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The Future of the European Union

Future of the European Union
Written by Robert Jackson

In this article, Robert Jackson (former MEP, MP, and Minister for Higher Education and Science) seeks to give a balanced analysis of these structural weaknesses. He draws no hard and fast conclusions as to how they will work out, and how the UK should respond to them. But readers of “Briefings for Britain” will find much matter in what he has to say.

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Editorial Introduction – in the debates about Brexit, both in Britain and on the Continent, it has been largely taken for granted that the European Union is a permanent and dynamic structure with increasing weight in world affairs. The British government wisely proceeds on this assumption, seeking continuing cooperation with the EU while at the same time also hoping to take advantage of the opportunities presented by Brexit. But there is nevertheless growing evidence of weaknesses in the foundations of the European structure – weaknesses that it may not be possible for the EU to surmount.


One of the most interesting developments in world politics since 1945 has been the emergence and development of the entity which has described itself successively as the European Communities, the European Community, and most recently the European Union. Over the past seventy years this European experiment has attracted much academic, journalistic, and political reflection. Assessments have ranged very widely between sometimes outright boosterism at one end of the spectrum to sometimes even apocalyptic scepticism at the other.

Basically the boosterist view regards Europe as moving towards the formation of a European version of the United States of America, by means of many of the same political and economic arrangements that led the USA in the course of two hundred years from its early days as a “confederal” union of previously British colonial states to an increasingly powerful “federation” on a continental scale. Like the USA, this USE is, or will be, based on a shared set of common political and legal institutions – a constitution, a supreme court to interpret it, a federal legislature and executive, together with the progressive development of federal jurisdiction over inter-state commerce, a common external tariff, a single monetary system, a federal defence and foreign policy, and the elements of a federal “Welfare State”.

The various sceptical views, on the other hand, have basically held that the fundamental conditions which enabled the formation in the USA of a unified sense of political identity – a unitary citizenship – simply do not exist in Europe, with its ancient histories, its many different languages and cultures, and its long and deep history of distinct and rivalrous national, religious, and ethnic identities. An interesting twist in this sceptical view of the prospects for the European Union has been the argument that so far the most significant achievement of the European project has been the rehabilitation of the various continental European national states, deeply discredited as they were by their failures in the first half of the 20th century. In this perspective the narrative concerning the post-war development of the European movement is not so much one of the progressive formation of a new USE but, rather, that of the “European Idea” as a projection of and a vehicle for the various national projects of the various European states – notably in a first phase in the 1950s and 60s the project and vehicle of France and, since the 1980s especially that of Germany, and also and to a lesser degree of the former dictatorships in Iberia and Greece, and more recently of the former Soviet satellites in Eastern Europe.

These, and other, diagnoses of the nature of the development hitherto of the European Union lead to rather different prognoses concerning its future.  Will its path towards what the Rome Treaty of 1957 called an “ever-closer union” eventuate in something like a “United States of Europe”?  Or will its development be arrested and then stabilised more or less at its present position, part-way between “Confederalism” and “Federalism”? Or will the continuing power of the various national factors increasingly assert itself in a more or less explicit and perhaps even disruptive retreat from ambitions for “Federalism”?

This article will seek to shed light on these various possibilities by reflecting on the main operative factors bearing upon them – first those of economics, then those of politics and political culture, and, finally, the factors of geopolitics.

Economic Factors

The first steps in the development of the European Union were taken in the early 1950s in the context of the solution of what now seems an almost archaic industrial problem – that of the future access of post-war Germany to coal and steel, then regarded as the basic sinews of war.  In the emerging Cold War with the USSR, the USA and the UK were determined to rebuild West Germany as a future ally, obliging France to look for safeguards against future German revival in the “Europeanisation” of the iron and coal resources of the Ruhr together with those of north-western France, Belgium, and Luxembourg. To this end in 1950 the French technocrat, Jean Monnet, and the French foreign minister, Robert Schuman (himself born a citizen of the pre-1918 German Reich) proposed the setting up by treaty of the common regulative institutions of a “European Coal and Steel Community” – an executive “Commission”, a legislative “Council” of the member-states and a parliamentary “Assembly” of members of the national parliaments, together with an adjudicative “Court” to interpret the prospectively constitutional inter-state “Treaty” setting up the “Community”.

It is relevant to note that in many respects this “Europeanised” industrial policy for coal and steel was a continuation at a European level of pre-war policies of the “cartelisation” of those industries at a national level. Thenceforth an important strain in industrial and especially agricultural policy at the European level has been similarly protectionist and even sometimes mercantilist.

In principle this cartelising strain should have been counterbalanced by the next steps in the development of the European project. These were the establishment of the European “Common Market” in the 1960s, leading to the removal of tariffs on intra-European trade, followed by the subsequent formation of the European “Single Market” in the 1990s, aimed at the removal of non-tariff restrictions on the European equivalent of America’s “inter-state commerce”.  But in practice the industrial consequences of these measures of “market-opening” have been quite limited, basically on account of the continuing weight of the various national factors in the European market-place.

Thus, although the EU has a larger population than the USA, in terms of market capital America has 50 companies in the world’s top 100 companies, accounting for 65 percent of total world-wide capitalisation, while the EU has only 17, none of whom figure among the top 10 – all of which are American except for Saudi Aramco, Taiwan Semiconductor, and Tencent from China. It is striking that France has only 2 companies in the global top 100 by market capital, ie l’Oreal and Total.  Meanwhile, in terms of total revenue the only European companies in the global top 10 are Royal Dutch Shell, BP, and Volkswagen.  In a world industrial scene that has been transformed in the past thirty years the integrative structures of the European common and single markets have produced nothing to match the new American tech giants which have recently come to dominate the list of the world’s top 10 companies (Apple, Microsoft, Alphabet, Amazon, Facebook, and now Tesla). And by the same token Europe has also failed to match the revenue growth of the new Chinese giants (Sinopec, State Grid, China National Petroleum).

A number of successful trans-European industrial combinations have indeed been developed, notably in the sphere of aviation – eg Airbus. But on the other hand, and perhaps paradoxically, European policies have also created a favourable climate for the preservation of “national champions”, ie large and politically well-connected national companies. A select few of these companies, German and Dutch and some French, have been able to establish dominant positions within the European market – but, again paradoxically, those few companies from Europe which operate also at the global level are also no longer reliant only or even primarily on their national and European markets: thus in 2020 just under half of Volkswagen’s revenue came from sales outside Europe (with China accounted for 40 per cent of deliveries), while the proportion of L’Oreal’s sales in the Asia Pacific area (41 per cent) and in North America (24 per cent) dwarfed its sales in Western Europe (18 per cent). Thus compared with the USA and Japan, and now also with China, Europe has relatively few very large companies, and almost all of these are not so much “European” as, rather, expanded national enterprises operating on a scale which is global rather than regional and European. Meanwhile, so far most of the successful transnational companies in Europe have been American.

Why is this happening? There will be many reasons, but prominent among them are first of all that European horizons remain stubbornly local and national rather than European or global – and second, that the process of “building Europe” is heavily dependent on the cooption of established interests (so-called “stakeholders” or “social partners”) whose influence is then heavily layered across the regulatory frameworks at both the national level and that of the European Union. This tendency to parochialism and liability to “producer capture” of the European and national regulatory systems surely also helps to account for Europe’s absence from the wave of technical innovation especially in computerisation and digitalisation which has occurred since the 1990s under the leadership of the mostly American “Big Tech” companies.  This is why Europe has had no counterparts to Microsoft, Google, Facebook, Amazon, and Netflix. Here the East Asian “tigers”, starting more or less from scratch, have turned out to be faster learners than the Europeans with their heavy burden of national “legacy” industries which are also “national champions”.  This is also probably the most fundamental reason for a projected decline of Europe’s contribution to world GDP from 15.64 per cent in 2016 to a 13.84 per cent in 2026, and to below 10 per cent by 2050.

Nevertheless, whatever its practical results, the sheer scale of the European institutional and regulatory framework for economic activity as it has developed over the past half century has undoubtedly been very impressive. Horizontally, its geographical reach has expanded by way of successive enlargements of the membership of the European project to include the UK (1973), Greece (1981),  Spain and Portugal (1986), the former German Democratic Republic (1990), and then most of the former Soviet post-war empire in Eastern Europe (2004).  So far the only major set-back has been the withdrawal of one of the Union’s three biggest member-states, the UK, in 2020 – and perhaps also the looming prospect of inability to complete the integration of the Balkan states into the framework of the Union, together with the ongoing failure of negotiations for the accession of Turkey.  At the same time, in terms of the vertical expansion of its legal competences, the European project has moved on from the original Coal and Steel Community of the 1950s through the Common Market and its associated Common Agricultural Policy in the 1960s, and thence to the Single Market of the 1990s followed by the formation in 1999 of the “European Monetary Union” abolishing the various national currencies and replacing them with the “Euro” issued by a new “European Central Bank” located in Frankfurt. Much of the elan associated with the emerging European Union around the turn of the millennia in 2000 was supplied by these notable successes over the previous decade in the setting up of this eye-catching continent-wide institutional framework for future economic integration.

On the other hand, and as we have also seen, the concrete and practical integration of the various European national economies within the over-arching framework remains elusive. Meanwhile, the operation of this institutional framework is itself becoming increasingly problematical.

The most fundamental problem concerns the relations between monetary policy, now allocated to the federal centre at the ECB, and the economic and fiscal policies which continue to be primarily determined at the national level in the various member states. From the start it was recognised that this disjunction was challenging, and a series of treaty-based rules have been promulgated to deal with the problem, notably by constraining to 60 per cent the ratio between the GDP of each member state and its level of public debt, and by explicitly ruling out the transfer of financial obligations from the national to the European level: the so-called “no bail-outs” rule.  But almost from the get-go these constraints have been compromised, to such an extent that instead of the Monetary Union promoting “convergence” on sound economic policies it has instead led to increasingly significant “divergence” in economic performance, now reinforced and compounded by the differential effects of Covid over the past two years.

An important marker of divergence refers to economic growth. Since the introduction of the Euro in 1999, while GDP growth in mature economy Germany has averaged between 1 and 2 per cent a year, that of developing economy Greece underwent a dramatic contraction by a third in the six years after 2008, from which it was only slowly recovering before it was hit by Covid. Meanwhile in Italy pre-Covid GDP in 2019 was 5 per cent below its level in 2008. Be it noted, by comparison, that since the late 1990s the economy of the UK, outside the Eurozone, grew by some 40 per cent.

Another important divergence concerns the public debt/GDP ratios in the various European countries. Instead of converging on the 60 per cent figure prescribed by the treaties, while in 2020 the German ratio was 69.8 per cent, the equivalent figures is rising to 156 per cent in the case of Italy, 120 per cent for Spain, 116 per cent per cent for France, and a startling 206 per cent in Greece. (The UK figure is 97.4 per cent).

Meanwhile, with regard to the exclusion of “bail-outs”, an informal device which effectively circumvents the Treaty provision which specifically forbids them has been developed by the German Bundesbank using the mechanisms for intra-Central Bank clearance to postpone indefinitely the settlement of liabilities incurred notably by Italy, Spain, and Greece, in effect by not cashing their cheques.  In June of this year the value of these outstanding so-called “Target 2” liabilities held in Berlin amounted to well over a trillion Euros, with the Italians and the Spanish owing in excess of 500 billion Euros – just shy of half the size of Spain’s GDP and one third of the GDP of Italy. These liabilities are continuing to accumulate, and it is hard to see how they will ever be paid off – except by way either of cancellation or even of default.

Under modern democratic conditions the architecture of a common currency requires the convergence of monetary, fiscal, and economic policies. In the EU this convergence is not occurring: quite the reverse in fact.  So-called “structural reforms” within the less economically competitive member-states of the EMU which would enable them to compete successfully within its fixed exchange-rate system continue to be elusive: eg French unit labour costs continue to be higher than those in Germany. And with that fixed exchange rate being too low for Germany and too high for the Club Med, the consequence is that German trade surpluses have ballooned while Club Med deficits accumulate and their economies stagnate. Indeed, the Italian economy has hardly grown over the past twenty years.

The outcomes of the recent German election and of the French elections next year seem likely to exacerbate these fundamental problems. Although the probable entry of the Greens into government at the federal level in Germany will introduce a new expansionary factor, the leaderships of both the SDP and the CDU/CSU are firmly committed to fiscal stability, within both Germany and the EU – and this bias will be reinforced by the FDP. While there may be agreement on off-budget “investment” in Green policies (increasing debt under another title), Germany is likely to press hard for a return to the fixed ceiling on public borrowing within the Eurozone, suspended during the pandemic crisis. And whoever wins the presidency in France will continue to struggle with the French tendency to fiscal incontinence.

Political Factors

Why is it that practical economic convergence in Europe is not occurring, in spite of every treaty commitment, and in spite of the imposing European institutional framework for integrating economic activity across the continent? Here political, social, and cultural factors come into play which also have a bearing on the future of the European Union.

Here I think that it is useful to situate the intellectual origins of the European Union in the context of wider thinking across the world in the mid-20th period, when the institutional forms of today’s EU were first projected. This was a period of physical, political, social, and cultural engineering on a grand scale: the prewar emergence of mass-manufacturing, the building of vast networks of electricity supply and road connexions, and the postwar rebuilding of cities and formation of new states (as, for example, the Federal Republic of (West) Germany, an entity previously known as “Bizonia”; also the French “Fourth” and “Fifth Republics”), together with the rise of state-sponsored mass education, the emergence of new technologies shaping mass culture, the development of the so-called “Welfare States” and, in the Soviet Union at least, the project of the deliberate creation of “Soviet Man”.

The pervasive guiding idea in this period was that of the primacy of technology and organisation and of its capacity to direct and mould the formation of human politics and culture. In Marxist terms this was the doctrine of the determination of the cultural “superstructure” by the underlying economic and technical “infrastructure”. In terms of the predominantly American academic political science of the time this was also the doctrine of “Functionalism”, holding that in politics, as in modern architecture, “form” is determined by “function”. Jean Monnet’s “Community Method” of what he called “engrenage” – literally, “gearing” – was very much a creature of this period: in his words “the fusion of economic functions will compel nations to fuse their sovereignty into that of a single European state”.

But as the great German philosopher Kant observed, mankind is made of “crooked timber” – krummes Holz. New forms of technology and of economic and institutional organisation do not operate automatically and predictably to form new ways of thinking and create new states of consciousness and identity. As Juergen Habermas pointed out in 2003 we now live in a “Post-Secular Age”.  In many ways the project of the construction of the European Union is an experiment which puts the 20th century hypothesis of the possibilities of political, social, and cultural engineering to a crucial test.

In this matter the central question is that of whether the processes of European institutional integration will in fact be capable of engineering a new political, social, and cultural phenomenon: that of “European Citizenship” – “European Man”.

In general terms a “Citizen” in a democracy is one who participates in a complex of rights which he or she enjoys, and of and duties which he or she accepts as binding. In Western Europe in the 20th century the character of these rights and duties at the national level has been transformed. Before 1945 the dominant factor was the duty of military service. Since 1945 and the rise of the “Welfare State” the dominant factor has been the right to benefit from and duty to contribute to vast national systems of “Social Security” based on the principle of national citizen-solidarity and pooled insurance. These systems redistribute financial and other resources from those citizens who are economically more successful or competitive or simply lucky to those other citizens who are unlucky or less successful or less competitive. Such transfers now occur on a massive scale, ranging in Europe from 30 per cent of GDP (as in France) to 20 per cent (as in Britain), and they take the form both of direct inter-regional “budgetary equalisation” transfers and – on an even greater scale – also of indirect transfers by way of the automatic operation of the national social solidarity, pensions, and health systems.

Against this background, “European Citizenship” is a relatively recent arrival, first promulgated in 1992 by the same treaty that promulgated the “European Union”.  Like much that is officially “European” this was not so much an innovation as a redescription of basically national facts. Every citizen of each member state is automatically a “Citizen of the European Union”.  At the same time, however, a number of new important rights deriving from previous European treaties were also attached to this new citizenship – notably the right to work, to move and to settle anywhere within the territory of the Union, including the right to plug into the various national social solidarity systems on the same basis as their national citizens. (One of its outcomes was the largest immigration in British history, with no less than 6 million “European Citizens” having qualified for a post-Brexit right of residence in the UK).

The case of intra-EU migration as a “Right” enjoyed by European citizens points to the existence of important tensions between the new citizenship rights and duties at the European level and the older ones at the national level. These tensions are most visible in the emerging West/East fissures within the Union, and they are also becoming increasingly evident in German relations with the EU.

In the case of Germany a rift in the European “uniform legal order” emerged as long ago as 1970 when the German Constitutional Court, the Verfassungsgericht, ruled that European legislation which contravened the rights of German citizens under the German “Basic Law” would be invalid in Germany. The EU eventually responded in 2009 by adopting a “Charter of Fundamental Rights of the European Union” which conferred on all European citizens a set of rights regarded as equivalent to those assured by the German Grundgesetz.  At the time of its adoption it was envisaged that these European Fundamental Rights were applicable only to acts of the European Union, and the British and Polish governments secured “Protocols” confirming this restriction. Nevertheless, mission-creep in Brussels and Luxembourg has led to an asserted universalisation of these Charter rights, in ways which challenge the claims of national courts, like the German Verfassungsgericht, to ultimate jurisdiction in respect of their national citizens. In 2020 the German court ruled against certain aspects of the Bundesbank’s bond-purchasing in the context of the European Monetary Union: and the Commission has retaliated by challenging this “violation of fundamental principles of EU law” – which the German court bases on the primacy of its ultimate sole jurisdiction within Germany. So: does the European citizenship of German nationals trump their German citizenship?  Europeanists hope that in the passage of time and with changes in personnel the Verfassungsgericht will climb down from its German high-horse. But the policy of the German court is well-grounded and of long standing: and it is doubtful that any German government would refuse to comply with a ruling of Germany’s own Constitutional Court if it were contradicted by the European Court.

In the same period as the European “Charter of Fundamental Rights” was adopted, so also were various declarations concerning “European Values” (2007), which have contributed to the legal basis of other attempts by the Commission to expand European jurisdiction: the highly abstract character of these “Values” readily lends itself to judicial engineering at the hands of the European “Court” which has been designed for this purpose.  So far the main target has been various governments in the East European member states. A first effort in this direction failed when the Commission argued that these states were under treaty and “Charter” obligations to accept asylum seekers allocated to them by Brussels: this move was successfully resisted. On the other hand, very recently the Polish government backed down on its plan for the reform of judicial appointments within Poland, faced by the Commission’s threat of financial penalties for this putative inconsistency with “European Values”; and similar pressures are being applied to the many Polish municipalities who refuse in the name of “family values” to promote what they call “LGBT ideology”. Battles with the Hungarian government on similar grounds are ongoing. So far at any rate the governments of Poland and Hungary seem to have retained popular support in spite – or perhaps even because of – these various challenges.

A cynic might observe that the “Multiculturalist” version of “European Values” which the Commission is promoting is coming under increasing fire in the EU’s Western heartlands. A notable recent development in this regard was Michel Barnier’s recent proposal, in the context of his bid for the French presidency, that France should assert its “legal sovereignty” to set aside all those European treaty provisions that might stop it imposing a five year ban on any migration into France from outside the EU. He has proposed a referendum in France to back this proposal: perhaps the only kind of European referendum in France which might result in a “Yes” vote.

Imposing (elite) Western interpretations of the duties of European citizenship on the relatively weak Easterners is one thing. But what might happen if an attempt were made to impose a serious European Citizenship obligation on relatively well-of Westerners, in the form of a duty to contribute to the same kind of “Welfare State” transfers of resources between citizens at the level of Europe which are taken for granted at the national level? I think that it fair to say that a genuine “European Citizenship” will only be realised if and when the European citizens accept duties of solidarity between Europeans similar to and on the same scale as those to which they are accustomed as national citizens. Such a duty is arguably also a political necessity in the context of the permanent fixing of exchange rates between the currencies of the European Monetary Union, which has removed from the less competitive states their previous freedom to compensate and perhaps catch up by depreciating their currency.

So far the official European answer to this rather fundamental aspect of modern citizenship duties has been in the negative. Direct budgetary transfers between the European states were explicitly ruled out as recently as the Lisbon Treaty in 2007, whose article 125 reaffirmed that “a Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities … of another member state”. A fortiori the even larger notion of indirect transfers through social security systems integrated at the European level has hardly begun to be discussed. Meanwhile, the present integrated budget of the European Union accounts for no more than 1.6 per cent of Europe’s GDP, and its distributional effects are in general more regressive than progressive.

Last year however, this question of resource-transfers between European Citizens at last broke surface in the context of the Covid pandemic and of negotiations establishing a so-called “European Recovery Fund”. European boosterists have billed this as the “Hamiltonian moment” at which the EU at last transitions to a “Transfer Union”. This may in fact turn out to be the case. But note first of all the label on the tin: “European Recovery”.  This programme is tied specifically to the Covid emergency, not to any broader and more long-term commitment: it is time-limited for only five years, with several of the contributory states insisting that it should not be renewed: and its renewal will require a unanimous decision of all the member states. Second, although the scale of the ERF is undoubtedly impressive, amounting to 750 billion euros – roughly 1 per cent of EU GDP in each of the next five years – it is considerably smaller as a proportion of GDP than the equivalent national programmes in the USA or indeed in the UK and within Germany.  Moreover, half the finance provided by the ERF will take the form of repayable loans rather than grants, and strict conditionality and EU surveillance must be applied to all expenditures. Third, while it was possible to introduce the ERF on the basis of existing treaty powers and without a further treaty, this point may well be contested in the future if it is proposed to renew the scheme, not least in view of the restrictive attitude of the German Constitutional Court. Fourth, the negotiation of this package of emergency financial support has been highly contentious. The so-called “Frugal Four”,  who together with Germany must pay for it (ie the Netherlands, Austria, Sweden, and Finland) were dragged kicking and screaming to the table, and eventually agreed to it only on the basis that it was not renewable – while in Germany the CDU and the FDP are opposed to its renewal and the SPD is ambivalent. At the same time the principal beneficiary, Italy, has accepted conditionality only with the greatest reluctance, and it remains to be seen how far the Club Med countries, including France, will actually get with the processes of “structural reform” which are necessary for them to compete successfully with the north Europeans in the framework of the EMU.

Thus I think that it is fair to say that the ERF is not so much a step towards a European Transfer Union as an indication of how difficult it will be to take such a step. Moreover, it seems clear that any move to a permanent European Transfer Union on a scale commensurate with that of the Monetary Union would require a new treaty or treaties.  This in turn would require not only unanimity among the member states but also probably endorsement by parliamentary super-majorities in some states and popular referenda in others, such as the Netherlands, Ireland, and perhaps also in France.  The last time that “European Citizens” were able to cast such popular votes was in 2005 when France and the Netherlands asked their national citizens to vote for a draft “Constitution” for the Union of which they had previously been constituted “citizens” without asking them. In the event they voted against this Constitution, which was itself no more than a legal framework for future relations. How much more likely would they be to vote for a Transfer Union in which their solidarity with their less well-off fellow “Citizens of Europe” would be tested to the tune of trillions of Euros-worth of transfer-payments?

Geopolitical Factors

A third set of factors bearing on the future of the European Union is geopolitical.

Since 1945 the configurations of world politics have developed through two main phases, from which a third phase seems to be beginning to emerge.  The first phase was that of “Bipolarity”, opposing the USA and its allies to the USSR and its satellites. It was during this phase that the European project got off the ground and took shape in Western Europe, under the aegis and protection of the USA and also of Britain.  This phase came to an end after the collapse of the USSR in 1991, which opened the way to the unification of the two post-war German states, followed by the series of European integration treaties in the 1990s and by the Eastern enlargement of the European Union in 2004. This new period was widely viewed as one of “Multipolarity”, marked on the one hand by the beginning of the rise of China to global power and, on the other by the development of European pretensions to independence from the USA. In French mouths such “strategic autonomy” has been largely a matter of talk: but in more softly-spoken Germany it was mainly a matter of concrete action, in the form of increasingly large-scale industrial cooperation between Germany and both China and Russia.

Over the past five years or so the rise of China may have inaugurated a new phase in respect of geopolitical scene – but it is not yet possible to be certain of the longer-term character of this new configuration.  The key question concerns the future of the USA: will it turn inwards and away from the role of Western leadership which it has discharged since the promulgation of the “Truman Doctrine” in 1947? Or will it rise to the new challenges posed by the rise of China and by Putin’s repristination of Russia? Either development will be fraught with consequences for the future of the European Union.

A retreat of the USA from Western leadership would give the EU an opportunity to take in hand its own defence against Russia, thus perhaps giving the European project renewed energy and momentum. “Strategic autonomy” for Europe, under French leadership, has been a long-term French ambition since de Gaulle withdrew France from NATO military structures in 1966, and it has persisted even since Sarkozy rejoined them in 2009. If President Macron is re-elected in 2022 it seems likely that the French will return to this long-standing project with renewed vigour. However in recent years the strategic balance between Europe and Russia has shifted against Europe, as Putin’s massive campaign of military spending is reviving Russian capabilities, both conventional and nuclear-strategic and nuclear-tactical.  On the European side, decades of failure to attain the NATO target of defence spending at 2 per cent of GDP has rotted the conventional military capacities of the European states, including those of France; and at the level of nuclear capabilities, both the French submarine-based strategic deterrent force and their aviation-based tactical nuclear weapons are few in number with ageing delivery systems. Faced by any serious choice between Paris and Washington in respect of defence and security there is little doubt that Berlin will continue to prefer Washington: and the same can be said in spades in respect of the Eastern powers on Europe’s front line with Russia.

The current tendency on the Continent to see the USA as in “accelerated decline” (so Dominique Moisi) is fundamentally mistaken: hence the French astonishment at the recent AUKUS pact. The USA will continue to have the strongest scientific and technological base in the world. It is currently correcting recent mistakes – overinvestment in unsustainable military commitments in strategically peripheral regions, and the hollowing-out of parts of its industrial base in favour of Chinese imports. The most probable scenario for the next phase of world geopolitics sees the USA reasserting its leadership of the global West in the face of challenges from China which are in many ways more powerful and threatening than those posed by the USSR in its heyday. In this context the scale of the economic relations between China and Europe and especially Germany is such that the Europeans may have to make a choice between those relations and the future of their ties to the USA: having it both ways in geopolitics is a European option which is closing down. And this choice will be heavily conditioned by Europe’s likely continuing dependence on the USA for its fundamental defence against Putin’s Russia in its alignment with China.

Such a development would not only limit the future scope for the geopolitical projection of the EU as an independent power-centre. It would also enhance the prospects for the European nation-states – pioneered by post-Brexit Britain – of positioning themselves in a much wider and looser configuration of democratic and open-market states in the “Western” tradition, grouped around the USA and extending not only across Atlantic but also across the Pacific and the Indian oceans. And for many Europeans this might offer an increasingly attractive alternative to the costs and the contradictions which are emerging in the context of the currently dominant project of the construction of an “ever-closer union” in the European region.

Three Scenarios for the Future of the European Union

Trying now to pull together the threads of this complex discussion, I suggest that the experiment which is the European Union is approaching a point at which it will either have to make a great leap forward, or it will find itself increasingly debilitated by its mounting costs and internal contradictions.

Such a European “Great Leap Forward” must involve a major move towards a “Transfer Union” within the European Monetary Union. As we have seen, this would be massively expensive, placing heavy burdens on the sense of European solidarity among the citizens of the prosperous nations of North-Western Europe, not only of Germany but also of France.

Add to this the consideration that Europe’s “Great Leap Forward” would probably also have to encompass a more closely organised and very much more expensive European effort in respect of European defence.  A genuinely independent European Defence would require something like a doubling or trebling of current levels of military spending.

It might be objected that Europe might continue for some long time in the mode of “kicking the can down the road”, neither undertaking any “Great Leap Forward” nor on the other hand going backwards in any significant fashion. Here the fundamental question concerns whether the Monetary Union can continue in its present form, with a fixed exchange system which stunts the economic growth of many of its members alongside probably increasing divergences in national fiscal and economic-structural policies, and a ballooning growth of liabilities held by the German Bundesbank and the ECB on a scale which is simply unrepayable by the states which owe those liabilities. If the present spike of inflation in the Western economies turns into a longer-term trend, a repetition at some point of the “Sovereign Debt Crisis” which the European Monetary Union narrowly overcame in 2009-12 must be quite likely.  And next time it may not be possible to do “whatever it takes” to preserve the fixed exchange structure of the Monetary Union.

When I was working in Brussels and Strasbourg in the 1970s and 1990s I often heard it remarked that the European project was like riding a bicycle: one either drove it forward, or the bicycle collapsed.  In the 1990s Gorbachev’s withdrawal of the USSR from Germany opened a smooth path along which the European tandem bicycle could be propelled forward at impressive speed. But since the moment of its greatest acceleration, represented by the launch of the Euro in 1999, the path ahead has become steeper and rockier, the pace has slackened, the riders are gasping, and one of the strongest of them has dismounted. For the European Union it remains to be seen whether the momentum of the bicycle can be recovered – or whether its riders might eventually prefer to dismount and walk.

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About the author

Robert Jackson