Can We Stop The Fragmentation Of Europe?

Kemal Dervis

The European Union’s economic crises of the last half-decade have fueled the emergence of a deep divide between the northern creditor countries and the southern debtors. Now Europe’s migrant crisis is creating an east-west divide between the countries that are welcoming toward the ongoing influx of refugees, and those who want to do little, or nothing, to help. Add to that growing political divisions within member countries, and one must ask: Is the EU coming unglued?

The creditor/debtor split was thrown into sharp relief this summer, during the negotiations over Greece’s third bailout agreement. Germany, the leading proponent of austerity and the most influential creditor, was accused of insufficient flexibility and solidarity; Greece, for its part, was lambasted for failing to implement the reforms that it promised the first two times it was bailed out. (It was France, neither entirely “north” nor entirely “south,” that ended up playing a vital role in facilitating the deal.)

Germany is now trying to lead the way in the migrant crisis as well, but this time by its generosity. Chancellor Angela Merkel has pledged to take in more than 800,000 refugees just this year. Welcoming crowds have lined streets and filled train stations in German cities, offering drinks, food, and clothing to the exhausted refugees, many of whom have walked hundreds of miles and risked their lives to get to safety.

Whereas Merkel declared forcefully that Islam was also a religion of Germany, some in Eastern Europe have declared that they will welcome only a small number of refugees – and only if they are Christian. Such bigotry plays directly into the hands of Islamist extremists worldwide.

The refugee crisis is all the more challenging in view of EU member countries’ internal political fragmentation. While those on the left support cautious acceptance of refugees, the further one moves to the right, the more negative the attitude becomes. Even the Christian Social Union, the Bavarian sister party to Merkel’s Christian Democratic Union, has proved a reluctant partner in this area.

Yet another divide lies between the United Kingdom and the rest of the EU. Given the UK’s role, alongside France, as the key force in European defense and a significant authority in world affairs, particularly with regard to climate- and development-related issues, the prospect of a genuine split should be a source of serious concern for the EU.

These divisions have created deep doubts about the dream of ever-closer union in Europe, underpinned by a shared system of governance that allows for more effective decision-making. Likewise, they are not conducive to implementation of the reforms that are needed to spur economic growth.

Yet it is still too early to write off progress toward increased European integration. In fact, when it comes to EU cohesion, more cleavages are probably better than a single divide.

When economic considerations alone were dominating the debate, austerity-obsessed northern Europe, oblivious to any Keynesian considerations, and struggling southern Europe, desperately in need of fiscal room to make demand-boosting, job-creating structural reforms politically feasible, were at loggerheads. The situation became so heated that some respected observers even proposed creating a “northern euro” for the region around Germany, and a “southern euro” in the Mediterranean (where France would fit was unclear).

In such a eurozone, the European Central Bank would have to split, and the northern euro would appreciate. Exchange-rate uncertainty would reappear, not only between the two euros, but also, before long, within the “northern” and “southern” zones, owing to the collapse of confidence in the very idea of a currency union. Within the northern bloc, Germany would play an even more outsize role than it does now, a situation that would likely generate new tensions.

Similarly, a clear division between a refugee-friendly west and a closed east would effectively end the Schengen Agreement, because the political disagreement would harden into a physical barrier blocking the free movement of people within the EU. Such a split would be as damaging to Europe’s cohesion as a divided eurozone.

But what if countries that are on opposite sides of one cleavage are on the same side of another? Germany, Italy, Spain, and Sweden may agree on the immigration issue, while Greece, France, Italy, and Portugal agree on eurozone macroeconomic policies. France, Poland, and the UK may be willing to spend more on defense, while Germany remains more pacifist. And Germany, the Scandinavian countries, and the UK may be at the forefront of the fight against climate change.

Moreover, the Europe-wide political “families” of Christian Democrats, Social Democrats, and so on could be allies on some policies and opponents on others, transcending national or regional borders, and moving toward pan-European politics, with the European Parliament increasing its democratic debate and oversight functions.

A Europe where countries do not fit neatly into one category or another, and where flexible coalitions emerge on various issues, probably has a greater chance of progressing than one divided simply between north and south or east and west. Of course, there remains the challenge of strengthening institutions so that they can manage this diversity and reconcile it with political effectiveness. Here, greater scope for weighted and double-majority voting is crucial. But, for truly democratic societies, the challenge of reconciling divergent interests never goes away.

© Project Syndicate