The European Union’s Great Crackup

Doug Bandow

In mid-2017, the European Union seemed ascendant, led by the young visionary Emmanuel Macron, the president of France. Macron advocated a united Europe, having dramatically vanquished the disreputable forces of nationalism during his election. Moreover, the EU had overcome threats of dissolution, as no other state had joined the United Kingdom in a rush for the exits. The EU remained the latest variant of mankind’s last best hope. Debt and migration crises seemed far behind.

All that remained was for Macron to convince Angela Merkel, chancellor of the continent’s de facto bank, Germany, to unite countries’ finances. If prosperous German burghers would take on the rest of the continent’s debts, the so-called European Project, envisioning something akin to a United States of Europe, would be on the move once again.

That was then. This is now.

A united Europe could be attractive: independent nations joining to create a continental market and forge a continental defense, while respecting national histories, cultures, and sensibilities running back thousands of years. In fact, the European Union began small. In 1951, six “Old Europe” nations established the European Coal and Steel Community, freeing the markets in those industries. One objective was to bring together historic enemies France and Germany.

A year ago, EU leaders like Emmanuel Macron were riding high. Today, not so much.

The next iteration was the European Economic Community, in which the same countries established a customs union, called the Common Market. Focused on liberalizing trade, the arrangement, formalized in the 1957 Treaty of Rome, increased political cooperation but with few restrictions on national sovereignty. Over the years, continental organizations merged, membership expanded, and responsibilities increased.

The European Union arrived in 1993, courtesy of the Maastricht Treaty. In 2002, a dozen European nations created the Euro. The common currency’s chief flaw, its lack of support by a common economic policy, was viewed as a virtue by some, since it would create pressure for greater political consolidation. To this task, an increasingly determined band of activists—intellectuals, academics, politicians, journalists, businessmen, bureaucrats, and other believers in a bigger Europe—dedicated themselves.

The process only worked one way: towards stronger, consolidated, continental government. After failed popular votes in France and the Netherlands on a new EU constitution, Eurocrats shifted to the Lisbon Treaty, which only required a popular vote in Ireland. After the people there voted it down, the EU pressed for another ballot—backed by more lucrative promises—and the plan passed, after which planning began on the next step.

In the midst of Greece’s debt crisis and the migrant flood from the Middle East and elsewhere, leading Eurocrats pressed for “more Europe,” by which they meant continental control over even basic fiscal and immigration decisions. Then came the backlash: rising nationalist movements, new populist parties, and Brexit.

Governments tottered, ruling parties faltered, and elites commiserated. Still, populists rarely won outright. No other country left the EU. And Macron easily dispatched nationalist Marine Le Pen in France. Eurocrats believed they could recapture the initiative if Macron were to join with Germany’s Angela Merkel to impose “more Europe.”

But Europeans had lost that lovin’ feeling. No new Eurocratic champions were elected. The grand European Project remained alive in solons in Brussels, but not among the public. Governments’ chief goal became survival. Regarding Brexit, EU-member governments saw their duty as punishing the United Kingdom’s people for voting to leave the continental compact. In doing so, however, they may have ensured that the United Kingdom will crash out without an agreement, risking costly administrative chaos and economic loss on both sides.

Even the once indispensable Macron’s sheen is gone. Acclaimed as the continent’s leader, he finds himself without allies. The Austrian, Hungarian, and Polish governments have been ostracized as illiberal, even un-European. Romania’s leadership was embarrassed over its chaotic corruption. Greece’s left-wing Syriza, once the symbol of resistance, is a dead man walking, almost certain to lose elections next year after imposing the European establishment’s fiscal will on the Greek people.

The traditional centrist ruling parties in Spain survived only by avoiding new elections. Populist forces wrecked traditional governing arrangements elsewhere, including in traditionally hospitable and welcoming countries such as the Netherlands and Sweden. In the former, it took 208 days for four parties to agree to a coalition without the anti-Islamic Geert Wilders. A September poll in the latter yielded an evenly divided parliament with a nationalist, anti-immigrant party holding the balance; deadlock over a new government continues amid talk of new elections. Earlier this year, in Slovenia, it took five parties to create a government without the anti-immigration party that dramatically finished first with a quarter of the vote.

Italy’s 2018 poll gave power to Matteos Salvini and Renzi, heads of the right-wing and left-wing populist movements respectively. While neither pressed to exit the Euro or EU, neither was inclined to play nice with Brussels either. Their coalition proposed a budget that exceeded Brussels’ guidelines, leading to a standoff as the EU threatened to open “disciplinary” proceedings against Rome. Last week, Italy trimmed its proposed deficit, but the Matteos won the political point, suggesting that Brussels had blocked Italy’s economic revival. Moreover, Italy has the Eurozone’s third largest economy and second highest degree of indebtedness; the EU cannot afford a Greek-style bailout there.

Even worse is the continuing collapse of the political center in Europe’s most populous, wealthy, and important nation: Germany. Seven parties were sent to the Bundestag after the September 2017 poll, and it took months for the emergence of another, much unloved “grand coalition” between the Christian Democratic Union/Christian Social Union and the Social Democratic Party. Since then, these historic governing parties have hemorrhaged more votes in state elections. Today, polls indicate they could not cobble together a national majority. That’s left Merkel without the political credibility to join a campaign to expand the EU.

As karma enveloped European politics, Emmanuel Macron was brought low. In early December, he was forced to open his nation’s treasury in an attempt to buy off the “yellow vest” protestors who flooded Paris and other cities to protest new fuel taxes. He canceled the hike while promising minimum wage increases and additional tax exemptions. With his public approval ratings below a quarter, Macron survives as a much-diminished figure, no longer a colossus bestriding the political universe. His domestic reform program, focused on the desperately needed deregulation of employment law, effectively expired.

More important, his role as EU champion has become irrelevant. His proposals always looked grandiosely unrealistic. Now they look simply fantastic. For instance, without Berlin, there is no chance of a European finance minister, as he’s proposed. Just last month he advocated a European military. Yet amid bloated budgets and busted domestic agendas, no one seriously imagines Europeans voting more money to fund his scheme, or transferring their allegiance from the transatlantic alliance, which includes an American security guarantee. Who will follow him now?

The best that can be said for the Eurocrats is that their opponents are no more competent. UK Prime Minister David Cameron resigned after a majority of Britons voted to leave the EU in a referendum he had placed on the ballot. Yet he almost certainly would have handled his nation’s exit more skillfully than has Theresa May, who triggered Brexit before her own government was prepared to negotiate. She then called an election with no message other than that she wanted a bigger majority, and ended up losing her small one. She was badly outplayed by EU negotiators at every turn. Now her Brexit package could lose by upwards of three digits in the House of Commons.

Alternative proposals include calling a second referendum, approving revised legislation that the EU says it will not consider, and “crashing out” of the organization to which London has belonged for four decades without even skeletal agreements for much of anything, including air travel, customs, and criminal justice. Yet as noted earlier, European leaders refused to help craft an agreement that May could sell. She survives as premier simply because there is no obvious alternative; stumbling along seems the best course for everyone.

It almost makes the prospect of a government headed by Jeremy Corbyn look good. Almost.

Those predicting the end of history never imagined Donald Trump, or the collapse of the self-assured elites who ruled Europe with little challenge for decades. European peoples still benefit from continental cooperation, but they appear to recognize that creating a powerful bureaucratic behemoth like America’s national government would be to replicate a failed model. Europeans should go their own way, irrespective of what their “leaders” desire.

Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to President Ronald Reagan, he is author of Foreign Follies: America’s New Global Empire.