Europe’s biggest policy fights aren’t just about policy. They’re about the very identity of the European Union. Understanding your opponents
and getting your way sometimes requires you to look past the clauses and articles at what the battle is really about.
What we talk about when we talk about trade: Liberalism
The EU, some argue, is essentially a “liberal empire” — one whose legitimacy rests on its core values: liberal democracy, constitutional government and individual liberty.
So what happens when this system is challenged not just by champions of “illiberal democracy” like Hungarian leader Viktor Orbán, but also by heavyweight countries such as France and Germany? That’s exactly what occurred when Paris and Berlin pushed for the merger of two of Europe’s biggest rail market suppliers, Siemens and Alstom, to create a European champion able to compete with Chinese rival CRRC. They were rebuffed in February by the European Commission’s competition authority, which found the merger “would have harmed competition” and “resulted in higher prices for the signalling systems.” France and Germany, predictably, cried foul.
As China rises and its illiberal political model proves to be economically successful, the EU faces a quandary: Should it compromise its free-market soul to protect itself from Beijing?
What we talk about when we talk about migration: The single market
The 2015 migration crisis may have faded from the headlines, but the incoming legislature will still be wrestling with the political fallout.
The biggest headache ahead is a stalled effort to reform the so-called Dublin regulation, which stipulates that the country in which an asylum seeker first arrives has to take responsibility for any claims of protection. This policy has placed an outsized burden on border countries such as Greece and Italy, which have pushed for asylum seekers to be redistributed across the bloc.
How to ease that burden has become a vexed question. Can the EU force another country to show “solidarity” and take in refugees? Should governments be able to lend support in other ways — by offering financial help, for example — if they don’t want to take people in?
So far, all attempts to find common ground have collapsed. This has far-reaching implications because the future of the Dublin regulation is directly linked to the future of the Schengen free passport zone, whose reform is also under discussion.
In response to the 2015 crisis, Austria, Germany, Denmark, Sweden and Norway reintroduced checks at their internal borders due to “exceptional circumstances.” (France also conducts border checks because of a persistent terror threat.) If another refugee crisis were to hit, with no mechanism in place to redistribute asylum seekers, it’s likely a greater number of countries would choose to reinstate internal border controls to keep people out.
Should that happen, the travel-free Schengen zone — crucial for doing business across the EU — could collapse entirely. That would end the single market as we know it. It would also be very expensive: If trade barriers are reintroduced within Europe, GDP would drop by 8 percent in Germany and 7 percent in Italy, for example, according to the European Central Bank.
What we talk about when we talk about financial markets: Macron and the single currency
The debt crisis that hit Europe at the start of the decade taught us that maintaining price stability — the European Central Bank’s primary goal — is not enough to prevent the collapse of banks across the Continent.
French President Emmanuel Macron’s plans to reform the eurozone — which include a dedicated budget and some remedies for the bloc’s lack of a common fiscal policy — is aimed at fixing some EU oddities, including the fact that the common currency area has no Treasury. When he presented his ideas in a speech at Sorbonne University almost two years ago, Macron hoped he had kicked the ball firmly into Germany's court. But that’s not quite how it played out.
Once Germany was the one pushing for more integration and France was the reluctant partner. Now their roles appear to have reversed, with Germany blocking efforts to create a shared budget. “There is no progress with the deepening of the monetary union because the Netherlands, Austria and all too often Germany stand in the way when it comes to solidarity in action and joint responsibility,” outgoing Commission chief Jean-Claude Juncker told German newspaper Handelsblatt in May.
The danger is similar to the one looming over migration talks: If disaster strikes, things could unravel quickly. Should Berlin miss Macron’s train, it’s easy to imagine history not looking back kindly on Germany’s role in stalling much-needed reforms.
What we talk about when we talk about health care: Angry voters
Europe is aging fast. The eurozone’s old-age dependency ratio — the number of people aged 65 and over as a percentage of the working-age population — is expected to rise steeply, from just above 30 percent in 2016 to about 52 percent by 2070, according to estimates by Eurostat, the EU statistics bureau. Add to this high prices for many drugs, and you’ve got a lethal combination.
Health care is fast becoming a political hot potato across the bloc. In Finland, former Prime Minister Juha Sipilä was forced to resign over a failed health care reform in March, despite the fact that, after the 2008 financial crisis, Helsinki oversaw the largest increase in money spent on social protection relative to GDP in any EU country.
To rein in rising costs, some countries — including Belgium, the Netherlands, Luxembourg, Austria and Ireland — have teamed up to negotiate cheaper drugs. The project is still in its initial stages but it has inspired other countries to follow suit.
In Europe’s south, the so-called Valletta Declaration group — Malta, Cyprus, Greece, Italy, Spain, Portugal and a few others — is trying to achieve something similar. Meanwhile, the Council is stuck with a Commission proposal to introduce a health technology assessment mechanism that is supposed to make it easier for countries to decide whether to introduce a new drug.
What’s at stake is a big part of the EU’s identity. The bloc accounts for just 7 percent of the world’s population and 25 percent of its GDP, but it is also the source of 50 percent of its welfare. If the EU can’t find ways to bring costs down, voters may see yet another reason to turn to Euroskeptic or nationalist politicians promising to find ways to better protect citizens.
What we talk about when we talk about defense: Promoting industry
There’s a major gap in Europe’s ability to stand on its own: If it were to come under military attack, it wouldn’t be able to defend itself without help from the United States.
To build up its capabilities, the EU launched a new military pact known as PESCO and a new multiannual fund, the European Defense Fund, which will funnel
€13 billion into the EU’s next long-term budget to boost the bloc’s industrial prowess and keep it from being reliant on the U.S. for military equipment. It wasn’t hard to convince countries to cooperate: Defense is one of the few areas where governments are happy to work together more closely — especially as Washington becomes an increasingly volatile and difficult diplomatic partner.
Still, few are delusional enough to think the EU will be able to defend itself from a Russian or Chinese attack without assistance from Washington anytime soon. In reality, the push for “strategic autonomy” is about something else: reviving the idea of Europe as an industrial project.
The EU took its first steps as a group of countries wanting a common market to buy and sell steel and coal. To some, the question underlying the debate about the EU’s military capabilities is whether a common goal on defense can kickstart a new industrial alliance that gives new life — and a greater raison d’être — to the European project.