By Andrew Hammond
December is traditionally a quiet month in international diplomacy, yet a lot is changing in Europe at the moment, politically and economically, as will be showcased at the EU summit of 27 presidents and prime ministers on Thursday and Friday.
Much is on the agenda from tackling the pandemic and a surge in the number infections from the Omicron variant; the significant rise in energy prices; and the Russian military build-up along the border with Ukraine.
The combined impact of these and other developments threatens to bring a new downturn across the continent with Germany, for instance, teetering on the brink of recession as supply bottlenecks and coronavirus cases are hobbling the economy with the strong recovery initially anticipated in 2022 now a mirage, according to projections published Tuesday by the Ifo Institute for Economic Research.
Economics aside, the underlying macro dynamic at the summit is a potentially historic power shift underway in the club of continental leaders that could bring about significant change in the months to come.
Exhibit one is the new pro-EU integration German government that took office last week and is already seeking to make the political weather in the continent. This new beginning follows the voting in last week of left-of-center Social Democrat leader Olaf Scholz as Angela Merkel's successor as chancellor, in a coalition that could now bring much change, not just to Germany but also to Europe and the wider world.
Exhibit two is the new Quirinale Treaty signed last month by Italian Prime Minister Mario Draghi and French President Emmanuel Macron to bolster bilateral cooperation in Europe.
The agreement has drawn comparison with the Elysee Treaty between France and Germany, created to rebuild their relationship after World War II, and could see significantly stronger international cooperation between Paris and Rome in coming years.
While these twin changes are perceived broadly positively in Brussels, there are however countervailing forces, mainly in Eastern Europe, that complicate the picture.
Exhibit three is the Hungarian government, the only EU administration not to be invited to President Joe Biden's summit of democracies last week, with Budapest blocking Brussels from taking a common position toward the big conference.
Moreover, only a few weeks ago, Poland's Constitutional Tribunal ruled that key articles of one of the EU's primary treaties were incompatible with Polish law, in effect rejecting the principle that EU law has primacy over national legislation in certain judicial areas, fueling concerns that Warsaw is heading towards the door, or "Polexit."
In this swirl of political tumult, the future of the EU is difficult to decipher given the multitude of views across the continent. This debate could remain blurry for some months to come, potentially at least until May's French election, which could either offer continuity in the form of a Macron second term, or potentially significant change, possibly even a new far-right leader, such as Marine Le Pen, who was the runner-up last time around.
At least until this political mist clears in France, Scholz, Draghi, Polish Prime Minister Mateusz Morawiecki and Hungarian Prime Minister Victor Orban will be key players seeking to shape the debate about the continent's future. And this week's summit offers a key opportunity to further their ambitions, which comes at a key moment.
The future ― by and large ― that Macron, Scholz, Draghi plus some others, including Spanish Prime Minister Pedro Sanchez, broadly favor is the 27 member states deciding to do more together, reigniting European integration and growth by deepening cooperation, with decisions agreed upon faster and enforced more quickly.
Building from the decision last year to give the bloc, for the first time in its history, debt-raising powers to finance a 750-billion-Euro post-coronavirus recovery plan, announcements to watch for in 2022 might include a push for the creation of a deeper European Defense Union, which has assumed new importance for some in Europe, since the announcement of the U.S.-U.K.-Australia security deal.
Should, however, there be persistent blockers of these agendas, it is plausible that France, Italy, Germany, plus others such as Spain, may move toward more coalitions of the willing in select policy areas to take forward the integration agenda on a flexible basis. A model here is the Eurozone, where some 19 of the current 27 EU members have entered into a monetary union with the euro as the single currency.
Yet, even this kind of partial, forward movement for the integrationists is far from certain, and the full spectrum of scenarios in the period to come also includes the possibility of the EU retreating backwards, post-Brexit. This scenario might even see for instance a retreat to little more than the current economic Single Market, which seeks to guarantee freedom of movement of goods, capital, services and people.
While the direction of the EU is therefore very uncertain, what is clear is that the recent changes across the continent have left the kaleidoscope in flux. Next year could therefore have an outsized impact in defining the economic and political character of the bloc not just in the 2020s, but potentially well beyond.
Andrew Hammond (andrewkorea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.
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Much is on the agenda from tackling the pandemic and a surge in the number infections from the Omicron variant; the significant rise in energy prices; and the Russian military build-up along the border with Ukraine.
The combined impact of these and other developments threatens to bring a new downturn across the continent with Germany, for instance, teetering on the brink of recession as supply bottlenecks and coronavirus cases are hobbling the economy with the strong recovery initially anticipated in 2022 now a mirage, according to projections published Tuesday by the Ifo Institute for Economic Research.
Economics aside, the underlying macro dynamic at the summit is a potentially historic power shift underway in the club of continental leaders that could bring about significant change in the months to come.
Exhibit one is the new pro-EU integration German government that took office last week and is already seeking to make the political weather in the continent. This new beginning follows the voting in last week of left-of-center Social Democrat leader Olaf Scholz as Angela Merkel's successor as chancellor, in a coalition that could now bring much change, not just to Germany but also to Europe and the wider world.
Exhibit two is the new Quirinale Treaty signed last month by Italian Prime Minister Mario Draghi and French President Emmanuel Macron to bolster bilateral cooperation in Europe.
The agreement has drawn comparison with the Elysee Treaty between France and Germany, created to rebuild their relationship after World War II, and could see significantly stronger international cooperation between Paris and Rome in coming years.
While these twin changes are perceived broadly positively in Brussels, there are however countervailing forces, mainly in Eastern Europe, that complicate the picture.
Exhibit three is the Hungarian government, the only EU administration not to be invited to President Joe Biden's summit of democracies last week, with Budapest blocking Brussels from taking a common position toward the big conference.
Moreover, only a few weeks ago, Poland's Constitutional Tribunal ruled that key articles of one of the EU's primary treaties were incompatible with Polish law, in effect rejecting the principle that EU law has primacy over national legislation in certain judicial areas, fueling concerns that Warsaw is heading towards the door, or "Polexit."
In this swirl of political tumult, the future of the EU is difficult to decipher given the multitude of views across the continent. This debate could remain blurry for some months to come, potentially at least until May's French election, which could either offer continuity in the form of a Macron second term, or potentially significant change, possibly even a new far-right leader, such as Marine Le Pen, who was the runner-up last time around.
At least until this political mist clears in France, Scholz, Draghi, Polish Prime Minister Mateusz Morawiecki and Hungarian Prime Minister Victor Orban will be key players seeking to shape the debate about the continent's future. And this week's summit offers a key opportunity to further their ambitions, which comes at a key moment.
The future ― by and large ― that Macron, Scholz, Draghi plus some others, including Spanish Prime Minister Pedro Sanchez, broadly favor is the 27 member states deciding to do more together, reigniting European integration and growth by deepening cooperation, with decisions agreed upon faster and enforced more quickly.
Building from the decision last year to give the bloc, for the first time in its history, debt-raising powers to finance a 750-billion-Euro post-coronavirus recovery plan, announcements to watch for in 2022 might include a push for the creation of a deeper European Defense Union, which has assumed new importance for some in Europe, since the announcement of the U.S.-U.K.-Australia security deal.
Should, however, there be persistent blockers of these agendas, it is plausible that France, Italy, Germany, plus others such as Spain, may move toward more coalitions of the willing in select policy areas to take forward the integration agenda on a flexible basis. A model here is the Eurozone, where some 19 of the current 27 EU members have entered into a monetary union with the euro as the single currency.
Yet, even this kind of partial, forward movement for the integrationists is far from certain, and the full spectrum of scenarios in the period to come also includes the possibility of the EU retreating backwards, post-Brexit. This scenario might even see for instance a retreat to little more than the current economic Single Market, which seeks to guarantee freedom of movement of goods, capital, services and people.
While the direction of the EU is therefore very uncertain, what is clear is that the recent changes across the continent have left the kaleidoscope in flux. Next year could therefore have an outsized impact in defining the economic and political character of the bloc not just in the 2020s, but potentially well beyond.
Andrew Hammond (andrewkorea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.
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