42 Europe The EconomistJuly 22nd 2017
L
IFE comes at you fast in the European Union. Barely a year ago,
with the wounds from the refugee crisis still gaping, Donald
Tusk, the president of the European Council, could be heard
warning that a British vote to quit the EU threatened to bring
about the collapse of western civilisation. In half the countries on
the continent, snarling populistseager for European disintegra-
tion were terrifying the pro-EU establishment.
Yet over the past few months, gloom has turned to sunshine.
In June Mr Tusk declared that he had never felt so optimistic
about the EU. Much of the credit goes to Emmanuel Macron.
France’s newly minted president has lifted pro-Europeans’ spirits
not only by winning election wrapped in the EU flag but by doing
so in revolutionary fashion, emerging from nowhere to humble
France’s old parties (as well as Marine Le Pen, the nationalist who
stalked Eurocrats’ nightmares for months). Rarely do members of
the European establishment get to feel like insurgents.
Some of the optimism needs tempering. Leave aside the fact
that none of Europe’s recent emergencies has been properly
fixed, from Greece’s economy, on an IVdrip of endless bail-outs,
to the migrants streaming across the Mediterranean. Mr Macron
is certainly brimming with ideas to reform the euro zone as the
core of the EU—from a common investment budget to the estab-
lishment of a parliament and a finance minister. But he has less to
say on matters that encompass all EUmembers, notably the sin-
gle market. Hailed as the saviour of Europe in some parts of the
continent, elsewhere Mr Macron is quickly proving divisive. The
new man in the Elysée seems to be pushing old French ideas.
Ta k e EUlabour policy. Perhaps to sugar the pill of the reforms
he wants French unions to swallow, Mr Macron promises to tight-
en EU rules on the pay and conditions of Europeans working tem-
porarily in other countries. To eastern European governments
that looks like a bid to keep their low-cost workers out of the high-
paid west, recalling the old French paranoia over “Polish plumb-
ers”. Mr Macron’s recent charge that some countries treat the EU
like a “supermarket” so unnerved the Visegrad four (the Czech
Republic, Hungary, Poland and Slovakia) that they hastily created
working groups with France to plead their cases.
That may be just the start. Mr Macron wants a Europe that
“protects” citizens, a phrase that implies any number of policies,from co-ordinated minimum wages to prohibitionson “social
dumping” and harmonised tax rules. Fans of such ideas tend to
sit inside the euro zone. Until recently Britain would try to pre-
vent the euro zone from pre-cooking such deals and presenting
them to the rest of the EU asfaits accomplis. This helped smooth
divisions between the euro-zone “ins” and the “outs”. But Brexit
leaves those outside the euro without a champion. Officials in
Brussels note that after Britain leaves, the 19-member currency
area will account for 85% of the EU’s economy. This is a none-too-
subtle way of locating the EU’s “core”.
The idea ofKerneuropa (“core Europe”) has a long pedigree.
First pushed years ago by WolfgangSchäuble, Germany’scurrent
finance minister, and later taken up by Nicolas Sarkozy, one of Mr
Macron’s predecessors, it was advanced as a tool to manage an in-
creasingly unwieldyEU. Today a core Europe built around the
euro zone could find itself collaborating on thorny non-economic
issues too, such as quotas for redistributing refugees. Should Mr
Macron get his wishes for institutional changes to the euro zone,
its political heft could leave the gaggle of non-members looking
like an afterthought. To western European countries interested in
more integration, this “multi-speed” Europe holds appeal. But
eastern European governments detest the idea offormal consign-
ment to a second class. “Either we get in the integration express or
we’ll be stuck in the depot on the second track,” said Robert Fico,
Slovakia’s prime minister, last month.Wedged apart
If some eastern countries struggle to make themselves heard, it
can be their own fault. Governments like Poland’s sabotage their
own case when they promulgate lurid horror stories about mi-
grants or, worse, undermine the democratic values to which they
signed up asEU members. Moderate governments that may sym-
pathise with their arguments on the single market will recoil
from association with countries in the grip of populism.
Several have joined Mr Macron in wondering out loud how
countries that defy the EU’s principles might be sanctioned, per-
haps by cutting the generous subsidies they receive. If such coun-
tries continue to drift away from the EU’s fundamental values,
others will be more likely to plough on with their ideas for inte-
gration and leave the stragglers behind.
The divides are not always clear-cut: Slovakia, Slovenia and
the Baltic states are euro members, and dislike being lumped in
with the more intransigent easterners. Others may soon face hard
choices, such as the Czech Republic, which sends over 60% of its
exports to the euro zone. Germany will have to play a vital bridg-
ing role between a resurgent France, with which it can strike a
deal on euro-zone reforms, and the eastern European countries
plugged into itssupply chains through the single market. Angela
Merkel, who grew up on the wrong side of the Berlin Wall, will be
reluctant to entrench division within Europe. But the chancellor’s
demand that all EU countries accept a quota of refugees creates its
own European wedge.
Eurocrats will head off to their summer breaks more confident
than they have been for years. Two cheers, then, for Mr Macron.
But by restoring Europeans’ hopes that there is life in their flag-
ging project, the president is bringing to the surface tensions that
lay dormant during the crisis years. The result could be a well-or-
ganised Europe running at different speeds. Handled badly, it
may resemble a cacophonous mess. Of the many tests before the
French president, this is among the largest. 7Sea change
Emmanuel Macron is both revitalising the European Union, and dividing itCharlemagne