2019 is a year of great importance for Europe. Britain will leave the EU in March; elections to the European Parliament will be held in May; and in October, new EU Commissioners and a new head of the ECB will take office. The budget for 2021–27 is being negotiated this year, and many important EU bodies and institutions will be reconstituted. In this way, the coming months will significantly impact the course charted by the European ship of state over the next decade.

Prof. Achim Wambach about the development of the EU
Prof. Achim Wambach, PhD, President of the ZEW – Leibniz Centre for European Economic Research in Mannheim about the importance of 2019 for Europe.

Current conditions are less than propitious, however. Brexit is a watershed moment in the history of the EU. The anti-EU sentiments that fuelled the Brexit referendum are by no means confined to the British Isles; Italy, Hungary and Poland are now ruled by Eurosceptic parties. Against this backdrop, it is of little solace that the number of people who identify themselves as “European” has increased since 2010, as a recent study co-authored by ZEW has found. Criticism of the EU has also been growing louder in Germany.

Yet a strong Europe is in all of our interests. China – which has increased its share of the world economy from less than 9 to over 18 per cent over the past 15 years – is just as eager to flex its economic muscle as the US. Indeed, while Trump’s “America First” policy would appear at first glance to be fundamentally different from “Made in China 2025” – which seeks to promote Chinese technological leadership – the underlying motivations are the same. Europe clearly benefits from a unified voice on economic issues and a strong currency. The single market is the largest common economic space in the world, and the EU should use this strength to its advantage when it comes to international trade, financial market regulation and environmental policy.   

"Europe should act in concert to address matters that are best dealt with collectively"

In recent years, the EU successfully signed free trade agreements with Canada and Japan; a free trade agreement is currently being negotiated with the US; and a direct agreement with China is now within the realm of possibility. While the US has been quick to use the hegemony of the US dollar as a foreign policy tool – for example, to implement sanctions against Iran – China has been working to establish the renminbi as a second reserve currency. These developments highlight the importance of a strong and stable euro – and, by extension, the need to complete the banking union. With a view to environmental policy, the Paris agreement must be seen as a mere milestone on a much longer journey. If the world’s three largest economic powers – the US, China, and the EU – were able to agree on a carbon price, then more than 50 per cent of the world economy and half of all CO2 emissions would be covered by a pricing system, thus furnishing a realistic blueprint for a worldwide agreement.  

Emphasizing Europe’s strengths does not necessarily mean advocating “more Europe”. In any event, the call for “more” or “less” Europe overlooks the core issue. Europe should act in concert to address matters that are best dealt with collectively. In this vein, EU budget commissioner Günther Oettinger is correct to insist that EU spending should create “added value”. In other words, the EU should only tackle issues when there is an added benefit of doing so at the supranational level. By this logic, the EU should increase spending on development aid, military cooperation, and joint border protection. Indeed, stronger cooperation in these areas would produce clear benefits for all. By the same token, the EU should reduce its agricultural spending, as the added value for Europe is less clear-cut. 

In 2020, the EU’s institutions will look quite different than they do today. If the upcoming elections, personnel choices and budget decisions help to underscore Europe’s strengths in a multipolar world, much stands to be gained. 

This article first appeared in the "Rheinische Post" on February 12, 2019.

Date

12.02.2019

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