Europe at a crossroads

With Europe's political establishment reeling from the electoral success of extremist parties, efforts to mend the EU must extend beyond economics

PUBLISHED : Wednesday, 11 June, 2014, 11:44am
UPDATED : Wednesday, 11 June, 2014, 11:57pm

Just under two weeks ago, this newspaper gave front-page coverage to the decision of a Hong Kong-born member of the British Parliament, Anna Lo Man-wah, not to stand for re-election.

Among her reasons for this were growing anti-immigrant sentiment and racism in Europe. The unprecedented success of far-right parties in the recent European parliamentary elections were a key tipping point for Lo's decision.

This story brings home to Hong Kong the worrying realities of politics in Europe. What happens in Europe matters both economically and politically in Asia.

The European Union is the world's biggest trading bloc, accounting for 16.5 per cent of global imports and exports. Its trade with the rest of the world doubled between 1999 and 2010.

These movements … reflect … public disillusionment with the ‘European experiment’

Free trade was one of the EU's founding principles and its proponents can argue convincingly that the free movement of goods, services, people and capital it facilitates have been vital to job creation and economic growth for its members - and those economies it trades with.

The EU is Hong Kong's second-largest trading partner - accounting for 9 per cent of the city's exports - after mainland China, as well as representing a major investment presence. Hong Kong's exports to the EU were worth €10.2 billion (HK$107 billion) last year, and its imports from the EU, €35.7 billion.

So how worried should business be about the outcome of EU elections that saw parties hostile to it in France, Britain and Denmark win majorities of more than 25 per cent of the votes cast?

In Italy and the Netherlands, parties of similar persuasion made significant gains. Discernible shifts towards support for far-right parties also occurred in several other EU member states. What do the rightist parties truly represent? Are they fascist, nationalist, protectionist, anti-immigration, anti-EU or just plain anti-establishment? The answer is probably varying combinations of these. And we should not forget the impressive showing of the left in Greece, whose platform is anti-austerity.

These movements challenge the political centre. They reflect a depth of public disillusionment with the "European experiment" unprecedented since the Treaty of Rome was signed in 1957.

European heads of government variously described the election results as a "political earthquake", "regrettable" and a sign that the public was "disillusioned".

Leaders of the populist parties in France and Britain proclaimed that people did not want to be governed any more by those outside their borders and that the inevitability of European integration was over. Secessionist politics in Scotland, Catalonia and Flanders might seem local, but they reflect growing anti-integration sentiment across Europe.

An easy explanation for the disillusionment and anger behind these electoral results is post-Lehman blues. Europe was hit hard by a sudden halt to growth in 2008, a severe contraction in 2009 and little or no growth since, accompanied by the euro debt crisis and soaring joblessness.

In a CNN interview following the elections, former US treasury secretary Larry Summers declared that the results were a natural consequence of failed elitist macroeconomic management. These failures, he said, had led to catastrophic consequences for millions of people.

There can be no doubt that economic hard times have contributed to deep disaffection. It would be a mistake, though, to assume that fixing the economy will fix Europe. The notion that the problem is simply economic is nowhere to be found in the populist rhetoric of the right. It goes much deeper and is to do with the very idea of centralised power in a united Europe.

The gradual transfer of economic and political authority to Brussels has alienated a growing number of citizens, who see EU power and its institutional machinery as remote and autocratic. They consider the Brussels bureaucracy arrogant, overpaid and unaccountable.

Member governments and EU authorities should have done more to carry the populace with them as they built Europe. Public squabbles over money, corruption scandals and the appearance of nonchalant disregard for the citizenry have crimped support. The objective of a united Europe was motivated by a desire to secure lasting peace on a continent that had torn the world apart in two terrible wars within less than half a century.

Shared prosperity and economic interdependency were considered vital ingredients in the mix to keep the peace, but the idea of a European identity transcending nationality was part of the vision.

This worked reasonably well for the first three decades or so. But successive moves towards deeper integration combined with geographical expansion gradually diluted enthusiasm for Europe as an entity. A unified Europe with a shared commitment to common policies disintegrated with the introduction of the euro.

This, together with the massive enlargement of the EU of 15 to a membership of 28, ensured a multi-tiered EU without uniform rights and obligations among its members for the foreseeable future.

The historical vision of unity had been undermined, and for many the integrationists were trying to push things too far.

It may be tempting for Brussels to think that as long as the centre maintains three-quarters of the votes in the European Parliament, things can go on as usual.

Such complacency would be foolish. It would also overlook the reality that EU politics is an amalgam of national politics. The time has come for serious thinking about the future.

Economic growth will surely not be enough. Europe must either mend itself by recasting the vision, or try to negotiate orderly disintegration. Let us hope for the former.

Patrick Low is vice-president of research at the Fung Global Institute