The Shape of Things to Come: Toward a Unified Europe

The European Union (EU) is undertaking one of the greatest feats of political engineering ever attempted--the unification of Western Europe with Central and Eastern Europe (CEE).

The European Union (EU) is undertaking one of the greatest feats of political engineering ever attempted--the unification of Western Europe with Central and Eastern Europe (CEE). This will reshape and change the political landscape of Europe. The single market and the euro will be strengthened, yet Europe must also deal with the challenge of ensuring peace and stability in this part of the world. There are also growing expectations that the enlarged EU will be expected to project a European voice in the international concert. 

The European Council in Copenhagen in December 2002 invited ten countries who are expected to become members of the EU as of May 1, 2004: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia.  Negotiations with Bulgaria and Romania continue with a target date of 2007 for possible membership.  

A word on Turkey: Turkey is often mentioned as a special case.  The conclusions from the meeting in Copenhagen suggest that is not correct.  They unequivocally state that the same criteria will apply for Turkey as for other countries applying for membership. In December 2004 the EU will examine the situation in Turkey and decide whether the criteria are fulfilled and, if so, enlargement negotiations will start. 

Enlargement has a real impact on Europe's foreign policy. Two things have happened in Europe after 1990. Territorial defense is out, while the soft side of security policy is in. It could be rephrased in a more conceptual form by saying two other things: First, security in Europe has become indivisible--meaning that either Europe as a whole is secure and peaceful or Europe as such faces a security problem. Security in one part of Europe is a concern for all of Europe. Second, threats to security in Europe no longer appear in the form of potential aggression from one European country directed at another European country.  

The enlargement also means that the EU now has some new neighbors. Russia, Ukraine and the Balkans--while North Africa is just outside its doorstep and the Middle East is looking at the EU for attention. 

Europe cannot escape, however, the inevitable and uncomfortable question of bang for the bucks - a common defense and military policy. I do not see the EU projecting power abroad more or less in the same vein as the United States. Not now. Not in the foreseeable future; maybe never. My reading is that Europe and the Europeans have crossed the line. We may still see, and increasingly so, European military forces participating in - in some cases even being the major shareholder so to speak - various international military interventions but we will not see a major European military action far away from Europe. 

To sum up concerning foreign policy: the EU will for some time confine itself to the soft instruments of foreign and security policy and be relatively successful in adjacent countries. A genuine common foreign-security and military policy is in the embryonic stage. It will come. When it comes it will rely less much less heavily on military muscle than is the case for the present American foreign and security policy. Hopefully the world develops in a way compatible with such reluctance to use force--commendable in itself but relying on a similar attitude gaining ground around the globe. 

In charting the future direction of the EU, four things come to mind. 

1) The future of the euro. The euro has come to stay. The rise of the euro in recent months can be explained in many ways but one of the explanations is that some, and perhaps many, of the Asian central banks are diversifying their currency reserves from U.S. dollars to euros.  (1) 

But when will the euro be a real international currency? We will have to wait a while. Confidence has to grow. The European economies and the enlargement have to stay the course. The ECB (European Central Bank) needs to establish itself as a partner among its peers in central banking. But it will come. The world needs and wants an alternative to the U.S. dollar and there are not many candidates around.   

2) The European economies need restructuring. Will it happen? Well, that is a good question. We still need mergers across borders; we still need the full exploitation of the single market that is now being enlarged. The mindset of European businessmen and politicians are still too secluded. A robust turnaround has yet to occur.  

My own guess is that the European economies will get back to a growth pattern somewhat higher than what we have seen in recent years but not much above a range of between 2.5 percent to 3 percent. The drive for reform and restructuring will not be sufficiently strong to push Europe back onto a dynamic growth pattern but a little bit less can probably do it. Here, as in other areas, the Europeans will choose their own model. And that model means that a combination of lower growth and higher degree of social welfare/social security is preferable to a combination of higher growth pattern and less social welfare/social security. And this European preference has its merits. Among other things there are strong reasons to believe that it mobilizes a large share of Europe's human resources while the American model does not do so but compensates by attracting human resources from abroad. 

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