Syrian refugees dying on European beaches, terror rampages on the streets of Paris, the rising tide of nationalism spurring doubt whether the European Union will hang together: these were the images of Europe in 2015.
The new year threatens to be a replay of the old, with the migration crisis moving into a tense new phase, open internal borders under siege, Britain potentially heading for the EU exit and a hesitant Germany forced, once again, to act as the political and economic backstop.
“It’s been a tough year for the EU but the potential crises for the EU remain incalculable,” said Philippe Moreau-Defarges, a researcher at the French Institute for International Relations in Paris. “Populism has shown its most virulent face in eastern Europe but it’s not limited to the east.”
As Syria’s civil war simmers, the chief imponderable — brought into relief when Brussels, the 28-nation EU’s administrative capital, went back onto alert over possible New Year’s terrorism — would be another attack on the scale of the murder of 130 people in Paris by Islamic State adherents in November.
Europe’s location next to the reawakened Russia and a short flight from the turmoil of the Middle East goes along with existential enigmas — will the EU or euro area splinter, will Spain or Britain stay in one piece? — to make for tumultuous trading conditions. A measure of volatility in the stock markets came close to a four-year high in August.
Europe’s fractious politics and social anxieties contrast with a more benign outlook for the economy, propped up by the European Central Bank’s bargain-basement interest rates and low oil prices. The European Commission expects the 19-nation euro area to grow 1.8 percent in 2016, lagging the U.S. for the fifth straight year but Europe’s best performance since 2010.
“What’s moving markets a lot more has been monetary policy and the ECB has very much left the door open to further stimulus, and that’s given people a lot of hope that that’s going to provide support for markets,” Gemma Godfrey, founder and chief executive officer of Moo.la, told Bloomberg Television.
Greece, which figures to be quieter this year after a turbulent 2015, still needs to come to terms with unpopular economic overhauls required in its bailout agreement, such as pension and income tax reform.
The European left had a bad year with migration and terrorism shifting mentalities to the right. Greece’s anti-austerity Syriza party bowed to German policy dictates when threatened with expulsion from the euro and a like-minded Spanish movement failed to take power in a December vote, albeit placing third at its first attempt.
Early jostling for France’s presidential election in May 2017 is in thrall to Marine Le Pen, whose blend of anti-euro, anti-foreigner nationalism with benevolence for the economically downtrodden made her National Front the top vote-getter in the first round of regional balloting in December. An alliance of convenience of mainstream parties and higher turnout set back her candidates in the second round, but a marker was laid down.
The same suspicions of immigrants and sense of betrayal by the establishment brought the Law & Justice party to power in Poland, ending a phase of pro-EU reliability in eastern Europe’s largest country and aligning it with the querulous Hungary of Prime Minister Viktor Orban.
Anti-immigration grandstanding on Europe’s edges adds to strains in societies in the middle — mainly Germany, Austria and Sweden — that flung their borders open to the mostly Muslim newcomers with the goal, eventually, of parceling them out across Europe in an equitable fashion.
So far, however, the EU has rehoused a mere 266 refugees out of a planned 160,000 — a legally enshrined target that, in turn, is dwarfed by the more than 1 million who descended on Europe in 2015. The EU sees 2 million more coming by the end of 2017. The breaking point may come by early spring, when better weather entices more refugees and puts even more strain on the bloc’s internal passport-free travel system.
There has been no shortage of dire predictions about Europe’s fate. One of the purveyors, Italian Prime Minister Matteo Renzi, said in late December: “Europe won’t explode over economic issues but it could explode.” Renzi’s primary policy plea is, however, economic: he wants to classify more public spending as “investment,” easing EU pressure on Italy to cut its budget deficit.
Many outside Europe look to German Chancellor Angela Merkel as Ms. Fixit. Time magazine named her “Person of the Year,” but Merkel’s refusal to set an upper limit on refugees coming into Germany triggered the first serious inner-party challenge to her hold on the chancellorship.
“Her leadership is more at risk now than at any other time in the decade that she has led Germany,” Tina Fordham, Citigroup Inc.’s chief global political analyst, told Bloomberg Television. “It’s hard to think of another leader, German or otherwise, who could really lead the way in Europe like Merkel does.”
On the other side of the English Channel, British opponents of the EU see the continent’s subpar economy, leaky borders and vulnerability to terrorism as justification for pulling out of the bloc in a referendum Prime Minister David Cameron plans by 2017.
For Britain, the decisive event in 2016 is the Feb. 18-19 EU leaders summit in Brussels. Cameron hopes to come away with new rules governing U.K. membership in the EU so he can campaign to keep Britain in. Britain’s call for the right to cap welfare benefits for workers from other EU countries is the main sticking point.
Or maybe the key date is later. “This is not about artificial timetables and deadlines and all the rest of it,” Cameron said at the December summit. “There’s plenty of time to get the substance that the British people need.”