Questions about Europe's future are best answered by making reference to three key trends: the increasing pressures from the international system that challenge Europe to adjust in the economic and defense realms; the domestic preferences of Europe's most powerful countries in determining how to respond; and the continued use of non-EU institutions by powerful member states to solve deadlocks in the European Council and Parliament. These three trends have become increasingly visible over the last decade of EU politics, and add to it developments of the broader international system based on the domestic ambitions and priorities of China, the United States, Russia, and the UK as the key challengers of European interests, and the countries that are bound to put the EU under the greatest strain.

This chapter explores Europe's response to these developments through principles of realist institutionalism (rather than standard integration theory). Realist institutionalism has three premises: that great powers are interested in upholding interdependence; that they pay attention to distributive gains in the institutions that provide this; and that they select, abandon, reshape, create, and nest institutions as required to secure those gains, in ways that cost the least (borrowing from historical institutionalism). Unlike classic EU integration theory, non-EU institutions are an expected outcome when there are strong threats to European interdependence, when distributive outcomes of a Council compromise would threaten a powerful country's interests (in the narrow, unenlightened sense), and when they ensure strong control over future choices.

Given the challenges it must face, the EU will continue to develop institutionally, becoming more important. But it will do so in the context of other institutions outside the EU that are led by Germany for the eurozone and by France for European defense. Such institutions provide elements of government rather than governance that the EU cannot, given the diversity of domestic political preferences across EU member states.

External pressures on Europe

Europe lives and evolves in a world that is becoming increasingly realist. That world will continue to challenge the EU and its member states to grow as a community. The United States, China, the UK, and Russia have a considerable impact on the pressures that Europe faces in order to develop.