October 2016: Updates on “Europe stretched to the limit”

In April 2016, The Economist Intelligence Unit released a report entitled Europe stretched to the limit, covering the then-potential Brexit, instability in Greece and the migration crisis which was believed to have the capacity to push Europe over the edge. According to this report, Europe’s crisis stemmed from economic troubles and the situation has only gotten worse with issues such as borders, sovereignty, culture, security and democracy.

Now, 6 months later in the wake of October, IPEBP (International Politics, Economics and Business Project) re-discusses the issues highlighted in the above report in a bid to identify any changes to Europe’s situation.

On Thursday 23 June, people of the United Kingdom voted to decide whether the country should leave or remain in the European Union. “Leave” campaigners won by 52% to 48%. The referendum turnout was 71.8%, with more than 30 million people voting. This monumental outcome eventually became the very first official exit of a member state from the European Union. With uncertainty looming all over the country and region in the days that followed the results of the UK referendum, Europe was undeniably thrust into a state of calamity. The plunging worth of the Pound, confusion on the country’s future, disagreements on the voting results from various regions in the United Kingdom. Unfortunately, these were only part of the problems on hand. Today, 6 months later, while most of the distress in the United Kingdom appears to have settled down, talks are still underway with the European Union and the country’s new Prime Minister Theresa May,  which highlight that it could take at least 2 years for the actual Brexit to take place. As such, IPEBP acknowledges that while Brexit did stretch the limits of Europe and could even indicate the break down of the European Union, Europe as a whole is appearing to cope with Brexit and the consequences that follow. However so, IPEBP also warns that this coping by the region could actually be pseudo where the real impacts of Brexit will only entail post the actual exit of the country from the European Union. While UK will continue to enjoy trade benefits with the rest of Europe, visa and migration issues may intensify factor and labour mobility within Europe, stretching its limits once again.

Instability in Greece has been an on-going trauma for the past few years and the situation does not appear to be improving both politically and economically. This being said, as of October 2016, the latest European country to experience instability is unexpectedly Germany. While the country itself is economically and politically sturdy as of now, Europe’s biggest lender, the German Deutsche Bank isn’t. Pending an unlikely government bailout further puts the bank’s future into deeper doubt following sharp declines in stock prices. A “Wallstreet meltdown” in Deutsche Bank could bring the Euro down with it and this directly trickles down to the rest of Europe. In the extreme case where Deutsche Bank is on the verge of collapse coupled with a no-government-bailout, Europe is most definitely set for a region-wide financial crisis stemming from the unlikely culprit, Germany.

The migration crisis may well be Europe’s biggest dilemma at the present moment and has been the case for the past year. The on-going Syrian war has contributed largely and directly to the refugee and migration crisis within Europe where thousands pass through the region almost everyday. Cities and towns all over Europe are now filled with refugee camps and wandering refugees looking to either seek political asylum or gain passage to “greener pastures”. In the most recent turn of events just days ago in Hungary, 98% voted against accepting EU migrant quotas. As the BBC reports, though the EU quotas would relocate 1,924 migrants to Hungary’s current population of 9.8 million, the outcome of the vote is seen as a strong representation of anti-refugee sentiments moving all across Europe. IPEBP expects that with the onset of Winter in the coming months, there would be lesser refugees crossing into Europe and thereby putting the migration crisis on a temporary hold. However, IPEBP suggests that a temporary hold also warrants time for other European countries to possibly rethink their given migration quotas and follow Hungary’s footsteps. If fellow European countries are in disagreement with supranational bodies of the European Union, the migration crisis will only be aggravated with pools of stranded refugees and nowhere to relocate them, giving not much option but to resend a portion to Turkey with whom the European Union will have to swallow the heavy task of once again renegotiating refugee quotas.

Hence, IPEBP believes that Europe’s limits continue to be stretched as seen in the last 6 months and is expected to follow this trend. In the event of an unfortunate situation arising from the collapse of Deutsche Bank, various flaws of Europe and the European Union may unravel and these very limits of Europe may just begin to disintegrate at the expense of countries in the region.

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