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Europe in the time of Trump

Nov 09,2017 - Last updated at Nov 09,2017

The transatlantic alliance — which for decades has underpinned global stability, fortified democracy and safeguarded the West as we know it — is under severe strain and risks terminal decline.

US President Donald Trump — who has repeatedly challenged America’s traditional alliances, including by attacking NATO — undoubtedly bears much responsibility for this deterioration. But Europe, through its inaction, has also contributed to this state of affairs — and now it must contribute to fixing it.

The West’s malaise is, no doubt, a result of the ongoing and unresolved economic-governance challenges created by globalisation. These challenges are particularly acute in the European Union, where policy paralysis has prevented governments from fully implementing the reforms needed to overcome the financial crisis that began a decade ago.

European leaders agree that the eurozone’s current institutional setup is flawed, and they know what must be done. But they remain plagued by inertia, immobilised by conservatism and preoccupied by domestic politics, with many leaders allowing themselves to be taken hostage by populist Euroscepticism.

As a result, they have failed to take the steps required to ensure the EU’s long-term stability, including a complete banking union to backstop Europe’s finances and a genuine system of EU-wide economic governance.

The absence of a cogent US president who is willing and able to encourage the EU to make further progress toward integration does not help matters. But European leaders must take responsibility for their own recalcitrance — and take action to save the Union.

The good news is that popular support for the EU has improved markedly since the United Kingdom’s Brexit vote in June 2016, creating a window of opportunity to deliver meaningful reform. But the window will not stay open for long. And, so far, EU leaders have failed to leverage renewed support for the European project to argue for change.

This is not to say that no positive steps are being taken. In a welcome contrast with Trump’s ignorant protectionism, the EU has continued to advance free trade, by concluding trade deals with Canada and Japan, and opening negotiations with Australia, Latin America’s Mercosur bloc and New Zealand.

Given European trade deals’ potential to help ensure a more progressive approach to globalisation — critical to salvaging it — such efforts should be intensified. But the focus must shift from free trade to fair trade. And Europe’s leaders must do a better job of communicating the potential benefits of EU rule-setting in global trade to those who stand to gain from it.

The same goes for other areas where the EU is showing valuable leadership. For example, the European Commission is leading the way in reining in abuse of capital-account openness — in particular, by clamping down on tax avoidance by multinational companies within the EU and elsewhere.

European leaders should showcase such efforts. Little more than a year after the Panama Papers underscored the extent of tax evasion by the world’s wealthy, the release of the so-called Paradise Papers has again exposed those — including many in Trump’s Cabinet — who have poured large amounts of money into offshore tax havens.

Now is the time for the EU to develop a fully public register of beneficial owners of trusts, while redoubling its push for global reform.

Another positive step by the EU, expected at this month’s Gothenburg Social Summit, is the endorsement of the European Pillar of Social Rights by the European Council, the European Commission and the European Parliament.

The pillar focuses on ensuring equal opportunities and labour-market access, fair working conditions, and social protection and inclusion. Here, too, such efforts — which disprove claims that the EU is nothing more than a club of neoliberal capitalist elites — must be publicised more effectively.

If the EU fails to seize the moment to implement effective reforms, illiberal political trends within the bloc could be reinvigorated, particularly if member countries that are already moving in this direction — namely, Poland and Hungary — are allowed to continue on their current path.

And just beyond the EU’s borders, the bloc’s leaders must move quickly to offer Turkey, where President Recep Tayyip Erdogan has concentrated political power in his own hands, a new kind of relationship not based on eventual EU accession.

Europe has no choice but to act. Almost daily, new evidence emerges that Trump remains committed to his “America First” approach, which renounces the traditional US role as the world’s main defender of liberal democracy.

Right-wing populists and authoritarian regimes — in Europe and elsewhere — will continue seeking to exploit the resulting global leadership vacuum. The only way to protect the liberal world order is for other powers — beginning with the EU — to step into the breach.

World leaders must resist the pressure of short-term political tribalism and confront the geopolitical and economic challenges ahead.

Populists and protectionists on the right and left will inevitably fail to deliver on their simplistic promises. But centrist and progressive forces in Europe and elsewhere must be ready.

The writer, a former Belgian prime minister, is president of the Alliance of Liberals and Democrats for Europe Group (ALDE) in the European Parliament. ©Project Syndicate, 2017. www.project-syndicate.org

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