Europe's Strategic Future: Implications of the Eurozone Crisis

from external pageEurope's Strategic Future: Implications of the Eurozone Crisiscall_made

How Will the Ongoing Crisis in Europe Shape its Geopolitical Role?

Europe’s future geopolitical role is contingent on the fate of the European Union, in particular the ongoing existence of the eurozone and impact of its crisis. The main questions that need to be answered in assessing the European Union’s future are: what are the likely directions of future strategic engagement by the European Union; what power would the European Union be able to bring to bear in such engagement; and, ultimately, is the European Union likely to exist as a geopolitical entity in the future?

The answers to those questions lie both in the current economic and political conditions that influence the actions and strategies of the European Union and in the foundations of the grand bargain that led to its creation.

First, the European Union will continue to strategically engage with the rest of the world and will endeavor to impose its own agenda on a number of global processes. However, its ability to achieve targeted outcomes faces a number of hurdles. It will be constrained in the breadth of its geopolitical engagement, concentrating its efforts and abilities on issues of major significance, such as energy and finance.

The European Union will also continue its endeavors to act as a monitor and judge of good conduct by countries in Eurasia, Africa, and Latin America. It will still be lecturing others on human rights and democratic development, irrespective of the situation within the Union itself, but it is likely to have less impact on the decision-making of countries that may emerge as new power centers for these respective regions.

In the area of global political issues, the European Union is likely to be a secondary force to the United States, China, possibly India, and regional unions around powers such as Brazil or Russia. What the European Union can and is likely to focus on is the role of a trusted “broker” and a factor of balance in future geopolitical tensions and confrontations between major powers. This could entail a greater focus by the European Union on the strictures and enforceability of international law, and a greater focus on diplomatic processes that do not rely on internal EU resources.

To maintain its geopolitical positioning, the European Union would be increasingly reliant on multilateral approaches and mechanisms—through existing institutional channels, and potentially new roles for frameworks such as the Group of 20. For example, in order to carry sufficient geopolitical weight, the European Union would do well to maintain the interest of players like Turkey in ongoing engagement and closer ties with the Union. Turkey has already established its intent to conduct itself as a regional power center in the Middle East, and is assuming leadership in a much more efficient and effective manner than the European Union on a number of issues of global significance. Losing the interest of Turkey to be a part of the European Union would reduce the sway that the European Union currently has and may potentially wield in the future.

Second, the European Union will continue to endeavor to develop its hard power capacities. The EU Defense Partnership is still on the agenda, despite a number of hurdles of practical and political nature. However, at present the European Union as an entity is unable to project a viable foreign policy stance and to mobilize a military presence that can project hard power. This weakness has been highlighted by a number of international conflicts, where European Union member states have either been late to engage, or were unable to do so without the support of others, in particular the United States. One of the latest examples was the action in Libya where, despite the reluctance of Washington, the forces and air power of certain European NATO members were only committed when the United States had assured the allies of its involvement.

The development of hard and concomitant soft power capabilities by the European Union is impeded by structural issues, reduced economic resources, and clashing political agendas. Conflict-related diplomacy and the participation in conflict itself do not easily fit with the more established EU processes of integration, convincing, and influencing inter- state processes. In practice, an EU defense force would need to be a combination of the major military powers of the Union, such as the United Kingdom and France, with a sprinkling of other countries’ military contingents that would have a relatively limited role and presence. This immediately raises the contradiction of one member-state facing a proportionately larger cost than others for the projection of hard and soft power by the whole Union. It would be inevitable that domestic political pressure would challenge the commitment of a country’s forces, in particular if loss of life becomes a factor.

In order for such hard power to materialize, the process of its development would have to be an outgrowth of other integration processes within the European Union. In all likelihood, EU hard power capacity would be directly proportional to the level of fiscal and political union achieved within Europe. The more clarity there is in how the member- states share the economic and financial costs of other integration activities, the easier it would be to formulate the appropriate methods of sharing the burden of creating and projecting a unified military and foreign policy stance.

The emergence of EU hard and soft power is probably going to be the result of dealing with specific crises faced by the Union as a whole than of a process of majority voting and referendums within the various member-states. It is possible that future geopolitical engagements could create a forcing action for internal EU processes to be modified to facilitate the emergency creation of hard and soft power, sometimes outside the scope of the accepted practices of legal, economic, and constitutional changes in the Union.

Third, as a political project, the European Union’s future would be assured if the political will behind its continuous existence remains in place . This will has been challenged by increasingly nation-centric views by different members, the anti-European sentiments in certain European constituencies, and the perceived weight of problems associated with membership in the eurozone and the European Union, respectively.

A key factor that would determine the continued political support for the European Union would be the state of the Union’s economy. The economic problems facing today’s Europe are unlikely to disappear over the short- to medium- term. In effect, the same political will that sustains the Union is also behind the preservation of the single European currency. In that light, although the political commitments behind the eurozone are being subjected to increasing internal political pressure within the major EU economies, in particular Germany, the interests vested in maintaining the euro remain strong. There are no indications that the political will behind these commitments has waned, and it may not dissipate as long as the eurozone and the European Union serve the political purpose of maintaining a politically stable Europe.

The question is whether the European Union can bear the economic cost of such political stability. This cost is directly linked to the social practices and approaches that are actually maintaining the political stability of Europe, ranging from the extensive social safety nets that are ultimately maintained through Union membership, to the manner by which the imperative of economic productivity is subjected to social concerns.

These principles are both laudable and well-meaning, but when looked at from the cold-hearted perspective of economic growth, they generate problems. As demonstrated by the travails of the eurozone economies since 2008, the efforts to maintain the socio-economic arrangements prevalent in European economies have led to sluggish growth, unemployment, and even measures that run counter to the implicit and explicit guarantees that states have made to their populations, as was the case in Cyprus in 2013, for example.

Of particular significance for European and, ultimately, global economic security, is the fact that the political nature of the European project often does not favor straightforward economic solutions or unified policy decisions. Indeed, the political aspects appear to have increasingly trumped the economic ones. The measures proposed to date and likely to be put forward in the future persist in addressing the liquidity of member-states, while the actual underlying problem, exposed initially during the global financial crisis was, and remains, solvency.

In addition, the proposed approaches of “more Europe”— tighter European integration—are clashing with the visions of the populations of a number of member-states that seek to have their own economic—and even foreign—policy, independent of Brussels, Berlin, or Paris. Instead, there is a need to address the fundamentals and rediscover the wellspring of economic growth, even in stronger economies, as well as of seeking new forms of leverage that would make Union-wide policies acceptable for all member-states. It is imperative to resolve from where growth will come, and how the economies within the Union are to achieve a level of competitiveness and improve productivity.

In essence, the future power of Europe and the future of the European project itself may be considered to be down to the future of Germany. Today, Berlin bemoans the lack of fiscal discipline of southern Europe, knowing full well that Germany itself was a major source of financing the perceived excesses of those same economies. The government and the business elites recognize the need for continued financing of what are ultimately customers for German goods. On the other hand, the increasing unhappiness of the German population about bailing out the rest of Europe is imposing restrictions on how much the German government can be seen to help others. In addressing the problems of Europe, the government of Angela Merkel is challenged by the convergence of contradictory political considerations that curtail its ability to react to the crisis. This is unlikely to change for any future German government elected after this September’s general elections.

In the future, Europe would be even less capable of applying economic resources to maintain the political framework of the Union. To begin with, the ability of governments to spend their way out of future recessions is almost negligible, and that is unlikely to change, barring drastic technological advances in globally significant fields such as energy, computing, or biotechnology. In addition, the ability of the European Union to address crises is hampered by its cumbersome decision-making mechanisms and undermined by the ability and need of the governments of individual member-states to be seen to act independently. That means that the future economic outlook for Europe is far from optimistic, which in turn implies greater pressure on the political undertakings that support the European edifice.

The upcoming challenges faced by the European Union and the strategies adopted to address them will also be shaped by the extent to which the European Union sticks to its intended goal as a political project. It can be said to have been established as a mechanism after World War II for harnessing German ambitions and intentions toward economic dominance of their chosen sphere of influence.

Although today’s political goal of the EU project may not appear the same on the surface, it remains closely related to providing an economic outlet for any possible endeavors by individual countries within the European Union to achieve political expansion. In a sense, the European Union is a balancing mechanism—fire that needs continuous stoking and the output it produces does not always exceed the resources that are put in.

Although there are a number of vested interests in maintaining the European Union and the eurozone in their current form, there are also rising pressures that open the door to new conflict flashpoints. The first such point has already been reached, and there is a rising level of dissatisfaction with the benefits that national populations accrue from EU membership, as well as resentment between different member-states’ inhabitants. For example, anti-German sentiments abound in the populace of most southern European countries, while at the same time Germany and other northern European countries like Holland see themselves forced to pay for the increasing “ingratitude” of southern member-states. Other areas of friction include the British and the Eurozone members, the “new” entrants to the European Union and the established powers, and other divisions and subdivisions within the European Union. These tensions are continuously fluctuating, and interpolate various subsets, where opponents on a specific issue band together against former allies on other issues.

Ultimately, the future role of Europe will be determined by the manner in which it is able to generate vested interests by other actors in the continued well being and strength of the European Union. As an existing ally of the United

States, the European Union is likely to maintain its position in global negotiations, relying as much as possible on the geopolitical clout it can extract from being seen by many as the “more reasonable” part of the Western alliance. On the other hand, it will inevitably try to establish specific bilateral arrangements with others, such as China, Russia, India, Brazil, the Middle East, Australia, Japan, and South Africa. The likely risk such a two-pronged strategy faces is becoming isolated and not trusted by either the United States or the new actors it is trying to woo.

The other factor that would determine the existence and role of the European Union will be how it integrates into upcoming geopolitical reshuffles of power. Before the end of the Cold War, Europe was a buffer between the United States and the Soviet Union, which entailed Washington’s continued and sustained support. The intrinsic need for such a role for Europe, however, gradually died down after the end of the Cold War, with America’s interests shifting toward the Asia Pacific and the Middle East. The various elements of the political will supporting the European project may be reinforced down the road, but such support is just as likely to evaporate under the spotlight of social upheavals and discontent resulting from economic turmoil. The erosion of this political will would be exacerbated by the continued inability of the European Union to operate as a unified geopolitical entity.

The very survival of the EU as we know it has been questioned increasingly since the eurozone crisis began. The doubts have been reinforced by the lack of viable strategy put forward for consideration, and by the plethora of nation-centric approaches put forward instead of long-term compromises. If the present is any guide, the most probable conclusion is that there is a loss of political consensus, and each new strategy comprises already undetermined and often nebulous goals.

Unless there is a revamping of membership structure, rights and responsibilities within the European Union, and a clear enforcement mechanism for implementing those changes, the European Union may gradually dissipate as a geopolitical force. It is also necessary to admit that the very implementation of such drastic measures may push certain governments to the brink of leaving the European Union altogether. This less optimistic scenario is likely to go through a number of iterations, but will finally result in several tiers of “integration,” with a core of European countries with close bilateral ties, similar economies and matching political visions, and one or more peripheral groups of European countries tied together according to economic strength, culture, or traditional relations.

There is also the option of the complete revamping of the European Union, with the terms of the Maastricht Treaty renegotiated to reflect the new terms of monetary union, probably of certain “core” economies, coupled with more stringent fiscal and political union, with member-states giving up sovereign powers to a new European central body. Such a scenario would create the framework of a new economic and customs union in Europe, within which the different members would pursue different lines of economic and foreign policy development. The new European Union could have a major power focus, with a number of countries grouped within the orbit of Germany, with several other “groups”—the United Kingdom, Ireland, and the Netherlands on one side, the eastern European members on the other, and the southern European economies constituting a third “satellite group.” This scenario would ultimately open the door for a new redistribution of geopolitical power across the continent, allowing countries to seek new partnerships and new arrangements without being constrained by their membership in the new version of the European Union.

All of the above scenarios and iterations do not actually represent different future paths. Rather, they are a representation of the potential ranges of the fluctuating future and capacity of Europe to contribute to and influence global geopolitical processes. It is likely that Europe will go through different aspects of all of these iterations, and they would leave an undeniable mark on its ability to alter global agendas. However, the fundamental factors of European geopolitical weight are unlikely to evolve beyond recognition, and will still rest on the economic, cultural, socio-political, and military wherewithal that specific member countries would possess and be willing to exert on behalf of the respective guise that the European Union will don in the future.