Towards a deeper eMU

Juha Jokela FIIa BrIeFING paper 140 • October 2013

U L KO P O L I I T T I N EN INS T I T U U T T I

U T R I K E S P O L I T I S K A INS T I T U T E T

THE F I N N I S H I N S T I T U T E OF I N T E R N AT I O N A L AFFA IR S

140

aN assessMeNT oF polITIcal

dIvIsIoNs wIThIN The eU

• The extraordinarypolitical decisions taken to tackle thefinancial and economic crisis, and toreformandreinforcetheEMUhaveopenedupsomeoldwoundsandcreatednewpoliticaldividinglinesintheEU.

• TheEUhaswitnessed the re-emergenceof thenorth-southdivideas akeymarkerofdistinctpolitical and economic visions and imperativeswithin theEU.At the same time, thedivisionbetweentheeastandwestisdiminishing.

• Theimportanceofthepoliticaldividing linebetweeneuroandnon-euroEUmembershasalsoincreased,yetitisnotclearlydefined.Theunevenburden-sharingbetweeneuroandnon-eurocountriesinprovidingfinancialmeanstotacklethecrisisis,however,shapingthecontoursofEUpolitics.

• Despite the British reluctance to join the current political processes propelling a deepereconomic integration,nootherprofoundpreconditions for theEU’s futuredevelopmenthavebeenestablishedbythememberstates.YetthedepthofthereinforcedEMU iscurrentlyunderconsiderationinmanymemberstates.

• ThestrengtheningofthepopulistandEuroscepticpoliticalmovementshasledtotheresurrectionof the anti-EU andpro-EU political dividing line inmanymember states.This is increasinglyreflectedattheEUlevel,andmightconstraintheEU’sfuturedevelopment.

Towards a deeper eMU

FIIA Briefing Paper 140

October 2013

aN assessMeNT oF polITIcal dIvIsIoNs wIThIN The eU

The European Union research programme

The Finnish Institute of International Affairs

U L KO P O L I I T T I N EN INS T I T U U T T I

U T R I K E S P O L I T I S K A INS T I T U T E T

THE F I N N I S H I N S T I T U T E OF I N T E R N AT I O N A L AFFA IR S

Juha Jokela

Programme Director

The Finnish Institute of International Affairs

J A N E a n d A ATO S

ERKKO FOUNDATION

PO Box 144, 00101 Helsinki, FINLAND

JANE OCH AATOS

ERKKOS STIFTELSE

PB 144, 00101 Helsingfors, FINLAND

The FINNIsh INsTITUTe oF INTerNaTIoNal aFFaIrs 3

Introduction

Policymakers, observers and the media havereferredtoavastnumberofdivisionsincrisis-tornEurope.TheEUisdividedbetweennorthandsouthor creditors anddebtors. Somehave emphasisedthe emerged division between anti-EU and pro-EU forces. Significantly, these divisions are alsomanifestedwithintheeurozone,intheformofthecurrentdifferencesbetweentheFrenchandGermanviews,andtheincreasingroleofthepopulistmove-mentsinmanyeurocountries.Yetothershavehigh-lightedtheboundarybetweentheeurozoneandtherestoftheEU,andsuggestedthattheeurocountriesnowformthecoreoftheUnion.Relatedly,someofthenon-euromembersaredistancingthemselvesfromtheEU–mostnotablytheUK–whilemanyothersaimtosecuretheir influenceintheUnion,evenifeuromembershipmayhavebeenputonthebackburner.

The objective of this briefing paper is to analyzetheseEuropeanpoliticaldivisionsinthelightoftheextraordinarycrisisdecisionsandplanstofurtherreformtheEconomicandMonetaryUnion(EMU).ThepaperarguesthatdespitetheBritishreluctancetojointhecurrentpoliticalprocessespropellingadeepereconomicandpoliticalintegration,nootherprofound red lines orpreconditions for theEU’sfuturedevelopmenthavebeenestablishedbythemember states. As the latter have demonstratedtheirwillandabilitytosidelinetheUK,theongoingprocessesareconstrainedbyalackofsupportfromtheEuropeanelectorates.

Still united in diversity?

ThedeepeningofEuropeanintegrationhasalwaysresultedintensionsamongEuropeanUnionmem-berstates.TheplantoestablishaEuropeandefencecommunityinthe1950seventuallycollapsedduetoFrenchopposition.Inthe1980s,theUKagreedupontheformationofthesinglemarket,buthesitatedtomove towards a deeper economic andmonetaryunion,andresistedstepstakentowardsapoliticalunion.IntheprocessleadinguptotheMaastrichtTreatyandtheestablishmentoftheEuropeanUnion,thememberstatesagreedtoretaincontrolovertheireconomicpolicies.Allofthem,withtheexceptionoftheUKandDenmark,however,agreedtotrans-fertheirmonetarypoliciestotheEUovertime;yet

FranceandGermanyclashedoverthenatureofthemonetary union in the making.While GermanypushedforamonetarypolicysetbyanindependentEuropeanCentralBank(ECB),theFrenchwantedtoseeadegreeofpoliticaldiscretionovertheECB.1Thetreaty-basedopt-outs,andtemporalvariationinjoiningthefinalstageoftheEMU,ledtoargumentssuggestingatemporaldividebetweenatwo-speedEUorthemorepermanentoneofatwo-tierEurope.

Relatedly,memberstateshaveoccupieddifferentpositionsvis-à-visEUenlargement.Thoseinfavourof deepening the process expressed reservationstowardstherapidexpansionoftheEUinthe2000s.A substantiallygreaternumberofmemberswereabletolimittheirabilitytosteertheEuropeanpro-jecttowardsan“evercloserUnion”,andgeartheprocess towardsasomewhat“looserUnion”pro-motedbytheUK.ThisreasoningfindssomesupportinthegeneralproblemsrelatedtotheeffectivenessofEUdecision-makingandtherecognizedneedtostreamlinetheUnionbeforeandafterthe2004/07enlargement.TheenlargingEU–withits15memberstates and 13 candidate countries – neverthelessmanagedtoagreeuponamajorreformoftheEU,namelytheConstitutionalTreaty,signedinRomein2004.However,twofoundingmembersoftheEU–FranceandtheNetherlands–whichdecidedtoputthetreatytoareferendum,resultinginitsrejectionin2005,ultimatelywreckedtheratificationprocess.

Since then, theroadmaps fordeeper integrationhave faced some significanthurdles and exposeddiverseopinionsandpoliticalcleavagesamongthememberstatesaswellastheEUinstitutions.WhilemostoftheinnovationsoftheConstitutionalTreatywereincorporatedinoneformoranotherintotheensuingLisbonTreaty,theabsenceofpoliticalunityamong thememberstateshascontributed to thesenseofadisunitedEU.ThishasalsobeenreflectedintheimplementationoftheLisbonTreatyandtheensuinginter-institutionaldebaclesandinfamousturfwarsinBrussels.

Concurrently,theEUwashitbytheglobalfinancialcrisis,whichmanifested itself inEuropethrough

1 Formoreonthis,seeErikJones2012,Bringing Stability

to Europe: Why Europe needs a banking union,FIIA

BriefingPaper117.Availableathttp://www.fiia.fi/en/

publication/295/.

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banking and sovereign debt crises that rapidlydestabilizedthemonetaryunion.Theextraordinarypolitical decisions taken to tackle the crisis andreformandreinforcetheEMUhaveopenedupsomeoldwoundsandcreatednewpoliticaldividinglinesintheUnion.Insodoing,theso-calledeurocrisisturnedintoapoliticalone,potentiallythreateningtheEuropeanproject.AsthePresidentoftheEuro-peanCouncil,HermanvonRompuynotedin2011:theEUwasfacinganexistentialcrisis.

Resurrection of the north-south divide

Therecentyearsofmultiplecriseshavewitnessedthere-emergenceofthenorth-southdivideasthemost significantmarker of distinct political andeconomicvisionsandimperativeswithintheEU.Atthesametime,thedivisionbetweeneastandwestornewandoldmembershasdiminished.Eveniftheeasternenlargementisamilestoneinthepost-ColdWarunificationofEurope,thenewcomerschangedthe political dynamics of the EU. Their entryimpactedtheallocationoffundsundertheCommonAgriculturalPolicy,theEU’sStructuralFundsandtheCohesionPolicy,whilethelowerlabourcostshad an impact on the economicdynamics of theUnion.

In terms of the EU’s foreign policy, the newestmembers’transatlanticinclinationsandcomplica-tionswithRussia furtherchallengedcommonEUpositionsandpoliciesinthisfield.Thepeakofthisdivisionoccurredontheeveoftheenlargementin2003.TheUSaspirationstowagewaronIraqprovedto be a highly divisive issue for Europeans. Con-sequently,theUSreferredtothe“old”and“newEurope”asakeymarkerinEuropeanforeignpolicy.

Theongoingfinancialandeconomiccrisishas,how-ever,re-directedthefocusawayfromtheeast-westdivisiontowardsthenorth-southdivision.Impor-tantly,themainchallengesrelatedtotheeconomicandpoliticalfutureoftheEUhavenotoriginatedfrom the new member states but from the oldones.Althoughthenewestmembershavealsobeenseverelyhitbythecrisis,therelativelysmallersizeoftheirfinancialsectorsandeconomiesingeneralhas not led to similarmarket speculation on theposedsystemicrisks,ashasbeenthecasewiththesouthernEUeconomies,IrelandandtosomeextenttheUK.Moreover,manyofthem,suchasthenewest

euromembersEstonia(2011)andLatvia(2014),havebeenabletoaccommodatethemselvestothecrisisandarecurrentlyrecoveringfromit.Againstthisbackground,thecurrentkeymarkerofdifferenceintheEU,intermsofdistincteconomicandpoliticalimperatives, isarguedtobetheoneofnorthandsouth.

Onagenerallevel,thekeyboundarybetweennorthand south is based on national economic indica-tors and a political system’s stability and abilitytodeliveraccordingly.Importantly,thesuggestedgeographicboundarybetweennorthandsouthismisleadingbecausesoundeconomicandpoliticalperformancevariesovertimeandspace,astheshiftfromtheeast-westtonorth-southdivisionsuggests.Importantly,theongoingcrisishasalsochangedthekeyfeaturesofthisdivide.

Untilthecurrentcrisis,wealthierEUmemberswerewillingtoshowanarguablyremarkabledegreeofsolidaritywiththeirlesswell-offneighboursinthesouthandeast.Thisresultedfromacombinationofself-interestandtrustinpositivedevelopment.2Inreturn,wealthiereconomiesgainedregionaleco-nomicandpoliticalstability,whichwasimportantfortheireconomicexpansion.Thecurrentcrisishasdramaticallyaltered this featureof theEuropeanproject.ThericherEUmembers’powerandinflu-enceoverthepooreroneshasincreasedasaresultofdecisionstakentostabilizethesinglecurrency.

The strict conditionality of the rescue loan pro-grammes (also extended to theECB’sOMT bond-buying programme) as well as the increasedsurveillancepowersoftheEuropeanCommissionovernationaleconomies,andsemi-automaticsanc-tionsrelatedtothe failureto followtighterfiscalrules,havebeenseentoempowerthehealthyeuroeconomiesinthechangingEuropeaneconomicgov-ernancesystem.Accordingly,theso-calledcredi-tor countries are dominating theEU’s economicdecision-making,whilethedebtorcountrieshave

2 FedericoSteinberg2013,A New Union of Creditors and

Debtors,RealInstitutoElcanoExpertComment19/2013,El-

cano:Madrid.SeealsoMicheleComelli2012,Creditor vs

debtor countries in the EU: a problem of legitimacy,Aspe-

niaonline,availableathttps://www.aspeninstitute.it/aspe-

nia-online.

The FINNIsh INsTITUTe oF INTerNaTIoNal aFFaIrs 5

littleoptionbuttofollowpoliciespushedthroughbythecreditors.

Importantly, the creditor-debtor divide is mostconcretely manifested within the current euro-zone.First,non-euromembershaveoptedoutofthe loan programmes initially agreed bilaterallyand then within the established stability funds.Whilenon-euroEUmembersdoparticipateintheprogrammesthroughtheirIMFcontributions,andsomehaveprovidedbilateralassistance,suchastheUKinthecaseofIreland,thefinancialburdenoftheloanprogrammeshaspredominantlyfallenonthewell-performing euro economies. Similarly, theconditionality,increasedmacro-economicsurveil-lanceandconsolidatedfiscalrulesapplyfirstandforemostwithintheeuroarea,andtheirimpactonnationaleconomieshasbeengreatestintheweakesteuroeconomies.AlsothefactthatsomeotherpartsofthestrengthenedEUeconomicgovernanceonlypartiallyapplybeyondtheeuroarea,directsatten-tiontotheassumeddividinglinebetweentheeuroareaandrestoftheEU.3

3 Thecrisisfunds(i.e.thetemporaryEuropeanFinancialSta-

bilityFacilityandthepermanentEuropeanStabilityMecha-

nism)werefoundedbytheeurocountriesandtheyareonly

opentothem.Thetwo-packlegislationenhancingestab-

lishedeconomiccooperationprocessesandclarifyingproce-

duresfordealingwithcountriesthatareinseveredifficulties

onlyaffecttheeurocountries.Thesix-packlegislationwhich,

togetherwiththeEuropeaneconomicsemester,formsthe

backboneoftheincreasedEU-levelmacro-economiccoor-

dinationconcernsallEUmembers,yettheeuromembersare

subjecttotighterrulesandsemi-automaticsanctions.The

so-calledFiscalCompact(TreatyonStability,Coordination

andGovernance)wassignedbyallEUmembersexceptthe

UKandtheCzechRepublic,yetitisbindingforthenon-eu-

rosignatoriesonlywhentheyjointhesinglecurrency,unless

theydecidetodeclareitbindingbeforehand.TheinitialEuro

PlusPact,wasjoinedbysixnon-euromembers.Themostre-

centdevelopmentsrelatedtothebankingunion(SingleSu-

pervisoryMechanismandSingleResolutionMechanism)are

opentoallEUmembers,yettheyarelikelytoadvancefirstin

termsoftheeuroarea.Thisthemewillbefurtherelucidated

inforthcomingpublicationsinthisBriefingPaperseries.

Consolidation of a two-tier EU?

Therecentyearsofcrisishaveunderlinedthedivi-sionbetweentheeurozoneandtherestoftheEU.TheEuropeanprojectiscurrentlyseentoadvancelargely in termsof consolidating and reinforcingtheEMU. Inthisrespect, theeurozoneandcredi-torcountrieshaveassumedpoliticalleadership,yetthey hold different views on the speed, depthandgovernancestructuresofthereinforcedEMU.However,atthesametimethantheeurocountriesaremoreorlesseagerlyacceleratingtheirpaceinmoving towards deeper integration, someof thenon-euro countries are searching for the brakepedal. Consequently, the level of differentiationbetweentheeuroareaandrestoftheEUisarguablyincreasing,andpotentiallydevelopingintoamorepermanentfeatureoftheEuropeanproject.

Thepoliticaldividing linebetweeneuroandnon-euroEUmembersisnot,however,clearlydefined.YetsomeoftheconcernsrelatedtoitaresignificantfortheEU’sfuturedevelopment.

Themacro-economicpolicyimperativeswithintheeuroareahavediverged.Itwashopedthatthevic-toryofsocialistFrançoisHollandeinFrancewouldresultinarelaxationofthetighteconomicpolicyfavouredbyGermanyonstabilizingtheeuroandresolvingtheEU’seconomiccrisis.Thesehopeshavelargelyprovedtobepremature,however,andthelandslidevictoryofAngelaMerkel’sCDU/CSUhasfurtherreinforcedthepolicyoffiscalconsolidationandstructuralreformswithintheeuroarea.

Moreover, the centre-right parties in the eurocountriesseemtoshareamorecommonEuropeanpoliticalagendathanthecentre-leftparties.Thesepartiesaredividedontheissueofsolidarityintheeuroarea.Whereas thecentre-leftparties in thedebtor countries would like to see a significantincrease incommonburden-sharing in resolvingthecrisis,andreformingtheEMU,theleftistpar-tiesinthecreditorcountriesoftenhesitatetotakefurthersteps to increase joint liabilitiesorassignsignificantlygreaterfundstojobsandgrowthpro-ductionbeyondtheirnationalborders.

Moreover, theeuroareahascontinuedenlargingduring the years of crisis. Estonia joined in 2011,andLatviaisjoiningin2014.Theprincipleofopen-ness of the thirdphaseof theEMU consequently

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remainsvalid,yettheongoingreformsmightleadtotighterentrycriteria.Furthermore,theoverallobjectivethatallEUmemberstateswhichdonothaveatreaty-basedopt-outwilljoinovertimehasnot changed,yet inpracticemorepermanentdefacto“opt-outs”canbeenvisaged.Thesearemainlyrelated todomesticpolitical constraints, such asthosewitnessed in Sweden,which rejected euromembershipinareferendumin2003.Assuch,theycannotbedeemedtoprevailovertime.Theassess-mentofthesuccessandbenefitsassociatedwiththesinglecurrencymightchangeinduecourseamongEuropeangovernmentsandelectorates.

Importantly, the governments of the non-euroEUmembershavevoiced theiraspirationsnot tobesidelined intheEU.Even ifPoland iscarefullyweighing the economic costs of euro member-ship,ithashoweveremphasizeditsdedicationtotheEU and the singlecurrency. Indeed, the ideaofenhanced“associatedmembership”oftheeuroareawashighlightedinWarsawduringthePolishEUPresidency.4ThePresidencywasseenatleastpartlydisadvantagedbytheEuroGroup’spowerfulposi-tioninECOFIN,yetthisCouncilconfigurationwasformallychairedbyPoland.

At the same time,Denmark’sEU policy is underreview and observers have identified an increas-ingDanish interest in re-considering theDanishopt-outssecuredintheEUtreaties.DenmarkandSweden, among other non-euromembers, haveexaminedtheimpactandpotentialbenefitsofthefirst phase of the banking union, and they havenot ruled out participation in the future if therepresentationofnon-euromembersissecuredtotheirsatisfaction.Finally,andassuggestedearlier,non-euromembersarealsoparticipatinginsomeelementsoftheenhancedmacro-economicsurveil-lanceprocesses.

Nevertheless,thefactthatthenon-eurocountriesdonotsharethefinancialburdenoftheEuropeanStability Mechanism or the ECB’s bond-buyingprogrammes has been reflected in their relativepowerandinfluenceintheongoingprocesses.Thishashadasignificantimpactonthemindsetofthe

4 PawelSwiebodaandRyszardPetru2012,“Associated mem-

bership”: Anchoring the pre-ins in the Eurozone,demo-

sEUROPA–CentreforEuropeanStrategy:Warsaw.

EUdecision-makersinthecreditorcountries.Theadvicedispensedbynon-eurocountriessuchastheUKonhowtomanagethecrisisandrespondtothebroaderEuropeanandglobalconcernsofthe“eurocrisis”hasbeengreetedwithfrustrationandannoy-anceinthecreditorcountries.France,forinstance,hassuggestedthatinsteadofgivingadvicetheUKismorethanwelcometosharethefinancialburdenofthecrisisorotherwisekeepitsmouthshut.Asimilarlogicseemstobehinderingtheestablishmentofthebankingunion,whichisopentonon-eurocountriesaswell.Theirworriesrelatedtotheirrepresentationintherelevantdecision-makingsystemshavebeennoted,yetthefulldecisionpowersarereservedforthosewho also carry thefinancial burdenof thenewmechanismsandwhoarefullyincorporatedintheemergingEMUgovernancestructures;inotherwords,theeurocountries.

Relatedly, ithasbeensuggested that thedeepen-ingeuroareamighthaveabroader impactonEUdecision-making.Theenvisageddeeperintegrationof the euro countriesmay lead to the increasingconvergenceof their interests inotherEU policyareasaswell,suchasregulationrelatedtothesinglemarket.5AsaresultofthepotentiallymoreunifiedEuro Group’s powerful position in the EU law-making system, thepolitical dynamics of theEUmightchangedirectionandstartworkingagainstthenon-eurocountries.Todate, theresponse tothesereservationshasbeenratherstraightforward.TheroadmaptoadeeperandgenuineEMUempha-sizesthatthesinglecurrencyremainsopenforallEUmemberstojoin,andinsodoingtheywouldsecurearoleinthedecision-making.

Moreover, there is also very little evidence of apotential spill-over effect of the Euro Group’sinterestsacrossdifferentEUpolicyfields.Theinter-estsoftheeuroareaseemtobedivergingintermsofthedevelopmentofthesinglemarketsandtheEU’ssocialdimension,forinstance.Moreover,theEuroGroupisnotunanimouslybehindthefinancialtransactiontaxproposal,whichiscurrentlybeingpushedforwardwithintheenhancedcooperationmechanism.Whatismore,theapplicationofthisdecision-makingmechanismrequirestheconsentofallmemberstates.

5 Grant,Charles2012,“Athree-tierEUputssinglemarketat

risk”,The Financial Times,26October.

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Against thisbackground,themostsignificantriftbetween the eurozone and non-euro countriesseemstooriginatefromtheUK,anditstraditionalreluctancetomovetowardsan“evercloserUnion”.Inthepast,theUKhasplayedanimportantroleasoneofthekeyarchitectsofEuropeanintegrationbyreducingthespeedofintegrationandsecuringspecialarrangements.TheLabourParty’sreturntopowerin1997gearedtheBritishEUpolicytowardsamoreconstructivepath.ItemergedasakeyplayerintheestablishmentoftheCFSP,theCSDPandtheenlargementpolicy. Even thoughPrimeMinisterTonyBlaircommittedtheUKtotheConstitutionalTreaty, his Chancellor and successor GordonBrownstymiedBlair’s ambition toconsidereuromembership.

TheEU’s currentcrisishas,however, servedasacatalystwhenitcomestoalienatingtheUK fromtheEU.Theinclusionofthepro-EuropeanLiberalDemocraticPartywasinitiallyexpectedtobalancetheEurosceptictendenciesoftheleadingConserva-tivePartyinthecoalitiongovernment.

However,thecurrentUKgovernmenthasinitiatedseveral interrelatedprocessesaimedatestablish-inganewsettlementwiththeEU.First,itpushedthrough legislationmaking any transfer of pow-ers fromthenational to theEU levelsubject toanationalreferendum.Second,theUKgovernmenthaslaunchedaso-calledbalanceofcompetencesreview aimed at analyzing in detail the impactof theEU on sectoralpolicyareas in theUK.ThereviewwillconstitutethebackboneoftheUKgov-ernment’s aspiration to advance the subsidiarityprinciple and repatriate powers from Brussels.Third,PrimeMinisterDavidCameronhaspromisedtonegotiateanewsettlementwiththeEU,whichwillbeput to theBritishpeople in the formofareferendumwithasimple“yes”or“no”questiononstayingintheEUunderthenewpactorleavingtheUnionaltogether.ThismostrecentturnintheUK’sEUpolicyisclearlylinkedtothecrisisandtheresultingdevelopments.

Therecentyearsoffinancial,economicandpoliticalturmoilintheEUhaveempoweredtheEuroscepticforces in Britain in general and in the Conserva-tivePartyinparticular.PrimeMinisterCameron’spolicy rationale is related to themanagement ofthese forceswithin andoutsidehisparty,whichis increasingly losing ground to thepopulist and

EuroscepticUK Independence Party (UKIP). Ontheotherhand,theUKhasclearlybeensidelinedintheEU.TheEUmembers’decisiontonullifytheBritishvetobysettinguptheso-calledFiscalCom-pact as an intergovernmental treaty outside, yetcloselyconnectedto,theEUframework,marksanimportantdevelopmentrelatedtothecurrentcrisis.ItsuggeststhattheEUispreparedtomoveaheadwithorwithouttheUK.Relatedly,theUKhasbeenincreasinglyconcernedaboutthepoliticalweightoftheeuroareaanditslargesteconomiesintheEU.

Finally,theroadmapstoadeeperandgenuineEMUenvisageatreatychangeatleastinthemid-termperspective,whichwould arguably enablePrimeMinisterCameronandtheUKtohaveasayinthefuturedirectionoftheEUaswellasnegotiateanewsettlement.

ThesuccessofCameron’saspirationsisinquestion.Inordertofulfilhispromises,heneedstopersuadeotherEUmembers to engage in a treaty change,concurwithhisvision–whichseemstoberatherfarremovedfromthatofotherEUmembers–andsecureavictoryinthenextgeneralelectionintheUK in2015.WhilethePrimeMinisterhimselfhassuggestedthathebelievesthattheUKbelongsintheEU,manyhavequestionedhisabilitytomanagetheprocessandsecureapositiveoutcome in thereferendum.Todate,Cameron’saspirationshavegarnered very little supportwithin the EU. Cur-rently,thereseemstobescantappetiteforatreatyreformamongthememberstates,particularlythemajoroneenvisagedbyCameron.

Itisnoteworthythatthereseemstoberatherlim-itedsupportfortheUK’saspirationevenamongitstraditionalpartnersintheEU,yettheNetherlandshasalsoflaggedup thecompetencequestionandGermanChancellorAngelaMerkel has suggestedduringherelectioncampaignthatthetimeisripetoconsiderwhethertheEUcouldgivesomethingback to the member states. Both Germany andtheNetherlandsare,however,deeplycommittedtotheEMUreforms,andtheyhavenotarguedforanymajoroverhaulofthecurrentEUsystem,otherthanreinforcingtheEMUasenvisagedintheplansapprovedbytheEuropeanCouncil.Itremainstobeseen,therefore,whetheracompromisethatwouldsatisfytheUKgovernmentandtheelectoratewillemerge.

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Euroscepticism is dead. Long live Euroscepticism!

PopulistandEuroscepticpoliticalmovementshavebeenontheriseintheEUmemberstatesduringthefinancialandeconomiccrisis.Whiletheirpoliticalpowerbaseandobjectivesarediverse,theysharesomecommonalities. Inshort,manyof themareanti-EUandanti-immigration.There-emergenceoftheEuroscepticpopulistmovementsinseveralEUmemberstateshasbeenlargelyseentoreflectEuropeanelectorates’dissatisfactionwiththeEU,aswell as the increasingly limited capabilities ofnationalgovernmentstomanagetheireconomiesinthelightofdeepenedEuropeanintegrationandglobalisation.Theanti-immigrationtendenciesofmanyofthesemovementshavealsocontributedtotheperceptionthattheyareintentuponreversingtheEuropeanprojectandglobalisation,andrestor-ingnationalsovereignty.Suchelementsinthecur-rentwaveofEuroscepticpopulismvaryovertimeandspace,however.

TheUKhasoftenbeenseenasthehomeofdistinctlyEuroscepticmovementsintheEU,whichhavenotebbed away since the polarized national debateson joining theEU.The anti-immigration tenden-ciesoftheUKmovementshaveincreasedinrecentyears.InmanycontinentalEUcountriessuchastheNetherlands, France andDenmark, the immigra-tiondebatehasbeenacharacteristicoftheriseofpopulistmovements,whichhavealsoprovidedahavenforEurosceptics.InsomeEUcountriessuchas Finland, the emergence of a major Euroscep-ticpopulistpartyhasbeen fuelledby theprotestmentalities highlighted by theEU crisis and theunpopularFinnishcontributiontotherescueloanprogrammes.Thepartyhas also given a voice topopularanti-immigrationpersonalities.

Theresurrectionoftheanti-EUandpro-EUpoliti-caldividinglineinseveraloldEUmemberstatesisasignificantdevelopmentwhichislikelytoshapetheEU’sfuturedevelopmenttosomeextent.Thesemovementsarealso increasinglyoperating trans-nationally,whichmayservetoincreasetheirpowerbaseinthefuture.ThechairoftheFinnsParty(pre-viouslytheTrueFinnsParty)isawell-knownfigureintheUK,forinstance,wherehehasparticipatedasaguestspeaker intheConservativePartyCon-ferenceaswellasatUKIPevents.AsaformerMEP,heiswell-networkedandinvolvedinthecurrentmobilizationofpopulistpartiesandmovementsin

Europe in the lightof the approachingEuropeanParliamentelections.

WhileEuroscepticismappearstounitethemajorityofthepopulistmovementsinEurope,theirabilitytoformaunitedfrontinEUpoliticsisindoubt.

First,duetotheEUmemberstates’electoralandpoliticalsystemsitisratherunlikelythatpopulistpartieswouldbeabletotakecontroloverseveralmember states’governments.Thosewhomake itintotheirnationalgovernmentswillbeconstrainedbypoliticalresponsibilityandcoalitionpartners.

Second,evenifthepopulistpartiesareontheroadtoalandslidevictoryinthenextEuropeanParlia-mentelections,theirabilitytoworktowardsajointpoliticalagendaorformacoherentpoliticalgrouporgroupingsintheParliamentislikelytoproveratherdifficultgiventheirdifferentpoliticalobjectives.

Finally, the populist and distinctive Euroscepticmovementshaveexpandedparticularlyinthecredi-torcountriesandintheUK.Inthedebtorcountries,thepoliticalprotestshavebeenchannelledthroughlooseanti-globalizationmovementsaswellastheradicalleftandextremeright.ThestancethatthesemovementsadoptonthecrisisandthecurrentplanstodeepenEuropean integrationdrawonaratherdifferentpoliticalmilieuthanthatfoundinpopulistmovementsinthecreditorcountries.Concurrently,thecentre-rightandcentre-leftpartiesseemtobeincreasinglybetterpreparedtofacethechallengeof political protest andpopulism.Yetdissatisfac-tion among the EU member states’ electoratescannotbeoverlooked.Theyearsofcrisis, relatedextraordinarydevelopmentsandcurrentplansfordeepereconomicintegrationhavealreadyledtoacriticalevaluationofthedemocraticlegitimacyoftheEUandthenatureofthepoliticalunionneededtoguaranteeit.6

Conclusion

Therecentyearsoffinancial,economicandpoliticalturmoilhavebothhighlighted someoldpoliticaldividinglinesintheEUandestablishednewones.

6 ThistopicwillbethesubjectofaFIIABriefingPaperpub-

lishedlaterintheseries.

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Mostoftheseseemtobeinflux,however.Thatistosay,theirboundarieshavenotbeendefinedorcementedinthelightoftherecentextraordinarycrisisdecisionortheongoingre-constructionoftheEMU.Yetthepoliticaldivisionsarelikelytobemani-festedinensuingEuropeanandnationalelections,andthusshapetheprocessessuggestingadeepereconomicintegration.Thatsaid,themostsignificantdivisionrelatedtothedeepeningoftheEU,andonewhichalsoseemstoprevailovertime,istheUK’sreluctancetomovetowardsan“evercloserUnion”.Whilethismayhavesomeramificationsforthere-constructionoftheEMU,theEUmemberstateshavealreadydemonstratedtheirabilityandwillingnesstomoveforwardwithouttheUK.

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