In the first part of this book, we closely examined the history, strengths and challenges of Europe. Then we shifted our attention to the BRICS and looked forward to the world in the coming decades. So now it is time to merge the two stories and decide on the best road for Europe, how to circumvent the many dangers in the 21st century, as well as dropping some of Europe’s luggage and altering the EU’s chassis.
But hang on, didn’t you just sketch a future in which the rising economies would be begging for our knowledge and governance experience? And wasn’t the West going to stay rich anyway, so why bother preparing for the future?
We do have to bother and to change, because of the serious problems that Europe faces. There is no guarantee that my prediction will come about, apart from the world transforming dramatically in the next few decades and making our environment a hell of a lot more insecure. The days of quiet evenings are over; we have to prepare mentally, physically and structurally for a bumpy ride.
Before we get to the main vision on the structure of Next Europe, which needs a new European Treaty, let’s focus on the most urgent problems that should be dealt with by the new Commission, that starts in November 2014. You may call this the short-term action list for the next couple of years.
Radoslaw Sikorski, the Polish Foreign Minister, claims that a new world is being born: “One that is more Europeanised, but less Eurocentric”. We have to accept this fact and act on it. Moreover we shouldn’t forget that the EU remains an attractive club for newcomers. “While we immerse ourselves in sterile disputes about the malaise, millions look to the EU with hope. Countries from the Balkans and Eastern Europe are still knocking on the Union’s door. The inhabitants of Belarus and the southern parts of the Mediterranean ask for our support in democracy. For those on the outside, the European dream is a desirable reality,” says Sikorski.
The big danger is that managing decline may become our main obsession. That we start to compare the European Union to the Roman Empire, where Rome’s prosperity ripened the principle of decay and a “slow and secret poison was introduced into the vitals of the empire. The minds of men were gradually reduced to the same level, the fire of genius was extinguished, and even the military spirit evaporated.” Those were the words of the great historian Edward Gibbon – and it’s tempting to apply them to Europe’s current situation: a continent that is rich, arrogant, closed and full of fear.
We could also end up like Japan: the country was asleep for decades after a long spike in wealth and economic development. But that country is a cohesive nation-state and was ready to bear high debts, zero growth and deflation for a long time. It is not feasible that Europe as a Union can survive a long period of stagnation like the Japanese have gone through.
The real warning shot comes from Argentina. The country has experienced a full century of decline. Before the First World War broke out, Argentina was one of the richest countries in the world, Buenos Aires, like so many others, was predicted to be the new Paris. Now it is hit by severe economic and political crises every decade or so, the country has decoupled itself from global financial markets, its economy is partly closed for external trade, Buenos Aires is an affordable tourist destination rather than a world power city. The decline has been largely self-inflicted. According to The Economist: “Building institutions is a dull, slow business. Argentine leaders prefer the quick fix – of charismatic leaders, miracle tariffs and currency pegs, rather than, say, a thorough reform of the country’s schools.” The newspaper fears that the same thing can happen in southern Europe and that good government is pushed aside.
Most interviewees remain optimistic and reject cynicism, even those who are critical like Jan Techau from Carnegie. “Europe has fantastic times ahead if it wants to, but at the moment it is very timid and small minded, and that can turn into a self-fulfilling prophecy,” says Techau. Robert Madelin is more optimistic: “Yes, the world is a hugely challenging place, but it is now a much more promising place than it has ever been before. Europe lives at peace and is politically stable unlike in its history. If the Europeans play it well and bring our strong position to the world, then there is lots that we can gain.”
Belgian researcher Jonathan Holslag blames the likelihood of a continuous decline on a lack of ideas: “As John Stuart Mill said: a democracy is a marketplace of ideas and it only functions if there are enough ideas that appeal to people and explain to them how the political structure benefits them. So what is really needed, especially amongst the pragmatic parties, is a new progressive vision for Europe. Conservatism and economic orthodox policies for me are not enough. We cannot conserve the current standard of living if we trample on it at the same time.”
Instead of accepting the decline, we should move our attention to what is still possible and how we can fix global governance. Political scientist Ian Bremmer: “Western powers aren’t doomed to permanent decline, but the most obvious near-term losers in the G-Zero era will be those who refuse to recognise the new reality and the need for change. Some US and European policymakers will try to hang on for as long as possible to the institutions, rules and standards that they created – which have traditionally protected their privileges – instead of working to shape the new institutions, rules, and standards that must eventually arise.”
Bremmer thinks that Europe can pull itself out its own mess: “If Europe can forge agreements that combine a new commitment to the single currency with much closer coordination on state spending and tax policies, the continent will emerge as the world’s most effective and efficiently run region. With more obvious German leadership, Europe could serve as a model for other regions.”
If there is already one country that could be Europe’s own model, it is Australia. The economy of this former colony has been growing for more than two decades. The composition and size of its population has altered dramatically. All Australian eyes are now fixed on Asia, not on Europe. In the fascinating government study Australia in the Asian Century, released in 2012, Asia is mentioned several thousand times. The word ‘Europe’ appears 54 times, and the European Union only six times.
Australia wants to become a more prosperous and resilient nation that is fully part of the region and open to the world. “The Asian Century is an Australian opportunity,” says the government paper. “As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity. Australia is located in the right place at the right time – in the Asian region in the Asian Century.” There is not the slightest hint of fear to be found in the analysis, quite the contrary. Australia already benefits hugely from the transition of Asia, especially in terms of a gigantic mining and energy boom.
So how exactly can Australia prepare for an Asian-centred century? The then-government pleaded for investment in people to drive Australia’s productivity performance. “Capabilities that are particularly important for the Asian Century include job-specific skills, scientific and technical excellence, adaptability and resilience. Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century.” Australian firms need new business models and new mindsets to operate and connect with Asian markets. The government promises to make the region more open and integrated, encouraging trade, investment and partnerships.
That is the economic part of the strategy, but Australia’s cultural mindset has to change, too. “As a nation we also need to broaden and deepen our understanding of Asian cultures and languages, to become more Asia-literate. These capabilities are needed to build stronger connections and partnerships across the region,” says the study. Australian students are encouraged to undertake a continuous course of study in an Asian language throughout their years of schooling. All students get access to at least ‘one priority Asian language’: Chinese, Hindi, Indonesian and Japanese.
Australia’s set of ambitions set the scene for what Europe should do: Embrace change, accept non-European leadership in the world and take an opportunistic stance. These are all crucial elements for Europe’s strategy for the coming decades, both in terms of politics and policies. So instead of looking more like Japan or Argentina, we should get more like the Australians.
If you like trashy blockbusters, a must-see is 2012. This is the epitome of bad disaster films. The world is collapsing – literally – and the heroes have to avoid Armageddon time and time again, before they reach a 21st century Noah’s Ark, which was secretly built by the Americans in the Himalayas. Several times in 2012 the main characters narrowly escape death, for instance by driving a limousine through a crumbling skyscraper, or taking off in an aeroplane while the runway is disappearing into a mile-deep gap.
The history of the European Union is full of similar cliffhangers, be they less dramatic or clearly visible. Several times in its history it managed to steer away from imminent danger – just before external and internal events could crush the fragile integration process. The EU survived the economic crisis of the 1970s and 1980s, it managed to integrate the former members of the Eastern Bloc, and it even prevented the break-up of the eurozone. But will the story of the EU have a happy end?
Roland Freudenstein thinks so. He is the Deputy Director of the Centre for European Studies, the think-tank for the European People’s Party – the conglomeration of centre-right parties in the EU. “We need to successfully overcome the crisis, that’s the only way to regain the trust of the citizens,” states Freudenstein firmly. And the signs are there. “We are on the right path. On a national basis we have a good strategy of consolidating finances and reform. In Europe, we have taken many measures that will bear fruit in the coming months and years. We have kept the eurozone together, and created a system that will prevent a crisis like that from 2008 ever happening again. It will not happen again in this form, because we have become smarter. Also we have laid the groundwork for bringing Europe back to sustainable growth,” he says.
Much depends on the programme, priorities and strength of the next European Commission, which will steer the ship from the end of 2014 until 2019. In these next five years some drastic decisions have to be made and executed, jointly with member states, companies, NGOs, citizens and other stakeholders. But as the world gets more complex, so too does the script for the 2014 EU movie. A multitude of challenges lies ahead of us and the Commission has to pick the right fights, as well as the right tools, to survive the upcoming perilous road.
This reform program is not just about content, but also about form. The Commission President and his colleagues have to demonstrate a lot of leadership and be able to inspire – particularly the audience outside the ‘eurobubble’. These politicians should show empathy, connect with citizens, recognise the dynamics in the member states and act with a certain amount of vigour as well as stealth. The leadership should be aimed at getting people on board rather than explaining to them why Europe is so important.
Sadly, many Commissioners and other leading politicians will be well over 40 years old and will have held a leadership role not for a healthy 10-20 years, but for much longer. It is time for a new generation to get behind the steering wheel; a generation that grew up at the end of the Cold War or even after it. We need a different mindset and fresh thinking in Brussels. And inspiring figures are necessary to overcome the big mental divides that have emerged within Europe.
By far the most imminent threat to the European Union is the ongoing eurozone crisis. Although national politicians and Commissioners keep reiterating the mantra that “the worst is behind us”, Europe’s economy is still in an extremely precarious state. The root of the eurozone crisis remains untouched: a flawed financial system.
Hardly any EU banks have been forced to close, while the US shut down around 500 banks and has written off huge amounts of debt. We still don’t know how many banks on the old continent are unviable, how many skeletons are in the closet. The erection of a ‘banking union’ may prevent a next banking crisis, but the current one has not been dealt with.
As long as the financial sector remains weak and vulnerable, so does the European economy. In some countries a ‘triple dip’ has taken place, meaning that in five years time three recessions took place. Millions of young people are without employment or training. Over 25 million Europeans are out of work. Total government debt of the EU member states is well over €11 trillion, more than 87% of total GDP. In the eurozone, public debt amounts to 93% of GDP. Before the crisis broke out, in 2007 eurozone debt was ‘only’ 66% of GDP, already a breach of the EU’s own 60%-rule.
So we are still in big trouble even as growth is (slowly) picking up. Repairing the damage in terms of lost GDP, rising debt, high unemployment, low trust, will take years. But do we have that time? Another problem is that hardly anyone really understands how financial-economic structures should be set up to ensure the eurozone is stabilised yet leave member states with ample sovereignty. A lot of proposed measures, like the banking union, are understood only by a small coterie of technocrats. Putting national banks within the eurozone under European surveillance makes sense, but what about local banks? What about democratic control of the European Central Bank? How to deal with the zombie banks, if we kill them properly what damage will that cause to the economy? One interviewee urged on ‘quick implementation of the Basel-III rules’. That sounds good, but what do these rules actually entail?
However, some measures and mistakes are pretty clear, even for outsiders and a general audience. Europe has overprotected the interests of the banking sector. It was too afraid to intervene because of a possible Lehman Brothers-scenario on our soil. That fear was exaggerated, say experts like Philippe Legrain. And it is clear that as long as the financial sector remains weak and disorganised, not aligned to the high level of market integration, the eurozone will not recover.
‘Walking back the euro’, as suggested by François Heisbourg, is not feasible. Some countries should never have joined the eurozone, but that is now a fact of life. Dismantling the eurozone to the level of national currencies within a bandwidth of flexible exchange rates may alleviate short-term pain, but it will only be one big boost of oxygen. And the risks of the operation going wrong are far too high. Reforming Europe’s financial sector is a safer first step.
By creating a stable financial-economic climate, investors will be tempted to spend their money in Europe. Non-European investors especially can make a difference, as there is fierce competition for their money across the globe. A better investment climate is one of the paramount results of a mended eurozone.
The ‘European Semester’ and the accompanying ‘Annual Growth Survey’, tools from the Commission to monitor member states’ economic policies, bring forth mixed feelings. It remains necessary that the EU’s economic area grows less fragmented and that weak economies reform, but the Semester has become a very technical, top-down process. Prescriptive recommendations increase the ‘coldness’ of the EU; rather, national reforms should be formulated by the member states themselves. So a more relaxed approach is better, stimulating local solutions and sharing knowledge. The reform contracts that the German governments wants to impose, would basically end national democracies and kill the remaining solidarity within Europe.
The power of the European institutes to get the economy back on track is fairly limited. As most social-economic policies are still formulated at a national level, the high levels of (youth) unemployment cannot be blamed on the ‘eurocrats’. But that does not mean that the Commission can be complacent – for the Commission is in charge of pulling down barriers and there are far too many barriers to employment in Europe, both within and across borders. There is lots of work in this field to be done in Brussels; work that has been delayed for too long.
What Europe desperately needs is a better level playing field between the old continent and the rest of the world. The EU’s policies and politics should become much more consistent, right now, many directives, measures and action plans contradict each other. Also innovation and investing in infrastructure are more important than Europe’s institutes recognise. According to Digital Agenda Commissioner Neelie Kroes, the new EU budget for 2014-2020 is “a budget of the past” rather than of the future, still focusing mainly on agriculture, structural and cohesion funds.
The single market needs to be improved and should become a top priority for the next Commission and European Parliament. Although it makes up 70% of Europe’s GDP, the service sector is still partly closed, this is a big opportunity. But there is a lot of resistance in member states, because of protectionism of their companies and fear of sovereignty loss. This applies especially to Germany which does not want to open up its highly regulated service market. Also in ‘rules-free’ Britain the opinion is that the service sector must be protected from continental influences.
Concrete measures to be taken include the abolishment of national protectionist measures, the streamlining of state support rules, and above all the completion of the digital, energy and transport market. The digital market could profit immensely from reform of intellectual property rights and copyright laws, currently the Spotifys of the world have to negotiate with 28 different copyright organisations to get access to the full EU market. In a society in which the music sector has become global and fully digital, national walls should be taken down as soon as possible.
Although the share of industry in Europe’s economy has dropped, it still is an important driver of employment. To remain an attractive place for the industrial sector, Europe needs a better coordinated and streamlined industry policy – for instance on energy and climate issues. Better regulation and less bureaucracy are evergreen measures, but still valid ones. According to business lobbies, many policies lack coherence. We may also consider re-shoring policies like the one that Obama is pushing in the US (‘Bringing our jobs back home’). With labour costs rising in China and high productivity in Europe, in a few years it won’t really matter where you produce your goods, according to labour experts. Plus you get to control labour circumstances, corporate social responsibility and other ‘softer’ factors around production.
The current trend of the Commission is to work with regulations instead of directives, which leaves less room for member states to ‘goldplate’ them with extra rules. Regulations are also effective immediately rather than two to five years later. This type of EU law is to be preferred, as regulations get more attention from media and national politicians: if there is a gap of several years between agreeing on a rule and implementing it, people will be surprised by the introduction of this “law from Brussels that we didn’t ask for”.
Reforming labour markets is a national issue, but the Commission should give it a push with the arguments of the single market and the lack of a labour level playing field. According to Robert Madelin, many labour market solutions have been on the table for decades, and basically what we need to do is be more flexible. “This is not a problem of technology, and it is not a reason to fear for the future of Europe,” he says.
The European Parliament has already called for the portability of social rights, to stimulate labour migration. With only 2.8% of the EU’s labour population working in a member state other than their own labour mobility remains low. Too low in fact if you consider high unemployment rates in several member states, while others have shortages of skilled workers, like Germany and the UK have in the ICT sector. Even in Spain less than 0.1% moved abroad in the crisis years. Irish people go to other English-speaking nations, not to continental Europe. The only upshot of Europe’s labour market is that in western and central Europe, hundreds of thousands are cross-border commuters.
Philippe d’Arvisenet of BNP Paribas has found high skills disparities between countries. In a single market, you need people with a more equal skillset, but also ‘transferability of social rights’. That includes a small common budget to start up a pan-European welfare state, alongside harmonising efforts in the pension area. “There are plenty of populist ingredients, but it is necessary anyway,” he says.
With more than five million young people (under 25) unemployed in the EU – and this figure will only rise the coming years – the necessity for drastic labour market improvement becomes enormous. One of the solutions to alleviate the dreadful situation of Europe’s young is to promote youth entrepreneurship. Growth doesn’t come from existing companies, so startups and small firms are essential in creating jobs and avoiding the looming lost generation. Entrepreneurship comes in many forms and different roles: it is a tool to develop talent and to stimulate innovation, but in the current context it is also a solution to unemployment.
Europe certainly lacks an entrepreneurial mindset compared to other continents. Europeans – old and young – prefer to work as an employee, often because of job and income security. But the potential is high: nearly a quarter of EU respondents have started a business or are thinking about starting one.
If we focus on the young, it becomes clear that mindsets are changing: 51% of young Europeans (aged 15-24) say that self-employment is desirable, against only 18% of the age group 55+. A quarter of young Europeans thinks about starting their own company; only 3% of the older Europeans considers this step.
Recent research by the OECD confirms this trend and reveals scope for more self-employment. The next generation of entrepreneurs has a lot of growth potential; their startups grow twice as fast as new companies set up by older peers. These digital natives understand much better the scope and opportunities of the digital economy. It is easy for them to become a ‘micro-multinational’ right from the start.
But little attention is paid to the specific barriers that young entrepreneurs face. Their starting position is fundamentally different; as they are younger, they lack experience, have trouble getting access to capital, miss essential knowledge of entrepreneurship and other important basic conditions for a successful entrepreneurship. Most have never had the opportunity to accumulate capital on their own in a decently-paid, full-time role, leaving them to depend on luck or parents. Some 66% of the young self-employed say entrepreneurial skills should be specifically taught, 73% of them say access to funding remains difficult, and one in two believes innovative funding platforms will accelerate entrepreneurship. Access to finance is the most significant obstacle to starting up a business.
Both member states and the EU can do more to make (youth) entrepreneurship easier. Measures include providing enabling infrastructures, offering targeted tax incentives, leveraging a relevant talent pool, expanding the choice of funding alternatives, reducing red tape, providing entrepreneurship training and giving improved access to loans and EU funding programmes.
External trade may get the economy going is as well. Rem Korteweg, a senior research fellow at the Centre for European Reform in London, hopes that the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU will make a difference. This trade deal is now being negotiated and its outcome could affect 40% of world trade. Korteweg: “Countries like Russia, China and India have a much stronger role for a state-guided system in the way business is done. That’s somewhat contrary to the way in which liberal market democracies such as Europe and the US operate. If the EU and the US are able to take TTIP forward we can set global standards for trade, basically forcing emerging economies to adopt these standards. This is good for business, for the trade norms we hold dear, and it’s good for our soft power influence around the world.”
Enlargement has been one the EU’s key successes. It is a real exporter of democracy and stability. After the dictatorships in Portugal, Spain and Greece gave way to democracy, the southern European countries were quickly integrated into the Union. The same happened to the 12 former Eastern Bloc countries, most of them joined 15 years after the fall of the Berlin Wall. Meanwhile, the Western Balkans area already partly in the EU. Serbia, Montenegro, Macedonia and Albania are negotiating on accession, and Bosnia and Kosovo are in the waiting room. Even Iceland considered joining after the credit crisis broke out, but it cancelled the application as fishing rights would be jeopardised by an EU membership.
The integration of the Western Balkans in the European Union is still necessary; only political and economic instability should be reasons to keep them out. What happened with Romania and Bulgaria should not be repeated. According to various sources, the accession of these two countries in 2007 was too soon and was mainly a political decision. The Directorate-General Enlargement of the Commission was against the enlargement as both Romania and Bulgaria were completely impoverished and corrupt in 2007. They needed several more years of internal transition, but the European leaders decided otherwise – just as they did in allowing Greece into the eurozone in 1999.
The two eastern European countries have shot themselves in the foot by joining the EU. Romania is already a net contributor to the EU, even though it is entitled to billions of euros of European funds because it is so poor and underdeveloped. To compare: in 2013 Poland – a ‘richer’ new member state – received €102 billion net from the EU and will get the same amount in the next six years. “Bulgarian farmers are committing suicide,” said one officer from the Commission. “They lent money as they expected their government would get the EU agricultural funds. But that didn’t happen because of gross mismanagement, and farmers went bankrupt. The enlargement led to an incredible amount of social drama.”
A positive development is that the accession negotiations with the countries in the Western Balkans are now much stricter. The difficult ‘chapters’ of EU Law are opened right at the start of the negotiations, instead of at the end, so the chance of political pressure is minimised. It will take many years for Macedonia, Serbia, Montenegro and Albania to get into the EU, probably only from 2022. So the club will remain with 28 members for quite some time.
This is good. Europeans have become wary of further enlargement, fearful of more poor neighbours flocking to the richer parts of the EU. The enlargement also puts a strain on the machinery of Brussels, as it becomes more difficult to negotiate with so many member states. Even the translation services are under pressure as they have to be able to interpret into 24 different languages.
Because Norway and Switzerland won’t join the EU, we should start talking about the boundaries of the project. I know it doesn’t really make sense as you want to keep the door open in the long term for European countries like Belarus and Ukraine. But if we don’t set the borders now (meaning including the Western Balkans), Europe’s citizens will increasingly feel the European integration project is nothing but an uncontrollable inkblot. Setting a finalité for Europe, let’s say for the next 20 years, will take a lot of their anxiety away.
So what about Turkey, should they be part of the EU? There are ample reasons for Turkey to join Europe. Its predecessor, the Ottoman Empire, has had a tremendous influence and role in the development of the continent. Our cultures are closely aligned even though the overwhelming majority of the population is (passively) Muslim. And we need to keep Turkey in our sphere of influence as it is a pivot state in a violent region.
Negotiations between Turkey and the EU have been going on for nearly ten years, and little progress has been made. Hardly any serious implementation of EU laws has taken place, the political divisions on both sides are huge, Turkey is even moving in a more authoritarian direction with suppression of street protests, corruption scandals and other infringements of the rule of law. Another ominous sign of a deteriorating relationship is that Turkey increasingly focuses on the East and on Russia, closing trade deals with Iran, keeping warm ties with Russia.
Public opinion in Turkey on EU membership has flipped. The writer Orhan Pamuk states that when the talks started in 2005, “Turkish newspapers speculated optimistically that things might move very quickly indeed, that Turkey might enjoy full membership of the EU by 2014. Other papers wrote fairytale accounts of the privileges Turkish citizens would finally gain once full membership was secured.” As the negotiations dragged on, the enthusiasm withered. In 2004 a large majority (73%) of the Turkish population supported the accession of their country to the EU. But in 2013 only 44% consider this ‘a good thing’. From the European side, only 20% of the population thinks a Turkish EU membership is desirable. And many leading politicians in France, Germany, Austria and the Netherlands are openly against Turkey ever joining the EU.
Considering the low levels of support from both sides, the fragility of the European project and the way the accession talks has been going, it would be wise to pull the plug. The main reason is that enlargement to Turkey will undoubtedly blow up the whole project. It will release much more anger and fear, feed the populist movements, and ignite the hate against Muslims. In several countries a referendum will be held, undoubtedly leading to a rejection – and even one ‘no’ is enough to block he accession. An EU membership for Turkey would destabilise rather than stabilise the relationship. Better we end the talks now, decrease ambiguity and bring in some realism. That will create room for a different kind of cooperation, for instance in creating a preferred access structure to bind the EU’s single market and Turkey’s economy together.
“The time has long passed to make the argument that Europe has no role to play or does not have an interest at stake in the development of Asian security,” says Rem Korteweg of the Centre for European Reform. He wants a stronger engagement of Europe in Asia. There is so much going on in this area, that EU-Asia relations have to be a separate priority instead of being part of foreign policy as a whole.
Just as Asian countries are somewhat reluctant to act on the world stage, so is the EU when it comes to deeper relations with Asia at large. Over the past 20 years, relations with Asia have been primarily around trade. The ‘strategic partnerships’ that the EU has closed with these countries are, in essence, not really strategic. They mainly cover issues like free trade and deepening trade relations. Korteweg sees ample opportunities for improvement: “There is basically a diplomatic competition taking place for the favour of Europeans. The reason for that is that Europe still matters in the international arena. There are EU member states who have a veto on the Security Council. European markets remain very important, also to Asian suppliers. So the EU is less and less able to get away with a neutral stance in some of the tensions that are currently emerging in Asia.”
If we do not get involved in geopolitical games in the East, we may shoot ourselves in the foot. Korteweg: “Asia is not only the continent where we will see the most economic growth over the next couple of decades, but also the place where we have the most likelihood for serious security issues. And these can spill over into interstate war. That would have trade consequences as well.” The risk of such wars is not negligible, as we have seen in the previous chapters. Quite apart from human tragedy, trade could be severely affected, warns the Dutch researcher. “If we realise that one in two merchant ships pass through the South China sea, and a significant amount of hydrocarbons passes through the region, any trade disruptions will affect Europe’s economy immediately.”
Shada Islam of the think-tank Friends of Europe also calls for deeper EU-Asia relations. “The EU needs to thrash out a new Asia policy adapted and responsive to the region’s emerging concerns, priorities and growing list of 21st century challenges. This is urgent,” she says. Every year a bigger number of high-level meetings between European and Asian leaders is being held, ranging from China to India, from Japan to Myanmar, but a truly European strategy for ‘sustainable engagement’ will require more. This is all about an “in-depth reflection of Europe’s many interests, strengths and weaknesses in dealing with more self-confident Asia,” says Islam. She quotes the former Indonesian foreign minister Hasan Wirajuda, who stated that the gains of the Asian Century are at risk because of unresolved historical conflicts and abiding mistrust in the region. As Europe has a lot of experience with solving conflicts and building trust, the added value of engagement is obvious for both parties.
According to Islam, Europe still matters in Asia. We are not looked down upon because we lack real military strength. Rather it is the concept of the single market and our technology that appeals to Asians. “It attracts goods, investments and people from around the world. European technology is in much demand across the region to tackle climate change, urbanisation and other 21st century challenges,” she says. Furthermore, Europe’s soft power is popular in stimulating peacemaking and reconciliation. “For many in Asia, EU remains an inspiration for their own regional integration initiatives. Europe can offer its expertise, but also crisis management, conflict resolution and preventive diplomacy.”
There are several pressing reasons why Europe should work on its general foreign policy soon. First of all the continuing instability at Europe’s borders – especially in the east – make foreign policy a priority. Another reason is the high risk of multilateral institutes failing. Europe should still take the lead to reshape global governance and try to realise a worldwide climate deal, but we should also prepare ourselves for a world of regions in which we are left to ourselves.
Ian Bremmer’s scenario of continuing regionalisation is right on the mark. “Many of the rest will rise,” he writes in Every Nation For Itself, but only to tackle local and regional issues. “Leaders will provide some public goods within their own sphere of influence, while increasingly self-confident regional heavyweights ignore major multinational institutions. This appears to be the path the world is already on.” Leadership will not only come from Brussels, but more from the heavyweight in the region, meaning Germany. The same happens in South America (Brazil) and Nigeria will take a leading role in Africa as well.
Before we zoom in on defence policies, we should realise that the nature of power is changing. Former NATO chief Javier Solana states that the concept of power is getting broader. It used to measured ‘in the size of armies and populations’, not in terms of GDP per capita, reputation and hosting of Olympic Games and the World Cup Football. Other indicators of power are – according to Solana – ideas, innovation, art and culture.
For successful European foreign policy we should consider extending our range of instruments, for instance by creating an active marketing strategy to export our governance and culture. Europe could start its own equivalent of the British Council and Confucius Institute. Let’s call it ‘The House of Europe’ which would get branches across the world, from Sao Paolo to Beijing, from New Delhi to Jakarta, from Mexico City to Abuja. This institute could work with governments in its territory, as well as with media, NGOs and universities. The House of Europe would aim to spread knowledge and understanding of Europe’s common culture, provide in language training, give courses in governance and the structure of the EU, organise events and exhibitions to put our leading artists and writers in the non-European spotlight.
One extra reason to do this is because our experiments with governance are very useful for non-European countries. Robert Madelin: “We were miles ahead of others, theorising and doing international economic openness. And it is still true. As playing with them in the European space trickles down to the local level, it will also enable us to be exemplars and partners at the global level.” If the sketch of 2030 becomes reality, the demand for governance will explode. The House of Europe will become a leading expertise centre in emerging countries if we play it right.
Hard power remains crucial, too. Europe cannot trust to NATO’s protective shield especially as the Americans seem fed up with our lack of interest in defence. If the Ukraine crisis has taught us one thing, it’s that we need to boost military capabilities and streamline Europe’s foreign policy procedures. We have lost respect both in Russia and in the US for the mishandling of, and the weak response to Russia’s intervention in Ukraine. What didn’t help either is that European countries decided to act on their own in recent outbreaks of violence – Mali, Libya, and Syria. In the latter country, military action by the UK and France was cancelled at the last minute.
Boosting military spending, sharing capabilities and information are the first steps to increasing Europe’s hard power. The next chapter will suggestion a proper European army in the long run.
The last priority should spark little controversy amongst Europe’s citizens. Especially after the Ukraine crisis, Europe’s energy policy is high on the agenda, combined with ambitious goals that the EU set to decline its carbon footprint by 2030. These goals include a reduction of greenhouse gases of 40% (compared to 1990), increasing the share of renewable energy to at least 27% and fix the emissions trading system. The renewables target is not on a national basis but rather on a European basis, which takes away a lot of pressure from member states to act.
Apart from footprint measures, creating a coherent energy strategy is easier said than done. In the end it is still the member states who decide to sign a deal with Russia to get their gas and oil, or to develop alternatives. Energy trade within the EU is a very complex matter as it involves a lot of national interests, different energy grids and a variation of energy sources – from nuclear to renewables. So completion of the internal energy market is vital, as well as building missing infrastructure links to secure a quick response to disruptions in the network. The European Commission launched a new strategy in May 2014, calling for an increase of energy production within the EU, diversifying supplier routes and speaking with one voice in external energy policy.
Rem Korteweg is quite optimistic about the action that the EU is taking in the energy field. “They are starting to think much more creatively and urgently about the matter. It means engaging much more with countries in North Africa and the Middle East, and also thinking differently about the relationship with the US. The United States always has played a central role in Europe’s internal and external relations, and now the energy relationship is becoming a part of that.”
The researcher also gives a stark warning: “We need to be very clear that Europe is a resource-poor continent. We are inherently looking abroad to gain access to sufficient materials and energy resources to meet the demands of our economy and citizens. The next ten to 15 years will see a lot of challenges when it comes to the supply of these resources.” Because of declining domestic gas fields, the EU will become more dependent on outside sources, unless we develop new sources in Europe, from renewables or shale gas.
One consequence of the search for energy security is the opening up of new energy corridors. Korteweg: “Europe will start to get more access from countries like Azerbaijan, Kurdish Iraq, and possibly Iran if we have a nuclear deal with them. The relation with Algeria will become much more important.” LNG – liquefied gas – may be another way to circumvent those nasty Russian pipelines. After 2020, Europe should be able to import large amounts of LNG from Qatar, America (shale gas) and other places.