The Limits of a Southern European Alliance

Forecast

• In the wake of the Brexit referendum, EU member states are searching for regional solutions to Continental problems, an approach that will make it more difficult for the bloc to reach a consensus.
• Although Southern European countries share similar views on Continental integration, domestic interests and constraints will keep them from forming a coherent group.
• Because of its status as both a Mediterranean and Northern European country, France will be trapped in the middle of conflicts between Europe's north and south, putting increasing strain on Paris' alliance with Berlin.

Analysis

Only seven weeks after British voters elected to leave the European Union, the bloc has begun tofracture along regional lines. According to Greek media reports, the government in Athens is attempting to organize a summit of Southern European countries in early September, just days before a scheduled EU-wide conference in Bratislava. So far, Greece has sent invitations to the leaders of France, Italy, Spain, Portugal, Cyprus and Malta.

The Greek initiative is only one indicator of a trend emerging across the European Union. The Brexit decision has raised questions about the bloc's future, and its members are turning to their neighbors, not to Brussels, for answers. Countries in Central Europe — Visegrad Group members Poland, Hungary, Slovakia and the Czech Republic — held their own meeting in July to assess the referendum's impact and craft proposals for EU reform. Their solutions, which they will present at the Bratislava summit, will likely center on a request to repatriate some powers from Brussels to national governments. Thus, the Greek meeting will be the second attempt by a European region to solidify a common position before the entire bloc meets in September — a troubling sign for the Continent's ability to reach consensus on the issues threatening its existence.

For Southern Europe, Unity Is Not Enough

Broadly speaking, Greece and its southern counterparts share similar views of what the European Union's path should look like. All are supportive of Continental integration, if taken to mean that the bloc finances agriculture and development subsidies, shares banking and public debt risk, and supports the European Central Bank's expansionary monetary policy to increase the Continent's competitiveness. Most southern states, having been at the center of Europe's financial crisis and having introduced unpopular austerity measures, also want Brussels to give individual governments more leeway to spend and borrow as they see fit.

Southern European countries have an interest in the events that take place in the Mediterranean as well. Instability in North Africa and the Middle East is a concern for these states, many of which have been deeply affected by the Continent's migration crisis. Greece, Italy and Malta, for example, are primary entry points for the asylum seekers and economic migrants seeking a better life in the European Union. Unsurprisingly, Southern European countries are also some of the most vocal advocates for a proposal to distribute refugees across the Continent.

For the states lining the Mediterranean, the Brexit has created an opportunity to push their agendas by taking control of the bloc's political process. When the United Kingdom leaves, the European Union will lose a market-friendly and reformist member that historically has supported tightening the bloc's budget and preserving its internal market over creating a federal Europe. Germany will no longer have one of its most important allies in keeping EU spending in check or reining in Southern Europe's protectionist tendencies. Likewise, non-eurozone states of Central and Eastern Europe, which have long resisted ceding more sovereignty to Brussels, will no longer have one of their staunchest defenders.

The problem for Southern Europe, though, is that sharing similar positions on EU issues will not be enough to challenge the status quo. Many of the region's states are coping with issues at home that have weakened their positions in the bloc. Popular support for France's Socialist government has hit an all-time low, boding ill for the administration's chances of securing a victory in the country's approaching presidential election. To the east, the Italian government has linked its political future to a constitutional referendum in November that it has a moderate chance of losing. Meanwhile, Spain's political parties are still struggling to form a government after two elections yielded inconclusive results, and a third vote cannot be ruled out. The Greek and Portuguese administrations are not faring much better, and their economies are too small to guarantee Athens or Lisbon much clout in Brussels. Cyprus' and Malta's contributions to EU decision-making are even more negligible.

To make matters worse, Southern European states are sure to encounter stiff opposition from their EU peers to any proposals for substantial reform. Northern Europe, for one, would undoubtedly resist any measures that would transfer wealth to the Continent's south, and Central and Eastern Europe are unlikely to be amenable to granting Brussels more power.

And so, during the Bratislava summit, EU members may discuss counterterrorism measures and perhaps even debate Continental programs to fight unemployment, but any meaningful change to how the bloc works and what its priorities are will be extremely unlikely. Instead, the best Southern Europe can hope for within the next year or so are small tactical victories whose impact is limited at best. The European Commission's recent decision not to sanction Spain and Portugal for failing to meet their deficit targets, for example, is the type of outcome that Southern European states can expect to achieve through collaboration. (In the face of French and Italian opposition, Germany decided that punishing EU member states only a month after the Brexit vote would do little to quell dissent within the bloc.) Such outcomes are temporary, however, and do not prevent the same issues from re-emerging later.

France's Dilemma

In fact, far-reaching reform can take place in the European Union only after France and Germany have held elections in 2017. But even then, Southern Europe will have a hard time imposing its point of view on the bloc. France's biggest geopolitical imperative is to keep Germany in check. After World War II, this meant maintaining close political and economic ties with Berlin through the formation of the European Economic Community, the European Union's predecessor. In the wake of Germany's reunification in 1990, the introduction of a common currency served as a way to bind France and Germany even more tightly together, forcing them to coordinate policies and find compromises with each other.

This is not to say that Paris is satisfied with the present state of Europe. The introduction of the euro has robbed France of its ability to use monetary policy to address crises, while the country's sluggish economic growth, insufficient structural reforms and political limitations have affirmed Germany's role as the bloc's most powerful actor. But Paris is not yet willing to side with the camp of politicians and economists who have floated the possibility of splitting the eurozone in two — a northern half led by Germany and a southern half led by France — since Europe's financial crisis began nearly a decade ago.

From a purely financial standpoint, such a move could make sense for France. Breaking the currency area into two smaller blocks would give Paris the chance to devalue its currency, regaining its competitive edge and reverting its trade deficit in the process. But from a geopolitical perspective, dividing the eurozone would be more dangerous for France than dissolving it altogether. Though the Franco-German alliance would not necessarily fall apart, it would certainly weaken as Germany shifted its attention to its partners in the north. Berlin would have a less pressing need to cooperate with Paris, and over time, mutual distrust and fear would rebuild between the two. At the same time, France would become responsible for leading the Mediterranean's politically unstable and financially fragile states, which will probably require additional economic assistance down the road.

The main contenders for France's upcoming presidential election reflect this dilemma. On one hand, the center-right Republican Party is divided on the European Union. Some factions advocate moving forward with Continental integration so long as it is on France's terms, while others have called for reducing the bloc's mandate to a core group of competencies and returning other powers to its member states. Both groups, however, agree on France's need to preserve its partnership with Germany, even if it means losing some EU members in the process.

On the other hand, the National Front, France's second-most popular party, has taken a different approach to EU issues. It has proposed holding referendums on France's EU and eurozone membership, arguing that the country must recover the power to control its currency and protect its industry with trade barriers. Even the National Front, though, has not gone so far as to suggest replacing the Franco-German alliance with a union of Mediterranean nations. The party has joined like-minded movements such as Italy's Northern League in opposing immigration, criticizing EU policy on Greece and bashing bureaucrats in Brussels. But in its view, cooperation in Europe should happen among sovereign states, not among the members of a federation — even one of Mediterranean countries with similar goals.

Europe's Leaders Pull Further Apart

In the years ahead, France will continue to rely on its rapport with its Southern European neighbors to shape EU policymaking — and twist Germany's arm — as best it can. But this strategy has its risks. There are forces in Germany that want Berlin to become more isolationist, working only with an exclusive group of "trustworthy" partners in the north. These forces will make it more difficult for Paris to influence the bloc's direction by leaning on the south without alienating Germany in the process.

Meanwhile, as Euroskepticism becomes more prominent in French and German politics, topics such as the reintroduction of border controls or the repatriation of powers from Brussels will be raised more frequently in talks between France and Germany. Even so, neither country is ready to end their alliance, in spite of the emerging points of contention that threaten to drive them apart. But preventing a rupture in the relationship will become more difficult as Euroskeptic forces gain surer footing with each election. While Europe's biggest players work to keep their strained partnership together, tension between their Northern and Southern European associates will steadily increase. And France, both a Northern European and Mediterranean state, will be trapped in the middle.

Lead Analyst: Adriano Bosoni

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