+ Europe in the world
There is only one way to react to the US-China war: accelerate the integration process. This would help manage crises, economic and social development and foreign policies
- Monday, 04 March 2019
The year 2019 has begun with Europe feeling much more pessimistic about its outlook than it was at the end of last year. This may be due to a considerable drop in GDP, which will mean some large countries like Italy dropping back down to zero after a few years of stunted growth. Or it may be due to an increasing rift between the establishment and the middle classes that has seen the yellow vest movement hit the streets and the 5Stars come to power in Italy.
However, our feeling is that the general uncertainty one perceives at a world level is mostly due to the rather disquieting attitudes of a number of major world players. I'm referring here in particular to the United States and China., which on 1 March will resume a war that is more than just a trade war, after a few wasted months of truce that were supposed to favour an agreement that never happened. The markets have shown their concern over the impact of this confrontation, which has already proven to be very tough, and can stretch as far as depriving people of their personal freedom, as has been the case for the CFO of the Chinese Huawei group.
So how are we going to react in Europe? We only have one way: to use the next European elections to vote in parliamentarians and leaders capable of accelerating the integration process, improve the management of crises and development, economic shocks and growth, foreign policy and defence.
We can no longer stand still, we have to move ahead right away towards a fiscal Union, an essential pre-requisite if we are to work towards a political Union as well. Without the British, we have the unique opportunity of increasing the scant EU budget from 1% of Europe's GDP to a more substantial 2 or 3% which, for example, would enable Brussels to table the required anti-cyclical policies, backing the actions of national governments that find themselves in tough economic situations as we have been witnessing for over a decade now. The budgets of federal states like the United States, Brazil or Australia enable so called aggregate shocks, as well as those that only affect specific states, to be weathered more successfully. For example, a 1 dollar drop in revenue in Taxes triggers a 40 cents rise in federal transfers from Washington to Dallas; a 1 euro drop in revenue in Spain, on the other hand, only results in the transfer of less than 1 cent from Brussels to Madrid.
Wouldn't a more centralised governance have enables us to be more efficient in our handling of the Greek crisis? And wouldn't the same apply to Portugal, Spain, Ireland and Italy?
Of course, we have to negotiate with Berlin. So let's do so! Let's have this discussion, there's plenty of issues that are even in Germany's interests. After all, two thirds of Germany's industrial production is earmarked for other European countries. So it would certainly be in Germany's interest to endow countries purchasing German goods with improved economic competitiveness and sustainability, possibly by centralising tax policies in favour of a European Finance Minister, who could even be German.
Now that London is out of the picture, France is the only country left with a nuclear arsenal. This is the time for a pro-European president like Macron to make his name in history, by providing Europe with its own nuclear arsenal and its seat on the United Nations' Security Council, in exchange for European leadership in defence matters. All Europeans would be prepared to accept a European Defence Minister with a French passport, if such an appointment stemmed from such a significant act of political generosity.
We all await the results of the 26 May elections with bated breath, but we are even keener to see decisive steps being taken towards a more federated Europe.
This article is also published in the March/April issue of eastwest.