The Eurozone crisis and the G20: A blow to EU leadership and influence?

G20 members are not happy with the EU. After six years of Euro stagnation, the crisis that engulfs the Eurozone still threatens to further disrupt the stability of the global economy.

At the latest G20 summit hosted last November by Australia in the city of Brisbane, exasperation was keenly felt when US Treasury Secretary, Jacob Lew, reminded the G20 that “the world cannot afford a European lost decade”. Lew added that “resolute action by national authorities and other European bodies is needed to reduce the risk that the region could fall into a deeper slump. The world is counting on the US economy to drive the global recover but the global economy cannot prosper broadly relying on the United States”.

Disappointment over “Europe” from a G20 seeking to promote a strong global economic growth, is a serious issue, one that the EU should take seriously. The EU may be the world’s largest market but its contribution to the world’s economic growth, a meagre 11%, is very far behind the US and China. Global growth could be far superior to what it is currently if European leaders dedicate themselves domestically to an adequate policy of growth. No wonder the heads of states and governments of the G20 are criticising Europe for its management of the Eurozone crisis. But the EU has struggled to provide a united response to the sovereign debt crisis affecting Southern European states. In the midst of the Greek chaos, Europeans leaders fell back on defending their own national interests. This failure to adopt a common and successful response to the Eurozone crisis has raised voices concerning the presence of Europeans in the G20 summits. The European Commission and Council of Ministers officially represent the EU as the twentieth member of the G20. On top of that, European members represent one fifth of the total G20 members, without counting Spain who has a permanent guest invitation.

Prior to the crisis, the EU was seen as a major player in the G20 as a result of the substantial knowledge it was able to contribute to the summits, its financial resources and the special relations its member states have with third countries, such as the African, Caribbean, Pacific Group of States. Moreover, the EU’s strong implementation records to its G20 commitments has reinforced its position within the fora, advantageous for an EU aiming to use the G20 as a venue through which to promote its agenda and have political relations with emerging countries. But the sovereign debt crisis has resulted in a shift in the EU’s role and its importance within the G20. Europeans are no longer seen as part of the solutions but part of the problems being tackled at these summits. The dominance of the Eurozone crisis on the G20 agenda also means that attention is being diverted from issues such as development and world hunger, two issues of importance to emerging powers. As a result there is an ever growing louder grumble from new economic powers and the US over the overrepresentation of the Europeans in the G20, but also in the G8.

So what does all of this mean for the EU? First of all, as the G20 is considered to be a series of fora between the world’s largest economic powers and given the current challenges the EU faces, it risks losing its influence within the G20. Between the years 2000 and 2010, emerging powers outperformed the EU economically. That, combined with half a decade long Eurozone crisis with no end in sight, means that claims of the EU being a major power economically are becoming increasingly contestable. The Union’s struggles to find a solution to the Eurozone crisis jeopardises its status as a credible voice in the global economy, and the EU therefore risks being excluded in the future from important talks. Notably a G2 between the US and China would render the EU irrelevant.

The EU considers itself a normative power meaning that it shapes international relations by exporting an “EU” set of values and norms, the so-called “EU model”. Having no military power, the EU has in the past relied on normative power to influence the global stage. However, the Eurozone crisis has weakened the credibility of the EU model which is being challenged by new models provided by emerging countries such as Brazil, China and India, grouped in the G20, which as a result has affected the EU’s normative ambitions both within the G20 and outside of it.

Additionally, the EU’s inability to “speak with one voice” renders relatively inefficient the roles of the European Commission and European Council in the G20. There has been little policy coordination between EU member states at the G20 summits - Britain, France and Germany have been more competitors rather than collective leaders in this process - and consequently the position of the EU as a member of the G20 could be put into question. US President, Barack Obama, has noted the difficulties of pleasing everyone when it comes to membership of the G20, with the states just under the cut off feeling it is highly unfair that they were excluded and want G20 membership to be extended. As the G20’s twentieth member the EU has taken the spot of other another state.

It is not all tears and distress though for the EU which remains a trade titan on the global stage and so is still able to considerably shape international framework. Furthermore, it remains a dominant presence in the Gx system - EU member states represent one half of G8 members. It is worthwhile noting that ever since the financial crisis the Commission’s role has been upgraded within the G20 and so there is potential for the EU to expand its influence and become a strong force within the G20. But the Eurozone crisis has split the unity of EU leaders and has cost the EU in credibility in a forum which brings together emerging powers that will not wait for the EU to pull itself back up.