A geoeconomic turn of the Single European Market?

JCMS |

by Anna Herranz-Surrallés (Maastricht University), Chad Damro (University of Edinburgh), and Sandra Eckert (Friedrich-Alexander-Universität Erlangen-Nürnberg)

The nature of global economic relations has shifted towards a geoeconomic world order that also affects the European Union at its core, its Single European Market (SEM). In our introductory article to a Special Issue we assess whether, how and why the SEM is experiencing such a geoeconomic turn, and how EU responses are shaping other international actors in the process. We develop a research agenda to examine the systemic pressures pushing towards geoeconomic responses, the internal drivers and processes determining the nature of the EU’s geoeconomic turn and the external consequences of the EU’s embrace of geoeconomics. In this blog post we focus on the second aspect, namely what we term the ‘shades of geopoliticisation’. We argue that the empirical trends within the SEM can be conceptualised as instances of superficial, reluctant or deep geopoliticisation. Our categorisation depends on whether geoeconomics is embraced only with regards to policy goals, with regards to policy means, or both.

Shades of geopoliticisation

Superficial geopoliticisation occurs when the declared policy goals reflect geoeconomic considerations, but there is limited change in policy practice. This pattern may reflect a time lag (change of policy instruments may take some time to adapt to changed policy goals), but can also be a longer-lasting feature, for example when the EU policy community fails to align the instruments with the goals, either because of normative disagreements, institutional path-dependencies or practical hurdles. The contribution on the Digital Single Market in this Special Issue provides a clear example of the latter, namely a situation where the initial aspirations of ‘European digital sovereignty’ did not materialise so far due to conflicting views on its very meaning. Another contribution shows that the idea of ‘strategic autonomy’ has followed a similar path – a seemingly new approach with unclear policy consequences due to long-standing political cleavages.

Reluctant geopoliticisation occurs when geoeconomic means are adopted in response to the perceived external pressures, but the underlying goals remain anchored in the liberal paradigm. Such a hesitant geoeconomic turn can be identified where the EU implements instruments of a defensive nature, aimed at being deployed only as a deterrent or last resort when other international actors engage in geoeconomic practices against the EU. The contributions on EU trade policy in our Special Issue mostly indicate these dynamics.

Deep geopoliticisation occurs when both goals and means become geoeconomic. This is a sign that the EU policy community accepts the geoeconomic world order as the new reality for the years to come, leading to pro-active rethinking of the EU’s geopolitical goals and ways to achieve them. A departure from the EU as a regulatory state could affect the EU’s institutional set-up in the longer run. The case of EU energy policy discussed in the Special issue provides a clear example of an area where long-brewing but partial geopoliticising tendencies culminated in deep geopoliticisation following the shock of Russia’s full-scale war on Ukraine, with the adoption of landmark instruments such as the joint purchasing of gas or more muscular industrial policy in clean-energy.

Contributions in our collection of articles also show, however, that a clear-cut classification across issue areas is a risky endeavour since geopoliticisation might sometimes manifest differently even within the same policy domain. For example, the contribution on the Single Market for Financial Services finds evidence of deep geopoliticisation when it comes to the response to Russia’s war on Ukraine, leading the EU to impose unprecedented sanctions to cut out Russia from the international financial system. Yet, in other areas of financial regulation, the EU displays a more reluctant geopoliticisation, by becoming more strategic in projecting its financial regulatory standards globally, yet still driven by market-liberal goals such as gaining better access to foreign markets. Similarly, other contributions indicate that geopoliticisation is not equally felt across the EU policy community. For example, Christou and Damro argue that the extent to which trade policy is geopoliticised depends on the level of policy making: with evidence of deep geopoliticisation at the political level (EU trade strategies), and much more reluctant geopolitication at the bureaucratic level (DG Trade strategic and management plans).

Despite these different expressions of geopoliticisation, it is noticeable that none of the examined areas of market integration has remained business as usual, suggesting that the geoeconomic turn within the EU is not merely anecdotical, but constitutes a structural transformation. This raises the question what EU responses do to the international system and the multilateral order.

A self-fulfilling geoeconomics dilemma?

As discussed in Guzzini’s work on the gradual return of geopolitics in parts of Europe, geopolitics has self-fulfilling properties. Translated to the current discussion on the geoeconomic turn, the more distrust, reduction in transnational economic interactions, focus on relative gains and bloc politics, the less the chances to reconstitute the liberal order. Many contributions in this Special Issue discuss concrete examples of this dilemma. In trade policy, the notion of “open strategic autonomy” exemplifies the tension between EU goals of safeguarding a liberal orientation and increasing its power vis-a-vis other key players. Most of the contributions agree that the new instruments adopted by the EU, for example the Investment Screening Mechanism or the Anti-Coercion Instrument, are mainly defensive and aimed at restoring a level-playing field, yet are likely to trigger similar responses by other countries. Moreover, as discussed in another contribution on the role of business actors, policy-makers will encounter business demand for similar instruments internally, which further plays into the geoeconomic dilemma. Haroche argues that other measures taken, such as the sanctions vis-à-vis Russia, are inherently geoeconomic and follow a different logic.

Determining whether and how to escape the self-fulfilling geoeconomics dilemma will remain a task for scholars and practitioners in the years to come. The conceptualisation of the geoeconomic turn provided in our paper can help identify some pros and cons of different options. Superficial geopoliticisation might continue being a common response, given the EU’s attachment to market-liberal instruments or obstacles to agreeing on geoeconomic instruments due to the lack of competence and/or intra-EU disputes. However, embracing geoeconomics only as a policy goal can still contribute to furthering a geoeconomic world order, without offering solutions to the challenges it brings.

The most frequent response adopted by the EU, reluctant geopoliticisation, still bears the risk of an over-extension of the notion of economic security. Von der Leyen’s announcement of an anti-subsidy investigation into Chinese electric vehicles in September 2023, which signals the EU’s move towards more pro-active use of its new arsenal of geoeconomic instruments, illustrates the fine line between reluctant and deep geopoliticisation. The latter implies investing decisively in geoeconomic measures, underpinned by a clear set of geoeconomic goals. Such a route implies catching up with other ‘big powers’ in terms of ability to engage in economic statecraft. The question that emerges here is whether the EU can actually compete in a coordinated and consistent way with the US or China in terms of industrial policy, trade policy and strategic outward investment, and whether the EU economy can thrive in a world of subsidy wars, reshoring and bloc politics.


Anna Herranz-Surrallés is Associate Professor of International Relations at Maastricht University, specialising in the European and global governance of foreign economic policies, particularly in the domain of energy. She serves as co-editor of Journal of European Integration.

 

Chad Damro is Professor of European Politics in Politics & IR at the University of Edinburgh. He also serves as Co-Director of the Edinburgh Europa Institute and Dean International – Europe.

 

 

Sandra Eckert is Full University Professor of the Chair in Comparative Politics at the Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) since August 2022. She has previously been Marie Skłodowska-Curie COFUND fellow and Associate Professor at the Aarhus Institute of Advanced Studies in Denmark, and Assistant Professor of Politics in the European Multilevel System at Goethe University Frankfurt.