In my youth, a small band of visionaries led by Jean Monnet transformed the European Coal and Steel Community first into the European Common Market and then the EU. People of my generation were enthusiastic supporters of the process.
I personally regarded the EU as the embodiment of the idea of the open society. It was a voluntary association of equal states that banded together and sacrificed part of their sovereignty for the common good. The idea of Europe as an open society continues to inspire me.
But since the financial crisis of 2008, the EU seems to have lost its way. It adopted a program of fiscal retrenchment, which led to the euro crisis and transformed the eurozone into a relationship between creditors and debtors. The creditors set the conditions that the debtors had to meet, yet could not meet. This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.
As a result, many young people today regard the EU as an enemy that has deprived them of jobs and a secure and promising future. Populist politicians exploited the resentments and formed anti-European parties and movements.
Then came the refugee influx of 2015. At first, most people sympathized with the plight of refugees fleeing political repression or civil war, but they didn’t want their everyday lives disrupted by a breakdown in social services. And soon they became disillusioned by the failure of the authorities to cope with the crisis.
When that happened in Germany, the far-right Alternative für Deutschland (AfD) rapidly gained strength, making it the country’s largest opposition party. Italy has suffered from a similar experience recently, and the political repercussions have been even more disastrous: the anti-European Five Star Movement and League parties took over the government. The situation has been deteriorating ever since. Italy now faces political chaos.
Indeed, the whole of Europe has been disrupted by the refugee crisis. Unscrupulous leaders have exploited it even in countries that have accepted hardly any refugees. In Hungary, Prime Minister Viktor Orbán based his re-election campaign on falsely accusing me of planning to flood Europe, Hungary included, with Muslim refugees.
Orbán is now posing as the defender of his version of a Christian Europe, one that challenges the values on which the EU was based. He is trying to take over the leader-ship of the Christian Democratic parties, which form the majority in the European Parliament.
The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effective-ly destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality.
WHAT CAN BE DONE?
The EU faces three pressing problems: the refugee crisis; the austerity policy that has hindered Europe’s economic development; and territorial disintegration, as exemplified by Brexit. Bringing the refugee crisis under control may be the best place to start.
I have always advocated that the allocation of refugees within Europe should be entirely voluntary. Member states should not be forced to accept refugees they don’t want, and refugees should not be forced to settle in countries where they don’t want to go.
This fundamental principle ought to guide Europe’s migration policy. Europe must also urgently reform the Dublin Regulation, which has put an unfair burden on Italy and other Mediterranean countries, with disastrous political consequences.
The EU must protect its external borders but keep them open for lawful migrants. Member states, in turn, must not close their internal borders. The idea of a “fortress Europe” closed to political refugees and economic migrants not only violates European and international law; it is also to-tally unrealistic.
Europe wants to extend a helping hand toward Africa and other parts of the developing world by offering substantial assistance to democratically inclined regimes. This is the right approach, as it would enable these governments to provide education and employment to their citizens, who would then be less likely to make the often-dangerous journey to Europe.
By strengthening democratic regimes in the developing world, such an EU-led “Marshall Plan for Africa” would also help to reduce the number of political refugees. European countries could then accept migrants from these and other countries to meet their economic needs through an orderly process. In this way, migration would be voluntary both on the part of the migrants and the receiving states.
Present-day reality, however, falls substantially short of this ideal. First, and most importantly, the EU still lacks a unified migration policy. Each member state has its own policy, which is often at odds with the interests of other states.
Second, the main objective of most European countries is not to foster democratic development in Africa and elsewhere, but to stem the flow of migrants. This diverts a large part of the available funds to dirty deals with dictators, bribing them to prevent migrants from passing through their territory or to use repressive methods to prevent their citizens from leaving. In the long run, this will generate more political refugees.
Third, there is a woeful shortage of financial resources. A meaningful Marshall Plan for Africa would require at least €30 billion ($35.4 billion) annually for a number of years. EU member states could contribute only a small fraction of this amount. So, where could the money come from? It is important to recognize that the refugee crisis is a European problem requiring a European solution. The EU has a high credit rating, and its borrowing capacity is largely unused. When should that capacity be put to use if not in an existential crisis? Historically, national debt always grew in times of war. Admittedly, adding to the national debt runs counter to the prevailing orthodoxy that advocates austerity; but austerity is it-self a contributing factor to the crisis in which Europe finds itself.
THE PRICE OF AUSTERITY
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Without going into the details, I want to point out that the proposal contains an ingenious device, a special-purpose vehicle, that would enable the EU to tap financial markets at a very advantageous rate without incurring a direct obligation for itself or for its member states; it also offers considerable accounting benefits. Moreover, although it is an innovative idea, it has already been used successfully in other contexts, namely general-revenue municipal bonds in the US and so-called surge funding to combat infectious diseases.
But my main point is that Europe needs to do something drastic in order to survive its existential crisis. Simply put, the EU needs to reinvent itself.
This initiative needs to be a genuinely grassroots effort. The transformation of the Coal and Steel Community into the European Union was a top-down initiative and it worked wonders. But times have changed. Ordinary people feel excluded and ignored. Now we need a collaborative effort that com-bines the top-down approach of the Europe-an institutions with the bottom-up initiatives that are necessary to engage the electorate.
THE BREXIT PUZZLE
Of the three pressing problems, I have addressed two. That leaves territorial disintegration, exemplified by Brexit. It is an immensely damaging process, harmful to both sides. But a lose-lose proposition could be converted into a win-win situation.
Divorce will be a long process, probably taking more than five years – a seeming eternity in politics, especially in revolutionary times like the present. Ultimately, it is up to the British people to decide what they want to do, but it would be better if they came to a decision sooner rather than later. That is the goal of an initiative called Best for Britain, which I support. This initiative fought for, and helped to win, a meaningful parliamentary vote on a measure that includes the option of not leaving before Brexit is finalized.
Britain would render Europe a great service by rescinding Brexit and not creating a hard-to-fill hole in the European budget. But its citizens must express support by a convincing margin in order to be taken seriously by Europe. That is Best for Britain’s aim in engaging the electorate.
The economic case for remaining an EU member is strong, but it has become clear only in the last few months, and it will take time to sink in. During that time, the EU needs to transform itself into an organization that countries like Britain would want to join, in order to strengthen the political case.
Such a Europe would differ from the cur-rent arrangements in two key respects. First, it would clearly distinguish between the EU and the eurozone. Second, it would recognize that the euro has many unsolved problems, which must not be allowed to destroy the European project.
The eurozone is governed by outdated treaties that assert that all EU member states are expected to adopt the euro if and when they qualify. This has created an absurd situation where countries like Sweden, Poland, and the Czech Republic, which have made it clear that they have no intention to join, are still described and treated as “pre-ins.”
The effect is not purely cosmetic. The existing framework has converted the EU into an organization in which the eurozone constitutes the inner core, with the other members relegated to an inferior position. There is a hidden assumption at work here, namely that, while various member states may be moving at different speeds, they are all heading to the same destination. This ignores the reality that a number of EU member countries have explicitly rejected the EU’s goal of “ever closer union.”
UNITED IN DIVERSITY
This goal should be abandoned. Instead of a multi-speed Europe, the goal should be a “multi-track Europe” that allows member states a wider variety of choices. This would have a far-reaching beneficial effect. Currently, attitudes toward cooperation are negative: Member states want to reassert their sovereignty rather than surrender more of it. But if cooperation produced positive results, sentiment might improve, and some objectives, like defense, that are currently best pursued by coalitions of the willing might attract universal participation.
Harsh reality may force member states to set aside their national interests in the interest of preserving the EU. That is what French President Emmanuel Macron urged in the speech he delivered in Aachen when he received the Charlemagne Prize, and his proposal was cautiously endorsed by German Chancellor Angela Merkel, who is painfully aware of the opposition she faces at home. If Macron and Merkel succeeded, despite all the obstacles, they would follow in the footsteps of Monnet and his small band of visionaries. But that narrow group needs to be replaced by a large upsurge of bottom-up, pro-European initiatives. I and my network of Open Society Foundations will do every-thing we can to help those initiatives.
Fortunately, Macron, at least, is well aware of the need to broaden popular support for and participation in European reform, as his proposal for “Citizens’ Consultations” makes clear. The Trento Festival of Economics, a large gathering organized by civil-society groups at a time when Italy did not have a government, met from May 31 to June 3. Its success sets a good example for similar civil-society initiatives to emulate in the future.