It is now eight years since the financial crisis that started in the US and then subsequently spread to Europe. Its impact was particularly felt on Portugal, Ireland, Italy, Greece and Spain, with the first initials of these countries being popularised through the use of the derogatory acronym PIIGS. These five Eurozone members suffered from a debt crisis that had arisen because their membership of the Eurozone had enabled governments and banks to borrow vast sums of money at lower rates of interest than they would have otherwise been able to do if they had retained their national currencies. This was because the Eurozone was in effect a de-facto zone of the German economy and as such other members benefited from its economic strength. The crisis also highlighted the fragility of the governance structures of the Eurozone which had largely been focused on the political imperatives that were set down in the Maastricht Treaty, with insufficient attention being given to the necessity of having a fiscal compact between countries which shared the same currency and yet retained distinct national financial policies. In an attempt to deal with the crisis, a combination of EU member state governments, EU institutions such as the European Central Bank (ECB) and global financial institutions like the International Monetary Fund (IMF) got involved. This included the purchase of bad debt and the issuing of bonds. Yet the effect of these strategies was to place the affected countries in a financial straitjacket, of which Greece and Spain were particularly badly affected. This in turn had an adverse impact on significant numbers of their citizens who either had their wages cut, lost jobs or were not been able to obtain employment. An upshot of this was that the likes of Greece and Spain experienced youth unemployment rates that approached 50 per cent. More significantly, nearly a decade on from its onset, the crisis was far from resolved.
Such issues bring to the fore the complexity of European integration where on the one hand national governments have sought stability and economic growth opportunities from being part of this European marketplace and at the same time have found themselves to be bound by decisions that are imposed by others. Eurosceptics view this as an unacceptable state of affairs and the reality of such adverse economic conditions has provided a breeding ground for political parties that are critical of mainstream politics and the EU. Moreover, the growing support for these parties has also proved a challenge for traditional political parties who have often moved their policy positions to appeal to such individuals. Many EU member states have therefore witnessed growing levels of support for nationalist political parties, while the general tone of the political debate has shifted towards emphasizing national rather than European issues. In the UK, these issues came to a head in the referendum on EU membership which took place on 23 June 2016 and which produced a vote in favour of leaving the EU (51.89% to 48.11%).
Notwithstanding the closeness of the result, the UK electorate’s decision to leave is the most significant challenge that the EU has faced in its history. No other member state has taken such a decision before and the implications of the UK’s departure have raised questions about the future direction of European integration. This includes whether there will be a further concentration of integration that involves those countries that are part of the Eurozone, with a combination of non-Eurozone members and the likes of the UK that are outside of the EU being part of the single market. It might also be the case that the whole European integration project is re-evaluated and that the EU is remodeled as a slimed down version which focuses much more on the challenges that Europe faces in terms of the diversity of its member states. In reflecting on these points, it is important to remember that the origins of the EU can be traced to a desire to ensure that future conflict would not take place and were let by major statesmen of the time. The EU’s success in providing stability in Europe is largely overlooked because its citizens take it for granted even though its borders are surrounded by considerable instability, whether that be the threats posed by Russia to the East or the fractured states of Libya and Syria to the South. The EU’s response to these crises has not been its finest hour and a yawning gap exists that needs to be filled by major European statesmen and women to fill the leadership void that the EU has largely suffered from in the twenty-first century. The challenges that the EU faces are both numerous and complex. But they fundamentally cannot be solved on an individual nation state basis. This is because the world is a far more complex place than it was when the EU was established after the Second World War. To this end, even despite the threat posed by the UK’s departure, the reality is that more than ever there is a need for a strong and united Europe, whether that be in dealing with the environmental challenges of global warming or responding to the humanitarian crises that surround its southern shores.
Alasdair Blair (email@example.com)
Jean Monnet Chair and Professor of International Relations
Department of Politics and Public Policy
De Montfort University