The EU’s resilience--indeed, its very survival--is being
called into question at a time of profound geopolitical transformation, in
which a stronger Europe is essential.
For more than six decades,
Europe’s integration process has been steadily evolving. Each step, from the
European Coal and Steel Community to today’s European Union (EU), was taken
with the common good in mind and based on shared values (democracy, human
rights and social justice) and goals (economic growth, prosperity and the
consolidation of Europe’s international prestige). In the coming year, the
result—the common rules and institutions that we Europeans have painstakingly
forged—will be tested like never before.
In 2011, Europe’s foundations
began to tremble, as the euro zone’s sovereign debt crisis, set in motion by
the global financial and economic crisis that erupted in 2008, moved from the
euro zone’s periphery to core countries. The EU’s resilience—indeed, its very
survival—is being called into question at a time of profound geopolitical
transformation, in which a stronger Europe is essential.
Global power is shifting towards Asia and the Pacific. New—and newly influential—non-state actors have appeared, in some cases (for example, terrorist organizations) jeopardizing states’ capacity to guarantee national security. Nuclear proliferation is a growing menace, as shown by the International Atomic Energy Agency’s recent report on Iran. Progress on crucial global issues—particularly energy security and climate change—has been disappointing. And the scourge of poverty and famine—most vividly urgent today in Somalia—continues to offend the very idea of civilization.
All of this stands in stark
contrast with the predictions of a peaceful, predictable and safe
“post-historical” world that were popular at the Cold War’s end. The Arab
revolts, unthinkable a year ago, now challenge a regional order that has
prevailed for more than a half-century. The Japanese tsunami has called into
question the future of nuclear energy worldwide. And, perhaps most remarkably,
the relative global decline of the US, the world’s economic and security anchor
since 1945, became unmistakeable in 2011, reflected in political polarization
and paralysis—and punctuated by a credit rating downgrade.
So the strategic challenges
facing the EU are vast. To meet these, it must first restore its international
credibility. Since the adoption of the Lisbon Treaty in 2009, great advances
have been made—and should continue to be made—towards reform and regulation of
the financial system. But many decisions came too late or have not gone far
enough to address the seriousness of the crisis, a shortfall with far-reaching
consequences.
Today, the EU must reinforce its institutional and fiscal coordination. An economic union cannot function properly unless supported by binding fiscal norms and the political integration needed to sustain them. As the sovereign debt crisis has proven, the euro requires mechanisms to confront asymmetrical shocks, which implies the creation of a common treasury. An important first step in confronting the speculative attacks that euro zone economies suffer today is a commitment to greater risk-sharing and greater authority for the European Central Bank. A stricter and more rigorous stability pact is also imperative to achieve greater integration.
These challenges were finally
taken up at the EU’s crucial summit in December, as Europe’s leaders sought a
solution to the sovereign debt crisis that could stabilize the euro zone. The
main lesson was clear: if we want the EU to emerge from the crisis
strengthened, any agreement must foresee a balance between austerity and the
need for economic stimulus. Simply put, without growth and higher employment,
the euro zone’s problems cannot be resolved.
In particular, euro zone
economies must tie their growth strategies to long-term competitiveness, which
is ultimately determined by the value added to goods and services. Emerging
markets understand this: in less than 15 years, China and India will account
for 20% of global spending on investment in research and development, more than
twice their current share.
Meanwhile, the EU will run up
against serious demographic constraints: in 2025, Europe will represent just
6.5% of the world’s population, compared with Asia’s 61%, and its average age
will be 45, compared with 28 in India, 37 in China, and 38 in the US. In the
absence of adequate strategies for immigration, integration, healthcare,
education and much else, Europe’s growth and competitiveness will decline, and
social tensions will worsen and multiply.
Europe must also contribute to
reforming the traditional system of international relations. The existing
multilateral institutions were designed for a vanishing Western-centric world.
At the same time, the dispersion of power, the degree of interdependence and
the sheer dimension of the challenges confronting the world require effective,
accountable and legitimate global governance. The inability to achieve a
consensus on acute issues, such as Syria’s internal repression, or on chronic
problems, such as climate change, highlights the (increasing) complexity of
global governance and responsibility.
Accommodating today’s
institutions to the new global powers is a key challenge that cannot be
postponed further in 2012. For example, as the International Monetary Fund
prepares for a general revision of quotas, due in 2014, no one is better
positioned than Europe to advocate for effective multilateralism and to
facilitate agreement and adjustment by adopting a common position to correct
today’s over-representation.
Speaking clearly will enable
Europe to promote its interests more successfully by developing partnerships
not only with traditional allies, such as the US, but also with new leaders,
like China and Brazil, and strategic players, like Turkey or Russia, and with
the increasingly important regional blocs that are forming around them. In the
Middle East—a region that, unlike Eastern Europe, has no landing strip—Europe’s
support is essential to constructing a new regional framework.
No one claims that meeting all
these challenges will be easy. All roads have ups and downs, just as every
crisis imparts a lesson. In 2012, the lesson should be the importance of
greater political integration and financial regulation, of a legitimate and
transparent institutional framework, and of consensus. All problems can be
worked out if we keep the lights on high and analyse the situation with a clear
strategic vision.
Javier Solana
Live Mint.com
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