The election in Germany, even if disappointing for the current coalition, allows the most respected European leader to remain Chancellor. She can continue to steer the European engine, with a new French counterpart, impatient to test his European agenda – as outlined in a speech in the Sorbonne on September 26.
Is this the light at the end of a long tunnel? The end of the somber decade which started with the financial crisis, then the crisis of the Eurozone, the mass migration of 2014/15, the referendum on Brexit in June 2016, and the unexpected result of the American election?
At the beginning of this year, electoral campaigns in Austria, the Netherlands and France as well as the political debate in Italy gave populist eurosceptic parties center stage, and many across the EU believed they might win a majority of the vote.
But they failed. Everywhere. Brexit, far from being divisive, brought the 27 closer together. President Trump’s unilateral moves boosted security and defense plans at the European level. In France, Emmanuel Macron was elected with an ambitious European agenda. Unexpected economic growth all over the continent (except in the UK) reinforces a return to self-confidence.
A Return to Euro optimism?
As European Commission President Jean Claude Juncker noted in his “State of the Union” address on September 13, “the wind is back in the EU’s sails”. And as always when the Union comes out of a crisis, new steps are now being envisaged in the EU’s integration process.
This does not mean that spectacular changes will come soon. The framework will remain the current treaties. The fundamental problem of the distance between the institutions and the citizens remains, as well as the fear of globalization they are accused of encouraging. But many weaknesses – shortcomings that preexisted the crisis or were brought to light by it – can now be dealt with.
This blog explores briefly the various fields in which this new “Euro-optimism” will be tested. Not surprisingly, the debate will continue to oppose, on the one hand, those who favor more cohesion and solidarity, and so want to reinforce the role of the Commission or facilitate decision making; and on the other, those who want governance to remain as much as possible in the hands of national governments.
The influence of the latter, which has prevented progress over the last ten years, might be reduced now that populist and nationalist voices have been (temporarily) silenced – though of course we shall have to see the outcome of Italian elections next year. However, some strong mistrust remains, notably between the “old” and “new” Member States, as well as between the North and the South. The return to economic growth should help mitigate these divergences.
The governance of the Monetary Union and the Eurozone
Most economists agree that the Eurozone needs further reform. A roadmap for reform has been articulated since 2011 by the presidents of the EU institutions. But, apart from the setting up of a “Banking Union”, the other elements of the reform were never really discussed, due to the diverging views between Germany and most other Member States over financial “solidarity”.
But these ideas continued to float in the air, and were revived recently by the President of the Commission and the French President.
Even on the campaign trail, Macron espoused the creation of a separate Eurozone budget. He now suggests that this could be funded through (harmonized) corporate taxes, and managed by a “Eurozone Finance Minister”. He has also mooted the creation of a Eurozone Parliament.