22 June 2020

Europe’s leaders risk provoking a second wave of Euroscepticism

By Mark Leonard

For years some people have referred to rising Euroscepticism and populism as a “virus”. Now, within the EU there is some hope that a real virus has helped quell the political one, with populism starting to subside.

European leaders like the German finance minister Olaf Scholz have even argued that the recovery plan will mark a “Hamiltonian moment” that gives new purpose to the European project. Just as the first American Secretary of Treasury set the USA on the road to federation through pooling the debts from the revolutionary war, they hope that the European recovery plan will be a staging post on the road to a United States of Europe.

There is no doubt that a massive recovery plan is critical to getting European nations back on their feet after the crisis, and the Franco-German initiative represents a brave and necessary first step. However, a major ECFR poll suggests there is a danger of misinterpreting public opinion and accidentally stimulating a new wave of Euroscepticism.

We asked Europeans in nine European member states covering roughly two thirds of the population if they support financial burden sharing and the results were very sobering.

We found large support for financial burden-sharing in countries who would likely be beneficiaries of a recovery fund, but none of the net contributors to such a fund yet have a majority in favour of it. Even in France – a leader in the drive for Eurobonds – only 47% of the respondents support financial burden sharing, in Germany it’s 43%, in Sweden 30% and in Denmark just 25%.

The key for unlocking support for the recovery fund lies in understanding the concerns of sceptical countries. Above all, they seem to fear creating permanent transfers from rich to poor countries, keeping unsustainable economic activities artificially afloat instead of paving the way for a new economy. To win over these people will require an argument rooted not in solidarity or federalism, but self-interest and modernisation.

Let´s start with self-interest. The Covid-19 crisis has shown to many European citizens that the globalised world order on which they depend is breaking. Neither Trump nor Xi Jinping are reliable partners and there is deep anxiety that in this moment of global concern, global markets will close as China and the US weaponise globalisation to compete with one another.

This creates a new rationale for the European single market. As countries round the world increasingly look to domestic markets, EU members will realise that the only viable domestic market is European rather than national. Just look at the trade figures even before the Covid-19 crisis: Trade in goods and services between EU Member States accounts for over two thirds of their overall trade. In the Netherlands a massive 43.9% of GDP depends on intra-EU trade in goods (in Austria it’s 29,8%, in Germany 21%, Denmark: 19,9%, Sweden: 18%).

In many European companies millions of jobs could be lost because of short-term shocks rather than long-term uncompetitiveness. A big one-off injection of capital into the market could generate a huge return, not least in frugal countries whose benefits very much depend on the single market. The argument in favour of the recovery fund is therefore very much about self-interest rather than solidarity with fellow member states.

The second urgent lesson to be learned from our polling is that Europe’s leaders should not talk about a ‘Hamiltonian’ past, but a green future. As data from the 2019 Eurobarometer survey indicates, public concern about the climate emergency is sky-high in all of the frugal countries. Almost three quarters (71 %) of Austrians see it as a “serious” problem and in the Netherlands (74%), Denmark (83%) and Sweden (84%) even larger shares of the population think it’s a “very serious” problem. And ECFR’s polling shows that in Denmark and Sweden it is the people who care about the environment who are also most willing to accept financial burden-sharing. If the case for the recovery fund is cast in terms of the future rather than the past, it should be possible to grow the constituency for recovery.

If EU leaders take those two lessons into account, they could yet make this a European moment. If they continue to make the argument in terms of solidarity and a Hamiltonian moment they risk a new wave of Euroscepticism – perpetuating exactly the concepts about which European citizens are sceptical. And just as with the Spanish flu, there is a danger that it is this second wave of Euroscepticism that proves the most deadly.

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Mark Leonard is Director of the pan-European thinktank, the European Council on Foreign Relations (ECFR).

Columns are the author's own opinion and do not necessarily reflect the views of CapX.