chapter  19
15 Pages

The undermining of ‘global Europe’?: The impact of the Eurozone crisis on third country perceptions of the European Union

WithEDWARD YENCKEN

The Eurozone crisis as an issue has been predominately analysed in the context of its impact internally within the European Union (EU). This focus, while understandable, tends to ignore the impact of the Eurozone crisis on the EU’s external relations with third countries. The intention of this chapter is to redress this situation by examining the impact, thus far, of the Eurozone crisis externally. Through the utilisation of the case study of EU-Australian relations and interviews with EU and Australian officials, this chapter will argue that while the Eurozone crisis has affected public perceptions of the EU, it has yet to impact on the EU’s external relations in a discernable way. This chapter will commence with an investigation of the economic implications

of the Eurozone crisis and the subsequent extent to which constraints have been placed on EU foreign policy. As surmised by Spyros Economides (2013), ‘a vulnerable single currency weakens the competitiveness of the single market; a less competitive single market weakens the foreign policy of a polity which is dependent – to a great extent – on its commercial prowess to be able to influence’. Consequently, the link between the Eurozone crisis and the potential undermining of the EU’s ability to project itself as an international economic actor becomes apparent. As Björn Fägersten (2012) has suggested, the EU is likely to have ‘less sway over issues of global economic governance’, until such time as ‘they put their own house in order’. Following economic implications, this chapter will then consider the broader foreign policy repercussions of the Eurozone crisis. Richard Youngs (2011) argues that ‘the precariousness of the whole EU integration project means that external policies have little priority – on the grounds that if the euro fails, all bets on a common foreign policy are off’. A further problem, however, may be the extent to which economic problems and lack of a coherent foreign policy are limiting the EU’s perceived importance as an international actor. As a result, the EU’s ability to engage successfully with third countries may be ‘impeded by structural issues, reduced economic resources, and clashing political agendas’ that have come to be associated with the Eurozone crisis (Mirtchev, 2013). The EU-Australia bilateral relationship, as the case study of this chapter, will

be utilised to ascertain the extent to which an otherwise healthy bilateral

relationship can be negatively influenced by the Eurozone crisis. Analysis will first focus on commonalities in values and interests that are at the core of the modern EU-Australia relationship. This will then provide the pretext for examining how the Eurozone crisis, as a newly emerged issue, can detract from the broader bilateral relationship. The often hostile tone of Australia and EU elites, suggests that, at the very least, the Eurozone crisis may serve to negatively influence the tone of bilateral relations at the public level. Despite the emergence of the Eurozone crisis as an irritant in bilateral relations, this chapter will argue that the EUAustralia relationship remains sufficiently durable to withstand such public disagreements. As an interviewed Australian Department of Foreign Affairs and Trade (DFAT) official noted, ‘it does have an impact but I don’t feel that it has an impact that really changes the overall relationship’ (DFAT official 1, 2012).1

This is particularly the case when viewed in the context of ongoing negotiations for a treaty-level Framework Agreement and the potential opening of negotiations for a Free Trade Agreement (FTA). Similarly, it will be suggested that the Eurozone crisis may by itself not be a significant enough issue to alter substantially the core dynamics of the EU’s relationships with other third countries.