What twelve months for Europe! Starting with the Brexit vote, the European project has seen some of the worst setbacks, as well as some astonishing recoveries. Today, the European Union appears reasonably stable, and perhaps even optimistic.
The seismic waves triggered by Britain’s referendum are far from over. Nevertheless, it is becoming clear how much power has already shifted within the EU.
There is the United Kingdom itself, which has completely lost influence on the continent – much more quickly and much more radically than the British themselves expected. After a brief phase of mourning, continental Europeans have moved on.
Contrary to British hopes, not even Germany came to the rescue. Both Chancellor Angela Merkel’s government and German industry, including the automotive sector, decided that safeguarding the single market for the remaining 27 EU members was more important than signaling to Britain that there might be some scope for cake-having-and-eating.
In the meantime, the untidy – to say the least – outcome of the recent parliamentary election is further weakening the UK’s position vis-à-vis Brussels. Just as the Brexit negotiations are starting on June 19, Britain’s objectives are less clear than ever. Hard Brexit? Soft Brexit? Perhaps no Brexit? Who knows.
Within the remaining bloc of 27, Brexit has strengthened the old, western European core and weakened countries in Central and Eastern Europe. Poland and Hungary in particular are coming under huge pressure, and not just for their attempts to keep out refugees and restrict the judiciary, NGOs, the press, and public opinion. They are also finding out that their position outside the eurozone will be difficult to maintain now that the biggest non-euro country is leaving the EU.
This has to do with power politics rather than economics. When Britain was fully on board, re-electing Donald Tusk as president of the European Council against the wishes of his native Poland would have been unthinkable. There would also have been much less talk of a multi-speed Europe – talk that is largely targeted at making Eastern Europeans realize that they will not be allowed a veto against closer integration.
Germany has been strengthened, and not just because in a smaller EU size matters even more. Chancellor Merkel has been very skillful at keeping the EU27 together on Brexit issues. Her standing is boosted by the country’s good economic performance and by her own excellent prospects of being re-elected for a fourth term in September. Finally, the re-emergence of France on the European scene – we will get to that in a moment – substantially benefits Germany by lessening fear of German hegemony.
The largest risk to Germany’s position in Europe is posed by Donald Trump. The US president has targeted Germany because of its large trade surplus, but it’s more than that: Merkel is more dangerous to Trump than any of the other Western leaders because of her standing with the American public. Just look at the extensive US coverage of her recent criticism of Trump’s G7 trip.
Trump is not committed to European integration in the least; if he can set European allies against each other, it will be Germany that suffers the most. And the United States’ role as NATO’s key country gives him a fair amount of leverage over Eastern Europe in particular.
Emmanuel Macron is the chief architect of France’s return to a central position of power within Europe. Other EU leaders know that they owe him simply for having won the presidential elections and keeping far-right Marine Le Pen from destroying the European project. This is most of all true for Germany because it needs the European framework more than any other country.
If Macron succeeds at pushing through at least some of the financial, public sector, and labor market reforms that he has promised, it’s not only his own credibility that will be boosted. Again, Germany will also benefit strongly because France will have shown that reform is possible. Berlin will have to pay for that with concessions on the future economic governance of the eurozone, but it will gain a strong ally on EU reform. The Franco-German tandem is making a real comeback.
Economic reform is also at the heart of the power shift in southern Europe. The big winner here is Spain, where the economy is now back on track after a hard slog at austerity. After Ireland and Portugal, Spain is the third showcase for the longer-term benefits of cutting deficits. With the boost in political power that comes with economic prowess, Madrid can be expected to play a much bigger role in EU matters over the next couple of years.
Spain’s gain is Italy’s loss: this member of the founding six has turned itself into the weakest link in today’s EU. Italy has not been able to muster the political will to address either the country’s economic flaws or the ills of its banking system. At the same time, the rise of the populist anti-European Five-Star Movement, recent electoral setbacks notwithstanding, presents a serious risk not just to Italy but to the future of the EU as a whole.
It’s too early for clear conclusions, but not for a warning: if anything has become clear over the past twelve months, it is how much political volatility has increased. Second-guessing voters is becoming impossible. Even Macron’s success, which provided Europe with a much-needed uplift, was built on the destruction of traditional politics and political certainties.