EU: Current and Future Challenges

The League of Nations
Why the EU shouldn’t let all the Crises it faces go to Waste.
By: Elena Della Valle

Globalization is not an option. It is a fact. Solid words by EU Commissioner Ferrero-Waldner, which led me to think about the efforts we ought to make in order to give a new meaning to the word European Union. We can agree that the union of politics, law and economics reached so far is considerable, but just not enough. In the next 10-15 year the EU has to go through a very deep process of renewal and has to set out new purposes. The challenge today is not stemming the tide of globalization, but making it work properly. The EU has a crucial role to play in this process. The EU is a tool to manage that change.

Our countries are more connected every day, so dismantling the EU does not ring as the best option just yet. On the other hand, the interconnection of our countries demands for a closer collaboration and more sovereignty going from the states to the EU. Not to mention, that this was a foreseeable progression for the EU as it was stated in the preamble of the 1957 Treaty of Rome: an “ever closer union among the peoples of Europe” is to be achieved, a phrase which also appears in most of the posterior treaties.

Political and economic crises

Many are the problems that the EU has to face nowadays, most of them brought to light by the economic crisis, the war in the Middle East, the slowing worldwide economy, the curbed growth of the emerging countries and the threats of Greece and Britain to leave either the euro, or worse, the Eurozone. And this is only to ention a few. At the same time, European citizens are disappointed by the EU politics and, moreover, they do not feel included in their policies. People are expressing their discontent by criticizing the lack of transparency in the negotiations of the TTIP. Furthermore, they are showing disapproval by participating poorly in the European elections, only about 43%. In addition, there is a shared feeling in Spain that the EU is not doing enough to try and ease our harsh situation aggravated by the economic crisis 8 years ago. The imposed austerity policies have almost led the country to the point of no return. Spain having nearly 50% (46, 7% in September 2015) of youth unemployment and 22% in total, Greece also reaches 49% and 25% in total. Italy is also almost there with 41% of youth unemployment and 12% in total. Meanwhile, Germany’s unemployment rate is not that alarming with 4.5%

Youth unemployment being so high indicates that no new jobs are being created. New generations are being ruined by the lack of opportunity arising in almost every European nation. Not to mention that it has also been difficult to maintain the status quo of employment. The focus now is to try and not destroy any more jobs, which brings about the devastating reality of youth trying to take over existing jobs and the pressure put on employees to keep up to date and secure their jobs. This unnecessary situation of extreme competitiveness is caused, not only but mainly by the lack of money injection whether it is by the government or by FDI (foreign direct investment).

Repercussions of ‘German’ austerity policy

Austerity was not the best option to boost the European economies; nevertheless it was indeed a policy that could be effectively applied in Germany. The problem arises from the fact that Spain is not Germany, Italy is not Germany and so on. Spain’s economy had been struck by the economic crisis in a much different way than other countries. Unemployment was already high and since then it has done nothing but increase, reaching a youth unemployment rate of around 50%. Austerity indeed did not work to lower this number or so many others. In addition, the growing debt in every single nation signals that the austerity measures are starting to tumble, which is a risk for the EU and its subsistence. Populism has started to grow among nations that have been affected the most. And we all know what populism can do to any nation’s economy.

The austerity was adopted under strong pressures by Angela Merkel without taking into account that in some other countries of Europe, that policy might not be the best option and that the consequences of its imposition could be worse, as they came out to be. With public spending decreasing year after year, growth and economic healing still seem hard to achieve. The outcomes of these policies are: a very dangerous high unemployment rate, deflation and a crisis of the single common currency.

What about the euro?

The Greek crisis has brought up the very uncomfortable question whether or not the euro is the best option since there are many scholars and politicians who believe that some countries would be better off without it. The Economist in his May 26th edition summed up this issue by stating, “Is the euro really worth saving? Even the single currency’s diehard backers now acknowledge that it was put together badly and run worse. Greece should never have been let in. France and Germany rode a coach and horses through the rules designed to prevent government borrowing getting out of hand. The high priests of euro-orthodoxy failed to grasp that, though Ireland and Spain kept to the euro’s fiscal rules, they were vulnerable to a property bust or that Portugal and Italy were trapped by slow growth and declining competitiveness.” It could be true that the EU took on a challenge that it was not ready to face yet, since it is very dif ficult to understand a single currency without a common economic situation to regulate, not to mention the lack of a unified tax policy, and the different political approaches of the ruling parties all over the Eurozone. The most evident reaction to this situation is the rise of populist and extreme right national parties.

“To survive, Europe has to become more federal. The question is: How much more?”

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Growing government debt is not directly the main difficulty, although many EU efforts are done to keep it low, the problem is its fragmented structure. Taken as a whole, the stock of euro-zone public debt is 92% of GDP, compared with over 100% in the US. Similarly, the banks are not too big for the continent as a whole, just for individual governments. To survive, Europe has to become more federal. The question is: How much more?

Risks and chances of immigration

To make matters worse, Europe is under extreme pressure to deal with the migrant and refugee crisis. It has long fought for human rights and the rule of law, but the chaotic response it is giving to the situation leaves much to be desired. While original EU-bloc countries such as Germany, Italy and France have backed a common European response to migration and asylum, there has been strong opposition from newer members in the East such as Hungary, Poland and the Baltic states: just a couple of weeks ago, the Hungarian prime minister made incendiary comments about the refugee crisis threatening Europe’s status as a Christian continent. These growing fissures between old and new Europe risk to undermine the momentous achievement that was Europe’s eastwards expansion and demonstrate how, in retrospect, European leaders prioritised the broadening of the union over its deepening. In the future we will have to work on keeping Europe diverse, but with common goals, as well as on eradicating extremist movements, in union with the rest of world-leaders.

Immigration is a sensitive topic for the EU. It represents both the challenge of a diversi fied Europe, and the opportunity to overthrow the decreasing population tendency. We have to take into consideration that EU nations have one of the worst demographic projections worldwide. The immigrants could turn around the problem and provide stability for the social welfare endangered by the ageing of the population. But everything has to be meticulously planned. Europe will not stop receiving millions of immigrants, refugees or not. The challenge resides in the organization of the immigration flow and the distribution of them among the nations, which should take into account more variables than just a simple number assigned to each.

This textbook solution sounds flawless, but again we must not stop thinking about the ongoing unemployment challenge that Europe faces, which must be solved before even considering granting the immigrants a decent opportunity. Just add to the equation more unemployed people to the already indebted EU. This is heading for an economic and (later on) social catastrophe. Solutions should be established now.

‘An ever closer union’

Europe should pay more attention to Churchill’s warning: “The League of Nations did not fail because of its principles or connections. It failed because these principles were deserted by those states who brought it into being… This disaster must not be repeated.” The European Union is far from perfect but it has shaped for the better not just the fortunes of our continent, but global patterns of transnational co-operation. It must be saved, and for it to be saved, it has to achieve a much deeper integration even if that means reestablishing the distribution of powers between the EU and the countries, surrendering state sovereignty for a greater purpose.

© 2016 Politik und Gesselschaft e.V.