Europe’s fragmentation endangers a vital Trans-Atlantic pact

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Last of three parts

The political implications of stagnation

This buildup of pressure is finding an outlet in the political sphere. Europe’s populations are gradually warming to the idea that perhaps a better future lies outside the eurozone, and Euroskeptical parties are gaining support. Instead of sudden default, the fear now is that economic stagnation will help a Euroskeptical party—or a leader heavily influenced by Euroskepticism—rise to power in France or Italy, resulting in a eurozone country removing itself from the union rather than falling out, as was the main danger in 2012. As Stratfor has noted before, the European Union functions smoothly in times of prosperity, but during its current economic weakness the fault lines have become evident. If Europe is to return to a path of convergence and contentment, it is imperative that it returns to a period of economic growth as quickly as possible. A free trade agreement creating more than 100 billion euros of GDP would clearly help to kick-start the eurozone. Thus, the TTIP’s potential collapse should be seen as a considerable threat to Europe’s future.

When it appeared, the TTIP seemed to be a welcome solution for Europe’s strained economies — a relatively painless way to create huge gains on both sides of the Atlantic and strengthen the geopolitical ties that bind the two continents. However, this view underestimated the power of vocal lobbies around the European bloc. While Europe’s governments have largely supported the treaty, social forces within member states have undermined and politicized the agreement to the point that it now appears unlikely to succeed. Juncker’s insistence that a treaty containing an investor state dispute settlement clause is unworkable because the clause is a lightning rod for dissent indicates the power of social organizations in Europe. However, it also shows that Europe’s national governments do not feel secure enough to be able to force through a trade pact they all agree would help solve the European Union’s problems (as with other EU foreign policy matters, a negotiated treaty would need unanimous approval from the bloc’s member states to be signed).


The investor state dispute settlement clause is a relatively small hurdle that the European Union and the United States should be able to reach an agreement on. Their failure to do so betrays the unwillingness of Europe’s leaders to expend political capital on an issue that does not aid their immediate futures. If TTIP falters or is weakened to the point that it only removes tariffs, then Europe will have failed to grab a rope which could have helped pull it out of the mire in which it is laboring. Continuing economic stagnation merely fuels the fire of Euroskepticism, and makes the rise of anti-Europe national governments in the Continent more likely.— © STRATFOR

Publishing by The Manila Times of this analysis is with the express permission of STRATFOR.

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