Two decades back, at the start of this century, international business was flourishing. The world was going through a post-Cold War era of economic growth.
Age-old protectionist business policies were giving way to neo economic liberalism across the developed west as well as the old Communist bloc. Rampant consumerism seemed to be the only way ahead, barring, perhaps, the odd environmental hazard. In the midst of this seemingly-endless prosperity was the European Union (EU).
The EU had become the buzzword for all supranational bodies that want to promote unfettered international trade, at least within its own bloc.
The EU had several advantages. On one hand, it had the traditionally strong western capitalist economies. This group included the likes of France, the Netherlands, Belgium, Italy, Sweden, Finland, Austria, Denmark, the Republic of Ireland, and of course Germany. An always reluctant UK was also on board, and so were the previously backward Iberians in Spain and Portugal. But another massive advantage was that the EU would soon expand to include former Warsaw Pact members as well. By the middle of the decade, Poland, Hungary, Czech Republic, Slovakia, and the Baltic States had also joined in. Some more would join soon, heralding a period of previously unseen prosperity for the region.
Watch: History of the European Union
A few irritants did remain for the bloc. One was the failure to convince either Norway or Switzerland to join. Another was the decades-long question of whether to include Turkey within the EU. But these were comparatively minor questions in an era dominated by liberal leaders who promoted international trade. The first major problem emerged in 2007 with the global economic recession. This continued across the pond in the USA until at least 2009 but lead to a longer period of austerity in Europe. Global trade and unfettered consumerism were now considered the villains of massive income inequality, even in the most prosperous of countries.
The rise of Nationalism and a faltering EU
By the middle of the next decade, global politics saw the rise of a new breed of nationalist leaders. They promoted their country’s self-interest above the global or regional order, and openly attacked these supra-national blocs. With Donald Trump elected leader of the world’s biggest economy, and Boris Johnson finally unleashing the pipe dream of millions through Brexit, global trade seemed to be on the back-foot. Protectionism was now in vogue. The final proverbial ‘nail-in-the-coffin’ moment for the bloc and its ideology may be what is unfolding in front of our eyes right now.
The ongoing pandemic has exposed several fault lines in an already faltering EU.
The perennial debate concerning Germany’s domination of the rest of the continent continues. Germany was indeed more successful in keeping its death toll much smaller than its immediate neighbors and countries with similar populations. But Italy accused Germany of not coming to its rescue when the former needed it the most. Similar voices have been heard elsewhere on the continent, though the ones who, like Germany, succeeded in keeping their numbers low, do not mind proclaiming the country as a quasi-bloc leader.
Tourism is another industry laid low by this crisis. It is one of the key industries on the continent, employing millions, directly or indirectly, and generating a lot of revenue. The open borders approach had to be put an end to, albeit temporarily, due to the various lockdowns. Since borders can’t be closed off forever, some countries have devised innovative strategies to kick-start their economies once again. For instance, the Baltic States of Estonia, Latvia, and Lithuania have opened a travel bubble, whereby they can cross each other’s territory like before but not venture beyond. Plans are also afoot to expand this bubble to neighboring Poland as well. Similar plans are proposed between the Czech Republic and Slovakia, while also considering Croatia.
What’s next for Europe?
So the question now is, what next? The bubble around the European Union may have been damaged to quite an extent, but there is still hope. Germany as usual will need to take the lead. But this time, France, the second-biggest economy, and Italy, the third, will also need to be significantly proactive. More than the obvious practical requirements with each other, the feeling of open borders fuels business continuity. It also helps to build scale, something where the USA, Russia, China, and even India have a natural advantage at. The likes of Finland, Denmark, Czech Republic, and Portugal too have done quite well in quelling the flow of the pandemic, so they must take strong leads in reviving the economy.
In spite of Brexit finally materializing, the UK needs to be cultivated as a strong business partner.
The island nation continues to be a strong economy, and able to attract investments, especially in the services. London remains unmatched as a hub for foreign exchange. The UK remains a part of several economic deals with the EU. The bloc for its part must also reach out to Turkey, Israel, and the GCC countries. Ukraine could be another potential entrant in the future. The east European country may even be used as a bulwark against any future Russian interest to dominate business on the continent.
Watch: Slovenian Philosopher Slavoj Zizek on the future of the European Union
The developing countries such as India, South Africa, and Mexico need to be high on the EU’s interest table. While these countries have also suffered from the pandemic, their young populations and the nature of their developing economies means that they may be amongst the fastest to be on the road to recovery. High growth rates are anyway not to be expected in a developed economy and with an aging population as most of Europe is on. So stability has to be the buzzword now. The advent of Artificial Intelligence (AI) means that several jobs could be altered forever. Some may even vanish. But manufacturing needs to be revived, to reduce the dependence on China and other countries. Globalization definitely has its plusses, but an overt reliance on a single country may not be the right approach.
Thus, overall the European Union must keep pushing on to be the leading supra-national body in the world, albeit with some modifications, for at least the short- term.