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Jul 9, 2020 in Review

Future of the European Union: Progress or Collapse

The European Union is a successful model of economic and political integration. It enjoyed a long period of the staggering achievements and prosperity. As the form of multilateral cooperation, the EU emerged in the 1950s due to several favorable external factors including the post-war fears and hopes for the peaceful future. However, the 2008 economic recession brought into focus numerous institutional, political, economic and social flaws of the European project. Such issues as the inadequate institutional framework, lack of political unity and the crisis of confidence point to the high possibility of its collapse.

During the last 60 years, the European Union enjoyed the unprecedented level of economic prosperity as well as exemplified the model of economic and political integration for the whole world. The necessity for the multilateral cooperation was the result of the historical circumstances that include the fear of another war and long-standing political rivalry between the leading European nations. The economic union quickly progressed from the free trade area to the monetary union and incorporated the traits of the state entity. However, the hasty and poorly planned process of integration and enlargement produced a number of the adverse effects. The economic disparities, the lack of the progressive and effective institutions, political unity and public trust strongly suggest a scarce possibility for the European project to move forward.

 
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Historical Background

Historically, the emergence of the European integration concept in the 1950s as well as the progressive integration during the later decades are the result of the contemporary tendencies. In the aftermaths of the World War II, Europe struggled to survive the post-war period of uncertainty by establishing the peaceful environment through the joint efforts. Ash explains that the memory of war was one of the most contributive factors of the European unification. Unsurprisingly, the war veterans became the most active proponents of the economic integration, considering it an effective way to avoid the military conflicts in the future. As the memory of the Nazi threat faded, the fear of the Communism became the main driving force behind the European unification during the Cold War. Further, consolidation of the European Union, particularly in the sphere of the foreign policy, during the troubled period of the international tensions, was triggered by a number of the external events that demanded the common response from the European states. They included the Arab-Israeli conflict, the Vietnam War, the Soviet invasion of Afghanistan in December 1979, the Iranian revolution and hostage crises in 1980, the Argentinean invasion of the Falklands and the Israeli invasion of Lebanon. The combination of these factors largely illustrates the historical prerequisites of the unprecedentedly fast formation of the European Union.

Parallel to the recognition of the necessity to combine efforts in response to the external issues, the establishment of the trade union was an expected outcome of the World War II. Ever since the establishment of the European Community of Coal and Steel in 1951, the German-French axis was the crucial factor in the development of the EU. Both countries sought to secure peace by laying aside the past hostilities and differences on any particular issues during the post-war period. Germany was especially concerned with the eradication of the common fears regarding its transgressions in the World War II. Helmut Kohl, the first German Chancellor after Adolf Hitler, exhibited a strong personal commitment to reinstall Germany’s reputation. As the result, Germany supported the creation of the monetary union even despite the nationwide reluctance to refuse from the national currency. France exhibited the same divergence between the elite’s commitment to the cause of integration and the public opinion. The French government welcomed the idea of delegating the sovereignty to the supranational institution and Germany’s engagement in the European affairs especially in the view of the German unification in 1990. However, a little more than 50 percent of the French population voted for the ratification of the Maastricht Treaty in September 1992. The evidence strongly suggests that the birth of the EU was essentially a German-French compromise.

Challenges of the European Integration

Despite the immediate benefits, the economic openness presupposes the exposure to the asymmetric economic shocks. The commercial interdependence creates the productive quality differentials among the states with the diverse economic structures as well as the regional specialization leading to the divergence that the institutional mechanisms of the European Union may not overcome. This assertion became especially obvious during the economic recession in 2008. Due to the lack of the labor mobility and poor level of fiscal transfers between the member states, the Eurozone could not cope with the economic shocks that varied from one state to another. The crisis provoked by the crash of the U. S. mortgage market amplified the economic disparities that laid at the core of the European Union since its creation. While the Northern states, especially Germany, responded to the recession by reducing the labor costs and welfare spending, the Southern states including Greece, Spain, Portugal, Ireland and Italy felt no need to establish the similar fiscal discipline. They enjoyed the benefits of the EU membership that permitted borrowing money from the leading members and let the private and public spending lead to the tremendously high size of the national debts.

At the same time, the economic crisis revealed the serious institutional flaws of the European project. Ever since the creation of the Eurozone in the 1990s, it lacked the institutions that would ensure the economic recovery in case of the current crisis. According to Bergsten (2012), the existing mechanism of the financial bailout is simply insufficient for restoring the economic default in Greece or Spain. The economic diversity of the EU members made it impossible to impose the fiscal criteria for membership and, consequently, had no intention to establish the supreme financial authorit. Moreover, the European Parliament lacks the legitimate power to initiate the legislation including the initiation of bills and decision-making. The absence of the authoritative power played the key role in the inadequate and ill-timed response to the economic crises.

Politically, any progress in deepening the European integration was stalled due to the lack of consensus and commitment among the member states. As the economic gap became evident, the concept of solidarity lost its appeal. According to Jovanović, the debt, poverty and unemployment as well as small possibility of the economic growth have led to the growing discontent and, subsequently, the lack of the joint efforts among the member states. The resulting drift was mainly the outcome of the long-standing differences in the political agendas of the national governments. The long-standing partnership between Germany and France has a long history of disagreements including the German objections to the French nuclear tests in the Pacific in 1995, the debate regarding the military intervention in Libya in 2011, concerns related to the nuclear power plants after the Fukushima disaster as well as the different attitudes to building the relations with the USA and Russia. Nowadays, the political platforms of newly elected governments in both countries are less focused on deepening the European integration. A new French President Francoise Hollande is more worried about tackling the unemployment while the present generation of the German leaders is likely to treat the European project in the strictly pragmatic manner instead of viewing it as the idealistic venture. The lack of political unanimity among the EU members is likely to have the discouraging effect on the process of the European integration. 

The issues mentioned above have led to the current lack of confidence in the credibility of the integration concept among the European citizen. According to Heinrich Böll Foundation, the EU is facing the challenging task of employing the large-scale democratic debates on a wide range of social problems including poverty, health, and gender equality. The reluctance to address the mentioned issues during the 2008 crisis resulted in the significant decline of the public support. Jovanović accurately points out the decreasing living standards and jeopardized the legitimacy of the European project lost the support of the general public, mostly composed of the young people who do not remember Europe in the period of post-war division, hostility and economic decline. Citing the recent surveys, Rubio claims that over 50 percent of the European population had a negative image of the EU in 2012, compared to 23 percent in 2007. The mentioned tendency is attributed to the certain discrepancies between the proclaimed intentions and reality. Initially, the European project was purely elitist due to several reasons. The small number of the founding states and the general assumption that the economic integration will automatically lead to the improvement of the living standards explain the complete exclusion of the social element from the contemporary EU legislation. 

The concept of the social cohesion is a relatively recent achievement. It became relevant only after the adoption of the Single European Act in 1986 that gave birth to the single market and raised the fears of the social inequality during the accession of the states with the lower level of economic prosperity. However, the hesitation in drafting the adequate supranational legislation led to the dichotomy between the economic growth and level of social protection. Heinrich Böll Foundation strongly argues that the field of social policy remained underdeveloped despite the few non-binding and legal attempts to codify the social and labor standards after the establishment of the European Economic and Monetary Union. In addition, the eastward enlargement brought together a number of culturally, politically and economically diverse states and significantly amplified those differences by demanding the hasty adaptation of their lower labor costs to the European standards and fueling the internal competition for jobs. Moreover, the economic and social crisis revealed the ineffectiveness of the ‘soft’ coordination methods that failed to trigger the substantive reforms on the national levels due to the harsh fiscal austerity. As the result, the public spending on the education in the countries that were the most severely suffered from the economic and social crisis has decreased by 37 percent. The evidence strongly indicates the undeniable lack certainty among the European population. 

Implications for the Future of the European Union

The issue of the EU’s future is currently one of the most debatable topics among the international community. The possible scenarios vary from the stable recovery to the complete economic disaster. The model of differentiated integration, in particular, was suggested as an effective way of deepening the European integration and simplify the process of accession for the new members. It may allow the member states to determine the extent of their engagement the Union’s affairs by granting the freedom of choosing the appropriate projects. The suggested idea is not entirely new; in the past, the European community enjoyed the right in choosing whether to participate in the euro and Shengen areas. However, Heinrich Böll Foundation states that the differentiated integration may undermine the process of the European consolidation by deepening the gap between the North and South, the core and periphery as well as significantly complicating the internal structure of the EU. The worst scenario predicts the collapse of the Eurozone that will be no longer capable of sustaining the mixture of the diverse economies. According to Ash, there is a low possibility of establishing the political and economic unity between the Eurozone core that contains the creditors and debtors, and the peripheral members such as the United Kingdom, Poland and Sweden.  At the same time, the absence of immediate necessity for unification will cause the gradual shift of attention from the European market to the more promising emerging economies.

Since the economic interdependence is not isolated from the political domain, one should expect the growing lack of political unity. The mentioned tendencies are primarily the result of the crisis of confidence. While many people raised their expectations regarding the future role of the EU in the crisis management, numerous nations reject the idea of delegating their decision-making powers in such areas budgetary, monetary and social areas to the discredited European institutions. The drift from the political unity is evident from the lack of the political majority that is necessary for adopting the productive legislation. In the extreme cases, certain countries consider moving in the opposite direction. The United Kingdom, in particular, exhibits a strong inclination to disengage from the European Union. Since the end of the World War II, Great Britain pursued a deeply dualistic course of the foreign policy regarding its relations with the continental Europe. In accordance with the mentioned motto, Great Britain joined the European Union in 1976 to gain the capacity to influence the decision-making process but remained the strict proponent of the European free trade area. One of the most obvious evidence of its opposition to integration is the veto of the new EU treaty that would provide the European Union with the legal tools for control and approval of national budgets according to the German template.

As the economic crisis deepened the British distrust in the European integration, the Conservative government of the UK moves toward the withdrawal from the European Union. These intentions were clearly expressed by David Cameron who stated that the current state of affairs is not consistent with the British expectations. The possible exit of Great Britain, usually referred to as ‘Brexit’, presupposes a wide set of adverse outcomes for the EU. In terms of the institutional framework, Brexit will cause the rebalance of power within the European Council and the European Parliament between the small and large states, the northern and southern states, protectionist and liberal parties. The European Union will lose 12,5 percent of its population, 14,8 percent of its economy as well as the largest contributor to the European budget. As for the economic integrity, Brexit will inevitably affect the commercial structure of the EU. It threatens to impose the tremendous costs on the relocation of the financial operations, previously conducted in London banks by the European business, as well as on the adjustments for the European investor. The combination of these factors is likely to create the first unexpected and undesirable precedent of withdrawal from the European Union. 

Conclusion

The accumulated evidence strongly indicates the possibility of the collapse of the European Union despite the long period of prosperity and well-being. The birth of this project was largely predetermined by the political and economic needs of the European countries that were plagued by the war memories and hope for the peaceful future. However, the rapid integration and pragmatic miscalculations paved the way for the economic crisis that may destroy the European Union. The lack of the centralized financial power, existing differences in the political agendas of the EU members and the crisis of confidence suggest a low possibility of future progress in uniting Europe.

 

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