Europe and the world: what must be done

Europe's strategic autonomy

Victor Ângelo

 

Tianjin is a port city, a little more than a hundred kilometres southeast of Beijing. When the European powers established concessions in China, since the middle of the 19th century, this was one of the localities chosen as a gateway, with the advantage of being close to the capital. Today, it is a metropolitan zone that covers an area larger than the district of Beja - imagine the entire Baixo Alentejo urbanized, a landscape of skyscrapers with more than 15 million inhabitants. In 2025, Tianjin should have an economy two and a half times the size of Portugal.

The Tianjin example shows how important it is to see the world with realism. China is an unstoppable giant. It has in its favour the size of its population, authoritarian centralism of power, political will, and massive investment in science, technology, and the acquisition of raw materials. In this context, what future can Portugal, or any of most European countries, have in the global balance of power? Fortunately, there is the European Union. The productive integration and the pooling of political efforts allow the member-states to carry some weight in international economic relations and in the geopolitical chess game. If there were no other reason to justify the deepening of the EU, this alone would be enough.

This is where the question of Europe's strategic autonomy arises. It is part of the ritual of the speeches now in vogue. But it needs to be deepened and transformed into an action plan. That is why I will address three aspects of the subject today, leaving the defence and security dimensions for another time.

In this decade, the first major step towards the affirmation of Europe is the strengthening of the euro as an international means of payment as well as a monetary reserve currency. The European currency is already the second most used in global transactions, well above the Japanese yen and the Chinese renminbi, but it is still far behind the US dollar. It is essential, to allow autonomy in other areas of sovereignty, that there be the political will to accelerate the use of the euro in economic and financial relations with the most diverse regions of the globe. This discussion must get on the agenda of European political leaders. This is not a mere technical problem or a question of waiting for the dynamics of the markets. It is a strategic priority.

The second line of intervention concerns foreign policy. At present, except for the climate issue, Europe's position on major issues is defined by two negative features: subordination to the conveniences of the United States and fragmentation, a consequence of the individual interests of the Union's member states. The EU High Representative for Foreign Affairs and Security Policy represents little more than himself. The current holder of the post, Josep Borrell, although more experienced than the two previous holders, does not show the ability to push a proactive and cohesive agenda. This is not the way for the EU to have a greater voice on the global stage. This is another issue that cries out for a new kind of agreement at the level of European political leaderships.

The third course of action became more evident when the pandemic highlighted the importance of self-sufficiency in the production of cutting-edge goods and services. European economies must continually invest in scientific, technological, and digital innovation, and in the training of citizens. The Social Summit held in Porto recognized the need for lifelong learning. This is the new way to look at the competitiveness of our economies. It remains to be determined which sectors should be considered key, in addition to health, the expansion of artificial intelligence, cybersecurity, and energy. 

Strategic autonomy does not exclude interdependence and cooperation between us and others. And it cannot be just talk. It requires clear ideas and appropriate policies. 

 

(Automatic translation of the opinion piece I published today in the Diário de Notícias, the old and prestigious Lisbon newspaper)

 

 

How to deal with Erdogan?

The situation in the Eastern Mediterranean is becoming very tense. Turkey is doing oil mapping at sea, in waters that are contested by a fellow NATO Member State – Greece. The oil vessel is escorted by several Turkish warships. And now France has responded to a Greek appeal and is sending navy assets to the region. This situation can easily escalate and become an open conflict. It must be dealt with by the NATO and European authorities immediately.

The truth of the matter is that Europe does not have a clear line of approach towards Turkey. Delaying the accession negotiations or approving a light package of sanctions against the regime in Ankara is not an effective policy line. A firmer position is required. The European leaders must understand that President Erdogan is a major threat to the stability of Europe. In addition, they must realise that someone of his calibre does not understand a soft approach. He knows about force and can get the message if the message is forceful.

Mark Rutte on the EU

"And I’ve said many times before that I believe the EU is stronger when a deal is a deal.  In the EU there can be no haggling over democracy and the rule of law. We must always draw the line when fundamental values come under pressure, as they have in countries like Poland and Hungary.But a deal is also a deal when it comes to the euro and the Stability and Growth Pact. Because here too, bending the rules can erode the entire system, and we cannot have that. To me the whole idea of the EU is a group of independent member states working together to bring each other to a higher level of prosperity, security and stability. Unity is the source of our capacity to act in the outside world."

Churchill Lecture by The Netherlands Prime Minister Mark Rutte, Europa Institut at the University of Zurich

Speech | 13-02-2019

Let´s be positive

The good news is about the EU economy. The employment rates are up and again there is economic growth. Science-based innovation and renewable sources of energy, among other sectors, are particularly contributing to the expansion. And the euro has kept its value when compared with the currencies of our main trading partners. It does not show any sign of imminent collapse. 

The Eurogroup has to take a decision that is clear

The Eurogroup meeting of finance ministers is still on at the very end of this evening. It has been a long meeting. And also a very tense discussion, from what I can understand at this stage. All this shows that the EU is confronted with a very serious crisis that has a major impact on Greece, of course, but also on the rest of euro zone countries.

It is time to be very balanced and to think positively. It is also time to be very clear, in one direction or the other.

Major crisis are complex matters, difficult to decide upon, but at the same time they call for clarity. People want to know the direction things will take.

Politics is about opting. And in the case of a grave situation is also about making sure that whatever is decided is the most reasonable approach, among a choice of options that are all rather painful. 

One very last chance?

Greece was told tonight three things: one, they have to come up with a detailed and implementable financial reform programme; two, the European Commission has already prepared a contingency plan in case Greece leaves the euro zone; and third, their new policy reform proposal has to be ready for a careful analysis by the Euro group by Thursday, in view of the EU extraordinary summit called for Sunday, 12 July.

All in all, this sounds like the final leg of a very confusing process. A deadline.

The major risk, besides the one related to missing the deadline, is related to a possible split within the EU. Some countries might go one way and others adopt a different direction. That has to be avoided at any cost.

As we have to prevent any decision that takes flexibility beyond the reasonable enactment of the rules. The rules are essential for the survival of the union.

On Greece´s next steps

We should congratulate Alexis Tsipras this evening. The Greek voters have shown they unmistakably support him and his approach to country´s debt issue.

Now Tsipras has to come up with a clear negotiating position. It has to be on the Euro group tables by tomorrow. There is urgency. And it is also very urgent to show that there is a way forward.

The proposal has to come from the Greek side. And be ready for a decision to be taken on Tuesday evening, when the Euro group leaders meet in Brussels.

These are indeed extraordinary times. They call for very clear commitments and well defined boundaries. Indecision and vagueness are key risks to avoid. As one has to avoid to be trapped by personal likes and dislikes. We might not like the other side, but we have to sit with him and talk in a very frank and constructive way. 

Greece: Fast running towards the abyss

The Greek crisis is now getting to the breaking point. Businesses are just closing their doors as they have little or no access to financial resources. Payments to external suppliers are becoming almost impossible. Domestic payments are just paper payments, no real cash is moving around.

Four days without an operational banking system has a major impact on the economy in a developed country.

And I do not see the banks being able to re-open on Tuesday, as the government wants us to believe. People have lost most of their confidence in the financial institutions and are desperate to take out of the system whatever little money they still have in their accounts.

We are running fast against the wall.

And we do not seem to be aware of it.

We just take the days as normal days in a country that can no longer afford to run as usual. The government needs to take exceptional measures. And I do not see the current leadership being able to do it. For whatever reason, they seem to believe that everything will be much easier after the referendum. Or, the referendum is three days away in a country that needs decisions now. 

Greece: calling a spade a spade

Today´s prevailing position on Greece´s fate, in the European political and financial circles that have power, was rather clear: it´s time to call a spade a spade.

This basically means, as I see it, that those leading circles have come to the conclusion that the Greek situation has reached a decisive point. And the decision is to let Greece go its own way. It makes no sense to advocate for a solution that the other side does not accept.

I tend to agree. Default is painful but it is not the end of the road. Argentina and other countries have gone through that experience. Even California did. Default can actually be the beginning of a new cycle.

On the markets side, it looks as if the default possibility is now perceived as inevitable but with a manageable impact.

In the end, those who will be seriously affected are the poor people in the streets and villages of Greece. Unfortunately it´s always like that.

Greece´s poker game

The Greek government is playing hard ball. They are convinced, I guess, that in the end the EU creditors will do whatever it takes to keep Greece within the Eurozone. And their poker hand is based on that assumption.

It´s a risky position. Athens might know more than we know about the concessions the other Europeans could possibly be ready to accept. But I am not sure they know. They just take the chance and hope to be right, that´s what I believe.

At this stage it is difficult to forecast the events of next week or so. We are certainly close to a clarification. And that moment of truth might be a difficult one for the Greek people. 

Greece has to move fast and show results

The Greek government has lost the last month trying to convince the European leaders to accept the merits of its approach to crisis management. In the current situation, a month is a long period of time for the Greeks. It is even longer when you achieve very little. It is hell, when you have empty pockets.

They should have listened to the advice coming from the key EU capitals: no programme implementation, no money. Such advice was repeated in Brussels last night, when a side mini-summit brought together the Greek prime minister, Angela Merkel, François Hollande and a couple of other senior people, Greece was once more invited to cooperate with the rest of the UE. Money was promised. It should be released when the Greeks start moving along the reform path.

Listening today to the Greek Prime Minister I got the impression he has not yet realised that time is running out. Money is getting very thin in the government´s drawers. And the political support they had in Europe is evaporating fast. It would be better for his government and his people to show they can implement the agreed reforms. The sooner they do it the better for them and for Europe´s cohesiveness. 

Greece´s way to hell

The end is close, preach those Christian fanatics that come to our doors, the Bible in their hands and the announcement of doom in their mouths. They are just in a mission to try to save us.

I thought of them today as I read the news about Greece. The end is close, the players seem to be saying. In this case, we know what they mean. But opposite of the preachers ‘approach, in the case of Greece many seem to be just waiting for it to happen. It is a bit as if different sides to this fate of gloom and doom would be relieved the day it happens.

The only problem is that once you reach the other side, hell can indeed be very bad. 

Greece´s anxiety

The Greek general elections will be held in a week. But the matter seems to have disappeared from the European news. Or, it will be an important event. The outcome of the elections might have a serious impact on the European agenda and be at the centre of the policy dialogue for a few months.

Syriza, the left wing party that is against the current austerity programme, is very much ahead in the most recent polls. It might not have enough votes to put together a government after the elections. But it will come out of the elections with a much stronger voice.

All this will lead at least to political instability in Greece. The country needs just the opposite: stability, to be able to attract new loans and new investments. And also to stop the ongoing social mistrust and fear. Because of the reigning atmosphere, many Greeks are taking their money out of the banks and keeping it under the mattress. The banking system is under serious stress as a result. And we can expect more anxiety as days go on. 

Europe´s future requires cooperation among the states

Le Monde printed this afternoon with tomorrow´s date has a very important opinion editorial by François Hollande about Europe´s future. The French President´s views are very clear: the continuation of the common European project means peace and will bring prosperity; on the contrary, the ultra-nationalism and the return to national borders carries with it the seeds of conflict among the different European nations; it is also a serious menace to the continuation of the common currency, which means a return to devalued and 

unstable national currencies; it is a move back to poverty and underdeveloped economies.

And the President shows he is very concerned with the current trends that run against Europe. The project cannot move if the people are not in support. And he sees that we are facing a serious risk that can easily undermine the survival of a joint aspiration and shared interests. He sees, with great concern, a continuing deterioration of the popular support to the Euro and the EU.

It is a good text. It should certainly be made available in other languages besides French. In the current atmosphere, when the nationalists are getting ground, it is critical to present a different view.

It is actually a very simple, and also very correct view. Europe needs to unite and cooperate better among its member states if it still aspires to play a role in the global world we live in. That´s the only reasonable way forward. The rest is just demagoguery. 

German elections

The German Election Day is getting closer. But there seems to be more debate in several corners of Europe about these elections and their impact of the future of the EU than in Germany itself. Domestically, the issues being discussed are very pedestrian. And there is indeed very little interest in matters larger than the petty things that are on the German table. Any reference to the euro, the Brussels institutions reform, the countries in financial distress or the banking union is no more than a passing whisper. It has very little weight.

One or two key observers keep repeating that Berlin simply lacks the political ambition to provide straightforward leadership in times of big challenges. I do not think so. Merkel and the others know what they want. And they are satisfied with what they have now, when it comes to Europe: no borders, a free trade zone, a strong euro and a bunch of governments that are too preoccupied with their own domestic problems to be able to pay more attention to the Union. Better, they are too busy to be able to challenge Berlin and ask for more from the Germans.

It is that kind of “minimal Europe” or “status quo Europe” that pleases the Germans. Then, they can think about their little problems at home and keep increasing the exports to Asia, the Middle East and the US. And that’s what they have been doing. The rest of the world is now more important for the German industries than the fellow European countries. And that determines the level of ambition Berlin wants to have

EU recovery winds

In the EU, this month of July ends with a more optimistic note. At least, that’s what some analysts would like us to believe. They are now saying they see some signs that the worst of the economic crisis is past. That we might return to positive growth rates during the second half of the year.

If we look at the recovery in Ireland, we might come to the same conclusion. I am certainly very encouraged by the level of international investment the country is able to attract, which is a clear indicator that confidence is back and the overall macro-economic framework is getting the right shape. 

But one swallow doesn't make a summer. 

We can even forget Greece and its chronic development challenges. We cannot however be blind to the economic situations in Italy and Spain. These countries are not out of the woods. And they combine economic depression with political fragility. This is the worst combination we can have as one of the keys that opens the door of recovery is a strong government with a clear popular mandate and indisputable political legitimacy.

Europeans

The latest Eurobarometer survey results published yesterday show that the European citizens value above all the free movement of people, goods and services within the EU and the fact that peace has been kept in the Continent. 62% of those living in the Eurozone also believe that the common currency is a positive development. However, a large number (67%) think that their voice is not heard and counts for little when it comes to influencing European politics.

It is also curious to note that the rich Luxembourg feel very “European” (88% of people in the Grand Duchy say so) and the poor Greek have a very different opinion (only 44% feel as Europeans).  They are at the end of table. 

European dreams

The leaders of the Visegrad Group – Slovakia, Czech Republic, Hungary and Poland – met yesterday in Warsaw with President Hollande and Chancellor Merkel to discuss defence matters. The four countries want to have a joint battle group of 3,000 soldiers in about three years’ time. This is a good move, particularly if one takes into account that the military cooperation between Slovakia and Hungary requires a confidence boost. It has indeed known better days.

The leaders also talked about today’s Europe. And, to the surprise of some of us, they came to the conclusion that the three instruments that will “construct” the EU are: 1) the economic and monetary union; 2) the competitiveness of the European economies; and 3) the reinforcement of Europe’s defence capabilities.

Well…First, the economic and monetary union seems to be a project for only part of the current members. I do not see the British, the Danes or the Swedes to be willing, one day, to join the Euro. The competitiveness issue is a dream that is killed every day, when one compares the economies of Northern Europe with Spain, Italy or Portugal – forget about Greece! And the European defence capabilities have a very troubled future in front of them. To insist in European common defence when military budgets are on the decline slope is misleading. The European defence will continue to be based on NATO’s role and on the commitment of the US towards Europe. The little resources still available within the European countries’ defence institutions should be used to strengthen the European contribution to NATO’s mandate.