Cause and Effect in European Politics and Law

The EU Single Market Is in Danger in 2013

Adelina Marini, January 7, 2013

As the tradition goes, the beginning of every year is the time when predictions are being made. What awaits us in 2013, according to the analysts from the European Council on Foreign Relations (ECFR)? 10 are the main challenges, according to them, the first of which is the most worrying for Europe. No matter how the EU and the euro area will deal with the crisis, the single market is at risk - the biggest achievement of the European integration. ECFR sees two possible scenarios. The first is a break-up of the eurozone that would shatter the single market, but Schengen as well. The second, is a giant leap towards integration where, however, the internal market is expected to shrink because of withdrawal of some countries (like Britain). Even if there were a third option, according to ECFR, where things continued in the same direction, the depth of the internal market will be diminished.

The analysts explain their forecast by saying that in the past months the eurozone banks have started to withdraw from their trans-border business. Because of the spreads, even badly managed German companies pay lower interest rates than better managed Spanish firms. All this will creates new barriers and will lead to re-direction of attention to national markets, the ECFR predicts. This means less competition for Europe, less growth and higher prices for consumers.

As second the analysts put foreign policy, predicting that smaller EU member states will have a leading role. According to the ECFR Scoreboard 2012, Poland and Sweden were the countries that undertook foreign policy initiatives at the global stage, while the big eurozone countries were focused on the crisis and Britain is more and more detached from Europe. In their ECFR Scoreboard for this year, the ECFR again puts Sweden at a leading position.

2013 will be the year when technocracy will end, the ECFR analysts believe. One year after technocrats without elections took the helm in the EU periphery, electoral politics is returning. In February, there will be parliamentary elections in Italy, which are expected to significantly change the political geography in that country. According to the ECFR, those elections will be something like a referendum on Mario Monti's reforms, a former EU commissioner and rector of the influential Milan University Bocconi. Whatever the outcome from the vote, it will have significant implications for the whole of Europe, is the analysts' forecast. There will be elections in Germany, as well, although not in the context of technocracy. ECFR believes that a new government is possible in Berlin that will have less constraints in its work, although the big risk is that Europe in general will be absent from the campaign. Unlike Italy, where Europe already is present in the campaign, mainly in Mario Monti's platform.

2012 was another year of detachment of Britain from the EU. ECFR expects 2013 to be less toxic for the British debate on Europe which will probably become clearer this month when the European speech of Prime Minister David Cameron is expected. According to the ECFR, the UK Independence Party (UKIP) of populist Nigel Farage (a very vocal MEP, calling for a British exit from the EU) will continue to gain speed. This year, Britain is expected to further realise that it is sleepwalking towards a devastating exit from the EU, ECFR predicts.

Syria is the fifth forecast of the European Council on Foreign Relations. The country will continue to be a terrain for regional conflicts, an epicentre of a much bigger regional battle that complicates the hopes for finding a solution and threatens with destabilisation the entire region of the Middle East. The Syrian civil war is sharpening sectarian tensions, reinvigorating Sunni jihadi forces, making Iran and its allies taking defencive positions and creating conditions for Kurdish ambitions. The latter creates problems between Turkey and its allies Saudi Arabia and Qatar, but it is also reverberating in northern Iraq, the forecast of the foreign policy think-tank reads.

Russia is becoming an increasingly ungovernable country because the sick and politically weakened Putin will not longer be able to play different power clans off against each other, is the ECFR forecast for one of the EU's strategic partners. Petro-economy is also expected to slowdown in 2013 which may prompt a return to defencive / aggressive postures to the south and the west, for instance by deepening relations with the former Soviet Union (and interferences in Ukraine and Georgia). Moscow will continue to show its muscles in Syria, with the US and against NATO, which will underscore it needs the West more than ever and that it cannot afford pushing too hard in difficult times.

And last but not least, 2013 will be a huge test for the European common foreign policy in the context of retracting United States. The question the ECFR analysts bring up is whether a post-American Europe will ripe to have a strategy of its own. Europe continues to fail in terms of its common foreign policy, but if the European leaders finally raise their heads from the eurocrisis they will notice how much influence the continent had lost, how much image and power. They may also realise the need to formulate a European global strategy. The analysts, however, do not engage with a forecast what are the chances this to happen.