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What New Zealand has to fear from turmoil in the European Union

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New Zealand has much to fear as the “European experiment” faces its greatest test this year. Internal discord and external threats have led to the rise of nationalism in the EU and an inward-looking tendency that could adversely affect our economy.

Even if matters were normal, 2019 would be a momentous year for the European Union. Britain is still due to give up its membership on March 29, and in late May, 705 members of the European Parliament are due to be elected.

But matters are far from normal, as the EU faces several major threats, many of which could end up hurting New Zealand’s economy.

French President Emmanuel Macron underscored one aspect of the times when he said at the Armistice Day anniversary that pushing nationalism was a betrayal of patriotism. Macron was widely interpreted afterwards as criticising US President Donald Trump. There’s no doubt Trump has openly espoused nationalism, and the “America first” mantra is never far from his lips, but Macron’s main target was closer to home: certain governments and groups within the European Union.

Macro alias: ModuleRenderer

Macron fears that nationalist sentiment, nativism – the pursuit of rights for native-born people above migrants – and populism will undo the values of the EU and perhaps destroy the union of 28 member states. “Populism” is a bit of a catch-all term, but it usually manifests itself through a leader who makes constant appeals to the “people” against the “elite”, who may or may not be in power. There are populists of the left as well as populists of the right, but in national elections within Europe, populists of the far right have recently made significant gains, usually at the expense of parties of the left: in Germany, Sweden and Spain, among many others.

The EU is holding together and probably will continue to do so, but there are major threats to its unity and to the values it has nurtured. The results of the May election will be highly significant, though they may not in themselves determine the organisation’s future.

Of the five major threats to the EU and its values, ideology is one of the most immediate. The EU embraces liberal democracy. Hungary’s Prime Minister, Viktor Orbán, openly rejects this and has articulated a preference for what he calls “illiberal democracy”. He is more specific about what he does not want from the countries to the west of Hungary than he is about the canons for running his preferred form of government.

French riot police clash with “yellow vest” protesters. Photo/Getty Images

Hungary has made major moves against a free press and forced the retirement of several judges and the appointment of judges sympathetic to Orbán’s Fidesz Party. Orbán holds and wins elections. The Government has forced the closure of the Central European University, funded by billionaire and philanthropist George Soros, in Hungary. In conventional political terms, Orbán’s system is a form of authoritarianism, though it remains to be seen how extreme it will get.

Poland is a stout defender of Orbán and has juggled the justice system to suit the position of the ruling Law and Justice Party, imposed severe controls on some of the press and defied an EU ruling on preserving an ancient forest.

Neither Hungary nor Poland wants to end its EU membership, but both would like the union’s liberal democratic ideals to be dropped and national governments to set their own ideological stances. Their approach has strong appeal within the Czech Republic and Slovakia, which, with Hungary and Poland, make up the Visegrád Group, a cultural and political alliance. Orbán has high hopes that this alliance of the four central European countries will become a powerful influence within the EU. (Steve Bannon, once Trump’s strategist, is in Europe seeking to influence various countries against the EU.) The May election will in part be about whether liberal democracy will prevail within Europe.

Hungarian Prime Minister Viktor Orbán. Photo/Getty Images

Europe's disunity

A second threat to the EU comes from Russia, which, delighted by Europe’s disunity and incensed by the sanctions against it over its annexation of Crimea, has shown support, probably extensive monetary aid included, to some of the Eurosceptic and right-wing groups. A Russian bank lent money to the National Rally, a party led by Marine Le Pen in France, to fight the election against Macron. The National Rally opposes France’s membership of the European Union and is generally considered to be a party of the far right, though it has modified some of the policies of the National Front from which it was formed.

The third threat, African and Middle Eastern migration, has already caused huge splits within the EU, and the Islamic background of many of the migrants almost certainly has been a major contributor to the rise of far-right nationalism and religious and cultural identity crises within Europe. For the EU’s leaders, the dilemmas involve practising humanitarian values towards the migrants, trying to limit their numbers to avoid a political swing towards the far-right and maintaining a workforce in a continent of declining population growth.

The fourth and fifth threats lie with problems within the union itself. There is a heap of unresolved issues about the EU states that are part of the eurozone (19 of the EU’s 28 countries are in the zone), the main one being that some of Europe’s southern states are vastly poorer than northern European countries yet have the same currency and no national control of it.

Lastly, a number of countries feel resentful about the influence of the Brussels bureaucracy and the fact that a lot of Europeans consider Brussels too distant from everyday concerns and without enough political legitimacy.

Spanish soldiers during a Nato-led exercise in Norway. Photo/Getty Images

Huge strategic uncertainties

These are not the only threats. Trump has talked about the US withdrawing from the North Atlantic Treaty Organisation (Nato), thereby creating huge strategic uncertainties in Europe, and also threatened to pull out of the Intermediate-range Nuclear Forces (INF) pact. Russia has tested a missile that seems to contravene the terms of the pact.

What is at stake in these developments, and where could they lead? A host of articles in serious publications show fear for the survival of liberal democracy, and among the books addressing the issues are Madeleine Albright’s Fascism: A Warning and George Friedman’s Flashpoints: The Emerging Crisis in Europe. Albright was US President Bill Clinton’s Secretary of State and Friedman runs a private intelligence service called Stratfor. Both come from Jewish families and the parents of both fled Europe, at different times. Friedman is the more pessimistic, believing that conflict within Europe is ingrained, even if he believes that there will not be a general conflagration. Albright’s title speaks for itself: she fears for democracy and is struck by the fact that the US no longer has a president who believes in democracy.

The UK’s imminent withdrawal from the EU will affect the organisation in several ways. Its contribution to the EU budget will be lost. During the referendum campaign, then Mayor of London Boris Johnson somewhat dishonestly portrayed the amount the UK contributed to the EU and failed to mention the amount that the EU contributed to the UK’s economy in development funds, but the UK is a net contributor to the union. It will be sorely missed.

Refugees stranded in the Strait of Gibraltar. Photo/Getty Images

It will affect the balance of power within the EU. Like France and Germany, the UK was always a solid upholder of the principles of liberal democracy. Its weight in support of liberal democracy will be missed. One optimistic view of the altering balance is that Scandinavian countries within the union with significant Eurosceptic numbers will seek to become more influential in preserving its principles. That remains to be seen. In the past, there was hope of safeguarding liberal democratic principles because of the bond between German Chancellor Angela Merkel and Macron. But Merkel has recently stepped down as leader of her party and Macron is facing major domestic protests over economic issues from the “yellow vests” movement.

Switzerland has been in the process of negotiating a trade deal with the EU. Observers noted that the EU showed some reluctance to make trade and other exceptions, almost certainly influenced by the negotiations over Brexit.

Interestingly, although the UK’s 2016 referendum on whether the country should leave the European Union initially stirred suggestions that there would be a series of demands for similar referendums in other countries and there would be other exits, something else happened: the demands for referendums continued, but the intentions to leave lessened markedly.

One influence was that the consequences of a country leaving had become apparent. To some EU nations, the prospect of losing funding from Brussels weighed heavily. A further effect was that the EU countries became more united. In the early days of exploring the terms of the UK’s future relations with the EU, the UK looked for support among individual EU countries. EU leaders sought to end that approach and insisted on a united front in negotiations. The outcome is that although Euroscepticism is still alive in much of Europe, it is not quite as well as it once was.

Feeling the heat: British Prime Minister Theresa May and US President Donald Trump. Photo/Getty Images

NZ must be affected

New Zealand cannot fail to be affected by any major change in the unity of the EU or the values it seeks to uphold. If traditional European values were lost, this would affect an international order already strained by the US under Trump. The Economist Intelligence Unit has ranked the US as a flawed democracy for the past two years. The US cannot at present be taken as a rational and reliable actor in world affairs, but, as always, it is too big to be ignored in ideas, trade and economics. And no one can be certain that the Trump Administration will prove to be a blip and that after him the country will return to more-traditional behaviour. The ingredients of the pot that Trump has stirred may continue to flavour future administrations.

New Zealand does not have the power, even if it had the desire, to impose a world order. But it does need a rules-based world order to preserve its own values and its trade. Losing the weight of the EU for those values would have a profound effect.

New Zealand always needs friends to protect its exports, particularly its agricultural ones. It once had to fight an earlier version of the EU over exports, but the present-day union is a friend. A drift towards nationalism in Europe and an inward-looking tendency would adversely affect New Zealand’s economy.

No doubt New Zealand will come under all sorts of pressures from China in the next few years. The EU is also under pressure from China, and some member countries have close links with Beijing. Nevertheless, the EU is big enough to withstand all manner of pressures from China, and New Zealand will need heavyweight friends such as the EU.

New Zealand has so far avoided the extremes of populism. In Europe, the threats to the EU and its values will be tested in the May election, but not finally resolved. Votes that affirm a belief in liberal democracy would strengthen it at a time the world sorely needs it. Votes that amount to a rejection of liberal democracy would add to world fragility. New Zealand would be unable to avoid the political, economic and trade effects.

Stuart McMillan is a senior fellow in the Centre for Strategic Affairs at Victoria University of Wellington.

This article was first published in the February 2, 2019 issue of the New Zealand Listener.