The EU’s Existential Crisis

Will the EU ship sink? With Britain leading the way and being the first member state to jump overboard, the question now hangs in the air of what will happen to the Union. There is no need for it to fall apart, just because one member state seeks divorce. Political trends tend to rely upon following a leader, and Britain’s success of Brexit will underpin the mood of the continent.

By Alexandra Phillips l April 10, 2017

Existential Crisis

LONDON-‘What will become of Britain?’

That’s the question that dominated Brexit, and continues to be deployed as a weapon of confusion by all that oppose it.

The very concept of self-governance has become so alien to the political establishment that the simple answer: ‘the UK will determine its own fate, as it did for over a century, and as most countries on the planet do’ has become less obvious among the warbling political elite than the perverse concept that a multilingual political union instead represents the absolute. That’s despite the lifespans of the USSR, the Habsburg Monarchy and even the Roman Empire illustrated throughout history that such constructs have a limited shelf life, however long their tenure.

The European Union, with its shaky currency and doom-destined economic non-plan, is the entity facing the greatest uncertainty. With one member state half way out the door, and with it, a huge slice of total net contributions and significant leverage in foreign mediation, as well as the rather public slap in the face to the entire ideology of the project, the EU is now left with gravely unanswered questions.

First, the ticking-debt-time-bomb, exacerbated by the euro’s unchanged fallibility, is likely to only be hastened by the weakening of political will for any deeper fiscal integration. Second, the example Brussels may have hoped to make of Britain seems less and less likely to be delivered, and will thus fail to act as a deterrent to other itchy-footed states. If a free trade deal is mooted between CANZUK (the grouping of the most prosperous Commonwealth countries; Canada, Australia, New Zealand and Britain) and customers for British exports stack up around the globe, it will prove Britain’s ability to not just survive outside the bloc, but prosper and grow enviably.

Contextualise that with stirrings across the continent as witnessed in the Netherlands, in Poland, Hungary, France, Italy, and even Germany (there are few member states without Eurosceptic movements), it is clear to see that the EU is now facing an existential crisis.

The EU’s Existential Crisis

Keenly aware of emerging friction from countries less keen on finding multilateral solutions to problems faced by the continent amidst the growing sense of nationalism in the West, the Commission President Jean-Claude Juncker has acknowledged that the EU project is at breaking point. The neighbourly love has rather depleted among countries not in the eurozone yet shoring up the currency’s debt, and those not immediately facing inwards waves of migration crossing the Mediterranean, but expected to keep their borders open and share the burden. Brexit is whispering in the winds of change.

As a result, Juncker has set out 5 possible paths for the EU’s future, where 27 member states have debated the white paper at a meeting of heads of state in Rome marking the EU’s 60 Year anniversary.

The fact that the EU is facing such an existential crisis is something many would have thought unimaginable but years ago. Juncker’s Five Path paper makes interesting reading for the architects of Brexit, who were faced with a zero alternative solution following Cameron’s so-called ‘renegotiation’. So excuse me, if you will, for feeling the need to analyse each approach and make a few predictions.

Path one: ‘Carrying on’
Essentially the status quo, but with “incremental progress” to strengthen the single currency:

I would imagine that this is likely to be the outcome of talks. The very nature of the EU’s Gordian Knot of legislation and grindingly slow progress by consensus means that any other choice but the status quo requires some major legal renovation that the Triumvirate structure and successive treaties of the EU were designed to prevent. In the short term, the EU would hold together until the waters potentially calm, but in the long term, problems brushed under the table will re-emerge. Particularly if the UK makes a success story of Brexit and other nations see fit to follow suit.

Path two: ‘Nothing but the single market’
The single market becomes the EU’s focus. Cooperation over migration, security and defense finishes and checks at national borders are reintroduced. Regulation is reduced meaning member states could compete over deregulation and low taxation. It would become harder to negotiate common rules, equally placing many tracts of extant EU legislation at risk.

Well come on! This is what the UK probably would have mooted from the outset, and had the vehicle been thrown into reverse after the threat of the UK referendum first came to the fore, the vote would probably not have gone ahead. Perhaps a successful Brexit and growing pressure from non-euro member states might force players in Brussels to retreat to a more basic model. But don’t be fooled. The Single market still encompasses many of the things that the general public in all member states are uncomfortable with, from oppressive bureaucracy to the free movement of people. If the EU did decide to strip back to just a Single Market, expect clamor from Remainers for another referendum or arguments to be made to get back in. For this reason it could well be backed as a popular approach by poorer member states wanting the UK with its capital and influence to rejoin the club.

Path three: ‘Those who want to do more’
Groups of states that want deeper integration can form coalitions on key areas such as security, taxation and justice. Trade would still be overseen by the EU.

This proposed fragmented approach seems like something tucked in there as a space filler just to get the total number of options to five. Suggesting member states can form their own politically aligned blocks, which would likely see Baltic states form one unit, wealthier western nations form another, would ultimately pit rich against poor, liberal against conservative and lead to balkanization, quite the opposite of the European Dream. However, it may be seen as an opportunity to coax the UK back in by allowing it to establish allegiances with economically equivalent countries, potentially mirroring the original line up of the EEC, however increasingly the UK’s common ideological allies are more varied and scattered, at times seeking solidarity with Czech Republic and Poland, but often politically paired with Netherlands who face similar cultural challenges. Also, smaller units would twist and vary based upon political ideology and would allow alliances forged to bolster nationalist interests, far from the homogeny that Brussels tries to evoke.

Path four: ‘Doing less, more effectively’
A reduced agenda focusing upon cooperation over technological innovation, but remaining a trading bloc, with continental security and managing shared borders and migration still at the centre. Other areas, such as regional development, health, employment, and social policy, would be returned to national governments.

This could be a sensible first step towards deregulating the EU while maintaining a federalist approach and would reflect a yearned for devolution of responsibility particularly in social areas, perhaps loosely modeled upon America’s state system. Yet, the domino effect of delegating social and employment policy on a state-by-state basis would have an inevitable knock on effect on keystone policies such as the freedom of movement. Anything other than homogeny would naturally evoke competition, and it would only be a matter of time before the EU would once again want to venture into national competencies to secure resolutions at continental level. Soon, the gear would be out of reverse and back into fifth.

Path five: ‘Doing much more together’
A more ambitious EU where power, resources and decision-making are shared across the board. The Full Monty. The single currency is made central to the project, and EU law becomes tantamount in majority of areas.

Ironically, this is probably the only proposal that makes any sense. Many in Europe are now too deep in euro debt and may feel beholden to the currency, and thus quake at the idea of having to rely on their own resources or wriggle out of the mass of legislation to go it alone. For member states that have historically leaned towards federalism (parts of the French political establishment, the current German tendency and sections within eastern European states which have profited the most from membership and suffered decades of Communist oppression), deeper integration has been the solution to all problems to date. However, when it comes to popular opinion, and with increasing crises facing the continent, this is probably the least feasible option.

Will the EU ship sink?

With Britain leading the way and being the first member state to jump overboard, the question now hangs in the air of what will happen to the Union. There is no need for it to fall apart, just because one member state seeks divorce. Political trends tend to rely upon following a leader, and Britain’s success of Brexit will underpin the mood of the continent. As I predicted once before, the European Spring is afoot, but with Article 50 activated last month requiring two years of subsequent negotiations before divorce is complete, like most things in the EU, it is unlikely to cause expedient action across the continent. It will, however, cause a lot of questions among the remaining member states. Questions, it seems, not many may have the answer to.

Alexandra Phillips is former Head of Media for the United Kingdom Independence Party (UKIP), the political party in Britain that successfully campaigned to leave the EU and was aide to its charismatic leader Nigel Farage. She left UKIP after the referendum victory and joined the Conservative Party in order to ensure other big political ambitions are met in the U.K. She is a political advisor and communications consultant in London. Ms. Phillips is also a contributor to SFPPR News & Analysis, of the conservative-online-journalism center at the Washington-based Selous Foundation for Public Policy Research.