The euro-zone debt crisis

The sovereign debt crisis that rocked the euro zone beginning in 2009 was the biggest challenge yet faced by the members of the EU and, in particular, its administrative structures. The economic downturn began in Greece and soon spread to include Portugal, Ireland, Italy, and Spain (collectively, the group came to be known informally as “PIIGS”), threatening the survival of the single currency and, some believed, the EU itself. As confidence in the afflicted economies continued to erode, rating agencies downgraded the countries’ creditworthiness. Borrowing costs soared as government bond yields rose, and the PIIGS countries found it increasingly difficult to obtain financing. A series of stopgap measures were undertaken by the EU and the International Monetary Fund in an attempt to halt the spread of the crisis, but it soon became apparent that a larger, more-organized response would be required.

Representing the two largest economies in the euro zone, German Chancellor Angela Merkel and French Pres. Nicolas Sarkozy spearheaded the effort to stabilize the euro—which had plunged to a four-year low against the U.S. dollar—and preserve the solvency of at-risk euro-zone members. A bailout package was approved for Greece in May 2010, and, over the next two years, similar rescue funds were assembled for Ireland, Portugal, Spain, and Cyprus. The economic crisis, and the austerity measures associated with it, took a staggering political toll on ruling parties across the continent. Between March 2011 and May 2012, more than half of the euro zone’s 17 members saw their governments collapse or change hands.

The debt crisis had revealed dangerous shortcomings within the regulatory measures that governed the euro zone’s shared economy, most notably the lack of any enforcement mechanism for the fiscal rules that were outlined in the Maastricht Treaty. EU leaders attempted to correct this with a new fiscal pact, signed on March 2, 2012. The treaty bound signatories to limit government deficits to 3 percent of GDP or face automatic penalties. EU leaders also created the European Stability Mechanism, a permanent bailout fund that officially replaced the EU’s temporary rescue measures in October 2012. The European Commission also proposed the integration of the euro zone’s 6,000 financial institutions into a single banking union, with oversight provided by the European Central Bank. The system would allow for the centralized supervision of banks’ capital reserves, as well as the restructuring or direct recapitalization of imperiled banks without regard to national boundaries. As markets calmed and the imminent danger to the euro zone began to diminish, EU leaders focused on returning the region to a path of economic growth. The bailout of the Cypriot banking sector in March 2013 was dealt with almost as a matter of course, while lingering issues, such as endemic youth unemployment, remained a subject of concern. The EU welcomed its 28th member on July 1, 2013, when Croatia completed the accession process.

The crisis in Ukraine and the rise of Euroskepticism

In early 2014 the EU faced what was perhaps its greatest foreign policy crisis since the collapse of Yugoslavia. In November 2013 the former Soviet republics of Georgia and Moldova signed an association agreement with the EU, pledging closer political and economic ties. Ukraine, which had been scheduled to sign the agreement, backed out at the last minute under pressure from Russia. The reversal by Ukrainian Pres. Viktor Yanukovych triggered a wave of popular protests that turned violent in February 2014. A bloody government crackdown left scores dead and hundreds wounded, and, with his political base disintegrating, Yanukovych fled to Russia. As an interim government assumed power in the Ukrainian capital of Kiev, unidentified troops fielding Russian equipment took control of key sites in Crimea, a Ukrainian autonomous republic that had a predominantly Russian population. Armed gunmen seized the regional parliament building, and a pro-Russian prime minister was installed. As the Russian troop buildup continued, the self-declared Crimean government announced its independence from Ukraine. A referendum was hastily scheduled, and 97 percent of Crimean voters stated their preference to join the Russian Federation. EU leaders called for dialogue and enacted economic sanctions against a number of high-ranking Kremlin officials, and Russian Pres. Vladimir Putin completed the formal annexation of Crimea on March 21, 2014. That same day Ukrainian interim Prime Minister Arseniy Yatsenyuk signed a portion of the EU association agreement that had originally sparked the crisis.

The Ukraine crisis expanded as pro-Russian militants occupied government buildings in eastern Ukraine. An existing EU sanctions package against Russian individuals and businesses was expanded, and in April 2014 the EU, the International Monetary Fund, and the World Bank negotiated a $17 billion bailout deal to bolster the flagging Ukrainian economy.

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Austria: Austria in the European Union

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Attention was soon focused closer to home, however, as Brussels struggled with the emergence of Euroskepticism as a popular movement. Elections for the European Parliament in May 2014 saw unprecedented wins by the U.K. Independence Party (UKIP) in Britain and the National Front in France as voters across Europe turned to antiestablishment parties. While the main centre-right and centre-left coalitions retained a majority in the European Parliament, EU leaders were forced to address a strong electoral performance by parties whose stated goals were the radical restructuring or outright elimination of the defining characteristics of the EU.

In 2015 Euroskeptic parties capitalized on the ongoing migrant crisis in Europe as hundreds of thousands of refugees from the Middle East and Africa sought asylum in the EU. Thousands perished while attempting the treacherous Mediterranean crossing, and thousands more found themselves interred in makeshift camps as countries suspended their participation in the Schengen Agreement and reimposed internal border controls. Euroskeptic leaders such as UKIP’s Nigel Farage and the National Front’s Marine Le Pen drew a direct link between the influx of migrants and deadly terrorist attacks in Paris and Brussels.

Brexit

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Facing pressure from UKIP as well as Euroskeptic members of his own Conservative Party, British Prime Minister David Cameron undertook a renegotiation of the relationship between the EU and the United Kingdom. Those talks were concluded in February 2016, prompting Cameron to schedule a long-promised referendum on Britain’s continued membership in the EU for June 2016. Despite Cameron’s relative success at achieving a “special status” for Britain within the EU, on June 23 some 52 percent of British voters elected to leave the EU. EU leaders pledged solidarity in the face of the “Brexit,” and they urged Britain to begin separation proceedings as soon as possible to restore stability to the EU. The following day, Cameron announced that he would resign as prime minister, and in July he was succeeded by Theresa May.

May had pledged to carry the Brexit to its conclusion, but in November 2016 Britain’s High Court ruled that she could not trigger Article 50—the Lisbon Treaty’s mechanism for withdrawing a country from the EU—without parliamentary approval. After months of wrangling between May’s government, the courts, and both houses of Parliament, on March 29, 2017, May presented a letter to EU president Donald Tusk formally invoking Article 50. That act opened a two-year window of negotiations between London and Brussels, and it soon became clear that the “divorce” between the parties would be neither clean nor easy. In Scotland, where voters had overwhelmingly elected to remain within the EU, First Minister Nicola Sturgeon voiced her support for a second Scottish independence referendum.

Voters in Northern Ireland had also opted to remain within the EU, and perhaps the most pressing issue of the Brexit negotiations was the border between Ireland (an EU member) and Northern Ireland (a constituent unit of the United Kingdom whose devolved government was not empowered to act independently with regard to Article 50). The May government framed the issue largely as a matter of trade, but a joint EU-U.K. study found that nearly 150 cross-border activities would be negatively affected by the reimposition of border controls. In addition, there were some 275 land border crossings between Northern Ireland and Ireland, more than twice as many crossings as there were along the EU’s entire 3,700-mile (6,000-km) eastern frontier, which stretched from Finland to Greece. Finally, the terms of the Good Friday Agreement, which had enabled the creation of a devolved government in Northern Ireland and had done much to defuse the sectarian violence there, were negotiated with the assumption that both Ireland and the United Kingdom would remain within the EU. A “hardening” of the border would potentially jeopardize the underpinnings of that historic agreement.

In an effort to bolster her slim parliamentary majority and strengthen her hand in Brexit negotiations, May called for a snap election to be held on June 8, 2017. The ploy backfired dramatically: May’s Conservative Party lost its majority entirely, and she faced calls for her resignation as prime minister. After weeks of negotiations, May was able to craft a minority government with the support of Northern Ireland’s Democratic Unionist Party (DUP). As the DUP were strict unionists who opposed any “special status” for Northern Ireland within the United Kingdom, May found her room to maneuver on the Irish border issue even more restricted. She would spend the next two years trying to forge a deal that would be acceptable to both Brussels and Westminster. In the end, she faced a series of embarrassing rejections from her own party, and her Brexit plan was voted down on three separate occasions by Parliament. Britain’s departure from the EU, originally scheduled for March 2019, was postponed until May and then again until October. May, having exhausted her options, resigned as prime minister, and she was succeeded by Boris Johnson, her former foreign secretary and one of the most visible faces of the pro-Brexit campaign.

Johnson initially fared little better than May, and he was forced to ask for a third extension of the Brexit deadline. Wagering that he could succeed where May had failed, Johnson called a snap election in December 2019. Johnson campaigned on the slogan “Get Brexit Done.” His gamble proved wildly successful, and the Conservatives won a commanding parliamentary majority. Having already purged the party ranks of dissenters who had blocked his proposed “no-deal Brexit,” and no longer beholden to the DUP on matters of the Irish border, Johnson now found himself in a position to realize his vision of Brexit. On December 20, 2019, Parliament passed Johnson’s Brexit bill, and the European Parliament gave its approval to the agreement a month later. On January 31, 2020, the United Kingdom formally left the European Union, and an 11-month implementation and transition period began.

COVID-19 and the Russian invasion of Ukraine

As the Brexit process was finally reaching its conclusion, there was a changing of the guard within the EU leadership. German defense minister Ursula von der Leyen replaced Jean-Claude Juncker as president of the European Commission, Belgian Prime Minister Charles Michel succeeded Donald Tusk as president of the European Council, Spanish foreign minister Josep Borrell took over the foreign policy portfolio from Federica Mogherini, and International Monetary Fund chief Christine Lagarde was tapped to follow Mario Draghi as the head of the European Central Bank. This new team would be faced with the greatest global public health challenge since the influenza pandemic of 1918–19.

In March 2020 Italy became the epicentre of the coronavirus SARS-CoV-2 pandemic, and countries across the EU reintroduced border controls in an effort to stop the spread of COVID-19, the potentially deadly disease caused by the virus. Across the Schengen area, free movement of people—one of the foundational pillars of the EU—was suspended as governments raced to develop and distribute an effective vaccine. National and local authorities enacted lockdowns, closed schools, shuttered nonessential businesses, and restricted internal travel in an attempt to head off outbreaks of disease from the mutating virus. Evidence suggested that these mitigation efforts saved countless lives, but the social and economic cost was enormous. Unemployment rates soared, and the EU economy contracted by more than 6 percent. As vaccines against SARS-CoV-2 became widely available in 2021, free movement within the Schengen area was restored on a conditional basis, many countries requiring proof of vaccination or a negative COVID-19 test for entry. By the end of 2021 nearly three-fourths of EU citizens had received at least one dose of a SARS-CoV-2 vaccine. Many restrictions were rolled back, and the economies of the EU returned to growth, but the human cost of the pandemic had been staggering. Within the 27 countries of the EU, more than 100 million people had contracted COVID-19 by January 2022 and more than 1 million had died of causes associated with the disease.

Just as the immediate danger of COVID-19 was beginning to recede, the greatest threat to European security since the end of the Cold War was taking shape on the borders of Ukraine. In late 2021 Russia began a massive deployment of troops and military equipment to western Russia, Russian-occupied Crimea, Belarus, and the Russian-backed separatist enclave of Transdniestria in Moldova. Although Western governments characterized the action as a prelude to invasion, Russian Pres. Vladimir Putin insisted that he was merely conducting exercises to guard against NATO aggression. Leaders of EU governments shuttled between Moscow and Kyiv in an attempt to head off what appeared to be an inevitable Russian attack. On February 21, 2022, Putin recognized the independence of self-proclaimed people’s republics in Donetsk and Luhansk, two regions in eastern Ukraine where Russian-backed separatists had been fighting Ukrainian security forces since 2014.

In the early morning hours of February 24, Putin announced the beginning of a “special military operation” to “demilitarize and denazify Ukraine.” Putin’s stated casus belli was widely ridiculed, as Ukraine’s military posture was entirely defensive and its president, Volodymyr Zelensky, was Jewish and had lost several family members in the Holocaust. Nevertheless, within minutes of Putin’s televised address, cruise missiles began striking cities across Ukraine, and Russia launched a wholesale invasion of Ukrainian territory. The EU immediately condemned the unprovoked attack and levied rounds of increasingly destructive sanctions against Russia and Putin’s inner circle. As Ukraine’s army and national guard mounted a spirited and largely effective defense, individual EU countries sent packages of humanitarian and military aid. On February 28 Zelensky signed a document formally requesting that Ukraine be granted candidate status for admission to the EU, and the following day he received a prolonged standing ovation after giving a video address to the European Parliament. As Russia continued its indiscriminate shelling of Ukrainian cities, more than a million people fled Ukraine, presenting the EU with a new refugee crisis on its eastern frontier.