Fixing Europe's Disunion

Technology Eye | Jan. 27, 2017

The EU faces big challenges that have led to dire predictions about its future. The end of the European project is probably not yet imminent. Still, manifestations of discontent in so many European member states make this an opportune moment for policy-makers to assess the reasons for Brexit and the rise of anti-EU populist movements. Only by understanding the drivers of this discontent can the EU remedy its problems and maintain its authority as a global player.

Economic stagnation

Pierre Moscovici, Commissioner of Economic and Financial Affairs, Taxation and Customs at the European Commission, Brussels, attributes this discontent to “too weak growth, too high unemployment, too much debt.” Industrial and trade policies have failed to provide for citizens and protect them within their own borders.

Joseph E. Stiglitz, Professor, School of International and Public Affairs (SIPA) at Columbia University, USA, agrees that the Eurozone has experienced economic stagnation since the financial crisis of 2008, but globalization and technology have contributed to Europe’s economic difficulties. For Stiglitz, the Euro’s weakness is a large part of the problem. A single currency does not provide enough flexibility for weaker countries (such as Greece) to adjust and leads to recession. Citizens in poorer countries have witnessed a weakening of social protections due to budget constraints. Economic hardship probably underlies anti-immigrant sentiment and resistance to refugees, he said, although 1.5 million Syrian refugees will hardly make a dent in the EU’s population of 500 million.

Betrayed expectations

The EU Commission is perceived as a stronghold of elites who operate without sufficient accountability to the people they serve. When countries signed up to the EU they gave up a degree of economic sovereignty, though they might not have realized it at the time. Promises were made that could not be fulfilled, creating anger towards the bureaucrats in Brussels. The economic divergence between countries compounded by the migration crisis and terrorist threat has only served to feed this sense of discontentment and betrayal.

More Europe, not less

The solution to these problems is more Europe not less. The EU should increase investments to improve economic competitiveness and create more jobs in line with the Juncker Plan. This can be done by distributing funds that the EU has at its disposal, e.g. in the European Stability Mechanism. It might consider a new approach to trade that shifts away from the traditional free trade narrative and focuses more on environmental and social rights. The EU can improve border and refugee management. It can invest less in welfare and more in educational systems to bridge skills gaps.

The EU has an important function on the global stage, especially with the rise of China, Russia and Turkey. Despite the stated views of the new US administration about the future of the EU and NATO, the EU and the US are valuable partners that have acted together as a bulwark of democracy in the world.

Greater EU intervention to improve economic and social conditions is a promising remedy. It will only succeed, however, if national governments support this policy and act in solidarity with Brussels. As importantly, the EU Commission might also consider reframing the narrative of why countries should be EU members. Instead of threatening to punish countries for exiting, perhaps they should start communicating a positive message about the value of belonging.

SOURCE: World Economic Forum

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