements and of transparency for the wider public has already poisoned the public opinion and discussion climate and enhanced the feeling of again being victim of the cosmopolitan elite promoting their interests.
The EU must not decide itself between flexibility and more common policies. The EU needs both. And it needs sometimes to hand over to national or regional entities the competence of regulation. It would be good if initiatives for new regulations would come from these levels and especially from citizens and not always from the Commission („the bureaucrats in Brussels“)
When we expect the Euroarea to be the core of the EU, than we should concentrate many reform efforts on thorough reform of the Euro and the Euro policies. Many steps in concluding the Banking Union and in constructing an European Monetary Fund are necessary. But also the long-term reform of the Euroarea needs more respects for the individual situations of countries in crisis. Of course in the long run we need to find a common strategy – here I understand the „German“ position – but we need to progress on the basis of respect for national particularities in different countries and of jointly elaborating a common path of implementing the basic structural reforms and stronger investment.
But these reforms do not concentrate on budget cuts but on changing the society’s response to the economic challenges of today. We need less bureaucracy and more organizational and financial incentives to create businesses. That demands also educational reforms including dual education and training to promote flexibility. And we need another understanding and dialogue between the social partners.
And in all our countries we need a stronger concern for all those who feel themselves left alone. This must not be leading to a policy of closing the EU but a more balanced globalization. There are always winners and losers of trade and technological innovations. It is up to society and especially politics to compensate those who lose and to integrate them into economic growth and social progress.
Refugee and migration policy has to take into account the concerns of those for whom the welfare state has been originally designed and organized. And we cannot accept an undermining and destruction of the welfare states, labour laws and the working conditions fought for by trade unions over decades if not centuries.
In modern societies as indeed all through history migration has taken place. But once welfare states have been established the perception that participation in welfare is a zero-sum-game is growing. Integration of migrants/refugees is anyway easier in times of growth. And therefore investment which is enhancing economic growth and creation of jobs is paramount for accepting a – relatively – open European Union.
* This text was the basis for my intervention at the Spring Seminar 2017 of the Vienna Institute for International Economic Studies with the title „Europe at a Crossroad“