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New regional powers: what role for Europe

  • ISPI, and we are very grateful for that, is gathering today a very rich panel of experts to discuss the crucial question of the challenges faced by the EU in an extremely complex world, where international power is changing face: both because it’s now distributed among multiple states and because non state actors are playing and increasing role. Vertically and horizontally, power is more scattered than even before.

  • If power is shifting and fragmenting, we may say that today’s world is in fact no one’s world (utilizing Charles Kupchan’s definition), without a clear centre of gravity and without “superpowers” – as we knew them. International power – according to GR:EEN project approach – it’s re-organising along regional lines. It can be; certainly, the future of Europe is key to decide whether this trend will be the prevailing one. Countries outside Europe and North America now account for about half of the world economy and demand their place in the sun. They actively compete with Europe and America for jobs and investments. Whereas the “Western model” was for a long time the only game in town, it now has to compete with a Chinese model, a Turkish model, an Islamic model, a Korean model etc.

  • One important question is whether the BRICS group is becoming a real cohesive force. Partially yes – and yet the failure to build up a new bank for development shows that the process will not be an easy one. Equally, we will see how the relative economic slowdown in part of the Brics will also influence their political cohesion.

  • At the same time, we see emerging new medium sized powers, a very heterogeneous group (among them Turkey, Pakistan, Nigeria, Qatar) which are mostly identified by their regional outreach potential. I call them the mini Brics, or pre-Brics. Turkey is particular important, for the Eu. Notwithstanding challenges, I Think Turkey must still be coinceived as an integral part of Europe’s future; its eventual accession would bring significant mutual benefits – in economy and foreign policy. Let me add a point on that. My view that the Eu – to solve the eurozone crisis – will have to be structured in a different way. The eurozone will gave to be more integrated, becoming de facto a light federation – to utilize Emma Bonino’s definition. We will have, then, an inner and tighter tier, surrounded by an external one, based upon the single market with its needed ramifications. A multi-tiered Europe will not easily run, and will require Treaty revisions. One advantage, in any case, is that accession of new large countries, like Turkey, will in theory become easier. In the meantime, the Eu and Turkey should agree on possible new forms of cooperation, for instance in foreign and security policy.

  • The more general question for us, Europe, is how to relate to big and emerging players that often play by different rules.

  • Europe has difficult choices to make. On the one hand, the euro crisis has reduced its soft power – its integration model and its power of attraction. On the other, the Ue must combine its focus on neighbouring regions with a more global strategy.

  • Europe, in fact, likes to see itself as a power with a regional and global reach. The reality, however, is harder, because we are perceived as the weak link in the world economy. Europe as a whole experienced the sixth consecutive quarter of recession, for the first time since the introduction of the Euro.

  • Shall we accept our relative decline then? Of course not: decline is a choice, not a fate. The emergence of new and strong players also presents us with opportunities. It’s all about cooperation versus competition, in my view. A balanced approach should reflect the right blend of these two ingredients.

  • First, cooperation. New economic powerhouses offer large markets, growing middle classes with a taste for Western products, opportunities for infrastructural cooperation, abundant financial resources. Europe must not be afraid to engage these countries with the various instruments at its disposal, with the aim to smooth some rough edges, such as the reluctance to take on global responsibilities or the tendency to use natural resources and the threat of exclusion from their large markets as instruments of political pressure. Fair inclusion in the multilateral system of rules – G20, International Financial Institutions, WTO, OECD etc. – is a means to this end, besides being the logical development of the shift in global governance.

  • The bilateral approach is complementary to this policy. The EU already has 28 free trade agreements (FTA) in force, that are often the core component of Association Agreements as well as Customs Union. The list include South Korea, South Africa and Chile, among others. It also has on-going negotiations with Japan, Canada, India, Mercosur and some ASEAN countries and, more importantly, is about to launch negotiations with the United States on a Transatlantic and Investment Partnership, a potential game-changer in the world of global economic relations. Let me add one point here: it would be in Europe’s best interests trying to forge a new Atlantic community, based upon TTIP (the economy before security) and stretching South. In other terms: in the so-called Pacific century, there is in reality ample space for more integration across the Atlantic, North and South. This panatlantic strategy would progressively include part of Latin America and Africa, balancing China’s increasing influence.This also implies that a future TTIP agreement will have to remain open to future accessions, so as to include key partners like Mexico, Canada, Turkey. If successful, TTIP will have an important norm-setting potential.

  • EU policies are stronger and more effective in areas, such as trade, where it has genuine competence, and weaker in areas where it shares competence with member States, such as energy and strategic foreign policy issues. Member States value their bilateral relationship with giants such as China, India or Russia, and see each other as competitors. This is an element of weakness for the EU: competition among member States too often prevents us from identifying and pursuing common interests.

  • The second element, competition. Emerging countries, especially the Brics, will probably not repeat in this decade the performance of the previous one, but they will still grow at rates that we can only dream of and they will remain fearsome competitors. We must, therefore, work hard to put our own house in order. Recession is biting hard; domestic demand, an essential driver of growth, has been languishing for years, which is hardly surprising, considering that we have all been practicing austerity at the same time. Fiscal consolidation has so far been at the centre of the European efforts to reform its economic governance, but there is now a general agreement that the focus must be on growth, jobs and investments, including through the completion of the single market. Europe must close the productivity gap that is at the roots of its declining share of global wealth. And must adopt the right political structure to run its economy.

  • More than anything, Europe must recover the sense of a common purpose, based on shared values. This means more solidarity between generations and more solidarity among the nations of Europe. It is hard to accept that for some European policy makers the appalling rates of unemployment in the periphery of Europe can be dismissed as acceptable collateral damage. Last week Minister Bonino has strongly drawn attention to the human and political costs of the economic crisis, a crisis that is now first and foremost a social crisis.

  • The lack of solidarity is the symptom of the European malaise, not the disease. The disease is the disillusion with the European idea, the feeling among our peoples – and especially among our youths – that they are no longer part of a common project, one that can improve the lives of present and future generations. We must produce concrete results and change that perception. If we succeed, everything else will fall into place.

  • The world, however, is not waiting, so we must move fast. The US engine is stirring again, Asia, Africa and Latin America keep growing and even Japan is awakening from its twenty year-long slumber. A rising tide lifts all the boats, but those without the boat are left to sink, or swim. Europe must build a more solid boat, in the euro-zone, or start swimming.

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