The European Union (EU) has been trying to cope with several crises at once for a time now. The Eurozone crisis that began seven years ago is still unresolved and Greek issues could soon return to the EU agenda. There are many questions regarding the Italian finance sector and capacity to implement reforms.
The refugee crisis is also unresolved – though the EU agreement with Turkey has reduced the flow of migrants from Turkey to Greece and the Balkan states, the migrants arrive through other channels, for example from Libya to Italy. An EU agreement with Libya will also be negotiated during the currently ongoing EU institution and country leader assembly in Malta, albeit implementing it will be far more difficult than the one with Turkey. The security situation both in the South and East neighbourhood is difficult, there have been reports of new victims in East Ukraine.
Beyond the aforementioned crises, the question of the United Kingdom exiting has been present in the EU agenda for more than half a year. After the recent speech by UK Prime Minister Theresa May it became clear that the UK will not seek to maintain access to the EU common market, which was held to be the main economic advantage since the country joined the union. The UK will also depart the EU Customs Union because membership in it would limit opportunities to pursue free trade agreements with other World Trade Organisation members – the USA, Australia, India and others. Hence it is likely that the definition of UK-EU relations will be a free trade agreement, similar to the EU-Canadian agreement with specific deals on cooperation in specific areas. Such a hard withdrawal from the EU will cause much concern for markets and will not be easy.
However the EU is most concerned by the speeches of new US President Donald Trump and his team about the union. Both the POTUS’ comment on what an excellent initiative the UK’s withdrawal from the EU is and that other EU states would follow such an example, but also his team members’ comments about Germany’s manipulation of the euro exchange rates or about the supposedly soon to crumble Eurozone, they all show a potential fundamental change in US policy toward the EU.
US presidents, regardless of their partisan leanings, all the way since the post-war European crisis have firmly supported European integration. This was done in hopes of avoiding further military conflicts in Europe and to create conditions for economic growth, to form a transatlantic community based on common values. US military support has created conditions for the EU states to rely on NATO and dedicate funds to other important spheres instead.
All of this could change soon. It is already clear that EU states will have to dedicate more funds to defence. If the majority of them manage to reach 2% GDP and this will not be easy given the slow economic growth in EU states, it could help keep NATO and US attention for matters of European security. In terms of security the European states need the USA more than the USA needs the Europeans. However other consequences of changing US policy are far more difficult to predict. Negotiations on the transatlantic trade and investment have been postponed for an indeterminate time or at least until the UK departs the EU and signs a free trade agreement with the US.
Coordination of positions between the US and the EU regarding conflicts in the Middle East or sanctions to Russia will become more difficult. Furthermore potential US bilateral conflicts with states such as China could have important repercussions to EU external economic links.|
It would appear that the EU symbolises everything the new US president criticised during his electoral campaign – an elite distanced from the people, national interests forgotten. EU decision making, based on negotiation and building common rules, appears to be neither worth supporting, nor useful in general to the US president. Such a stance has become an example to EU politicians seeking power, how think that they can win elections by juxtaposing themselves to the ruling elite and the EU. At the same time signals are being sent to other countries which are not beyond ignoring international regulations, primarily Russia, that the USA is leaving more and more space for other actors to come into play in Europe, in projecting their interests and enacting bilateral deals.
As a letter released this week by the President of the European Council Donald Tusk and the reactions of the German chancellor and other EU heads of state, such a shift in US policy could become a pretext for EU states to unite to solve mutual problems. The question is whether they will manage to come to terms on how to do it. In what spheres and how should they work together and will they manage to convince their citizens of the benefit of working together? Some things will become clearer already next month when the EU commemorates the 60th anniversary of the Rome agreement.
It will not be declarations that matter, but specific actions. Even more important will be election results in various European countries, they will show who the citizens of Holland, France and Germany support. It will be specifically the role of EU country politicians and not the European Commission or European Parliament that will be decisive and upon it hangs the future of the EU. Particularly at a time when not only the UK is departing the EU, but the US is also turning away from it.