What happens in Europe should be of great interest to Indian policymakers, as Europe is at a crossroad and the very existence of the EU is under threat.

 

Europe is important to India. If you don’t believe me, take a look at some facts. The European Union (EU) is India’s largest trading partner, accounting for 92 billion euros worth of trade in goods in 2018, or 12.9% of total Indian trade. This is ahead of China (10.9%) and the United States (10.1%). The EU is also the leading destination for Indian exports, almost 18% of the total. In the last decade, trade in goods between the EU and India increased by 72%. In services, there has also been an increase in trade, rising from 23 billion euros in 2010, to 29 billion euros in 2016. India is now the fourth largest services exporter to the EU and the sixth largest destination for EU services exports.

If you want further convincing, consider this. The EU’s share in foreign investment inflows to India more than doubled in the last decade from 8% to 18%. Some 6,000 EU companies are present in India, providing directly 1.7 million jobs and indirectly some 5 million jobs in a broad range of sectors. In return, Indian companies have invested more than 50 billion euros in Europe since 2000. What happens in Europe should therefore be of great interest to Indian policymakers, especially today as Europe is at a crossroad and the very existence of the EU is under threat.

Europe has never been a monolithic concept, but rather an amalgam of different traditions, the mix of which has changed over time. Yet, for the past decades since the end of the Second World War, the answer to the question of what it was that kept Europe together was straightforward: a commitment to liberal democracy and human rights, to a market based economy, and to international cooperation in international institutions. Nowadays, just as the meaning of the West as a whole is increasingly contested, so the meaning of the EU is being redefined while the UK leaves after 47 years of membership. Just as many expert commentators argue that we are witnessing the “decay of the West”, so others are predicting the “decay of the EU”.

Democracies across the world are eroding. In Europe, populist movements are seen as the main culprits behind this decline and alarm bells are ringing. Although EU populist parties failed to make the expected gains in last year’s elections, they remain an existential threat to the EU. The murder of nine citizens this week, believed to be from Germany’s Muslim community, is a clear reminder that the far right anti-immigration populists are alive and well in Germany, as they are in most EU countries.

Concerned at the casual attention to democracy and liberal ideas in certain member states of the EU, the Swedish Prime Minister, Stefan Lofven, reminded other leaders that “The EU must stand up for our fundamental values, for what would be the ultimate point of our work, the ultimate point of our union, if it did not promote the values we believe in?” Lofven and other EU leaders are horrified by the insatiable appetite of governments in Hungary and Poland to weaken the rule of law and the independence of the judiciary and media.

Lofven’s speech to European Parliament last year was a thinly disguised attack directed at Hungary’s Prime Minister, Victor Orban, who has presented himself as a pioneer in leading the opposition to a “liberal” Europe, redefining “Christian democracy” as essentially “illiberal democracy”. At home this meant a defence of traditional family values against “liberal decadence”. Internationally, according to Orban, illiberal democrats must oppose liberal elites who “are advocating a world without nations again, who want open societies, and who are fabricating a supranational world government”. Orban and others reject liberal internationalism and advocate a new nationalism as the only way to protect their national sovereignty.

The return to national sovereignty was at the forefront in the UK during the recent BREXIT campaign, with immigration and border control as the principal argument. This nostalgia-inspired return to homogeneous nation-states is a powerful force in many Eastern countries of the EU, while they gladly accept EU money to further their cause. No doubt they are inspired by Donald Trump, who said in his address to the UN General Assembly in 2019, “The future does not belong to globalists. The future belongs to patriots”.

Orban’s view of the nation-state in Europe is the polar opposite of France’s President Macron, who argues for an economically and politically integrated Europe. In Macron’s view, the EU should also develop a strong and credible defence and foreign policy. In short, it is the EU which had to become more sovereign. Macron’s views are at odds with those of the German Chancellor, Angela Merkel, who has consistently supported the expansion, not deepening, of the EU. She was enraged by Macron’s veto of the start of EU accession talks with Albania and North Macedonia in October last year. Macron argues that the EU needs first to get its own house in order before taking on new members.

Britain was the traditional arbitrator between the opposing views of France and Germany, encouraging solutions by compromise. Now that it has gone, the incompatibilities between Paris and Berlin are more exposed, illustrating the EU’s inability to pursue policies of integration, enlargement and strategy. France wants a banking union, something which Germany opposes, fearful of the loss of its financial strength. Emmanuel Macron wants to reach out to President Vladimir Putin, arguing that Russia is essential for Europe’s security, a view not shared by Merkel, notwithstanding her unqualified support for Nord Stream 2, the massive pipeline delivering Russian gas to Germany in 2021. Germany didn’t consult its EU partners over its support for Nord Stream 2, which will increase the EU’s dependency on Russian energy and cause tensions with President Trump.

Merkel puts Germany’s economic interests first. She is bent on avoiding alienating Beijing at almost all costs by refusing to bar the Chinese firm Huawei from providing limited services to Germany’s 5G network, subject to certain security standards. This is one area in which Paris and Berlin agree. Last week the French Finance Minister, Bruno Le Maire, said that while Paris would give priority to European suppliers such as Nokia and Ericsson, it wouldn’t exclude Huawei from bidding. But then it has always been Macron’s principle that what’s good for France must be good for Europe. Along with Britain, the EU is struggling to find a middle way to balance Huawei’s huge dominance in the 5G sector with security concerns pressed by Washington and the fury of Donald Trump, who threatens untold consequences to any country allowing Huawei into their networks.

There are therefore immense questions hanging over the future of Europe. Will it survive the surge of populism, keeping alive its principle of a liberal democracy while keeping the “illiberal” Visegrad countries within the Union? Will it expand to include any of the five recognised candidates for membership, whose applications go back to 1987, or will it deepen the relationship between existing states, eventually creating the United States of Europe? Can it manage its finances with a 94 billion euro hole following Britain’s departure, when the “net contributors”, the northern states, refuse to open their wallets any further? Can it keep a united voice in international policy when lead members such as France and Germany are increasingly operating unilaterally, each pursuing national interests? Can the EU simultaneously maintain friendly relations with the US and China, an increasingly impossible task? Already no less than eight members, Austria, Bulgaria, the Czech Republic, Greece, Portugal, Hungary, Poland and Slovakia have joined China’s Belt and Road Initiative, against the advice of Brussels. The recent decision of Italy to join the BRI illustrated clearly the failure of the EU in promoting infrastructure development. Almost in desperation, Italy succumbed to the love-fest from China and joined the eight in breaking ranks with Brussels in order to assist its struggling economy. Cosying up to China in self-interest is unlikely to enhance favour with Donald Trump’s America.

The new European Commission’s President, Ursula von der Leyen, emerged successful from a ferociously contentious election because of a last minute compromise and by the narrowest of margins. Only by attracting votes from the ant-immigrant, euro-sceptic ruling parties in Poland and Hungary, the very countries arguing for illiberal democracy and the elevation of the nation state within the EU, did she succeed. Unless the EU is able to resolve its fundamental problems in the next five years, she may be the last.

John Dobson is a former British diplomat to Moscow and worked in UK Prime Minister John Major’s Office between 1995 and 1998.

 

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