The dependent variable is the integration of the European Union, measured by Integration Achievement Score (IAS) version 4.3 by Genna (Appendix 2). Based on six political and economic categories, this measure is a continuous index of regional integration. IAS is calculated by taking the average of these six categories for each year. It takes values between 0 and 5, with higher values representing greater levels of integration.7 It is transformed by multiplying each year by 20 to vary between 0 and 100 in order to simplify the interpretation of coefficients.
GDP data are obtained from World Bank World Development Indicators. Relative power is calculated by calculating the ratio of each country's GDP for every year with respect to Germany's GDP, since Germany is the leading actor within the European Union. Throughout the period of analysis, Germany is distinctively the most powerful country of the European Union, constituting at least 1.12 times the GDP of the second most powerful, United Kingdom, and up to 1,500 times the GDP of the smallest country, Malta, any time of the analysis.
Questions related to support for the European Union in Eurobarometer surveys between 1973 and 2011 are used depending on data availability as measures of trust.8 Each member country is included in the analysis from the year they joined the European Union. For years after 1996, we used a question that directly asks whether the participants tend to trust the European Union. For the remaining years, we took the values for the trust question as the base to extrapolate back using the rate of change of question that asks whether being a member of European Union is a good thing or not. This procedure allows us to analyze a consistent series for 38 years.
In addition to the main explanatory variables, GDP per capita is included to control for the effect of wealth, and population is included to control for the effect of size of nations on integration. Both are taken from Penn World Table (Heston, Summers, and Aten 2009).9 A control for being a Eurozone member, taking the value 1 after a country adopted Euro and 0 otherwise is also included as a control. Finally, the UK is the only member with the highest voting rights in the Council of the European Union that also constantly displays mistrusting behavior. To capture the effects of UK's lack of trust in integration, a control variable is used that applies UK's trust values to each EU member.
The relative power term is positive and highly significant. More specifically, a 10-point increase in relative power boosts the EU integration by 2.29 percentage points. This means that a more powerful Germany has a higher ability to enhance the integration levels. Thus, the integration in the European Union increases with an ordered hierarchy, in this case under the lead of Germany.
As expected, the coefficient for trust in European Union is positive and significant.10 This suggests that more trust in EU augments integration levels. Despite the speculations, as we do not have any case of a country leaving European Union or Eurozone yet, our model cannot say anything about when would integration turns into disintegration. However, EU integration increases when countries become increasingly trusting and comes to a standstill when trust levels decrease.
The UK restricts EU integration. The coefficient for the UK trust levels is negative and significant suggesting that it works to slow down the progression of integration. In fact, having the UK's trust levels has a larger effect than the general individual trust levels. This result supports the observations in UK's behavior in opposing further deepening in integration beyond the Single Market. Since the UK is one of the most powerful countries in the European Union, which is at the same time one of the least trusting, its impact on integration is substantial. Recent developments also suggest that especially in times of crisis, the UK focuses more on domestic politics rather than on the well-being of the European Union. This is contrary to behavior of Germany and France that concentrate on EU interests as much as on their respective domestic priorities.
Being a Eurozone country also increases integration. Keeping everything else constant, adopting Euro increases integration by 3.9 points. Surprisingly, GDP per capita has a rather small coefficient. Being $1,000 per capita, richer increases integration levels by about 1 point. Affluent societies are more satisfied with integration since higher GDP per capita values result in higher integration levels. Population has almost an identical impact on integration. Having 1 million larger population increases integration by about 1 point. Thus, larger and richer members advance the EU integration. This supports the two-tiered integration in Europe: the wealthier and Eurozone countries integrate faster than non-Eurozone countries.
This analysis shows that within Europe, the Power Transition perspective accounts effectively for the decline in the rate of integration. The “dissatisfaction” of the UK slows down the process of integration in the same way as “dissatisfaction” among competing countries that might lead to conflict. Germany appears to be the key dominant nation that can sustain or scuttle the integration process, which is consistent with the findings of Genna et al. (2012) on the regional leadership role of this country.
Long-Term Implications of Alternate EU Futures
The power transition logic that is used to assess the effects of integration warns us of the consequences of EU disintegration for the stability of the international system. While coherent, satisfied, and substantial members of the international community maximize the likelihood of long-term cooperative interactions, fractionalization, dissatisfaction, and the lack of dominant and large satisfied entities set the preconditions for conflict when major economic changes are under way (Tammen et al. 2000). The non-obvious implications of an EU realignment are not only regional but global. Below we explore the likely implications of EU contraction along with potential rearrangements that can dramatically affect global politics.
Consider first the regional consequences of a more integrated Eurozone led by Germany that excludes large free riders like the UK, compared with the European Union and an enlarged European Union that includes Turkey. The United States is added to provide a size comparison (Figure 6).11
This four dimensional graph presents total output to assess the size of the society in y-axis and population to assess the future potential of the society in x-axis. The size of the bubble is the GDP per capita to approximate the productivity of the population. Lastly, the time dimension is embedded through the flow of bubbles. The initial bubbles, which start near the origin, stand for the year 1960, and the outermost bubbles, where the labels are attached, stand for the year 2100. Each bubble in-between represents a year from 1960 to 2100. Bubbles linked by lines indicate EU expansions.
The smaller Eurozone could become more of a federation but at the expense of reducing much of the population and power capability of the current European Union. While not inconsequential, this unit would represent about half of the power of the United States and less than half its population. The current European Union would be closer to 75% of the United States. This situation points out a classic Catch-22. A smaller Euro group would be cohesive, but would have far less capacity to incorporate other large members and would be less powerful at the global level. A more intergovernmental European Union that reverts back to a Single Market could attract more new potential large members. Yet, with reduced trust, it would be less powerful at the global level for lack of cohesiveness. The way out of this dilemma is a more federal union with fiscal, monetary, and security union.
If the European Union were to add large counties like Turkey, Ukraine, and perhaps even Russia into its ranks, the anticipated trend line changes substantially. In these cases, the United States and the new larger European Union would be equal partners in the future.
These observations are magnified when we consider global implications. First consider what would happen if the European experiment were to revert back to less than an EMU (that is, Common Market) or collapse altogether returning to pre-EC patterns. In those situations, we would not be able to consider the aggregate impact of partly integrated economies of the member states, but focus on the impact of individual EU nations as global actors. If this were to happen, the patterns that emerge are as follows (Figure 7):
We select Germany for illustration because it is the largest and most significant global European actor. By extension, the UK, France, and Italy would be very small members of the international system compared with the larger United States, and the preponderant China or India. Size would assure that any European nation will have a limited impact on global politics. Market size and power are prerequisites for international influence. Compared with the overall capabilities of the United States, China, and India, individual European nations are and would be far too small to impact policy and international norms. Clearly, to maintain global European influence a viable, preferably expanded, European Union is required.
Let us now turn to Figure 8, which compares how a fully integrated European Union fairs in global competition with other great powers. By the end of the twenty-first century, the European Union and its likely ally the United States are expected to have half the economic power of China and India, and one-third the size of their respective populations.
China or India alone will have the overall capabilities of the United States and the current European Union. These Asian giants will no doubt dominate global affairs in the next century. For this reason, an expansion of the European Union and the recreation of an Atlantic alliance are central if the Western nations are to play a principal role in the next Century.
As a final check for these assessments, we consider how the Atlantic Alliance (NATO countries) fairs against each of the Asian giants and a possible but not probable coordination of China and India's interests. The results are shown in Figure 9:
Consistent with Tammen et al. (2000:53–5), Asian giants will overtake the Atlantic Alliance as dominant powers by mid-twenty-first Century. China and India will even individually match the capabilities of a possible Atlantic Alliance. From the power transition perspective, this outcome increases the probability of a conflict during this transition unless trust is built to offset dissatisfaction.
An unlikely unified Asian coalition would create a super dominant hegemonic structure for the international system. Even a unified Atlantic alliance would face an overwhelmingly Asian collation that, like the United States following World War II, could set the norms of international interactions for the latter part of the next Century.