The fate of the EU Wilson Center

Halting the Over liberalized EU

The European Union has undoubtedly been the most fascinating experiment in the history of political discourse, but the reason its accomplishments seemed so artificial is the bloc's whole controversy. "The final goal," Helmut Schlesinger, the head of the German Bundesbank, explained in 1994, "is a political one, to reach any type of political unification in Europe, a federation of states, an association of states or even a stronger form of union." In this agenda, "the economic union is merely an important vehicle to reach this target."

In fact, on an economic scale, the miracle of the European Union keeps surprising. Despite the problematic economies of the Southern states till today enjoys a plethora of economic benefits. For one, the Union has seen over 6 billion in profits in the last quarter of 2015 without having a single fiscal union, while requesting from member states such as Belgium to increase tax transparency.

At the same time, however, the increasing profit may find itself in a rapid decrease. Most companies establish themselves in member states with low taxation while enjoying the privileges of the free movement, and continuous expansion of the Union. The theoretical problem here, being threefold:

1) With the growing taxation restriction and the opposition from the private sector, the friction of between statist policies and the demand of the market will deteriorate growth.

2) Deteriorated growth in the private sector according to tradition Keynesian economics will decrease the expansion of knowhow and fall victim to capitalist economic crisis’s as the market would not have achieved a technological revolution to innovate growth.

3) Fiscal profit is due to two basic elements, non uniformity in fiscal policies, and continuous territorial expansion. By accepting new member states, Europe initiates areas where markets can expand into providing both for growth and short term economic prosperity. In the inevitable future, for the Union to keep growing it would have to plunge into unfamiliar waters creating a paradoxical cultural shift by accepting Northern African states, and/or Turkey, and/or Russia. All three of which are undoubtedly questionable members and voices for concerns between the member states.

Opposing member states:

The European Union’s slow motion finally seems to be coming to a halt. "Europe could lose its historical footing and the project could die quickly," French Prime Minister Manuel Valls warned in a speech at the World Economic Forum in Davos, Switzerland. "Things could fall apart within months," which, in the words of the German Finance Minister Wolfgang Schaeuble, "would be a tragedy."

Tragedies appear to be ongoing in the Union, the Grexit, and now Brexit have been strong pressure points of the overarching intertwined relations between the member states and it’s preservation. Prime Minister David Cameron leaded the “remain” camp, and he was ethically forced to resign as the Prime Minister of the UK after his efforts have failed, despite being backed by most of the Conservative government he leads, the Labour Party, the Liberal Democrats and the Scottish National Party, which is strongly pro-EU.

Most independent economists and large businesses favoured the remain campaign, alongside with the most recent heads of Britain’s security services. President Obama, Chancellor Angela Merkel of Germany and President Xi Jinping of China also wanted Britain to stay in. Maybe their voices have not been enough.

However the economic aftermath of the Brexit will depend on what deal will be negotiated, especially on whether Britain would retain access to the single market for duty-free trade and financial services, and essentially, if it would move back to its original raison d’être for being part of the European Union, while simultaneously having a larger say in migration issues, and development policies.

Inevitable doom or potential growth?

Quintessentially, bringing forth one singular argument, how possible is the aforementioned unification. The rise of far right groups and the rejection of centre left principles of obsolete tolerance, border openness, and both the difference of the purchasing parity of the citizenry and the different production levels between the Northern states and the Southern states ultimately challenge what is to be expected. Federalisation of states appears to be a long way from Schlesinger’s dream. The role of Turkish strong-arming the EU also challenges the stability of the union’s whole, but essentially, a clash of hegemonic polar opposites finds itself at the heart of European discourse between the traditional mercantilist zero-sum game, and the liberal win-win game.