(Bloomberg Opinion) -- We non-Europeans tend to get lectured a lot by folks from the European Union about “European values.” In their defense, we always believed they were sincere. Surely a continent so ruined by devastating wars, which had somehow managed to extricate a form of concord from the wreckage, understood that a union was about more than budgets, transfers and regulations: It meant creating some sort of solidarity across the divides of ethnicity and nationality, and defending — no, not European, but universal — rights and principles.
That faith in the EU’s bedrock of values began to weaken in recent years as far-right populists climbed in the polls across the continent. And it crumbled when faced with the actions of leaders of Hungary in Poland — two countries that, had they not been located in Europe, would have been the subject of much head-shaking by European diplomats and criticism as budding third-world autocracies.
Illiberal Hungarian and Polish leaders consolidated their power and undermined independent institutions even as their governments soaked up transfers from the rest of the EU. It was a relief, no less intense for being long delayed, when the EU decided in November to condition further funding on a government’s respect for the rule of law.
The budget deal that European leaders reached last week should have been a great step forward. The EU has taken on an even more ambitious climate target: to reduce emissions at least 55%. A €750 billion pandemic recovery fund will send money directly to the worst-hit member states, financed by borrowing by the commission itself. The deal represents yet another messy compromise, but also a step towards proper intra-Union fiscal transfers.
Sadly, the price of compromise — effectively, a delay in the application of the rule-of-law requirement — may have been too high. Europe’s leaders should not have indulged Hungary and Poland as long as they have. Now, at the crucial moment, they have postponed a reckoning yet again.
Liberal financier George Soros — the main target of Hungary’s conspiracy-theory-loving populists —called the deal “the worst of all possible worlds.” As Soros correctly points out, it treats the populists’ challenge as “a legitimate political stance deserving of recognition.” If Europe intends to unite on the basis of liberal values, then those who attack those values and embrace illiberalism cannot, in fact, be treated by their partners as having equally legitimate arguments.
Whether alliance or federation, any grouping of governments needs to be able to discipline errant members for flagrantly and repeatedly breaching its values. Have Hungary’s leaders, or Poland’s, crossed a red line or not? Do we even know if there is a red line for them, or for whichever tinpot populist next takes over an EU member state?
Here in Asia we have our own country grouping that has failed to live up to its potential precisely because it cannot exclude or discipline any of its members — the Association of Southeast Asian Nations. Faced with China’s overly expansive claims to the South China Sea, the group has consistently failed to agree on a strong, mutually supportive policy because of opposition from states beholden economically to Beijing. Most famously, in a meeting in 2012 that ended for the first time in ASEAN’s history without a joint statement, Cambodia held out to ensure that there was no consensus. ASEAN’s political clout has grown progressively weaker since then.
Surely, if there is a lesson from the past decade, it’s that you can’t compromise with illiberal populists or bribe them with funding in the hope that they will temper their illiberalism. In the long run, Europe’s failure to deal with Hungary and Poland could well prove more damaging to the EU’s stature globally than Brexit. The departure of a disgruntled component leaves a union stronger. Allowing a unit to subvert the union from within only makes it weaker.
It would be tragic if this budget compromise turned out to be the last act of German Chancellor Angela Merkel as the unacknowledged leader of Europe. Future historians will wonder about her vision for the continent. Was it a pragmatic one, focused on building ties through trade and transfers? That seems to be what this deal, and even her Russia policy, would suggest.
If so, however, then the greatest European politician of her generation will have failed the European Union after all. After all, Europe has no armies. It is a superpower in no domain but one — that of norms. If, indeed, Europe has no values to share and propagate, then it is no superpower at all. It may not even be much of a union anymore.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mihir Sharma is a Bloomberg Opinion columnist. He was a columnist for the Indian Express and the Business Standard, and he is the author of “Restart: The Last Chance for the Indian Economy.”
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