Europe&’s place in a globalised world is changing, but talks of its demise are much exaggerated, writes
Believe me: it&’s palpable and tangible. Everywhere you go, every conference you attend, every senior official you meet, the talk is about the economic crisis — and Europe&’s uncertain future.
The fact that the Organisation for Economic Cooperation and Development has again cut its growth forecasts for the eurozone and called on the European Central Bank (ECB) to consider doing more to boost growth has further hammered home the message that European economies are in deep trouble.
In a sign of some hope for a shift in direction, the European Commission has indicated it is switching its focus from austerity to measures designed to promote growth. The shift is generating much talk of a new era of European growth and reform. But it&’s not going to be that simple. Europe&’s current malaise is due to more than the economic slowdown and rising unemployment — especially among young people.
Across the continent, the mood is downbeat about Europe&’s role in a world where the US appears to be abdicating its once predominant global presence, China is becoming more assertive and self-confident and Russia persistently refuses to play by Western rules.
Certainly, Europe still matters enormously. The European Union (EU) market attracts global exports and investments. Despite the crisis, many Europeans still enjoy an extremely good quality of life and there is peace across a continent which was once ravaged by war. Still, there are fundamental changes taking place in how Europe and Europeans see themselves in a globalised world.
Increasingly, EU policymakers say the bloc is more a regional power than a global one. The EU&’s focus, they argue, should be on its neighbourhood, including the Balkans, Eastern Europe as well as the Middle East and North Africa. I have heard much-respected scholars who once waxed lyrical about a “European century” now admit that Europe is becoming increasingly irrelevant.
“People used to ask what Europe thought about events and developments ~ and wondered how Europe would and could contribute to solving world problems,” one well-regarded French scholar told a recent conference in Paris. “Nobody cares about Europe anymore.” Others at the same meeting noted the lack of hope and optimism in Europe, compared to the energy and dynamism in China ~ and even in the US.
There was agreement, however, that despite the dark clouds of pessimism hanging over the continent, Europeans still lived an enviable lifestyle ~ at least for the moment. “I would rather live in declining Europe than in rising Asia,” said one scholar, pointing to the pollution, security, poverty and other challenges facing Asian nations.
There is a strong hope that the current economic problems will soon give way to a brighter economic future ~ an economic renaissance similar to Japan&’s economic bounce back under Prime Minister Shinzo Abe. The European Commission this week voiced just such sentiments when it decided ~ after a three-year focus on austerity ~ to put an equal emphasis on measures aimed at spurring growth.
Unveiling a highly anticipated evaluation of all 27 EU members’ budget plans, the Commission warned that social safety nets were fraying and poverty was rising dangerously in many parts of Europe as efforts to combat growing unemployment faltered. “There is no room for complacency,” European Commission President Jose Manuel Barroso said at a news conference. “The social emergency in many parts of Europe and the increasing level of inequalities in some regions add to the pressing need for reforms.”
“The fact that more than 120 million people are now at risk of poverty or social exclusion in Europe is a real worry,” he said. “We need to reform, and reform now. The cost of inaction will be very high.”
As expected, the Commission extended by two years the deadline for Spain and France to get their budget deficits to less than 3 per cent of GDP. Both had been supposed to hit that target this year. In addition, the Netherlands and Belgium were given another year. Barroso said the extra time must be “used wisely” to lift competitiveness. Even Europe&’s stronger economies, including Germany, are being urged to allow wage increases and increase flexibility in the jobs market to improve competitiveness.
Analysts warn, however, that although the rhetoric is now about growth, there has been no policy U-turn.
To be sure, governments are being urged to focus on reforming labour markets and pension systems, opening up more sectors to competition and easing business regulation to improve countries’ growth potential.
Small initiatives are in the works, amid great political fanfare, to combat the scourge of mass youth unemployment, which threatens southern Europe with a lost and alienated generation. The ECB is exploring ways to ease lending to smaller businesses in the hardest-hit peripheral countries of the eurozone.
Much will depend on German Chancellor Angela Merkel, who has used Berlin&’s financial clout since the start of the crisis to press for fiscal discipline ~ and who faces crucial national elections in September. Merkel is increasingly unpopular in Europe ~ but much respected within Germany.
Her relations with French President François Hollande are especially tense although the two try to put up a brave face in their public appearances. In short: talk of Europe&’s demise are much exaggerated ~ but it will be some time before the continent can walk as tall as it did in the last decade of the 20th century.
The writer is a Brussels-based journalist.