From Triumph to Travail: The EU's 1989 Legacy

Editor's Note: This piece is part of a full report, "Reassessing 1989," which looks at the major events of that year, including the fall of the Berlin Wall, the Tiananmen Square protests, and the breakup of Yugoslavia.

As party systems across Europe adjust to changed popular demand at rapid speed, the European Union struggles to find its bearings in this whirlwind of political transformation. Euroskepticism has won a few big victories across Europe, and loose talk about the EU falling apart or being beyond repair is rife.

To understand the malaise, it helps to take a look in the historical rearview mirror. The seeds for the current EU illness were planted at the very moment of the bloc’s greatest triumph – in 1989. When open societies and markets prevailed over closed ones, when cooperation in Europe triumphed over enmity, the EU’s long trek to today’s situation of “system overload” began.

First of all, 1989 unleashed what we now call globalization, and with it an integration dynamic that led the EU into the previously unthinkable. Not only was more and deeper cooperation between countries suddenly possible – it was necessary. As the world became flat, and the double whammy of removed borders and the IT revolution put globalization on steroids, the EU answered marvelously. It expanded its integrative, regulatory, and compromise-brokering mechanisms into more and more policy fields.

But with time, push-back against the broader EU scope grew, and thirty years after 1989 the EU finds itself in a double bind. The problem is that integration has gone too far, but also not nearly far enough, as the ongoing crises neatly illustrate. For too long, the EU member states integrated the easy bits. Today, the success or failure of the EU is measured in those policy fields that are hard to integrate. The EU is now asked to produce results in areas that it was never designed to manage. Migration, defense, social policy, border security, a shared currency – all of these are fields in which the member states have reserved strong national veto rights for themselves and where the competences of the EU’s institutions are weak. The member states cannot find compromises to move forward, and they also oppose any major treaty change that would allow for the EU institutions to step in and broker deals. Intergovernmentalism, not the community method, is now the mechanism of choice in Brussels, at least in the key policy fields against which EU success or failure is now mostly being measured. As member states block any kind of meaningful reform in any of these fields, it is “the EU” that unjustly gets blamed for the lack of results.

Perhaps nowhere is this trap more evident than with Europe’s shared currency, the euro. In the great political bargain that made German re-unification possible, Germany gave up its strong and successful deutschmark as a concession for retaining enlarged territory and population. This deal worked, and Germany became much more closely intertwined with its neighbors’ economic fate than before. The common currency also did exactly what its integration-friendly creators had envisioned: it unleashed market forces that made closer political integration between the euro countries an obvious necessity.

What the founders of the euro failed to anticipate, however, was that the member states could ignore necessity. That they would be eager to cash in on the benefits of the shared currency but would remain unwilling to integrate politically. By now few people doubt that a common currency also needs a joint fiscal policy, which, in the end, means joint budget-making and joint decisions about how to spend the money. In other words, massive political integration. Nonetheless, member states cannot jump over their shadows, even after the painful euro debt crisis dramatically illustrated the enormous vulnerabilities and imbalance between deep economic integration and shallow political integration. Nearly thirty years after it was dreamt up, the euro seems stuck in an improvised middle, functioning but not fully functional, without meaningful reform in sight.

Thirty years after the Iron Curtain was lifted, Europe is again a contested geopolitical space with a fragile neighborhood, but the EU, the centerpiece of its political architecture, has no effective means of dealing with any of it.

Soon after the Berlin Wall came down and the Soviet Union collapsed, the EU, like NATO, embarked on its own path toward enlargement. Western Europe owed membership in its economic community to the countries that had been denied freedom and prosperity for so long. Enlargement was the right thing to do and any alternative would have been a disgrace. But what the Europe failed to see was that a largely expanded EU realm would also require the geopolitical means to assert itself in the world.

To be fair, the rise of China was in its infancy in 1989, and few people would have predicted relations with Russia going as sour as they eventually did. Nearly no one expected the United States interest in Europe to fade so starkly. So its perhaps no surprise that few policymakers in member-state capitals took discussions of an EU foreign and security policy too seriously in the early years. To this day, EU foreign policy is a game that the member states play without including the EU institutions significantly.

As a consequence, the EU is unable to play geopolitical hardball, as was visible in the Ukraine crisis in 2014 (where it tried to play geopolitics bureaucratically), nor is it even a major player in global diplomacy, as proven by the Iran nuclear deal (where Iran and United States were focused on each other and needed the EU only as a place holder before they could get to the core of the matter). Thirty years after the Iron Curtain was lifted, Europe is again a contested geopolitical space with a fragile neighborhood, but the EU, the centerpiece of its political architecture, has no effective means of dealing with any of it.

Europe needs to integrate more (albeit carefully), not less, if it wants to keep its levels of wealth and freedom. It needs to become a foreign policy and security power if it wants to play a role in the newly emerging world order. And it needs to reform governance of its currency so that a more balanced euro can become a unifying force, not one that drives Europeans apart.

As party systems across Europe are adjusting to changed popular demand at rapid speed, the big question is whether, under these changed conditions, the EU can make the progress it will need. The new generation of policymakers in Europe that has been swept to power in their home countries need to prove whether they are worthy of the legacy of 1989.

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