Europe’s Changing Geopolitics
The Cipher Brief: Is the landscape of unity within the EU changing and why?
Michael Leigh: The fundamentals of EU unity remain in place: the single market, the EU's exclusive responsibility for trade, and the primacy of EU law over national law. The EU and its member states are the largest providers of development assistance in the world. The EU still does many things right. But the EU suffers from over-reach and a changing geopolitical setting.
The euro was set up for political reasons, following German unification, without the economic fundamentals being in place. A currency union requires fiscal transfers between stronger and weaker countries. This is banned by treaty in the Eurozone, and Germany refuses to share the debt of weaker Eurozone countries. France doesn't accept the Eurozone meddling with its fiscal stance. Banks are still shaky in Italy, Spain, and elsewhere.
EU unity has been challenged by almost a decade of low growth and high unemployment. This has led to populism and nationalism challenging mainstream political parties. The refugee crisis, Russia's aggression in Ukraine and Syria, and the risk of Britain leaving the EU exacerbate the EU's fundamental governance challenges. Reconciliation after World War II, the Cold War, the collapse of communism, and EU expansion provided a geopolitical impulse for European integration over many decades. Now the geopolitical landscape is different, and Europe needs to find new motivation and new incentives if it is to move forward.