tag:theconversation.com,2011:/uk/topics/treaty-of-rome-22097/articlesTreaty of Rome – The Conversation2019-02-07T09:35:10Ztag:theconversation.com,2011:article/1112062019-02-07T09:35:10Z2019-02-07T09:35:10ZEU membership has many benefits, but economic growth is not one of them – new findings<figure><img src="https://images.theconversation.com/files/257480/original/file-20190206-174894-iomf94.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Growing, growing, gone. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/flag-european-union-large-display-daily-361928702?src=24kGkU789Fx3KqiWu4gC2w-1-75">William Potter</a></span></figcaption></figure><p>From <a href="https://europa.eu/european-union/sites/europaeu/files/docs/body/winston_churchill_en.pdf">Winston Churchill</a> in the 1940s to the <a href="https://europa.eu/european-union/about-eu/history/2010-today/2012/eu-nobel_en">Nobel Peace Prize Committee</a> in our era, peace and prosperity have always been put forward as the two main goals of European integration. The EU founding fathers saw the European project as a way of taming nationalist passions by serving mutual commercial interests: a common political and economic entity that would guarantee both peace and economic progress. </p>
<p>In his famous United States of Europe speech in Zürich on September 19, 1946, Churchill argued that “the sovereign remedy” to the plight of post-war Europe was “to recreate the European family, or as much of it as we can, and to provide it with a structure under which it can dwell in peace, in safety, and in freedom”. </p>
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<a href="https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=787&fit=crop&dpr=1 600w, https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=787&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=787&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=988&fit=crop&dpr=1 754w, https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=988&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/257492/original/file-20190206-174861-sxqhh9.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=988&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Founding father Robert Schuman.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Robert_Schuman#/media/File:Bundesarchiv_Bild_183-19000-2453,_Robert_Schuman.jpg">Wikimedia</a></span>
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<p>Four years later, on May 9, 1950, the <a href="https://europa.eu/european-union/about-eu/symbols/europe-day/schuman-declaration_en">epochal declaration</a> by then French foreign minister Robert Schuman stated that pooling the coal and steel production of West Germany, France, Italy, the Netherlands, Luxembourg and Belgium had the double aim of “contributing to raising living standards and to promoting peaceful achievements”. When the <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Axy0023">Treaty of Rome</a> was established in 1957, Article 2 explicitly talked about “raising the standard of living”. Fast forward 70 years and the official website of the European Union <a href="https://europa.eu/european-union/about-eu/eu-in-brief_en">proclaims that</a> the “EU has delivered half a century of peace, stability and prosperity”. </p>
<p>Growth continues to be prominent in the EU’s general objectives today, of course. A stated aim of the influential <a href="http://news.bbc.co.uk/1/hi/business/4373485.stm">Lisbon 2000 Agenda</a> was to make the European economy the “most competitive and knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”. All seven of the <a href="https://ec.europa.eu/research/innovation-union/pdf/innovation-union-communication-brochure_en.pdf">Flagship Initiatives</a> adopted as part of the Europe 2020 Strategy were also about growth – smart growth, sustainable growth, and inclusive growth. </p>
<p>But is this correct? In <a href="https://poseidon01.ssrn.com/delivery.php?ID=716097073084075000127114064105118004042021055002019085109023122093009003126105000018021054116024117056041070110019107099085066055058046000054091102102071088113104032073024026127070090008118127111090068094127000097027100095118028118084025104088067096&EXT=pdf">new research</a> forthcoming in the economics journal Kyklos, which we co-authored with <a href="https://www.ceps.eu/content/mikkel-barslund">Mikkel Barslund</a> from the Centre for European Policy Studies in Brussels, we looked at whether joining the EU has actually increased domestic economic growth for EU member states on average over the past few decades. In a nutshell, most probably it has not. </p>
<h2>The elusive growth premium</h2>
<p>To cut a long methodological story short, we sought to answer our question using different empirical strategies, different time periods from the 1960s to 2015, different country samples and different datasets. We compared the growth of the EU to the US and to comparably wealthy OECD countries outside the EU. We compared the growth of former Soviet satellites inside and outside the EU, and also looked at growth in different countries within the EU. At the end of the day, we were unable to demonstrate the presence of a clear-cut membership growth premium: the EU bloc performed roughly comparably to countries on the outside, and in certain cases worse. </p>
<p>It could be that EU membership is more economically beneficial than it seems. GDP is a poor measure of the economic effect of certain new phenomena like Facebook, for example, as well as smartphones. Equally it could be that cause and effect are just too complicated for EU economic benefits to be properly captured in the data. If either of these are true, however, it doesn’t mean our conclusion is wrong – only that we should remain agnostic about the EU’s growth impact. </p>
<p>Whichever way one chooses to interpret our results, our inability to find a significant positive economic benefit from EU membership runs contrary to many official reports arriving at the opposite inference. The OECD’s <a href="http://www.oecd.org/unitedkingdom/the-economic-consequences-of-brexit-a-taxing-decision.htm">Brexit report</a>, for example, claims that the EU has contributed in no small measure to British prosperity. The Danish government recently commissioned <a href="https://erhvervsstyrelsen.dk/det-indre-markeds-oekonomiske-betydning-danmark">a study</a> which found that EU membership had made Danes much richer. And the Netherlands Bureau for Economic Policy Analysis, an independent part of the Dutch Ministry of Economic Affairs, has <a href="https://www.cpb.nl/sites/default/files/publicaties/download/internal-market-and-dutch-economy-implications-trade-and-economic-growth.pdf">found that</a> EU membership had made the Dutch much richer. </p>
<p>Since we focused on the EU average rather than on individual country performances, we are not necessarily disagreeing with any one of these individual country studies. But for every country that has done better than average, there must be another which has done worse, so we certainly question the bigger picture. It suggests that taking a confidently positive position about the growth effects of EU membership is at the very least inappropriate. </p>
<p>This is consistent with the <a href="https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/what_do_trade_agreements_really_do.pdf">latest thinking</a> within economic policy research on <a href="https://www.imf.org/external/np/pp/eng/2013/031413.pdf">growth strategy</a>. This would say that the EU can create a level playing field in terms of regulation, but does not provide any off-the-shelf blueprint when it comes to growth policies. Policies to address country-specific constraints on growth must be tailored to local context, and so only national governments can implement them. </p>
<h2>The upside</h2>
<p>So there are no straightforward messages as regards Brexit here: we are not looking at the UK on its own, and in any case, the effects of leaving need not be symmetrical to those of joining. Evaluating the EU’s growth contribution also does not amount to an evaluation of the entire EU project. The EU provides many direct benefits to the citizens of Europe – or costs, depending on your perspective. The right to study, work, travel and live in any EU country is a right that many Europeans value highly, even if others do not. </p>
<p>The EU has contributed to, among other things, consumer protection, workplace safety, regional convergence and constitutional rights protection. By focusing exclusively on economic growth, we obviously leave all these things out of the picture. But none of this detracts from the fact that a key component of the whole EU rationale and its ongoing accomplishments is far from clear-cut. If the EU does not in fact deliver prosperity, it could profoundly affect the future of the project.</p><img src="https://counter.theconversation.com/content/111206/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Brexit has stimulated the debate about the net economic benefits of EU membership. New findings show these are not clearly positive.Thomas Barnebeck Andersen, Professor of Economics, University of Southern DenmarkPieter Vanhuysse MAE, Professor of Comparative Welfare State Research, University of Southern DenmarkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/751092017-03-24T09:59:01Z2017-03-24T09:59:01ZAmerica can’t be first without Europe<p>On March 25, European Union leaders celebrate the 60th anniversary of their founding treaty, a central pillar of the structure set up in the aftermath of World War II to solidify peace, prosperity and partnership in Europe.</p>
<p>Over the last 60 years, the EU (and its predecessors) has served as an essential U.S. partner: for example, by enhancing economic opportunity for U.S. companies in Europe and <a href="https://2001-2009.state.gov/p/eur/rls/fs/48475.htm">increasingly supplying vital foreign assistance</a> and diplomatic support to help solve international problems. Indeed, if the EU did not already exist, the United States would be looking to invent something like it to help preserve peace and generate prosperity on a continent that suffered through two devastating world wars.</p>
<p>More recently, however, the EU has faced a variety of existential threats as the <a href="https://theconversation.com/15-economic-milestones-which-have-led-to-the-current-eurozone-crisis-53503">euro crisis</a> rattled its members’ financial well-being, economic growth slowed, <a href="https://theconversation.com/what-explains-britains-brexit-shocker-61620">U.K. voters opted</a> to leave the union and “<a href="http://www.newsweek.com/donald-trump-eu-wonderful-european-union-brexit-euroskeptic-560200">euroskeptics</a>” in countries like <a href="https://theconversation.com/how-marine-le-pen-could-become-the-next-french-president-68765">France</a> and the Netherlands use criticism of Brussels to contest elections. And even in the U.S., <a href="http://www.the-american-interest.com/2016/06/15/brexit-good-for-the-united-states/">some reacted to Brexit</a> with cheers.</p>
<p>The bottom line – based on our many year of experience as diplomats, policymakers and researchers on transatlantic issues – is that the U.S. needs a strong economic and political partnership with Europe to advance its own economic well-being and address vexing international and regional issues. Such a partnership would be <a href="https://www.cambridge.org/core/journals/international-organization/article/div-classtitlewhat-single-voice-european-institutions-and-euus-trade-negotiationsdiv/13091C901403ADB37A006BA31F51C913">enormously more difficult</a> to maintain without the EU’s single voice, something Washington would be wise to remember.</p>
<h2>Ensuring peace and prosperity</h2>
<p>As it happens, the EU <a href="https://www.amazon.com/Recovery-Europe-Richard-Mayne/dp/B00D1FGXPW">might not even exist</a> today if it wasn’t for the United States and its efforts to rebuild Europe – via the Marshall Plan – and stop the spread of Communism following World War II. </p>
<p>Seventy years ago, U.S. Secretary of State George Marshall, U.S. President Harry Truman and members of Congress – Republicans and Democrats alike – <a href="https://www.brookings.edu/wp-content/uploads/2016/10/table-of-contents_-the-marshall-plan-and-the-shaping-of-american-strategy.pdf">agreed</a> that the way to ensure peace and prosperity in Europe was for Europeans to develop interdependent, competitive economies. What we now know as the European Union emerged from these American efforts.</p>
<p>And it has worked. The EU – whether through the <a href="http://www.consilium.europa.eu/en/european-council/">European Council</a> of heads of state, the <a href="https://ec.europa.eu">European Commission</a> or the <a href="http://www.europarl.europa.eu/portal">European Parliament</a> – has helped underpin prosperity and economic competition among democratic nations on the continent. </p>
<p>The EU’s <a href="http://onlinelibrary.wiley.com/doi/10.1111/jcms.12175/abstract">single market in particular has led to unprecedented wealth</a>, as it established rules and norms for doing business across the member states. The EU has also served as the vehicle for embracing Central Europe into that market and community of members after the fall of the Iron Curtain and still remains a pole of attraction for others hoping to join the EU. </p>
<p>Since the signing of the <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3Axy0023">Treaty of Rome</a>, the <a href="https://www.weforum.org/agenda/2015/10/is-europe-outperforming-the-us/">EU has grown</a> from six countries with 186 million citizens to 28 countries with 515 million citizens and a GDP seven times larger than in 1957. The <a href="http://www.businessinsider.com/charts-eu-economy-is-bigger-than-the-us-2015-6">combined EU economy</a>, in fact, is larger than that of the United States, making it the <a href="https://www.thebalance.com/world-s-largest-economy-3306044">second-biggest</a> in the world behind China.</p>
<h2>The economic ties that bind</h2>
<p>Even from an “<a href="https://theconversation.com/trumps-america-first-echoes-from-1940s-59579">America first</a>” perspective, it is important to recognize how much value has been created by the European Union’s single market and other initiatives that have made Europe’s economy more integrated and open to U.S. businesses. </p>
<p>For example, today the transatlantic economy <a href="https://transatlanticrelations.org/publication/transatlantic-economy-2017/">generates US$5.5 trillion</a> in total commercial sales a year and employs up to 15 million workers on both sides of the Atlantic. Combined, they represent the largest and wealthiest market in the world, driven by investment in both directions. </p>
<p>Roughly 60 percent of America’s total foreign assets are in Europe. Sales in Europe by EU units of U.S. companies topped $3.1 trillion in 2015, and their assets in the region are valued at an estimated $15.7 trillion. Europe accounted for over 70 percent of the $3.1 trillion invested in the U.S. in 2015, while European assets in the U.S. are estimated to be worth $8.4 trillion. Trade in goods across the Atlantic has almost doubled since 2000, totaling $686 billion in 2016, and 45 states export more to Europe than to China. </p>
<p>With a deeply integrated economic relationship of this size and nature, the U.S. should take steps to increase the ease of mutually beneficial economic activities, and urge the EU to take <a href="http://www.atlanticcouncil.org/publications/reports/charting-the-future-now">steps needed to spark economic growth</a>. </p>
<p>If the Trump administration wants to address the U.S. trade deficit with the EU, for example, let’s negotiate a new economic agreement that takes better advantage of the massive transatlantic market place described above. The U.S. and the EU were trying to forge such an agreement via the <a href="https://theconversation.com/why-ttip-will-live-on-but-not-for-the-eu-61718">Transatlantic Trade and Investment Partnership</a> before the U.S. elections. While that <a href="http://www.politico.eu/article/trumps-pick-for-trade-envoy-open-to-continued-eu-trade-talks/">agreement remains on hold</a>, we believe a strong trade deal between the partners could open up job opportunities for new generations on both sides of the Atlantic.</p>
<h2>Tackling troubles together</h2>
<p>EU is also a partner for the United States in tackling international problems and vital as a source of funds to meet humanitarian and development needs <a href="https://euaidexplorer.ec.europa.eu/DevelopmentAtlas.do">in almost every corner of the world</a>. This role is even more important if the <a href="http://www.cnn.com/2017/02/28/politics/trump-budget-foreign-aid/">U.S. wants to reduce</a> its own aid spending. </p>
<p>The EU and its members <a href="http://www.oecd.org/dac/stats/statisticsonresourceflowstodevelopingcountries.htm">together provided</a> over $87 billion in official development assistance in 2015. That is 55.7 percent of the global total. The comparable number for the United States is <a href="https://euaidexplorer.ec.europa.eu/AidOverview.do">just $31 billion, or 23.6 percent</a>.</p>
<p>On the diplomatic front, it is true, the complicated institutional makeup of the EU often means slow decision-making, and it becomes very hard when competencies and authorities at the EU conflict with those of the member states: for example, in fighting terrorism or dealing with refugees. The EU has taken major strides to improve this, such as by establishing a high representative to speak for members in a range of regional situations. The EU has been <a href="http://onlinelibrary.wiley.com/doi/10.1111/jcms.12175/abstract">an active partner</a> on Ukraine, Iran, the Middle East and Afghanistan, for example.</p>
<p>Despite the remaining shortcomings, in other words, the EU is <a href="http://www.ecfr.eu/scorecard/2016">still a much stronger foreign policy partner</a> for the U.S. today than in the past. If the EU were not there to contribute significant resources to help deal with major humanitarian crises, handle the fallout of conflicts and terror and bolster the prospects for peace and stability in countries like Ukraine, a much greater burden would fall on the United States.</p>
<h2>Winning with a strong Europe</h2>
<p>The EU currently <a href="http://www.atlanticcouncil.org/images/publications/Charting_the_Future_Now_0316.pdf">faces serious challenges</a>: low economic growth, massive immigration flows, euro-skepticism among its citizens and a complicated structure necessary to fashion decisions among 28 member states. </p>
<p>The U.K. vote to leave the EU in June, which <a href="http://transatlanticrelations.org/wp-content/uploads/2017/03/TE2017_Chapter1.pdf">will surely leave the British poorer</a> economically, only adds to the aging union’s woes as the two sides negotiate their future relationship. </p>
<p>Russia, meanwhile, is <a href="https://theconversation.com/war-of-words-how-europe-is-fighting-back-against-russian-disinformation-65444">trying to divide and weaken Europe</a>. And some in the U.S. are likely tempted to leave Europe to the Europeans and to tend to our own concerns.</p>
<p>The United States, however, remains an integral part of the European equation through bilateral ties, NATO and relations with the EU. We have learned, often to our sorrow, that whenever we ignore European problems, we end up paying a higher price later, as was the case when we pulled inward in the decade before World War II.</p>
<p>American interest in a strong EU, then, derives from a steely-eyed appreciation of fundamental U.S. national interests: a Europe that is at peace and open to U.S. goods, ideas and cooperation.</p>
<p>While the U.S. would be wise to let Europeans sort out their political differences and options for integration, America will pay enormously if the process of European cooperation or prosperity goes badly off track. We should be clear-eyed about potential costs and work to deepen transatlantic cooperation.</p>
<p>The U.S. will not be better off with a divided and weak Europe. We win with a strong European partner.</p><img src="https://counter.theconversation.com/content/75109/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Earl Anthony Wayne advises HSBC's Mexico and Latin American operations on combating illicit finance and is paid for that advisory work. He is a public policy fellow at the Woodrow Wilson International Center for Scholars, a non-resident Fellow at the Atlantic Council, and a senior non-resident advisor at the Center for Strategic and International Studies. </span></em></p><p class="fine-print"><em><span>Daniel S. Hamilton served for 15 years as Executive Director of the American Consortium for EU Studies, has been a consultant to Microsoft, the Business Roundtable and Transatlantic Business Dialogue, and a member of advisory boards and committees for the Robert Bosch Foundation, Alexander von Humboldt Foundation, the Heinrich Böll Foundation, the German Institute for International Security Affairs (SWP), and the Körber Foundation. In 2008 he served as the first Robert Bosch Foundation Senior Diplomatic Fellow in the German Foreign Office.</span></em></p>The Treaty of Rome, which eventually led to the European Union, is turning 60 at a time when many inside and outside Europe are questioning the union’s value. For the U.S., much is at stake.Earl Anthony Wayne, Visiting Professor of International Affairs, Hamilton CollegeDaniel S. Hamilton, Austrian Marshall Plan Foundation Professor, Johns Hopkins University School of Advanced International Studies, Johns Hopkins UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/492672015-10-28T05:31:16Z2015-10-28T05:31:16ZCan the EU keep the peace in Europe? Not a chance<p>The European Union <a href="http://europa.eu/about-eu/basic-information/eu-nobel/index_en.htm">won the Nobel Peace Prize in 2012</a> because of its “six decade-long contribution to peace and human rights in Europe”. In 2015, as the UK gears up towards its referendum on EU membership, we hear very often that the EU played a key role in building peace after World War II. For all its faults, <a href="http://www.bbc.co.uk/news/world-europe-19924216">the argument goes</a>, the European Union is the best peace project Europe has.</p>
<p>There are three reasons why this is wrong. The first is that European integration contributed very little to the building of peace in post-war Europe. The second is that the EU’s record in keeping the peace on its external borders is poor. The third is that the Euro has aggravated conflicts between the members of the Eurozone: between north and south, creditor and debtor, exporter and importer.</p>
<p>It may seem crazy to suggest that the EU is not a peace project. This is, after all, its founding narrative. But history suggests otherwise for two reasons.</p>
<p>One is that in the late 1940s and 1950s there were many more powerful forces leading to peace in Europe. The shift from warfare to welfare states, made possible by the class compromise put in place after World War II, was crucial. European cooperation was really just an extension of that deeper change in European societies. The <a href="http://www.politics.co.uk/reference/common-agricultural-policy">Common Agricultural Policy (CAP)</a> was intended to extend welfare provision to farmers. </p>
<p>Central to post-war peace in Europe was also the Cold War and the support given to Western Europe by the United States. Most important of all was the post-war boom. After the war, people wanted a better life and it was to their own governments that they turned.</p>
<p>Another reason is that the EU of today has little to do with European cooperation in the 1950s. Today’s EU has more recent roots. The <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:xy0022">Coal and Steel Community</a> was a cartel intended to make European steel production more competitive and give the French access to West German coal. This initiative was quickly overcome by the economic success that raised demand for coal and steel. By 1957, it was quietly folded into the <a href="http://www.civitas.org.uk/eufacts/FSTREAT/TR1.php">Treaty of Rome</a>.</p>
<p>The aim of the Treaty of Rome was to soften the effects of economic success. Growing economies push up wages and prices, which makes imports cheaper and leads to repeated balance of payments problems. Look at Britain’s <a href="http://www.ehs.org.uk/dotAsset/727f5198-c788-4481-b4b6-cea1af25155b.pdf">Stop-Go economic experience of the 1950s and 1960s</a>. A common external tariff, which raised the prices of imports, was Western Europe’s answer to this problem.</p>
<p>Today’s EU has its roots in economic crisis, not in economic success. Its history takes us back to the 1970s and the end of the post-war consensus. Governments sought many ways to exit this crisis and eventually settled on European market integration (the <a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:xy0027">Single European Act</a>) plus fiscal consolidation through more robust external rules (the <a href="http://europa.eu/eu-law/decision-making/treaties/pdf/treaty_on_european_union/treaty_on_european_union_en.pdf">Maastricht Treaty</a>). This takes us to the EU and the euro of today.</p>
<h2>Groundhog Europe</h2>
<p>The European Union has not been very successful at promoting peace beyond its own borders. The EU does have a foreign policy but it is stuck in a time loop.</p>
<p>If one goes back 20 years to 1995, the kinds of questions being raised about Europe’s role in promoting peace related to whether it would speak with one voice. This was the time of the <a href="http://news.bbc.co.uk/1/hi/world/europe/4997380.stm">Yugoslav war</a> when European divisions meant that the United States got heavily involved in the Balkans. People wondered if the EU would finally become not just an economic giant but a political one, too. People described 1995 as a <a href="http://1995blog.com/2014/07/02/why-1995/">crossroads and a watershed moment.</a></p>
<p>Fast forward to 2005 and the <a href="http://www.lse.ac.uk/publicEvents/pdf/20050218GarethEvans.pdf">very same clichés are being used</a>. Two years after the US invasion of Iraq had divided Europe, people asked when it would speak with one voice. The EU was again at a crossroads. This was two years after the EU’s first Security Strategy, intended to give Europe a sense of direction in foreign policy.</p>
<p>Today, we hear much the same thing and Europeans are <a href="http://eeas.europa.eu/top_stories/2015/150627_eu_global_strategy_en.htm">once again drafting a new security strategy</a>. The <a href="https://theconversation.com/uk/topics/ukraine">war in Ukraine</a> led commentators to lament the divisions between EU member states. The rise of Islamic State in the Middle East has made people wonder if the EU will ever become a regional power or whether it will always have a “lowest common denominator” foreign policy.</p>
<p>As in the film Groundhog Day, where Bill Murray is stuck in a time loop, the European Union is forced to relive its foreign policy frustrations time and time again. Groundhog Day has a Hollywood-style happy ending; the EU may not be so lucky.</p>
<h2>The euro versus democracy</h2>
<p>The euro was meant to lead to convergence in Europe. It was expected that a single currency would lead to harmonisation of national business cycles. Instead, the <a href="https://www.ecb.europa.eu/press/key/date/2012/html/sp120615_1.en.html">buzzword amongst economists is heterogeneity</a>.</p>
<p>The euro has created new divisions but it has also cemented older ones. It has exaggerated the differences between productive and unproductive national economies. It has heightened intra-Eurozone competition. New <a href="https://theconversation.com/uk/topics/grexit">divisions between debtors and creditors have broken out</a>. There is no single European economy, just very different national economies. More than ever before, the economic map of Europe looks like it did in the 19th century when advanced northern societies complained about the “backwardness” of southern and eastern Europe.</p>
<p>A solution to this is to build a political union with fiscal powers. Transfers from rich to poor parts of Europe would iron out today’s enormous gaps. There is no political appetite for this anywhere, neither among elites nor among domestic publics. As a result, the survival of the Eurozone seems set against national democracy. Few accept this at present but the euro and national democracy may be incompatible.</p>
<p>We are right to ask if Europe can keep the peace. The answer is “no”. Peace in Europe owes much to other factors and the EU has done little to build peace beyond its borders. Peace within Europe has become fragile as the euro unleashes competitive pressures that pit national economies against one another.</p>
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<p>This is an edited version of a talk by the author at the <a href="http://www.festivalofideas.cam.ac.uk/events">Cambridge Festival of Ideas</a>. A full audio recording <a href="http://www.festivalofideas.cam.ac.uk/photo-gallery/audio-recordings">can be listened to here</a>.</p><img src="https://counter.theconversation.com/content/49267/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Bickerton does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The European Union was billed as the most important post-WWII peace project. It has failed.Chris Bickerton, Lecturer in politics at POLIS, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.