Bursting the Bubble

The EU’s deepening crisis and the problem with Germany’s leadership

1 April 2016 | by

The EU has now been in permanent crisis mode for almost a decade. It has been rattled by the combination of the lingering sovereign debt crisis in the eurozone and the emergence of a mounting refugee crisis since last summer. The crisis conditions have profoundly shifted the EU’s internal leadership dynamics. Germany has moved into an increasingly hegemonial role in the EU due to the absence of alternative leadership constellations. Its former close partner France has lost influence as a result of its weak economic position. The United Kingdom has chosen to move to the sidelines under the Conservative government of Prime Minister David Cameron and is unlikely to engage proactively in the EU before the crucial membership referendum on June 23rd is decided. Even Poland, which became closest ally under the Civic Platform government led by Donald Tusk, is now once again adopting an increasingly eurosceptic tone since the October 2015 national elections returned the Law and Justice Party (PiS) to power.

German chancellor Angela Merkel is clearly overburdened with the task of being relatively alone at the helm of the EU. Merkel never intended to adopt this position, which was illustrated when she initially hesitated to take the lead on initiating a collective response to the deepening sovereign debt crisis in the eurozone. Merkel had to be strongly nudged by others, especially French president Nicholas Sarkozy and the Donald Tusk’s government in Poland, until she became active and lead the way towards reforming the Single Market and eurozone governance mechanisms. When she eventually sprung to action Merkel adopted an approach which turned out to be profoundly problematic. True to her nature as a natural scientist, Merkel avoided talking about the ‘vision thing’ and instead took a forensic and technocratic reform approach with the aim of transforming the ailing eurozone into a genuine stability union.

The resulting institutional developments illustrate this approach. Parliamentary scrutiny of the new governance mechanisms, which Merkel pushed through for the eurozone and the wider Single Market, are elite-driven and lack democratic accountability and scrutiny. The role of the European Commission has been expanded significantly under the EU’s new annual policy cycle, the European Semester, where it has the power to enforce budgetary and macroeconomic reform plans for eurozone member states. It has also become the agent for the implementation of austerity measures in sovereign debt crisis countries in the eurozone as part of the troika which it represents alongside the IMF and the European Central Bank. The latter has moved into a similarly prominent position as the Commission since the onset of the eurozone crisis. The ECB is not only part of the troika but also has moved into the position of direct supervisor of large-scale financial institutions under the Single Supervisory Mechanism of the eurozone Banking Union. The European Parliament and national parliaments are only marginally involved in the new coordinative governance mechanisms. Citizens and national stakeholders have little or no input in the determination of national budgetary and macroeconomic policy parameters under the European Semester. Merkel promoted the prioritisation of effective policy coordination and the disregard for democratic input legitimacy as an approach which would be ‘without alternative’. This is in line with her support for the installation of technocratic governments in Greece between November 2010 and May 2012 and in Italy from November 2011 until April 2013.

She has maintained this approach in her response to the migration crisis which has preoccupied the EU since last August. This time Merkel unilaterally abandoned the EU’s Dublin convention by signalling on 31 August that Germany would be willing to welcome refugees from Syria, even if they would legally have to apply for asylum in the country they had first arrived in. ‘Wir schaffen das’ (We can manage this) became the catchphrase that quickly spread to war-torn Syria and other regions in the EU’s wider neighbourhood, where people are eagerly awaiting any opportunity to escape widespread poverty and political instability. The Balkan route from Greece through to Hungary and Austria subsequently witnessed an unprecedented mass influx of refugees from the late summer all the way into the autumn and winter. Most of Germany’s EU neighbours were completely surprised by the swift escalation of events as Merkel had failed to consult them. Her single-handed decision eventually resulted in the breakdown of the borderless Schengen area, as an increasing number of EU countries followed Hungary’s example by reinstating national border controls. Even Austria, whose social democratic chancellor Werner Faymann had initially strongly supported Merkel’s welcoming approach, has now turned its back on Schengen and not only reintroduced border controls but also strictly enforced daily caps on asylum seekers. Merkel responded to these developments by moving further down the road of unilateralism.

The German chancellor proposed to introduce a system of binding refugee distribution quotas, which all EU member states would have to accept on the basis of a  ‘moral imperative’, which she publicly proclaimed during her speech at the CDU party conference in Karlsruhe on 15 December 2015. Merkel’s approach towards the migration crisis has resulted in growing opposition towards Germany’s leadership. The Visegrád 4 group of Central-Eastern European countries (Czech Republic, Hungary, Poland and Slovakia), who have traditionally been Germany’s closest allies, uniformly and firmly oppose Merkel’s refugee quotas. The newly Polish Justice and Law Party prime minister Beata Szydło, has refused to implement the agreement made by her predecessor Ewa Kopacz’s to accept a limited number of refugees. Szydło has argued that her government would not be bound by this decision. Even more devastating for Merkel was the fact that French prime minister Manuel Valls publicly rejected the quotas in his speech at the World Economic Forum in Davos on 22 January this year. Valls also warned that the migrant crisis risked ‘destabilising Europe’ if it was not brought under control through more efficient controls of the EU’s external borders. The French government is therefore now supporting the British line on the migrant crisis which rejects binding quotas.

In spite of her relative isolation in the EU Merkel continued with her backroom diplomacy by working towards a deal under which migrants arriving in Greece can be sent back to Turkey in return for the EU. The deal was rumoured to have been prepared secretly between the German, Dutch and Turkish government[1].  In return the EU agreed to take in an equal number of Syrian refugees who are currently in Turkey, to grant Turkish citizens visa free travel in the Schengen area and to accelerate Turkey’s EU membership application. The deal was signed on Thursday last week and came into operation on Sunday, although many EU countries expressed reservations against the details that were agreed. Merkel and her ministers have promoted the deal as a major breakthrough in resolving the crisis but ultimately it offers no guarantee that all 28 EU member states will accept refugees from Turkey and that visa free access will be granted to Turkish citizens in all Schengen countries. Moreover, hostility towards Turkish EU membership remains firm, not just amongst many EU countries (including Austria, France, Greece and more recently also the UK) but also within Merkel’s own ranks. The CDU’s Bavarian sister party, the Christian Social Union (CSU), is fundamentally opposed to Turkish membership and is very unlikely to back Merkel if she indeed intends to seal the membership deal with Turkey in the near future.

Merkel’s increasingly uncompromising leadership style poses wider long-term risks for the future of the EU, which is already displaying signs of deep internal disunion under persistent crisis pressures. The German approach to the migration crisis risks deepening existing divisions between EU member states and to further fuel the fire of euroscepticism. Support for populist eurosceptic or far-right nationalist policies has grown substantially across the EU, including in Germany itself, where the right-wing Alternative für Deutschland (AfD) has just made substantial gains in three regional elections. Most significantly fears of the re-emergence of a German Europe, in connection with the issue of migration which is likely to dominate headlines over the summer, is likely to boost support for the Brexit camp in the UK referendum on EU membership on 23 June. The UK’s exit would be a major economic and political blow for the EU and it would further strengthen Germany’s dominance as neither France, Poland or any of the other remaining larger member states are currently in the position to act as an effective counterweight to German power.  It is therefore in their interest to become more active with the aim of steering Germany back to its traditional multilateral European policy approach. A crucial role in this respect will fall to France which has been less than a junior partner in the EU’s leadership since the election of Francois Hollande as president. Hollande has shown little initiative in trying to challenge Merkel’s European agenda and instead concentrated on his country’s domestic economic and social problems. Paris has therefore let EU business drift and failed to effectively engage with Poland, Italy, Spain and most of all with the UK to develop alternatives to Merkel’s approach to the eurozone and the migration crises. France’s current lack of engagement and the UK’s chosen self-isolation under Cameron have hence significantly contributed to the EU’s current leadership problem. It is time for Paris and London to think again and to realise that Berlin is increasingly overburdened with the task of steering the EU-28 unilaterally. A helping hand for Merkel is urgently needed and would most likely not only be appreciated by the rest of the EU but also by a substantial section of the German public, whose unease with their chancellor’s EU-level diplomacy is growing.

 

[1] Alex Barker and Peter Spiegel (2016), ‘Angela Merkel takes big gamble on migration deal with Turkey’, Financial Times, 8 March.

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