How Can the European Union Become Popular Again?

This is a transcript of a keynote speech delivered on 28 November 2017 by Open Europe’s Head of Brussel office Pieter Cleppe on how the European Union can become popular again.

The European Union is possibly the greatest project of opening up trade in history. Its strategy has been to promote peace by opening markets: if goods don’t cross borders, armies will. So let’s make sure goods cross borders.

It was not just a success during the decades after World War II. The Eastern expansion and the prospect of accession helped to prevent civil wars like in Yugoslavia – despite obvious problems and thanks to NATO as well, of course. Central Europe is now growing at the fastest rate in nine years, Romania even with 8.6%.

Still, to what extent do young people still relate to all of this? There are a rumoured 1 million “Erasmus babies” so you could argue these have their lives to thank to the EU. There are many more born out of mixed marriages resulting from the opportunity to travel, work and live across-borders.

Young people – those aged 18 to 34 – stand more favorable toward the EU than people aged 50 and older, according to a Pew poll. Still, the percentage of the young having a favorable view of the EU only ranges between 55 and 62% in founding member states such as Italy, France, Germany and the Netherlands. So real passion seems to be lacking. The support is similar in Sweden and Spain but higher in Central and Eastern Europe.

Also, if the EU is such a great success, why did the UK decided to leave? Why does it seem the governments of Poland and Hungary to be on a constant clash with Brussels? Why have eurosceptic parties done well in virtually every single Western European country?

If you love your children, you should correct them when you see them going the wrong way. That’s also the case with the European Union.

Let’s have a closer look at the legitimacy crisis of the EU in Britain and in both the “new” and the “old” member states.

To learn what went wrong in Britain, it’s important to listen to the other side. Let me quote  John Redwood, a veteran British eurosceptic member of Parliament. He has said:

“Over the years, what appeared to be a modest measure to form a common market has transformed itself into a mighty set of treaties and become, through endless amendment and new treaty provision, a very large and complex legal machine that is the true sovereign of our country.” This feeling of a project having developed in a different direction than it had been sold is quite widespread in Britain.

Regarding the tensions between Brussels and Central and Eastern Europe: the dispute really escalated when the EU imposed mandatory relocation of refugees. If a consultant were to recommend the EC how to become more unpopular over there, the advice would probably have been to do just that: force these countries to welcome asylum seekers. It’s already hard for national politicians to convince their population to be generous to them, so one can’t really blame the EU for struggling to do this.

Then why did the EU decide this? France warned Germany not to do it until 2 weeks before it was decided, but Germany insisted on mandatory relocation of refugees anyway and France went along. What followed was a Eurosceptic backlash, with the Hungarian government thankfully using the opportunity to hold a populist referendum on whether the EU should impose migrant quotas. A lot of capital that has been spent to anchor these countries in the West has been put at risk.

And for what? Telling people where to live is challenging anyway within the passport-free Schengen zone: Only 35 of the 160 Christian Syrians who were given asylum in Poland in 2015  were still in the country one year later. Most of the refugees relocated to Latvia have already left. It’s clearly a good idea to wish for asylum seekers not to be concentrated in one place, but in the borderless Schengen-area this seems like an uphill task. And naturally we should not give up Schengen. Luckily, the EU decided in September to move to a system on a non-mandatory basis but some damage has been done.

In Western Europe, the EU had already been facing anti-EU sentiment before the eurocrisis emerged in 2010. There was Denmark voting against the Maastricht Treaty and France almost rejecting it in the 1990s. In 2005, France and the Netherlands voted against the European Constitution. It was repackaged as the Lisbon Treaty to avoid referendums, according to Valery Giscard d’Estaing, the former chairman of the European Convention, which drafted the Constitution. Ireland voted against both the Treaties of Nice, in 2001, and the Lisbon Treaty, in 2008. Twice it was asked to vote again. These Treaties all had in common that they amounted to transfers of power to the EU policy level, either in the form of scrapping vetoes or by creating ever more EU institutions. How can it not have had any effect on the EU’s legitimacy when popular votes against these projects were countered? This wasn’t helped by the fact that politics remains national and that national politicians have always been eager to blame the EU for everything it did and everything it did not do. When people don’t agree with something at the national level, they typically won’t accuse the national level of governance of lacking the legitimacy to take a certain measure. At the EU level, that often happens. People that don’t like a certain tax imposed by the Dutch government would simply say this is a bad policy. If there was a German-Dutch government and it imposed the exact same tax, many Dutch would say the problem isn’t just the policy but the legimacy of such a German-Dutch government. Whereas Dutch people typically wouldn’t find it unfair to have been outvoted by their national compatriots, many would find it unfair to have been outvoted by Germany. Yet, national governments have been trying to push more and more political decision making to the EU level. One cannot accuse the European Parliament of being unable to mend this so-called democratic deficit, because also there, the so-called Dutch demos would be outvoted.

That level of disconnect was reinforced by the eurocrisis, which boosted the popularity of all kinds of Eurosceptic populists.

How did the euro end up in crisis then, and how did this boost eurosceptics?

What happened with the creation of the common currency is that banks no longer had to obtain funding from their national central bank but could now in many cases obtain much cheaper funding from the ECB. That easy money wasn’t a blessing. It led to unsustainable public investment, most notoriously in Greece, but also to unsustainable private investment, for example in the Spanish and Irish real estate sectors. When the bubbles had busted, to save the euro, politicians decided to organize bailouts. That created a lot of animosity, propelling European politics to the frontpages of the newspapers and not in a positive way. Those having to pay for the bailouts weren’t happy and neither were those having to accept the conditions linked to the transfers, sometimes even in the form of so-called “Troikas” – teams of foreign officials sent to supervise national policy. No governing politician really ever promised this on the campaign trail, but it happened anyway.

The euro seems to drive a dynamic towards transfers and more centralization of power. But, dangerously, this then fuels a certain anger, translating into electoral success for Eurosceptic populists from both the left and the right. Some of them are not merely against the euro, but have used the eurocrisis to rail against the European Union itself. But even if the euro would endanger the EU, nobody has come up with a convincing plan to unwind the euro in an orderly manner. This is also why populists are dropping opposition to it as they get closer to power.

Now what do these Western European Eurosceptic voters, the Brexit voters and authoritarian populists in Poland and Hungary have in common? In my view, whether they are coming from the left and complain about having to follow certain economic or budgetary policies, or from the right, and don’t want the EU to organize transfers or determine asylum policy: the common thread is that they are all concerned about losing control.

So to provide solutions, and looking at how the EU can be made more popular again, we must take this concern serious.

But we must also look at what young people find important.

A 2015 survey by the Brussels-based think tank ThinkYoung found that what young people regard as “the most significant achievements of the EU” are “peace and stability in Europe and the right of EU citizens to travel, to live or study in another member state”.

The Erasmus student exchange scheme, is a precious tool towards the creation of a new reality for younger generations. It truly combines the educational dimension with other formative aspects of life. The late Italian writer Umberto Eco has suggested that “the Erasmus idea should be compulsory – not just for students, but also for taxi drivers, plumbers and other workers.” Well, it looks like Ryanair, founded by the rather Eurosceptic businessman Michael O’Learry, has made that possible, exploiting the opportunities provided by the EU single market.

It’s no surprise that young people are not willing to give up the opportunities created by the EU. They have get used to the ability to travel, work, study and live abroad. As opposed to many older people, they cannot even imagine how life would be like otherwise. Imagine if somebody would propose to reinstate a monopoly for the national airline carrier, effectively banning Ryanair. That won’t go down too well with young people, to put it mildly. The Brexit vote clearly demonstrated this: 73 percent of Britons under 24 voted Remain, 62 percent of voters between the age of 25 and 34 also voted Remain, and even 52 percent of the voters between the age of 35 and 44 wanted to stay in the EU. They only didn’t turn up in sufficient numbers to win.

Secondly, young people are also getting used to the benefits of disruption provided by technology. Airbnb, Uber and Bla Bla Car offer cheaper alternatives to traditional service providers in tourism and transport. Surely regulations need to be adapted but a full ban would be fiercely opposed by the younger part of the population who love to exploit these opportunities.

It is very telling that the only truly major anti-government demonstration in Hungary in the last few years took place when the government wanted to tax internet data traffic. Tens of thousands of youngsters protested on the streets which provoked a very rare result: the Hungarian government backtracked.

Here, I think, the EU has a great advantage, simply because it will find the younger generation on its side when it fights to conserve its achievements and when it proposes further opening of barriers to trade, which inevitably means disruption. Disruption is typically good for the outsiders and often disturbs the cosy position of the insiders. Young people typically are outsiders,both economically and politically.

There is so much the EU can still do to develop its core business, which is working to scrap barriers to trade and barriers in our everyday lifes. It’s good to see the EU making a new push to agree trade deals with non-EU countries. But what about opening up trade within the EU? Why has the insurance market not been properly opened up? People spend quite a bit of money to this so more competition could make insurances cheaper. Why has there in some countries, for example Bulgaria, not been more progress to liberalise the energy sector? Bulgaria receives a lot of EU funds so the EU has leverage there. Some vested interests also seem to manage to stop progress in opening up railways, postal and telecom services. In the age of e-commerce, we can no longer afford this.

To be fair to the EU, it’s often the member states blocking this. But has the EU sufficiently prioritized this? Hasn’t the focus in the last twenty years been more on institutional naval-gazing and increasing the EU’s powers and responsibilities? It’s fair to be in favour of that, but is it the right time to pursue it when the fundamentals of the EU may be under siege?

The EU is losing political capital by sometimes focusing on the wrong things. When a member has just decided to leave the club, because it thinks the club management has deviated from the core business of the club – opening up barriers to trade , the answer seems to be even more deviation: a Eurozone budget and Finance Minister, a European army, European asylum policies, European social policies. Regardless of the pros or cons, this is going beyond what the EU was initially meant for. It is clear that there are areas where there is wide divergence of opinion between EU countries. Italy looks differently at Russia than Lithuania. Romania’s labour market is different than the one in Denmark. In my native Belgium, it’s already hard to conduct a harmonized labour market policy for the different economic realities. Isn’t the EU inviting gridlock when focusing on this?

Would vested interests who fear a European Union that finds back its mojo, as it did in the 1980s, when the single market was decided, not prefer the EU to lose itself in endless debates on grand projects for which there is insufficient common ground?

Luckily, the recent establishment of Juncker’s Task Force on “Doing Less More Efficiently” is a promising initiative. Also, we’ve seen enhanced cooperation tried for willing member states to pursue more cooperation on areas that aren’t the EU’s core business, for example with the financial transation tax, so those who don’t want to participate are respected. With Open Europe, we’ve even suggested that this procedure could be used for the single market: a coalition of willing countries could agree to open their services markets up to each other.

To become more popular, I think the EU should simply focus on what is popular. The EU’s core business – opening up trade – is very popular. Most of the time when the EU faces opposition, it is because it is organizing fiscal transfers, because it is imposing conditions linked to these fiscal transfers or because it’s sticking its nose into what possibly is the most sensitive topic in every country in the world: immigration. Not when it enables Ryanair or Easyjet.

Also free trade of course still suffers from opposition, but even the opponents of the EU-Canada deal CETA did not really complain about the fact that there will be less tariffs. On the contrary, they were more concerned about issues related to sovereignty, such as the fact that their governments would have to respect the judgements of private tribunals or would no longer be able to set their preferred industry standards. Few have complained how scandalous it was that consumers would now have to pay 0% tariffs on Canadian products, or that they would would enjoy more choice, or that Canadian and European companies would now become able to bid for each others government tenders.

Isn’t freedom of movement then unpopular in some quarters? True, but when there is opposition, it’s mainly against the fact that migration isn’t controlled, not against migration in itself. Even 80% of Brexit voters support skilled migration. The EU Treaty offers opportunities for member states to impose some controls so citizens feel this isn’t a chaotic process. Perhaps some more controls should be devised to boost support for freedom of movement, in the same way that the European Commission’s suspending of Schengen in 2015 in some countries may have served to save it. Some flexibility will go a long way.

In 2021, the EU will get a great opportunity to show it has changed. This because a new EU budget period then begins, and the EU is about to lose the net payments coming from the UK. In the current 2014-2020 budget more than 270 billion is spent on “direct payments” to owners of agricultural land – banks, for example, or the Queen of England– regardless of whether they produce or not. To put that in perspective: that’s almost seven times the amount the eurozone bailout fund used to bail out the Spanish banking system a few years ago. How can the EU ever be popular with young people if it continues to focus on this, instead of for example boosting the Erasmus – programme? Surely supporting struggling farmers doesn’t mean the same as handing out checques to those who happen to own agricultural land? These payments aren’t going to bankrupt our Continent but along with other wasteful spending and the problematic travelling circus of the European Parliament between Strasbourg and Brussels, they inflict great damage the EU’s reputation. The EU’s core business of opening up trade and administrative barriers is very much in tune with the younger generations, so the EU has a great opportunity to reform itself by focusing on where it is good at. It should not waste it.

Pieter Cleppe is the Head of the Brussels office of Open Europe.

Source: Open Europe


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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