A contest is under way for the future of Europe and the battle lines have been drawn. From the east, Hungary’s prime minister, Viktor Orbán, is spearheading a popular revolt against the EU’s ancien régime. And in the west, France’s Emmanuel Macron is leading its defence. Ahead of next year’s European Parliament elections, the Hungarian has thrown down the gauntlet to his rival, who has responded in kind. “If they want to see me as their main opponent, they’re right,” Macron said in August.

This is an ideological war about the true nature of Europe. In one camp are the defenders of the old liberal order, who see themselves as the bearers of Europe’s Enlightenment legacy – its commitment to democracy, the rule of law, liberty and rights, rational enquiry, cosmopolitanism, the open society and economic freedom. They pride themselves in having successfully faced down the forces of prejudice, superstition and nationalist fervour, presiding over an unprecedented period of stability, freedom and prosperity since the end of the Second World War.

In the other camp are the challengers to the liberal order who claim to embody the “true Europe” – its Christian inheritance, its mosaic of national identities and the traditional family structure on which the continent’s society is built. From their perspective, liberals are destroying Europe with their promotion of alternative lifestyles, their attack on the nation state, and their suppression of liberty by an authoritarian bureaucracy and a stifling culture of political correctness.

Crucially, this ideological fault line is also geographical, dividing the EU’s core in northern and western Europe from its periphery in the south and the east. This division emerged at the start of the decade when Hungary, reeling from the impact of the financial crisis, elected the charismatic Orbán, leader of Fidesz, for his second stint as prime minister on a manifesto to correct the defects in an imported liberalism and restore stability.

In a flurry of activity, he brought strategic sectors of the Hungarian economy, such as banking, energy, utilities and food production, back under national control. He created new laws to protect and promote the family. And Orbán has repeatedly changed the constitution, enshrining the pre-eminence of the Hungarian nation, while effectively barring immigration from outside the EU.

Subsequently, almost every state in eastern Europe has adopted a form of Orbánism, which fits better with its social needs and traditions than the alien doctrine of liberalism, imposed by outsiders in the 1990s.

Notionally, the governments in Slovakia, and Romania are left-wing, Poland is pursuing a 21st-century form of Catholic-infused Christian democracy and the prime minister of the Czech Republic is a maverick businessman. But the differences are secondary to what they have in common. Across the region, a discredited form of liberalism is in rapid decline and a form of popular national conservatism based on family, faith and flag is the dominant mode of government. From here, the new politics is spreading to the adjacent states of Austria and Italy, on the back of a refugee and migrant crisis.

This situation contrasts starkly with the state of politics in the north and west of Europe – France, Germany, Benelux, Ireland and Scandinavia – where liberal parties have successfully held on to power. Unsurprisingly, liberalism has greater support in the region where it was incubated and whose needs it was designed to meet.

This is not to suggest that everyone in “core” Europe endorses the liberal status quo. On the contrary, its demos is divided between defenders and challengers, just as the south and east are also internally divided. But the numbers matter. In the rich and urbanised north and west of Europe, adherents of liberalism still constitute a majority; in the poorer and more rural south and east, rejectionists do, and this has consequences at election time. Where once Europeans were separated by faith, empire and superpower rivalry, they are now split by ideology. Europe is once again divided in half.

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Belatedly, the battleground for this conflict has become the European Union, the continent’s central authority, which sets the ground rules for its members and determines what constitutes the true Europe. This was not always the case. Prior to the financial crisis, eastern and southern Europe were happy to abide by the liberal precepts on which the EU was founded – its promotion of open trade and investment, the free movement of peoples across borders and the dilution of national sovereignty. Although liberalism was an untested novelty in the old eastern bloc, its promise of good government and prosperity was eminently preferable to a Soviet-imposed socialism.

Even after the onset of the financial crisis and the start of the Orbánist backlash, the EU was marginal to the drama. Aside from some grumbling by MEPs about democratic backsliding, the EU largely ignored the political transformation taking place in countries such as Hungary and Slovakia.

Not only was the bloc distracted by the need to deal with the eurozone crisis, but its officials were slow to realise that countries that had long been paragons of compliance were now in open rebellion – even more so since Orbán and his supporters consistently expressed their support for European integration. For as long as the EU left Hungary and others alone, they were content to do likewise, and a facade of unity was maintained.

The turning point came mid-decade following the EU’s tortuous stand-off with Greece; the migrant crisis and the subsequent breakdown of the Schengen arrangements; the election of the Law and Justice party in Poland in 2015; and the Brexit vote in 2016. Many at the heart of the European project acknowledged the risk of the EU collapsing. However, with the election of Macron, and a return to economic growth to buoy their spirits, the EU’s establishment belatedly embarked on an effort to reverse the decline. On the one hand, the attempt at revival involved a bold new phase of liberal integration that would make a success of the EU’s existing projects, especially the eurozone. France and Germany initiated a European military capability (PESCO) and the Commission took steps to demonstrate the EU’s relevance by cracking down on tax avoidance by American multinationals. On the other, revival meant disciplining those states that had openly defied the EU’s ideological foundations.

The European establishment’s weapon of choice has been the EU’s “Article 7”, a procedure which, taken to its conclusion, can see a malfeasant state suspended from the Council of Ministers, the key decision-making body. Last year, the European Commission triggered this procedure against Poland for what it described as a “serious breach” of the rule of law after moves by the Polish government to change the composition and functioning of its judiciary.

In September this year, the European Parliament voted overwhelmingly to trigger the same procedure against Hungary for what it called a “systemic threat” to the EU’s fundamental principles. The two states dispute the charges against them as politically motivated. The EU would deny that. But in the debate that preceded the vote against Hungary, the veteran federalist Guy Verhofstadt hinted at the real motives at work by accusing Hungary’s leader of being “the seed of discord that will ultimately destroy our European project”.

In the background to this, threats have been made to link the huge subsidies the EU sends to the east each year to adherence to the “rule of law”. The French foreign minister Jean-Yves Le Drian recently said that France “does not want to finance a populist Europe”. At the start of October, in the same week that its government held a referendum directed against gay marriage, the European parliament threatened to act against Romania for a series of reforms to its judiciary. In his assessment to the Council of Ministers, Frans Timmermans, vice president of the European Commission, threatened to be “brutal”.

And after months of insults and provocations, Italy too is finally being brought to heel as the Commission threatens for the first time to reject a member state’s spending plans, for breaching the EU’s Stability and Growth Pact.

Unsurprisingly, pressure from Brussels has galvanised the rebels who refuse to submit to the EU’s authority – not least because their own electorates would punish them severely for it. Instead, Orbán has been marshalling his forces. After shoring up his position at home in an election in April that delivered him a parliamentary supermajority, he is building a regional coalition opposed to the EU’s liberal prescriptions. His alliance extends from Warsaw to Rome, via the Christian Social Union in Munich, and is backed by powerful external allies such as Russia and Turkey.

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The next showdown will be the European elections in May 2019, in which anti-liberal parties are expected to do well, changing the complexion of the European Parliament. This could be decisive in shaping the new Commission which, Orbán hopes, will be decidedly less communautaire in its approach to its work, allowing a revival of inter-governmentalism and ideological diversity at the domestic level. As Orbán rallies his allies, he has predicted “only two winners” in the election – himself and Macron – and that he, Orbán, will achieve the ultimate victory.

That is mere fighting talk, because nothing is certain. On the contrary, as the conflict between Europe’s two halves escalates, its future becomes ever more opaque. Perhaps the rejectionists will do well in the elections and Orbán’s rebel army will make a push to transform the EU into a looser union of independent nation states, bound together by trade and a common desire for security.

But the immediate problem they will face is the continued presence of liberal government in western Europe, and especially France and Germany, which will veto any kind of systemic transformation of the EU away from liberalism. Beyond that, there is the problem of the eurozone and, specifically, the question of how to adapt an institution designed as an irreversible stepping stone to a political union.

There are two possibilities, neither viable. One is for its members to continue using the currency while simultaneously reasserting national control over fiscal (and monetary) policy, as Italy is now doing. However, it is hard to see how the eurozone could survive the stresses and strains, and the corresponding loss of market confidence, that this implies. The other is a negotiated dismantling of the monetary union, allowing an orderly pathway out for those states whose national interest compels them to leave. But that is no panacea. The exiting states could well find themselves in precarious economic circumstances, with capital flight, a weakling currency, an inherited pile of euro-denominated debt and sky-high premiums for borrowing. When confronted by this reality in 2015, Greece recoiled.



Hungarys’​s Viktor Orbán describes next year’s European elections as a battle with Macron

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If the rebels fail to take the citadel, then perhaps the European establishment can suppress their insurrection by resolving the underlying problems that have fuelled the challenge to the system. This would require the securing of Europe’s frontiers and establishing Macron’s desired fiscal union, which is really the only viable remedy for the shaky monetary union. In the course of time, southern and eastern Europe would return liberal governments to power, restoring the order that prevailed until last decade.

But how likely is this? Amid a continued threat from migration, discontent with neoliberal economics and ham-fisted attempts by the EU’s establishment to impose its authority, rejectionist politics is spreading across the region. Crucially, it is also gaining ground in western Europe, where mainstream parties are having to adapt their programmes in order to stay in power, most recently in Sweden.

At the same time, after a decade of indecision, there is little prospect of Europeans agreeing the kinds of measures that might make a success of the eurozone – even less so as solidarity wanes. So, a return to business as usual is unlikely.

If neither establishment nor rejectionist governments can establish their vision of Europe, then the EU faces the prospect of stalemate and then retreat. This is, in fact, its present reality as the EU struggles to reach agreement in any major area of policy – the latest failure being the rejection of a strengthened external border force. Meanwhile, rebel national governments are reasserting their sovereignty in areas of

policy vital to their national interest – unilaterally curbing immigration, ignoring spending limits, restoring relations with Russia, and so on.

If the EU proceeds in this direction, it will eventually come to resemble a kind of United Nations for Europe, in which its member states discuss their concerns and cooperate when it suits them, while the real politics takes place at the national level.

An optimist might argue that would not be so bad as the enduring idea of pan-European unity adapted itself to the conditions of the 2020s. The problem, however, is that a loosening of the EU by neglect – effectively a victory for the rejectionists – is intolerable to the EU’s establishment.

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So there is another possibility: that the EU splits. The basic problem the European establishment has with its south-eastern periphery is the opposite of the problem it has had with the UK – that wayward states such as Hungary and Italy refuse to leave and insist on changing the system from within. This leaves two options. Either the core must secede and establish an EU 2.0, comprised of states that endorse its liberal precepts. Or it must expel the EU’s most unruly members, starting with Hungary.

In the context of recent events, this would be less a change of policy than a continuation of an existing process. By triggering Article 7, the EU’s institutions have already set Poland and Hungary on a glide-path to departure, and Luxembourg explicitly called for Hungary’s expulsion in September 2016. With other wayward states such as Italy, Romania, Malta and Cyprus similarly out of favour, the outcome would be a reversion to the original concept of the European project – a union comprised of a handful of like-minded, geographically proximate states, at the core of which are France and Germany.

A Great Schism may seem far-fetched from the vantage point of 2018. But the political calculus will be very different come the start of the next decade when the EU confronts the next recession, which is inevitable. With the eurozone unreformed, interest rates already at zero and its weakest members sitting on a pile of new debt, the next crisis is likely to hit hard.

What will happen when troublesome elements such as Italy and Greece once again find themselves in financial straits? Will the EU’s core members dig deep into their pockets, as they did before?

That seems improbable. More likely is that the creditor states cut the Mediterranean loose and concentrate on shoring up their own defences. In the process, the EU will squeeze out recalcitrant non-eurozone members such as Hungary and Poland, by whatever means necessary. Already, the former head of the European Parliament, Martin Schulz, has proposed a compulsory referendum in every member state which offers just two choices – accept a political union or quit the EU.

That would, of course, have massive geopolitical implications for the old periphery. Hungary and Italy would seek to balance internationally between the new reduced EU, Russia and China. Poland would focus its attention on the US and UK. New alliances would emerge in the region to replace the EU, encompassing not just central Europe but the Balkans, Belarus and Ukraine. And issues suppressed by EU membership would return to the fore, starting with Hungary’s unresolved grievance over the status of its regional diaspora.

As for the rump EU, it may overcome the challenge emanating from the periphery by expelling its members, but its problems would not be over. It would still be faced with the shortcomings of liberalism – the threat to identities, the economic insecurity, and so on – that fuelled the populist uprising from the east. The core EU may defeat the external enemy by banishing it from the realm. But the challenge from within may prove even greater.

Timothy Less is leading the “New Intermarium” research project at the University of Cambridge