Euro Summit: Chinese Help and Italian Trouble

The Economist just published this post on the element of this week's eurozone summit that would involve Chinese cash as a part of the currency zone's recapitalization plan. Ever instructive, the article lays out the China factor in some of the magazine's trademark economics-in-layman's-terms. I didn't know, for example, that the EU is China's biggest trading partner. Given all the hub-bub stateside, wouldn't most Americans assume that position was enjoyed (or maligned) by the United States? 

Yet the piece's author makes an effort to signal that the appeal for Chinese cash is neither revolutionary nor a particularly important change in the status quo. He takes a longer-term view on the EU-Chinese relationship, which of course bears direct influence on the American role between the two. 

"Grand political bargains between China and Europe—money in return for more representation at the IMF, or market-economy status—seem wildly improbable. These prizes will eventually come anyway; and weak though parts of Europe are, the EU cannot be seen to trade them too nakedly. Bargaining of this sort would also require both parties to change their positions markedly. China is keen not to be seen as a source of “dumb money”, but requiring big political concessions in return for cash is a pretty clear signal that this is not a commercially attractive investment. As for the euro zone, it can hardly claim that senior Spanish and Italian debt is now safe for institutional investors if it has to horse-trade too hard to get China on board."

And further along the pessimism spectrum is the Wall Street Journal, which, true to form, has expressed typical euro-skepticism on the summit's results and bemoaned the plan's lack of detail and the risks that remain for U.S. companies and stakeholders. Though the European Financial Stability Facility will "backstop" troubled eurozone countries against default, the paper says, this week's decisions fall short of the muscular moves called for by experts and do relatively little to stem fears of a backslide toward recession in Europe and worldwide. 

Both articles signal the lingering dangers of the tenuous Italian situation, where fractious politics in Silvio Berlusconi's government has dimmed hopes for any kind of meaningful action against the euro's woes. Italy is heavily in debt and, as the third-largest economy on the euro, its future determines that of a host of other dependent nations both in and outside the monetary bloc.

Courtesy of the Wall Street Journal and ICAP

Though the chart refers to Italy only, its title -- "Brief Relief" -- sounds just as appropriate for the whole of the eurozone for the many observers that continue to be concerned about the currency's immediate and middle-term prospects.

Mixed Feelings on Mid-Crisis EU

Behind the euro crisis is a crisis of confidence, felt differently but to similarly intense degrees throughout the Continent. 

Northern countries have been feeling taken advantage of, with the common refrain echoing a feeling that the southern EU countries have spent with abandon the considerable benefits received from their neighbors. But "the feeling is mutual," reports Global Post, and in the case of Spain, many feel they have exchanged cash for compromised protections of rights, crisis-time mismanagement, sacrifice of national sovereignty, and kowtowing by Prime Minister Jose Luis Rodriguez Zapatero toward demanding eurocrats in Brussels. 

Nobel laureate Robert Mundell said on August 26, "I don't think the euro is on the verge of collapsing."

Alan Greenspan, the former head of the US Federal Reserve, said on August 24, "The euro is breaking down."

Eschewing with the "United States of Europe" idea, Romanian Mircea Cărtărescu favors a union centered around the "European mind" and a federation "not solely focused on the issue of economic survival." He says: 

"Present-day Europe relates to the United States as Athens once did to ancient Rome. And although at one point Athens sought to emulate Rome, I can see no reason why modern Europe should seek to emulate the United States."

German ex-foreign minister Joschka Fischer counters that "we need to work toward the United States of Europe now."

In Estonia, a slightly but definitely more optimistic note can be heard in the public opinion of the country's lot as it relates to the EU, again reported by Global Post. Says Swedish Prime Minister, Carl Bildt, 

“I remember the days when the counters of the shops in Tallinn were empty and the people were starving. The economy more or less had to be rebuilt from scratch... If you had asked people on Aug. 20, 1991 whether in 20 years “Estonia, Latvia and Lithuania would be seen as economic success stories in Europe, would be full members of NATO, full members of the European Union,” Bildt asked, “if anyone had said yes, that person would have been seen as a fairly likely candidate for lunacy.”

But such a public, party-line voice is bound to be tempered by ordinary citizens, in this case from Tallinn, the Estonian capital:

"Nineteen-year-old Katrina Ulbeerte, bopping along with her younger sister, laughs when asked what she knew about Soviet times before she was born. In American slang, she said her parents have told her that life then was difficult. “They told about special lessons about, like, communists and, like, all kinds of military stuff. I’m happy I don’t have to go work in a factory!”

"But 55-year-old Ieva Inauska, who couldn’t speak English but conveyed her thoughts quite clearly in broken German and hand gestures, doesn’t see much of a change. “Soviet Union? Bah. European Union? Bah. The European Union bureaucracy is even bigger than the Soviet Union’s!” And, she indicated, she preferred the latter."

EU, Texas Economics: Language, Money, Mobility

The Wall Street Journal compares, of all things, EU economics to Texan ones:

"Arguably, the heart of the euro zone's problem isn't a matter of culture or governance or remaining barriers to trade in goods. Rather, it's the huge hurdle that has always existed: Europe's multiplicity of languages. The fact that few Greeks or Portuguese have enough German to take on professional or even semi-skilled jobs in Germany removes the sort of safety valve that properly integrated federations rely on.

A case in point is the Texan economic miracle, the subject of considerable debate in the U.S. right now. Texan politicians make strong claims for the state's performance relative to the rest of the U.S. during the recovery. Doubters point to the fact that Texan unemployment remains high.

But a close reading of the data by Matthias Shapiro on his Political Math blog highlights something very interesting. Texan unemployment belies the strength of the state's economy because it has had considerable population growth during the past couple of years. Texas's strong employment growth has inspired people to flock to the state—so much so that the actual proportion out of work hasn't come down as fast as it might have done otherwise.

Since the start of the recession in December 2007, Texas's labor force has grown by 6%, astonishingly quickly for such a large state—more than twice as fast as the next-fastest state. When people are hit by hard economic times in one part of the U.S., they pack their bags and move to where the jobs are. The same doesn't happen in Europe.

For instance, the economically active population in Germany, Europe's economic powerhouse, has shrunk by about half a percentage point during the same time Texas has boomed. This is why Germany's unemployment rate has fallen much faster than that of Texas even as unemployment remains at stratospheric levels in countries like Spain.

Even in the years before the financial crisis, immigration to Germany from other European Union countries was equivalent to only about 0.4% of Germany's population, and most of that in the form of cheap labor from neighboring Poland.

Because it's harder for people from poorer euro-zone countries to move to the core, where there are jobs, fiscal transfers are crucial to address imbalances between the economies. But there's currently very little scope for these in Europe. EU spending as a percentage of GDP is less than a tenth of the U.S. federal government's.

 

Tidbits on Libya and the EU

A brief from EUobserver reports that on May 26 Hadeiba Hadi, the Libyan Ambassador to the EU, defected from his post as representative of the Qaddafi regime in Brussels. His staff also resigned.

In a statement made to the AFP, Hadi explained that he and his team felt obliged to make a decision to "no longer represent the regime," which is currently embattled against rebel forces seeking to ouster the Libyan leader from his decades-long rule.

Speaking of EU-Libyan affairs, last week EU foreign affairs chief Lady Catherine Ashton opened an EU office in Benghazi, Libya, where rebel governing structures like the Transitional National Council (TNC) are based. In a statement made following a meeting with the TNC's Chairman, Mustafa Abdul Jalil, Ashton promised EU partnership in policy areas including security, economy, health, education and civil society. 

The EU's move to set up shop in Benghazi marks perhaps the boldest diplomatic decision for Libya's long haul. This takes one step further the decision by French president Nicolas Sarkozy to be the first to recognize the Libyan rebels' legitimacy. Much remains to be seen in the development of a Libya without Qaddafi in charge -- and even this, though desired by much of the international community, is a far-from-certain outcome. 

In an unexpected result from the G8 conference currently taking place in Deauville, France, Russian president Dimitri Medvedev has offered to try to coax Qaddafi into stepping down. This seems like an unreliable hand-off of negotiating power should the decision-makers in Europe and the US decide to go with it. But it may allow Russia to assert itself as a key player in conflict resolution, while the EU and US would benefit from some much-needed relief to then focus on issues closer to home such as the ongoing euro crisis and global recession more broadly. More to follow.

Making Sense of the EU: Back to Basics

The EU, or rather, the EU's delegation in Washington, has just released a broad four-page overview of the the European Union. Should be a good guide for those transatlantic policy newcomers seeking to understand the EU in simple terms, as well as those who could use a refresher on "what exactly the European Union is – and what it is not,"  to borrow the delegation's words.

If only answering those questions -- both inside and outside the EU -- were that simple!

Click here to see the document, then scroll to the "Latest Publications" section and click on "EU Focus: Understanding the European Union." For deeper (if dated) info on the EU, see this 2009 survey.

Germany Slammed by French Left, Domestic Press on Libya Vote

The French left has damning words for German foreign policy. The country, which recently decided to abstain from armed intervention in Libya in a March 17 UN Security Council vote, has since faced withering rebukes from the international community. 

Jean Quatremer, a star writer of the left-leaning newspaper La Libération, takes a decidedly EU-focused approach to his criticism, dismayed that "the [European] Union must, therefore, stay confined to what's humanitarian..." He echoed the words of new foreign minister Alain Juppé, who on Wednesday lamented, "must we resign ourselves to the EU remaining a humanitarian NGO?" He also quoted ex-foreign affairs minister Hubert Védrine, who lamented while in office that the EU must not grow into a kind of "giant Switzerland." When the Libé's top name aligns with the center-right French government's official voice on foreign affairs, Germany faces a uniformly hostile neighbor, which will also rally outside opinion into France's camp and against Germany's.

Der Spiegel, Germany's best-known English-language newspaper, has little better to say about the response to Libya by Angela Merkel and the German foreign minister, Guido Westerwelle. In an article written collectively by Spiegel staff, the newspaper presents a symbolically potent show of solidarity against their government's latest foreign affairs calls.

"The general sense of consternation," they emphatically write, "raises the question of whether this government is simply out of its depth when it comes to foreign policy." They signal that Germany missed a great opportunity to forge a "yes, but" alternative. The team quotes a German diplomat's accusation that his government is guilty of "historical cynicism," and they surmise that "Merkel's administration now welcomes any bad news from Libya that suggests its partners were wrong to intervene." 

And as if Merkel thought it would alleviate anything, Germany unveiled a conciliatory gesture to send more surveillance planes to NATO operations in Afghanistan as a way to free up allied materiel and military hardware for the Libyan campaign.

Lukashenko Versus WashPo, Or, Basic Freedoms

The Washington Post ran this interview Sunday between Belarusian President Alexander Lukashenko and one of the newspaper's editors, Lally Weymouth. Last December, the country held elections that gave a victory and a fourth presidential term to Lukashenko. The news incited massive protests and the round-up of over 700 pro-democracy demonstrators. The EU and the US have responded by imposing sanctions and asset freezes on Belarus' top government officials and their families. Relations remain tense as the Lukashenko administration and opposition forces continue to struggle against one another both at home and in foreign diplomacy and press.

On an editorial note, Lukashenko exhibits what seems to be a fundamentally flawed understanding of the exercise of the freedoms of assembly and the press in the United States, which results in what is at times a comically arrogant disdain for these human rights. See the full interview for more discussion on legal rights, amnesty and the jailing of opposition leaders. 

The president's stance utterly owns his designation as "Europe's last dictator," as he was recently described by former U.S. Secretary of State, Condoleezza Rice. He references ideas such as "propaganda" and "the fifth column" that smack of a Cold War rhetoric most in the West would be disappointed to learn had not vanished forever. The president goes so far as to offer a bizarre-o insinuation that President Obama may be assassinated and "repeat the fate of Kennedy" -- and this, according to the Belarusian leader, because he's not keeping a tight enough rein on his political opposition. 

The following are some of the interview's best parts, with Weymouth in italics and Lukashenko in regular typeface.

"If you hold an election and seven out of the nine candidates running against you end up in jail, it is not a very good signal to the West that [Belarus] is an open and democratic place. Plus, there were limits on the amount of money the candidates could raise and how much time they could spend on television. There was only one debate, and you did not participate.

"The question is not about the time limit the candidates [had] in the media. The question is what these candidates said. They were saying that Lukashenko needs to be hanged. Belarus is a wayward country. So, the Americans decided to treat the results of the elections in a very negative way."

...
 

"... If your security services had information that people were trying to engage in mass disturbances, they would arrest hundreds of thousands of people.

"I don't think so.

"You don't think so, but I know so."

...

"Why did you kick out the U.S. ambassador in 2008?

"Why do we need an ambassador who is masterminding the actions of the fifth column?

"Do you really believe this?

"I am the president of Belarus. I know this."

...

"What is your impression of President Obama?

"Good opinion, but you don't let him do his job.

"Who is "you?"

"The opposition.

"You mean Republicans?

"Not just Republicans - I mean businessmen, some part of the security forces. I don't think Obama would like to repeat the fate of Kennedy.

"Why did you bring that up?

"If Obama will go on pursuing his course of action, there will be people who may not like it. He will pursue the interest of the majority of his people, but there will be radical people who don't like this course of action. It may have bad consequences."

The EU's "Grand Area"

Earlier this year the British geostrategist James Rogers introduced this map of the European Union's current sphere of influence on European Geostrategy (part of Ideas on Europe). He calls it  the EU's "grand area." (See his full report from the Egmont Institute here.)

The zone covers a sort of C-shaped expanse that curves from Greenland and the North Pole, spreads over the European continent, North Africa and the Caucuses and then over the Indian Ocean, ultimately including Southeast Asian states like Singapore and Indonesia.

Rogers' depiction offers a reading of the eurozone's influence that is equal parts impressive and troubling. 

Impressive, in that the EU still leverages power over a huge swath over its home continent and former colonies. It includes the power centers of Russia and Central Asia, as well as those currently engulfed in popular unrest in Africa and the Middle East. Despite the grumblings of economists and euroskeptics, the EU still exerts massive influence on a huge slice of global territory. 

Troubling, however, in that those powers outside the "grand area" rank among those poised to dominate global affairs in the near and further future. The United States is conspicuously absent from the chart, as is for that matter the whole of the Western hemisphere. Many of the countries steadily gaining rank in tomorrow's multipolar power scheme -- including Brazil, India and China -- also fall outside the EU's influence zone. Even many of sub-Saharan Africa's former colonies align more to non-European powers, such as regional players like South Africa, than to their old patriarchs. 

There is much to hope for in the global power the EU says it wants to be. But, given that a good chunk of factors are missing from the EU's strategic equation, there's just as much to trigger doubts.  

...

Also see Rogers' illustration of current and future strategic recommendations for the EU, its neighborhood and those outside both.

NY Times Suggests EU's North African Policy Is Unclear

See this New York Times piece on the European Union's mixed-bag policy suggestions on the current turmoil in North Africa. EU leaders have in recent days spent much fretting over the prospective masses of immigrants from the Mediterranean's southern crescent. The article underscores the particular concern that the possible collapse of the government in Libya could unleash "chaos and anarchy," which may in turn prompt huge flows of migrants into southern Italy and other European nations from that point on. 

The British foreign secretary William Hague has signaled that the North African situation has far broader implications for EU foreign policy, terming it a “major test, a historic test for the EU.”

“Clearly if we can succeed in bringing more democracy and more stability to North Africa and the Middle East that will be the greatest achievement for the E.U. since enlargement,” he added, referring to the bloc’s expansion to bring in former Communist states. “If we don’t succeed, the dangers to the E.U. of instability or extremism on our frontiers are immense.”

Other EU chiefs moved beyond hypotheticals and toward crippling financial restrictions for Libyan leaders who may be considering flight from the country. There is an implication the same would hold true for other government officials in the region, though whether other EU seniors will rally behind the pronounced position seems politically unlikely.  

A few EU politicians voiced benevolent, if politically unrealistic, aspirations to have functional democracy materialize in nations so long accustomed to authoritarian rule.

"Belgium’s foreign minister, Steven Vanackere, suggested that European parliamentarians should help countries like Egypt to develop a parliamentary system."

Also see how protests in Tripoli, the Libyan capital, were fought off with troops and warplanes on Monday, Feb. 21. In a symbolic shift in political capital, Libya's diplomats at the U.N. openly renounced Col. Muammar El-Qaddafi, the country's leader since the 1980s, called for his resignation and calling him a genocidal war criminal for his violent crackdown on protesters.

Egypt and the European Angle

Here's some of what we in the U.S. may not be seeing in regards to the European response on Egypt:

From Presseurop
 

The European Voice reports that the EU is reconsidering their aid structures to the country, which for the last three weeks has been paralyzed by protesters demanding the ouster of President Hosni Mubarak. Earlier this month EU leaders gathered in Brussels called for a democratic transition 'now,' offering various EU instruments that include "proposals and projects" to assist a post-Mubarak Egypt. The columnist Bruce Stokes underscores the leverage that trade could provide in stabilizing the nation should the current president, who has occupied his seat since 1981, respond to broad calls from his citizens that he step down.

From Le Figaro

Le Figaro describes a furious public after this afternoon's speech by Mubarak, in which the president announced the transfer of his powers without going as far as resigning his office. This article features a fascinating minute-by-minute timeline on the events of the day, from before the speech to the march toward the TV station where Mubarak had delivered his address.  

EUobserver sports a black-and-white dichotomy between in reporting and editorial blogs, with almost zero attention paid to the Egypt conflict in the former, and near-exclusive focus poured onto the Middle Eastern nation. Roberto Foa alludes to the region then segues nicely into a demographic analysis.  George Irvin surmises that, "will Mubarak go? The answer must surely be ‘yes’," before launching into a security debate with an Israeli-Arab orientation.  Nicu Popescu writes on revolutions, European "fence-sitting" as policy and the Egypt uprising's similarities with those in Albania and Belarus.

Presseurop submits that the revolutions across North Africa are only difficultly comparable to the fall of the Berlin Wall in 1989. On EU-Middle East relations, they say it's "time to ditch the Arab stereotype."

Euronews bring an under-reported angle to the religious climate in Egypt, where Muslims and Coptic Christians are united in solidarity during anti-government protests.

Global Europe illustrates discord between the EU's foreign policy chief, Catherine Ashton, and the Egyptian government, after the latter warned her not to follow through on a planned diplomatic visit later this month. Those close to Ashton say she still plans to arrive in the region, at least to Tunisia.

Watch this space for more on European and US dealings in the ongoing Egyptian turmoil.

The West and the Sudan Referendum

THOUGH it deserved better than being relegated to the Sunday "Outlook" section, The Washington Post today ran a compelling early-warning article and video on the role of the international community as Sudan gears up for a referendum on January 9th. In less than a week, southern Sudanese will take to the ballot box and determine whether their half of the country will secede from its northern counterpart. The north-south divide has produced decades of violence fueled by economic, racial and religious differences, notably in the region of Darfur, and many international figures have expressed great regret over not doing more to stabilize the region.

This time, leaders hope, will be different: President Obama has initiated a blitz of diplomatic activity in an effort to preemptively avoid violence. The push has involved US officials as well as foreign partners. Obama has sent over twenty envoys to the region in recent months, and has bundled a mixed carrot-and-stick package designed to motivate Sudanese power figures into a proactive mindset toward keeping the peace. The US president has also enlisted the help of Egyptian President Hosni Mubarak, whose country abuts Sudan's northern border. Mubarak can leverage diplomatic and political heft with Sudan's would-be warmakers, the US administration hopes. Said Samantha Power, an advisor to Obama on the region, "this is the first time I have seen the US government devote so many high-level resources to preventing violence before it happens rather than responding to it after the fact."

In light of the violence in recent years, the event will take

place under the strong glare of international media, which boosts at least somewhat the chances of a peaceful referendum. And a host of international groups are involved, with the African Union acting as peace brokers, the European Union with offers of economic aid, and a full 10,000 UN staff on the ground to ensure a voting process both fair and on-time.

However, the piece argues, "diplomacy can only be effective if it is complemented by a willingness to take action if prevention fails." This rings loudly of a hard-power solution of last resort, should the violence that is so dreaded nonetheless erupt. The article, written by the genocide prevention expert Michael Abramowitz, goes on to suggest dim hopes for the overly optimistic. It reminds the reader of the recent catastrophes in Rwanda and Bosnia, as well as the withering criticism roused by the international community's role -- by turns inappropriate, insufficient or lacking entirely -- in both of these.

Abramowitz therefore urges that the international community be prepared to make war to break war, so to speak, even as he strongly questions the role the UN would be able to play should armed intervention become necessary. 

"It is far from clear that the U.N. Security Council would react quickly to an unfolding crisis, and most experts agree that the U.N. troops in Sudan would be of little use should atrocities commence. (Years of conferences, NATO and E.U. deliberations, and think-tank studies on civilian protection have yet to yield momentum for an effective international rapid-deployment force to deal with such emergencies.) The United States has the capacity to intervene militarily in Sudan, but after 10 years of war in Afghanistan and Iraq, would it have the will, and would it be effective?

If the unthinkable were to happen in Sudan this year, we might hear echoes of Romeo Dallaire, the Canadian general in charge of peacekeeping forces in Rwanda in 1994, who futilely begged the United Nations for more troops to end the slaughter there - and who has lived in anguished regret over his failure ever since."

Abramowitz clearly sees the need for a two-pronged security approach for Sudan: 1) do everything possible to prevent violence from happening, and b) should violence return, be prepared to quell fighting with a persuasive (meaning mighty) show of force from the international community. 

PRACTICALLY speaking, the burden of the second task of course falls to the West. The military prowess of the African Union and its members is more reputed for internecine warring than for effective peacekeeping. More worrying still, the other blocs involved -- the EU, the UN, the United States -- face deep structural differences on what necessitates armed response to bloody conflict. The recent ghosts of Bosnia, Rwanda, Afghanistan and Iraq have only emphasized this disparity, in which the US is most often ready to fight (Afghanistan) -- but fights when it shouldn't (Iraq), or doesn't when it should (Rwanda), or fights too late (Bosnia). 

By drastic contrast, Europe suffers from a nearly Pavlovian reflex against military action of any kind, for any reason. This is the product of deeply entrenched civilizational lessons learned from two world wars fought at home, as well as a "never again war" dogma that has occasionally blinded the continent to its responsibility to act militarily in the world during times of true humanitarian need (Bosnia, again).

We all hope that no referendum-related violence transpires in Sudan, but another major question may develop among the international community of the West: if intervention becomes necessary, will we be of one accord to execute it?

Krugman's US-Euronomics

Consider this an info-dump of Nobel Prize winner Paul Krugman's latest postings at the New York Times. If this seems like something of an antidote to EurAmerican's atypically hawkish and euroskeptic posts from this week's Wall Street Journal, so much the better. Balance in partisanship -- that's what we like!

Krugman's pieces grow from the spark provided in this piece, also from the NYT, which takes the pulse of the current "we told you so" debate going on between Europe's solvents and debtors. It traces the germinations of the euroskeptic debate back to an obscure 1992 report from the Financial Times. In it the politologue Ed Balls observed a crucial and possibly disastrous difference between the nascent euro currency project and the environment of the US, another continent-wide monetary zone. The report concluded, to borrow the NYT piece's shorthand, that "Europe lacked the type of federal taxes and transfer payments used in the United States to ease economic divergences among its many states." 

Courtesy The New York Times

The NYT piece goes on to juxtapose prominent voices from the euroskeptic and the pro-EU antipodes. Speaking about the current troubles, Norman Lamont, the former Conservative chancellor of the exchequer, had this to say about the euro in the near future:

“I have always said that the euro will break up,” Mr. Lamont said in a recent interview. “Not after the first crisis today, but after the second crisis, which could be 10 years away. This is, after all a political project, not an economic project.” 

In contrast, Jerzy Buzek, the current head of the European Parliament, used with these words during December's opening of the Europe House, headquarters of the European Union delegation in London:

“We remember what happened in the last big crisis — it was something horrible, and such a threat is always waiting for us... Let us answer by having more solidarity. Overcoming history is an imperative for us.” 

It bears noting that Buzek's tone on the euro crisis -- which is far from finished ravaging great swathes of Europe and the world -- suggests that the "last big crisis,"  as he puts it, is already past, and belongs to history. These pictures provide a markedly more compelling argument that the euro crisis is both ongoing and far more serious the Buzek's seemingly clueless tone would indicate.

US Pessimism on Euro Crisis, New START

Two noteworthy US media pieces have blipped on the Euro-pessimism radar, so I thought I'd echo them. 

EurAm doesn't necessarily endorse these views in their entirety, though it's certainly closer to these than the euphoria sweeping parts of the anti-nuclear set. Regardless, at the end of the day, it's about the sharing of Europe commentary -- especially what's taking place outside of Europe, especially what's candid and controversial -- that allows you the reader to cut to the heart of transtatlantic debate.  

So away we go:

1) Count on The Hudson Institute for consistently euro-pessimistic, moderate-conservative commentary from Washington. In today's Wall Street Journal, Hudson's economic policy expert Irwin Stelzer lays out acid commentary characteristic of his firm in a 2010 EU year in review, excerpted below. Note the passing reference to the US Constitution, lending a spontaneously Euro-American comparative view to the succeeding lines. Stelzer also leaves off with an intentionally troubling final thought on China, and the economic and geopolitical capital it could gain as the eurozone tailspin continues.

"All else that happened in Euroland in 2010 pales into insignificance when compared with the decision to set up mechanisms for replacing—some say supplementing, some say monitoring—national decision-making on fiscal policy with control by the Brussels-based Eurocracy, amending the Lisbon Treaty to make that possible. This is the step that the founders of the euro always knew would some day be necessary. That day has now arrived, and they are delighted.

EU Parliament Pushes Forward on EEAS Final Legislation

The European Parliament voted in a decisive show-of-hands vote today that it will move forward with the finalization of plans on the European External Action Service (EEAS). 

The vote was focused on relaxing staffing rules, following early demands by newer and less well-represented member states to enshrine into law measures gauranteeing geographical and gender balance in the EU's new diplomatic service, set to launch December 1st. 

The official vote will take place tomorrow in Strasbourg, home of the European Parliament. At the same time, representatives will also be voting to relax the EEAS' budget rules. 

Drafted by German MEP (Member of European Parliament) Bernhard Rapkay, the bill seeks ensure for the EEAS the “highest standard of ability, efficiency and integrity, recruited on the broadest possible geographical basis from among nationals of member states,” the European Voice reports. 

The service's staff should comprise an “appropriate and meaningful presence of nationals from all the member states." The rules also foresee the promotion of equal opportunities to ensure a better balance between men and women. 

Pan-EU balance remains a bone of contention among many of the EU's states, especially its new members which typically hail from Eastern and largely ex-Soviet republics such as Romania and Bulgaria. On gender, many leaders across Europe have demanded there be a set minimum for women in senior positions, a result of the generally progressive attitudes in Europe advocating women's professional equality. 

Promising geographical as well as gender balance is seen by these states as a way of securing a decent footing within the fledgling diplomatic corps.

Editorially speaking, the loosening-up of gender and geographical balance will surely allow the EEAS more of the room it needs to maneuver a successful start. Whether the lack of gaurantees for balance will rear its ugly head down the road, however, remains very much an open question.

Europe Under China: The EU's U.N. Tug-of-War

NYT/IHT journalist Judy Dempsey serves up some interesting perspective on Germany and Portugal's recent assession to nonpermanent seats to the UN Security Council. She uses China as an axis of comparison with western powers' UN moves, catering to the center of focus for the American majority of her piece's readers. 

By default, her article relegates Europe to the same observer status Germany and Portugal have just won. 

The following excerpts bring the China element to the fore:

"Europe’s decline is partly linked to China’s growing influence as an economic power, donor and lender. From Belarus to Iran, across Africa and Latin America, China is lending money, forging trade deals and building roads, airports and schools while tapping the natural resources of these countries.

And there are no strings attached. “China sets no conditions, unlike the E.U., which often sets them in an inconsistent way” [quoted from source]. Indeed, China’s way of doing things is seen as a direct challenge to Europe’s dominance in development aid and trade agreements."

And:

"... With the radical shifts in global influence led by China, Europe’s influence is waning, and fast.

The E.U.’s hopes of supporting human rights and democracy around the world are at risk of being defeated by changes in the global balance of power,” said Anthony Dworkin, international law expert at the European Council on Foreign Relations. Nowhere is this more obvious than at the United Nations, where the Union has suffered embarrassing defeats.

Last month, it failed to win expanded rights to the General Assembly, where it has observer status. A new status would have allowed Brussels the right to make proposals, circulate documents and address the Assembly.

To the dismay of  Catherine Ashton, the Union’s high representative for foreign affairs and security policy [as implemented by the EEAS], some of Europe’s closest allies — Australia, Canada and New Zealand — abstained. Diplomats blamed the Union’s lack of strategy and consultation.

“The E.U.’s shambolic defeat was more than a humiliation,” said Paul Luif, Europe expert at the Austrian Institute for International Affairs in Vienna. “It showed the growing lack of support for an E.U. that seems more and more ineffective at the U.N.”

The article's title is "For Europe, a Challenge to Make Its Voice Resonate." Sounds more than a bit like "Europeans Woo U.S., Promising Relevance," also from the New York Times. One of its most prominent columnists, Roger Cohen, has similarly declared that "Europe is history," a "strategic backwater."

If what is arguably America's most Europhile newspaper sees grim days ahead for Europe, it should be equally gloomy -- and disconcerting -- to ponder the EU's eclipse within the UN Security Council specifically.

On EU Foreign Corps, EU Officials Optimistic, Others Very Skeptical

           The locomotive of the European Union’s nascent diplomatic corps has been picking up speed, with a ribbon-cutting at the service’s new Washington site on Sep. 29^th, and officials in Brussels promising it will be ready to roll before the planned start of December 1st. But critics on both sides of the Atlantic have expressed major doubts as to whether the world can expect an EU foreign agency that can chug its weight.

            Created after the landmark Treaty of Lisbon in December 2009, the European External Action Service (EEAS) will seek to unify the EU’s voice in world diplomatic affairs. Its chief architect, Lady Catherine Ashton, sits as the EU foreign affairs chief and one of several vice presidents of the European Commission. Another key figure is João Vale de Almeida, the EU ambassador to the United States, who has been promoting a strongly optimistic view on the EEAS starting off well this winter.

EU Officials: New Service? No Problem

            The EU’s new service will offer a “a more reliable, more credible, and a more results-oriented partner” to the United States, Almeida pledged in a September interview with Washington’s The Hill newspaper. A Portuguese national and longtime deputy to European Commission head Jose Manuel Barroso, Almeida arrived in Washington in July amid talk of a “wider mandate” for his ambassadorship.

           

            “My ambition is to move beyond what exists today, to build a stronger and even more positive EU-US agenda with solid bilateral and global pillars,” Almeida said in an August press release, before presenting his credentials at the White House. He promised “an agenda that unlocks the full potential of our economies, promotes joint action in foreign policy, and enhances our capacity as global partners."

            Almeida’s words obliquely addressed critics’ concerns about the EU’s readiness to operate a new diplomatic structure—and a big one at that. As a branch of the Brussels-based European Commission, the EEAS will comprise 8,000 officials, with 800 more EU diplomats dispersed among the agency’s 136 foreign embassies. On budget, the latest estimates from the Devex newswire put the EEAS’ funds at $620 million. (...)

Roubini on European Recession : "Hangover"

The economist fabled to have predicted the global financial crisis shoots from the hip on European recovery -- and describes a still-dire bill of economic health for the Old Continent. Nouriel Roubini, professor at New York University, dubs the European condition a "hangover" and one sure to continue galling livers for a good while to come.

The professor employs a host of disparaging idioms in his take on the EU's present status, decrying 1) the policies that "stole demand from the future," 2) the laughable "stress tests" (quote marks his) that only "kicked the can down the road,"  and 3) the lingering "fundamental problems of the eurozone." He singles out sitting EU president and Belgian head of state Yves Leterme as "unable to keep his own country together, let alone unite Europe."

He also dismisses the notion that the EU bail-out created anything beyond transient relief. Though Brussels policy heads managed in May to slap together a rescue fund, risk spreads have returned to their pre-bail-out levels for several European countries. Roubini sniffs that operatives "fudged" this summer's round of financial "stress tests" for European markets, serving to pep up world markets' frail confidence only temporarily -- a move that is already beginning to wear thin.

Even the sunniest eurozone example, Germany, suffers Roubini's ire, and he shrugs off that country's supposed promise as the EU's post-crisis front-runner:

"Even Germany’s temporary success is riddled with caveats. During the 2008-2009 financial crisis, GDP fell much more in Germany – because of its dependence on collapsing global trade – than in the United States. A transitory rebound from such a hard fall is not surprising, and German output remains below pre-crisis levels."

In what may bear nightmarish implications,  the "double dip" recession so feared throughout the world may actually be taking root as we read his words.

"Indeed, the latest data from Germany – declining exports, falling factory orders, anemic industrial-production growth, and a slide in investors’ confidence – suggest that the [double dip] has started."

His forecast on current and future European politics provides little sustenance for optimists. He cites a litany of bummer political events ranging from Angela Merkel's recent shallacking in German regional elections, to unlikely odds that Sarkozy will initiate real (Roubini says "cosmetic") structural reforms in France -- and that is concurrent with sobering competition prospects from the Socialist Party's presidential likely, one Dominique Strauss-Kahn. Similarly unpopular leaders also face grim predictions across the EU's southern belt, from the vulnerable Presidents Silvio Berlusconi (Italy) and Jose Luis Rodriguez Zapatero (Spain), to the bete noire of EU fiscal cohesion, George Papandreou (Greece).

If all that wasn't enough, Roubini finishes by going for broke on two scenarios for the eurozone's future. The first, the "best" case scenario (though hardly a good one) says the monetary bloc limps on some years longer. The second -- this is the 800-pound gorilla whose presence EU public officials from across the 27 states refuse to entertain -- predicts that "the eurozone will break up, owing to a combination of sovereign debt restructurings and exits by some weaker economies."

US Congress, Anonymous Official Step in to EU Roma Row

When the EU-neglectful United States Congress interjects, it's serious. Democrats Benjamin Cardin (MD) and Alcee L. Hastings, and another official insisting on anonymity have criticized France's deportations of the Roma as a "shell game" for minority migration laws that have often played against the country's Muslim population, the largest in Europe. See the full story from EUobserver.

German Pride, EU Crisis, and the US

Check out this big-picture perspective on resurgent national pride in Germany from the New York Times.  The country that Jurgen Habermas once termed the "self-absorbed colussus," crippled with guilt over two world wars, the horrors of the Nazi-led Holocaust and global acrimony spanning generations is now staging a comeback -- to itself. 

The historically conflicted "German-German relationship" of its citizens could be showing signs of thaw, evident in new roles of German prominence from crisis-time leadership in the European Union, to its soccer team's success in this summer's World Cup to the current preponderance of German acts on European pop charts. From the article:

“Maybe it’s our time again,” said Catherine Mendle, 25, a school social worker strolling the grounds and halls of the square glass and concrete Chancellery building on a recent afternoon as part of a government open house. A military band played in the background, and Mrs. Merkel signed autographs for curious visitors.

“We have this extreme helper syndrome, to try to make the world love us again, and it’s completely overdone,” Ms. Mendle said. Germany, she said, had been reduced to simple stereotypes — Oktoberfest, auto factories, the Holocaust. Its rich traditions in music and literature, and its enduring emphasis on social welfare and a strong commitment to the environment, deserve more respect abroad and at home, Ms. Mendle said.

And this on German politics and history:

 "... Chancellor Angela Merkel has led a bloc of countries fending off President Obama’s calls for stimulus spending to combat the economic crisis, certain that the world should follow Germany’s example of austerity.

German pride did not die after the country’s defeat in World War II. Instead, like Sleeping Beauty in the Brothers Grimm version of the folk tale, it only fell into a deep slumber. The country has now awakened, ready to celebrate its economic ingenuity, its cultural treasures and the unsullied stretches of its history.

As Germany embarks on this journey of self-discovery, the question is whether it will leave behind a European project which was built in no small measure on the nation’s postwar guilt and on its pocketbook."

It remains to be seen how Germany will deal with its load of problems also shared throughout Europe. On integration, for example, a stark line is drawn between the assimilated and those who suffer the brunt of the global unemployment trend, including immigrants, like the Turkish manual laborers brought in en masse during the 1970s and after. Immigration remains today a question roiled by entrenched opinion, and the European demographics problem doesn't help. The German vision for economic recovery stands at loggerheads with the socialized economic thinking of France, Spain, Italy and elsewhere. 

The risk of playing the EU's rich daddy during the crisis, of course, is that other Europeans won't remedy their economic weaknesses exposed by the 2008 meltdown -- or worse yet, that Europe will come to expect German bail-outs at every hard turn -- both after the crisis and in the long run.

And what would such a reality mean for the United States? Frittered German cash means badly depleted EU capital, both of the economic and political kind. (And on the latter: ask an average American to name three EU leaders, they'll likely say "Uhh," "Hmm" and "What?") Skeptics and Euro-Doomers are already airing bold claims that "Europe is history" -- and that particular damning, from IHT editor-at-large Roger Cohen. 

A healthy future transatlantic relationship is not just a matter of national pride as with the Germans, a growing light within a confused-as-ever European palette. Both the US and Europe want to see a finished EU masterpiece -- not because it should be beautiful, but because it's vital to our common interests.

Belgian Government Talks Fail -- Risk of Meltdown, Splitting of Country

 

The Future "State" of Belgium?

The Belgian national government crisis is again peaking in the red, with questions of separation now being voiced openly by the country's statesmen in Brussels. 

Following the meltdown Friday of negotiations between leading Socialist Laurette Onkelinx and separatist Flemish leaders for a coalition government, Onkelinx warned that the world should "get ready for the break-up of Belgium."

Even as King Albert II attempts to restart talks between the seven-party patchwork currently working toward a more stable Belgian government, the dysfunction is reeling and risks pushing the country into political chaos.

The underlying problem traces back to dissent between Belgium's two main linguistic communities, the French-speaking Walloon and the Dutch-speaking Flemish. The threat of Flemish secession has loomed with real potential since 2007, when a fractious multi-party coalition took nine months to solidify. Scarce public confidence and musical chairs among senior leaders only perpetuated the rift. 

In 2008 the high-profile Flemish figures Yves Leterme stepped down from the prime ministership to allow Herman Van Rompuy into power in December. Van Rompuy was called just eleven months later to take up the immensely demanding post of President of the European Council. Leterme then returned to his former seat as prime minister, only to see talks founder in April 2010 amid party disputes and overall dysfunction.

The Belgian political scene risks to devolve further if leaders and parties fail to cobble together a government, make it function and keep it working over time. 

Chiefs of the Belgian government in Brussels have chosen words with unusually strong tones on the prospect of a split. Francophone socialist Philippe Moureaux has warned of a "progressive organization of separation." Another senior from the Wallonia state government has expressed that "all options" are possible.

"Let's hope it doesn't come to that because if we split, it will be the weakest who will pay the heaviest price," Onkelinx, the francophone leader, has said, as reported by Agence France Presse.  "On the other hand, we can no longer ignore that among a large part of the Flemish population, it's their wish [to separate]... Loads of people think it's possible. (Our) politicians have to be prepared."

Some have dismissed Onkelinx's remarks as exaggerated. But almost all observers agree that such statements could rock not only the Belgian political scene, but far more broadly, European markets.

"I'm afraid the political parties are playing with fire," said Philippe Ledent, a Brussels-based economist at ING, in a Reuters wire. Continued rancor in the Belgian government could impact public finances and the country's stable image abroad. 

Some pessimistic Belgians fear that Belgium may take on a reputation as the "Greece of the North Sea," an echo of the Mediterranean nation's severe deficit woes in the last year.