Several events that occurred Tuesday highlight the social, political and economic stresses in the European Union. Despite recent promises of economic growth and improved living conditions, political fragmentation, high unemployment and conflicting national agendas will continue to threaten the survival of the continental bloc in its current form.
On Nov. 5, the European Commission released its economic projections for the next two years. During a news conference, EU Commissioner for Economic Affairs Olli Rehn announced that the eurozone would grow by 1.1 percent next year, down from a forecast of 1.2 percent growth made in May, and he added that "there are increasing signs that the European economy has reached a turning point." However, Rehn stressed that unemployment remains at unacceptable levels in several countries.
The two statements are a reminder of the current state of the European crisis. Even if most members of the eurozone see modest economic growth in 2014, unemployment will remain at critically high levels for several years. Greece, Spain and Portugal, the countries with the highest jobless levels in Europe, will see little to no relief in their unemployment crises next year. More important, jobless rates will grow in Italy, France, Finland and the Netherlands — evidence that the crisis is slowly spreading from the eurozone's periphery to its core.
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The European Union's deficit and debt projections are not optimistic either. France and Spain will not meet the bloc's deficit target of 3 percent of gross domestic product anytime soon. This means that Paris and Madrid will continue to fight with Brussels over this issue for the foreseeable future, further weakening the credibility of the EU Commission's attempts to make member countries meet their fiscal obligations. Public debt in the eurozone will reach an average 95.5 percent of GDP in 2014, up from an average of 79.9 percent in 2009. In fact, public debt will exceed 100 percent of GDP in many countries, including Italy, Ireland, Portugal and Cyprus. In the context of stagnating or contracting economies, several eurozone countries will struggle to "grow out" of their debt.
Probably the most important forecast made by the EU today — and one that has been largely ignored by mainstream media — is that credit will remain tight in the eurozone next year. Some countries in the currency bloc have been trapped in a vicious circle where banks do not lend to households or companies, since they are afraid that they will not get their money back. Companies and households do not demand credit because the conditions are unfavorable and because they do not know whether they will be able to repay their loans. In a continent where people and institutions depend heavily on banks for financing, tight credit conditions are at the core of the economic crisis. Even if the European Central Bank made money available at reasonable costs, only "safe" countries such as Germany and Austria would benefit from these policies. Credit conditions do not significantly improve in crisis-hit countries such as Spain and Greece.
Three other events on Nov. 5 highlight the political consequences of the European crisis. In Greece, police suggested that anarchist and far-left extremist groups may be linked to the murders of two members of Golden Dawn, a neo-Nazi political party. Golden Dawn has targeted left-wing activists for some time, and now it looks like those activists have decided to strike back. The prospect of retributive attacks in Greece could add an extremely dangerous element to an already unstable political situation. Greece is a reminder that in some EU member states, especially those in the throes of economic depression and massive unemployment, there is a thin line between political instability and political violence
Looking beyond the eurozone, we see more troubling trends for the future of the European Union. British Prime Minister David Cameron said today that public support in his country for staying in the European Union is only "wafer thin." Since earlier this year, when he announced that an in-out referendum would be held around 2017, Cameron has played a subtle game. On the one hand, he has been more outspoken against the European Union in response to electoral pressure from the U.K. Independence Party, Britain's rising Euroskeptical party. On the other hand, he has reassured business leaders that his government will try to renegotiate the terms of Britain's membership in the union to reclaim some national sovereignty without leaving the free-trade zone.
His ambivalence corresponds with Britain's grand strategy, which seeks some alignment with the United States without detaching completely from Continental affairs. But it also reveals London's growing concerns about the future of the European Union, an institution that takes away national sovereignty from its members but no longer necessarily fulfills its promise of economic prosperity.
Poland is similarly worried about the future of Europe. When Warsaw looks to the West, it sees a weakening and fragmenting European Union. When it looks to the East, it sees a relatively stronger and more assertive Russia. Because of its location in the heart of the North European Plain, Poland historically has been subject to invasion, occupation and even partition by its neighbors. Thus, Warsaw has always been concerned about events beyond its borders and has tried to adapt to the region's political and economic environment. This has made the Polish government demand a greater U.S. presence in the region — a claim that was acknowledged today when U.S. State Secretary John Kerry met several Polish authorities in Warsaw to discuss Poland's role in NATO and the future of the missile defense system in Europe.
Poland understands that Central Europe is no longer the same priority for the White House that it was during the Cold War or even during the mid-2000s, but it needs to make sure that its alliance with the United States remains strong. History has taught Poland that no military alliance is permanent, but the fact that Warsaw was the only European stop in Kerry's tour to the Middle East suggests that the White House is still trying to demonstrate its commitment to its Central European partner.
The European crisis is far from over. Even if some economies grow next year, the political consequences of high unemployment would still be felt for years to come. The rising popularity of nationalist and anti-establishment parties across the continent and in some cases, political violence, will remain a key feature of European politics in 2014 and beyond. Outside the eurozone, countries will react to the political fragmentation in the European Union by focusing more on strategies that serve their national interests. In some cases, this will involve developing a greater independence from decision-makers in Brussels. Even as news trickles out on EU members temporarily exiting recession, these broader trends will continue to haunt Europe in the longer term.