08 February 2022

Carnegie Europe: Europe is Struggling, Thirty Years After the Maastricht Treaty

Three decades after Maastricht, the EU remains a work in progress. While the political constellation in 2022 seems favorable to reforms in several policy areas, the union could easily once again be thrown into crisis mode.

The Maastricht Treaty signed thirty years ago, on February 7, 1992, was the last big gamble of European integration. Then French president François Mitterrand had convinced Helmut Kohl, Germany’s chancellor at the time, to sacrifice the D-mark on the altar of European unity in order to make Germany’s reunification more palatable to its neighbors.

Contrary to the expectations of many experts, the euro became a success. But neither of the two leaders anticipated that the monetary union would increase rather than diminish Germany’s influence or that the project would require major repair work during the financial crisis some years later.

Three decades on, the era of radical innovation through treaty change is gone. In an enlarged and more heterogeneous EU, governments struggle to find common ground. Also, as populist parties now have significant support, substantial treaty change could trigger multiple referendums with unforeseeable results. Governments hate playing Russian roulette. However, the need to develop EU policies remains and so the focus has shifted to secondary legislation, soft law instruments, and financing tools.

Today, the EU reform agenda resembles a series of loosely connected building sites, including the monetary union, economic governance, climate, digital innovation, migration, and defense.

The Conference on the Future of Europe was meant to mark a return to a comprehensive approach to EU reforms in addition to being an experiment in deliberative democracy. The citizens’ panels brought forth numerous ideas, but many will not survive scrutiny by governments. The final report in May 2022 might give an impetus to reforms but will not change the dynamic described above. Progress is likely to remain compartmentalized and piecemeal.

The constellation of political forces appears more favorable to EU reforms in 2022 than in recent years. If Emmanuel Macron is reelected as president of France, the four biggest countries will all have strongly pro-European leaders. The group of so-called frugals (Austria, Denmark, the Netherlands, and Sweden), which previously fought for restrictive fiscal policies, might be less of a constraint, as the Netherlands and Austria have softened their stances. The time between the French parliamentary election in June 2022 and Italian general elections in 2023 could thus become a window of opportunity, in which a number of important dossiers can be moved forward.

The climate transition will remain at the top of the agenda. After setting ambitious targets and delivering a compelling political narrative in the form of the European Green Deal, the emphasis has now shifted to implementation. Key legislative files for delivering faster emission cuts are set to be negotiated throughout 2022. With the focus on implementation come far greater political challenges. The current gas price spike already shows the strong headwinds ahead, just as the urgency of progress increases steadily.

Economic governance will also receive a lot of attention, as the fiscal rules suspended during the COVID-19 crisis will come back into force after this year. Major changes in the parameters of the fiscal pact seem unlikely, but greater flexibility in their application could facilitate new investments in climate, digital, and resilience.

In reforming the Schengen system, EU member states will replace the European Commission in the driving seat and emphasize tougher controls over external borders. The demand by Southern European governments that the burden of hosting asylum seekers be shared remains the biggest hurdle in reforming the EU’s asylum system.

When it comes to security and defense, in March 2022 the EU will adopt the Strategic Compass, a tool designed to give impetus to the development of these policies. However, the EU is still far from being a credible geopolitical player. The Commission-led efforts to enhance resilience by reducing asymmetric dependencies, diversifying supply chains, and protecting the EU from external coercion assume even greater urgency in this context.

While the alignment of political forces appears more propitious than in recent years, it is impossible not to see the dark clouds looming over Europe.

After two years, the pandemic still dominates European politics, consuming much of the energy of political leaders and distracting from other priority concerns. There is hope that the virus might finally become endemic, but uncertainties remain. While economic risks have receded, the societal damage will burden the EU for a long time.

Russia’s aggressive behavior has brought Europe to the brink of war. Rather than “learning the language of power” as HR Borrell proudly announced at the beginning of his mandate, the EU is relapsing into the old dependency on U.S. leadership. For the moment, Washington may help manage the crisis. However, this dependence could become problematic given the uncertain prospects for constructive U.S. policies beyond 2024.

Finally, the rule of law deficits in Hungary and Poland put the very foundation of the EU as a community of law into question. If neither elections nor the deployment of legal and political instruments by EU institutions remedy the situation, tensions will further rise and poison European cooperation in various policy areas.

At the moment, it is unclear whether the current constructive disposition of most governments will allow for genuine progress to be made in the coming months, or whether the EU will again be thrown into full crisis mode by external or internal challenges. Either way, 2022 promises to be an interesting year.

Carnegie