Last week, Jean-Claude Juncker, president of the European Commission, delivered his annual ‘State of the European Union’ speech. Despite his attempts to stir up greater political enthusiasm across the union, it remains mostly an exercise that preoccupies the Brussels bubble – and few outside it. Nevertheless, the speech offers a useful glimpse into where the EU stands and where it is heading – and it is looking rather boldly beyond Brexit.

Primarily, the speech captured the European zeitgeist. At the beginning of the year, an electoral supercycle appeared to come at the worst possible moment: the UK’s vote to leave the EU and the election of Donald Trump in the US were read as ominous signs of an impending populist revolt. After the Euro area crisis, deepening security problems and a migration scare there were some grounds for concern.

Yet developments since then have led to a collective sigh of relief among EU supporters. The speech, coming just a few days after the 10th anniversary of the beginning of the 2007 global financial crisis, feels like closure for a period of constant challenges.

The new normal

Whereas the operational environment of the EU might have ‘normalised’, the ‘new’ normal is rather different from the old one. Gone are the days of permissive consensus when enlightened elites could tinker with European treaties far away from their citizens. Eurosceptics, seen as a curious oddity until recently, were in the ascendance. They are now often declared ‘defeated’, yet this is at best a Pyrrhic victory, with one of the largest member-states leaving the EU and many mainstream parties copy-pasting large parts of the populist playbook.

In Eastern Europe, there are also stark transformations, with slower-burning but potentially more profound challenges for the EU. Many would put the high point of European integration in the recent past; encompassing the apparently successful transformation and absorption of the post-Communist part of the continent into a ‘Europe, whole and free’. However, challenges to the rule of law in Poland and Hungary are forcing uncomfortable conversations, which have so far resulted in a game of institutional hot potato, with neither the European Commission nor member-states ready to engage with the challenge.

The UK leaving the EU has heralded a turning point for the union. Photo credit: Wikipedia Commons.

The language around the EU itself has also changed notably, shedding its previous optimistic, outward-looking orientation and instead accentuating protection. This hints at the changing role of the union from an enabler, looking to transform its neighbours and the world; to a region that is increasingly being transformed by forces – from globalisation and trade to conflicts and migration – beyond its borders. Whereas once it was believed that multilateral Europe was uniquely placed to succeed in the networked 21st century, today there is a malaise, mixed with nostalgia about a time when EU was the future.

Repairing the ship

As such, the speech was also a call for navigational adjustment. The time is ripe for addressing the flaws that have become evident over the last decade. In endless crisis summits, EU leaders sought to hold the ship together in stormy waters from the Euro area crisis to security to migration. Now it appears that finally it has reached a safe harbour for brief respite, according to Juncker. His words stress that the EU must seize the moment and make sure it is better equipped when it finds itself again on the open sea.

Whilst the political and economic winds might not be at the EU’s back, as Juncker claims, they are at least not blowing against it. Politically, a number of key figures are beginning to think about their long-term legacy – from Juncker himself, whose term ends in 2019, to Merkel, who is likely heading into her last administration after the German election this weekend. Others, such as French President Emmanuel Macron, are ambitious new faces who appear to carry the promise of addressing domestic checks on reform.

Economically, the EU can be described, without caveats, as being in ‘good shape’ for the first time since the global financial crisis. True, structural problems from institutional incompleteness (banking unions, lack of fiscal capacity) to concrete policy issues (levels of non-performing loans in Italy and exiting unconventional monetary policies) are not resolved – indeed they are barely covered – but there is some breathing space.

Angela Merkel smiles at EU summit
The reelection of Angela Merkel in Germany would afford welcome respite to the embattled Union. Photo credit: Wikipedia Commons.

Juncker’s proposals are rather wide-ranging, and without a doubt an impossible ask in the short term. Combining the key presidencies of the European Commission and the Council, as well as having a European finance minister as a vice-president of the Commission, are all non-starters with many member states. Asking them to give up nation-state vetoes in key areas such as tax, social and foreign policy in order to accelerate integration is also unlikely to go down well. Some of the narrower, shorter-term and more specific elements – think investment screening mechanism, European Labour Agency, trade talks with Australia and New Zealand – are all more plausible.

What can possibly go wrong?

Policies can still go terribly wrong. Juncker had a strong position against a multi-speed Europe, arguing for his ‘sixth scenario’ of a one-speed Europe based on unity in the Euro area and Schengen Zone. This was a welcome stance for many Eastern European countries, which see their path to both institutions blocked by political rather than economic or technical considerations.

Furthermore, despite somewhat awkward rhetoric, his position on equal food standards is also likely to resonate with Eastern Europeans who sometimes have the feeling of being treated as ‘second class’ citizens. Yet, the logic of a divided Europe can still reemerge, particularly if further integration takes place outside of existing treaty mechanisms. To this ‘known unknown’, one would be wise to add the ‘unknown unknowns’ of an unpredictable external environment.

Nevertheless, perhaps the biggest risk is complacency. When even the European Commission is not ready to defend the existing institutional setup, a change is needed. The worry is that, without a crisis, it is up to national leaders satisfied by the status quo to shake things up themselves. Juncker’s speech is in some ways self-serving, seeking to cement his legacy and the future of the Commission in the EU power system. However, he is also right – for things to remain as they are, things need to change.

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