European sovereignty? Solidaristic development at the "turning point"

Many flags of the Europe Union standing in a row


European sovereignty?

Solidaristic development at the "turning point" (1)

Helmut Scholz and Dr. Joachim Schuster


In the third decade of the 21st century, a good 70 years after its founding, the EU, as a political and economic actor, is facing the greatest convergence of challenges in its history. The global economic environment is being reshaped by a digital revolution of the productive forces, which is transforming all economic conditions and areas of life worldwide. As the climate crisis deepens, it substantially threatens the natural basis of human life. Without a revolution in the energy system underlying production and our way of life, more and more regions of the world will be uninhabitable in just a few decades. The war in Ukraine exacerbates these problems, in some cases dramatically.

Although this constellation of problems suggests ever closer cooperation between all EU member states and a conscious reorganization of the economic and monetary union and its competences in recognition of the internal and external development impulses and with no sensible alternative, the attempt to develop a coherent European response has been unsuccessful. On the contrary, the EU as a group of states seems currently largely incapable of making decisions in many areas because it is unable to forge compromises in the Council that are appropriate to the material problems at hand, especially in the international context, and that open up new development perspectives or at least limit destructive tendencies. At the member state level, narrowly defined national interests still dominate, which prevent new strategic decisions regarding political and economic integration and the corresponding joint realignment of the EU as an economic, monetary, social and environmental union. Rather, the tendency to seek solutions to problems at the EU level remains very limited, especially if this implies the deprioritization of national policy goals. The result is the continuation of a European policy of the lowest common denominator, which is not sufficient to meet the present challenges and which only aims to ensure the continued functioning of the internal market. However, the tectonic changes in the real global economy and the US-China-EU geopolitical power triangle are at least forcing the EU and its member states to react to these circumstances.

These deficits call into question the internal cohesion of the EU, it’s economy and society. In broad public discourse, the political (and probably also the financial policy) elite of the United Kingdom promoted the idea that national interests can be better represented outside the EU. They thus drew the conclusion for Great Britain as the first member state that it would no longer be possible to follow the course of further integration without compromising on key national interests. This is one of the reasons why Britain left the EU in 2016, which was the ultimately logical outcome of this determination. Equally serious and problematic is the increase in right-wing authoritarian and nationalist tendencies in all member states. These forces are fundamentally critical or even openly hostile toward a democratic and pluralist EU that seeks fundamentally new solutions and defends joint values. The problem is that the domestic containment of right-wing populist tendencies on the one hand narrows the scope of governments that are essentially pro-European and on the other hand limits their options for a process of further integration that is supported by civil society and broadly accepted. This also makes it considerably more difficult to develop far-reaching common EU policies, or even to arrive at new, common forms of cooperative and solidaristic relationships, beyond compromise. In contrast, two Member States, Hungary and Poland, are not only openly questioning the common consensus of values in the EU, but are also aggressively restricting the independence of the judiciary as well as freedom of speech and freedom of the press. This dismantling of the rule of law is accompanied by offensive propaganda for an "illiberal democracy", tendencies that are also currently of great relevance in some other member states in Central and Eastern Europe (such as the Czech Republic, Slovenia or Slovakia).

Even more alarmingly, under the tenure of governments in almost all EU member states, political parties or other groups act as purveyors of such ideologies and are gaining increasing social influence precisely through a discourse that is critical of the EU or rejects integration, making use of real-time propagation of information in social media and a lack of transparency of the multi-level decision-making structure of today's EU. As a result, the rule of law and basic democratic liberties are currently not fully guaranteed in a significant number of member states. Conversely, this constellation makes the development of new perspectives for European integration, which is so necessary at the present juncture, more difficult.


The Exhaustion of the Type of Neoliberal and Globalized Societal Regulation Dominant in the EU

The phenomena outlined above point to deeper causes for the multiple crises of European integration and the ensuing geopolitical shifts and turmoil. Our central thesis is as follows: The economic basis of the long-dominant development path of the EU is eroding. As a result, there is a need to adapt the old type of accumulation, which was characterized by the dominance of the financial sector and the reduction of barriers between national and regional economic areas. This type of accumulation is proving to be unsuitable for combating climate change and species extinction, which are on the immediate political agenda today. The necessary conversion of the energy basis of our production and way of life from fossil to renewable energy sources in a historically extremely short period of time cannot be achieved with the prevailing model of accumulation and political regulation, which was based on the withdrawal of the state and the strengthening of market mechanisms. A significantly more extensive, political and social control remains necessary, which is in conflict with prevailing economic interests. The erosion of the previously dominant model of accumulation and regulation is accompanied by a comprehensive dispute between the U.S. and China over global hegemony. This has far-reaching consequences for the EU. Within the framework of the previous model of integration, which was based on a comprehensive design of globalization along neoliberal lines, both internally and externally, it is obviously no longer possible for the EU to overcome these challenges and the existing blockades in decision-making in the EU without serious disruption in the realm of economic and social policy.

This type of accumulation and regulation of neoliberal globalization, which is still dominant today, succeeded the growth model of the post-war order through an extended transition process in the 1970s and 1980s. The political breakthrough of the new order came with "Reagonomics" in the U.S. and Thatcherism in Great Britain. The implementation of neoliberal globalization was favored politically and at the same time ideologically by the weakness and the economic and political failure of the societies of “really existing socialism” in Central and Eastern Europe and the Soviet Union, which was becoming increasingly evident. The "end of history" was proclaimed. From now on there would no longer be any fundamental alternative to the neoliberal economic model in connection with the liberal social order and this model would therefore have an impact on a global scale because it had proven to be clearly superior. Developments in the 1990s and the 2000s superficially seemed to prove confirm this view. Neoliberal dogmas shaped the economies and politics of many countries around the world. The driver of neoliberal globalization was the United States. Under its leadership and dominance, both the global economic institutions that were largely built up in the post-war period and the rules and standards governing these organizations were restructured and realigned in accordance with an increasingly global nature of supply chains. They thus became key players in the implementation of this form of economic globalization. The collapse of the international financial markets of 2008/2009 was the first decisive turning point in decades that shook neoliberal dogma considerably. Nevertheless, this type of accumulation and regulation continued to be dominant in the U.S. and in the EU in the following decade of the 2010s. In emerging economies – above all in China, but also in many countries of the Global South –, however, the attractiveness of this model has decreased considerably. Especially since in almost all of these countries the state plays a dominant role in shaping the respective society and economic system, regardless of the extensive integration into the world economy. Politically, this is linked to a refusal to continue to be subordinate to the interests of the U.S. and the EU.

The change towards a neoliberal globalization had quite different manifestations in different states, based on their different social and economic models but also depending on the respective intra-societal balance of power. Nevertheless, important commonalities can be identified between most North American and European states. An essential element of this type of accumulation and regulation is the enforcement of markets that are designed to be as unregulated as possible, especially unregulated financial markets. In addition, restrictions on the movement of capital were eliminated on a large scale. In terms of trade policy, efforts to implement free trade received a new impetus. Nationally, labor markets were deregulated and made more flexible. The limitation of sovereign debt as a guiding principle dominated state financial policy, with the at least partial reduction in social spending being of particular importance. In terms of tax policy, redistribution from the bottom up dominated. Top income tax rates and corporate taxes have been cut across the board. Indirect taxes on consumption became more important than direct taxes, which in turn resulted in distributional effects in favor of higher incomes. Corporate strategies also changed in this environment. Corporate structures became differentiated in a large number of subsidiaries, product ranges were streamlined and alue chains were differentiated internationally and largely organized according to the criterion of cost efficiency. The financial sector was significantly strengthened compared to the real economy. Many corporate strategies were no longer determined by long-term competitiveness and the expectation of long-term returns from activities in the real economy, but rather by the shareholder value of investors as reflected by capital markets, geared towards short-term return. Global economic integration increased significantly. Globalized value chains structured according to cost efficiency created global dependencies and vulnerabilities.

As a result, a specific global division of labor emerged with neoliberal globalization, which did indeed increase the average economic prosperity in many countries – including countries of the Global South and so-called "middle-income countries" – overall. At the same time, however, regional and social inequalities within and between states and groups of states increased considerably (see B. Hacker, M. Reinhardt, St. Stache, 2021). However, the development of this global division of labor also had an impact on the leading economic powers, since many stages of production have been relocated to lower-cost countries. The dominating factor here was the outsourcing of simple production stages to countries with significantly lower labor costs.

In the EU, the principles of neoliberal globalization became relevant in two respects. On the one hand, the external relationship was structured along these lines. On the other hand, the intra-European division of labor was also determined by this pattern. This reorientation of EU integration began with the adoption of the Single European Act of 1986, which essentially implied the deepening of the internal market with its so-called four freedoms (freedom of circulation for capital, services, goods and labor) through negative integration – i.e. through the dismantling of existing state regulation –, and no longer through positive integration – i.e. the agreement on common European rules. Ultimately, this principle also dominated the decision to establish an economic and monetary union in the Maastricht Treaty of 1992, which anchored market integration without the adequate establishment of institutions of political control. In the long term, greater joint action by EU member states was to be achieved via the path of economic and monetary union and the introduction of the common currency, the euro, without being restricted by state actors or even EU institutions. Germany, in particular, prevailed here in terms of regulatory policy against other countries in the EU with the strict rejection of common obligations of EU member states, which still applies today, even if this principle threatens to cause serious distortions of the EU internal market. The lack of political willingness to establish a real community-wide economic policy has proven problematic to this day – the common currency alone was to bring about the necessary steps towards integration and the convergence of the EU member states. This paradigm, in view of the far-reaching effects of the Covid-19-pandemic and the apparent vulnerability of the production and consumption architecture that has been linked worldwide for more than 30 years, in particular the interdependencies in global supply chains, can no longer be pursued without social and democratic destabilization in the societies of the EU27.

Despite the economic constraints created by a common internal market with a common currency and a common monetary policy, important political fields of action, such as social, economic, financial and tax policies, were to explicitly remain within the competence of the member states. In order to ensure a minimum level of coordination, all states were subjected to a strict set of neoliberal rules. Attempts to change this at the beginning of the 2000s within the framework of the discussion about a European constitution and to strengthen the European regulatory level failed due to the resistance of the political and economic elites in the EU member states. What remained was a new iteration of the well-known neoliberal paradigm in the form of the Lisbon Treaty, which was achieved within the framework of intergovernmental negotiations. The admission of sixteen new members from Northern, Central and Eastern Europe to the EU in the 1990s and 2000s also proved to be of long-term importance.

This cemented an intra-European division of labor that allocated individual member states to stages in the value-added chain. The Eastern European accession countries became the extended workbench of the highly developed Northern and Western European states and a reservoir for cheap labor throughout the EU. At the same time, the foundation was laid for a shift in the political landscape of the EU against the background of these processes of social and, above all, economic transformation, which have not been completed in almost all of these countries and which to this day have shaped the discourse on goals and values of European integration.

The concept of negative integration in the EU, including eastward enlargement, was successful because it was compatible with the neoliberal and globalized type of accumulation and regulation. In other words, the EU benefited from the international division of labor and was able to unleash intra-European growth potential. It was able to take advantage from cheap production in other parts of the world. The deficits and shortcomings of integration repeatedly mentioned by progressive forces paled in the face of the EU's "economic successes". The EU appeared as a guarantor and condition of dynamic economic development that was sufficiently attractive, at least for the majority of the population in its member states. Due to the lack of political willingness to integrate important policies that determine economic development, especially labor market, social and financial policies, the European single market remained nationally fragmented to a not inconsiderable extent, because this was politically desired. Integration did not experience a real democratic boost experienced by citizens: maintaining the status quo remained the sole measure of success.

However, the collapse of the international financial markets in 2008/2009 and the slowdown in economic development in the following 2010s made the contradictions of neoliberal globalization increasingly apparent. Inequalities within and between countries increased. As a result, political approval of the EU eroded in individual member states and among individual groups (see S. Dullien, 2021).

The economic policy structure of the EU is also shaped by the fact that the EU economies have not succeeded in becoming decisively competitive internationally in digital technologies, the new, formative industry of the 21st century. To date, the EU has not been able to counteract the rapid pace of technological upheaval with an appropriate framework structure that would have succeeded, in whole or in part, in purposefully and constructively enclosing the development of the productive forces. This, too, is a major consequence of the European integration policy of the past few decades, since industrial policy interventions were only possible to a limited extent in this environment. As a result, the EU is largely dependent on American tech companies and/or Chinese companies for basic digital infrastructure.

Neoliberal instruments, especially in the context of global interdependence, are proving to be insufficiently suited to meet climate policy challenges, both economically and politically. The type of growth on which they are premised is inextricably linked to constantly increasing resource consumption and inexpensive access to fossil fuels. Environmental and climate damage is mostly externalized. The necessary conversion of the energy sources for the economy and society from fossil fuels to renewable ones as well as a sustainable management of resources will only be possible with far-reaching structural changes. With the assumption of responsibility for climate policy in the Paris Agreement, which was also promoted by the EU, and a regulatory switch to the "Green Deal" as well as the promotion low-carbon or carbon-free industrial and energy policy, a far-reaching restructuring of economic policy is now inevitably on the agenda. At the same time, this makes it clear that combating climate change requires significantly greater regulatory intervention by states, which in turn must entail much greater restrictions on regional and private partial interests that go beyond previously regulatory frameworks, not only in the EU, but globally. At the same time, this requires other forms of international cooperation. This climate-neutral transformation of production, consumption and lifestyles is the central challenge of the 2020s as the decisive decade in which dangerous climate change can still be avoided. "The transformations to climate neutrality and sustainable development within the limits of the planetary system, which are described in the Paris Climate Agreement and the 17 UN Sustainable Development Goals, can only succeed if global cooperation in these fields is massively intensified" (Dirk Messner , 2022, p. 59).


Controversy over Global Hegemony – The Global Consequence of the Exhaustion of Neoliberal Globalization

The crisis of neoliberal globalization is primarily reflected in two developments. Firstly, it is becoming increasingly difficult to resolve international conflicts of interest by means of the international economic institutions reformed in the 1990s. This means that the economic interests of the U.S. and the EU can hardly be enforced under the guise of embodying the general interest. This is reflected, for example, in the inability to agree on substantial reforms of the World Trade Organization or to get a grip on the indebtedness of individual countries.

In addition, the prevailing global order clearly limits the development of the emerging economies of the Global South. Breaking out of the assigned place as an extended workbench of the Global North is hardly possible in accordance with these rules (see K. Burmeister, J. Schuster, St. Stache, 2021). Politically, this leads to a certain distancing of many countries of the Global South and the emerging BRICS countries (Brazil, Russia, India, China, South Africa) from the U.S. and the EU. At the same time, this enables the development of independent regional or even global institutions, networks and trading platforms with independent regulations and standards – e.g. the II Asian Infrastructure Investment Bank" (AIIB) (2015), the "Regional Comprehensive Economic Partnership" Agreement (RCEP) (2020) or the Chinese "Belt and Road Initiative" (BRI) (since 2013) – independently of structures and organizations dominated by the U.S. and OECD member states and increasingly shaped by China. Nevertheless, C. Fred Bergstein insists that despite all these new possibilities and developments, there is no indication that China has made a hasty "attempt at dominance". There is no sign of a Bretton-Woods-like conference being convened to build a reconfigured global architecture, rather China's growing power is geared towards creating and de facto capitalizing on emerging developments and scopes rather than creating a distinct legal architecture. These differences between the U.S. approach and the BRI become evident in comparison to the original "Trans-Pacific-Partnership" (TPP) or its successor structure, the "Comprehensive and Progressive Agreement for Trans-Pacific-Partnership" (CPTPP), which even China now wants to join after the withdrawal of the United States see C. Fred Bergstein, 2022). In this regard, it is worth to consider interactions of global currency policy and their influence on the real economic processes in the individual national economies, and thus China's ability to both work towards strengthening the current system and at the same time to stake out a certain claim to "responsible leadership" wihtin it and to thus adopt a role which U.S. has indisputably claimed for itself for more than a decade.

Secondly, also as a reaction to this constellation, an alternative type of accumulation and government has established itself in China, which aggressively questions the uninhibited neoliberal globalization as a development model for the entire world. It is a state-centered regulatory model that is nevertheless largely intertwined with structures of private capitalist ownership. In this system, key decisions are made by long-term political guidelines from the state and are not left solely to the decisions of powerful corporations in free market competition. With this hybrid model, which is very successful from an economic point of view, initiated by and building on Deng Xiaoping's policy of reform and opening, China has become the second largest global economic power, which is increasingly thwarting the global leadership claim of the U.S. economically and thus also politically and is advances its own political and economic plans in the global economy, unimpressed by growing imbalances. At the same time, the Chinese government's self-confidence has grown to shape global economic relations (see J. Simon: Chinas neue Seidenstraßen, in: spw 1/2021).

The resulting dispute over global hegemony between the US and China now dominates international relations. These disputes are by no means only fought in the field of economics, but also politically and militarily. They are also, or precisely because of the Russian aggression against Ukraine and the massive military and economic support from the U.S., a dynamic encompassing all actors and accelerate the re-focusing of regulatory strategies (Ukraine, of course, as NATO Secretary General J. Stoltenberg emphasized on July 13 in the Foreign Affairs Committee of the European Parliament, has been massively supported by NATO and above all the U.S. since 2014). It is becoming increasingly apparent that energy – especially oil and gas – will be an integral part of the new geopolitics in a post-pandemic world and will significantly influence global economic strategies as well as traditional political and economic interrelationships (see Daniel Yergin, The New Map – Energy, Climate, and the Clash of Nations, 2021).

These geopolitical and geoeconomic challenges and interdependencies, which increasingly show a tendency towards deglobalization, become clear in the regional and international network of relationships of the U.S., the EU, China and other international actors, both internally and with one another. When the WTO tribunal ruled on September 15, 2020, the "punitive tariffs" imposed by US President Trump against China would, at least with a volume of 200 billion U.S. Dollars, be in violation of international trade law, the US Trade Representative at the time, R. Lighthizer, countered that with this ruling, the WTO demonstrated its complete inability to counter China's harmful technological practices. This reaction, unusually rude for a diplomat and international trade representative, shows how uncompromising the U.S. is in its dispute with China and that it is striving to stick to a zero-sum game in which only the American side can win. At least since D. Trump took office in the White House, US political advisors have been propagating almost uniform accusations against China: Its successful economic policy would allegedly challenge US interests and values; they would undermine the global competitive landscape (Report to Congress 2018) and endanger the future prosperity of the U.S.. Since China shows no willingness to change its policies, the US faces not only an economic but also a serious geopolitical and ideological provocation (Boustany Jr., Charles W.; Friedberg, Aaron L., 2019). Referring to such allegations of threats, American policy is currently deliberately focusing on confrontation and escalation with China, especially in the areas of trade, technology, but also capital flows (Ferguson 2020; Zheng 2019).

This is accompanied by an increased expansion of economic, political and also military cooperation between the U.S. and Taiwan. Associated with this is a forced, gradual but increasingly offensive ignoring of the Shanghai Protocol signed with the People's Republic of China on mutual recognition of the "One China" policy. Against the background of today's "systemic rivalry", Taiwan is now being upgraded from its previous, traditional role as a zone of influence to an independent actor to secure U.S. dominance in the far east-pacific region. This step further strains the bilateral relationship. In the knowledge of the previous broad international recognition of the One China policy with the mutually recognized principle of "One country, two systems" and thus de facto admission that Taiwan as part of China, the already tenuous stability in the region is fundamentally in doubt. This step will further increase tensions, especially since U.S. tech corporations in particular are increasingly diversifying their value-added and supply chain links with corresponding production facilities in Shenzhen and in eastern and southern China.

As China's largest trading partner, the European Union has so far been more cautious in its positioning and policy towards China. But here, too, discussions about the specific structure of the future of the relationship and a certain disengagement that the EU sees as necessary are increasing significantly. China's strategic course in the direction of restructuring its own economic and social model by 2030/2050 looms in the background of these debates. These discussions still seem open with regard to their outcome, mainly due to real and self-inflicted economic dependencies. In spite of the policy of entanglement and economic cooperation in service of German and European productive capital, above all the manufacturers of automobiles and machinery, which has been followed for many years by Germany, the world’s largest exporter, there are already signs of increased political and economic conflict. In a strategy paper on the prospects for EU-China relations issued in March 2019, the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy were still generally committed to a comprehensive strategic partnership with China. However, they amended this commitment to the effect that China, with which they are still cooperating and pursuing coordinated goals in certain policy areas, is also regarded as an economic competitor in view of its claim to leadership in key technologies. Wherever it promotes alternative governance models internationally, China is seen as a "systemic rival". The paper urged a new, "more realistic, confident and multi-faceted approach" to EU policy towards China. This demand is derived from the massive and rapid increase in China's economic power and political influence, which forms the basis for its ambitions to become a world leader. This was reaffirmed at the last EU-China summit: Where it is (still) mutually beneficial, cooperation is encouraged and economic integration is also promoted through bilateral, contractually secured cooperation in the area of investment and reciprocal market access. At the same time, however, there is the realignment of EU foreign policy, but above all of EU trade policy towards an "open strategic autonomy".

These development "will not only have negative effects on growth and employment in China in the short term, but probably also on productivity: if the country is cut off from international connections, i.e. if it has no access to other technologies and skilled workers, China's productivity could suffer, according to the calculations of U.S. strategists and the assessment of many Western economists" (W. Müller, 2021).

Following this logic, the 2021 G7 Summit agreed on a global value-driven, high standard and transparent infrastructure partnership, known as the Build Back Better World (B3W) initiative, which echoed the Build Back Better campaign announced by US President J. Biden in 2020. This comprehensive investment program aims to reduce the estimated trillion US dollar investment gap in least developed and middle income countries by 2035. B3W thus aims above all to make up lost ground in competition with the BRI (see G. Grieger, 2021). In this framework, economic competition is focused more on "decoupling" than on new, globally active cooperation in value creation processes, especially by way of the introduction of the concept of "like-minded countries"; because China is also an increasingly independent “competitor” and a "systemic rival" in terms of governance and regulatory structures.

China's international weight has grown as a result of the economic and social opening process initiated under Deng Xiaoping, which culminated in the decisive step of joining the WTO in 2001 and the county’s subsequent firm anchoring in the world economic system. The high dynamism with which the country's political, economic and technological potential continues to develop today mean that China's planning projects and strategic policy approaches are increasingly gaining global significance. "Engaging China is no longer the question; China is now engaging us" (Brown 2018, p. 14).

In view of these developments, the U.S., still under D. Trump, but even more so under the current US President J. Biden, has embarked on a policy of forced decoupling of supply chains and the financial system and has not only redefined the economy, trade and ultimately politics, but rather used it as part of a general emphasis on its own geopolitical claims. In this way, the formation of a bloc between Western democracies and open societies, especially in relation to the OECD countries, on the one hand, and other states classified as authoritarian, on the other, is being promoted in order to make this constellation the basis for the further development of bilateral or regional relations and more far-reaching cooperation in existing international organizations and networks.

Contrary to the EU's original concept of "open strategic autonomy", against the background of the economic and trade confrontation between the U.S. and China, the EU now seems to be focusing more on a transatlantic alliance with the U.S., against China. At the least with the "Global Gateaway" concept (July 2021), which aims to invest 300 billion euros by 2027 in quality infrastructure projects and "connect data, people and services worldwide" (Ursula von der Leyen, SOE, September 2021), the EU has taken a competitive, rivalrous and ultimately delimiting stance towards China.

Even though a joint strategy paper by the German Institute for International and Security Affairs of the SWP (Foundation for Science and Politics) Berlin, the Institut Montaigne and the Center for European Reforms entitled "Rebooting Europe's China Strategy" states that "the only way for Europe (defined here as the EU institutions and member states as a whole) consists in developing its 'strategic sovereignty', which in practical terms must mean becoming more resilient and better able to chart its own course. This implies an increase in its own influence on Washington and Beijing and to subsequently use this as a means of pressure" (SWP, 2022, p. 10). This also corresponds to the explicit emphasis on the key points that have been made known so far for a new China strategy by the German federal government, which is to be completed by the beginning of 2023. It is explicitly pointed out that, unlike in the past, this would enable better coordination of both corporate and state interventions with respect to China, take into account its transatlantic and pacific dimensions and overcome the German lack of strategic thinking in alternative scenarios, because the time of far-reaching agreements between Germany and China is likely to be over. Germany is also concerned with achieving a common Western position in the transatlantic relationship on regulatory and security policy issues towards China (see: Arbeitspapier Bundesakademie für Sicherheitspolitik, P. Heferle, April 2021).

The basic tenor of the current discourse on an EU and German China policy is as follows: A world economically, politically and military influenced by China would be fundamentally dangerous for the future of European societies. It would not only jeopardize prosperity, but also the liberal democratic power structures. The existence of the European Union itself, however, is based on the continuation of the effectiveness of the multilateral system (ibid.). However, this Eurocentric view obscures the actual necessities of the decisive paradigm shift toward a cooperative and solidaristic redesign of international relations.

In connection with the above developments, the relative economic decline of the U.S. has become apparent, which not only manifests itself as a weakening of the U.S.'s international position, but also in the U.S.'s declining ability to cope with the heightening domestic contradictions and inequities attending neoliberal globalization. Under President Trump, "America First" became an economic and trade policy maxim and at the same time a strategic answer, modifying the basic neoliberal paradigm by resorting to protectionism, aggressively playing off the remaining economic and political power for one's own benefit. China, but also the EU and, in particular, Germany were being targeted as enemies. President Biden seems to be returning to a more moderate strategy of "Buy American" which, although appearing much more cooperative, at its core is also aimed at defending American interests, even against allies, according to Robert E. Scott of the Economic Policy Institute, who explains in the Spiegel interview in April 2021 that the Biden administration is aiming to make U.S. goods manufacturing competitive again worldwide with the help of a targeted dollar devaluation; jobs should be brought back from overseas (Spiegel [S+], interview by Benjamin Bidder, April 27, 2021). Both strategies neglect the function of providing global regulatory services. The U.S. is thus objectively no longer fulfilling its role as a global hegemonic power (see I. Schmidt, 2021).

The dispute over global hegemony between China and the U.S. opens up new options for action for other important regional powers, because the old hegemonic setup, which provided a relatively stable framework for international relations, has lost its ordering power. As in the case of the Russian attack on Ukraine, powerful states can also see the opportunity for themselves to assert their interests with military force and thus violate fundamental principles of the still existing security order, such as the inviolability of borders. This indicates that in times of unresolved hegemonic constellations with a missing or at least weak international order, a phase of international uncertainty occurs that can include military conflicts.

The aggressive, imperialist policy of Russia is also a consequence of its loss of economic and political status in the international community over the last two decades. Associated with this is the inability to initiate and implement even basic restructuring and diversification of the country's economy. Rather, the structures of extractive industry were retained almost exclusively. The revenues were used, on the one hand, to buy political influence and, on the other, to finance the military-industrial complex. These developments were accompanied by a perception that the policy of the Cold War, i.e. the confrontational subjugation of a once recognized strategic and military partner, was being continued. At the same time, this development was favored by a reorganization of global alliances and relationships. The failure of security policy cooperation between Western Europe and Russia – for which Russia has advocated since the 2000s – or a real economic cooperation encompassing a future-proof energy policy between the EU and Russia indicate that the gap in perception is widening. And: "Our Western perception is: What is at stake here (ie Russia's war against the Ukraine) is the cornerstone of the global order and international law, the rights of weaker states against great powers prepared to use violence, even the prevention of a nuclear war that threatens humanity [...] ". But "in relevant parts of the world, the Ukraine war is perceived less as a potentially global crisis and more as a conflict between Russia and the West." And behind this framing hides the perception in many regions of the world that double standards are at play: "Eurocentrism instead of universalism, hypocrisy and double standards as well as the failure to keep the promise of fairness are the cardinal accusations" in view of many broken promises of generous support for the global South in terms of technology and economic support, a solidaristic global vaccine rollout in times of the pandemic (see D. Messner, 2022, p. 62 ff.). Apparently, part of the Russian calculation is to compensate for the aggressive turning away from the "Western" states by strengthening economic, political and military cooperation with the emerging new hegemonic power, China. Only time will tell whether the Russian calculations will work out. This will depend in particular on the further course and outcome of the war and the international reaction to it.

Much will also depend on the further behavior of China, which has so far hesitated to openly side with Russia and comprehensively realign its own international relations in view of the polarization that has arisen. China certainly still has an interest in mutually beneficial economic relations with European states, also against the background of the reorientation towards the priority of strengthening of domestic demand in the People's Republic as the decisive engine of growth in the future. How China positions itself also depends on how the "West" positions itself. The U.S. in particular interprets Russia's war as part of a global conflict between democratic states that are committed to human rights and authoritarian regimes that violate these rights and basic democratic freedoms. So far, the EU and its member states have largely followed this U.S. narrative, even if France, Italy and Germany have expressed some doubts about this interpretation. In this respect, the war in Ukraine is also becoming part of the dispute between two leading powers, the U.S. and China, about the starting positions for the future development of the international order, which for their part are also realizing their own economic interests in Ukraine.


"Business as Usual" Won't Work

The crisis of neoliberal globalization and the geopolitical changes outlined have far-reaching consequences for the EU. The blockage of decision making outlined above indicates that no new societal consensus on the strategy to be pursued has yet emerged. At the same time, however, it is evident that "business as usual" is not a realistic option. This applies to internal developments as well as to the future geopolitical role of the EU. A broad spectrum of possible future development paths are conceivable.

In this constellation, it is not surprising that in all member states forces are increasingly articulating themselves that question the usefulness of further membership in the EU or reject the contractually fixed consensus of the EU as a community of values with a strong supranational level of regulation, arguing instead for an alternative development model instead of or inside the EU. Brexit, but also the political stance of some Central and Eastern European countries, above all Hungary and Poland, show that important EU member states are at least considering such alternative strategic options or are even implementing them in their policies. They struggle for their own power-political structures in the EU, in particular the formation and strengthening of the Visegrad Group and also aim to establish stronger ones with the capability of influencing the development of the EU.

This strategic discussion is reflected in the European policy debate in Germany (also on the political left), which often revolves around the question of whether "more or less" Europe is the right path to overcome the neoliberal structure of the EU. In our view, this is an improper and misleading simplification. The development of the EU over the last 30 years was closely linked to the enforcement and safeguarding of the basic regulatory framework of neoliberal globalization. Without a doubt, this meant "more Europe" in the sense of strengthening the internal market with competition rules decided at EU level and possible EU regulatory options, which even went hand in hand with a limited strengthening of the democratic rights of the European Parliament, but without seriously reducing the serious democratic deficit of European politics . From a left-wing point of view, however, the implementation of neoliberal globalization was by no means a comprehensively progressive project, but always associated with diverse contradictions, societal conflicts and also the unresolved deepening of differences of development within and between the EU member states and many regions of the EU, which left-wing forces often felt were unable to give any convincing and thorough answers. In this context, the political left has suffered some bitter defeats.

Of course, many of the challenges mentioned can only be dealt with in a suboptimal manner at the national level and require international cooperation. In Europe it is therefore obvious for many political forces to strive for closer cooperation in the EU. The recently concluded Conference on the Future of Europe calls for a comprehensive deepening of European integration, which can certainly only be achieved by making changes to the applicable European treaties, including Recommendation 16, a change in or modification of the unanimity principle in EU decision-making), 14 (strengthening of EU competencies in the field of social policy), 18 (expansion of EU competencies in energy policy), 25 (expansion of EU competencies in the area of citizens' rights, including the introduction of EU citizenship) and others. At the moment, however, the majorities that would enable a major push towards deepening European integration are not yet evident. During its first assessment of the results by the EU Council summit on June 25th/26th, 2022, the European Council made it clear that it was not yet ready to initiate the procedure for a comprehensive change to the treaties. However, the Czech EU Council Presidency intends, in view of the Article 48 procedure (initiation of a convention) triggered by the European Parliament, to bring about a relevant resolution and response to Parliament's concerns during the October 2022 Council meeting.

Since European integration has made a significant contribution to the implementation and consolidation of neoliberal globalization, some parts of the political left are calling for a renationalization of politics. However, in view of the global challenges, even within paradigm, there would be a need for European and/or international cooperation. Anyone who advocates such a "national" conception would have to explain why it would be easier to advance progressive politics in such a constellation, including comprehensive democratization (see B. Hacker, 2019).

In the foreseeable future, against the background of the current state of debate in politics and civil society and the underlying interests, the question at hand should not be about "more or less" Europe, but a problem-centered and appropriate linking and combination of the national and European regulatory frameworks with regard to the economic and socio-political requirements of a process of integration that is geared towards the interests of citizens. In individual policy areas, this can certainly go hand in hand with a disentanglement of EU-integrated measures (examination of the scope and targeting of subsidiary control and, if necessary, transfer of decision-making back to the national or even regional level) and thus a certain renationalization. On the other hand, in other policy areas, a further limited transfer of competences to the EU will be called for. ln mutually influencing national, inner-European and global conflicts in different fields, a completely new development path for the European Union will emerge over several years, which will replace the old model of accumulation and regulation of neoliberal globalization both internally and externally. Today we can only speculate about the future shape of the new development path, its contradictions and the social groups that will benefit from it. If the political left wants to help shape this future, it is however necessary to initiate an intensive debate among all institutional and social actors in the EU about such possible alternative development models.


Discussion on Possible Development Paths

This book does therefore not attempt to design a comprehensive or even seemingly complete development path for a future Europe at the drawing board. Rather, we are concerned with naming important areas of debate in which the decisive course will be set for the emergence of a new European development model. We want to give food for thought and thus make a contribution to the necessary discussion of the political left in Germany about the future of the EU. There is no doubt that the outcome of these debates will have a significant influence on the prospects for progressive politics in Germany and will also restructure the space for debates within German society.

We have asked various authors to contribute specialist articles on important aspects in areas of discussion that we believe to be relevant. The first section "End of European neoliberalism" deals with the inevitable changes in the economic and financial policy regulation prioritized in the Lisbon Treaty and in the Stability and Growth Pact. Here, important groundwork is laid for the development of a new type of accumulation and regulation in the European Union – possibly in connection with the discussion about the future of the German “debt brake”. The first issue at hand is a fundamental reform of economic and financial governance (see the articles by D. Biegon and S. Kaufmann). A new development model must also provide answers to the dual challenges in the realm of industrial policy post by the necessity of a transformation toward a carbon-neutral and digital economy and society (see the articles by K. Gapp-Schmeling, N.V. Michaelis and H. Ragall as well as F. Mach and J.P. Rohde). The status of the economic and monetary integration of the countries of Eastern and Central Europe that were admitted after the turn of the millennium is another important concern (see the article by M. Schrooten). Another example for the reorganization processes within the EU, especially with regard to the self-confident formulation of their own priorities for current and future EU foreign policy and the perception of their own economic interests on the part of numerous Central and Eastern European EU member states is the contradictory process of the integration of Poland (see article by H. Politt).

The second section "Geopolitical Options” highlights important world regions that are of great importance for the geopolitical reorientation of Germany and the EU. It will be of outstanding importance whether the EU presents itself as an independent force or as an uncritical junior partner of the U.S. in its struggle for global hegemony. In this context, questions about the future nature of EU-China relations (see article by H. Gräf and S. Schmalz) and the relationship to the United States (see article by I . Schmidt) are examined in detail. The Indo-Pacific region is gaining considerable importance, both due to the economic strengthening and the strategic constellations (see article by P. Degenhardt and S. Mentschel). Last but not least, the reorganization of the relationship with the African continent could be decisive for the degree of European sovereignty, economic and energy sustainability and the ability to solve security policy problems (see the articles by E. Bollrich and H. Maihack as well as M. Horn and J. Schuster).

In the third section "More Democracy in the EU", the expansion of economic, social and political participation of the population is examined. This remains the decisive question for the future of the EU, its necessary democratic underpinnings and further development in the third decade of the 21st century – 80 years after it was posed by Spinelli and Rossi in their Ventotene manifesto. Crucial for the implementation of a progressive development of the EU will be the extent to which it is possible to link national political concepts with European projects that are acceptable to the population in other Member States. The further democratization of the EU is an indispensable part of its further progressive development. Democratization in a multi-level system requires an expansion of the rights of the European Parliament (see article by A. Fisahn). Democracy, however, is not exhausted by parliamentary participation. Without progress towards "societal democracy", greater participation by civil society and economic democracy, the democratic structure of the EU will remain deficient (see articles by D. Seikel, D. Vancic and H.-J. Bieling).

Objectively, "business as usual" is not a viable policy option, neither for the EU nor for individual member states. It is obvious that the exhaustion of the type of accumulation and regulation still currently dominating the EU on the one hand, and the geopolitical upheavals related to the conflict between the U.S. and China over global hegemony on the other hand, will transform the shape and function of European integration for other EU member states as well. Many variants of development are conceivable, which, depending on the concrete design, respond to the current global challenges to different extents and will have different effects on the various European states as well as on diverse social groups. One thing is clear: Decisive struggles will not only be fought at the national level. Societal and political disputes at the EU level are just as important. The political left in Germany would be well advised to go on the offensive in these debates, both nationally and at a European level.




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1This book was conceived prior to the start of the Russian invasion of Ukraine on February 24, 2022. The ongoing war gave us reason to reconsider the conception of the book. However, we have decided to retain the original concept with its primary focus on political economy. The aggression and the ongoing war only exacerbate the problems and developments that laid out here. They put into stark relief the need to make an independent, consistent contribution to restoring peace on the European continent through a drastic change in narrative. However, in view of the lack of knowledge about the progress of the war and its political consequences for the Russian Federation, at this point in time we have avoided predictions about how relations with Russia and other eastern neighbors will actually develop.


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