European Commission President Ursula von der Leyen delivers the State of the European Union address to the European Parliament, in Strasbourg, France, on Wednesday.Yves Herman/Reuters
Two years ago this month, former European Central Bank president Mario Draghi warned that the continent faced a “slow agony” of decline without radical reforms aimed at boosting investment and innovation, reducing regulations and increasing its energy security.
What happened next was typical of the bloated bureaucratic behemoth that the European Union has become. Much talk and a few symbolic gestures followed Mr. Draghi’s report. But it was soon back to business as usual in Brussels.
Frustrated by the EU economy’s continued slide, Mr. Draghi last month created the Rhine Group, a new think tank bringing together leading academics, business people and policy-makers to produce proposals for economic reform.
“In every emerging technology that will shape the coming decades, Europe is weak,” the Rhine Group’s manifesto says. “The stakes are existential. If stagnation continues, the continent will progressively lose the ability to fund the core functions of a modern state.”
This is the brutal reality facing the EU as it opens the door to Canada becoming an “associate member.”
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It is easy to understand why European Commission President Ursula von der Leyen, desperate for growth but hamstrung by divisions within the 27-country bloc, would want to promote EU-Canada integration. It is less clear why Canada would seek to tie its future to an economic also-ran.
There are different theories about why Mark Carney has so emphasized deeper ties with Europe since becoming Prime Minister. For starters, unlike his recent predecessors, he is a Europhile who is at home among the salon set in Paris and Berlin. As democratic institutions come under assault in the U.S., Mr. Carney genuinely believes in the need for like-minded middle powers to band together to protect their values.
Then there is the strategic imperative of diversifying Canada’s trade and security relationships to reduce our dependence on the United States. When you are dealing with President Donald Trump’s zero-sum trade negotiators, it does not hurt to look like you have alternatives to the U.S. market and defence umbrella, even if it is not really true.
For Canadians who only know Europe through tourist lenses, the appeal of closer Canada-EU ties may seem irresistible. The continent’s history, culture, fast trains and walkable cities are rightly admired. But outside the tourist zones, EU is beset by deindustrialization, demographic decline and political tensions even greater than those roiling the United States.
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The rise of far-right parties in most EU countries is the result of both overreach on the part of Brussels and the social insecurity that average European citizens increasingly feel amid a migration crisis and stagnant economic growth. Climate and open-border policies imposed by Brussels are at the root of their anger.
Countries seeking EU membership these days are generally poorer ones seeking to gain access to generous subsidies or those seeking protection from a hostile Russian neighbour. The 21-country eurozone is mainly bound together by the shared fear that, without the implicit borrowing guarantees provided by the European Central Bank, several member countries would likely face a run on their debt.
The European Parliament that Mr. Carney is set to address on Thursday is seen at most as a rubber stamp for the regulations conjured up by Eurocrats, or at worst, a sinecure for politicians biding their time until better gigs become available in their home countries.
With national elections scheduled or likely in several key EU countries in 2027, Ms. von der Leyen is reportedly pushing to accelerate the adoption of the bloc’s next seven-year budget as the prospect of far-right parties winning or sharing power in France, Spain, Italy and Poland risks upending her agenda. The potential ouster of German Chancellor Friedrich Merz amid a surge in support for the far-right Alternative for Germany also threatens to destabilize the bloc.
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France’s National Rally, whose leader Marine Le Pen has a nearly 20-percentage-point lead in the polls over her nearest presidential rivals, is vowing to cut in half France’s €28-billion ($45-billion) annual contribution to the EU budget and repatriate EU powers over climate, border and foreign policies.
French President Emmanuel Macron, who leaves office in seven months, is already locked in a heated battle over the EU budget as Mr. Merz resists his calls for more joint borrowing to fund climate-adaption and defence spending. Mr. Macron also wants the EU to appoint a new ECB president before April’s French presidential election to deny Ms. Le Pen a potential say in deciding who controls European monetary policy.
Any move by Ms. von der Leyen to push through unpopular climate or budget policies could backfire when voters go to the polls in their respective countries. Reaching a feel-good partnership with Canada will be the least of her challenges before her term ends in 2029. Just keeping the EU together will be hard enough.