November 2009

Europe: Mission Accomplished?

Jean Pisani-Ferry

Angela Merkel and her colleagues are about to claim ‘mission accomplished’. José Manuel Barroso has
been reappointed, the new treaty has been ratified, and the two new positions it has created are about
to be filled. There may still be hiccups: at the European Parliament over the choice of some
commissioners; with a Tory government in the UK; during the future negotiations on the EU budget; and
with the new competition commissioner. But all this amounts to little more than routine. In the years to
come, Europe is unlikely to be on the shortlist of strategic issues that durably capture the leaders’
attention.

The mission, however, was not only to appoint two generals and a lieutenant. Europe also needs a
defined purpose and, on this count, much remains open. The truth is that Europeans no longer know
what exactly they want to do together.

Gordon Brown was the first, back in 2005, to point out that the traditional project of building political
integration on the basis of economic integration was in trouble. On the one hand, he observed,
globalisation was making integration within European borders less relevant. On the other hand, he
claimed that economic integration had not created a European polity that could substitute, or even
complement, national polities. So the EU was becoming less relevant economically without having
become more relevant politically.

The intellectual challenge did not go unnoticed and, a few quarters later, on the occasion of the
anniversary of the Treaty of Rome, the European heads of state and government claimed that their new
goal was to make Europe able to shape globalisation in the interest of European citizens. This was a
recognition that the traditional internal agenda was no longer sufficient and that the European Union’s
new raison d’être was to help transform, or at least manage, the world. Climate change looked to be the
perfect test-case for this new ambition, and it was indeed recognised by the vast majority of European
citizens that, on a number of issues, only Europe was big enough to have sufficient weight faced with the
new global giants.

Nothing in the last four years has invalidated Gordon Brown’s view. On the contrary, the crisis has made
it blatantly obvious that, in spite of all the EU’s efforts and achievements, it is immersed in, and subject
to the gyrations of global finance and global trade. But instead of being vindicated by events, Europe’s
new emphasis on responding to the globalisation challenge suddenly looks much less secure. What
seemed an obvious stance – that only the EU could count confronted with China and the US – now looks
much less certain.

The reason is the rise of the G20. Instead of feeling, as was the case yesterday, that their time has passed
and that after the eventual demise of the Group of Seven they would necessarily be substituted by the
EU in international economic fora, the four European G7 members (Germany, France, Italy and the UK)
now feel bolstered: if Argentina belongs to the Group of Twenty, surely they have a legitimate and
indisputable right to participate in it too. They have furthermore been joined by Spain and the
Netherlands, which feel even more strongly about their enhanced international standing. Emerging
countries may resent Europe’s overrepresentation in the G20 and the US may look East and increasingly
speak of a G2 with China, nonetheless the major European countries have no intention of backing off.

Even more significantly, the G20 may de facto substitute the EU in some fields. On most aspects of
financial regulation, it is at G20 level that policy direction is determined, leaving to the EU a mere
implementation role. And on macroeconomic matters, what has been launched at the Pittsburgh summit
with the aim of reducing global imbalances and mapping out a path to sustainable growth is in several
respects more ambitious that what has been done at European level.

The EU is therefore in a state of strategic confusion. At the very time when its purpose is being redefined
and at the very moment that it should be preparing itself for a stronger role on the world stage, it is at
risk of being bypassed by its own main members.

Only the heads of state and government can end this confusion. They will not give way to the EU at the
G20 and actually they do not need to. What they must do is to state clearly in what fields they want the
EU to represent them and negotiate with partners on their behalf and, in those fields, agree to limit
themselves to the role of demanding principals who set the goals and monitor the results. Experience,
especially in international trade, shows this is a very workable model. But one, certainly, that requires
clarity and self-discipline.