2016, a critical year

When running for election as the President of the European Commission, Jean-Claude Juncker, with a strong awareness of the problems ahead, declared throughout the campaign that this was the “last chance” Commission. If this Commission fails, he said, it would spell the end of the European Union.

Since then, events have moved so fast and the political landscape has altered so drastically that the decisive moment has undoubtedly been brought forward. In fact, 2016 marks our entry into a very dangerous new landscape. But this also offers a major chance to resolve the interminable crisis engulfing Europe.

Planetary alignment

2016 will see the end of a favourable alignment of the planets, which might even start to turn against us. The fall in oil prices has brought recession to oil producing countries, first and foremost in Russia (a fall of 4% of GDP this year), while Venezuela is suffering from a general economic collapse… The era of dropping interest rates is drawing to a close: the US Federal Reserve has started bring rates back up, sending shockwaves to countries servicing their debts in dollars.

The euro has depreciated by 25%. But this has not led to the drop in employment rates that many had hoped for. Despite the ultra-lax policies of the European Central Bank (ECB), the European Union continues to report a huge lack of investment, with an average shortfall of forty billion euros each year since 2007. Above all, 2015 saw new political fractures appear in the Union. This threatens to upend the established order.

North-South divide

The classic North-South division, opposing Germany and its allies against the discontented South, is shattering. To Portugal, Ireland, Greece and Spain, we must now add Finland. Once heading up the list of Europe’s most arrogant countries, it has now been brought to its knees. The country is stuck in a major recession, with a right-wing coalition at the helm that totally failed to impose its adjustment policies by lowering salaries and cutting budgets. On the street, protesters have managed to block them. But this is only one piece of the new puzzle that is emerging. It is in fact the German dominated bloc, which previously called the shots in Europe, that is now busy disintegrating.

The East is in fact taking over. Led by an ultra nationalist extreme right, Hungarians and Poles have made clear their view of Europe, of its values and its rules, during the migrant crisis. These countries were until now united behind Wolfgang Schaüble’s “firm respect for the rules” in stamping down on the Greek rebellion. But their governments have given free rein to certain xenophobic impulses that the Union had once been able to keep under control (incidentally, it would be good if those pushing for the EU’s dissolution were to consider the outcome of a return to nation states in the context of the severe crisis that we have been facing.)

The secession of the East

The fractures become all too obvious if we also examine the pressure applied by the United Kingdom, and its threat to jump ship if its demands are not met, which is furthering divisions between Europe’s capitals.

Under the weight of the crisis, internal as well as global, under the weight of wars and the refugees they create, Europe is fracturing in ever smaller parts of new alliances. It is a terrifying, sinister alignment of the planets that has given hope to those seeking a return to nation states. Say it quietly, but this new order is establishing itself. If we do nothing, we will head towards the abyss.

A win-win resolution?

But if reason prevails, not all is lost. Since the crisis currently devastating the Union, inherited from the Maastricht and Lisbon treaties, is opening up a number of opportunities that, if exploited, can pave the way for an entirely different outcome. A win-win resolution.

Let’s remark, first off, that the full weight of the EU, imposed in the most brutal fashion, to bring Greece to submission had virtually no impact. It did not stop the formation of a new anti-austerity coalition in Portugal (a coalition which took as one of its first measures an increase of the minimum wage), nor the clobbering of Mariano Rajoy in Spain (a favourite of Angela Merkel) and Podemos’ impressive electoral performance that has led Spain into a new political era. In spite of the measures imposed on Greece, anti-austerity voices – at the very least in Portugal and Spain – are sending a clear message.

Anti-austerity

Now just look at how voices from two different political positions, voices that are entirely “authorised”, have said that the budgetary rules – and the austerity they imply – could and should be relaxed. The European Commission agreed to François Hollande’s unilateral declaration that “the pact on security takes priority over the pact on stability.” In the same vein, the CDP, Germany’s majority party, implied that an acceptable level of support for refugees requires a rethink and relaxation of budgetary rules. Of course, these are only declarations. But, coming from the Commission and the CDU, they are unprecedented.

Finally and most importantly, the time has long come to measure the ineptitude that has been ensnaring Europe. In 2015, the European Union reported a 3.2% trade surplus compared to GDP, 8.3% for Germany alone, or 2.3% more than the European rules allow. These rules are normally so important to Wolfgang Schaüble, but this time he seems unbothered. Instead of letting this surplus be invested in the international markets or vanish into various more or less reputable capital markets, would it not better for a European politics worthy of the name to direct this money towards internal investment?

Last Chance

Employment – notably for young people – deprived regions, ecological transition, to cite only a few issues, are suffering from a cruel lack of resources. Could the European Investment Bank (EIB) not roll up its sleeves to rethink and scale up a “Juncker plan” of investment to the size of these problems?

Isn’t it time that Junker himself remembers that he is running the last chance Commission? A win-win solution is not only desirable, it is possible. Room for manoeuvre exists, but time is pressing. In Europe, it is one minute to midnight!