A European Green Deal faces not only internal challenges: its success depends on the construction of a wider global order.
In her opening statement to the European Parliament in July, as candidate for the commission presidency, Ursula von der Leyen promised: ‘I will put forward a Green Deal for Europe in my first 100 days in office … I will propose a Sustainable Europe Investment Plan and turn parts of the European Investment Bank into a Climate Bank. This will unlock €1 trillion of investment over the next decade.’
This is an ambitious plan, in terms of the resources involved (about €100 billion per year) and the profound effect it will have on consumer habits and production structure in Europe: industry pollutes, agriculture pollutes, transport pollutes, cities pollute. It will not be easy to achieve and the protests of the gilets jaunes against an ecological tax should remind us that some things are easier said than done.
There are added complications from international politics. The US presidency of the anti-ecological Donald Trump is only the end-result of a crisis which began with the fall of the Berlin wall and the breakup of the Soviet Union. The desire for freedom and democracy in the USSR and eastern Europe undoubtedly contributed to this—the last Soviet leader, Mikhail Gorbachev, wanted more freedom and democracy too, but in a federal union. The disintegration of the USSR was however a victory for nationalism, which immediately showed its brutal face in former Yugoslavia and Chechnya.
Nationalism had to overcome resistance from two opposing forces: globalisation, supported by the ideology of neoliberalism (the ‘Washington consensus’) and the great convergence between rich and poor nations, which has drastically reduced income gaps between countries. Trump has openly acknowledged that the US is no longer a superpower capable of guaranteeing world peace and prosperity, yet ‘Make America Great Again’ implies ruling the world once more. This is an impossible and dangerous dream, because no one can stop China, India, Brazil and other emerging countries as they progress towards economic and political parity with the US.
The EU has also succumbed to the poisonous charms of nationalism: sovereigntist parties are threatening its future, despite the support for pro-European parties in the last European Parliament elections. Unfortunately the union is not only divided between Europhile and Eurosceptic parties but among its governments—between the ‘Visegrád’ countries to the east and the ‘Hansa’ countries in the north. It will not be easy to arrive at a consensus for a Green Deal for Europe.
The first serious obstacle was highlighted by Jean Pisani-Ferry. At present the EU is responsible for 10 per cent of global CO2 emissions, the US 15 per cent and China 27 per cent. To halve that figure by 2030, Pisani-Ferry observes, ‘the EU will undertake the painful task of cutting its annual emissions by 1.5 billion tons, while by 2030 the rest of the world will probably have increased them by 8.5 billion tons. Average global temperatures will therefore continue to rise, possibly by 3°C or more by 2100. Whatever Europe does will not save the planet.’
In her opening statement Von der Leyen proposed a remedy: ‘Emissions must have a price that changes our behaviour. To complement this work, and to ensure our companies can compete on a level-playing field, I will introduce a carbon border tax to avoid carbon leakage.’
At first glance this seems a sensible idea, but what effect will it have in a world on a rapid downward spiral into a disorder threatening to overwhelm international institutions, such as the World Trade Organization, the International Monetary Fund and the United Nations itself? The carbon border tax will inevitably stir up a hornet’s nest, because it will be seen by many countries hostile to environmental measures as a strong-arm tactic, a form of protectionism for Fortress Europe. By implementing this tax the EU could run the risk of increasing the degree of international anarchy.
Von der Leyen did not offer any solutions. ‘We will stay transatlantic and we have to become more European. This is why we created the European Defence Union,’ she said. But this is not a proposal for a new international order. The EU was founded with the aim of rejecting national divisions, eliminating borders and constructing peace. It cannot be limited to acting as ‘first mover’.
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How can we convince the Brazilian president, Jair Bolsonaro, not to destroy the Amazonian rain forest? How can we convince the US, Russia, China and India not to build more coal-fired power plants? We need to make the shift from leading by example to launching a new international order based on multilateralism and global governance among a ‘coalition of the willing’—to build a post-hegemonic international system.
First steps should be:
- Appoint a single representative of the economic and monetary union to the IMF. This would immediately give the EU equal weight to the US in terms of votes.
- Complete the capital-market, banking and fiscal unions, issuing Eurobonds to allow European citizens to place their savings in secure bonds guaranteed by the EMU. This would create a single capital market and enable European banks to hold secure bonds in their reserves, attracting capital from the rest of the world, just as the US does with its Treasury bonds. The European Commission would also be able to reduce the carbon tax thanks to savings gained by means of the Eurobonds.
- The single representative of the EMU in the IMF would start discussing guidelines for reform of the international monetary system with the relevant countries, in particular Russia and China, which at the G20 in 2009 presented proposals for the use of special drawing rights as a world currency. It would be the first step towards a multilateral, co-operative and peaceful international order.
- Lastly, the EU should relaunch reform of the WTO, eliciting the support of an increasing number of countries with the aim of safeguarding and strengthening the system of multilateral rules governing international trade. This has fostered decades of orderly, peaceful growth of the world economy but today is severely under threat from US protectionism and unilateralism.
Until now, European foreign policy has been based on passive resistance to the disintegration of the post-war international order. The time has come to take a proactive approach. Just as Julius Caesar had to take the decision to cross the Rubicon in 49 BC, heading into an uncertain future, so the EU must find the courage to take the lead in reforming the international order. Alea iacta est.
Guido Montani is professor of international political economy at the University of Pavia. His latest book is Supranational Political Economy (Routledge, 2019). Riccardo Fiorentini is associate professor of international economics at the University of Verona and author (with Montani) of The New Global Political Economy: From Crisis to Supranational Integration (Edward Elgar, 2012).