Artwork: Claude Cadi

France has a difficult relationship with capitalism. 69 percent of the French think markets do more harm than good (55 percent in Germany), according to polls. Believing in laissez-faire is considered naive, whether it’s about the economy or raising your kids.

But this does not preclude the country from having an affinity for finance. If you want to talk to a quantitative analyst in New York who creates esoteric financial products, you’ll likely be able to do so in French. And the French have a pragmatic relationship to debt. The average household holds debt worth 121 percent of net disposable income. Before having kids, couples typically get a flat and a 25-year mortgage—a knot much harder to untie than marriage!

So when President Emmanuel Macron proposes issuing European bonds to shoulder the cost of the COVID-19 crisis together, the French don’t worry much. Debt is part of life and contracting it together part of being a community. “Solidarity means common financial means,” French finance minister Bruno Le Maire said outright when detailing his proposal.

Siamo Tutti Italiani

Macron’s insistence on a European debt-instrument is primarily about Italy. Paris is seriously concerned about the economic and political dynamics across the Alps.

Lega’s Matteo Salvini and especially Giorgia Meloni from the post-fascist Brothers of Italy are not so different from Marine Le Pen. Salvini’s and Meloni’s parties together are polling above 40 percent, high enough to give them a parliamentary majority. With the Five Star Movement potentially splitting over whether to use the European Stability Mechanism (ESM), snap elections are not out of the question.

Beyond the short-term, Paris believes the EU’s fate will be decided in Rome, too. Italy, like the rest of Europe, will need to mobilize enormous funds to weather the crisis. But Italy’s debt stands at 135 percent of GDP. So far, the Italian government has only dared to disburse direct fiscal measures worth 1.5 percent of GDP to keep its business and citizens afloat. By comparison, Berlin’s measures amount to more than 4.5 percent of GDP, as research by the Jacques Delors Center shows.

No wonder Milan bankers worry about a wave of insolvencies crashing through the country’s economy. And how could the populists be kept at bay in such a scenario? For Europeans the motto is really “siamo tutti italiani” (“We are all Italians.”), as Le Maire declared. And for Paris in particular. French banks are by far Europe’s largest holders of Italian Treasuries.

Rendezvous with Reality

Even before the current crisis, it was clear to Paris that Europe had to become more of a transfer union—by borrowing together and increasing EU spending. There is simply no way around it in a currency union. That’s why most German economists initially opposed the euro, arguing in a famous 1992 manifesto that it would inevitably necessitate “high transfer payments as part of a fiscal equalization.”

Macron sees no value in moral hazard arguments. Rome has run a primary budget surplus since 2011. Once in the debt trap, no austerity diet can get you out of it. But demanding repentance without the promise of deliverance cannot work in the long-run. France’s moral hazard policy of drowning Germany in debt after World War I backfired. That’s why the allies cancelled Germany’s debt after World War II, Macron recently lectured the Financial Times.

For Paris the feeling is thus that the day where German politics finally has to bend to economic reality has come. In fact, in Macron’s eyes the negotiations are less about whether there will be some form of debt mutualization, but how it is done. Either one holds on to today’s method of the European Central Bank buying Italian Treasuries, or Europeans go for the “clean” and honest alternative: common debt.

Geopolitical Grants

Macron, of course, prefers the second option. There are four reasons why.

First, the current solution undermines the ECB’s monetary independence and comes with legal risks. The ECB’s decision to lift the limit on how many bonds from a eurozone member it can buy will almost certainly be challenged in German courts.

Second, if the ECB does the heavy-lifting, the EU does not get to claim credit for helping Rome. Macron understands that this crisis is also a battle of narratives. That’s why he  gives interviews in the Italian press defending the EU.

Third, European bonds are another facet of Macron’s “sovereign Europe” idea. Having a large euro-denominated sovereign debt market with an abundance of safe assets is a precondition for overcoming Europe’s dollar dependence. European bonds would be a first step toward countering Washington’s habit of weaponizing the dollar to override EU policy, for example on Iran.

And most importantly, only if the money is raised through a European bond can it be given to the worst-hit EU members via grants. Sure, European loans would yield some interest savings for Rome and Madrid. But that won’t be enough. As Macron said after the EU’s leaders videoconference on April 23, whether the EU or the ECB acts as creditor, the loans still end up worsening Italy’s debt-to-GDP ratio. Paris wants outright transfers, may be also for itself. The lockdowns are particularly costly for service-oriented economies such as France.

En Douceur

In order to get what he wants, Macron is dropping the bulldozer approach to EU politics that hasn’t served him well so far. When he came to office, Macron did not lose time to demanded a sizeable budget for the eurozone. He hardly took into account other countries sensibilities in his campaign and ended up with next to nothing: a budget without money.

For once, Macron is not moving alone; he has managed to build an alliance around his cause. It even includes low-debt countries like Luxembourg. This is no longer just a North-South debate.

For once, Macron is framing the problem rather than dictating what he thinks is the best solution, giving Paris more negotiation space. It doesn’t matter whether it is a separate vehicle or the European Commission that issues bonds and hands out grants, as long as it is done, Macron said after the inconclusive EU summit.

And for once, Macron isn’t asking for the impossible. He doesn’t campaign for a move to fiscal union all at once. Instead, he reassures Berlin that the debt-issuance and spending measures should be time-limited.

It appears to be working. Angela Merkel, for the first time, stated she can imagine the European Commission issuing more bonds to finance the recovery. And Merkel told the Bundestag she wants to massively increase the country’s contribution to the EU budget, which serves as the main tool of fiscal transfers within the union. Both would cross traditional German red lines. It is still early days, but Paris is more hopeful than it has been for a while.

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© REUTERS/Reinhard Krause

Germany’s six month presidency of the European Union in the second half of this year could hardly come at a more important moment. As the EU’s largest and most financially powerful member, Germany must rediscover its earlier role as leader and mediator. By doing so, it can help hold the organization together, something also very much in its own interests.

To do this, however, Berlin must face up to the EU’s conflicts, both internal and external. Germany faces three challenges in Europe, all given new urgency by the coronavirus pandemic. It must reestablish cohesion within the EU, bridging the gaping divide between its northern and southern member states; it must stand up for democracy and the rule of law; and it must strengthening the EU’s international role.

Germany’s six month presidency of the European Union in the second half of this year could hardly come at a more important moment. As the EU’s largest and most financially powerful member, Germany must rediscover its earlier role as leader and mediator. By doing so, it can help hold the organization together, something also very much in its own interests.

The presence of COVID-19 in Europe was confirmed early this year. However, since the EU had no relevant powers in health policy, early countermeasures took place on local, regional, and national levels. Basic freedoms of movement within the EU were restricted overnight, in partial contravention of European law. Twelve countries, including Germany, closed their borders. In early March, Berlin imposed an export ban on personal protective equipment (PPE) for medical staff, while the French government requisitioned face masks. The absence of declarations of solidarity, let alone practical assistance, gave rise to profound political disappointment. The early response, in other words, was dominated by national unilateralism, bringing back memories of the eurocrisis.

However, the EU has shown itself capable of correcting course. Management of the outbreak was quickly taken up at the highest levels, more rapidly than during the financial crisis. The European Commission instituted weekly coordination meetings. There were joint rescue flights for European citizens stranded overseas. Coronavirus patients were transferred between EU countries. Once common rules on exporting medical supplies outside the EU had been established, most governments lifted export bans within the single market. European companies began to manufacture face masks and ventilators, while the Commission introduced the joint procurement and stockpiling of medical materials.

As with the financial and migration crises, the early months of the COVID-19 crisis showed that removing internal EU borders only works when accompanied by policymaking at a European level.

Basic Freedoms at Risk

The EU’s “common area of freedom, security, and justice” was created to support cross-border mobility and interconnection. For this integrated space to survive intact, health protection must be guaranteed as a pan-European public good, with open borders balanced against the need to protect the public.

If common health policy instruments are lacking and national health systems cannot successfully deal with the pandemic, the basic freedoms of the internal market will be cancelled out. Moreover, the EU will lose public trust if it can neither defend against dangers to public health nor come to the aid of struggling member states, helping them to help themselves.

Now, as Angela Merkel put it, the EU must confront “the greatest test it has faced since its foundation.” Insufficient preparedness in public health will now be followed by the continent’s most serious economic crisis since the Great Depression of 1929. All industrial nations seem likely to fall into recession in the first half of 2020, with long-lasting and painful consequences for their social fabric.

In March alone, Spain lost over 800,000 jobs, with unemployment expected to soon approach 18 percent. Italy, too, will likely face unemployment well above 10 percent. In France, after four weeks of lockdown, a quarter of all private sector workers are on reduced hours, with half of the economy at a standstill. The crisis threatens to hit Central and Eastern Europe just as hard.

Strengthening the Economy

Cushioning the economic crisis and the resulting social damage will thus be another crucially important responsibility of the German EU presidency that starts in July. This will initially mean rolling back restrictions on the internal market and ensuring that crisis-driven health policy does not undermine the EU. Some governments will take a greater role in industrial policy, seeking to guarantee essential food supplies and critical infrastructure. This could mean a new wave of nationalizations, as well as a more flexible interpretation of EU subsidy rules.

Despite facing the greatest economic crisis in the history of European integration, the EU needs to develop common approaches and principles in order to minimize national protectionism and reestablish European competition principles once the virus dies down. At the same time, it will be all the more important for a united EU to pursue its own global interests, with member states acting together as a common currency area, as well as on trade policy and investment regulation.

The German presidency must also address the question of additional financial cushioning. Short term liquidity has been made available through the European Central Bank and €500 billion in new financial instruments at the disposal of the European Commission, the European Investment Bank and the European Stability Mechanism. Nonetheless, fresh money will probably need to be put on the table to prevent a resurgence of tensions between northern and southern European states. Negotiations on the EU’s next “multiannual financial framework”—due to be finalized under the German presidency—may see a revisiting of more expensive policies, triggered by the COVID-19 crisis. Any revision to the EU budget would likely prioritize investment in research, technological competitiveness, and health protection, as well as measures against climate change.

Finally, the German presidency will also look to use greater international cooperation to alleviate the negative impacts of national austerity. Defense policy will be one such key area. Uncoordinated budget cuts could weaken the pooling of national defense capacities, as they did in the aftermath of the 2008 financial crisis. For this reason, Berlin will likely encourage its NATO partners and the EU to focus on defense capability, the arms industry, and their general technological competitiveness in light of the pandemic.

Social Resilience

In spite of the financial efforts undertaken by the EU, it is quite possible that the virus’s economic and social effects will promote political instability and undermine social resilience. That will intensify Europe’s vulnerability to hybrid threats. The post-2008 era saw populists, many opposed to the EU and to globalization, take their place in parliaments and even in governments. The Hungarian prime minister Viktor Orbán has used the coronavirus as a pretext to strengthen his autocratic power. Like Hungary, Poland is the subject of an EU investigation, triggered by its judicial reforms. Former Italian prime minister Enrico Letta has warned that his country could become the “Hungary of the eurozone” if Europe fails to offer adequate assistance. Even before the crisis, popular support for the EU in Italy was on the decline. In Spain, the position of Pedro Sánchez’s minority government could be significantly weakened.

At a time of increasing political polarization, weakened social resilience and  burgeoning foreign influence, basic democratic principles and the rule of law must be more actively protected across Europe. Along with existing European procedures against member states, the EU budget will be a key instrument: spending should be dependent on states upholding human rights and democratic principles, in addition to the rules of the internal market. At the same time, we must keep close tabs on how technology is used to monitor the virus, ensuring it complies with basic European rights. The definition of common criteria for ending the state of emergency will be another concern.

Europe’s vulnerabilities will need particular attention if the European economy collapses while China enjoys a comparatively rapid recovery. In a bid to boost its foreign influence, China could make liquidity available to selected European companies, banks, and governments, buying up strategic elements of European supply chains, including in Germany. The question of how much protection the EU and national governments should offer domestic companies will thus be highly political.

The coronavirus has made Europe’s international context even harder to assess. Under Donald Trump, the United States continues to undermine the structures of the international order, for example by the president’s recent decision to stop US funding for the World Health Organization. Meanwhile, reaction to the crisis has sharply highlighted the systemic conflict between China and the West. Its ongoing power struggle with China is taking the United States further down the path of isolationism. But Europe must also think about its own future supply chains, deciding which elements should be based on its own territory, particularly in pharmaceuticals and other systemically vital sectors.

No Way Around Conflict

As the international system continues to gradually unravel, the pandemic has shown the importance of close cooperation on health policy. When Germany takes over the EU presidency on July 1, it faces the acutely important task of driving short-term crisis management in the EU and among its member states. But it must also continue to develop European and international instruments able to cope with the challenges confronting us. The aim should be for Europe to emerge strengthened from the crisis. To achieve this will inevitably mean conflict, both within the EU and in its relations with other countries.

For this reason, Berlin cannot limit itself to the role of honest broker, the typical approach of the country holding the EU presidency. Germany, France, other members states, and the presidents of the various EU institutions must all energetically promote European interests and the core principles of the Union. Only in this way will it be possible to lead the EU through these complex and testing times.

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© REUTERS/Piroschka van de Wouw

According to Jean-Claude Juncker, the European Union needs to be “Weltpolitikfähig.” In other words, if the EU wants to defend its “way of life” it must develop the capacity to play a role in shaping global affairs, the outgoing Commission President argued in his State of the Union speech last year.

Time and time again, from the Russian annexation of Crimea in 2014 to the current Venezuelan crisis, the EU has failed to influence events to its liking. Even worse, the EU struggles to uphold its ability to decide for itself in a new international environment dominated by geopolitical rivalry.

Washington wants Brussels to join its stand-off with Beijing, while squeezing the EU with secondary sanctions against Iran. China, for its part, buys into the European economy, thereby also hoping to influence policy-making on the continent. This development has prompted the European Council on Foreign Relations to put forward a series of proposals to reinforce the EU’s strategic sovereignty.

Some progress has already been made. In an attempt to limit US secondary sanctions, Germany, France and the UK have set up the special-purpose vehicle INSTEX enabling European companies to continue to trade with Iran at least in food and medical products. Brussels has also put in place a first EU-wide mechanism to screen investments from foreign countries, such as China.

Unanimity and Asymmetry

These are defensive instruments. But Europeans also need to be able to react and proactively influence international events to defend their interests.

The EU cannot rely on the law of might—it lacks not only a joint military capacity, but also a common view of how to use it. Instead, the EU must use its economic weight to muscle its positions. The 28 member states that make up the EU together constitute the world’s largest single market, and the union is also one of the world’s biggest arms exporters.

As a result, when Europeans want to show their teeth, Brussels resorts to sanctions or other restrictive measures. The repertoire stretches from classic arms embargoes to sanctions targeting specific individuals. Most far-reaching are economic sanctions suspending trade in goods and financial flows.

But the biggest hurdle to their rapid and effective use is that sanctions require unanimity among the EU members. Hence, every country has a veto-power on EU foreign policy measures.

History is rife with examples of a countries using their veto to block, delay or water down resolutions and sanctions. Most recently, the populist government in Rome impeded a statement recognizing Juan Guaido as Venezuela’s interim president.

This frustration has led many to reconsider the unanimity criteria. Germany and France agreed in the June 2018 Meeseberg Declaration to explore the introduction of qualified majority voting for the EU’s foreign and security policy. The European Commission has jumped on the band-wagon and advanced its own proposal. And in her recent speech to the European Parliament, the incoming Commission President, Ursula von der Leyen, also spoke in favor EU positions on external affairs being decided by a qualified majority vote instead of unanimously.

Putting an end to unanimity in foreign policy is a sensitive subject. EU members still have differing views on many third countries, such as Russia. Foreign affairs sometimes also play an important role in the domestic political discourse. EU members are not only reluctant to give up national sovereignty for political reasons. Ultimately, they also want to be able to safeguard their economic interests.

Control and Liability

Most of the time the negative economic consequences of EU sanctions and retaliatory measures are asymmetric, and are borne by some member states more than others. The trade sanctions on Russia, for example, hit Finland and Poland the hardest, but had a much smaller effect on the German and French economies. Any move towards overcoming unanimity must recognize this reality.

One way of dealing with this is to devise a burden-sharing mechanism. A dedicated fund could, for example, compensate individual member states or their companies for losses resulting from EU sanctions.

Many questions would need to be answered about the design of such a mechanism, most notably how to calculate compensation. But you don’t have to start from scratch. The EU already has the European Solidarity Fund (EUSF), which distributes money to member states struck by natural disasters. Aid is disbursed based on how wealthy an affected region is and how large the damage is.

Such a fund would not have unlimited resources and would certainly be an imperfect tool to even out costs. The EUSF currently has an annual allocation of €500 million. But as the EU’s new multi-annual framework 2021-2027 is being decided in the coming months, the groundwork for such a burden-sharing mechanism could be laid.

If the EU truly wants to become a powerful actor on the international stage, it must shoulder the consequence of its policies together. In the debate about the reform of the euro, Germany has argued that it can only allow for further EU integration if control and liability are aligned. The same argument is also valid when it comes to foreign policy.

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© REUTERS/Toby Melville

The European Council summit resumed on Friday morning in Brussels with a plethora of subjects on the table: relations with China, industrial policy and climate change among them. The agenda had become so overloaded after the Brexit talks the previous night dragged on so long that all other business was delayed.

EU leaders are not happy about it. They are tired of having Brexit hijack these summits, held just four times a year. Frustrations boiled over last night after the British prime minister, Theresa May, was unable, after 90 minutes of questioning, to explain to the other 27 leaders how she could possibly find a way out of the Brexit impasse.

The EU27 had been set to approve a draft text that would have granted the UK an extension until 22 May, on the condition that the British Parliament approves Theresa May’s withdrawal deal next week. By the time May left the room, there wasn’t a single leader who had any confidence that she could get her deal passed, according to EU sources. Desperate to avoid a last-minute emergency summit in Brussels next week, they had to move to Plan B.

After hours of talks that dragged on to midnight, they decided to grant the UK an unconditional extension to April 12—the date by which the UK would have to start preparing for EU elections in May. Should the UK Parliament approve the withdrawal deal next week, the UK can get a further extension to May 22 (the day before the EU elections) to complete the legislation.

If Parliament cannot or will not vote to approve the deal, Council President Donald Tusk said at a press conference at the end of the night, then the UK has only three options to avoid a disorderly Brexit on April 12.

How to Avoid No-Deal

“What this means in practice is that, until that date, all options will remain open. The cliff-edge date will be delayed. The UK government will still have a choice of a deal, no-deal, a long extension or revoking Article 50.”

EU diplomats were at pains to emphasize that this timeline envisions no further discussions on the EU side. Journalists will not be summoned to Brussels once again on April 11 for an emergency last-minute summit. All EU countries will finalize preparations for no deal and will be ready on April 12. This is it—Brexit is banished from the Council meeting room.

It remains unlikely that the UK would actively choose a no-deal Brexit should the deal fail next week, given the UK Parliament has already voted to rule out such an outcome. But it could still happen if they cannot come up with any other solution. And the EU27 have said they will not intervene if they see the UK accidentally stumbling toward the cliff edge. Whether they would actually stick to this threat is open for debate. Never say never to an emergency summit.

The UK government could, as Tusk mentioned, choose to avoid the cliff by revoking Article 50 and cancelling Brexit. The European Court of Justice has ruled that this can be done unilaterally and cannot be vetoed the EU27. This would not necessarily mean Brexit doesn’t happen—the UK could choose to trigger Article 50 again at a future date, once the government has a clearer idea of what it wants.

The other option is to ask for a long extension. EU leaders have said this would only be possible should circumstances materially change. This would most likely come in the form of a new general election and government change, or a second referendum.

In order to get this long-term extension, the UK must commit to holding an election to the European Parliament in the week of May 23—something Theresa May has said she cannot countenance doing as prime minister. The concern is that if the UK is still a member when the new European Parliament takes its seats on July 2, and Britain hasn’t run elections in May, it would mean that this EU Parliament is illegally constituted. This would leave both the European Parliament and the Commission open to legal challenges.

However, even if the UK commits to run the European Parliament election and plans a new national election, the EU27 could still reject a long-term extension. French President Emmanuel Macron has said he is opposed to a long-term extension in almost all circumstances. He does not want a situation where the UK continues to be inside the EU and voting while it still intends to leave.

However Macron could be convinced to soften his stance if the UK commits to abstain from voting in the EU unless and until it decides to remain.

What’s Next?

Eager to be rid of the Brexit mess, the EU27 leaders were at pains last night to stress that the ball is now in London’s court. John Bercow, the speaker of the House of Commons, must first decide if he will allow Theresa May to bring back the same deal for a third vote.

Should the vote go ahead, Theresa May will have to convince more MPs to approve her deal. Given how much she alienated MPs in her televised address to the public on Wednesday night, this seems unlikely. Indeed, her attacks on the Parliament as thwarting the will of the people so incensed some members of her own Conservative Party that they have said they would vote against her deal on the third try, even though they had supported it on the second try.

It is quite possible that Theresa May would respond to a third rejection by calling a general election—or could be forced to do so by a no-confidence vote triggered by opposition leader Jeremy Corbyn. Such an election would obviously take longer than two weeks to organize, and so the UK would say this is enough reason to grant a long-term extension.

It is possible, some have theorized, that the general election could happen on the same day as the European Parliament election—maximizing turnout and providing a clearer gage of whether the public wants a second referendum to overturn the first one.

The other option, calling a second referendum without a new general election, remains a distinct possibility. The Labour Party officially supports it, even though everyone knows that party leader Corbyn secretly opposes it. Parliament rejected the idea of a second referendum last week in a procedural vote, but that is assumed to have failed because MPs who support the so-called “People’s Vote” thought it was not the right time to ask for one. It does not mean that Parliament has definitively ruled it out.

How things play out in the coming week may depend on what kind of turnout a “People’s Vote March” attracts in the UK this weekend. If the turnout is lackluster, MPs may not be convinced that there is the public will for anything but a no-deal Brexit. If the turnout is equal or greater to the last march, they may well be convinced.

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© REUTERS/Stephane Lecocq/Pool

It was a classic elephant-in-the-room situation: In early November, Europe’s largest political alliance, the European People’s Party, held its all-important pre-election congress in Helsinki with speeches from German Chancellor Angela Merkel and EU Commission President Jean-Claude Juncker. Several EPP heavyweights talked about upholding democratic freedoms and values, but notably, no-one explicitly named the target of their warnings—the person sitting right next to them: Hungary’s illiberal premier Viktor Orbán.

The EPP was keen to display unity at the congress as it heads into the European Parliamentary elections next May. The gathering followed months of speculation over whether the EPP could split after the election, with some liberal-minded deputies joining a yet-to-be formed alliance with France’s president Emmanuel Macron, and whether Orbán and his ruling Fidesz party would leave to lead their own alliance with other like-minded European nationalists.

The EPP has had an Orbán problem for years. The Hungarian premier has been systematically undermining rule of law and democratic values in Hungary, and challenges those same fundamentals in the European Union. Ongoing demonstrations in Budapest for independent media and courts, and against a labor law increasing overtime hours, will cause further headache for Europe’s largest political alliance. This week, opposition MPs were violently thrown out of the public media’s headquarters in Budapest, the central propaganda-machine for Orbán, after they vowed to read protestors’ demands on air. Orbán, who has never faced political consequences on the European level for his actions, is unlikely to back down, putting the EPP in an uncomfortable spot.

The EPP is the powerhouse party in Brussels and much of Europe. Its politicians head the three most important institutions in the European Union and command seven governments in the (still) 28-member EU, plus they hold the Romanian president’s post. The EPP has sheltered Orbán for years, with the party’s president Joseph Daul, an influential French politician, amicably referring to Orbán as the party’s “enfant terrible.”

The EPP’s Red Lines

Initially, EPP members were arguing that keeping Orbán close would tame the Hungarian prime minister, who likes to see himself as a “street-fighter,” and curb his autocratic tendencies. It set out what it called “red lines” over Orbán’s targeting the Central European University in Budapest, but failed to act when the CEU did decide to move to Vienna as the Hungarian government refused to secure its future in the Hungarian capital. Despite mild EPP criticism, Orbán kept running his anti-EU, anti-liberal, anti-migration campaigns, and continued to centralize power back home. Liberal-minded EPP members in the European Parliament grew increasingly annoyed with the lack of disciplinary action, and saw Orbán as a dangerous pull for EPP to the right.

The frustration with Orbán boiled over last September, when the majority of EPP members in the European Parliament, including its leader, Bavarian Manfred Weber, who is running for the presidency of the EU commission, voted to launch a sanctions procedure against Hungary under Article 7 of the Lisbon treaty for breaching EU rules and values. But the procedure is unlikely to lead anywhere, as deciding on biting sanctions depend on fellow member states reluctant to challenge each other’s internal measures.

Despite calls to kick Fidesz out, the EPP party leadership refused to tackle the issue, arguing that according to the party rules, seven member parties from five different member states need to come forward with a request. No such request has been made. Petteri Orpo, the leader of the Finnish National Coalition Party, tentatively said that if there were other six parties, his group would join in calls for Fidesz’s expulsion.

Clear Intentions

Orbán isn’t hiding his intention to pull the EPP to the right either. He made it clear in a speech in June 2018 that he does not want to leave the EPP and create what he called a “successful anti-immigration” party, but rather he wants the center-right alliance to turn his direction and return to its “Christian democratic roots.”

He argued that the EPP could either become a flavorless, colorless party stuck in an anti-populist coalition with the social democrats and liberals, or move to the right and continue shaping EU politics. “The other model which has been successfully tested in Austria and Hungary is taking up the challenge, is not creating such a people’s front, is taking the issues raised by new parties seriously, and is giving responsible answers to them,” Orbán said at the time.

The EPP attempted to portray itself in Helsinki as a united political force that can stop the threat of extremist and populism in Europe. Yet speakers at the congress were more interested in rallying EPP members against their socialist and liberal contenders than populists. The party leadership also knows that Orbán will deliver at the ballot boxes. His party alliance is expected to win well over a dozen MEPs to the party in May’s election, much needed by the EPP, which could lose 30-40 seats, according to projections.

Orbán argued at the party should respect winners. “What is even more important to understand: we have to win, not just survive, and victory must be wanted. Let us not listen to our opponents, and let us not measure ourselves by the standards of the leftist parties and the liberal media. […] The European elections must be won at home, in each of our countries. In order for the EPP to become the party of the winners again, we need winning prime ministers,” he told delegates.

EU council president Donald Tusk retorted in his speech following Orbán: “We all want to win the upcoming elections. But let us remember that at stake in these elections are not benefits and jobs, but the protection of our fundamental values. Because without them, our victory will make no sense.”

The most recent EPP argument for not stepping up criticism of Orbán cites Brexit. Party officials argue that the Brexit process really started when British Conservatives, led by David Cameron, left the EPP and formed their own group in 2009. This started the UK’s drift away from the EU core, they say. The same could happen with Hungary if Orbán is put under more pressure. Meanwhile, EPP president Daul insists on keeping the party as large and wide-reaching as possible. The continued support for Orbán’s autocratic measures will nevertheless further encourage the Hungarian leader. It might also signal an EPP shift to the right during and after the European elections.

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© REUTERS/Annegret Hilse

British Prime Minister Theresa May, fresh from surviving a no-confidence vote called by disgruntled members of her Tory party, left for Brussels on Thursday morning to seek assurances that the UK will not be trapped in the “backstop” her government agreed to in November.

But she’s not likely to come back to Westminster with much in hand. EU leaders such as Council President Donald Tusk made clear earlier this week that, while the EU could offer Britain some (legally non-binding) assurances that the backstop is not the desired long-term outcome, there is no room whatsoever for renegotiating the agreed legal text.

The EU’s biggest member-state is now hammering that point home.

Germany’s Foreign Minister Heiko Maas said he was relieved to see Theresa May survive the no-confidence vote within her party. But he sees no room for reopening negotiations on the already agreed divorce deal, in particular on the Irish backstop.

Those sentiments were backed by the chairman of the foreign policy committee in the Bundestag, Norbert Röttgen of the CDU, who said that EU negotiators had already worked for months on the current deal and that “all possibilities have been exhausted. There’s nothing left.” And a few hours later, the German Bundestag passed a motion asserting that the Brexit divorce deal could not be revisited.

(Merkel herself already told her CDU colleagues on Tuesday that she opposes renegotiations.)

The central sticking point for Theresa May and her government is the backstop, a safety-net provision meant to prevent the return of a hard border in Ireland: if no UK-EU trade deal has been agreed by the end of the transition period in December 2020, the backstop will keep Northern Ireland in parts of the single market and the whole of the UK in the EU customs union. This is anathema to both unionists in Northern Ireland, who don’t want the region to be treated differently from the rest of the UK, and euroskeptic MPs, who fear the backstop will leave Britain indefinitely subject to EU rules and unable to sign new trade deals.

Neither side can dissolve the backstop unilaterally, but only the EU would be comfortable letting trade talks drag on while the UK remained indefinitely bound by rules in which it had no say. So May is looking for a legally binding commitment from the EU that the backstop is temporary. And she is particularly keen to do so because the DUP, Northern Ireland’s unionist party, is propping up her shaky government and has threatened to pull out of the coalition if its concerns are not addressed.

As May seems incapable of getting her deal through the British parliament, there seems to be a growing consensus in Berlin that only two viable options remain: a no-deal, hard Brexit, which all sides are keen to avoid, or a second referendum.

And Norbert Röttgen has voiced his support for the latter, saying in a post on his Facebook page:

“The no-confidence vote didn’t change anything much. There is still no majority in parliament for the Brexit deal. Therefore, the only logical way out of the chaos that I can see is a second referendum on the future of Great Britain.”

The EU will continue to discuss Brexit at a summit in Brussels. But the ball is in Britain’s court.

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© REUTERS/Piroschka Van De Wouw

Last Friday, another government minister resigned—the seventh since the Brexit deal agreed with Brussels was published last month. More than 100 MPs from British Prime Minister Theresa May’s own party have already said they will vote against the EU Withdrawal Agreement when it’s put to Parliament next Tuesday. Labour, the official opposition, has said it will also vote against the deal, as will the Scottish Nationalists (SNP) and other smaller parties. Even those 10 MPs from Northern Ireland’s Democratic Unionist Party (DUP) who prop up May’s minority government have also vowed not to support her.

In fact, there are some who believe that Downing Street will decide that success for May in next Tuesday’s vote is so implausible that they will scrap it altogether. As one leading Brexiteer told me, somewhat cynically: “That’s what they do in the EU Council of Ministers, so why not in Westminster?”

Yet against all odds, it looks like Theresa May and her loyal team of MPs and advisers are pressing on with the vote. They apparently believe that they can turn it around. There is the usual arm-twisting going on by government “whips,” whose role it is to ensure party discipline. The prime minister herself is holding one-to-one talks with MPs who might be persuaded to support her.

It’s not an easy job, but it must have helped that lead Brexiteer, Michael Gove, who has stayed in May’s cabinet as environment secretary, has publicly warned that voting down her deal could lead to a second referendum and possibly no Brexit at all. He believes that it’s more important to get the United Kingdom out of the EU as soon as possible than to worry too much about details now. Many call this a “Blind Brexit,” but for the likes of Gove it’s simple politics. All May needs is a one vote majority on December 11 in Parliament and she’s pretty much sealed her deal.

But let’s assume that next Tuesday evening  May fails. What then? There are various scenarios that could play out and much would depend on how heavy the defeat is:

Second Parliamentary Vote

The smaller the rebellion, the more likely May is to ask that Parliament be given a chance to vote again. Some believe that this has always been Downing Street’s plan—let MPs experience the chaos their “no” vote unleashes, particularly in financial markets, and then be given the opportunity to try again.

Ask for More EU Concessions

The prime minister may decide to head straight back to Brussels to try to eke out more concessions from the EU, particularly over the deeply unpopular Northern Ireland “backstop.” It’s unclear, though, what more the EU would be prepared to give. Spain’s concerns over the future of Gibraltar post-Brexit have proven that it’s not all about what the UK wants.

Calls for a Softer Brexit: “Norway Plus”

A “no” vote could also see May come under more pressure from a cross-party coalition of MPs who are demanding a softer Brexit—the so-called Norway Plus. Essentially this would keep the UK in both the customs union and the single market, for a limited amount of time at least. But with the single market comes freedom of movement. Given that it was the issue of immigration that prompted many in the UK to vote to leave the EU in the first place, this could be deeply unpopular. As the name suggests, those in favor of “Norway Plus” want extra concessions from the EU, and there will be member states who will feel the UK has already been offered enough.

May Resigns

May could of course quit—either by choice or due to pressure from senior ministers. The hard-right Brexiteers within her party, who are led by the rather eccentric Jacob Rees-Mogg, could finally secure those 48 letters needed to push for a leadership contest. The question would then be: who would replace her? There would likely be outright civil war within the Tory party. And as I wrote before, the big risk is that neither side gets the leader they want.

Labour’s Motion of No Confidence

If May loses the Parliamentary vote next week, the Labour Party looks certain to force a no-confidence vote in the government. Of course, what the party really wants is a general election. But Labour would need a majority in Parliament, and there’s no guarantee that it would get one. Those Tory MPs who are either vehemently pro- or anti-Brexit are unlikely to risk a hard-left government led by Jeremy Corbyn.

May Calls a General Election

May herself could call a general election. She’s spent the last few weeks trying to win over the public, as seen during her tour of the country. But the 2017 general election didn’t go too well for her and this would be an even greater risk.

A Second Referendum

So could this be the moment when the so-called People’s Vote becomes a real possibility? One of those behind the campaign has admitted that to make this happen, the Labour Party would need to be on board. So far, however, the Labour front bench has given mixed messages. Party leader Jeremy Corbyn, himself a euroskeptic, has been unwilling so far to lend his support or even say which way he would vote if there were to be another referendum. Still, Shadow Chancellor John McDonnell said recently that a “People’s Vote” might become inevitable. The problem with a second referendum is that the UK is still divided over Brexit and there’s no guarantee that the result would be different to that of 2016.

***

Things are moving extremely fast over Brexit. On Tuesday night, the government lost three successive votes, including being found in contempt of Parliament–the first time in British history. This was over the government’s decision not to  publish its Brexit legal advice in full. It has now done so, opening up another can of worms over the so-called Irish backstop.

But it was the third vote that could be the most interesting. MPs backed a proposal that Parliament could help determine what happens if they reject May’s Brexit deal next week. Many see this as a way of ensuring a no-deal Brexit will be avoided. It’s being hailed as a victory for those politicians who either want a softer Brexit or none at all.

The only silver lining to all this for Theresa May is that it may convince rebellious Brexiteers that if they don’t back her deal next Tuesday, Brexit could be derailed all together. That, of course, is what many pro-Europeans are hoping for.

This article was updated on December 5 to reflect the British government losing three votes in parliament at the start of the debate.

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© REUTERS/ Remo Casilli

Italy’s deputy prime minister, Luigi Di Maio, did not look like a man under siege. Dressed in a suit and tie, the dapper 32-year-old flashed a smile as he faced the media last Friday (Nov. 9) to complain about persistent attacks on the government, questions about its long-term survival, and whether its controversial budget would be rejected by Brussels.

The head of the populist Five Star Movement (M5S) had weathered one of his toughest weeks since his populist party and the far-right League party had formed their uneasy ruling coalition this summer.

“Repeat after me: ‘The government will not fall, the government will not fall’,” Di Maio jokingly urged journalists at the Foreign Press Club in Rome.

Italy has been on a collision course with Brussels after presenting a 2019 budget plan that the European Commission warned would raise the country’s deficit to around 2.9 percent of GDP in 2019, veering very close to the 3 percent limit allowed by the EU in its rules on debt and deficit. The Commission has demanded a correction to the draft budget, but Italian leaders are refusing to budge, spurning Europe’s demands to present a new, revised plan by Tuesday. The standoff has sparked uncertainty on financial markets and triggered fears across Europe that Italy’s ballooning debt will drag down the rest of the eurozone.

But DiMaio’s eurozone woes are just the beginning. He’s also facing growing problems much closer to home, where he’s been dealing with an internal revolt after five of his Five Star senators abstained from a confidence vote called by Interior Minister Matteo Salvini over his controversial security bill, a decree that clamps down on migration and asylum. The senators are against the legislation because they felt it strips away all humanitarian protection for migrants and is inconsistent with Five Star values. They’re now facing a party inquiry for abstaining, and they could be expelled.

“Will there be consequences? I am not afraid,” said one of the rebel senators, Paola Nugnes, a Neopolitan elected in 2013.

Di Maio has also faced embarrassing questions about the future of Rome’s Five Star mayor, Virginia Raggi. She swept into office promising to end corruption, overhaul public transport,  close Roma camps, and promote business and tourism. Instead, Rome is sinking in trash and potholes, and thousands of Romans took to the streets in late October to protest the capital’s run-down conditions. At the same time, Raggi has been embroiled in a scandal over corrupt hiring practices after appointing the brother of a close ally to be Rome’s tourism chief. While she was cleared of the charges, she remains deeply unpopular for failing to stop the city’s degradation and modernize its shoddy public transport.

 If all that wasn’t bad enough, the Italian daily, La Repubblica, accused Di Maio’s father, Antonio, who runs a construction business, of building an extension on the family home back in 2006 without securing a permit.

Di Maio lashed back, saying: “To all these people who spew poison at me, and the Five Star Movement, every day I say, ‘Give us a little more love.’”

Duelling Deputies

The foundation of Di Maio’s political future is a marriage of convenience with Salvini, who is now widely considered Italy’s most powerful political leader. Backed by a relentless social media team, Salvini’s aggressive anti-immigrant platform and his outspoken criticism of the EU have helped to lift his party’s popularity to 30.5 percent, while M5S has dipped to 28.5 percent, according to a recent poll. The coalition government, in other words, is still widely successful. But political differences between the two deputy prime ministers are constantly making headlines.

Last week, Salvini scheduled a parliamentary confidence vote after a slew of Five Star amendments to his security decree, which makes it easier to deport refugees and migrants who have arrived in Italy in recent years. The bill would also put an end to two-year “humanitarian protection” residency permits that were given to 25 percent of asylum-seekers last year. The lower house of parliament has until the end of November to approve it.

Separately, Di Maio and Salvini have clashed fiercely over changes to overhaul the statute of limitations on trials. M5S, which made fighting corruption their battlecry in getting elected to the government, wants to ease the limits on prosecuting a series of infractions, including white collar crimes. After much wrangling, Di Maio and Salvini were able to save face and strike a last-minute compromise.

Yet the leaders’ opposing views over yet another issue–the future of the TAV Turin-Lyon high-speed rail link–were thrown into stark contrast over the weekend. The project has sparked fierce debate in Italy, pitting environmentalists, who object to constructing a 60-kilometer-long tunnel between between Maurienne in France and the Susa Valley in Turin, against those who favor its development.

League supporters see the project as a means of creating jobs and growth: more than 30,000 people took to the streets of Turin to demand that the rail link proceed. Salvini, meanwhile, has consistently voiced his support for the 270-kilometer rail link. “I am convinced that Italy needs more projects, more bridges, more roads, more railways, more airports, not fewer,” he said on the issue.

But the budget for the link has mushroomed. Originally slated to cost €9.6 billion, Italy’s transport minister Danilo Toninelli said recently it would now cost €26.1 billion. “I can only feel anger and disgust at how Italians’ money has been wasted,” wrote Toninelli, a M5S member, on Facebook in July.

Amid all the turmoil, unnamed League sources have started speculating about an imminent coalition collapse and potential elections in March. Salvini has tried to quash rumors, saying in a statement: “There is no conflict, we are working well with the Five Star Movement. Our government has very high popularity levels and in five months we have done more than anyone else.  We are going forward united in order to change the country.”

Five Star Turmoil

While Di Maio also insists there’s no risk to the government’s long-term survival, he is facing yet another challenge within the party, and not only from the rebel senators who abstained from the confidence vote.

Soon he will have to deal with the return of Alessandro Di Battista, a popular M5S politician and former MP currently on sabbatical with his family in South America who is widely seen as Di Maio’s main rival. Di Battista is openly critical of Salvini and is often dubbed “Five Star’s Che Guevara” because of his passion for the Latin American revolutionary, and he’s considered the movement’s most prominent leftist. He has often adopted a hardline against political corruption while criticizing the League’s hardline stance on immigration.

He decided not to run in this year’s national election but regularly expresses his outspoken opinions to his 1.5 million Facebook followers, with his partner and toddler by his side. His return to Italy in December is certain to highlight internal policy differences and exacerbate divisions between M5S and the League.

Giovanni Orsina, professor of political history at Rome’s Luiss University, says M5S is an ideologically complex movement still in its infancy, and under Di Maio it has appeared ambiguous about its policies while allowing the more aggressive League to largely set the political agenda.

“Parts of the Five Star Movement are very unhappy with this government and they think Di Maio is not negotiating hard enough,” he said. “But the movement has not yet grown up.”

The biggest priority for the coalition right now is winning the European Union’s approval on the budget, which they insist will only total 2.4 percent of GDP, not 2.9 percent as the European Commission has predicted.  And it would seem that neither Di Maio nor Salvini want to tear their coalition apart before the European elections in May.

But as M5S is struggling to evolve from a grass roots, populist protest movement into a fully-fledged political party with coherent policies, that is becoming an increasingly difficult task.

“They have a major identity crisis,” says Orsina. “They know what they don’t want, but they don’t know what they want. I still believe the coalition will survive until the European elections. But anything can happen and the pressure certainly is growing.”

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© REUTERS/Lisi Niesner

Watching EU leaders shuffle uncertainly around the Mirabell gardens in Salzburg, cameras clicking and whirring from the sidelines, I thought of when the pretty park—and indeed most of the city—attracted attention in 1964. The cast and crew took up residence to film “The Sound of Music,” a Hollywood musical about a singing family, a sinister duchess, and a young post boy who—spoiler alert—joins the Hitler Youth.

If they ever make a musical out of Brexit, it’s unlikely that, in the words of one Sound of Music tune, Salzburg will count among EU leaders’ favorite things.

With Brexit looming large, leaders’ hopes were again raised by the British spin machine that London might have something to move talks beyond the departure lounge. But hopes of entering a new space, to discuss a future relationship between Britain and the European Union, were once again dashed.

British Prime Minister Theresa May had everyone’s attention at dinner on Wednesday evening. With half a year to go until a disorderly departure from the EU, would May move? And would the EU shift in return, as senior officials had signaled before the meeting? No and no.

In the words of one dinner attendee, May “effectively read out an op-ed” she had written for that morning’s Die Welt newspaper. “To come to a successful conclusion, just as the UK has evolved its position, the EU will need to do the same,” she wrote, and said.

Everyone besides Britain views the UK’s position as wanting to have its cake and eat it. But they are waiting for London to put forward proposals that would make such cake-eating politically or legally possible for the EU27. Thus, the response of Donald Tusk, president of the European Council, to May’s after-dinner address was short and blunt: “It won’t work.”

Squaring the Circle

Talks on what happens after March 29 next year are stalled because London has yet to square the circle on the border that divides the Republic of Ireland and Northern Ireland. In six months’ time this will be an outer EU border and all such borders—particularly those which are also a customs border, as Britain wants—require checks and infrastructure.

This is unacceptable to Dublin and many in Northern Ireland who thought borders belonged in the bad old days of the province. The old border infrastructure from the Troubles was dismantled, never to return, after the 1998 peace agreement. Last December Britain agreed that Brexit must reflect and respect this when the UK departs the EU and the customs union.

Brussels put forward its proposal for turning this political aspiration into legal reality: minimize controls on the island of Ireland by keeping the province inside the EU customs union. Any checks on people or goods entering and leaving could then take place between Ireland and Great Britain, with a new border effectively in the Irish Sea.

But London views this as unacceptable: it would create different legal regimes within the UK—and Belfast politicians loyal to the crown fear this would separate them from the mainland. Their reservations carry weight because May depends on their parliamentary support in Westminster.

But if the EU’s legal proposal is unacceptable, what is the UK’s alternative? Salzburg could have been the moment when the prime minister presented even an outline. But she didn’t.

For the Irish, Brexit is not a technicality but, in the words of foreign minister Simon Coveney this week, a “lose-lose-lose situation.” The best Dublin hopes for on Brexit is a damage-limitation deal. Open borders in Ireland will keep people and trade moving. But Irish trucks having to exit and re-enter the EU on their way to mainland Europe could be disastrous—in particular for fresh food exporters.

For Dublin, the so-called Brexit backstop—no border on the island of Ireland—is as non-negotiable in Brexit talks as the 1998 peace agreement, the result of years of complicated talks backed by Dublin, London, but also Brussels. Irish Prime Minister Leo Varadkar said that all EU leaders he had spoken to gave him their “absolute support in standing behind Ireland,”and that the only acceptable EU agreement on Brexit was one that worked for Ireland. “I am leaving here very reassured,” he said.

With the clock running down to “finalize and formalize” a still non-existent Brexit deal, EU leaders will come together again next month for a moment of truth meeting—and possibly for an emergency meeting in November, in case more truth is needed.

All or Nothing

Will the EU27 hold together in the weeks ahead? Hungarian leader Viktor Orbán suggested in Salzburg that a group of EU leaders were seeking to “punish” the UK.  But in their closed-door talks, EU officials said, Orbán had nothing to say, not even when officials from Poland, a close ally of the Hungarian leader, proposed greater flexibility in the mandate for EU Brexit negotiators.

After a “frank bilateral” with Tusk, the British prime minister left Salzburg. The remaining EU27 leaders stayed to discuss the political declaration on their future relationship with the UK. That is supposed to accompany the legally binding Withdrawal Agreement but is also suspended in limbo.

Again, leaders reiterated that existing British proposals could not provide the basis of such a relationship. May has proposed a free trade agreement between her country and the EU, but wants to exclude services. EU leaders, with thinning patience, insist the internal market is not a cherry-picking farm: it’s all or nothing.

For what felt like the 1000^th time since the 2016 Brexit vote, Chancellor Angela Merkel said: “We were all unified today that there can be no compromises on the internal market.” French president Emmanuel Macron describes such thinking as “unacceptable” and called on his EU colleagues to increase pressure on London in the coming weeks. Echoing growing voices in Britain, Maltese leader Joseph Muscat called for a second referendum in the UK—but other EU leaders declined to follow suit.

The EU circus left Salzburg with leaders calling for compromise with London. Even the Irish—who have the most to lose—said they were open to creative thinking on “language and detail” of any agreement. But this is difficult, they say, given the British have presented nothing to work on.

“De-Dramatizing”

The lack of progress on Brexit couldn’t hide a significant shift on the EU’s other major headache: a long-term political answer to the emotive migration question.

Tusk said there was a “sharp determination” to expand the EU’s border and coast guard Frontex. He said most EU leaders want to press on with plans to create a standing corps of 10,000 border guards—amid some concerns over national sovereignty.

After the pre-summer drama on migration, pushed by German domestic politics, EU leaders transferred their hopes of “de-dramatizing” Brexit onto the refugee question.

Since 2015, EU member states have been divided on whether they should be obliged to share the continent’s refugee burden. In a bid to end the deadlock, European Commission President Jean-Claude Juncker proposed a new push for “flexibility solidarity.” Describing it as “a proposal I don’t even like myself,” he suggested countries that refuse to accept asylum seekers, such as those in central Europe, should be obliged to contribute on other—chiefly financial—fronts.

President Macron warned in his post-summit press conference that countries that refuse to contribute more to Schengen or other solidarity measures will be edged out of the common travel area. “Countries that don’t want more Europe will no longer touch structural funds,” he said.

Meanwhile EU leaders have pressed on with plans to push offshore the refugee issue, returning people rescued at sea to Egypt and other non-EU countries.

With the migration issue flaring up again in Germany before state elections in the fall, Chancellor Merkel is happy not to push for big changes at the EU level. Above all the German leader knows that, after leading the moral charge on refugees three years ago, such a migration compromise now is less music to her ears than the sound of a political climb-down.

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© REUTERS / Kevin Lamarque

It has become a weekly ritual. In the midst of desperate attempts by American diplomats to assuage the concerns of counterparts in Europe, President Donald Trump unleashes a volley of tweets that further destabilize a transatlantic alliance that has been crucial in sustaining the global dominance of the United States. In the past few weeks the pace of Trump’s malevolent bumbling has accelerated, with the bullying of European allies at the NATO summit in Brussels and his courting of Vladimir Putin at their summit in Helsinki leading many European policymakers to question the future of an alliance that has endured for over seventy years.

For many observers, the disruptive impact Trump has had on a global order that entrenched the preeminence of the United States seemed to mark a sudden break from established American foreign policy traditions. Disoriented policymakers in the United States often interpret this system shock in near revolutionary terms. The willingness of Donald Trump to undermine America’s alliances is often depicted as a sudden moment where a relatively stable liberal order was overturned by a small faction of Trump loyalists that reject the global role American institutions have played since 1945. Indeed, the idea that the current turmoil engulfing the transatlantic alliance is the product of a unique electoral aberration is comforting to those who hope for its swift restoration after Trump falls.

Yet a closer look at the evolution of relations between the United States and members of the EU since 1992 indicates that there are long term structural factors at play that have been causing tensions within the transatlantic alliance for quite some time. Many of the resentments that Donald Trump’s wildly provocative rhetoric plays upon reflect frustration over supposed free-riding on American generosity. This issue has repeatedly flashed up under previous presidents. In the 1990s, the inability of European states to head off the Yugoslav wars of secession caused frustration among US policymakers who had hoped that the collapse of the Soviet Union could lead to a shift of strategic focus to the Asia/Pacific theater. The invasion of Iraq in 2003 led to deep tensions with key EU states, though British, Spanish, and Polish support for the US war effort balanced rhetoric from those US conservatives, such as John Bolton, who were already beginning to define the EU as a potential strategic adversary.

For many Europeans, the subsequent election victory of Barack Obama in 2008 fueled hopes that the transatlantic alliance could overcome such challenges. But despite initial emphasis on renewed cooperation, the inability of European states involved in the NATO intervention in Libya in 2011 to sustain targeted airstrikes without American assistance brought to the surface frustration with what many US officials believed was a lack of equitable burden-sharing when it came to defense spending. In his final years as president, Barack Obama expressed frustration with a perceived imbalance between high levels of US defense spending and budget cuts in EU member states that were increasingly hampering the operational effectiveness of European militaries.

An Emerging Europe

A paradox of these growing tensions between the US and its European allies is that they were also a product of the EU’s increasingly powerful global role in other key policy areas. While the end of the Cold War led to cuts in European defense budgets that exacerbated the military imbalance with the United States, it also intensified a process of European integration that would lead to an vast concentration of collective trade and regulatory power in a restructured EU. When the Treaty of Maastricht in 1992 consolidated economic and monetary integration and deepened political union, the ability of the EU’s institutions to influence trade and regulation on a global scale expanded rapidly in ways that clashed with the interests of key American business sectors.

Though there are still many unresolved aspects of economic and monetary integration despite the waning of the Eurozone crisis, it is notable that Europeans have repeatedly resisted American pressure over the past decade—for example, Europe has brushed off American calls to change course over such issues as debt relief for Greece or Brexit. The divergence of European strategic priorities from American attempts to shape the global economy has been a source of tension since at least a decade before Trump’s election. As the EU intensifies integration and puts pressure on trading partners to adopt its own regulatory framework, that tension will only grow.

In the context of a transnational system that is increasingly developing its own state-like structures, the EU’s internal institutional dynamic was also creating pressures for greater defense coordination before Donald Trump took power. The dawning realization of the extent of military weakness in the period between the Libyan War and the Russian annexation of Ukraine fueled concerns within Europe about the extent of its reliance on US security guarantees.

The increasingly unpredictable behavior of the US has accelerated these efforts, as even many Europeans who are strongly committed to the transatlantic alliance have swung to the view that American unreliability may well make the effort needed for the EU to achieve strategic autonomy a matter of existential necessity. In what can be described as a belated victory for the Gaullist view of geopolitics, there is now an emerging consensus across the EU that its interests can no longer be made reliant on an American political system that is vulnerable to violent electoral swings between belligerence and paralysis. As ever with shifts in EU policy, this is still likely to be an incremental process. But the emergence of an EU able to project collective power in all areas of policy would diminish US leverage and influence in Europe and geopolitical flashpoints surrounding it.

So rather than just assuming that Donald Trump is the primary factor behind the crisis threatening the transatlantic alliance, it is worth looking at how he has been able to use this long term divergence in institutional approaches and strategic interests between the US and the EU to his advantage. Even in an alternative scenario in which Trump had lost in 2016, a more benign US president would have still have faced tensions between the EU and the United States. These would have needed to be managed in a way that acknowledged the divergence of interests while still retaining the benefits of continued cooperation in security and defense. If Trump leaves office soon, it could still be possible to have such an honest dialogue. Both sides could discuss the implications of a strategic rebalancing process in which the EU expands its military strength to lighten the load on an overstretched United States while American political elites accept the strategic implications of a truly equal partnership.

Yet if Donald Trump continues to sabotage any attempts to explore such a managed rebalancing, the accelerating strategic divergence could quickly become unbridgeable. The differences in opinion between Europe and America would then fuel strategic rivalry. If one takes the potential global implications of such a breakdown in the alliance between the US and the EU into account, then those American policymakers should be careful what they wish for in demanding a massive expansion of European military power.

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