Time for a Rethink

By Kerry Brown

The World Cup in Russia has been a reminder of the things that Europe does best. Even though teams like Portugal， Germany and Spain were knocked out before the quarter-fi nals， the overall level of football has been excellent. The World Cup has brought the best out of teams， with a lot of the best from Europe.

The state of the EU

Politically though， the European Union （EU） seems to be in perpetual crisis. This predates the current watershed， when the UK decided after a referendum in June 2016 to exit the union. There was the fi nancial crisis and its almost catastrophic impact in 2008， followed by fears over the euro and the immense battle to keep the Greek economy from imploding and doing a sustainable debt deal which overshadowed 2009 into 2011. From 2014， however， the main issue has been the management of immigration， with large numbers of refugees arriving by sea and land， mostly as a result of the devastating civil war in Syria.

That war has now seemingly stabilized， but the hundreds of thousands that fled the confl ict and made their way to Europe have left an indelible mark on the political landscape， and one that will take decades to work out. Germany accepted almost a million over 2015—an act of magnanimity on the part of Chancellor Angela Merkel， but one that has sapped her strength and left her increasingly vulnerable to attacks from populist parties. For them， the social and economic consequences of taking so many people over such a brief period of time from such different cultures were unacceptable. They have managed to reap the rewards at the ballot box， with antiimmigration， largely right-wing parties in Germany， Italy and much of Eastern Europe gaining parliamentary seats， and in the case of Italy， power.

Few issues are more sensitive than immigration. Supporters of the free movement of people point to the demographics of a Europe where populations are ageing and birth rates dwindling. Skills， talent and population growth need to come from elsewhere. Opponents look at social tension and blame migrants for everything from pressure on public services to terrorist acts. The most an objective observer can say is that at the moment there is no sustainable consensus on the issue in any EU country. Its ability to anger and inflame tempers， however， transcends national boundaries. The EU summit on the matter in June was therefore positive and necessary， but was never likely to produce a resolution that would stay in place for good. Migration centers will be set up and the rules on how to process the case of migrants and settle people more equitably will be more rigorously observed across EU member states. That， at the moment， is the only practical outcome.

However， the controversy surrounding this issue and the passion it ignites will not be so easily appeased. Part of the reason British voters chose to leave the EU in June 2016 was due to fears about unmanaged immigration， and the lack of any clear mechanism within the EU to deal with this. The British have always been skeptics in this regard. They never joined the Schengen Area for borderless transit， yet they were required to observe the free movement of people among EU citizens and the consequent arrival from 2005 of as many as 3 million people from newly acceded states in Eastern Europe has been credited by some as the main reason why confi dence in the EU collapsed. Many communities in the UK， particularly in the north of the country， complained of job losses， competition， and pressure on public services caused by immigrants， many from within the EU. Non-EU migrants， ironically， were less of an issue， with the UK only accepting 20，000 refugees directly from Syria at the peak of the crisis in 2015.

When it comes to migration， facts are less important than public perception. Many British people who voted for Brexit did so out of the belief that the UK had lost control of its borders. Still， two years after the shock result of the referendum and with much of the fi nal details of Brexit undecided， it seems that a large part of the population still believe economic uncertainty and suffering is worth it as long as stronger immigration controls are in place， despite the fact that most credible studies show liberal migration policies usually benefi t economic growth.

A proactive stance

None of the EUs travails in this regard have been helped by the maverick leadership of Donald Trump in the U.S. The ferocity of his attacks on trade deals and economic relations with the EU has taken many by surprise. Old alliances that have been in place since World War II have been called into question， with Trump saving particular scorn for Merkel， and， despite initial attempts at cordiality， Frances Emmanuel Macron. The NATO summit in July is likely to be as bruising between Trump and his European counterparts as the G7 summit was in Canada in June. His mantra will remain the same—the U.S. pays too much for the security of others and there needs to be a new， more equitable deal. China is hearing much of the same language from Washington， which has aligned the EU and China as supporters of global free trade like never before against an increasingly antagonistic United States.

For all the complexity of the current situation， the bottom line is a fi nancial one. Trumps vulgarity and crudeness are distracting， but his politics are based on the underlying fact that U.S. debt is unsustain-able and that there needs to be an act of massive rebalancing. That at least is the conviction of his advisors and supporters. The EU also cannot afford the high costs of social welfare and healthcare forever. Germany has some of the most generous in the world. France has workers who are able to retire from public companies at the age of 52 （as is the case for high speed train drivers） and live on state pensions deep into their 80s and beyond. The UKs National Health Service treats 1 million people every 36 hours， and is claiming more and more from the public purse. Everyone knows these arrangements cannot last forever and need to change. But no one agrees how this is going to happen， who needs to make sacrifi ces and what the timescale and fi nal outcome might be.

For these reasons， the EU will hold its summit with China in July in a differ- ent frame of mind and with a different set of preoccupations than even a year ago. Trump has raised issues about the current global set of alliances， creating a more fragmented world in which fresh allegiances might be coming into view. The EU and China have been seeking a common framework and a common language for a number of years. That goal may arrive sooner than expected with both sides forced to act more quickly and effectively than ever before.

The EU is undergoing unprecedented changes. For the fi rst time， a member will be leaving， not joining. The implications of that will take some years to work out and it is unlikely whether the impact will be clear even a year or so after Brexit takes place. The EU is fundamentally built on four freedoms： the movement of goods， capital， services and labor. These were en- shrined from the moment the Maastricht Treaty created the EU from the European Economic Community in 1993. They are part of the identity of the whole union， but there are growing signs that commitment to these principles is being reconsidered. The EU is therefore in the midst of a deep transformation， in a world which is also transforming fast. The question remains as to who can be the most fl exible and adjust the quickest. So far the EU has shown it can deal with crises and their consequences. But now it needs to take on a more proactive and forward-looking stance. The relationship with China is a place where it can put that new attitude into practice.