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Radnor Geopolitical Report
by Florian
Hauswiesner
Washington
At the dawn of the 21st century,
Europe finds herself at a turning point after having been the world’s power
center for several hundred years. Many observers argue that Europe’s role as the
world’s preeminent global power ended in the suicidal Second World War, because
it was followed by 45 years of dependence on decisions made in Washington and
Moscow.
While this is true, Europe is about to face another significant loss in the
decades to come. No doubt, she has made significant progress in the last 50
years since, currently, the European Union has 25 member states with a
population of over 450 million, making it the world’s largest economy in
absolute terms. Although several obstacles towards an integrated common market
persist, goods and services are less regulated than ever in Europe’s history.
Boundaries are no longer an issue in Europe as people relocate from the
Netherlands to Spain much like the Americans do from Virginia to Florida.
As a consequence of Europe's integration efforts, for the first time in seventy
years, the dollar faces serious competition from another world currency, the
Euro, which is now the official currency in 13 EU member states with a
population of close to 312 million. It is no question that with the United
States being increasingly perceived as an arrogant bully by the rest of the
world, the economic weight of the Euro is likely to gain further ground, be it
for political reasons alone.
Europe’s economic and political crisis: Where is the European dream?
Unfortunately, all this progress can not distract from the hard fact that the
European Union is in its deepest crisis since its creation. Its efforts to
proclaim the existence of a European Dream sounds something like fairytales in
the ears of an objective observer. What makes matters worse is the fact that
Europe’s crisis is threefold: economically, politically and socially. As this
article will illustrate, they are mainly the product of weak leadership on
European and national levels.
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Prior to moving to the United States several years ago, Florian
Hauswiesner had worked as a legislative and political advisor in Germany
and the European Parliament in Brussels. Critical of 'Europe’s inability
to do better' and 'widespread social democraticism,' he decided to
continue his legal career in America.
However, Mr. Hauswiesner has continued to analyze the political and
economic landscape as an independent observer from this side of the
Atlantic. He is practicing as a business lawyer in Northern Virginia with
a focus on cross-border transactions.
Mr. Hauswiesner can be contacted at:
fhauswiesner@h-klaw.com.
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On the economic level, nothing is more exemplary for Europe’s economic distress
than the approval of the Lisbon Agenda in 2000 by Europe’s heads of state with
the aim to make the EU the most competitive and dynamic knowledge-driven economy
by 2010. Reality, however, has made it obvious that the Lisbon Agenda has proved
to be nothing more than wishful thinking. Whereas almost every other part of the
world has been experiencing strong economic growth ever since, Europe’s economy
has been growing at a snail’s pace and unemployment remains at all time highs.
While many Europeans scoff at the economic growth of India and China, arrogantly
pointing to the underdeveloped state of these economies, the economic growth of
the United States as a competing developed economy leaves little room for false
self-assurances. Ironically, economic growth in Europe has been so mediocre that
growth rates that would indicate a recession in the United States are praised by
European leaders as “solid growth.” With fragile economic growth come stagnating
wages and a decline in living standards evidenced by low consumer spending and
angst savings patterns. At this time, it is very likely that Europe’s economy in
the year 2010 will be weaker, in relative terms, compared to other economies
than it was in 2000. This would constitute a far stretch from the objectives of
the Lisbon Agenda and cause a public disgrace for Brussels’ bureaucrats and
national governments.
Europe is also hurting politically. Strategic mistakes, made by European heads
of state and European politicians, leading up to the EU enlargement on May 1,
2004 which added ten new member states without first reforming Europe’s
political institutions and absurd fiscal policies, proved to be a mistake of
colossal proportions. While Europe’s most important institutions, the European
Commission, the European Parliament and the European Council, have hardly
functioned with 15 member states, they are doomed to deadlock in an enlarged
Union of 25.
While representatives of the member states ceremoniously signed the constitution
on October 29, 2004, the document proved to be less popular among European
citizens.
On May 29, 2005, the French voters said non followed by a resolute Dutch nee on
June 1. Uncertain about the popularity of the Constitution among their
respective electorate, governments of other nations, such as Germany, did not
bother to ask their citizens about their opinions on such a fundamentally
important document which will deal a further blow to national sovereignty
rights. While most voters that objected to the Constitution never even had a
look at the document they rejected, the message to Brussels and their national
governments was clear. We do not want more of the same Europe, one which keeps
on making decisions affecting every citizen without a real democratic system in
place. Many Europeans rightly criticize the lack of a democratic legitimization
of Europe. The European Parliament still has only very limited legislative
powers and a one person one vote representation is illusory in a Europe where
one German member of the Parliament represents 830,000 compared to his colleague
from Luxembourg who represents 77,000 constituents.
Europe’s executive organ, the European Commission, is also tied down in a
leadership crisis. Having been at the forefront of economic liberalization in
the '90s, resulting in the greatest privatization phase the continent has ever
seen, the Commission has become increasingly enfeebled and influenced by
national governments. Several large member states, notably France and Germany,
have used their political leverage to shield their economies from the forces of
free market competition. As a consequence, important directives, such as the
takeover directive, have been watered down and labor markets been shut from
“unfair” competition from laborers of the “New East.” In addition, several large
member states keep on pushing the European Commission to impose European minimum
taxes to discourage “tax dumping” from smaller member states. It has to be seen
whether the European Commission will give in to these demands in the near
future. There is also further trouble from the publicity front. An increasing
number of Europeans regard the European Commission as the equivalent of the
Soviet Union’s Politburo with the mission to implement bureaucratic ideas on an
unprecedented scale in all of Europe. Recent suggestions by European bureaucrats
to levy an email tax on all emails sent from one European to another did not
really help to change that.
In a time of global turmoil, in which the limits of American power are obvious
to the rest of world, Europe seems unable to take on a leadership role. In
addition, the EU’s often proclaimed common foreign policy is non existent, which
was illustrated during the Iraq war and with the current crisis in the Middle
East. While this is one area, next to a European defense policy, where European
integration would make sense, it doesn’t appear that that will happen anytime
soon. Not only is there no structure in place which defines Europe’s global
interests but military spending is down in most member states. This leaves the
world stage to an overstretched United States, an oil-powered Russia and an
emerging Chinese challenge.
Germany – Europe’s natural born leader in a crisis
While Germany is also experiencing profound problems, which will be discussed
later, she has some features that make her Europe’s natural leader. Economic
growth has remained weak for over a decade but nevertheless Germany still has
Europe’s largest economy and population, not to mention a very highly educated
workforce. Despite high taxes, only a recently recovering economy, and a rigid
labor market, German businesses have successfully restructured themselves in
recent years and have conquered markets abroad - and as a result are more
competitive than ever. Another advantage is that both Germans and their
political leadership have a realistic picture of Germany’s and Europe’s role and
influence in the world. Unlike in France and in the United Kingdom, German
colonial rule ended a long time ago and national hubris has suffered heavily in
Germany since its crushing defeat in the Second World War.
It appears, however, as demonstrated during the last world cup in which Germany
took third place under the direction of coach Klinsmann, that Germans are
rediscovering their love for the fatherland with patriotic feelings comparable
to that in most nations world wide. Interestingly, the recent wave of
black-red-gold fervor, begun among high-school students and members of the so
called generation XYZ, waged to show their colors despite of concerns of many
’68 left wingers. The fervor rapidly spread among all Germans irrespectively of
their ethnic or religious backgrounds. For the first time in modern German
history, the German flag was used to demonstrate inclusiveness.
Moreover, while the current constitutional system has its flaws and needs to be
reformed, Germany has the advantage of having a relatively stable political and
social system. Mass riots like in France are hardly imaginable and Germans in
general have a more pragmatic approach to reforms deemed necessary by the
government.
The leadership problem – Why Merkel is not Thatcher (nor Klinsmann)
The German leadership problem: Germany’s current problems are mainly caused by a
lack of political leaders with a clear vision for Germany. While Germany’s
multi-party system makes it much harder to form a stable government than in the
UK or the US, the main cause for slow economic and social reforms is the lack of
visionary political leaders such as Ronald Reagan or Margaret Thatcher. Some
people argue that this is due to the fact that most of Germany’s leading
politicians are career politicians who have never gathered real world experience
in another profession.
While this plays a role indeed, the selection process for party leaders is more
to blame for Germany’s current misery than anything else. This process makes it
almost impossible for party members with a professional career outside of
politics to get ahead in the party system. Basically, the party leadership picks
the chancellor candidate. A real participation of the party base does not take
place. Not surprisingly, the Christian Democratic party leadership chose rather
uncharismatic figures such as Edmund Stoiber in 2002 and Angela Merkel in 2005
as its chancellor candidates. It is highly unlikely that these candidates would
have ever survived a US-style primary election. Not surprisingly, neither really
appealed to the majority of the German electorate. Stoiber lost against
incumbent “charming boy” Schroeder and Merkel had to enter into a murky “grand
coalition” with the Social Democrats.
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Interested in attending a Radnor political or legislative briefing? Please
call Sarah Scotch at +1 202 659-4300 for more information.
Our next briefing, by Louis-Lyonel Voiron, will concentrate on the coming French presidential
election and the possibility that the right-of-center candidate, Nicolas
Sarkozy, will be brought down not by the Socialists but by jealous members
of his own party.
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While reaching to the left on economic and social issues (she is responsible for
the largest tax hike in Germany’s history and more direct subsidies for
families), Merkel has not proved to be an effective leader on foreign policy
issues. While Merkel was praised by some foreign media outlets for brokering the
EU budget deal in December 2005 between France and the United Kingdom, the
German taxpayer, already accounting for the largest part of the EU budget, will
once again bear the burden of the compromise.
It is highly questionable if Merkel will be able to modernize Europe’s
institutions and balance the interests between Brussels and the member states
now that Germany has taken over the European Presidency this month. Some
observers vehemently doubt her intellectual ability to define Germany’s foreign
policy objectives in the twenty-first century. Germans have not forgotten how
much respect Germany earned in the world for Schroeder’s, partly short sighted,
opposition to the US-led invasion of Iraq. The current American administration
is grateful with Merkel in office, mainly due to the fact that almost all other
European willing coalition leaders have been ousted by their electorate. But one
may argue that Merkel’s Germany is less a global leader now than during
Schroeder’s reign, very much in the tradition of the check-book diplomacy of the
Kohl era.
Under the given circumstances, it is unlikely that the incumbent Merkel
administration will survive the full four-year term, perhaps giving Germany a
chance for a real reform government. Therefore, it could very well be that time
will run out fast for Mrs. Merkel where she will enter history as a transition
Chancellor whose heyday was the success of the fabulous Klinsmann-team.
Conclusion
Germany’s internal struggle has two implications for Europe: First, a reformed
and self-confident New Germany will be a blessing for Europe since other large
nations such as France and Italy will eventually be more willing to modernize
their sclerotic economic and social systems if Germany is moving ahead. A new
Germany would also be able to lead Europe out of its current crisis to the
benefit of the United States who needs a strong Europe. While France and the
United Kingdom might jealously attempt to counter a German leadership role, most
smaller European nations would rather have Germany lead than France. Besides,
many of the new member states in the East have a traditionally positive attitude
towards Germany, due to cultural and political ties.
On the other hand, if Germany, as Europe’s largest economy, does not solve her
current problems in the very near future, by means of a capable and decisive
leadership, the twenty-first century will be the turning point in Europe’s
history and Europe will become a powerless actor in the flat-world of the
twenty-first century somewhere between the United States and emerging powers
like China and India. One can’t help to wonder; where is the Chancellor who can
do the job?
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copyright © 2007 Radnor Inc.
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