The case for a new Hanseatic League

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By Glen Hodgson-Founder & CEO of Free Trade Europa

With the European Parliament elections upon us, and a new European Commission set to be installed in the autumn, we stand at a perfect juncture to look Janus-like at what has happened, where we are now and assess where the European Union should be heading. Now more than ever there is a need for an EU that is committed to free trade, openness and personal choice.

The EU: democracy’s graveyard?

Within the EU, the belief in liberal democracy and globalisation has been questioned. The 2019 European elections will be held in a climate of uncertainty, discontent and change. The reasons for this are complex and nuanced. All across the EU, voices are being heard on perceived inequalities, falling living standards and reduced opportunities. Ever since the Financial Crisis of 2008, the Euro Crisis of 2010 onwards and the Migration Crisis starting in 2013, voters have been turning to more extreme solutions to local, national and European problems. With national elections across Europe having delivered significant gains for right-wing political parties and nationalists, we need to ask the question: are liberal values, openness and free trade falling out of favour?

From Italy to Poland, Hungary and beyond we are seeing the rule of law diluted and a desire to put up barriers to protect against perceived threats from foreign businesses, labour and money. Many column inches and much ink has been used to describe the decline of liberal democracy in Europe.

Granted the financial crisis of 2008 dented the image of free trade and liberal policies, as has the fact that living standards in Europe are no longer growing at the levels they once did. Elites are seen as out of touch and many feel that popular views are not being expressed in policies. These are serious concerns, and they should be addressed, but it is important to keep a perspective.

Fear the alternatives

After the Second World War, the alternative to fascism was clear and attractive to all. Similarly, during the Soviet occupation of Central and Eastern Europe and the Cold War, liberal democracy was again the natural choice around which to organise states and society. Today, we should once more consider the alternatives. Do European countries really want to install regimes where we see rights eroded and the will of the people increasingly – and counter-intuitively – ignored? Free trade, liberalisation, personal choice and the rule of law need to remain central pillars of our democracies. Just looking at the alternatives underlines this reality.

A new hope

The current period of reflection and soul-searching should be put to good use. One reality is that the smaller states with export-orientated economies who favour free trade, openness and personal choice are losing their champion with the UK leaving the EU. While the UK would take many of these fights in the past, there is now the need for like-minded countries such as the Nordics, Baltics, The Netherlands and Ireland to work together and increase their cooperation to make their voices heard and shape the EU agenda. There has been ad hoc, high-level cooperation on financial issues between these states, but there is a need to expand this across policy areas – from environmental stewardship to the digital single market – while also facilitating a bottom-up approach from business and civil society. In this way, “the new Hanseatic League” as it has been christened will be a vital vehicle in modernising the EU and ensuring that free trade, openness, Atlanticism and personal choice remain front and centre in EU policy-making.

No “Fortress Europe” and no Franco-German closed shop

By contrast, the creation of a “Fortress Europe” would be a disaster for the EU and also send out the wrong signals globally. Despite being faced by a progressively more isolationist and the tariff-wielding US, and a commercially aggressive China, the EU needs to stay true to its liberal democratic heart. After all, there is never a right way to do the wrong thing.

By the same token, the future of Europe cannot be built solely on the outdated concept of a Franco-German axis. The calls to create a European Industrial Policy – with all the terrible trappings of old-style state intervention and French dirigisme – are a worrying sign of what may come to pass if we blindly followed this route. Statism, picking winners and creating national/EU champions would waste resources and ensure that consumers and other businesses lose out. History clearly shows that a lack of competition often leads to higher prices, less choice and poorer products due to a lack of innovation.

In sum, the EU needs to evolve and address an increasing number of internal and external challenges. Free trade, openness and personal choice rest at the heart of the solution to these issues and the Nordics need to partner like-minded countries to promote this agenda.

 

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