The Implications of the Euro Crisis for European Foreign Policy – Lessons from Crisis Management and International Trade

Written by | Wednesday, February 4th, 2015
European Values

Björn Fägersten (Swedish Institute of International Affairs)

The Euro crisis has fallen upon Europe at the end of the first decade of this century. Although the “old continent” is pulling through slowly, some traces of the recession are still apparent. What is the situation in the EU’s foreign policy in this regard? Has the EU’s image been damaged and its position weakened? A convincing answer is being outlined through the exploration of two different spheres – crisis management missions in North Africa and international trade with India and the United States. Coherence, resources available to the EU members as well as the international context are crucial criteria for the evaluation of both spheres.

Coherence means the ability of states to cooperate not only on the basis of external threat, but also on the basis of common interests or values. Material and institutional capacity of individual states, such as financial reserves, equipment for solving the crisis or appropriate procedures to execute and assert key measures, represent the resources. The concrete situation, perception and interests of other actors matter in the international context.

EU’s international missions that require crisis management are one of the research subjects. Material resources of the strategically most powerful EU countries (France, Great Britain, and Germany) that are gradually decreasing their military budget are of major importance here as well. The second research subject is international trade, especially the traditional partnership with the U.S., and the dynamic of EU’s relations with India. The Indians made quick use of the initial fall in bilateral trade in order to increase their demands, but the fall has been settled due to a good mutual cooperation and this effort has also resulted into, among others, the often-mentioned TTIP treaty.

The research shows that when these all three criteria are applied in these particular cases, the euro crisis did not affect the EU’s foreign policy not even closely as negatively as one could have expected. Its only significant negative influence concerns the shrinking military spending in important EU Member States, which consequently leads to the reduction of the staff in international missions. On the other hand, we can say that the EU has come stronger out of the crisis, mainly with regard to international trade and the deepening cooperation with the U.S. and Asia.

(The study can be downloaded here)

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