STRATFOR GEOPOLITICAL DIARY

The battle for political control of Europe continues

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The battle for political control of Europe continues to heat up. As member states struggle to find a consensus on whom to appoint to key posts in EU institutions, the attitudes of the most influential countries of the European Union reveal profound differences in their vision of the bloc’s future.

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On Tuesday last week, German Vice Chancellor Sigmar Gabriel made headlines when he said that countries in the eurozone should be given more time and flexibility to meet EU deficit targets in exchange for applying structural reforms. The statement was praised almost immediately by the Italian government, which has been promising to promote similar measures when it takes over the rotating EU presidency in July.

But Gabriel’s statement put his own government in an awkward position because Berlin has been the one pushing for structural reforms and strict fiscal targets in the eurozone since the beginning of the crisis. His comment reveals that the debate over the effectiveness of austerity policies is no longer held exclusively in the European periphery; the center-left in Germany also believes some of the measures that Berlin has supported since the beginning of the crisis need to be revised. Gabriel’s Social Democratic Party is the junior coalition partner in the government of Chancellor Angela Merkel, a situation that has perpetually forced the German leader to balance the interests of the center-left and center-right members of her government.

Gabriel’s words were also significant because of their timing. In recent weeks, the debate over the designation of the new EU commission president has led to a new political conflict in Europe. Merkel believes that Jean-Claude Juncker, the former prime minister of Luxembourg, should be the next commission president because he belongs to the party that received the most votes in the EU Parliament elections. But British Prime Minister David Cameron has said that giving the EU Parliament the power to appoint the EU Commission is a violation of the European treaties and a significant reduction of the prerogatives of the member states, which are technically in charge of the decision. From Cameron’s point of view, such a violation of national sovereignty could be harmful at a time when Euroskepticism is on the rise in Europe.

The Italian government has threatened not to support Juncker, but for different reasons. Italian Prime Minister Matteo Renzi believes that the next EU Commission should abandon its obsession with fiscal consolidation measures and give member states more time to apply reforms. The Germans fear that an anti-Juncker alliance led by Britain and Italy could result in an unprecedented political defeat for Berlin, so they have been talking with the Italians. On Tuesday last week, an Italian official admitted that Rome could eventually support Juncker in exchange for a softer position on fiscal matters. While this decision would certainly please the Germans, it would probably irritate the British.

But these negotiations actually have little to do with fiscal policy. Member states have been ignoring the European Union’s deficit and debt targets for two decades. With the eurozone crisis, Brussels multiplied the number of mechanisms to oversee national budgets and require specific targets, but enforcement remains a problem and flexibility (or resignation to the status quo) prevails. Countries such as France, Spain and Portugal have repeatedly been given more time to meet their deficit targets, while their sovereign debt keeps piling up.

On Wednesday, the German newspaper Frankfurter Allgemeine Zeitung published a report that said EU member states have applied only 10 percent of the recommendations that the EU Commission made in the past 12 months in the context of the “European Semester” (an initiative in which Brussels sets out the key economic policy priorities for the year to come). While the recommendations given in this context are not binding, the lack of interest from member states is quite revealing of the disconnect between Brussels and national governments. Even if the Italians and the Germans reached an agreement on a flexible interpretation of the existing pacts, it would probably not be a break with the past but rather a confirmation of an ongoing trend.

The current dispute is basically about control of Europe’s main institutions. In the next six months, member states will have the rare opportunity to appoint officials for the most important roles in the EU bureaucracy, including the complete composition of the EU Commission and the president of the EU Council. These individuals have considerable influence in shaping the political and economic agenda of the Continent, and member states want to make sure the new officials protect their national interests.

Since its inception in the mid-1950s, the promise of economic prosperity was the glue holding European integration together. With the European Union becoming increasingly unable to deliver on that promise, the cracks in the union are becoming more and more difficult to hide. The British want a European Union that is built around free trade. Germany wants to preserve the currency union to favor its exports while keeping as much control as possible on the economies in southern Europe. Countries in Mediterranean Europe support the process of continental integration, but only as long as it means subsidies, financial assistance and some degree of protectionism. Probably the most notable element of the current political dispute is the deafening silence coming from France. Paris’ unwillingness or inability to take a leading role in the current battle for the future of the European Union speaks volumes about France’s internal political crisis.

Ultimately, an agreement on the composition of the EU Commission will be reached, but the fight will leave long-lasting wounds on the Continent. The irony is that it may be a Pyrrhic victory because countries will keep selectively challenging, or directly ignoring, the decisions and orders emanating from Brussels.–© 2014, STRATFOR.

George Friedman is the founder and chairman of STRATFOR.

Republishing by The Manila Times of this Geopolitical Diary by George Friedman is with the express permission of STRATFOR.

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1 Comment

  1. Carlo L. Adan on

    Thank you, dear Manila Times, for sharing the intelligence-based analyses of STRATFOR with us. Its insights and details are far more deep and instructive than those found only in wire service reports.