2/2/15 2/2/15

2015 at dawn.com)

The new European Union Commission, in office since November last year, likes to talk of a “fresh start” for Europe. There is upbeat talk of streamlining EU actions, simplifying procedures, launching a new era of mega investment projects and revving up growth.The reality is more complicated. The election in Greece of a new anti-austerity coalition government headed by Alexis Tsipras has highlighted growing dissent and anger in the Eurozone over the unrelentingly rigid fiscal policies imposed by Germany and followed by the EU.The much-publicised 315 billion euro investment plan launched by the new European Commission President Jean-Claude Juncker may look impressive on paper but is seen by many as too woolly to really generate the growth and jobs that Europe needs so desperately.Additionally, the aftermath of the terrorist attacks in Paris earlier in January means that the Far Right and anti-Islamic parties continue to gain traction and become ever more dominant in the debate on immigration.It’s equally bleak on the foreign policy front. Relations with Russia remain tense. Although there is almost agreement among the 28 EU nations on the need to maintain sanctions against Moscow, depending on their national histories and experiences, European foreign ministers’ attitudes towards Moscow range from very tough (the Baltic states and some Central and Eastern European countries) to soft (Greece and Italy).In the south, the EU is struggling to forge a coherent and meaningful strategy towards Turkey and its other Southern Mediterranean neighbours as well as the Islamic State (IS). European governments also remain divided over whether or not to recognise an independent Palestinian state.Further afield, relations with Japan, South Korea and India remain largely lacklustre and uninspiring. Unlike US President Barack Obama, no European leader can claim to have a glamorous bromance with India’s celebrity Prime Minister Narendra Modi or Japan’s Shinzo Abe.Not surprisingly therefore to many observers in Asia, EU foreign policy seems slow and plodding, focused almost exclusively on trade and business and not enough on a long-term strategy for closer political and security ties.There is one striking exception, however: China. Surprisingly in a world of flux, EU-China relations remain relatively strong, vibrant and multifaceted even as Europe dithers over Russia, India and other emerging nations.The point was made at a meeting of European think tanks in Brussels this week, with experts agreeing that Europe and China must up their engagement. Such consensus is rare in Brussels, especially among academics.Certainly, it’s their mutual economic interdependence that keeps EU-China ties dynamic and buoyant. China’s growth rates may be slowing down but its appetite for European goods and investments continues to be crucial in determining the pace and success of Europe’s economic recovery.China’s economic transformation — and plans for even more change in the coming years — demands that it has access to European know-how, experience and technology.China’s reform agenda also gives European companies myriad opportunities for enhanced trade and investments. Both sides are negotiating a formal treaty to further boost mutual investment flows.Increasingly, also in Brussels there is recognition that a deeper EU-China relationship is important in order to polish Europe’s foreign policy credentials.Europe’s one-time ambition to shape China into a “responsible” international stakeholder now appears hopelessly out-of-date and patronising. But there is no doubt that the EU needs to engage with China on a range of urgent foreign and security policy issues including relations with, Russia, Iran’s nuclear plans, policy towards the IS, fighting Ebola and combating climate change.Significantly, China has invested time, effort and money into upping its relations with Europe. Beijing is working on several tracks at the same time. The focus in recently years has been on further consolidating the China-Germany “special relationship” but also reinforcing ties with former communist nations in Central and Eastern Europe, countries in the Western Balkans and also Nordic states.Responding to critics who complained that Beijing was paying too much attention to European member states and not enough to the EU, Chinese leaders have made it a point in recent months to visit Brussels.The result is a surprisingly solid and well-rounded EU-China relationship which could even become a model for other Asian countries.A key problem, however, is that the EU still treats China as just another emerging nation rather than the regional and global mammoth that it has become. The emphasis is on bread and butter issues like trade and investments, urbanisation, good and valid subjects but do not reflect Beijing’s increasing global clout and outreach.The EU should be looking at thrashing out a new narrative for China which is truly strategic and considers issues like global governance, sustainable development goals and international terrorism.In other words, as the EU and China prepare to celebrate 40 years of their relationship, the EU-China relationship should move from the ritualistic to the strategic — as quickly as possible.

10/13/14 10/13/14

View from Abroad: Europeans challenge Germany on austerity (Originally published 11/10/2014 at dawn.com)

With apologies to Jane Austen, it’s (also) a truth universally acknowledged that Germany is Europe’s undisputed leader. Its powerful economy, large population, mostly stable politics and mostly responsible politicians assure that Berlin looms large over the European Union landscape.Nothing happens in the EU without Germany’s blessing. For years that was a good thing. It isn’t any longer.Whisper it softly but Germany’s EU partners are getting a little fed up with Berlin’s writ. This is especially the case when it comes to agreement on how best to bring economic growth back into the flagging 28 EU economies.Germany’s focus on austerity is coming under harsh criticism — some of it veiled, some of it open — for jeopardising Europe’s economic recovery.Disaffection with Germany is spreading beyond economics. EU insiders complain in private at Berlin’s growing influence in key EU institutions, its ability to grab some very senior EU jobs for its nationals or close friends and its newly-found assertiveness in areas such as foreign and security policy.Europeans liked a Germany that always said “yes”, kept trying to atone for its role in the two World Wars and opened its wallet whenever others in the EU needed help.Linked up with former adversary France, Germany was the “locomotive” that kept the EU moving up and forward, through economic and monetary, the negotiation and implementation of different constitutional treaties and kept the flame burning on issues like further European integration.It’s different now. Germany is doing all that and more. And its EU partners like it less and less.What went wrong? In fact, the economy. Ever since the Eurozone crisis reared its ugly head, Germany as the bloc’s healthiest economy, has been calling the shots, insisting that governments across the bloc must tighten their belts, cut spending and talk and walk austerity.The tide is changing, however. Across Europe, national leaders, policymakers and economists are starting to challenge Germany’s insistence on budget austerity as a precondition to healthy growth.France is in, what some observers refer to as, an “open revolt” against German Chancellor Angela Merkel’s continued demands for deficit reduction in the face of slowing growth.Italy has warned against too rigidly following Germany’s preferred approach. The president of the European Central Bank, Mario Draghi and IMF head Christine Lagarde are also pushing for Germany to loosen up.Critics of austerity say that more government spending would increase demand for goods and services in Europe and help avert a dangerous fall into deflation, a downward spiral in wages and prices that can cripple an economy for years.Proponents of austerity, which include the Dutch, Austrians and Scandinavians and the three Baltic states, say that governments that fail to get their budget deficits and accumulated debt under control risk losing the ability to borrow at affordable rates in the bond markets and sowing the seeds of financial instability.The debate is unusually “philosophical”, not just economic, say observers. Warning against an escalation of mutual recriminations, the respected former Italian prime minister Mario Monti said the divergences of policy revealed divergences of “national cultures”.Matteo Renzi, the current Italian Premier, has said more bluntly that Berlin has no right to lecture its partners, urging Berlin — and the European Commission which now vets national budgets — to show more understanding for countries with no growth and high unemployment.French Prime Minister Manuel Vall, meanwhile, has unveiled a “no-austerity budget” designed to cut the deficit more slowly than austerity advocates would like.Monti has especially urged the EU (and Berlin) to consider more favourable treatment for public investments within existing rules.Critics of Germany point out that while Berlin is keeping the eurozone in fiscal chains, the United States has loosened the reins — and that thanks to fiscal stimulus, the American economy is starting to grow.At least for the moment, Berlin appears unwilling to deviate from its plan. But change may be around the corner. After all, while she is still very popular in her ninth year in power, Merkel is also under fire at home.In a new book, The Germany Illusion, one of the country’s leading economists, Marcel Fratzscher, takes the government to task for declining to invest in infrastructure and failing to encourage private investment or foster a modern service sector that would yield better pay and thus fuel higher consumer spending.Perhaps, Germany may finally listen. Latest forecasts spotlight a slowdown in the German economy, with economists underlining that the last thing the faltering European economy needs is a sudden downturn in Germany.But others argue that a bout of German weakness may be precisely what is required to convince Merkel to loosen the fiscal reins at home and provide Europe with a dose of stimulus that struggling states like France and Italy have long been seeking.If she does that, Europeans may once again rediscover their earlier respect for Merkel. Unlike the late British prime minister Margaret Thatcher, Merkel, as the ‘Iron Lady’ in charge of the future of both Germany and Europe, should not be afraid of “turning”.