Many looming challenges for the EU


Will the European Union survive 2016? It’s a fair question considering the battering the region has taken from a perfect storm of crises in recent years and with fresh challenges looming over an increasingly darkening horizon. Hartley Milner goes in search of some answers.

Whether the EU collapses this year or not will be of no consequence in the broad scheme of things, according to one prediction that foretells of an even more catastrophic fate in store for the continent.

Baba Vanga, a Bulgarian psychic who is said to have foreseen the Chernobyl disaster, the 2004 tsunami and 9/11, is now being credited with having predicted the rise of ISIS.

And her supporters say that before she died in 1996, the sightless seer warned of ‘a 2016 invasion by Muslim extremists’ and that by the end of the year Europe would ‘cease to exist’, becoming a ‘wasteland almost entirely devoid of any form of life’.

Though a shade less dramatic in their outlook for the region, critics of the EU nevertheless warn that its ‘arrogant’ leaders are sleepwalking towards catastrophe with dire economic results, and that their inaction over the migrant crisis is sparking widespread anti-Brussels resentment as well as seeing the rise of nationalistic parties across France and Germany.

On the face of it then, you would have thought campaigners for a united Europe would have had little to raise their glasses to as the final seconds of 2015 ticked away. After all, there could be no ushering out of the trials and tribulations of the old year, just the prospect of having to deal with unfinished business in the new, such as the credit market liquidity crisis that has been holding back business investment since the recession and the growing threat of a Greek loan repayment default and its exit from the eurozone.

Sluggish growth

Despite ever greater fiscal control by member states, growth in the eurozone remained sluggish throughout 2015, just 0.3 per cent in the third quarter, while dole queues reduced only slightly. Unemployment in Spain, sometimes held up as a eurozone ‘miracle’, stood at 22 per cent. In Greece, the figure was above 24 per cent.

So at the end of the year even the staunchest advocates of a single Europe would have pinched themselves to check that their dream was intact and had not been torn asunder by the myriad internal and external forces ranged against it. Then they may have taken heart that the EU had shown its roots are strong and reach deep, anchoring it against the tempests that have threatened its demise in the past.

Sternest test

“Without doubt, these past few years since the recession have provided the European Union with its sternest test since its creation in Maastricht in 1992,” said European business consultant Paul Petherick. “And last year it came through a series of unprecedented challenges
that many said would sow the seeds of its destruction.

“In fact the year saw the EU tested by twin crises – firstly, the six-month stand-off between a newly elected far-left Greek government and its international creditors that almost ended in Greece’s ejection from the eurozone and then the arrival of more than one million migrants that threatened to trigger the collapse of the Schengen agreement for free movement of citizens between borders.

“Yet the EU has survived both tests. The Greek government dropped its demand for immediate debt relief and accepted an onerous third bailout, which was then approved by an overwhelming majority of the Greek parliament and endorsed by voters in a general election.

“Meanwhile, EU leaders committed themselves at a December summit to the creation of a border-security force that could be deployed anywhere in the bloc at the behest of the European Commission, a remarkable transfer of national sovereignty designed to shore up trust in the EU’s common migration rules.”

However Petherick cautioned that the lessons of the 2015 experience would need to be taken on board this year as the EU’s cohesion is certain to be severely tested again.

The battle lines are already being drawn ahead of the first review of the Greek bailout programme, which is due to start imminently with eurozone governments promising that it will pave the way for a restructuring of Greece’s debt. A possible flashpoint is the participation of the International Monetary Fund, which the eurozone insists is a legal and political necessity but which Athens is resisting because it knows that the IMF will drive a hard bargain.

Similarly, sophisticated people-smuggling operations are unlikely to face a shortage of new customers among the millions of refugees from the Syrian crisis currently living in camps in Turkey and Lebanon or the many millions in Africa and Asia who dream of a better life in Europe. That is bound to put the EU’s new border security measures to the test, while once again challenging the limits of political cohesion.

“The EU will also face many new hurdles in 2016,” Petherick continued. “Just as a Greek exit or ‘Grexit’ from the eurozone in 2015 would have raised doubts about the survival of the single currency, a ‘Brexit’ this year would deal a devastating blow to the European integration project, weakening the continent’s ability to work together to address common challenges.”

Political risks

Meanwhile, political risks are rising across the EU. A fragile minority Socialist government backed by two far-left parties took office in Portugal at the end of last year on a promise to reverse austerity. Spain may be forced back to the polls later this year following an inconclusive election in December that offered little prospect of a stable government. I

n the spring it will be the Irish government’s turn to face the verdict of voters and while France’s mainstream parties saw off the National Front threat in December’s regional elections, the far right remains a potent electoral force in northern Europe.

Even so, the best bet must be that the EU will hang together again in 2016, if only due to the trepidation among member states about the implications of going it alone. European citizens may rail against what they regard as an increasingly over-mighty EU, but their governments will continue to look to Brussels for solutions to crises that they are too weak to manage alone.

Even the reluctant British are ultimately likely to opt for the security of continued membership of a club that allows them to shape the continent’s responses to common challenges.

“Overall the EU has been a massive success economically for its member countries, even if it has not enjoyed the harmonious political unity that its founders had hoped for,” continued Petherick.

“Some countries may indeed feel that they might be better off if they were independent from the EU, but trade in Europe is imperative in order to survive. Europe is now one of the largest markets in the world and is likely to get even bigger.

“So one of the biggest challenges for the EU is to decide to what extent it wishes to control its members. Having a single free market and a single currency might be the extent of it. Some of its wealthier members are reluctant about poorer nations joining. They fear they will only end up supporting these countries financially, which is a prophecy that has come home to roost for Germany. Being the region’s strongest economy, it is considered to be the paymaster of Europe, shouldering the burden of helping to bail out more troubled eurozone nations. But it can only do this for so long.

“The other fear is the free movement of labour within the EU. While having resulted in a huge influx of migrants into wealthier countries, it has also provided a huge boost to the economies of member states, refreshing markets blighted by labour shortages due to falling fertility rates and ageing populations.

Refugee crisis

“Now, on top of this, we have had the refugee crisis, which represents the largest population movement in Europe since the Second World War. Its size and complexity make it difficult to draw simple economic conclusions. The affected countries in Europe – from Germany to Greece – have different capacities to respond and are receiving refugees with vastly different skills and backgrounds. Still, studies on previous waves of refugees are encouraging. Contrary to popular perception, they show that asylum-seekers do not necessarily depress the wage of natives.

“But ultimately it is popular perceptions that will decide the future of the European project. While the heads of member states are politically committed to the EU, how will their citizens respond to seeing refugees pouring over their borders in ever increasing numbers? When will they say enough is enough? We will get an indication of this when Britain puts its continued EU membership to the vote.

“There has been growing disillusionment with the European Union among its citizens for a number of years now, and what is certain is that at the end of the day it will be they who will decide whether the EU survives and in what form.”

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