January 20, 2020
The EU in a diplomatic bear hug
Wolfgang Munchau and Zaki Laidi offer a similar analysis of the new diplomatic situation the EU is confronted with, but arrive at different conclusions. As Laidi puts it, the US, Russia and China all have an interest to stop European integration, and actively conspire to do so. Munchau writes that the US and China have simultaneously discovered that the easiest way to put pressure on Germany in particular is to threaten car imports. China has done so in connection with Huawei's 5G bid whereas the US has threatened tariffs to put pressure on the EU over Iran. Munchau's main point is that the EU’s has made itself vulnerable through its policy to run large and persistent current account surpluses, a residual of the eurozone crisis. This has made the EU susceptible to political blackmail. The US, China and Russia know how to put a wedge between EU countries or, in the case of Huawei, to force the EU into compliance.
Laidi has just taken on a job as senior adviser to Josep Borrell, the EU’s high representative for foreign policy. He says that the best way forward for the EU is to leverage the tools it already has. He notes that, through its power as one of the world's largest markets, the EU is in a position to set world standards. He mentions the general data protection regulation as one example. But Europe has yet to develop its monetary, industrial and military capacities to similar effect.
Munchau and Laidi agree that internationalising the euro would be one of the most effective ways for the EU to stand up to international pressure. Munchau does not think this is likely to happen, and expects the status quo to continue, more or less. The EU is not at risk of disintegration, he concludes, but of losing its cohesion and becoming a playground for the diverging interests of foreign powers. Laidi, by contrast, believes that the EU could mount a credible defence through a strategy of what he calls effective modesty, as opposed to vacuous ambition.