How Nationalism

European Union

Undermines

the

Analysis

The loss of economic prosperity has hurt European integration

efforts. Member states will now push to devolve power from the
European Union to the national level.
Nationalist and anti-establishment parties in member states will
undermine fundamental EU policy.
EU institutions will be able to manage this trend in the short term,
but the economy will force Brussels to reshape the European
Union.
Over time, nationalism will trump European integration and
governments will repatriate power for the first time in EU history,
leading to the collapse of the union.

On May 29, 2005, French voters rejected a proposed European

Constitution in a nationwide referendum. A week later, the Dutch
followed suit. This clear rejection of greater European integration was
an iconic moment in the history of the European Union. Although it
came in the form of a nation-state constitution, the European
Constitution would primarily have collated all previous EU treaties into
a single document. This symbolic act, plus the granting of more
legislative powers to Brussels, would have been a major step toward a
unified Europe formulated in the wake of World War II.
A decade since the Dutch and French referendums, the European
project is in its deepest crisis. The economic turmoil that began in 2009
and produced the eurozone crisis has awakened nationalist instincts
that undermine pan-Europeanism. These centrifugal forces have
always been present and, historically, led some members to opt out of
certain initiatives. The key difference in 2015, however, is that nations
will choose to backpedal on integration a first in EU history.

Integration and Sovereignty

The contest between nationalism and pan-Europeanism has been at the
core of the European Union since it was first formulated in Rome in
1957. The union is an attempt to create a transnational entity out of a
group of nation-states defined by different economies and political
traditions, divided by a history of conflict. To unify these states, the
European Union promised peace and economic prosperity. The
resulting organization was a hybrid between a unified pan-European
entity and a community of sovereign nation-states. In the ensuing
decades, these competing visions have continued to clash, with
nationalism succeeding several times in slowing the integration
process.
The first move to slow integration came only three years after the
foundational Treaty of Rome. In 1960, French President Charles de
Gaulle made a bid to amend the treaty to reduce the European
Commission's power and devolve authority back to national
parliaments. The bid failed because of resistance from other member
states, but it set a precedent for French resistance to transnationalism
when integration undermined France's imperatives. In both 1963 and
1967, the French president vetoed attempts to fold the United Kingdom
in the European Union out of fears that London, which France
considered to be under Washington's influence, would gain too much
power.
In 1965, de Gaulle opposed the European Commission's plan to accrue
more power and the European Parliament's plan to direct the funding
of the Common Agricultural Policy. France did not want to lose control
of this policy because French farmers were the primary beneficiaries.
De Gaulle's opposition sparked what came to be known as the "empty
chair crisis." Paris withdrew from the European Council and all its
committees, forcing the European Commission to abandon its bid
because a French exit would have meant the death of the European
project. European unification entered a long period of stagnation after
that, caused in part by the economic downturn and oil price crisis of the
1970s.

In the 1980s, the European Union emerged from this slump in

integration. An extremely efficient European Commission led by
French Europhile Jacques Delors oversaw this period from 1985 to
1994. The end of the decade brought German reunification and the fall
of communism, a sweeping historical change that the European Union
used to push for more integration. During this period, the EU president
also adopted measures such as the common euro currency in 1988
through the Single European Act and the 1992 Maastricht Treaty.
However, nationalism continued to hamper the European Union.
British Prime Minister Margaret Thatcher targeted what she deemed
Brussels' excessive powers. In 1980, she famously declared, "I want my
money back," during a dispute with Brussels to adjust the United
Kingdom's EU contributions. Though Thatcher left office in 1990,
London built on this legacy by opting out of several EU measures in the
early 1990s, including the Schengen area and the Economic and
Monetary Union. As a result, European integration progressed but for
the first time left some nations out.
The 2005 French and Dutch rejections of the European Constitution
brought this slow progress to a halt. The opposition stemmed primarily
from the symbolic nature of the document the public considered the
term "constitution" to indicate an attempt to centralize power into a
European state at the expense of national sovereignty. In 2007, most
member states adopted the Lisbon Treaty, which replicated the text of
the European Constitution line by line. In most member states,
including the Netherlands and France, parliaments and not popular
vote ratified the treaty. Many deemed the treaty a backdoor deal
between national and EU leaders, feeding public anti-EU sentiment.

The Current EU Crisis

Shortly after the adoption of the Lisbon Treaty, Europe entered an
economic crisis that completely derailed integration. With most EU
member states in recession and unemployment rising, national
governments became divided over economic policy. They have sorted
into two camps: those who see crisis as the best time for painful reforms

and those who think stimulus should precede reforms. The economic
downturn also revealed key problems caused by integration, most
notably that the Economic and Monetary Union had made it impossible
for member states to adjust their individual monetary policies.
The crisis opened opportunities for Euroskeptic parties and the local
politicians who supported them. In May 2014, these parties won
European elections in several member states, including France and the
United Kingdom. More important, these victories increased nationalist
rhetoric in domestic politics. But ultimately it is only member state
governments that can force Brussels to return sovereignty. The May 10
Tory victory in British elections yielded promises from David Cameron
for a referendum on EU membership and a renegotiation of the Lisbon
Treaty. Euroskeptic parties, such as UKIP, and members of Cameron's
own party that cleave to Thatcher's anti-EU legacy motivated such
promises.

The Upshot of the Nationalist Surge

Unlike previous drives for national sovereignty, the current wave will
actively bring power back to the states instead of simply exempting
them from further European integration. Opt-outs were previously the
norm. This time, the United Kingdom is directly challenging existing
policies and EU principles. Cameron's renegotiations would call for
permission to delay benefit payments to new migrants until four years
after they enter the United Kingdom, new single market rules and a
British exemption to the principle that members should strive toward
an ever-closer union. All would be a step back from unification.
The question now is how these policies would be implemented. If
negotiations between London and its European partners led to a new
European treaty, popular pressure throughout the European Union
would force governments to hold referendums. The European Union's
current unpopularity would likely cause some member states to reject
the new treaty. Moreover, Brussels is unlikely to accept a European
referendum on a treaty that would undermine any of its power or
achievements.

Thus, Brussels will not accept this possibility. Ensuing negotiations will
result in more British opt-outs. But even if British negotiations avoid a
near-term EU crisis and keep the United Kingdom in the organization,
they will set a precedent for other states to push for increased
sovereignty. The United Kingdom is not the only country where antiestablishment parties have emerged.
Meanwhile, EU member states will continue to struggle over the future
of specific policies and core values. The Schengen area the open
control of common borders in Europe is even under attack from
France, a founding member. The opposition to Schengen targets the key
EU principle of free movement of peoples. The principle of free trade
could also come under fire, since many member states criticize German
surplus as harmful to their national economies.
The anti-EU push will, however, provoke a reaction. Brussels, Berlin
and other pro-European governments will probably try to establish an
inner club of member states eager to promote integration. This division
could lead to two tracks for EU membership, with some full members
becoming entirely involved in the European Union while others become
associate members that benefit from the free trade zone but would not
have an influence on policymaking. The question of the French-German
alliance will be at the center of this reshaping. France could be tempted
to bring back the idea of a Mediterranean Union, leaving Germany in
an alliance with Northern Europe.
Regardless of its shape, any restructuring of the European Union would
require a new treaty. Current European economic optimism is only the
result of short-term patterns a cheap euro and low oil prices.
Structural reforms are needed to boost the economy in the long run, but
member states are unwilling to implement them because they are
unpopular with voters. Consequently, economic prosperity will remain
Europe's main challenge. The longer Brussels waits, the harder it will
be to convince some member states to engage in integration projects as
the prospect of prosperity fades. In the meantime, the temptation of
nationalism will influence member states to confront Brussels and
repatriate power to their capitals, ultimately meaning the death of the
European Union.

Analysis
Editor's Note: The following is an internal Stratfor document
produced to provide high-level guidance regarding May 31 Italian
elections. This document is not a forecast but rather a series of
guidelines for understanding and evaluating events, as well as
suggestions for areas of focus.
On May 31, Italy will conduct elections in seven of its 20 regions and
over a thousand municipalities. The vote will be a political test for Prime
Minister Matteo Renzi, whose ruling Democratic Party is the most
popular force in the country but is internally fractured. Elections will
also indicate the status of the opposition, which is also divided and
dealing with its own problems.

What to Monitor
The performance of the Democratic Party. The ruling party and
the local forces that support it are expected to win in at least four
regions: Tuscany, Marche, Umbria and Puglia. A surprise defeat for the
Democratic Party in any of these regions would weaken the prime
minister's position.
The situation in Campania. The vote in Campania, Italy's third
most populous region, will be important to watch because the
incumbent center-right politician Stefano Caldoro is in a tight
competition with the Democratic Party's Vincenzo De Luca. De Luca's
candidacy is controversial, because he has been convicted for abuse of
office and may be forced to resign if a judge rules he is ineligible to
retain his position under anti-corruption laws.
The contest in Liguria. In this northeastern region, dissident
members of the ruling Democratic Party are presenting their own
contender to compete against the party's official candidate. Should this
alternate candidate perform well, dissent within the party would
escalate. Additional tension within the Democratic Party could
undermine the prime minister's plans for constitutional reform.

Friction within the center-left camp could further benefit the centerright, because Liguria is one of the few regions where the candidate
representing former Prime Minister Silvio Berlusconi's Forza Italia
party has a chance of winning.
The
battle
for
leadership
of
the
Italian
right. The Euroskeptic and anti-immigrationNorthern League is
already expected to retain power in Veneto, so a win in this region would
not significantly change Italy's political landscape. However, the vote in
the rest of the country will be a test for the Northern League, which is
trying to build a broader power base. The election will also show
whether Berlusconi's Forza Italia is still relevant. If the Northern
League outperforms Forza Italia, it will consolidate the League's preeminent position in the right wing.
The health of the Five Star Movement. The protest movement led
by comedian Beppe Grillo has lost popularity since its strong
performance in the general elections of 2013. However, it remains
Italy's second largest party, attracting around 20 percent of the vote. A
strong performance by the Five Star Movement in the upcoming
regional and municipal elections would give new life to a somewhat
weakened party.
If the Democratic Party performs well May 31, the success will reinforce
Renzi's leadership and help him move forward with his reformist
agenda. However, if the center-right and party dissidents defeat the
Democratic Party candidates in Liguria and Campania, the losses will
lead to additional conflict within the government. The elections will also
test the health of the opposition, as the Northern League, the Five Star
Movement and Forza Italia are struggling to attract the protest and
conservative votes. So far, Renzi has benefitted from a weak and
fragmented opposition. A stronger-than-expected performance by any
of the opposition parties could mark a turning point in Italian politics.
Source: https://www.stratfor.com/analysis/analytic-guidance-whatwatch-italys-elections