Who will be the EU's "Romans"?

Judging by some of the arguments being used around the EU27 and the Euro17 today the EU could wind up with city-states or 500,000,000 states of one!

While the best interest of the 500,000,000 imo is ONE country of 500,000,000. (1/14th of world population) able to stand tall next to China (1,300,000,000), India (1,200,000,000) and USA (310,000,000).

Or maybe Europe has "too much" history while not enough wisdom to survive as anything and soon may be taken over (become economic or other subsidiary or cantons) by others! 

Ancient Greece did not have the wisdom to unite into a political union. And paid the price. Does Europe have to wisdom to avoid same price?

Ancient Athens was acting like a primadona (in the Delos Alliance, Sparta left early). Then Sparta beat Athens and acted like an even bigger primadona-bully to the other Greek city-states. Then Thebes eliminated Sparta as a power. Then Macedonia took the lead (reminds one of the EU, with Germany, UK, France playing corresponding parts).

Then came the Romans and engulfed all Greek city states under the Roman Empire. Then others. Greece became a country 180 years ago. So: Who will be the EU's "Romans"? The Russians? China? America? All three? Someone else?

Oh Europe, wake up and see what is going on in the world!

More analysis of the above topic available to clients and close friends

One way for the EU to move forward is ...

The main mistake of Maastricht Treaty was using EMU as step towards Political Union whereas full Political Union was/is actually a prerequisite for EMU (aka the Euro).


So how does one repair the mistakes of the Treaty of Maastricht? 


Well, not Merkel's (bull in a china shop) way, that's for sure!

I disagree with Westerwelle et al. The EU needs a new Treaty ASAP (amend EMU, steps towards political union, etc).

To avoid a UK veto to such move, the UK (and others?) could be offered the opportunity to leave the EU as the majority seems to want in Britain, but with a "good" (for the UK) special relationship of UK-EU as part of the "deal".

Just thinkin!

What does Europe really need?

Food for thought:

Many, among them George Soros (see eg "We need to do whatever we can to convince Germany to show leadership and preserve the European Union as the fantastic object that it used to be. The future of Europe depends on it", June 2) and  Charles S. Maier (professor of history at Harvard, "Europe Needs a German Marshall Plan" New York Times, June 9)  have called on Germany and its PM, Anglea Merkel. to "save" the Eurozone and even the EU. The latter even suggests a German Marshall on Europe.

But as Soros points out in his Trento speech/comments )see link above) the Euro crisis started with a flawed EMU design in the Maastricht Treaty (for which he blames the "center" of Europe as opposed to the "periphery")and adds this crucial comment: "The first step was taken by Germany when, after the bankruptcy of Lehman Brothers, Angela Merkel declared that the virtual guarantee extended to other financial institutions should come from each country acting separately, not by Europe acting jointly".

As he points out, "it took financial markets more than a year to realize the implication of that declaration, showing that they are not perfect".  That Merkel pinpointed the flaw and limitation of the Maastricht based Euro and EMU.

I would add that Merkel's behaviour in the last 2-3 yrs has turned European political union from a difficult to an impossible mission.

So which are the key elements of a solution to the European predicament?

a) The austerity road? Fewer and fewer yet still many think so.
b) A German Marshall Plan on Europe?
c) An orderly termination of the Euro project, possibly with the beginning of a political union project that may or may not include Germany (a political union of the willing and able (in terms of national Constitutional constraints) not necessarily the same 17 as the Euro, after all such a political union would not include a common currency at first, not until full union was established and working)?

If we accept the premise that the Euro was working until Merkel burst the bubble of a flawed Euro architecture with her post Lehman comments, then maybe, I say, what is needed the most is neither austerity not money or unrealistically urgent (if not clumsy or even barbaric) "structural reforms" in the labour markets etc (economic cold showers for the ordinary people, while popular with many economists and policy makers, can be viewed as a form of "torture") but a concrete affirmation of unity of Europe, the one that Merkel may have burst with her post Lehman comments Soros refers to or Merkel's "micromanagement" of the Euro crisis that inter alia alienated The Greeks and many other Europeans, thus making a political union a near mission impossible (while I( argue, before that, it was difficult already).

What would constitute such a re-affirmation though?

That is Europe current 10 trillion plus survival question.

Is the UK the "Austria" of European unification (in 1871 analogy)?

Is the UK potentially the "Austria" of European unification (in 1871 analogy)?

By European unification I mean not the current state of the EU but the potential political union, that would count of a unification analogous (to be compared AND contrasted) with the Germany unification of 1871 and the 20-30 years after that.

One of the policy issues coming out of such analysis is whether the UK can potentially be the "Austria", ie left out of the unification.

Another issue is whether European unification of the depth of the 1871 German one, will lead to stringer or weaker large members of the EU, namely Germany and France. And of course for the United Europe as a whole, and all its components 25 or more or less of the current member of the EU27.

Prussia after German unification vs Germany after European unification

A historical comparison - contrast exercise:

Is Germany afraid re European (political) unification of the same/similar thing that happened to Prussia after a few decades of the German unification in the 1870s?

Addition (15/4/2012): In other words, will/can a (political) unification of Europe have )within a few decades) the same effect on Germany that the 1870s German unification had on Prussia?

Can the modern Europeans succeed where the Ancient Greeks failed?

"The Delian League was turning from an alliance into an empire" (source: Wikipedia)

Could have led instead to a United States of Greece in the 5th century BC.
Had that happened, history, at least European one, would have been quite different.

Can Europeans and their states, via the EU, form the federal state that the Greek city states were unable to do? What difference can this make to the future of Europe and the world (Earth)?

Failure? The Greeks were occupied by the Romans, the Byzentines and the Ottomans, forming a state only in 1831, 2200+ years later!

Will a United European state take 2200+ years, ie will Europeans have to wait until 4212 and beyond? And who are going to be the Romans, Byzantines, et al in Europe's case?

Have modern Europeans forgotten the lessons from WWI and WWII?

In the 20th the "precious asset" was know-how (the "how to do"), In the 21st it is philosophy (the "why do", watch my vlog (on YouTube): "A key difference between the 20th and 21st centuries: From "How?" to "Why"", 1 min 46 seconds)

In the first 11 yrs of the century, all the conventional wisdoms, golden, common senses, and most theories of the 20th have expired.

The crises are a result of the business as usual, politics as usual, economic policy as usual bc the "usual" has become outdated-irrelevant.

Eg Merkozy's neo-conservative "new ideas" is not an answer to the challenges of the era. In spite of their spreading around the EU in 2011

Portugal, Spain, Ireland have caught the neocon virus in 2011. Italy & Greece are trying a strange recipe. UK had already fallen in 2010.

The "Middle Earth" is France and the key "battle" will be on May 6.

By being so blatant, Agorocracy is actually helping the political world & people wake up and stand up to it. They have not, yet.

The neocon approach of Merkozy et al to the crisis suffers from a kind of "Stockholm syndrome" vis-a-vis Financial Agorocracy.

The worship of the Financial Markets is not consistent with secularism.

The EU is not the problem. Germany is not the problem., The neo-conservatives in Germany, France, NL, all over the EZ and EU are the problem.

Europe needs to rediscover its core values, ie the Ancient Greek and Renaissance ones. And build its new ideas & policies on those roots.

For the US, the challenge is even more challenging.

The lessons from WWI and WWII were not that economic crises can be avoided, It was that they are no excuse for racism, xenophobia, nationalism, scapegoating. With that in mind, 2011 showed that Europeans have forgotten the lessons from the world wars of the 20th.

Values, culture and traditions are real if they can evolve, be inclusive and blend with others (see eg the so called Hellenistic Times, see my post "Globalisation, today and in 300 BC")

Values, culture and traditions that cannot do that and instead use dominance to try to become adopted by others, are pseudo ones, not real.

Can Europlus become Germany times 5 in the global economic arena?

On the post Dec 8 Europlius:

1) A much more spendthrift Europlus would mean less consumer spending too, ie a much stronger exports orientation for the Europlus

2) In other words, turning the Europlus into a lean and mean global exports "machine".

3) That could mean a much more aggressive trade policy for the Europlus with its trade partners (USA China, other BRICs etc).

4) Including less tolerance for hidden and other protectionist barriers by others esp in the G20.

5) So the US admin which already "accuses" Germany of exporting too much & consuming (& thus importing) too little, is probably having a fit!

I am not impressed by alleged 2 speed Euro "theories"

The alleged Merkel-Sarkozy plans for 2-speed Europe or Euro do not impress me.

Why?

They cannot change the EMU part of the existing EU Treaty (via a so called IGC - Inter-Governmental Conference) w/o giving in to Cameron's demands for "repatriation" of certain competencies from EU back to national (or just UK) level!

1) If they offer Cameron what he wants, then other EU members, eg one of the other 9 outside the Euro, but not anti-EU, may raise a veto, ie veto the whole IGC agenda.

2) If they plan a Treaty that works outside the EU Treaties (in a format similar to the original Schengen way/model), then the contents of such Core EU/Euro Treaty can it seems to me can only add, not amend, articles of the existing EU Treaty.

Hence there is a Catch22 of sorts.

So what on Earth are (allegedly) Merkel and Sarkozy talking about?

In an IGC, be it EU or Euro one (see above), all will have to agree, not only Merkozy & "German thinking" others!

Bottom line: Euro membership was/is irreversible, those who do not get that are the ones in denial of legal, technical and other factors!

In speech in Strasbourg, Sarkozy called such plans a mere "intellectual exercise". IMHO they are not a trick. They are just that. Nothing feasible about them.

Zeus, Ulysses, Pericles, Merkel and central bankers

Read below my comments on "Modern Greece’s real problem? Ancient Greece" by George Zarkadakis in The Washington Post.

I disagree with most of the points of the article/opinion by Mr. Zarkadakis.

IMO the paradox is that Zeus and other Greek gods and goddesses, legends such as Ulysses and Achilles, real life ancient Athenians and mostly politicians even of the Pericles era would probably be considered more "unruly" and "less EUropean and EUROpean material/stuff" than modern Greece/Greeks, in the eyes of "purists" (to say the least) such as A. Merkel, central bankers, conservative US and European media, etc etc etc and of course "some" modern Greeks.

Eurozone moving forward outside the EU Treaty framework? What's new about that possibility?

In the Wintour and Watt blog today, Saturday 5 November 2011, in The Guardian, titled: "Britain turns on 'disreputable' Germany as relations sour over eurozone crisis", I read:

"David Rennie, who writes the Bagehot column in the Economist, has one of the most important scoops of the eurozone crisis this week. Rennie, who has just returned from Berlin, reports that German officials are so angry with Downing Street that they are threatening to draw up a treaty just among the 17 members of the eurozone. This is what Rennie wrote: ..."

What scoop? It seems that since May 9 Spiegel International had "scooped" the scoop, as I posted in early September: "it seems, according at least to my reading of the 09/05/2011 "Divide and Rescue: Berlin Lays Groundwork for a Two-Speed Europe" report in Spiegel Online International that the Treaty that will move the Eurozone towards political union (uniform labour laws, budgetary "unification" (to what extent we shall see), etc etc) will not be an EU one, but, like Schengen (when it was set up), "hors EU"! That means that the UK, unless it joins this 1st speed union (ultra highly unlikely), will not have a say in it or get to vote on it! Any referendums will be by the participating states! Bazinga?!"

Here is full part of my Sept. 7, 2011 post "EU: Who kicked the can down the road? (mach 2)"

"Now, we come to maybe the most interesting bit:

While Cameron supports closer integration if the Eurozone becauses he thinks that the needed EU Treaty changes will give him a chance to negotiate in return for allowing the Eurozone to move ahead, repatriation of certain "competemces" back to the UK (from "Brussels"), it seems, according at least to my reading of the 09/05/2011 "Divide and Rescue: Berlin Lays Groundwork for a Two-Speed Europe" report in Spiegel Online International that the Treaty that will move the Eurozone towards political union (uniform labour laws, budgetary "unification" (to what extent we shall see), etc etc) will not be an EU one, but, like Schengen (when it was set up), "hors EU"! That means that the UK, unless it joins this 1st speed union (ultra highly unlikely), will not have a say in it or get to vote on it! Any referendums will be by the participating states! Bazinga?!

That also raises the issue of the role of the European Commission, the ECJ, the European Parliament, the Council of the EU, etc, as well as the European Council in the operation of the "EU Mach 2". It seems that the Eurogroup plus other, new, bodies, probably lean, will be set up to do the "job". The EU institutions will continue to operate the affairs of the EU27 but the "EU Mach 2" will have its own institutions. Can there be another way considering that:

a) Cameron wants to use an EU27 IGC to get his way, thus a change in the EU Treaties must be avoided by the rest.
b) Not all members of the EU27 will be participating in this "closer union"?

To be continued!

PS. That would also mean that the "hors EU" Treaty of the core union cannot change the EMU/Euro aspects of the EU Treaty, ie exit from the Eurozone/Euro will continue to be not an option. That IMO means that all 17 of the existing EZ members will participate in the core union, unless they figure out a way of having a Euro member not be part of the core union and still have the who thing work! Does not look likely!

PS2. Times are beyond interesting. But at least there is a reversal of direction, from backwards to forward. Unless of course Angela Merkel and/or the CDU change their minds, yet again!"

United States of Europe sans UK, France & Germany?

An outside the box syllogism, prompted by current developments in European and EU Affairs:

Maybe Europe is not meant to be fully united (ie political union).
Maybe is meant to consist of 5 separate political entities:
1) UK,
2) France,
3) Germany,
4) Russia

plus

5) a United State of Europe new country, comprising of a political union of most of the rest of Europe's countries (ie 24+ federated member states)

A solution to the EU and Euro problems?

A number of EU member states can form a political union between them (outside the EU Treaty) and continue to be members of the EU but as a single member state!!

So if let's say all 17 Eurozone members merged into one (federal country) then this new country, let's call it "Federal Republic of Europe" (FRE) could be a member of the EU instead of the 17, in other words an EU with 11 (10+1) member states.

Of course this new "country", FRE, would have its own publlc servants and its own institutions which would probably be staffed by former members of the former national administrations.

If indeed this country consisted of all members of the Eurozone, then that would go a long way towards solving the Euro crisis. It would have a Prime Minister elected in the same or similar way the German PM is, have a federal tax system and a federal "IRS" to administer it, maybe its own army, and of course FRE-wide laws. Its own bonds, etc.

Now, if this new country did not match the current Eurozone in membership, that would not help solve the Euro crisis, ie the Euro would not gain a country, but it would still go a long way towards the destination of European integration. Over the years and decades more European counties, EU members or not, would merge into this FRE country.

That would not be good new for the EU per se, but the EU (much like the EEC) is but a vehicle for European integration. What matters is European integration not the EU per se.

This FRE solution could work irrespective of the future of the Euro, even providing alternative impetus in Euro's worst case scenario (the FRE would not necessarily have a single currency at least at first).

There are other solutions too of course.

The solution to Eurozone's problems

Much is being written and said these days, especially today, around the globe re the Eurozone and its future etc etc etc.

Here is my 2 (euro)cents worth:

In addition to specific measures to address situations at specific member states, what the Eurozone needs is:

a) A "softer Euro" policy. A 1.4 or 1.5 USD per Euro rate hurts Eurozone exports and services such as tourism plus makes the Eurozone's market a "playground" for cheaper Chinese, American, British, Swedish, etc products. IMO this affects all Eurozone members, including the German economy, even exports.

b) A single currency needs a single Polity. In other words, it EU political union, all the way to a Prime Minister and proper government is needed. It should have been decided 19 some years ago in Maastricht.
European Political Union, be it with 26, 23, 20, 17 or even 15 members, will mean that the single currency will be based on a single (federal) Polity, with a proper European government, a federal income tax (US style) and a US style IRS, a central bank that is in line with the decisions of the European government (eg on exchange rate policy, see JC Junker's views expressed at the EP last week), a European NHS, a real single market for capital, goods, services and jobs.

(a) + (b) are IMO the best if not only decisive solution to Eurozone systemic problems. They are rather straight-forward but require realtalk to their eleectorates by the leaders of the states that will choose to participate.

53 years after the start of the EEC, the time for real union in Europe has come. It is as simple as that. With anything from 26 to 15 member states.

Systemics and prospects of the WTO and of a USA, EU, Russia, Canada merger!

"Doha Trade Deal Seems Likely" reports the Wall Street Journal on May 31. 2011 (must read, here).

Whether the Doha lite, or in my opinion "extra lite" agenda is agreed upon by the end of the year, or even a "zero" one (ie no deal, end of the round that started in November 2001 in Doha) I do agree with the view that the era of progress in trade multilateralism is probably over.

As I have pointed out in my posts that one can find on this blog, after the 2003 failed Cancun meeting of the WTO, many bilateral and regional trade (or more than just trade) agreements have popped up.

A few days ago (25/5), I posted on what systemics I can see developing post Doha. IMO China, India, the US, the EU (mainly) plus Japan, Russia and Brazil or UNASUR (South America's "EU" project that of course includes Brazil) will be the main "players" in the world economic "arena".

The WTO rules as they stood before the Doha Round of talks in 2001 will probably still exist (although the survival of the WTO is not a given IMO) plus whatever rules come out of the Doha lite agenda that some seem to hope to be concluded (I have my doubts, read the WSJ article for some of the reasons, aka USA, plus. as far as I know, the US Pres has no fast track powers given by Congress on concluding a deal, and if that is indeed so, it is possible that the US Congress may decide to amend (!!) any deal, thus bringing a new deal back to the WTO, etc).

Conclusions

1) Most progress in rules or deals will most likely between 2 or more of the above 4+3 main players.

2) The EU, the US, and the other main players will continue to conclude (or at least try to, see US) bilateral deals with others, in some cases group agreements, regional or not.

3) The EU needs to strengthen its position and a political union of the EU is the main such way.

More:

Here comes some thinking that some may consider sci-fi, but we shall see:

I was involved in a most interesting discussion on Twitter (aka "tweetscussion") with a very esteemed fellow tweeter, @paulstpancras) on the night of May 29 to May 30. At some point, talking of the EU, political union potential, the UK POV, I said: "Or maybe UK would be OK with EU if merged with (the) USA; 77+ states. Then (UK) could ally with Texas, Arizona, etc! :)".

"Or a circumpolar space... USA, Canada, EU, Russia ..." proposed my fellow tweeter, which was exactly what I was also thinking as another potential scenario.

Why, because in addition to covering a ring around the planet, this union would have a population size that starts to approach that of China (1.3 billion) and India (1.2 billion):

USA+CAN+EU+Russia = 0.3 + 0.03 + 0.5 + 0.14 = 0.97 billion people.

In terms of GDP (nominal (in trillion USD) 2010 estimates (Source: CIA, World Factbook)) the picture would then be:

European Union 15.9 + United States 14.6 + Canada 1.6 + Russia 1.5 = 33.6

China 5.7
India 1.4

There is an obvious imbalance between the 33.6 and China's and India's GDP but with their rapid growth the potential for more GDP balance between the three exists.

There is another reason why a USA+EU merger would have to bring in Russia too. Russia would get very itchy if the US and EU were to merge, and including it could fix that. Canada has only 30+ million inhabitants but huge natural resources.

So while one scenario is EU+USA+Russia+Canada, another is EU+USA+Russia with almost the same population as the former, 0.94 billion and 32.0 instead of 33.6 2010 trillion USD.

But is a EU+US merger scenario even a remote possibility? Well, yes and no. 2-3 years ago, when I think the US proposed a free trade deal, some in the European Parliament said, why not a "single market". Well, IMO a single market, even without a common currency, needs single laws, which brings things, again IMO, towards a single legislature, ie political union. IMO the US+EU potential will largely depend on developments in/with China.

But what about the rest of the world? Well, China+India+EU+USA+Russia = almost 3.5 billion people. That leaves out 3.4 billion people (of the 6.9 billion total in 2010). Note: Only 11 countries have population size over 100 million but there are many countries, more than 200 in the world (planet).

Since world GDP was estimated at 62.2 trillion USD in 2010, the result of this scenario would be:

EU+USA+Russia: 32.0

China 5.7

India 1.4

Rest of the world: 23.1

including in that 23.1:

Japan 5.4

Brazil 2.0
Canada 1.6
Australia 1.2
Mexico 1.0

Such a merger could prompt other countries to merge in groups, eg Japan, ASEAN & rest of Asia (with or without some of the ex-USSR states) plus Oceania, Africa, South and Central America. The world would not become a global polity, but a small number of super-countries/states (regionalisation+). Global trade talks would bring to a table reps of 4 to 6 such super-states. Not all of the world's countries would want or be included of course (and why should they, there should be room for exceptions and other approaches).

But in any case, in the complicated and perpetually changing world after 10% of the 21st century has elapsed, and the rapid growth, economic and in "power" of the BRICs as well as other developing countries, the EU has to be a single polity, it cannot continue to be a loose group of 27 countries. EU political union is a must, for the EU to be taken seriously by the rest of the world (see eg recent issues re selection of new IMF chief, the issue of a UN Security Council seat for the EU, the marginal role played by the EU as opposed to the US and China in the Copenhagen COP 15+, etc).

EU Dynamics: 19.5 years after (the mistake in) Maastricht!

It was roughly 19.5 years ago when the leaders of the then EC12 met at an Intergovermental Conference (aka IGC) to agree on a new EU Treaty, the Treaty of Maastricht (signed in early 1992).

It was then that the Economic & Monetary Union project was decided and the relevant Treaty articles drawn. It was there and then that "The Mistake" occurred:

A currency union was decided without the foundation of a political union. The leaders of the 12 reshuffled the 3 ECs into one and called it European Union but without the essence, ie the political union (united Polity) the name implies.

Some 40 years after the defeat of the European Defense Community in a French General Assembly vote and the later (alternative) creation of the EEC and the Euratom, European leadership still lacked the will to announce the end goal of the European project: Political Union.

The effort to bring, European countries closer politically via the EEC ie via trade/biz/economics (the common and then (1993-....) single market) was successful, but it seems, at least now, that it had then, in 1991, reached its limits, as a method.

Instead of establishing a Economic & Monetary Union (EMU, the Economic was later kinda forgotten) as a way of preparing the way for Political Union later (how much later one can ask, 19.5 years later), Political Union (with or without EMU) should have been established.

Why?

Because maybe there is a reason why the intellectual works of Ancient Athenians and other Ancient Greeks, that shaped much of Western civilisation, were mainly philosophical and political. I am not aware of any economic or financial theories made in Ancient Greece. That is because politics (in the positive sense of the term) and Democracy, despite what many (including GW Bush,, but that is another story) thought, come before, way before, economics and "Agorocracy".

That "Mistake", made at the Maastricht IGC, seems to have come (back?) to haunt the EU (which has grown from 12 to 27) like a bad dream (a nightmare, called "ephialtes" in Ancient & Modern Greek)

For many decades, the Asian Mercantile Startegy (by Japan, then the Tigers, then China) and the US Dollar Reserve Currency Strategy (by the US) have dominated the "game" (see Gordon T. Long's excellent analysis here). EUrope self-confined itself to an "observer status" it seems, and now to a role not very different than that of Ifigenie (or is that part reserved for one of its members?).

Finance is "all Greek" to many people around the world who have been watching, listening to and reading the current affairs global reality show of the last few years, originally Crisis: NY. then the spin-off series (2009-...) Crisis: Euroland .

Unlike Bill Clinton's, this epoch calls for "It's the Polity, stupid". Better late than never, the EU needs its one (federal) Polity foundation. For the common currency and the rest of the policies to be based on. The walls that will save Europe are not literal (ie ones that keep immigrants out) but as in the case of Salamis, a metaphor, and in this case Political: Political Unity. That (political unity) which if the Ancient Greek city-states had established between them, the History of the last 2500 years would have been quite different.

Can the EU Europeans (named after a daughter of Zeus, Europe), especially those of the Eurozone or the Europlus, absorbed by their national affairs and "interests", afford to say that the above is "all Greek" to them?

If they do say so, then they better start learning Chinese, the future official language of a dysfunctional Europe.

The battle between Global Fin-Agorocracy and European Democracy is being fought at New Thermopylae. Beware of any modern Ephialtes, btw.

The EEC was never (mainly) about economics

The debates, discussions, analyses, even headlines on EU affairs in recent years seem to hav lost sight of the fact that the EEC, although titled "European Economic Community" was not set up in the mid-late 50s for primarily economic reasons!

Following the narrow defeat (264-319) in the 1954 French National Assembly of the proposal for a European Defense Community, the deliberations which were under way for a European Political Community were also scrapped. Instead, the EEC and the Eurupean Atomic Energy Community were created, while the European Carbon and Steel Community had already been estabished in 1951.

As an alternative to formation of the EDC and the EPC, the EEC as well as the other 2 communities had as their main foundation political and security matters.

First was to avoid another war in Europe, world or European. France and Germany, plus the Benelux 3 and Italy were the fonding members. The common market was seen as a more gradual means of bring the countries of Europe together and that had and has a concrete political foundation. A common market was the means but not the end. The end was, by design, a gradual evolution towards the initial goals of European Political and Defense Union.

Many of the 21 other countries that joined the EEC (or EU after the Maastricht Treaty) did so, overtly or implictly, for secueity purposes.

Eg Greece joined in 1981 and was eager to also join the Euro for primarily security purposes (known by everyone, no need to mention re which other country), the same reasons that have made it overspend in defense (eg No 1 in the EU and No. 22 in the world in pe capita defense spending in 2006, source: CIA World Factbook).

I could mention the specific scurity concerns of other memebers that drove them to the EEC or the EU but it is always a touchy subject. So touchy that most like to pretend that a common market or customs union was the objective behind the vast undertaking that started in the 1950s.

Which brings us to 2011 and the Euro crisis. Which of course is not due to the deficits and debt of an economy that is less than 2.64% of the Eurozone's GDP and its debt is 4% of the total Eurozone debt! If a "structure" or "system" (forgive my lingo, due to the decision science part of my educational background) can be de-stabilised by such a factor, then of course there is something wrong with the system.

What is fundamentally wrong/faulty with the Eurozone system?

The main fault, which actually is for many, the elephant in the room, ie the one they choose to ignore or push under the carpet, is that the single currency was created, based on the Maastricht EU Treaty (1991/1992) without the foundation of a single polity, ie without the prior or concurrent establishment of poitical union, the actual European goal since the early 50s! Talk about denial!

Had the leaders who gathered for the Intergovernmental Conference (IGC) in Maastrict in December 1991 the collective guts to decide on a political union instead of merging the 3 communities into an EU with 3 pilars, etc, and a common currency, and merely renaming the thing "Union", then the singe currency would have been built on solid ground.

They did not. Not too late though, not yet!

Read also my post: The EU's No. 1 problem is .....

Key factors of "strength" in "post Doha" (and post WTO?) world systemics

The combination of population size & GDP (not per capita) are key factors of "strength" in "post Doha" world systemics.

What do I mean?

1) The WTO and its 180 some members have failed to reach an agreement on the "Doha Round" for almost 10 years now. While that does not mean that the existing WTO rules are not in force and that they provide for some kind of multilateral "free-ish" trade (ie with many fewer quotas & tariffs than when the GATT started post WWII), it does call into question the whole WTO/multilateral system.

2) After all, in the last few years, because of the failure of WTO to reach agreement in Cancun & Hong Kong, many bilateral and "group" (usually regional) trade agreements have sprung up as a hedging mechanism. Eg in South America, UNASUR has been gaining ground. Brazil, India & South Africa signed an agreement a few years ago. Many ASEAN members have signed an agreement with China. The TransPacific Partnership is evolving. Africa was developing its own union (although it is nor clear how events in North Africa in recent months will affect it).

3) The US and the EU have signed many on the bilateral ones (although the US had trouble signing anything trade related while the House was in Democrats' hands).

4) The G7 then G8 has now been sort of taken over by a G20.

With multilateral "globalisation" in shaky grounds, a system of sub-global entities have been evolving.

In my systemics and dynamics based POV, the following new "geography" is evolving, in terms of its major participants:

EU, USA, China, India, Brazil or UNASUR, Japan, Russia, ASEAN

Some see the BRICs (Brazil, Russia, India, China) as a group. But IMO they do maintain their own POVs.

On the other hand, countries like the UK (a member of the EU, at least for now), seems to favour a more "free agent" approach compared to the other EU members (especially with Cameron as PM).

With NAFTA not much of a success, where does that leave Canada & Mexico?
Canada is a traditional member of the G8 and now of the G20, but with some 30 milion population, where does a country like Canada fit in the new global geography?

But let's go back to my theory that a combination of population size & GDP (not per capita) are key factors of "strength" in "post Doha" world systemics and have a look at the top rankings in terms of these two parameters:

A) Population (out of 6.9 billion total)
Note: Only 11 countries have population of over 100 million

China 1.34
India 1.21
USA 0.31
Indonesia 0.24
Brazil 0.19
Pakistan 0.17
Nigeria 0.16
Bangladesh 0.15
Russia 0.14
Japan 0.13
Mexico 0.11

Note: No EU member country has population over 100 million.
3 of the 11 are in the Americas (2 of which from North America and NAFTA)
6 of the 11 are in Asia (7 if one counts Russia)
1 of 11 in Africa

The EU, with 0.5 ranks 3rd, after China & India and well above the US. Even the Eurozone, at 0.33 has a larger population than the US!


B) GDP nominal (in trillion USD) 2010 estimates (Source: CIA, World Factbook)

World 62.2
1 United States 14.6
2 China 5.7
3 Japan 5.4
4 Germany 3.3
5 France 2.6
6 UK 2.3
7 Italy 2.0
8 Brazil 2.0
9 Canada 1.6
10 Russia 1.5
11 India 1.4
12 Spain 1.4
13 Australia 1.2
14 Mexico 1.0

If one does not count individual EU members (in this case the 5 richest ( and largest in population) but only the EU as a whole, then the geography becomes:
(World 62.2)

1 European Union 15.9
2 United States 14.6
3 China 5.7
4 Japan 5.4
5 Brazil 2.0
6 Canada 1.6
7 Russia 1.5
8 India 1.4
9 Australia 1.2
10 Mexico 1.0

Population and GDP are 2 key parameters but of course other parameters play a role. Eg export (trade balance or current accounts power).

Notes:

1) Canada (1.6 trillion USD) has GDP power but (in spite its size in surface), its population size is a key handicap in being considered, on its own, a major participant in the post Doha geography. Mexico (1.0 trillion USD) and 0.11 billion inhabitants, is a candidate, albeit marginal, for the "premier league". It is thus ufortunate that NAFTA is not working that well and the potential for a North American Union (the equivalent of the EU for NAFTA) is bleak. But the US may soon find that its population may put it at No. 4 in the world, behind China, India and the EU and its GDP at No. 2 but it its way behind in the population parameter and that a USA+Canada+Mexico entity would have 0.45 bilion inhabitants and put its 1.3 trillion USD above the EU in GDP at No. 1.

2) In effect the EU, China, India and the US are the "big teams" in the above premier league that is based mostly on GDP and population.

3) The above analysis shows why a real European Union (ie united politically and with a real internal market) is an urgent need.

Time of EUropean political and opinion leaders to speak out! Some are!

Some have started to do so.

Eg. Michel Barnier (Berlin, May 9)

Another voice, yesterday, 13 May, in an interview with EurActiv, of Josep Borrell:

"EU leaders played poker with euro and lost, says Borrell"

A truly must read interview, kudos to Mr. Borrell and EurActiv!

One brief excerpt (merely one of the key statements made by Mr. Borrell):

"Borrell is clear: EU leaders have blatantly failed to make the case for a stronger Europe & continue to cultivate the myths of independence"

My comments:

I have written many tweets and posts (eg "The EU's No. 1 problem is ..", "Time to talk about the sovereignty of Europe from China, USA, Russia, et al", "Some thoughts re Independence and Sovereigny in 2010+ (on the occasion of July 4)", "More thoughts on "national sovereignty"", there are a total of 18 posts in this blog with the keyword "sovereignty") with a similar tone and emphasis. But I am merely a policy analyst. Political and opinion "leaders" must do the speaking out, all over EUrope and beyond.

Sovereignty and independence - near self-reliance in energy, investment, staple foods and other basic elements that define sovereignty and independence in 2011 terms, given the systemics and dynamics of our era, can only be achieved at continent level in Europe.

The EU's No. 1 problem is .....

On this Europe (or EU (or EUrope, I prefer "EUrope" actually)) day, May 9, 2011, I am re-iterating what I have for years considered as the EU's No. 1 problem. Here is my syllogism:

The European Communities/Union have for some 54 years now been an on-going building project. Like a road that is being continuously upgraded.

The problem with such a road is that there is always construction going on and that disrupts traffic and confuses (and irritates) the drivers.

Well, by analogy, that is the reason why the ECs/EU have never been a very popular "project".

Does that mean that the ECs/EU should have abandoned their target of ever closer Union? Should they have remained a mere "customs union" or "common market" (not even a "single" one)? Or stopped after 1.1.1993 (the start of the Single Market)? Or after 1.1.2002 (the intro of the Euro notes and coins)?

No! On the contrary!

In spite of what some think (and even more claim) the ECs were from the date of their conception a "project" that aimed at political union, "a sort of United States of Europe" (as a well known British political figure is supposed to have said (after WWII) that Europe needed).

Thus, the problem with the EU is that this "end" (goal) has been too slow in being reached. And the on-going (but painfully slow) upgrading of the ECs/EU, day in day out, has been a disruptive element in the lives of the ECs/EU's firms (especially the SMEs and micros) and citizens.

At the end of the day, we (EUropeans) all know (both those who we like it and those who do not) that the ultimate goal is a United States or Federal Republic of Europe (ie something like the USA or the FR of Germany). But most national level politicians, for reasons that are more or less known, have and been still are afraid to announce officially to their citizens/voters/populous what they/we already all know.

A USE/FRE government with a PM, a cabinet, based on the seats of political parties in the USE/FRE Federal Parliament, with an FRE Upper House or USE Senate that consists of the elected PMs of the member states (German model) or 2 reps per member state (elected), the Euro, a USE/FRE army, a USE/FRE IRS (tax authorities), federal minimum wage (USA has one too), federal police and of course federal laws. Plus a federal budget financed not by X or Y "rich" state but the rich and high income earners from all over the USE/FRE! A USE/FRE that is a major "player" in global affairs of all kinds. With a foreign Minister (Secretary of State) who has as many powers as Hilary Clinton does in the (first) Obama administration! Maybe even a USE/FRE President, probably with a mostly decorative/ambassador role (ie not US or French style, sorry Arnold)!

Come on, that is more of less, what we (500 million EUropeans, at present) know that the final state of the ECs/EU is going to be! Some want that, some do not. Maybe that is a matter for an EU-wide referendum to decide.

But what almost no EU citizen likes/wants, I argue, is the perpetual upgrading of the entity, like a road, that makes our lives difficult with all those work signs, bulldozers, workmen, etc!

Enough is enough though!

Get on with it. Finish this European Integration "project", finally!

Get it done.

Stop the lame concerns re political costs and announce what we anyway know that the end result is going to be: United States or Federal Republic of Europe. Give us all the details of the final "product" and set a precise and fixed deadline to get there, ASAP. Give us a chance to say Yes or No and when we probably say Yes, even by 51-49 margin. do it, just do it. So that we can experience that final product. Live, work, venture, employ, plan, dream, career, export, etc in it!

Just do it! Until you do, that's the main problem of the EU, the Euro, all things EUropean!

It this a Catch 22? Nope.

A Gordian Knot? Neither!

No need for the determination of an Alexander the Great to do it. Merely a matter of enough political and other leaders (eg opinion leaders) having the guts to announce to us what we all more or less know is coming but do not know when (while we suffer the daily upgrades).

I personally think that until January 2013 at the latest you will make the announcement.

PS. Does that mean no more new members? IMO no, the possibility to expand the project geographically with new members is not the real problem. The wider vs deeper dilemma, discussed before the 2004 enlargement, is a pseudo one, although some (eg the UK government) did manage to materialise part of that pseudo dilemma into reality! But that's another post.