Rethinking Europe’s global strategy

by Giancarlo Elia Valori, Honorable de l’Académie des Sciences de l’Institut de France

Europe is showing many negative things to the global strategic players: firstly that it is put under crisis by the long-standing and well-known problem of the Greek default, which had to be solved at least three years ago – and it was easy at that time.
 I assume that the fact that 2% of the EU GDP  undermines the rest will make the global large financial companies – and certainly the Unites States – laugh and will certainly make the eyebrow of the Chinese global finance leaders raise.

 Hence a whole peninsula – namely the Eurasian peninsula – is clearly showing to those who can understand it that it is weak and it is preparing – a bit at the time – to offer itself to the highest bidder.

The latter, however, will not materialize and there will only be the classic relationship between hunter and prey – well described by the ethologist Konrad Lorenz.

 If we are not good at solving the problems of our 2% of EU GDP, how do we think we can believe to be  impervious to the future asymmetric shocks – far greater than in the past –  or that other EU Member States, also floundering into a crisis, do not want to leave the Euro and therefore fall prey to the big geofinance?
 If we are not even able to understand how and to what extent there is a linkage between the Greek crisis and the perviousness – at a critical stage – of our  NATO borders in the Eastern Mediterranean, in a context in which, once chased away the Greek “bad money”, China, Russia and Israel will come to the fore to take over the Greek area, then really the accountants’ dangerous Chekhovian mindset  will put Europe’ strategic set-up under crisis.

We must wonder, however, what Europe is, today, in a perspective of ten-year forecasts of equilibria and their primary determiners.

Like Germany before its unification, the European Union is a political dwarf and an economic giant.
With a view to functioning well and making headways, the opposite should occur.

Mary_Poppins4The line of the Maastricht Treaty of January 1992 was, and still is, the line of financial strictness  through which capital for growth is generated. Here the banker George Banks of the famous musical fantasy movie Mary Poppins comes to our mind – the dad who made his child dream by showing her how a tuppence could be multiplied, by dint of compound interest, up to becoming a huge amount of money.
Capital can be generated by attracting it and as early as 1992 globalization Number One, namely the globalization of Finance, could be helpful in this regard.
 Before that globalization, the globalization of unlawful finance had taken place – the basis and tool of the world circulation of the so-called “white” capital. .

Gerhard_Schröder_(cropped)Basically, thanks to the reforms implemented during Prime Minister Schroeder’s era, Germany moved
forward focusing on employment and, as early as 1997, it reduced corporate taxes, while wages decreased more than the wages in its EU competitors-allies. In those years, in particular,  Germany  created a much lower net inflation than its future co-members of the Euro area, which made it unbeatable in a context of overlapping and export-driven economies such as the EU economies which were about to fall into the Euro coils.

The EU future will the future of its single currency, which was the only way to deal with the waves of the global financial markets at the time.

The Euro will hold, at first, if it becomes a credible currency in international transactions.

Currently the European Central Bank (ECB) tells us that the single European currency has grown up to 30%  as a share of global capital, with a 9% increase of the disclosures denominated in euro as against the  two years preceding this very hot summer.

The rest can be broken down as follows: 67% in US dollars and the rest in other minor currencies, with a special role still played by the Swiss Franc.

Where EU leaders believe they can go with such a small percentage of trade, which shows that not even all the transactions generated in the EU are denominated in euro?

As the Americans know all too well, it is the use of the dollar which produces the US rayonnement, with the aggravating circumstance that Washington is net debtor.
 The dollar is the real “absolute weapon” of the United States and, considering that the euro has depreciated by about 12% over two years, in Europe we should create a global EU single currency area, thus defining our European spheres of influence, and only marginally our national ones.

The EU is the pivot of Central Asia’s modernization  both geographically and economically: the continuity of the Silk Road leads the European Union to arrive in the great Eurasian plain, namely Mackinder’s Heartland.
 Hence to “dominate the world’s oceans,” as the British geopolitical expert said.

The USA have been expelled – just to use the right words – from Afghanistan in which, together with us Europeans, they have brought neither peace nor modernization.

The Islamist central area where, before the Eastern  jihad, the Greek Empire of Alexander the Great Greek and the Mauryan Empire flourished, is a reserved area for the Pakistani military and demographic potential, as opposed to the Indian nuclear power.

If this is not resolved, there will be no such great armies capable of “bringing democracy” to Afghanistan.
 With its soft power, Europe can penetrate the area, very rich in raw materials, only jointly with Pakistan and its great historical ally, namely China.

The Russian Federation will keep the areas bordering its former central republics.

Furthermore, by overcoming parochialism and regionalism, Europe can handle a new relationship with Japan, which is looking for a future of its own after a past of US guardian in the Pacific, as opposed to China which is the largest US competitor-ally at global level.

India will create its geo-economic identity as power broker of world seas – just to use again Mackinder’s terminology. It will resume its position as global broker of world trade, with a domestic production which will rapidly replace the Chinese production when China updates its supply of goods and services with a technological upgrade.

The Latin American booming economy is now a memory of the past, since it was based on “vegetable oil” with high rates and on the growth – which is now over – of the non-oil commodity prices.

It seems here we are reading again the little masterpiece written by the unforgettable Uruguayan journalist, writer and novelist Eduardo Galeano, Open Veins of Latin America.

A subcontinent which produces the raw materials that others trade in currencies other than its own.
 Regionalizing a currency means marginalizing the economy denominated in it.

The USA will never leave it to us. They have inherited it from Great Britain, as a result of the Second World War, and will not make any European country play in that courtyard, except for small operations and transactions which do not affect and change business cycles.
 The Union, which shall have a less archaic military  and strategic logic, shall think less to the economy and more to the strategy.

Hence less talk about the acquis européen, and more aggressive and rational programs to create, in the Maghreb region, an area which should not be left to itself, even from the military and strategic viewpoint.   I am thinking of a “Euro-Mediterranean Union“, hopefully with greater success than Prime Minister Sarkozy’s Union for the Mediterranean (UFM), which  remained dead letter and led to the payment of many unnecessary salaries for its employees.

The EU must not “be humble and abased”, as St. Paul advised, but it must make use of all its weight and power in areas and activities which can create the enlarged market we absolutely and urgently need.

италия-мигранты-лодка-1346131And here comes the issue of migration. Calculations are difficult to make in these unpredictable situations  with huge implications at human level, but apart from cultural, religious and humanitarian evaluations and considerations, working on the assumption that the share of immigrants remains the same, the pace at which the fiscal collapse of our Mediterranean States comes closer is 35% per year.

This means that, as things stand, if landings and the joint costs borne for ”hosting” migrants remain the current ones, the pace at which the fiscal collapse comes closer is 35% compared to the other variables not connected with mass immigration.

As George Soros said recently, it is true that with so many poor wretched people willing to accept any job the GDP tends to increase. However the health spending, as well as the social and housing costs, tend to increase even  more – all out of a credible fiscal consideration.
  Dear Soros, your passion for Karl Raimund Popper’s philosophy makes you always too optimistic.

If the “open door” policy is impracticable, particularly in countries which are already largely overpopulated as the EU Member States, the only solution is the one put forward by the British Prime Minister Cameron.

The Tory leader has proposed no welfare for European citizens for their first four years of residence in the UK; forced repatriation for foreign unemployed people; a restriction on the entry of non-EU migrants.
Obviously the EU Treaties shall be amended, but  unlike what happens in Italy, Great Britain knows that, as Mao Zedong used to say, international law – more than other sectors – is a “a helm which leads the ship where the commander wants”.

The alternative is Great Britain’s exit from the EU  a paradox considering that Great Britain is overtly alien to the rituals, myths and to the very European and pro-European mindset and way of thinking.

Nevertheless, a huge  amount of financial transactions takes place in London, which supports 34% of  British public expenditure.

Hence why should Great Britain remain – even  playing the watchdog role – in an area of no interest to it, except for some exports?

Off the record – even though with this political class there is little hope – Italy and all the other EU Member States should renegotiate the Treaties which  affect them.

Italy should reconsider many things, but above all the policy related to the protection of trademarks and agribusiness, textile and machinery products. It should ask to the Brussels’ authorities whether the EU is only a “free exchange hotel” – just to use the title of the famous play by Georges Feydeau – or a project for the Middle East and the Maghreb region, not wavering  between mad destabilization – as in Libya – and artful  and sentimental humanitarianism.

image (3)This reminds me of a dear friend and schoolfellow at the “Marco Polo” High School, Gianni De Michelis. I do not hesitate to define him as one of the best – maybe the best – Foreign Affairs Minister we have had in recent years.

While everybody knew that the East was breaking up and crumbling, Gianni invented the so-called Ottagonale (the Octagon) for relations between Italy and the Balkan countries, as well as the former  pro-Soviet East. During his six-month EU Presidency, Gianni paved the way for the single currency that he thought should be quite different from the currency which was achieved and implemented. Finally he was the Minister who properly interpreted the fall of the Berlin Wall, with all his subtle distinctions.

Indeed, we would need the imagination and strategic ability to precisely design the new Italian role within the EU “free from base flattery and from baser outrage” – just to paraphrase the verses of Manzoni’s famous poem Il Cinque Maggio.