Drivers of change

During 2016 the pressure for EU reforms has deepened, which has been clearly expressed by referendums in several European countries. But the big picture is unclear. There is widespread dissatisfaction with the Union while the majority of EU voters do not want to follow the UK into leaving the bloc.

The situation seems to be that the European Union still stands firm, but changes will come. Decentralization is a keyword. Equally as important is the content of the politics - whether it is produced by the EU or the Member States. The Scottish historian Niall Ferguson has some interesting reflections in an interview with Nikkei Asian Review .

The frame for the interview is what to expect from US foreign policy under a Trump administration, and Ferguson draws attention to the change drivers behind Brexit and Trumps victory.

The first question for Furguson is about the main driver behind the Trump phenomen. He answears that many people have jumped to the conclusion that populism is mainly about economics because populists focus on immigration, free trade and other similar issues.

But there is a very noneconomic cultural component to it. Part of what people are reacting against is not just globalization but multiculturalism and a whole range of other ideas.

The cultural aspects are more important. What makes Trump popular and what made Brexit happen is a cultural backlash which has to do with immigration, but not only with immigration. It actually has to do with a whole complex of liberal ideas that members of the elite really like, cosmopolitan ideas about cultural relativism, feminism, all kinds of different liberal ideas that are profoundly unappealing to middle America, middle England, to people who perhaps didn't go to elite institutions to study and therefore don't feel the same enthusiasm for these ideas.

After being invited to expand on multiculturalism he says

If one looks at polling data in the U.K and the U.S., it's very striking how populist voters, people who voted for Brexit or voted for Trump, expressed their dissatisfaction. It isn't just about employment. It isn't just about the economy generally. It's about the perception that, for example, policy has gone too far in giving advantages to minorities. It's about the sense of estrangement between middle America and the elite sissies on the coasts.

I cite often Charles Murray's book "Coming Apart." He argued there was a profound social polarization in America between elite, highly educated groups and a white working-class that felt not just economically but culturally alienated from the Obama presidency. And I think those issues can't be simplified with terms like racism. The reason the slogan "Make America Great Again" resonated with so many people was that they felt America had, in some measure, changed to their disadvantage. The Trump victory represented a relatively spontaneous backlash against this politically correct culture. ........

In many ways, Brexit and Trump were, in fact, improvements on a status quo that was failing. Clearly, things have to change in Europe. The Monetary Union has been a failure. One can't simply carry on pretending that it works, because the result is a permanent economic slump in southern Europe. The migration policy has been a disaster. They can't simply have open borders around the Mediterranean. So those things need to be changed. And I think Brexit may have sent the first of a series of signals to Europe's leaders to change their ways.

In history, nothing lasts forever. And the ideas and institutions of the Cold War have had a remarkably long life, considering that the Cold War ended 25 years ago. We probably need some new ideas at this point. So I think populism is, for all its kind of crudity and vulgarity, it's a healthy challenge to a status quo that was failing.

Will the EU be able to identify and manage the change drivers Ferguson describes, or is the Brussels-culture unable to perceive and take account of strong signals from alienated voters ? 

Consequences of the Netherlands-EU deal on Ukraine

On 6 April 2016 Dutch citizens for the first time tested their new "direct democracy" tool - a referendum possibility on legislative decisions if more than 300 000 signatures of supporters are gained.

The background for the referendum on 6 April was partly the general dissatisfaction with the EU and more specifically the ratification of the EU-Ukraine agreement. Voters should answer the question: "Do you support or oppose the EU-Ukraine Association Agreement?"

Before the referendum the Dutch government argued strongly for a "yes", but the result was that 61% of the voters said "no" to the ratification. Even if the referendum is "advisory" and not legally binding, the result represented a problem for the Dutch government. And for the EU. If the Netherlands said "no" to ratification, it would stop a process which the 27 other member states (and the Dutch government, the Ukraine and the US) wanted to continue. And if the Netherlands said "yes", it would be another example of how the EU circumvents and neglects undesired referendum results.

8 months after the referendum the Dutch government and the EU have now agreed how this can be handled. The solution is a deal - adopted by the European Council 15 December 2016 - which supplies the EU-Ukraine Agreement with a supplementary addressing "..the concerns expressed prior to the referendum ..".  Dutch PM Rutte has said he is uncertain if the deal will secure a ratification from the Dutch parliament. 

It is difficult to predict how the Dutch referendum and the Netherlands-EU deal will affect European politics. May be the deal will be accepted by the Dutch parliament as a reasonable compromise. But there is absolutely a possibility that Geert Wilders and eurosceptics can capitalize on it in the forthcoming general elections in the Netherlands. And also in other countries the handling of the Dutch referendum will be followed with great interest.
 

Brexit can help EU survive

Next year the EU will celebrate it´s 60th anniversary. But the jubilee is not in a good shape. Some - like Mr Nigel Farage - believe it is terminally ill. Others say that a collaps is possible.

Last week Nobel economic prize winner Oliver Hart told spanish news agency EFE that he believes the keyword in EU politics is now “decentralisation” and that Brussels has “gone too far in centralising power”. The British-born economist said that “if it abandons this trend, the EU could survive and flourish, otherwise, it could fail”.

The Harvard University professor insisted that the EU member states are not “sufficiently homogeneous” to be considered one single entity, adding that trying to make the EU-28 into one was an “error”.

Hart said that the concerns felt by the member states about decision making and centralisation of power in Brussels should be addressed by returning competences to the EU capitals. The Nobel winner conceded that the EU should retain control of “some important areas”, like free trade and free movement of workers, the latter of which he admitted is “ultimately, an idea that I personally like, although I understand that there are political worries”.

Hart´s Nobel economic prize-winning colleague, Bengt Holmström, also told EFE that the EU needs to “redefine its priorities, limiting its activities and its regulatory arm, in order to focus on what can be done on the essential things”.

While Hart´s and Holmstrøm´s critisism seems to hitting the target - and the EU admits that it is necessary to be clear about what the Union can do and what is for the Member States to do, the EU is still dominated by a strong tendency to always call for more Europe. It seems like it is impossible for the EU to follow the principle of subsidiarity. Brexit forces, however, the EU to think differently. 

A Member State leaving the union is a completely new situation for the EU. Article 50 was never intended to be used. Now, both the UK and EU must prepare their divorce thoroughly. Both parties will benefit from finding mutually satisfactory solutions. Depending on what kind of future relationship UK and EU will negotiate, the agreement might serve as a model also for other Member States which to day are not comfortable within the Union. If the UK (and the EU) should choose to go for an EEA like solution, transitional or permanent, such an arrangement might later represent an option for e.g. Greece, with their economic Euro burdens. 

The European melting pot

The European 2016 drama continues. A few days ago Mr Hollande - suffering from historically low popularity ratings - announced that he will not run for re-election as French precident in 2017, and yesterday PM Renzi said also he was heading for the exit after suffering a major blow in the Italian constitutional referendum.

While there are additional explanations and differences between France and Italy, it is tempting to see the fate of Hollande and Renzi as an expression of people's dissatisfaction with their handling of Europe's economic, migration and security crises.

Earlier in 2016 also people in other countries have objected strongly to European politics - as the Dutch Ukrain-European Union Association Agreement referendum, which the government lost, and of course the Brexit referendum in the UK.

There is of course an interaction between the political develpment in the EU member countries and what happens at the European level. The Delors era with a strong supranational Commission seems far away. To day the European Council - the member states institutional channel - occupy the drivers seat. 

And on a global level Mr Trump´s election victory represents a change in the context of European politics. 

In total the European melting pot has many ingredients and it is difficult to predict results of the mix. Some think the EU itself will collapse. But the Union is a strong construction, and a more likely development is policychanges and institutional reforms - hopefully with more democracy and better distribution of responsibilities between national and supranational level.