HANDELSBLATT SURVEY A Continent in Crisis

A survey reveals how downbeat Europeans are about the economy and prospects for the next generation. Meanwhile, the IMF voiced its own fears about the European Union’s future.
Police in riot gear protect one of the memorials to the victims of the recent Brussels attacks.

As Europe’s heart trembles, the political weakness of the European Union was on display again over the Easter weekend in Brussels, the capital of the 28-nation bloc.

The death toll from last week’s terror attacks rose to 35 while the hunt for accomplices continued and the city gradually turned into a fortress. And far-right hooligans, of all people, succeeded in disrupting a vigil for victims.

But it’s not just terrorism that’s weighing on large segments of the E.U. population, according to a Handelsblatt survey of the world’s most important industrial and emerging nations. Many Europeans are also worried about their economic prospects, especially in France, Italy and Spain.

In France, 64 percent are dissatisfied with their current economic situation. In Italy, it’s 65 percent and in Spain 63 percent. Even in Germany, where the economy is still doing relatively well, 40 percent are unhappy with their economic reality.

There has been a trend throughout Europe towards rejecting economic integration and looking for nationalistic solutions. Maurice Obstfeld, chief economist, International Monetary Fund

Europe’s most industrialized nations are even gloomier when it comes to the future of the next generation. In all five nations polled, the majority of people predicted prospects would deteriorate for the generation born now. The French were the most pessimistic with 65 percent.

There are many problems, including the refugee crisis, debate over the euro single currency, a growing divide between rich and poor, Britain’s looming E.U. exit vote and mounting support for nationalist populists in many countries.

It’s little wonder that the chief economist for the International Monetary Fund is also fretting about Europe’s prospects. In an interview with Handelsblatt, Maurice Obstfeld warned against a European trend to reject economic integration and seek national solutions. He said the IMF was especially worried about border fences going up in Europe.

 

Quelle: Bloomberg
Maurice Obstfeld, chief economist at the IMF.

 

“If you put in borders you’re working completely contrary to the idea of a monetary union,” he said. “You’re imposing economic costs that could become quite large."

Europe will have to figure out how to share the burden in order to deal in a humane way with absorbing refugees and getting them into the labor force.”

The chief economist said the return of national thinking was explained by disappointment with globalization. “What we economists may have overlooked is how many people growth leaves behind,” he said.

Mr. Obstfeld added that a “Brexit” — the term for Britain possibly leaving the bloc after a June 23 referendum on membership — could be harmful to both the British and European economies.

“They both have long-standing trade relationships,” he said. “In terms of sovereignty, Britain would probably find that it would wish to have access to European markets on any terms like what it has now. It would not be in a materially better situation.

“But there has been a trend throughout Europe towards rejecting economic integration and looking for nationalistic solutions. Not just England but in several other countries.”

If the Europeans fail to guarantee public safety, the bloc’s legitimacy will wane.

Martin Schulz, the president of the European Parliament, recently painted a pitch-black picture of the strained economic partnership.

“The European Union has never been in such a dramatic situation,” he said recently, referring to negotiations among E.U. leaders to ward off a looming Brexit.

Surveys show the U.K. referendum could be a neck-and-neck race between “Yes” and “No” camps.

Europe seems locked in crisis mode. Rather than shaping the Continent’s future, its decision makers are preoccupied with reacting to new threats. The debt crisis, when leaders only just managed to keep Greece in the euro zone, was bad enough. The hope then was that things couldn’t get any worse. But they have. The escalating refugee crisis has confronted Europe’s cohesion with another fundamental test.

Conflicts over border fences, distributing refugees across the Continent, and protecting Europe’s external borders have whipped up sentiment against Brussels among eastern European members and elsewhere.

Now the future of the Schengen area of passport-free travel in 26 nations is in doubt. If the system were abolished, the costs to businesses would run into the billions.

“There’s not enough union, not enough Europe,” E.U. Commission President Jean-Claude Juncker warned recently.

The European Union seems devoid of vision or solutions to its manifold problems. This year will be a key test, but Handelsblatt’s survey suggests that citizens are not confident the bloc is up to the challenges.

Some government leaders are already drawing links between the refugee influx and terror attacks in France and Belgium. Polish Prime Minister Beata Szydlo cited security reasons in saying her country could not take in any more refugees, contrary to an E.U. agreement.

If the Europeans fail to guarantee public safety, the bloc’s legitimacy will wane.

Since last week’s attacks in Brussels, the wave of arrests in Brussels, Rome, Paris, Rotterdam and Antwerp highlights how closely Islamist terror cells are interlinked across Europe.

E.U. interior ministers have pledged to improve the exchange of information between national intelligence services and police forces to minimize the terror threat. Time will tell if they can succeed.

In the meantime, right-wing populists are riding a wave of public fear, worsening the Continent’s crisis. They already are in governments in Poland and Hungary. They have scored electoral victories in German regional elections. Next year they could even win the presidential election in France.

 

Thomas Ludwig is a correspondent in Brussels covering E.U. policy. Moritz Koch is Handelsblatt's Washington correspondent. To contact the authors: [email protected], [email protected].