Transatlantic Conference 2016: EU What’s Up? Juggling Member States, Institutions, Exits & Conflicts

Dalibor Rohac (Source: FNF)

“Europe is not in good shape.” – those were the rather pessimistic words by Dalibor Rohac[1], research fellow at the American Enterprise Institute (AEI), who opened the panel discussion on “EU, what’s Up? Juggling Member States, Institutions, Exits & Conflicts” at this year’s Transatlantic Conference of the Friedrich Naumann Foundation for Freedom. But Rohac is certainly not the only expert on Europe who concludes that the European Union is facing major challenges. Jean-Claude Juncker, President of the European Commission, Martin Schulz, President of the European Parliament, philosopher Jürgen Habermas and business magnate and philanthropist George Soros all uttered similar if not even more pessimistic words. Even the World Economic Forum, which is usually careful and somewhat reserved in its statements, is distinctly pessimistic about the state of the EU.  

In his presentation Rohac drew parallels between the Europe of today and several different Europe’s of history, mainly the Europe of the 1930s. While history does not repeat, it does rhyme. And so we can find differences but also similarities between the world we live in now and the interwar period in 1930s.

Source: Wikimedia Commons by Sceptre

Rohac reiterated world-famous economists like Milton Friedman, Anna Schwartz and Ben Bernanke who concurred in that the Great Depression of the 1930s was largely a result of inept monetary policy. In general, central banks let Western economies contract and go through a painful period of downward price adjustments and deleveraging instead of providing them with liquidity. One reason for that was the central banks’ commitment to gold convertibility in the interwar period. However, the interwar gold standard eventually disintegrated. Dalibor Rohac argued that this was for the best because countries that left it first – such as the United Kingdom and several Northern European countries – experienced more dynamic economic recoveries than those which remained with the gold standard. The euro can be seen as today’s equivalent of the interwar gold standard as it prevents individual Eurozone countries such as Italy or Greece from using exchange rate adjustments to ease economic pain. Still, leaving the Euro is politically as well technically an extremely risky enterprise. Ultimately, the Euro is a political project and its disintegration will have political consequences.

The second parallel is that of a rising revisionist power in Europe. In the 1930s, Nazis ascended to power in Germany. Today, Europe is challenged by increasing aggression from Russia. While Rohac emphasized that Vladimir Putin is certainly not Adolf Hitler, he did see a parallel with regard to the mindset of the countries. Much like Germany in the 1930s, with the trauma from its defeat in World War I, Russia in the post-Soviet period suffers from trauma from the disintegration of the Soviet Union that still has an impact on the Russian psyche. Putin leveraged this trauma masterfully to strengthen his political power, with the immediate victims of Moldova, Georgia, and Ukraine. And there still is the potential that Moscow will reach even further westwards to undermine democratic progress made by European countries that outpaced the Soviet Union a long time ago.

Another defining characteristic of the interwar period was a lack of leadership by liberal democracies. While the United Kingdom was too weakened by World War I, the United States showed little interest in developments outside of the country, which had both political and economic consequences. Today, many Europeans feel abandoned by the US as well while leadership in the EU is lacking with the UK drifting away from the Union and Germany remaining reluctant to take on  a leadership role.

Conference participants discussing the political situation in Europe (Source: FNF)

In addition to this lack of leadership, a lack of cooperation can be observed both during the interwar period and today. During the 1930s, it became clear that the League of Nations was not effective at maintaining the international rule of law. The organization was not able to stop Italy’s aggression against Abyssinia, Japan’s invasion of China, and Hitler’s support of nationalists in the Spanish Civil War. Today, the lack of support to Ukraine and Georgia against Russia’s aggression by free societies of the West and the ongoing refugee crisis in the EU are paramount examples of the failure of international cooperation. Rohac added that the problem of the refugee crisis is neither the sheer number of people who are coming to Europe nor the potential security dimension of the problem. The real problem is the lack of a common European response.

The last parallel to the Europe of the 1930s that Rohac mentioned is the lost battle of ideas. In the 1930s, supporters of democracy and free enterprise had a hard time defending their beliefs as many Western intellectuals were infatuated with the Soviet Union under Stalin’s rule and believed that a planned economy could function just as well as a market economy. In the UK, Oswald Mosley’s British Union of Fascists became a notable political force. Today, we are observing the rise of populist far-right and far-left political groups. Mainstream politicians are replaced by diverse populist groups such as Front National, Pegida, Podemos, or the anti-immigration Sweden Democrats. In Hungary, the rhetoric of the major national-conservative party Fidesz is becoming ever more xenophobic in order to win over the electorate of Hungary’s even more radical nationalist political party Jobbik. Poland is governed by the Law and Justice Party, a specifically nationalist and Eurosceptic group that has challenged the independence of Poland’s constitutional court.

Dalibor Rohac admitted that these current developments are concerning. Yet, he emphasized that these trends are reversible and that in spite of the problems, the EU, NATO and the basic architecture of a liberal world order are still in place.

Conference participants discussing the political situation in Europe (Source: FNF)

Commenting on Rohac’s remarks, Hans H. Stein, Director of the European and Transatlantic Dialogue of the Friedrich Naumann Foundation for Freedom, agreed that Europe is facing a lot of problems and added that many problems would be similar on both sides of the Atlantic. Stein had also observed a lack of leadership in the EU and argued that lot of the blame has to go to the leaders of the individual member states, as they often do not follow up on the promises they make. For instance, in 2013 EU member states agreed on combining their strength to secure EU’s external borders, but still no concrete steps have been taken yet. In addition, member states agreed to send administrative specialists to Greece to help the country with managing incoming refugee flows and setting up a functioning asylum system. Germany alone promised to send 300 experts over to Greece. But so far only about 30 experts have made their way to Greece. Therefore, Stein argued that EU member states who still have the biggest stake in the European Union have problems with regard to commitment and following up on promises. Furthermore, many national leaders would use the EU as a scapegoat for a lot of their domestic problems. Yet, in the end they all know that they depend on each other.

While in some parts of Europe people seem to be taking the easy route by electing populists, new political forces and leaders are emerging who are pro-Europe, anti-Putin and who believe that Europe needs a common solution. Liberal parties such as Poland’s Nowoczesna and Spain’s Ciudadanos are prime examples for fresh, new liberal-centrist forces emerging in many countries across the continent.

[1] Dalibor Rohac outlines his insights and thoughts in his book ‘Towards an Imperfect Union: A Conservative Case for the EU’.