Europe’s overly complex union

PRINCETON — The European Union is currently facing challenges more severe than even the debt crisis that threatened to sink the eurozone earlier this decade. North-South and East-West tensions in Europe have continued to rise since then, and are now being aggravated by growing uncertainty about the future of German Chancellor Angela Merkel’s government. Could these tensions finally tear the EU apart?

Logically, there is no reason why the EU should now be at risk of destruction. Not only has a sustainable agreement on Greek debt finally been agreed, but the United Nations Refugee Agency has recorded just 42,213 refugees so far this year, nowhere near the million-plus who arrived at the EU’s borders in 2015.

Yet, this year, there has been a spike in angst over migration, in what seems like a delayed reaction not only to the huge influx three years ago, but also to the sense of insecurity brought on by the 2008 global financial crisis. Europeans are more worried about the future than they were a decade ago, not least because they are not convinced that their political leaders can respond effectively to current challenges.

Those challenges extend far beyond migration and the enduring euro debate. They include the security issue raised by continued fighting in Ukraine, the question of how to coordinate energy policy, the stalled Brexit negotiations and the threat of a global trade war. The EU has not proved that it is up to the task of confronting any of these issues, even trade, the one policy domain that fits fully within the EU’s jurisdiction.

In theory, all of these issues could be dealt with together, in a kind of “grand deal”. The advantages of such a deal are obvious: in an uncertain world, membership in a larger community provides valuable protection and assurance. Not all countries would win in all areas, but everyone would be better off overall.

For example, while Italy and Greece would still have to register asylum seekers and provide them with medical and social assistance, their European partners would support that effort, because they would benefit from a stronger frontier, policed by a European force. Likewise, all EU members would gain from the increased resilience afforded by greater investment in energy transmission.

Nonetheless, a grand deal has always been something of a chimera in Europe. A key problem lies in the intricacy of the EU, which is poorly equipped to function amid chaos, much as Germany’s highly disciplined football team was ill-prepared to face their Mexican opponents’ frenetic play early in this year’s World Cup. This is not the first case of a football match taking on symbolic significance in the EU: in the summer of 2012, at the height of the eurozone’s debt crisis, the decisive European summit occurred at the same time as a European Cup match between Italy and Germany.

The world of 2018 is one of chaotic play. Consider the recent G-7 summit in Quebec, where trade was at the top of the agenda. This is an area where the EU should have considerable agenda-setting power. But its representatives missed a golden opportunity when US President Donald Trump, who might as well have written the chaos playbook, offered an alternative to the trade wars he himself launched: the complete dismantling of tariff barriers. Europeans should have seized on that proposal and insisted on the rapid completion of an initial agreement on G-7 tariff levels.

It was just such a move, it should be remembered, that effectively ended the Cold War. In 1990, at the White House, Soviet leader Mikhail Gorbachev unexpectedly suggested that NATO membership for a reunified Germany would stabilise the continent. US president George H. W. Bush and his aides leapt at the opportunity, pushing Gorbachev to seal the deal quickly.

In the case of Trump at the G-7, an agreement to scrap tariffs would have been good for the whole world, even if Trump later tried to renounce it. As it stands, tariff barriers are not particularly high: the weighted mean tariff for all US and EU products is just 1.6 per cent. Getting to zero would be relatively easy, and it would send a powerful signal that there will be no tit-for-tat escalation, that global supply chains will not be disrupted, and that the global economy is secure.

Of course, such a deal would raise challenges for the EU. Some businesses, especially in the agriculture sector, currently enjoy higher levels of protection; eliminating tariffs would thus alter the alignment of domestic interests in the EU, and in the US.

But the fundamental problem is that European leaders at the summit could not get on the same page fast enough to respond in time. Europe has too many moving parts. The EU is deliberately complex, in order to allow for the coordination of a wide variety of national interests. That complexity is fine in normal times, but it is problematic at exceptional moments, when the play is frenetic. At those moments, the EU looks more like the Habsburg Empire, a complex vessel of nationalities where satirists joked that the situation was desperate but not serious.

The Habsburg Empire had its own potential grand deal, a major political reorganisation that would have altered the political weight of its nationalities, but it was never concluded. Instead, the political elite began to believe that only an external political challenge, in the event, a brief war, could solve the problem. But World War I was no brief war, and far from rescuing the empire, it destroyed it.

After 1918, nostalgia for the old empire surged. It looked better, more tolerant, and even more capable than the group of competing nation-states that succeeded it. Today’s Europeans should take note. If they allow the fears of the present to continue to stifle action, they may soon find themselves wishing for a vanished opportunity.

Harold James is professor of history and international affairs at Princeton University and a senior fellow at the Centre for International Governance Innovation. Copyright: Project Syndicate, 2018. www.project-syndicate.org