EU states face confusion amid clashing views, economic woes

Warwick Powell

Tied into a war in Ukraine, confused about its identity and autonomy, the European political establishment has consigned EU member states to a period of considerable perturbation. The eurozone economies are being buffeted by major headwinds. Hampered by high energy costs, eurozone economies are witnessing industrial hollowing out as energy-intensive industries shutter.

How EU member states, individually and collectively, deal with the present impasse will determine the medium-term prosperity and security of the zone’s citizens. In the face of its myriad challenges, the EU is showing signs of fragmentation. There are doubts about the European Commission’s capacity to build a genuine and robust sense of common purpose. This is apparent across all key policy vectors: the Ukraine war, migration and industrial development.

The unquestioned commitment to the war in Ukraine is now being questioned. The loss of low-cost Russian gas and oil is like Voldemort, the villain in Harry Potter. Mario Draghi’s recent report to the European Commission on European competitiveness acknowledges the centrality of energy costs, but did not dare name the role played by EU and American sanctions against Russian energy.

Voters are angry at the costs of the war, in terms of local industries, jobs and the adverse impact on the cost of living. Many increasingly want peace through negotiations. Hungarian and Slovakian leaders have spoken out against the continuation of the war, despite coming under intense pressure from the political mainstream. The dominant establishment view, from Brussels, is to continue arming the Ukrainians.

A schism is apparent. Not just among political leaders. Since the Russian special military operation of February 2022, an estimated 6 million or more Ukrainians have fled into Europe. While welcome at first, there are increasingly more signs that the refugees are beginning to overstay their welcome.

The Ukraine conflict and Europe’s economic problems are interrelated, resulting in increasingly high energy costs. The German economy has been in protracted stagnation. As the beating heart of European industry, the rest of the eurozone isn’t doing much better. The eurozone as a whole is expected to achieve GDP growth of around one percent this year. With economic woes and concerns about migration, voters turn toward anti-immigration and anti-war candidates.

European nations’ responses to proposed tariffs on Chinese-made electric vehicles (EVs) is further evidence of growing schisms across the region. The European Commission initiated a closed-door inquiry into alleged subsidies for Chinese manufacturers, resulting in proposals to impose a range of tariffs. At a vote of the 27 member states, the proposal for tariffs was supported by 10 nations; five opposed the tariffs and 12 abstained. The Commission proceeded to impose the tariffs anyway, despite the overwhelming majority of member states not supporting them.

The UK, while no longer a member of the EU, is also on the cusp of economic challenges. The new Labour Government’s austerity measures are more likely to exacerbate the economic woes than to alleviate them, while already leading to a collapse in the administration’s public standing.

Divided on critical issues, European nations and the EU generally face an uncertain future. The economic conditions are dire for many. The social embodiment of these problems, particularly in terms of growing hostility toward migration, feeds a feverish political environment that destabilizes institutions and elites. Without addressing the elephant in the room – namely, resolving the energy uncompetitiveness problem – European economic policy is likely to be piecemeal. Without a coherent long-term vision, the tensions between protectionists and others are likely to continue for the foreseeable future.

French President Emmanuel Macron once said that Europe will not be a geopolitical priority for the US. Like before, Macron laments the loss of European autonomy; and like before, there seems to be little clarity about the root causes of Europe’s confusion and discomfort. Meanwhile, and as a consequence, the social-political situation across Western Europe is likely to become more volatile.

The author is adjunct professor at Queensland University of Technology, senior fellow at Taihe Institute and a former advisor to Kevin Rudd, former Australian prime minister.