Margaret Thatcher campaigning to “Keep Britain in Europe” in 1975. Of course, much has changed since then, and there is disagreement about how she would have voted in 2016 were she still alive.
Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University:
“The real lunacy of the United Kingdom’s vote to leave the European Union was not that British leaders dared to ask their populace to weigh the benefits of membership against the immigration pressures it presents. Rather, it was the absurdly low bar for exit, requiring only a simple majority. Given voter turnout of 72%, this meant that the leave campaign won with only 36% of eligible voters backing it.
“This isn’t democracy; it is Russian roulette for republics. A decision of enormous consequence – far greater even than amending a country’s constitution (of course, the United Kingdom lacks a written one) – has been made without any appropriate checks and balances.”
“Does the vote have to be repeated after a year to be sure? No. Does a majority in Parliament have to support Brexit? Apparently not. Did the UK’s population really know what they were voting on? Absolutely not. Indeed, no one has any idea of the consequences, both for the UK and globally. I am afraid it is not going to be a pretty picture…”
“What should the UK have done if the question of EU membership had to be asked (which by the way, it didn’t)? Surely, the hurdle should have been a lot higher; for example, Brexit should have required, say, two popular votes spaced out over at least two years, followed by a 60% vote in the House of Commons. If Brexit still prevailed, at least we could know it was not just a one-time snapshot of a fragment of the population.”
A VOTE WITH GLOBAL CONSEQUENCES
[Note by Tom Gross]
This is another in a rare series of dispatches not directly concerning the Middle East.
I attach six articles about the European and global ramifications of Britain’s historic “Brexit” vote.
I have also given a number of short TV interviews about Brexit. For those interested, here are a few of them:
* On the political turmoil engulfing Britain (June 27)
* On the “dangers of Brexit” (June 16)
And for the many people across the Arab world who subscribe to these dispatches:
* Please “like” these dispatches on Facebook here www.facebook.com/TomGrossMedia, where you can also find other items that are not in these dispatches.
1. “Britain’s democratic failure” (By Kenneth Rogoff, Project Syndicate, June 24, 2016)
2. “This is how Brexit could be good for the world” (By Jeffrey Garten, Time, June 24, 2016)
3. “The English have placed a bomb under the Irish peace process” (By Fintan O’Toole, The Guardian, June 26, 2016)
4. “Brexit loophole? MPs must still vote in order for Britain to leave the EU, say top lawyers” (By Ian Johnston, The Independent, June 27, 2016)
5. “This is just the start of the Brexit’s economic disaster” (By Philippe Legrain, New York Times, June 26, 2016)
6. “Post-Brexit: EU Still a Superpower” (By Steven Hill, The Globalist, June 27, 2016)
BRITAIN’S DEMOCRATIC FAILURE
Britain’s Democratic Failure
By Kenneth Rogoff (Professor of Economics and Public Policy at Harvard University)
June 24, 2016
CAMBRIDGE, MA – The real lunacy of the United Kingdom’s vote to leave the European Union was not that British leaders dared to ask their populace to weigh the benefits of membership against the immigration pressures it presents. Rather, it was the absurdly low bar for exit, requiring only a simple majority. Given voter turnout of 70%, this meant that the leave campaign won with only 36% of eligible voters backing it.
This isn’t democracy; it is Russian roulette for republics. A decision of enormous consequence – far greater even than amending a country’s constitution (of course, the United Kingdom lacks a written one) – has been made without any appropriate checks and balances.
Does the vote have to be repeated after a year to be sure? No. Does a majority in Parliament have to support Brexit? Apparently not. Did the UK’s population really know what they were voting on? Absolutely not. Indeed, no one has any idea of the consequences, both for the UK in the global trading system, or the effect on domestic political stability. I am afraid it is not going to be a pretty picture.
Mind you, citizens of the West are blessed to live in a time of peace: changing circumstances and priorities can be addressed through democratic processes instead of foreign and civil wars. But what, exactly, is a fair, democratic process for making irreversible, nation-defining decisions? Is it really enough to get 52% to vote for breakup on a rainy day?
In terms of durability and conviction of preferences, most societies place greater hurdles in the way of a couple seeking a divorce than Prime Minister David Cameron’s government did on the decision to leave the EU. Brexiteers did not invent this game; there is ample precedent, including Scotland in 2014 and Quebec in 1995. But, until now, the gun’s cylinder never stopped on the bullet. Now that it has, it is time to rethink the rules of the game.
The idea that somehow any decision reached anytime by majority rule is necessarily “democratic” is a perversion of the term. Modern democracies have evolved systems of checks and balances to protect the interests of minorities and to avoid making uninformed decisions with catastrophic consequences. The greater and more lasting the decision, the higher the hurdles.
That’s why enacting, say, a constitutional amendment generally requires clearing far higher hurdles than passing a spending bill. Yet the current international standard for breaking up a country is arguably less demanding than a vote for lowering the drinking age.
With Europe now facing the risk of a slew of further breakup votes, an urgent question is whether there is a better way to make these decisions. I polled several leading political scientists to see whether there is any academic consensus; unfortunately, the short answer is no.
For one thing, the Brexit decision may have looked simple on the ballot, but in truth no one knows what comes next after a leave vote. What we do know is that, in practice, most countries require a “supermajority” for nation-defining decisions, not a mere 51%. There is no universal figure like 60%, but the general principle is that, at a bare minimum, the majority ought to be demonstrably stable. A country should not be making fundamental, irreversible changes based on a razor-thin minority that might prevail only during a brief window of emotion. Even if the UK economy does not fall into outright recession after this vote (the pound’s decline might cushion the initial blow), there is every chance that the resulting economic and political disorder will give some who voted to leave “buyers’ remorse.”
Since ancient times, philosophers have tried to devise systems to try to balance the strengths of majority rule against the need to ensure that informed parties get a larger say in critical decisions, not to mention that minority voices are heard. In the Spartan assemblies of ancient Greece, votes were cast by acclamation. People could modulate their voice to reflect the intensity of their preferences, with a presiding officer carefully listening and then declaring the outcome. It was imperfect, but maybe better than what just happened in the UK.
By some accounts, Sparta’s sister state, Athens, had implemented the purest historical example of democracy. All classes were given equal votes (albeit only males). Ultimately, though, after some catastrophic war decisions, Athenians saw a need to give more power to independent bodies.
What should the UK have done if the question of EU membership had to be asked (which by the way, it didn’t)? Surely, the hurdle should have been a lot higher; for example, Brexit should have required, say, two popular votes spaced out over at least two years, followed by a 60% vote in the House of Commons. If Brexit still prevailed, at least we could know it was not just a one-time snapshot of a fragment of the population.
The UK vote has thrown Europe into turmoil. A lot will depend on how the world reacts and how the UK government manages to reconstitute itself. It is important to take stock not just of the outcome, though, but of the process. Any action to redefine a long-standing arrangement on a country’s borders ought to require a lot more than a simple majority in a one-time vote. The current international norm of simple majority rule is, as we have just seen, a formula for chaos.
A MORE OPTIMISTIC SCENARIO
This is how Brexit could be good for the world
By Jeffrey E. Garten (Dean emeritus at the Yale School of Management)
June 24, 2016
There is no lack of apocalyptic handwringing about the UK’s vote last night to leave the European Union – the so-called Brexit. But a more optimistic scenario is also possible.
Admittedly, no one really knows what the impact of a divorce from Europe will mean for the British economy or for the country’s role in the world. It is impossible to say whether other countries like Greece will now want to exit the EU, possibly leading to the disintegration of the Eurozone bloc itself.
Globally, there are scary unknowns, too. Financial markets are already throwing a tantrum, and who knows where that will end? The UK has been a strong voice of democracy, free markets and the rule of law within the EU, and it is not possible to calculate what its absence on the continent portends.
Just as important, Britain’s leaving could fan the fires of nationalism, xenophobia, and revolt against elites – all of which are burning in countries such as France, the Netherlands, Germany, Hungary, and Poland, for starters. Given that British voters turned revolted against immigration, in particular, Donald Trump and his supporters could look as if they may be part of an historical tide. “There is a great similarity between what happens [in the UK] and my campaign, “ Trump said today. “People want to take their country back.”
How, then, could anyone construe a more positive outcome out of this morass? Here is a way to think about the possibility for a more positive picture.
We should take a longer perspective. Of course, the immediate fallout will need to be dealt with. But governments should also look ahead, and think about the next decade and how to deal with the fundamental issues that the British vote revealed. There are no quick fixes, but there are fixes.
We should acknowledge the need to deal with globalization’s shortcomings. Since the early 1990s, globalization – the intertwining of trade, investment, travel, communication, and transportation that has together made the world smaller and more interconnected – has been expanding at warp speed. It has been much too fast for governments and societies to digest and manage.
Not long ago, for example, the international financial system almost melted down, and in its wake came a long, deep global recession. Governments were simply unprepared for that kind of crisis. We are now seeing the largest refugee flows since World War II, the humanitarian system designed to deal with such tragedies has all but collapsed, and governments are paralyzed. Another example: China and other emerging markets have grown much faster than anyone could have predicted and now constitute almost 50% of the world economy’s production, creating all manner of dislocations in advanced industrial nations that governments could not control.
As a result of challenges like these, the EU, the most advanced experiment in lowering barriers and enhancing cooperation across borders in world history, has been straining to the breaking point for a number of years now. The US seems to be turning inward out of frustration with trade and immigration; our dysfunctional politics also seems incapable of addressing these issues.
The UK’s exit could be signaling to the world that there must be some fundamental political adjustments. It could be a history-making wake-up call. Ultimately, most of the challenges that our societies face are global in nature, and require global cooperation to solve. But just maybe national governments will now redouble their efforts to get a stronger handle on their affairs in order to build a stronger and more confident base from which to engage in meaningful global efforts. Maybe they will think much harder about effectively addressing the downsides of globalization, including income inequality, stagnant wages, too many people out of work, and fears about immigration and refugees. There is no denying that nationalism is today’s trend, but hopefully it could be a highly constructive nationalism. The British exit could focus politicians’ minds on the dire state of governance today. In the EU, this could mean deep European-wide political reforms to strengthen the foundations of the Euro. In the U.S., we could start with better policies to help men and women impacted by imports and technological change that eliminate their jobs or lower their wages.
We should recognize that globalization is, on balance, a good thing, and won’t stop no matter how ineffective or retrograde government policies become. In the last several decades, globalization has ushered in a lot of prosperity, including lifting some 500 million people around the world out of abject poverty. It has provided upward mobility for billions of people, and given consumers the world over more choices and lower prices which come for hyper-competition. It has, so far, provided an alternative to major wars of the kind we saw in the twentieth century.
We should take some comfort that whatever governments do or fail to do, globalization is not going to stop. As a result of the linkages among societies today, it is inconceivable that we will go back to the 19th or early twentieth centuries when a strident nationalism was the order of the day. Globalization has been proceeding inexorably since ancient times when silk, ceramics, textiles and precious stones were traded between the Roman and Chinese empires, and it has survived wars, depressions, and natural disasters. Moreover, it is driven not just by government action but by revolutions in communication, such as Google or Facebook; advances in transportation, such as containerized shipping or FedEx type overnight delivery; and by expansion of finance, such as ever larger global bond markets. All of these factors will continue to grow.
Bottom line: the optimistic view of Brexit is that governments could sit up and take note of the need to get a grip on problems they have not been dealing with effectively, and that this could be a prelude to a deeper and more realistic kind of global political and economic order. Now it’s time to look ahead, minimize the negative fall out, and tackle the real problems that the British vote revealed.
A BOMB UNDER THE IRISH PEACE PROCESS
The English have placed a bomb under the Irish peace process
By Fintan O’Toole (assistant editor of the Irish Times)
June 26, 2016
The rather patronising English joke used to be that whenever the Irish question was about to be solved, the Irish would change the question. And now, when the Irish question seemed indeed to have been solved, at least for a generation, it is the English who have changed the question.
Recklessly, casually, with barely a thought, English nationalists have planted a bomb under the settlement that brought peace to Northern Ireland and close cordiality to relations between Britain and Ireland. To do this seriously and soberly would have been bad. To do it so carelessly, with nothing more than a pat on the head and a reassurance that everything will be all right, is frankly insulting.
Just five years ago, when Queen Elizabeth became the first reigning British monarch to visit southern Ireland in a century, there was a massive sense of relief. It was not just relief that the visit went off peacefully and well. It was much deeper than that: it was relief from centuries of both British condescension and Irish Anglophobia. A long story – often nasty, sometimes merely tediously wasteful – was over. There was a dignified, decent, democratic settlement that allowed the natural warmth of a neighbourly relationship to come fully to the surface.
I never imagined then that I would ever feel bitter about England again. But I do feel bitter now, because England has done a very bad day’s work for Ireland. It is dragging Irish history along in its triumphal wake, like tin cans tied to a wedding car.
All but a few diehards had learned to live with the partition of the island of Ireland. Why? Because the border between Northern Ireland and the Republic had become so soft as to be barely noticeable. If you crossed it, you had to change currencies, and if you were driving you had to remember that the speed limits were changing from kilometres per hour to miles. But these are just banal details. They do not impinge on the simple, ordinary experience of people sharing an island without having to be deeply conscious of division.
What will now happen is not that the old border will come back. It’s much worse than that. The old border marked the line between neighbouring polities that had a common travel area and an intimate, if often fraught, relationship. It was a customs barrier. The new border will be the most westerly land frontier of a vast entity of more than 400 million people, and it will be an immigration (as well as a customs) barrier.
It will, if the Brexiters’ demands to take back control of immigration to the UK are meant seriously, have to be heavily policed to keep EU migrants who have lawfully entered the Republic from moving into the UK. And it will run between Newry and Dundalk, between Letterkenny and Derry. The Dublin-Belfast train will have to stop for passport controls. (Given that the border could not be secured with army watchtowers during the Troubles, it is not at all clear how this policing operation will work.)
Meanwhile, the cornerstone of the peace settlement, the Belfast agreement of 1998, is being undermined. One of the key provisions of the agreement is that anyone born in Northern Ireland has the right to be a citizen of the UK or Ireland or both. What does that mean in the new dispensation? Can someone be both an EU citizen and not an EU citizen? Likewise, the agreement underpins human rights through the “complete incorporation into Northern Ireland law of the European Convention on Human Rights”. Though not strictly required by Brexit, the leave leadership is committed to removing the convention from UK law – in other words to ripping out a core part of the peace settlement.
But the Belfast agreement isn’t some minor memorandum. It is an international treaty, registered with the United Nations. It is also arguably the greatest modern achievement of British diplomacy, partly crafted by public servants and made possible by British politicians, especially John Major and Tony Blair. It is one of the most successful models for conflict resolution around the world. Messing around with it is an insult, not just to Ireland, but to Britain’s international standing.
This fecklessness in turn is deeply unsettling for unionists in Northern Ireland. It suggests that the new English nationalism is completely indifferent to their fate. During the referendum debates, a few pro-remain voices, such as the TUC general secretary, Frances O’Grady (herself of Irish descent), tried to make a gentle plea to voters to think about Ireland and the Belfast agreement. They went unheard. English nationalists, it turns out, wouldn’t give the froth off a pint of real ale for the Irish peace process.
And if they don’t care enough even to talk in any serious way about the consequences of Brexit for Northern Ireland, what grounds are there to believe that when they come to power in their own little England they will care about (or pay for) a province they clearly regard as a closer, wetter Gibraltar, an irrelevant appendage of the motherland?
Northern Ireland desperately needed a generation of relative political boredom, in which ordinary issues such as taxation and the health service – rather than the unanswerable questions of national identity – could become the stuff of partisan debate. Brexit has made that impossible. Sinn Féin’s immediate call for a referendum on a united Ireland may be reckless and opportunistic, but no more so than the Democratic Unionist party’s failure to understand that Brexit is the best gift to Irish nationalists. It is the beginning of the breakup of the union and the rise of an independent England for which Northern Ireland will be no more than a distant nuisance.
When they take power, the Brexiters have a moral duty to think deeply and speak honestly about these effects of their victory. But the signs are that they will pay as much attention to them as gung-ho warriors typically give to any other kind of collateral damage.
MPs COULD REJECT BREXIT
Brexit loophole? MPs must still vote in order for Britain to leave the EU, say top lawyers
* “MPs will have to do their duty to vote according to conscience and vote for what’s best for Britain”
By Ian Johnston
The Independent (London)
June 27, 2016
Parliament must still vote on a bill to allow the UK to leave the European Union, leading lawyers have said.
Geoffrey Robertson QC, who founded the Doughty Street Chambers, said the act which set up the referendum said “nothing” about its impact, meaning it was “purely advisory”.
A new bill to repeal the 1972 European Communities Act that took Britain into the EU must now be passed by parliament, he said, adding that MPs might not be able to vote until November when the economic effects of Brexit will be clearer.
“Under our constitution, speaking as a constitutional lawyer, sovereignty rests in what we call the Queen in parliament,” he told The Independent.
“It’s the right of MPs alone to make or break laws, and the peers to block them. So there’s no force whatsoever in the referendum result. It’s entirely for MPs to decide.
“The 1972 communities act ... is still good law and remains so until repealed. In November, Prime Minister [Boris] Johnson will have to introduce into parliament the European communities repeal bill,” Mr Robertson said.
“MPs are entitled to vote against it and are bound to vote against it, if they think it’s in Britain’s best interest [to vote that way]. It’s not over yet.
“MPs will have to do their duty to vote according to conscience and vote for what’s best for Britain. It’s a matter for their consciences. They have got to behave courageously and conscientiously.
“Democracy in Britain doesn’t mean majority rule. It’s not the tyranny of the majority or the tyranny of the mob ... it’s the representatives of the people, not the people themselves, who vote for them.”
Mr Robertson said there had been “a lot of stupid statements” suggesting Britain could simply send a note to the EU to trigger “Article 50” of the Lisbon Treaty, which lays out the process under which states can leave. The article itself says a state can only leave in accordance with “its own constitutional requirements”.
“Our most fundamental constitutional requirement is that the decision must be taken by parliament. It will require a bill,” he said.
“In November, the situation may have totally changed. According to polls, a million vote leavers appear to have changed their mind, that could be five million by the November.”
In a letter to The Times, another leading QC, Charles Flint, of Blackstone Chambers, also stressed that British law required MPs to vote before Brexit could happen.
“Under the European Union Act 2011 ... a change to the treaty on European Union, agreed between member states, would have required approval both by referendum and by act of parliament,” he said.
The Lisbon Treaty was the first agreement that laid out how member states could leave the EU.
Article 50 of the treaty says:
1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.
A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.
THIS IS JUST THE START
This is just the start of the Brexit’s economic disaster
By Philippe Legrain
New York Times
June 26, 2016
A few weeks before Britons voted on whether to remain part of the European Union, Michael Gove, one of the leaders of the Leave campaign, was asked why he should be trusted over the overwhelming number of economists and international authorities who opposed Brexit. “People in this country have had enough of experts,” he replied.
Experts are, of course, known to make mistakes. But in this case, the people who voted for Brexit will pay a big price for ignoring economic expertise. The harmful effects of this vote are both immediate and lasting.
Britons are already worse off. The pound has – so far – plunged by nearly 9 percent against the dollar, slashing the value of British assets, with higher import prices likely to follow. The stock market has also taken a hit. The prices of property, most British people’s main asset, are almost certain to fall, too. While Mark Carney, the governor of theBank of England, has already pledged 250 billion pounds (about $345 billion) to support the financial system and has said he could offer more if necessary, central bankers cannot protect against an enduring economic shock.
Rarely have businesses faced such uncertainty. Britain’s economy had already slowed as they put investment decisions on hold ahead of the referendum. Now, a country renowned for its political and legal stability is descending into chaos. The future prime minister is unknown, as is the direction his or her policies will take. The favorite to replace David Cameron, Boris Johnson, the former mayor of London who opportunistically campaigned for Brexit, styles himself as pro-market and pro-globalization, but in the lead-up to the vote he said he supports curbs on European Union migration, tariffs on Chinese steel and higher public spending. The future terms on which the Britain will trade with both the European Union and all the countries with which it has negotiated trade deals on Britain’s behalf are uncertain. Domestic regulations on everything from finance to environmental protection may change.
All that uncertainty is amplified by the prospect of a second referendum on Scottish independence, which may this time be won. In Northern Ireland, the political party Sinn Fein has already called for a referendum on a united Ireland.
Faced with such uncertainty, businesses are likely to continue to put investments on hold. Consumers may pull back, too. The resulting downturn will cause the government’s budget deficit, already large, to swell. The pound’s depreciation, which might have been expected to boost exports, is unlikely to do much to cushion the blow. Its huge decline in 2008 failed to boost exports and Brexit will dent them.
This unpredictable situation will not be brief. Once triggered, the formal process of leaving the European Union is supposed to take two years. But extricating the union’s second-biggest economy from 43 years of European Union legislation is a daunting task.
Negotiating a new trade relationship with the European Union is equally tricky. Britain seems certain to lose access to the single market – with which it does nearly half its trade – because this is conditional on accepting the free movement of people and contributing to the European Union’s budget. (These were key issues for pro-Brexit voters.) That will jeopardize the foreign investment and good jobs predicated on single-market membership. Britain-based financial institutions will lose their rights to operate freely across the European Union.
Brexit’s supporters are deluded when they argue that Britain could cherry pick what it likes about the European Union and discard the rest. Since exports to the European Union (13 percent of G.D.P. in 2014) matter much more to Britain than exports to Britain (3 percent of G.D.P. in 2014) do to the European Union, the European Union will call the shots. Other governments have every incentive to be tough, both to steal a competitive advantage and to deter others from following Britain out the door.
A fallback position is trading with Europe on the basis of World Trade Organization rules, as the United States does. But that entails tariffs on good exports – up to 10 percent on car exports, for example, most of which go to the European Union – as well as non-tariff barriers that gum up trade. It offers little access to Europe’s markets in services, in which Britain specializes. Less open markets will stunt competition, crimping productivity growth and living standards.
Brexit’s supporters claim that a deregulated Britain that trades with the rest of the world would prosper once unshackled from Brussels’s overregulation andprotectionism. But Britain has the least regulated labor markets in the European Union and the second-least regulated product markets, so any potential benefits from deregulation are likely to be meager. Moreover, Britain is likely to end up with worse access to markets in the rest of the world. While it won’t be hamstrung by protectionist interests in the European Union, its relatively smaller economy, largely open markets and desperation for new deals will weaken its clout in trade negotiations.
The young, the higher educated and city dwellers, the most dynamic members of Britain’s economy, voted to Remain. They were outvoted by the old, the less educated and non-urban English, who often rely on taxpayer largess. With economic opportunities stunted, everyone will suffer for Leave voters wrongly blaming hard-working, taxpaying European migrants for everything they dislike about modern Britain and wrongly trusting economic charlatans like Mr. Gove.
“WATCHING THE EU IS LIKE OBSERVING A PLANET IN FORMATION – A WORK IN PROGRESS”
Post-Brexit: EU Still a Superpower
By Steven Hill
June 27, 2016
If you type the words “European Union” and “crisis” into the Google search engine, you instantly receive 115 million hits. When I did that back in 2009, before the eurozone crisis, “only” 58 million hits popped up. Is the EU really in that much worse shape today? Apparently yes, according to the daily headlines. Recall that even before the Brexit vote, French Prime Minister Manuel Valls declared that Europe could “fall apart within months.”
But this is not the first time that political leaders and media outlets have declared the end of Europe. Prior to the economic crisis of 2008, the European economy was written off by most analysts as suffering from “Eurosclerosis” and condemned to decline.
Here’s a small sample of brassy headlines from leading media outlets over the last decade, trumpeting imminent collapse:
“The End of Europe”, “Europe Isn’t Working”, “Will Europe Ever Work?”, “What’s Wrong with Europe”, “Is Europe Dying?”, “The Decline and Fall of Europe”, “Why America Outpaces Europe”, and many more. In the 1990s, The Economist dubbed Germany the new “sick man of Europe,” and other media doomsayers warned of a future of rising unemployment, crime, and taxes to “a level not seen since the Weimar Republic.” Yet now a prospering Germany has become a global player.
The superpower rationale
Yes, the EU is juggling a number of daunting situations, but that’s what superpowers do. They deal with one crisis after another, year after year, some of them domestic and others international.
A superpower by definition occupies a big corner of the world, in which messes happen and things have a tendency to fall apart.
That rationale, always applied to the United States of America, also has its place when analyzing the EU. But does the EU really qualify for that lofty status? Emphatically yes. First, the EU is powered by one of the world’s great economic engines. Even with the eurozone crisis, what I call the EU-Plus (EU28 + Norway and Switzerland) still has the largest economy in the world (post-Brexit, the UK would still be part of the EU-Plus, due to the deep integration of the UK and EU economies). These nations produce a quarter of the world’s GDP.
Indeed, according to World Bank figures, the EU-Plus economy is larger than that of the United States and India combined.
It has more Fortune 500 companies than the U.S., India and Russia combined, and some of the most competitive national economies according to the World Economic Forum (European countries hold 13 of its top 25 rankings). This vitality extends to small and medium-sized businesses (SMEs), which provide two-thirds of Europe’s private sector jobs and 85% of net job growth (in the United States, SMEs only provide half the jobs). I hear many leaders complaining, “Europe isn’t innovative enough. Where are the European Facebooks, Googles and Apples?” Before we fall too much for that Silicon Valley-hyped rhetoric, let us just remember that those companies actually don’t create that many jobs. They are using software and algorithms to replace human workers. You want innovation? Take a look at Germany’s Mittelstand (i.e., small and medium sized) companies which are world-class exporters as well as job creators, making products that are crucial to industrial growth all over the world. So much for excessive red tape supposedly strangling the European economy. In another display of bold innovation, Europe has led a small revolution for greater economic democracy and a broadly shared prosperity. It is based on practices like codetermination, works councils, effective labor unions and the “visible hand” of an active government that guides the “social capitalist” economy.
These are things largely unheard of and/or unimaginable in the United States to date. The way in which Bernie Sanders’ campaign resonates with large swaths of young people and others underscores that there is a stron appetite in the U.S. for a similarly fairness-based approach to the economy.
EU as world leader while US stands still
But it would be a mistake to measure superpower status purely in economic or geopolitical terms. The 21st century world is facing two immense challenges:
1. With China, India and Brazil rightly demanding their seats at the table, how do we enact a desirable quality of life for a burgeoning global population of nearly 7.5 billion people?
2. And how do we accomplish that in a way that does not burn up the planet in a carbon-choked Venus atmosphere of our own creation?
Creating economic as well as ecological sustainability – preserving our “EconoEcoSphere” – is one of the defining challenges of our time.
The EU has been the world’s leader in this crucial endeavor. Led by Germany and its ambitious Energiewende program, Europe has moved forward vigorously.
The program includes renewable energy technologies like solar and wind, as well as efficient mass transit and “green design” in everything from public buildings, homes and automobiles to low wattage light bulbs, motion sensor lights and low flush toilets.
In the process, member states have created hundreds of thousands of new green jobs. That job performance stacks up very well to that achieved by the much more hyped Silicon Valley companies.
And this innovative green sector responds more directly than does Silicon Valley to the pressing global need to rein in deadly carbon emissions.
Not all is well
Unquestionably, Europe’s potency and reach have limits. German-led austerity for the eurozone has had limited success in recovering from the global economic collapse of 2008. Greece in particular has paid a steep price.
But even on this touchy front, indications are that lately there is a remarkable meeting of the minds has occured between Mr. Tspipras, the Greek prime minister, and the German finance minister Wolfgang Schäuble.
Russian adventurism in Ukraine, a flood of refugees from the near-abroad, and now the looming secession of the UK – or perhaps just that of England? – from the EU have exposed existing tensions and fault lines, north-south and east-west.
A military weakling?
Also, the classic idea of a superpower includes military might. President Obama has lately accused the EU of being a free rider when it comes to “hard power” – meaning that it more or less relies on the US to step in militarily.
But Europe isn’t the military weakling that some people believe it to be. Even not counting the UK, the EU states collectively have one of the largest military budgets in the world.
They also have well over a million soldiers in uniform, substantial military hardware and nuclear weapons.
Remember as well that military hard power is sometimes counter-productive. Would a military response to Russia’s invasion of Ukraine really have yielded better results than the EU’s diplomatic efforts?
And what have the bombardments in Syria achieved, apart from creating millions of refugees that are washing up on Europe’s shores?
EU: Still in evolution
Part of the ongoing struggle is a natural consequence of Europe’s institutional incoherence.
The EU is governed by an odd form of quad-cameralism (= four chamber system) between four indistinguishable chambers: the European Commission, the European Council, Council of Ministers and the European Parliament.
Each of these even has its own “president” – and who can keep track of four different presidents? Why not call one a premier, another a prime minister or regent? Even a superpower only gets one president!
This overly complex system of governance leaves even the most ardent europhiles confused. Partly for this reason, German chancellor Angela Merkel, as the head of the largest member state, has been thrust by recent events into the role as the de facto prime minister of Europe.
Yet, how does a chancellor of Germany rise above domestic passions and politics to do what is best for Europe, in the absence of clear-cut institutional coherence at the EU level?
In her makeshift role, Merkel has done an admirable job in certain respects. But she also has made mistakes, in part because her role as the EU’s prime minister conflicts with her domestic priorities as chancellor.
Pandering to national passions, she unwisely joined French President Nicolas Sarkozy in telling Turkey that its bid for EU membership was blocked out of hand. Now, Merkel is regretting that lapse of judgment, and Europe is paying a higher price.
Similarly with the excruciating Greece impasse: Germany’s reluctance to write blank checks for Greek profligacy is understandable, to a point.
But Mrs. Merkel allowed Germany’s historical fixation over debt in general, and Greece’s transgression in particular – which was relatively small, compared to the overall size of the EU economy – to trump the more important geopolitical need to secure the EU’s borders in a troubled member state.
Again, Europe – and Germany – are paying a higher cost.
Compare Brussels’ woes to Washington’s
But the other two superpowers, the United States and China, also have had to endure their own ongoing lapses and institutional shortcomings. The U.S. has many admirable qualities, but it also suffers from its own immigration woes, rising inequality and an eroding safety net.
Internationally, President Obama still carries a big stick. Yet, it’s smaller than the one used by previous U.S. presidents got to use. Moreover, its use sometimes seems to make matters worse.
NSA spying and surveillance abuses, as well as Bush-era torture of prisoners at Abu Ghraib and Guantanamo, have undermined long-cherished values and diminished America’s global appeal.
U.S. politics is plagued by a degree of paralysis that seems almost European-like, even though the United States has a well-established federal union. All of these tensions have boiled over and resulted in the phenomenon of Donald Trump.
Meanwhile China’s “communist capitalism” hybrid remains an authoritarian puzzle of immense contradictions.
A growing middle class is still proportionally small compared to the vast numbers of poor, even as inequality, corruption and cronyism thrive. Impressive levels of industrial production have resulted in astounding levels of ecological ruin.
Strong executive leadership, it turns out, is only great when it leads in the right direction. Being a superpower isn’t always super, nor is it for the faint-hearted. In comparison, the EU doesn’t always look so bad.
Yet, Europeans are stuck in a hyper-self-critical mentality. They still seem to view Europe as the junior Cold War partner, sitting in the backseat, while America sits up front driving the vehicle.
Sitting in the backseat has its benefits; you don’t have to take much responsibility for the direction of the vehicle, and you can always defer the hard questions to the driver. However, with the United States possibly on the edge of driving over the cliff via the Trump option, it is time for Europe to put forward more boldly its own brand of leadership and vision. This will remain a challenge without a greater degree of institutional coherence and competence, which evolve slowly over decades.
U.S. integration took a lot of time too
To understand Europe’s present and future, I find it helpful to revisit the past – of the young United States of America.
In 1789, this nation was torn by regional tensions and sovereign-minded member states that pushed back against central government and ever closer union. Initially, young America had no single currency – each state, even individual banks, used their own.
Americans were so suspicious of central government that President George Washington, who was a military hero, dared not propose allocating funds for a standing army. People were so against federalism that the first national tax, which was levied on whiskey – chosen because it seemed uncontroversial – led to open rebellion in Pennsylvania, prompting President Washington to march troops there. Finally, a full 70 years after its first government, Americans fought a bloody civil war over “states’ rights.”
The issue was whether a central government could supersede the member states’ “rights” to allow ownership of enslaved people.
In short, it took many decades for the United States to solidify as a nation. During that time, the economy suffered at least seven bank and financial crises. Those crises make today’s euro difficulties look mild. One could still see these centrifugal tensions reflected in the 1960s during the U.S. civil rights era. One can even see it today in Donald Trump’s candidacy and the anti-government Tea Party movement. In short, centrifugal tensions are not just visible in Europe today. They are very much present in the United States as well.
A planet in formation
While this comparison is instructive, it is also imperfect. The European Union has divisions that are rooted in centuries of conflict. It is a miracle that it has come this far.
But when you hear the next “Europe is dying” headline, remember that “old Europe” actually is quite young. The EU can survive David Cameron’s folly and Viktor Orbán’s audacity, and a few million refugees, and radical Islamic terrorism and too much austerity – as long as the European appetite for union remains steadfast and the heart of the enterprise remains beating. Watching the EU is like observing a planet in formation – a work in progress, on a decades-long trajectory. At this point, as it sorts out what to do about the UK, it can be said to have reached “the end of the beginning,” to borrow Winston Churchill’s useful phrasing.