The EconomistMay 16th 2020 BriefingEurope under strain 172 tries to influence the world, portraying it-
self as a global power. Ivan Krastev, a politi-
cal scientist and the bloc’s most impish
critic, sees two paths for the eu. Either it
becomes more of a “mission”, going forth
and evangelising European values globally,
or it becomes a “monastery” and preaches
only to Europeans within its precincts.
The idea of a European mission has its
fair share of supporters. Ursula von der
Leyen, the new president of the European
Commission, said it would be a more “geo-
political” body under her leadership. En-
rico Letta, a former prime minister of Italy
and now the head of the Jacques Delors In-
stitute, a think-tank, argues that the eu
should aim to become a third superpower
between America and China.
I’ve seen it before, and I’ll see it again
Indeed, the eualready has immense regu-
latory clout. It sets global standards on
everything from privacy to processing
chemicals to environmental rules. Rather
than use different standards across the
globe, businesses obey the eu’s (usually
more stringent) regulations to save costs, a
phenomenon known as “the Brussels ef-
fect”. Translating this into more tangible
forms of power is difficult. Superpowers
require strategic unity, which may be hard
to build in a club that has very different
views on Russia, to give just one example.
If the eurolls back its global ambitions
and goes down the second route suggested
by Mr Krastev—becoming a monastery—it
will have to deal with a war among the
monks. Any claim that the euis united in
its support for liberal democratic norms is
disproven by the fact that Poland and Hun-
gary have steadily eroded the rule of law—
and yet they remain members of the club.
Poland’s government has tried to nobble its
supreme court. Hungary’s prime minister,
Viktor Orban, has subverted or sidelined
most of his country’s checks and balances
over the past decade, and seized on the
pandemic as an excuse to rule by decree in-
definitely. Meanwhile, cronies of his ruling
party are gorging on aid from Brussels.
Even previously unchallenged parts of
the eu’s dogma, such as its legal order, look
more shaky. In May Germany’s constitu-
tional court ruled that the European Court
of Justice in Luxembourg was acting be-
yond its authority in the way it ruled on the
European Central Bank’s bond-buying in- In effect, the German court declared
that since the euis not a federal state, na-
tional courts can decide whether the ecj
has gone beyond its remit. The ecj dis-
agreed, leaving the two courts jostling for
supremacy. The European Commission is
examining whether to launch sanctions
against Berlin for breaking the eu’s trea-
ties. (The ecjwould have the final say.) A bi-
zarre situation looms in which the German
government is criticised for the actions of
its independent court.
These warring judges have also called
into question the future of actions taken by
the ecbto stem the financial effects of the
covid-19 crisis. A €750bn bond-buying pro-
gramme launched in March by the ecbsaw
the central bank hoover up debt from Italy
and Spain, in a bid to dampen the effects of
the pandemic. As a result, Italy and Spain
can easily borrow on the open market. This
contrasts sharply with the start of the euro
crisis, when the euro zone’s future seemed
to hang in the balance every time Italy held
a bond auction.
However, the ecb has created moral
hazard. Bold action by the central bank has
led to political complacency among the
eu’s northern states. It has thus relieved
pressure on Europe’s leaders to take tricky
decisions, such as whether they should
provide southern Europe with enough fis-
cal power to get out of the crisis. Germany
and the Netherlands once railed against
the ecb’s largesse; now they are among its
beneficiaries, delaying difficult choices in
the knowledge that the bank will continue
to keep the bloc afloat. For a project that
seems to move decisively only when in per-
il, this is a problem.
The result is that a constitutional reck-
oning has never seemed more necessary,
yet it has never felt less likely. Hard ques-
tions proliferate: whether or not the euwill
pursue deeper integration, what role the
bloc will play in global politics, and so on.
Even dilemmas unimaginable a decade
ago, such as whether the euis only for lib-
eral democracies, need to be cleared up.
Although Britain’s chaotic departure
was not exactly a tempting advertisement
for the joys of leaving the bloc, it is still
likely that big changes to the eu’s rules
would lead to a slew of tricky plebiscites.Eurocrats have painful memories of past
referendums. A fully fledged “constitu-
tion” was rejected by French and Dutch vot-
ers in 2005. Indeed deeper ties in Europe
have always been controversial. In 1992
French voters agreed by just 51% to adopt
the Maastricht treaty, which led to the
monetary union.
Bold federal steps would help. But a
sturdier constitution would result in even
more fractious politics. If pushed, German
officials will insist that they have no funda-
mental objection to a mutualisation of
debt. At the same time they insist it would
have to be accompanied by a correspond-
ing centralisation of fiscal power over how
national governments spend, which is
likely to upset many European govern-
ments. For countries in southern Europe,
fiscal union is seen as freedom; for Ger-
many it is seen as tighter control.Just little bits of history repeating
Either way resentment is brewing, particu-
larly in southern Europe. Italians have
been among the most communitaire of
Europeans. In a survey for the commission
in 2000, just before the euro became legal
tender, only 9% were against eumember-
ship, compared with an euaverage of 14%.
But by May 7th almost 44% were ready to
quit. “Italians feel betrayed,” says Gianluca
Borrelli of Termometro Politico, the insti-
tute that conducted the latest poll. Apoca-
lyptic rhetoric flows from southern Eu-
rope’s leaders. Portugal’s prime minister,
Mr Costa, declared: “Either the eudoes
what needs to be done or it will end.”
A more complacent view exists in the
eu’s northern capitals, particularly in Ber-
lin. When it comes to common debt, a feel-
ing exists that Spain, Italy and France—
which has supported the two southern
countries throughout—are trying it on, us-
ing the crisis to mask opportunism. “How
do you distinguish between genuine ne-
cessity and political opportunity?” asks
one ambassador from a northern European
country. In this view a compromise will be
found; yet another chapter in the eu’s long
history of muddling through.
According to an old joke, economists
have predicted nine of the past five reces-
sions. Those predicting the demise of the
eumay look similarly foolish. The bloc, its
currency and its institutions are so central
to much of European political life that un-
picking them all would require a level of
wanton destruction that not even the eu’s
harshest critics have advocated. However
after a decade of crises survivor bias afflicts
the eu’s supporters and fresh thinking is
urgently needed. An uncomfortable jour-
ney is justified if the destination is worth-
while. But without a clear answer to the
question of what Europe stands for, the
next decade or so will resemble a rather
pointless ride. 7