Briefing

Europe After the European Union

In previous pieces, we have discussed the crisis facing the EU and the triggers that could lead to its collapse. But what would Europe look like were such a collapse to occur? This is a question that ought to be asked more often, if only to focus the minds of policy-makers on what needs to be done to avoid it.

To recap some of the argument in my first piece, it is important to note that there is no possibility of a managed exit from the single currency. If a state chooses to leave or is forced out by the markets, we can expect an unmanaged route. There would be contagion to other countries. And with one or more states having exited, the TARGET 2 payments system underpinning intra-Eurozone trade would be likely to collapse as states began to lose confidence in each other’s ability to settle their trade bills.

New currencies introduced in exiting countries would be subject to immediate devaluation and those introducing them would be accused of seeking unfair trade advantage over others. Counter measures in the form of tariffs or non-tariff barriers should be expected and the European Single Market would therefore begin to fragment. The turmoil would mean severe disruption of economic growth, recession and possibly depression in some parts of Europe. This would be likely to trigger new waves of economic migration within the Eurozone and make free movement of people highly politically contentious. To all intents and purposes, the EU, and not only the single currency, would unravel.

In those economic conditions, what kind of politics should we expect to see?  There is more than a strong possibility that it would involve a great deal of scapegoating of other member states as the cause of all the turmoil and trouble. The EU institutions would also be subject to political attack for having mismanaged the crisis. The politics of nationalism would be given a boost. Within member states, the elites who had supported both the EU and the failed approach to the management of the single currency would further be discredited. The attack on the ancien regime would not be restricted to individuals but would also encompass institutions.  The separation of powers itself would be blamed as ineffective and we should expect the rise of a strongman or strongwoman politics where more and more power is accumulated in the hands of specific individuals as a solution to the crisis.

In terms of security and geopolitics the likely effects could hardly be worse.

It is inconceivable that the break-up of the EU would leave NATO unscathed. With trade barriers going up inside Europe, one group of Europeans blaming another for chaos and nationalist politicians making hay in that context it would be hard to maintain any semblance of the political solidarity required to underpin a credible collective security guarantee. Whereas in the past, the United States could have been counted on to act as a powerful stabilising influence on events in Europe, in the age of Trump that could no longer be taken for granted. Indeed, Trump’s negative rhetoric with regard to both the EU and NATO is suggestive of a possibility that he would actually try to use a crisis in the EU as an attempt to hasten the fall of both the EU and NATO.

The big winner in all this would be President Putin at the head of a more assertive Russia. China, already encroaching into the European space through its investment and trade relationships, would also try to increase its footprint and influence. The combination of a collapsed EU with a larger role in European affairs for both Russia and China would further weaken efforts to embed liberal democratic norms in the politics of Eastern Europe, the Balkans and the Caucasus.

With the EU gone and NATO, if still in existence, weakened to the point of irrelevance, the structure of European international relations would also change dramatically. Germany would dominate central Europe, perhaps with a few smaller countries staying close to it in what would effectively be a re-constituted Deutsche Mark zone.  The UK would seek to influence events from its vantage point off the north-west coast of the continent. Turkey would attempt the same from the south-east and Russia would seek to dominate the east.  An open question might be whether France attempted to form and lead a new Club Med group of southern European countries. Whether this happened or not, we would return to something akin to the balance of power politics of old in Europe, with all the attendant risks.

Those risks are all too real. During the Cold War, there were clear spheres of influence and, certainly after the Cuban Missile crisis in 1962, conflict prevention and crisis management mechanisms in place to keep the peace. In post-EU Europe, however, there would be grey zones and contested spaces while much of the arms control and conflict prevention regime that kept the Cold War cold has already been allowed to atrophy.

Political leaders in the geopolitically sheltered western parts of Europe often mock the idea that great power military conflict could once again be a part of the European landscape but their military leaders are quietly war-gaming for it and the citizens of places like Ukraine, the Balkans, and the Caucasus know that war has been an all too real feature of life in their part of the continent since the early 1990s.

If the EU collapses, the economics, politics, and geopolitics of Europe will be thrown into turmoil. The continent may come to look more like it did in the 1930s than like anything that has existed since 1945. The stakes in play as efforts are made to manage and overcome the EU’s crisis could not, therefore, be higher.