The European Union has had a rough go as of late. Beset by problems, from a flagging euro to sovereign debt crises in Greece and elsewhere to a massive influx of Syrian refugees—not to mention the stinging rebuke of the Brexit vote—many have begun to question whether the European project is likely to survive much longer.
To discuss this topic, the American Enterprise Institute (AEI) on Wednesday convened four scholars to offer their thoughts on the future viability of the E.U. While they disagreed about the answer, one thing united their remarks: the idea that the future of the union all comes down to economics.
Fred Bergsten of the Peterson Institute and Carlo Cottarelli of the International Monetary Fund were optimistic about the union's chances largely because keeping the E.U. together is in the self-interest of Germany, the country with the largest economy in Europe. The pair noted that the introduction of a common currency has allowed Germany to keep its exports artificially cheap and its manufacturing sector booming, which transformed it from a country divided during the Cold War into the success story it is today. As a result, the Germans "will pay any price to keep Europe and the Eurozone together," Bergsten thought.
Desmond Lachman and Vincent Reinhart (both of AEI) had a gloomier take. They likewise emphasized the economic dynamics of the E.U., but rather than seeing those forces as the glue keeping the union strong, they viewed them as the likely cause of its unraveling. The euro crisis has exposed deep flaws in the long-term feasibility of European integration, they said, and there are no quick fixes. Indeed, despite years of monetary stimulus and fiscal '"austerity" measures, the economies of member nations like Spain and Italy remain moribund, with sky-high rates of youth unemployment, rising sovereign debt, and non-performing banking sectors.
Moreover, the heavy-handed intervention of Brussels during the crisis has stoked anti-E.U. sentiment among both target countries—who resent their loss of sovereignty—and better-performing E.U. states (including Germany), where taxpayers are growing increasingly tired of footing the bill for endless bailouts. Should a Greek-style crisis spread to a larger economy, like Italy, Lachman and Reinhart contended, neither the political will nor the resources will exist to save the union.
Lachman noted that political dissatisfaction has already damaged the E.U.'s cohesiveness, prompting the British vote to leave the project altogether and giving rise to a successful Eurosceptic movement across the continent. From France's National Front to Germany's Alternative for Deutschland, a number of anti-establishment, anti-Brussels political parties are letting it be known that they are decidedly unwilling to "pay any price" to preserve the E.U.
Of course, whatever its problems, the E.U. is not likely to disappear overnight. Large taxpayer-funded projects rarely do.