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Press Meeting Press Event 23. January 2017 With Trump, despite Brexit: How to rescue the EU

Europe has frequently been in crisis since its integration process began 66 years ago. At such times, there has often been a lack of imagination about what the next step might be. There were also periods when things ground to a halt. But there has never been a truly existential crisis like the one we are experiencing today.

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23. Jan
Press Meeting Press Event 23. January 2017

With Trump, despite Brexit: How to rescue the EU

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German Economic Institute (IW) German Economic Institute (IW)

Europe has frequently been in crisis since its integration process began 66 years ago. At such times, there has often been a lack of imagination about what the next step might be. There were also periods when things ground to a halt. But there has never been a truly existential crisis like the one we are experiencing today.

A reversal of European unification, which has appeared unimaginable over the course of the past 66 years, threatens to become reality in 2017 – at least, the probability has never been so high. Now we must contend with what once appeared unthinkable.
Looking back at 2016, we can see that the foundation of common understanding in Europe has weakened:

  • The Brexit referendum presented facts in an entirely new dimension. Those who felt that they had lost out from globalisation directed their rage and their seeming powerlessness against Londoners and therefore, indirectly, against the Brussels elites. The planned exit of the United Kingdom will not only stop integration in the EU moving forward, but will actually reverse it.
  • Once the disquiet surrounding Brexit plans had subsided somewhat, and the greatest worries about an economic rupture had faded away, Donald Trump was elected US President. Much like the Brexiteers, Trump relied on a post-factual populism strategy which fed on popular dissatisfaction with globalisation and the elites. His election added fuel to the fire in Europe.
  • Finally, the failed Italian referendum about the (sensible) restructuring of its political system additionally weakened an already vulnerable Europe. Since Italy was a founding member of the EU and, as a major country, has the capacity to destabilise the European Monetary Union, it is a worrying setback to Europe when it falters.

From our perspective at the beginning of 2017, it is clear that Europe faces a high risk of being torn apart. This year’s European election calendar could seal its fate. The 17 million citizens of the Netherlands will vote in elections on 15 March, with the anti-Europeans of the Freedom Party currently ahead in the polls. In France, the first round of the elections on 23 April and the run-off on 7 May will elect a new President. There too, anti-Europeans in the form of the Front National wield a strong influence. New elections are also expected in Italy, where the Five Star Movement remains strong despite the latest turbulences and the disappointment with the M5S’ mayor in Rome.

The nihilism expressed by those who reject Europe offers no solutions, but appears at the same time to be attractive to many voters. Frustrations about national problems are often directed against Europe. One such right-wing election result in one of these core European countries will be enough to herald the end of European integration.

Brexit and Trump are putting pressure on the European Union, which has already been placed under considerable strain by Putin and the refugee crisis. Right-wing populists are challenging the EU from within, because they believe this approach will bear fruit. The EU is therefore faced with the great challenge of preventing further disintegration and establishing new legitimacy.

  • On the one hand, there are three concrete areas of action that must be implemented: setting Brexit on the right track, avoiding a renewed escalation of the Euro debt crisis as a result of turbulences in Greece or Italy, and correcting the ultra-expansionary course in monetary policy.
  • On the other hand, and very fundamentally, the European Union must find a new perspective on integration – one which leads the way out of the alleged conflict between Member States and the EU. Integrated Europe must not only demonstrate its ability to act with openness and strength on the continent, but also defend the principle of open markets in the world in the face of advancing protectionism.

In addition, peace in the European Union is at stake. The populists are not giving any indication of what order they want. At any rate, a return to nation states which are not bound to each other will lead us straight back to the potential for conflict that has been all too familiar in the past.

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Michael Hüther: With Trump, despite Brexit: How to rescue the EU

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