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Editorial correspondence | Back to History | Back to the world news
TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.

Articles written after 2007
If Iran wins
Europe's economic recovery
A vision for Europe
2006 articles

  • (september 2007) If Iran wins. Whether people like it or not, the Iraqi civil war has become (among many other things) a proxy war between Iran and the USA. (See The proxy war between the USA and Iran)
    There is a theory in the USA (first promoted by senator Murtha) that the Iraqis will have not motivation to get their act together for as long as the USA is in Iraq. It is the USA that has to take care of the terrorists and the militias. If the USA left, so the theory goes, the Iraqi government would have to take responsibility for real.
    The theory is right to the extent that the USA presence provides the very rulers with some degree of security that they would have to provide for themselves if the USA left.
    The same theory can be applied on a broader scale, though, and then the target of the theory changes dramatically. If the USA left and let Iran win the proxy war in Iraq, there's someone else who would have to wake up and face its responsibilities: the European Union. The European countries are letting the USA sort out the mess. (They did so even before 2003, incidentally: letting the USA decide what to do with the ghost regime of Saddam Hussein). Now even Britain is leaving Iraq and pretending not to be interested in what happens next. They are all living in denial. They will be more affected than the USA by anything that happens in that region.
    Thomas Friedman wrote "either we get help or we get out". If the USA starts withdrawing, the Iraqi politicians will not be the only ones who will have to start calculating the consequences. The European countries will also have to do some serious thinking. In a sense, France already realized it (now that it has a president who actually thinks) and sent an envoy to establish more direct relationships with the Iraqi government. It is wishful thinking that the USA withdraws its troops and life in Europe goes on like before. Life in Europe goes on life before only for as long as the USA stays in Iraq. (This is reminiscent of the Cold War: life in Western Europe was "normal" because the USA stayed, not because the USA left).
    It may eventually dawn on both USA and European leaders that a USA withdrawal would effect Europe more than Europe is prepared to be affected by.
    TM, ®, Copyright © 2007 Piero Scaruffi All rights reserved.
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  • (july 2007) Europe's economic recovery is a problem. In a sense, the worst thing that could happen to Europe is the mild recovery underway in the summer of 2007. Western Europe still has one of the slowest growth rates of any region in the world, but it is doing much better than in the last decade. Germany, in particular, has finally reduced unemployment and increased competitiveness. The other countries are benefiting from the German recovery. The truth, though, is that Western Europe is still anemic by any standard. It is being passed by the Far East in pretty much any field. And, at this pace, it won't catch up with the USA any time soon, no matter how many more countries it annexes.
    The deep-seated problems of Western Europe are still there: the budget deficits, the rigid labor market, the lack of innovation, etc. New leaders such as Merkel and Sarkozy have only brought a sense of reform more than the reforms themselves. Because their economies never completely collapsed, these aging countries feel that painful reforms are not necessary anymore. Most likely, the decline will soon resume.
    There is change in the system, but it is coming slowly. Both Germany and France seem to have endorsed a two-tier system of employment. There are the old-fashioned permanent jobs, that come will the best benefits in the world and de-facto guarantee of the job. And there are new kinds of jobs that are "temporary" and do not qualify for either great benefits or job guarantee. The "temporary" jobs are basically the jobs that the USA and the Far East are used to. Since the newly-created "temporary" jobs are usually for the younger generation and the old-fashioned "permanent" jobs are usually for the older generation, the system will eventually but quietly lead to the labor-market reform that is needed: in a couple of decades there will be only "temporary" jobs.
    So far the only reform has been the ability of the governments to keep salaries from increasing. Germany's gains in competitiveness are mostly due to salary stagnation, not to real structural improvements. As long as workers are willing to be paid less (adjusted for inflation), countries can become more competitive.
    The most likely future for Western Europe is a combination of the two: salaries that become lower and lower compared with world standards, and less rigid forms of labor that slowly become the norm.
    TM, ®, Copyright © 2007 Piero Scaruffi All rights reserved.
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  • (march 2007) A vision for Europe. A recent poll by the Financial Times shows that an increasing number of Europeans are dissatisfied with the European Union. This comes after France and the Netherlands killed the project for a European constitution.
    There are many problems with the European Union. In a nutshell, it looks like a copy of everything that is wrong with the USA with little of what is good about the USA. It is a vast bureaucratic apparatus that has the huge drawback of all bureaucracies: a preminence of process over policy. In other words, the European Union lacks a vision, something that can inspire the people to believe in it. The European Union is simply a generator of regulations. No matter how right they are, regulations per se do not make you a popular subject with the masses.
    The lack of vision is reflected both internally and externally. Internally, the European Union is totally powerless to heal the social ills of, say, France. If people riots in France, the solution must be found by the French government. The European Union has literally no idea. Externally, the European Union is powerless to change the world. Its role is becoming the role of a senior consultant for the real protagonist (the USA). It does little more than advise the USA (and the USA rarely listens). Even the role of Britain is likely to be greatly reduced after the Iraqi debacle and Tony Blair's forthcoming retirement. Thus the European Union matters little, and European citizens simply reflect that insignificance by showing little respect and gratitude for it.
    Europe is enacting some of the most daring legislation in the world. For example, the European Union wants to enact legislation against climate change. From the point of view of "process", that is impressive indeed. However, the European Union does not want to recognize nuclear energy as a source of "clean" energy in the context of global warming (nuclear energy does not produce carbon dioxide). That is an issue of policy, not process. That involves a vision for the future: from where should a continent without oil obtain its energy if not from oil? The European Union is good at legislating against global warming, but not at showing how it can survive in a world dominated by oil.
    The main problem that Europe faces in the 21st century is the emergence of China and India as the economic world powers, and, right to its borders, of Russia as an enigmatic military power. And yet the European Union does not have a vision for Europe in such a context. If the European Union did not exist, it is likely that at least France and Britain would have already worked out a survival strategy for a world dominated by the USA, China, India and Russia. Thus the skepticism of the European masses is well founded: they perceive that the European Union is giving them a lot of (useful but not indispensable) regulations, but not the one thing that is vital for survival.
    The European Union's emphasis on process rather than policy is visible also in the main difference with the USA. The USA grants its states a lot of latitude in legislating on so many issues. The advantage is not only more freedom for citizens. The advantage is that each state becomes a laboratory of ideas. Those that do work are copied by other states. Several USA states are trying different kinds of universal health care (that the USA does not provide). California approved funding for stem-cell research that the USA rejected. Several states are experimenting with alternative forms of energy. It is Darwin's systems applied to government. The European Union, instead, has a philosophy of deciding which is the best idea and then dictating that idea (and only that one) on all member states. The laboratory of ideas does not exist. Darwin showed that competition helped create species that were good at surviving. The European Union did not learn Darwin's principle.
    TM, ®, Copyright © 2007 Piero Scaruffi All rights reserved.
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  • 2006 articles
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