The Next Europe. The EU as a Power for Formative Action

In 2030, Europe must hold its ground in a world of competitive multipolarity and rivalry between illiberal and liberal societies. Technological progress and digitalisation are opening up new instruments for authoritarian regimes to maintain their power internally and to exert international influence. In the face of complex hybrid threats, Germany and the European Union (EU) need to bolster their resilience. Soft power and the transformation approach alone do neither guarantee the EU its self-assertion or the stabilisation of the regional and global order, nor are they sufficient to shape these orders to suit its purposes.

Traditionally, German foreign policy has been geared towards strengthening multilateral organisations, partnerships, and action in a cooperation between liberal democracies. The guiding idea of international cooperation as a positive-sum game has given way to a world of strategic competition. Consensus-based coordination within the framework of the European Union and the transatlantic NATO Alliance are, from a German perspective, proven and preferred approaches. The strong commitment to deepening the EU and cultivating close relations with the US have not only helped Germany politically and economically. Both, strong partners with extensive involvement in foreign, security, and defence policy – such as the US, France, and the United Kingdom – and functioning regulatory structures, have allowed Germany to show relatively little international engagement and still guarantee security for its population.

A Competitive and Insecure World

For some time, however, these global regulatory structures and institutions have come under pressure – and with them the basic assumptions and practical routines of foreign policy. Three factors are central to this. First, the shift of economic, political, and military clout towards Asia, and the relative underrepresentation of emerging powers in international institutions, have resulted in the necessity to reform structures and institutions of the post-war world order.

The second factor is that the Western model of liberal democracies is not spreading to the extent it was assumed it would in the 1990s. The persistence of competing systems also has implications for the recognition of values and legal principles that have been incorporated into international law and international organisations.

The third factor is that authoritarian forces which are gaining in strength, such as those in Russia or Turkey, are explicitly turning away from the Western model of politics and society which they are attempting to undermine, even defining an antagonistic image of the ‘West’, both culturally and politically. Meanwhile, in many capitals and even in Washington, D.C., a mode of ‘friend or foe’ thinking prevails. The guiding idea of international cooperation as a positive-sum game has given way to a world of strategic competition, in which one party’s wins are offset against the losses of another. Not only countries such as Russia and China, but also the US have, in various ways, become large elements of uncertainty and even a threat for Europe.

Russia and the EU

Russia is fundamentally and explicitly challenging the international order, in particular the post-Cold War European security architecture. It considers itself as a major power with the right to shape structures of regional and global order. For that reason, it feels entitled to interfere with the internal affairs of smaller states, both in post-Soviet states, to prevent them from moving closer to the EU, and in countries that are already members of the EU and NATO. Russia resorts to old and new technological instruments to influence its own neighbourhood and the world at large and to preserve its internal power.

Russian elites act on the assumption that in the multipolar world, the law of the strongest applies and that there can only be limited interest-oriented alliances with other states. In an increasingly tense situation, from a Russian point of view, Moscow has been investing heavily in the modernisation of its army. They are increasingly prepared to include nuclear weapons in strategic and military planning. President Vladimir Putin seems to be trying to redefine Russia’s role in the global order by undermining the system in order to have a say in its ­ensuing renegotiation. The weakening of the rule-based international order by US President Donald Trump offers Putin the opportunity to strengthen his position vis-à-vis the US and the EU, sometimes in conflicts, including in the Middle East. He uses proxy wars, as in Syria, to demonstrate, maintain, and expand his own power. This approach and the attempts to undermine the European model and build an alternative narrative are related to the goal of maintaining internal power.

China and the EU

China will represent the biggest challenge for Germany and the EU for the foreseeable future, even if its leadership has its own internal risks to contend with. While Russia is a declining power with a revisionist foreign policy agenda whose primary power resources are the military and the use of hybrid means against other states, China is expanding its power politically, economically, militarily, and technologically. The ‘Made in China 2025’ strategy sets the ambitious goal of catching up with the industrial nations by 2025 and becoming a world-leading industrial nation itself by 2049. It has become apparent since 2014 at the latest that China is systematically implementing this strategy. Beijing’s ‘New Silk Road’ initiative, for example, aims to develop trade routes for China, transforming the Eurasian space into a new arena of economic and geopolitical interference. China’s influence, which involves strategic investments in key industries and infrastructure, is clearly notice­able even inside the EU. Cooperations with German and European companies, including research and development facilities, provide China with more and more technological know-how. In the course of a reorientation, Chinese higher education and research policy could lay the foundation for enormous innovation potential in the country, provided that China manages to integrate international expertise. The EU is threatened by the loss of its innovative lead in key areas. In Africa and Latin America, too, China is securing influence and access to resources, for instance through the development of infrastructure and the (largely) unconditional development cooperation.

China’s determined return to the world stage is driving a fundamental to change the system, which is accompanied by both opportunities and significant dangers. China does not pursue a strategy of destroying Western or global institutions, as it benefits greatly from the stability of the international system and the EU.With its mercantilist state capitalism, China has triggered a dynamic in the liberal world economic order that confronts the former creators of this order – the US, Europe, and Japan – with difficult economic and social problems. At the same time, China is domestically turning into a technology-based surveillance state in which the ruling party is expanding its capacity for control – both in relation to society and in the development of the economic and innovation system. China’s growing economic power meanwhile enables the People’s Republic to pursue its geostrategic interests – and potentially its territorial claims and maritime control – even more effectively in the future, and to make progress in military technology. It cannot be ruled out that, in the medium term, China will put its rejection of military alliances on hold and try to overcome the traditional rivalry with Russia if this is seen as a meaningful step for guaranteeing cooperative security or expanding China’s global supremacy. China does not pursue a strategy of destroying Western or global institutions, as it benefits greatly from the stability of the international system and the EU. However, it seeks to influence existing systems, such as the United Nations (UN), and is also establishing new structures, such as the Asian Infrastructure Investment Bank (AIIB), while strengthening its influence on governments of individual states. China will change the West more than the other way around, especially if the West does not stand united in maintaining the structures and principles of the current world order.

Trump’s US – Strategic Competition with the EU as a Guiding Principle

Under the leadership of President Donald Trump, the US is evolving from being the closest partner of the EU and many of its Member States into becoming a strategic competitor: the US and the EU are still economically intertwined and have long-standing political and social relationships. For lack of alternatives, Europe hopes that the US remains Europe’s protective power within NATO, but this is uncertain.

In an increasingly globalised world with greater division of responsibility, the US is transforming transatlantic economic relations to a mode that ensures greater profits. Rule-based organisational structures are seen as ineffective and expensive, or even an obstacle in the attempt to improve their own situation. It is historically unique for the leading state to weaken and dismantle the very order it established itself – in this case the world order – from within.

The idea of maintaining the liberal world order without or even against the US seems impossible and absolutely necessary at the same time. One crucial question until 2030 will thus be to what extent and for how long the US will crawl back into its own shell, and how great the damage to the structures will be in the post-Trump era. While it still appears that the US is at least benefitting from parts of the rule-based order, a return to pre-Trump times is unlikely. The election of Trump as President represents social division and more permanent polarisation, rather than a singular sign of protest. The withdrawal of the US also allows countries such as China and Russia to ‘fill in the gaps’ and implement their strategies for strengthening their own position. Today, in their national security strategies, the major powers consider strategic balance a zero-sum game. At the same time, given their demonstrated strength and in part successful catch-up and overtaking of Europe – and, in the case of China, its financial strength and market strength – their appeal to the international community is growing. In contrast, the liberal-democratic powers see their own appeal, and with it their soft power, declining, and are now forced to defend it.

Internal Consolidation and International Expression

Germany and the EU are faced with a threefold task in order to be able to assume a role of significant formative power at all. First, despite all the difficult framework conditions, they must maintain their relations with the US and with the institutions, values, and principles of the liberal democratic world in order to preserve them rudimentarily in the ongoing transformation of the international order. In principle, it is of course conceivable that the EU and also Germany will undergo a fundamental change in preferences and discover advantages for themselves in closed, illiberal models of society, state, and economy. However, this is unlikely in view of the existing deep international interdependence, and would entail a departure from Western values. Second, they must develop their own capacity for projecting power politically, economically, militarily, and technologically, which might include demarcation from the US and illiberal regimes such as Russia and China, so as not to be undermined, divided, and crushed by precisely these states. The aim is also to face them from a stronger position, in order to fathom cooperation, at least in individual policy fields. Third, the EU must increase its own resilience, as attacks of a hybrid nature will increase. Neither the EU nor national governments are able to guarantee protection on their own.

These are extensive and difficult tasks at a time when tensions in the EU-28 have become greater than ever since the start of integration. There are divergences of interest on the further development of the Eurozone and the European Economic Area as well as on social aspects. The issue of migration and asylum divides the Member States of the EU, as do some of the Community’s basic principles such as open borders, the rule of law, and liberal democracy. The EU’s internal cohesion and international environment are directly related: external players offer alternative political models, partnerships or modes of funding that some of the EU states are using. Regardless of whether they are doing this because they are convinced of the merits or because they want to improve their bargaining position within the EU: they are weakening the EU further either way.

The EU depends on globalisation, free trade, and regulated and peaceful coexistence. A closed economic model is not an option for either Germany or Europe, and for most EU states illiberal models of state and society are unacceptable. Accordingly, and in its own interest, the EU should actively defend and shape liberal and multilateral norms – both internally and externally. There are divergences of interest on the further development of the Eurozone and the European Economic Area as well as on social aspects.Only then will its relevance be accepted by its members. A normatively consolidated EU can and must do its utmost to maintain multilateral structures, while at the same time making them fairer, more inclusive, and more sustainable than in the past. There’s no other way, these structures must become so attractive that they continue to represent a superior alternative to the models offered by China or Russia. The effort that this parallelism requires should not be underestimated and must begin now. Only if the EU is cohesive and strong can it avoid becoming a plaything in the competition between systems, to then be crushed by it.

Strengthening the Economy and Social Cohesion

Although the EU and the Eurozone are showing moderate growth rates, there are still three weaknesses. All three are attributable to the Single Market and the Eurozone, which were important steps towards the removal of barriers and the creation of a common monetary system. All the same, opportunities to exert political control have been lost. At the EU level, the development of budgetary, financial, economic, and social policy instruments has not kept pace with monetary policy.

At the same time, the governments of the Member States have lost means of control as a result of the new framework conditions on open markets and European monetary policy, and through European rules that set limits on national budgetary and economic policies. In this respect, the discussion about the completion of the Eurozone and the shaping of the Single Market is only superficially concerned with the issue of transfer of powers. The common idea of a re-establishing sovereignty and scopes of action at the European level describes the situation much better.

International Agenda of the EU

Transfer of internal development goals and power resources of the EU into its international agenda.

The first weakness is that, despite significant reforms in governance structures in response to the crises since 2008, the Eurozone is far from being crisis-resilient. Instability and loss of confidence in the markets, insufficient consolidation in the banking sector, and increased political and digital vulnerabilities in the financial sector could cause even greater crises, for which the Eurozone is still unprepared. As political polarisation within the EU and also within Member States has increased, it may be more difficult to respond on an ad hoc basis, and even to create the instruments necessary for crisis management, something which the EU successfully managed from 2010 onwards, with debt rescue packages during the first sovereign debt and banking crisis, and later with the creation of the European Stability Mechanism.

Second, from the point of view of many citizens, the EU no longer fulfils its promise of prosperity; on the contrary, it is regarded by many as the engine of threatening globalisation. A 2017 Eurobarometer survey shows that forty-three per cent of respondents did not consider the EU capable of protecting them from the negative effects of globalisation. This perception is exploited by populist parties and used against the EU. The EU depends on globalisation, free trade, and regulated and peaceful coexistence.It is therefore an urgent political task to adopt European measures in the field of economic and social policy that will, in the short term, at least somewhat reduce this impression of vulnerability and delimitation created by the EU and world trade, and make the protective role of the EU tangible. This includes a more realistic economic policy towards China, such as investment control measures, in order to fend off strategic purchases of relevant key industries. The EU and its Member States need a more decisive industrial policy in order to be able to compete with players who do not respect liberal market principles themselves.

Third, all of this will only work if the EU shapes and regulates the digital transformation of the working environment and society in Europe, to effectively define global standards in the future as well. It is in the European interest to act as proactively as possible. As a result, Europe will not be able to concentrate on monitoring and responding to developments in other countries and regions, but will need to prioritise its own competitiveness and attractiveness as a strategic resource.

Consolidation of Foreign and Security Policy

In the field of Common Foreign and Security Policy (CFSP), too, the EU resembles a semi-finished house. Long-established institutions and processes are indeed being developed further. But the EU is only superficially pursuing a common strategic direction, because most EU governments are wary of an additional foreign policy directed from Brussels. This is why the EU acts selectively and ultimately incoherently in its foreign policy. Furthermore, it lacks the resources to be able to act independently. Especially in the traditional core area of security – defence –, the EU is dependent on the US. The much-cited EU initiatives for enhanced military capabilities, permanent structured cooperation (PESCO), and the development of a strong industrial defence base, including the European Defence Fund (EDF), will only take effect in ten to fifteen years.

The challenges of security policy today go far beyond the military. Internal and external risk areas are merging. In addition, the grey area between war and peace is widening, especially in ‘non-military’ fields such as politics, business, and society. Violence can take a variety of forms, be it oppression through economic dependency, disinformation, or cyber-attacks that steal data but also endanger infrastructure. This conflict plays out below the threshold of a classic war, which makes it difficult to react unambiguously. Governments need to consider new categories and competences in security policy. This is all the more difficult for the EU because of its lack of strategic capacity. The challenges of security policy today go far beyond the military. Internal and external risk areas are merging.This ability to define and pursue far-reaching objectives is particularly crucial in multilateral contexts, given the diversity of strategic cultures and national perspectives, which already vary greatly in the way they analyse problems ranging from international security assessments to risks facing the Eurozone. The discussion on common strategy should use and connect different traditions and strengths, but needs an explicit understanding of the starting position, common goals, and ways of burden sharing. Even closely cooperating partners, such as Germany and France, operate out of different security and defence-related cultures and therefore have to be all the more explicit about common goals and instruments.

Germany and France

Despite these shortcomings, the EU is a more competent actor to cope with the existing complexities than any single Member State alone. Germany should be an active advocate to ensure that the EU is provided with the necessary resources and transfers of competences. It is essential that the EU finds a better approach to handle the complex threats, which will allow it to keep the ­internal acceptance of the integration project alive. ­Externally, this assertion represents a power resource for the future regulatory struggle. Starting points for a necessary debate on the ambition and vision of the EU as a formative power, as a space of liberal order and as a cooperative but more independent player in international politics, are provided by the EU’s Global Strategy, establishing the concept of ‘strategic autonomy’ in response to major transformations in regulation and security policy. The security policy narrative of a protective EU finds its origin in this strategy. Germany should proactively collaborate with France and other partners to ensure that the EU builds up the independent ability to act in three areas: strategy (political goals), decision-­making ability (institutions and processes), and ability to act (instruments and resources). Strengthening European and national strategic capacity within NATO is a prerequisite for its credibility in security policy, following its own principles in security and defence alliance, and for policy-making. If the EU succeeds in doing so, it will also strengthen its ability to impose its own interests and ideas in other areas as a formative power.

Normative Self-assertion

The EU needs to reach a new agreement on the common values that underpinned its founding and expansion. This will offer more external credibility as a liberal democratic agent. A major challenge here is to prevent states such as Hungary and Poland from moving further away from the European model of democracy and value consensus, sometimes under the external influence of Russia, even after agreeing to these principles upon accession. There are governments in power, not only in Hungary and Poland, that are undermining the functioning of their democratic order and restricting important elements of liberal societies. There are governments in power, not only in Hungary and Poland, that are undermining the functioning of their democratic order.This relates to, for example, the freedom of the media, the existence of an independent civil society, and the independence of the judiciary. So far, the EU system has failed to contain or even reverse these developments. If the existing instruments prove unsuccessful and there is no clear protest against this path within the societies concerned, consideration must be given as to whether states that are in permanent conflict with the principles of democracy and the rule of law should leave the EU. They could be tied to the EU in a weakened form.

The EU must also actively shape policy and regulations that affect democratic principles. This concerns, for example, digitalisation and data protection. The EU itself must first develop a common understanding of how it wants to regulate these areas or protect itself against undermining and attacks. The EU needs to internally formulate basic principles and concrete regulatory approaches to operate as an actor in international regulation.

Designing Trade and Development Practices in a Sustainable and Fair Way

The world as we know it will change dramatically over the next few decades: by 2030, up to 135 million people will have to leave their homes because of desertification. The UN estimates that around sixty million people from sub-Saharan Africa will migrate to Northern Africa and Europe. Climate change will also destroy and create economic sectors, altering trade and production chains.

If the EU wants to do more than respond to these upheavals by building walls, it should first define its action priorities, since tightening physical defence measures and conventions on refugees will not constitute an adequate response to migratory pressures. Stabilisation and opportunity-based development policies, as well as fair trade, should be linked to better combat initial causes of flight. An example is provided by the Alliance for the Sahel, where Germany and France are strengthening perspectives for remaining in the region by combining labour market measures and on-site migration management and consultation with military training to strengthen local counter-terrorism efforts. The EU should furthermore define concrete measures to implement the seventeen UN Sustainable Development Goals. In addition, the possibilities of partnerships with states that are themselves involved in fragile regions, such as China, should be investigated. Germany should work within the EU framework to promote the debate on the nexus between free and fair trade and development. In international negotiations, the EU can intensify its advocacy for qualitative improvements such as sustainable production chains and human rights standards. The promotion of the economies of emerging nations through trade agreements and similar economic agreements should receive more consideration as a tool for combating flight. In this context, the EU must also reassess the trade and development consequences of its agricultural subsidies. It is true that the distorting effect of European trade and subsidy measures has been reduced by various reforms; however, there is great potential to continue opening European markets to products from developing and emerging countries.

The redesign of the European Neighbourhood Policy is another priority. The EU needs to redefine its role as a regional power and re-focus its attention on its neighbours, for which purpose it seems clear that, on the one hand, the expansion narrative is largely exhausted, while on the other, the half-hearted conditionality of the neighbourhood policy leaves many questions unanswered. Therefore, approaches to relations with MENA countries or eternal pre-accession countries such as Turkey should be reconsidered. The EU needs a regional vision that promotes economic and social exchange as well as mobility, creates honest incentives, and cushions migratory pressures in a humane way. Existing structures such as the Eastern Partnership, the Southern Neighbourhood Policy for MENA, or the Union for the Mediterranean can be strengthened, or new forms of connection (short of full membership) that better meet common challenges can be developed.

Developing European Society

In the coming decade, Germany and the EU will have to continue to revise their foreign policy. The Western alliance in the form of EU and NATO played an identity-building role for the Federal Republic, while its own foreign and defence policy was restrained. Today, European ideas and formative power within the international system, which is undergoing fundamental change, must be developed. The factors of change are well known, but neither the EU nor its Member States have defined a realistic vision or a strategic approach for shaping the transition from the post-war order to a new world.

This requires simultaneous actions of security policy and regulatory procedures. First of all, the basic strategic decision must be made as to whether the EU, together with Western partners, wants to maintain an open system of liberal societies. If so, the EU must try to more vigorously shape or include globalisation and the new environment of power policy associated with it. An unadulterated view of the strategies of other players and the consequences of the described trends and upheavals is required to assess the necessity and options for action resulting from years of inconsistent response to threats. Neither the Federal Government nor the European partners will manage to forego placing inconvenient demands on society when faced with the real challenges, such as the provision of resources and the need for joint action. The EU must try to more vigorously shape or include globalisation and the new environment of power policy associated with it.However, it will only be possible to organise political support for this if the EU increases internal convergence, security, and resilience. The task of developing the EU into a formative power in a hostile environment requires far-sighted political decisions, both internally and externally, which Germany, together with its partners, should bring about. This is threatened by populist attempts to pit the nation state against Europe – Europe can only gain formative power if the two entities pull together. It is likely that the EU will continue to differentiate itself in the coming years and will increasingly work together in subgroups in order to maintain its capacity to act.

The risk of internal fraying, confusion, and weakening of institutions that strengthen the social fabric must be deliberately minimised. At the same time, internal differentiation offers opportunities for including relevant stakeholders outside the EU. This applies, for example, to Great Britain, which should be kept as close as possible in the area of defence and security. New forms of connection short of full membership, that promote stability and cooperation, could be created for the western Balkan countries, the Eastern Partnership, and the Southern Neighbourhood – as well as, depending on the political situation, Turkey. In order to develop the EU into a formative power, both in its own region and on a global scale, Germany and its partners have a great responsibility to develop new modes of thinking and more decisive forms of action-taking in the face of existing challenges.

Europe

How We Must Act

  • Germany should play a key role in strengthening the EU internally and in its capacity to act externally, take on the role of a formative power in a more complex and conflict-laden world.
  • Germany and the EU must respond to the weakening of the rule-based world order caused by competitive multipolarity and the rivalry between illiberal and liberal societies. Attempts by authoritarian regimes to influence the EU and its neighbourhood need to be warded off more decisively.
  • EU divisions between the north and south, as well as east and west, must be overcome. Differences of opinion on the normative foundations of cooperation, democracy, and the rule of law can weaken the EU internally and undermine it as an international formative power if they grow too profoundly.
  • Socio-economic cohesion is crucial for increasing resilience and reducing external interference and attempts at division. Therefore, the crisis resilience of the Eurozone and economic and social convergence must be supported by more determined measures. If this fails, the openness of the European model will be called into question – undermining the formative power of the EU.
  • The EU needs to build strategic capacity. Germany should make a decisive contribution, initially within smaller groups. Britain should be closely involved in foreign, security, and defence policy, even as a non-EU state.
  • The EU must develop its own capabilities for projecting political, economic, military, and technological power; this includes demarcation from the US and illiberal regimes such as Russia and China.

Dr. Daniela Schwarzer (45) is Director of the German Council on Foreign Relations (DGAP). From 2014 to 2016, she was Research Director on the Executive Team of the German Marshall Fund of the United States. Prior to that, she headed the European Integration division at the Stiftung Wissenschaft und Politik [German Institute for International and Security Affairs], after five years as Editorialist and France Correspondent at the Financial Times Deutschland. In 2014, she was appointed Senior ­Research Professor at Johns Hopkins University and was a Fritz Thyssen Fellow at Harvard University.