Global crises may be eclipsing EU’s internal turmoil

The EU is experiencing a leadership vacuum affecting its foreign policy capabilities, with its attempt to forge a unified foreign and security policy largely failing

In a world rife with crises, including conflicts in the Middle East and Ukraine and devastating climate change, crucial issues such as the European Union’s (EU) internal turmoil may be getting eclipsed.

The EU, comprising 27 nations with a 345 million population and a gross domestic product (GDP) of $19.35 trillion nominally and $26.64 trillion by purchasing power parity, faces its own struggles.

The EU’s website, however, tends to portray an overly positive outlook. Even the narration of its past is incomplete. It begins its historical account with the 1950 proposal by then French foreign minister Robert Schuman to integrate steel and coal production—key munitions components—without mentioning the significant US aid through the Marshall Plan post-World War II.

Economic stagnation in the euro zone

The euro zone is experiencing stagnation, with Germany, traditionally the EU’s growth engine, now floundering.

With a GDP of €4.186 trillion in 2023, Germany stands as the world’s third-largest economy—trailing only the US and China—and Europe’s top economic player. Nevertheless, it is projected to see a slight contraction of 0.1% in 2024, although modest growth is anticipated in the following years.

Germany’s crucial automobile sector, a key factor in its status as the third-largest global exporter, has been particularly hard hit. The industry has lost approximately 46,900 jobs from 2019 to 2023 due to the shift toward electric vehicles, with forecasts indicating a potential total loss of 190,000 jobs by 2035.

Volkswagen, a significant player in this sector and one of the largest automakers worldwide, is facing these challenges head-on. It plans to close three factories and is currently engaged in tough wage negotiations with its workforce. The workers want increased wages, but the management says that only with a 10% cut can the company survive.

How can anyone square the circle?

EU’s faltering diplomacy and foreign policy

The EU is experiencing a leadership vacuum affecting its foreign policy capabilities. After chancellor Angela Merkel, who led Germany since 2005, stepped down in 2021, her successor Olaf Scholz has struggled to establish himself as a credible leader, and his political support is waning.

France and Germany have traditionally spearheaded EU leadership. However, French President Emmanuel Macron has damaged his political standing by precipitating a snap election that plunged France into political turmoil, leaving the National Assembly without a clear majority.

Macron’s foreign policy has also been erratic; despite declaring in February 2024 that he would consider deploying NATO troops to Ukraine—a statement from which both the EU and NATO quickly distanced themselves—he later repeated the suggestion, to little effect.

The EU’s attempt to forge a unified foreign and security policy has largely failed.

Established by the Treaty of Amsterdam in 1997, the office of the High Representative for Foreign Affairs and Security Policy has not met its goals.

This inefficacy was highlighted when Henry Kissinger famously inquired in 2009: “Who do I call if I want to speak to Europe?”

Further complicating matters, Brexit in 2020 significantly diminished the EU’s geopolitical influence.

EU Commission President Ursula von der Leyen has aggressively pursued a militaristic approach towards Russia, seemingly without considering alternatives to confrontation.

This stance underscores the ongoing challenges within EU foreign policy, marked by reactive strategies and diminishing diplomatic clout.

By 20 November, the Russia-Ukraine war will mark 1,000 days. A total of $192.9 billion has been provided between 24 January 2022 and 31 August 2024 in support for Ukraine, including $118.2 billion from the EU and $55.9 billion by the US.

Currently, Russia holds a military advantage, making it prudent for Ukraine to initiate ceasefire talks. Despite this, President Volodymyr Zelensky remains adamant, and the EU has yet to advise him to pursue such negotiations.

On Friday, 1 November, EU high representative Josep Borrell was in Tokyo to sign a defense and security treaty with Japan, the first of its kind. What practical actions can the EU take in the Indo-Pacific, where the Quad—Australia, Japan, the US, and India—is already established?

There is a misconception in Europe that if Donald Trump returns to office, he might withdraw from NATO. Although he has suggested this possibility, it does not necessarily mean he will follow through.

As president, Trump was a vocal proponent of the US military-industrial complex. If he were to leave NATO, European nations might cease purchasing US arms. Trump, who advocated for NATO member-states to spend at least 2% of GDP on defense, is likely to advocate for even higher contributions.

Can Europe defend itself against Russia? Is there a genuine threat of a Russian attack on Europe?

It would be in Russia’s interest to maintain a cooperative relationship with the EU, especially for energy sales.

The EU should consider a non-aligned stance between Moscow and Washington over time, although such a strategy is currently unimaginable for EU leaders.

Human rights concerns and development aid

Europe is a prime destination for millions of Africans fleeing oppressive regimes or seeking better economic opportunities. Under Ursula von der Leyen’s presidency, the European Commission has adopted a stringent policy towards refugees.

Amid this, EU parliamentarians have voiced concerns over the Commission’s financial support to authoritarian leaders without adequate oversight.

A notable case is Tunisia, where President Kais Saied, labeled a dictator after questionable elections, allegedly misused EU funds intended to curb migration from Tunisia to Europe.

Boats carrying fleeing Tunisians and others do leave Tunisian ports for Europe. To get the Tunisian government to prevent these boats from coming to Europe, EU transferred €150 million to Tunisia.

Despite calls from Members of the European Parliament (MEPs) for transparency, von der Leyen has declined to release a pertinent investigation report by the EU’s ombudsman into President Saied’s alleged diversion of the money to his personal benefit.

The EU website does talk about transparency at some length.

Meanwhile, the region contributes 42% of global overseas development assistance, surpassing the US’s 27%. The EU’s nominal GDP of $19.4 trillion is smaller than the US’s $29.4 trillion.

Stagnant EU-India Trade Relations

The EU is India’s third-largest trading partner, with trade in goods valued at €88 billion in 2021—10.8% of India’s total trade.

Conversely, India ranks as the EU’s 10th largest trading partner, making up 2.1% of the EU’s total trade in goods.

Services trade between the two reached €30.4 billion in 2020.

Although negotiations for a renewed trade and investment agreement started in 2007, significant progress has been lacking.

In June 2022, both parties agreed to resume discussions for a free trade agreement and started separate talks for an investment protection agreement and an agreement on Geographical Indications (GIs).

The EU’s investment in India was €108.3 billion in 2022, up from €82.3 billion in 2019, signaling its status as a key foreign investor, though still less than its investments in China (€ 247.5 billion) and Brazil (€293.4 billion).

About 6,000 European companies operate in India , providing 1.7 million direct and 5 million indirect jobs across sectors. Negotiations have faced hurdles, notably after an incident in 2012 involving Italian marines, when EU halted the talks for a while.

Given the underexploited potential of EU-India trade and investment relations, all that we can say is that both sides should work together to compensate for the time lost, bridge the gaps and capitalize on untapped opportunities as the actual trade and investment are far below the potential.

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