Europe’s Soft Core Is Getting Tougher

Euro-area countries led by Germany and France are no longer backing away from conflict with the rest of the EU and beyond.

Thanks to the defeats of populist candidates in several European elections and Theresa May’s failed bid for U.K. political dominance last month, the European Union has appeared triumphant. But it’s only a triumph for an increasingly exclusive club of countries that is increasingly willing to embrace conflict on its periphery.

In the euro area, mainstream political parties are riding high after populist failures in Austria, the Netherlands, France and, soon, in Germany; the split of the Finnish far right; the taming of Alexis Tsipras’s once-fiery far-left government in Greece; the lack of political achievement by radical leftists in Spain, and the lackluster performance of the Five Star Movement in the Italian local election last month.

It’s that heart of the EU — 19 out of the 27 countries remaining after the U.K. leaves — that will be the focus of fiscal and banking reforms that French President Emmanuel Macron is discussing with German Chancellor Angela Merkel. The rest of the EU is no longer courted. Core Europe appears to have few reservations about alienating the Eastern European countries that have chosen to keep their own currencies and nations that could be the targets of further expansion, such as Turkey and Ukraine, with harsh rhetoric or public expressions of contempt.

The standoff with Poland over its ruling Law and Justice Party’s attempts to give the parliament and the government more control over the judiciary is an example. On July 19, European Commission First Vice President Frans Timmermans said the EU was “very close” to triggering Article 7 of the Lisbon Treaty — a procedure that has never been used against any country. Seen through to the end, it strips a member nation of its vote for deviating from the EU’s core values, which include the rule of law. Poland is also the first country under investigation for possible rule-of-law breaches for previous moves to take control of the judiciary.

No one as senior as Timmerman has ever threatened to invoke Article 7, even though Hungary, like Poland run by a populist government, has also weakened its courts in recent years. Though the EU made threatening noises and took legal action in several cases, Hungarian Prime Minister Viktor Orban has never been challenged as forcefully as his Polish allies are challenged today.

There’s even high-level talk in Berlin and Brussels about making subsidy payments to Eastern European countries conditional on their compliance with the core European values. That’s another new kind of threat in response to Eastern Europe’s illiberal tendencies and its refusal to help Western European allies with the crisis presented by migrants from North Africa.

The Eastern Europeans appear to be betting that the threats are not serious. On July 19, the leaders of the Visegrad Four — Poland, Hungary, Slovakia and the Czech Republic — wrote a letter to Italian Prime Minister Paolo Gentiloni saying they’d be happy to help his country deal with the influx of migrants smuggled across the Mediterranean from Libya, but not by taking in migrants. The Polish government is defiant despite the prospect of an Article 7 procedure.

The Visegrad countries are also pushing the issue of dual food quality — branded foods sold with cheaper ingredients in Eastern Europe than in the West — to show that they won’t tolerate being treated as second-class members.

The defiance is based on the assumption that the loud noises from Western Europe mean little: The core EU and the bloc’s institutions have always preferred to signal inclusiveness, even at the expense of declared values. Things could be changing, however, as attention switches to deeper euro-area fiscal integration.

The EU’s toughness in Brexit talks is an example of what could come for Eastern Europe, too. Eastern European nations have called on the European Commission to be softer on the U.K. as it tries to leave. Instead, the negotiators in Brussels have taken a hard line, which was evident throughout the first round of substantive talks this week.

Negotiations are deadlocked on every key issue: the exit bill to be paid by the U.K., post-Brexit citizens’ rights, the Ireland-U.K. border, the post-2019 jurisdiction of the European Court of Justice. The likelihood of no deal by 2019, when the U.K. drops out of the bloc, is higher than ever. The EU doesn’t feel it has anything to gain by being toothless; its uncompromising position on Brexit appears tougher than in the 2015 negotiations with Greece, which, although in a far weaker economic position, was still a privileged partner as a euro-area member.

Core Europe also shows a new, sterner face to its allies just outside the bloc. Germany has just announced a “reorientation” of its policy toward Turkey, warning tourists and investors to stay out of the semi-authoritarian country.

The warning, fueled by recent spats over Turkish political campaigning in Western Europe, the use of a military base in Turkey and the arrests of German journalists and rights activists by the government of Turkish President Recep Tayyip Erdogan, is a far cry from Merkel’s attempts last year to preserve an alliance with the Turkish leader. It’s hard to believe that just a little more than a year ago, Merkel agreed to the prosecution of a German satirist for a mischievous poem criticizing Erdogan, and that the EU promised Turkey a faster path to membership in exchange for keeping Syrian refugees from trying to cross EU borders. It’s clear that the idea of Turkish membership is a non-starter in the foreseeable future.

A recent EU-Ukraine summit ended without a concluding document because core EU countries, including the Netherlands, Germany and France, refused to include a line recognizing Ukraine’s desire for eventual full membership — even though a similar formula is part of Ukraine’s trade and association agreement with the bloc. Eastern Europeans pushed for the small concession but were ignored.

The more assertive EU core — which also dares to state its differences with the U.S. on trade and environmental policy — may be just an optical illusion born of the Western European centrist parties’ forced electoral combativeness in the face of populist threats. But it could also mean the birth of a smaller, tighter and tougher Europe that only wants allies on its own terms and is confident of its power. Like a harmless, over-friendly teenager whose patience has been abused by classmates, this core of Europe is beginning to lose its temper and ball up its fists.

By Leonid Bershidsky 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.



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