Around this time last year, I did something that commentators are frequently advised not to do: I made predictions of how events in Europe would unfold in 2010. As a year has now passed, it is time to take a look back and briefly take stock of how those fared.
• Prediction 1) For the first year since 2005, the EU will not face a legitimacy crisis. There will be no constitutions to discuss, and no referenda results to be picked over by the press. The day to day business of Brussels will turn to unedifying ‘guns and butter’ topics. Well, I don’t know about guns. But butter, certainly. And thanks to the Icelandics, maybe fish too.
Whoops. At this point, I think I will simply give up predicting crisis-free periods for the EU. 2010 will of course be remembered as another crisis year – the ‘eurozone crisis’ – which we can add to the 2009 Lisbon crisis, the 2008 ‘Irish referendum’ crisis, the 2005 French and Dutch referenda crisis and so on. Was it a ‘legitimacy crisis’? That’s an academic point. EU crises occur with such a regularity these days we will probably have to start grading them on a Richter scale, so as to distinguish the earth-shattering from the merely wibbly-wobbly.
• There will not be a eurozone member debt default, but driven by sovereign debt concerns, the rising run of the euro, which has lasted from 2002 to date, will finally come to an end. During the coming year the single currency will break below 1.40 against the dollar, perhaps even plumbing towards its 1.20 purchasing-power-parity value.
But on the euro, at least, I can feel pretty vindicated. There wasn’t a default, but the euro did indeed plummet, and my target of 1.20 to the dollar (reached during the May crisis) almost exactly marked the bottom. What I did not forecast was that the euro would subsequently recover all the way back to 1.40, though I did highlight the long-term value of the euro in the midst of the panic, and acted accordingly. Whether the long-run positive trend against the dollar has really turned: now that is another question, to which I’ll have to return.
• As governments set about implementing austerity measures, eurozone economic governance will become more contentious. There are still no agreed upon rules to replace the defunct Stability and Growth Pact. I suspect this will lead to a smouldering conflict between the ECB (backed by Germany and the Netherlands), who wish to maintain a strong currency so as to keep building its long-term credibility as a global reserve currency, and a motley group of politicians (possibly a coalition of southern European states spearheaded by Nicolas Sarkozy) who wish to have a weaker currency and weaker fiscal rules so as to promote domestic demand and export-led growth.
Once again, I think I can say that I called this right. Conflict in the European Council over the eurozone’s economic governance has surely been the issue of 2010. What I did not perhaps entirely get right was an assessment of how the alliances would form, as instead of standing up for a more reflationary policy, France has begun to sidestep the debate, allowing Germany and the Netherlands to impose a more austere set of rules, and leave Spain and Italy without any voice to propose an alternative. Nonetheless, during the May crisis it was France which forced Germany to accept the creation of a Eurozone Financial Stability Facility, and the Financial Stability Mechanism that allow for the purchase of peripheral eurozone bonds, as Sarkozy famously slammed his fists and huffed about pulling France ‘out of the euro’ unless Merkel signed the Greek package.
• The economic tendency of the euro’s first decade, where ‘peripheral’ members (Ireland, Greece, Spain, Finland) grew rapidly and ‘core Europe’ (France, Italy, Germany) stagnated, will likewise come to an end. Consumer and corporate deleveraging, not to mention government austerity, will lead to painful year-on-year adjustment in the peripheral countries while core Europe surprises to the upside.
Again, I feel vindicated here, as it certainly wasn’t obvious in December of 2009 that Germany and France were on the verge of an economic mini-boom, with German GDP having rocketed upwards by 3.7 per cent this year. Perhaps it was more obvious that the eurozone periphery had a difficult period of adjustment ahead, though I’m not sure how many people foresaw that Greece and Ireland would still remain mired in recession. Though it isn’t much of a surprise prediction at this point, I still believe this is the beginning of a very long trend, possibly lasting a decade, in which the core eurozone continues to outperform the deflating periphery.
• When the first Council meetings are chaired by Van Rompuy next year and when Ashton starts shuttling off for mediations in Moscow or Tehran, their roles will actually be taken seriously. Currently they are written off as irrelevant. But they have not actually begun. So I suspect that by the end of 2010, journalists will at least have learnt how to pronounce ‘Van Rompuy’ correctly (and perhaps decided whether to call the new High Representative ‘Baroness’, ‘Lady’, or simply ‘Cathy’).
Alas, I may have to retract my words here, as 2010 did not allow either of the new EU roles to clearly define their purpose or function: instead, post-Lisbon Europe has clearly emerged as a Europe of nation-states, and the key personalities remain the heads of state and government, not least of all Angela Merkel and Nicolas Sarkozy. The High Representative role has remained tied down with bureaucratic legwork, like getting the approval of the European Parliament, finding offices, and making appointments, while Van Rompuy has not been as prominent a figure in the eurozone’s economic governance agenda as the Heads of State and Government, or, for that matter, Jean-Claude Trichet.
• The looming prospect of budgetary cuts across all EU member states will lead countries to take defence cooperation more seriously — if only as a means of ‘doing more’ (or rather, the same) ‘with less’.
Defence cooperation, however, has indeed been a breakthrough trend of 2010. Its most prominent instance has been the decision of the British and French governments to share their nuclear capacity, aircraft carriers, and start a joint expeditionary force. The deal agreed between Mr. Cameron and M. Sarkozy last month surprised many: but not myself, driven as it was less by a commitment to the European ideal than a desire to cut public spending. A separate proposal, reached between Germany and Sweden a month later, may lead to a similar deal next year, and be the first of several such treaties between EU member countries. The only question now is whether such bilateral negotiations will be superseded by any EU-wide collaborative ventures, which seems unlikely as long as they remain blocked by the British.
• EU integration in the western Balkans may make a surprise breakthrough after years of stasis. Macedonia, Serbia and Croatia will all be on track for eventual EU entry, leading to hopes the whole region may eventually follow suit.
We didn’t see either a starting date for accession negotiations for Macedonia, or an entry treaty for Croatia, as I had expected – though on the plus side Montenegro was last week granted candidate status. Also, visa-free travel was finally granted to residents of the entire western Balkan region (with the exception of Kosovo) as from this month Albanians and Bosnians can travel freely throughout the Schengen zone – a development that may be of little note to existing EU citizens, but that will transform the lives of those stuck in Europe’s “forgotten” southeast.
• Europe will be ‘on track’ for a transcontinental high-speed rail network. With the completion of the Italian and the Spanish high-speed networks, only two remaining links (Turin-Lyon and Barcelona-Montpellier, both expected sometime in the next decade, though construction at least may begin 2010) stand in the way of a full north-south network running from Madrid to London, and back down again from Amsterdam to Naples.
This wasn’t much of a prediction for 2010, as much as a general outlook for the future, as none of the lines I mentioned were meant to be complete by now. Some new developments include the start of high speed trains direct from London to Germany, a faster connection to Amsterdam, and the completion of the first ‘arcs’ of the Eastern network, including Helsinki-St-Petersburg, opened this month. Ground has also been broken on the Lisbon-Madrid line, which will eventually connect through to Paris, London and Brussels.
• Finally, Brussels had better enjoy the ‘business-as-usual’ atmosphere while it lasts. The most likely origin of the next institutional crisis, which I predict not for 2010 but shortly thereafter: the UK, where an incoming Conservative government this May will be torn between moderates who wish to remain members of the EU and sceptics who are firmly set on the exit door. These divisions will remain hidden as long as the new government’s honeymoon lasts, but break out not long afterwards – in particular when it becomes clear that à la carte membership is not on the menu. Those who doubt this need only recall the cantankerous atmosphere of the mid-1990s — and this time British public opinion is far more hostile than then.
Well, here I think I was utterly wrong. The surprise of a coalition government in the UK, with the ‘Tory Wet’ (sorry, Liberal Democrat) Mr. Clegg joining the rather dry Mr Cameron in government has taken the edge away from traditional British euroscepticism, and instead produced a government that prefers to kick the Europe issue as far as possible down the line. Still, my original prediction was ‘not for 2010 but shortly thereafter’, and I suspect that it may still be right, as some of the coalition fissures continue to fizzle under the surface.
I am currently considering whether to revisit this foolish enterprise again for the coming year. In the meantime, what predictions would you have for 2011? Feel free to post your ideas below.
#1 by Marcel on December 26, 2010 - 5:17 pm
I have some predictions, but some of them are more wishful thinking and there is little chance of them coming true, there always is hope yet.
1. the Euro currency has been firmly exposed and discredited as the empty shell that it is. The peoples of countries such as Netherlands, Germany and dare I say a few others now experience firsthand that they did NOT benefit from it at all. Only the elites ever did. Encouragingly, opinion polls show more and more doubters coming over to the ‘restore our old currency’ or ‘establish a Northern euro’ idea. All we need now is a political party that will embrace this idea. Note to the German SPD: say you will take Germany out of the Euro = an election winning idea.
My prediction for 2011 regarding the Euro is that we will see further progress to our ideals to break up the Eurozone, though the breakup itself will not happen in 2011. We do not want to pay or give guarantees to Greece, Ireland or any other country.
I do not underestimate our ‘leaders’ psycological commitment to the euro, as they seem to be willing to destroy more and more of our wealth in order to prop it up.
2. I think 2011 will see some ‘lone gunman’ somewhere gun down a banker or a pro-corporate and anti-popular politician. Do not be surprised if someone will take action against some EU-ite as we the people are increasingly frustrated that the politicians simply do not listen and keep furthering their undemocratic ideal of a neo-feudalist rule in Europe without democracy. Remember, the EU is effectively born out of the reactionary Congress of Vienna, albeit indirectly.
I hope this prediction will not come true.
3. The undemocratic EU will continue to lambast others (like Belarus, Sudan, Ivory Coast) for ‘lack of democracy’ or call for them to ‘represent democracy’ and in effect make utter fools out of themselves. Whilst all the way denying us referendums and not listening to the majority which doesn’t want more political integration.
This isn’t really a prediction but it is self evident. They just cannot help themselves.
4. increasingly the people will reject politicians rambling on about how wonderful islam is and see it for the malign ideology that it always has been.
5. my final prediction is that the EU and its acolytes will make a desperate grab for total power to establish their dream (and peoples nightmare) politically integrated union, all under the guise of ‘necessity’. Do not be surprised if they try to change or ignore EU treaties (bailout fund = ignoring treaties). Espacially rat Sarkozy has to be watched.
#2 by dcm on December 27, 2010 - 1:23 am
How about “For the first year since 2005, the EU will not face a legitimacy crisis”? There is a really unconventional prediction for you. One of these years it has to be true, so who knows maybe 2011 is going to be the year…
Else I don’t know. What about i) Turkey withdraws its EU application and starts its own regional entity, ii) Angela Merkel is revealed as the mystery guest at Berlusconi’s Sardinia villa or iii) Carla Bruni leaves ‘loser’ Sarkozy to start a new life with muscleman Vladimir ‘Vlad’ Putin. Now that would be a year to remember.
#3 by Pedro on December 27, 2010 - 2:35 am
DCM!
Right on! LoL!
*And maybe, in 2011, the Europhobic trolls will come to the realisation that the European Union is here to stay!
#4 by Marcel on December 27, 2010 - 3:53 pm
Hey Pedro, the word Europhobic, is that similar to naziphobic?
Why do you hate democracy so much?
#5 by Erik on December 27, 2010 - 4:52 pm
Why do people continue to complain the EU is not democratic? The EP is elected. The heads of states who meet are elected. They agree to the composition of the EC. So what is not democratic about it? You want more democracy? In that case most EU states can learn a lot from Switzerland. We then really need to switch to having much more referenda. But when applying the Swiss model as the standard for democracy, nations such as the UK are also not a democracy.
#6 by Pedro on December 27, 2010 - 8:40 pm
“Hate”…such a strong word. Some people ‘throw it’ around as if it has benign connotations. I appreciate democracy, peace, cooperation, goodwill, unity, diversity, prosperity. I appreciate everything that the European Union stands for: “In Varietate Concordia”
I am not a xenophobe, an isolationist, a democracy loathing monarchist (an insular, arrogant isolationist), I am over the second world war, and I appreciate Germany for what it is today (I’m not stuck in the 1930′s and/or 40′s).
A very happy and prosperous 2011 to all in Portugal, Germany, the Republic of Ireland, and all in the ‘continental’ European Union!
P.S, Estonia, welcome to the Euro!
#7 by Diarmaid on December 28, 2010 - 2:42 pm
I always have to laugh at the ridiculous comments of people like Marcel.
You obviously have no sense of unity with anyone outside your little platz Marcel.. The idea of European unity is a cornerstone for a unified humanity.. Which is a major milestone in our development of a species..
If you can’t see that the world economy is flipping as it has done for hundreds of years, then instead of blaming the EURO for your problems, you should educate yourself in matters that surpass your through process..
_____
However, I do admit there is a deficit of democracy in the EU, it amounts to about 5% maximum.. But who’s government doesn’t have such a deficit? Noones!
And this deficit gets smaller every year.. Not one European nation can say that their country developed through a peaceful democratic process.. Except those who in the future may have a ‘Europe’ to call a country. So therefore, if you are an EU member, do don’t be a hypocrite.
_____
While it definitely is not perfect, the EU is the best future this continent has and its collapse/collapse of the EURO would be devastating for us, not to mention the World.. So instead of being an antagonistic child, why don’t you use the Rights you have and attempt to iron out the issues you have with the EU and angle it in the direction you want…
Instead of bitching about it like a wannabee doomsdayer and calling for its collapse: And only for the obvious reasons that you clearly don’t understand that there is a future we need to work towards.
#8 by Betterworld Now on December 29, 2010 - 12:59 am
After the near collapse of the Euro on international markets in August 2011 (due in large part to German procrastination over the referrendum demanded by the EU Comission), the German government will be given an ultimatum: back the Euro or get out of the Euro club. By December.
#9 by mike turner on December 29, 2010 - 11:30 am
I am a great believer in a united and co-operative Europe, since the age of 12. Unfortunately it will not happen under the current system. Far too much emphasis is placed on central control – the USSR failed because of this. True democracy is lacking and the eurocrats are given far too much power and lack of acountability. Brussels is a hive of self interest and nest feathering.
Even the word “eurosceptic” is a deliberately divisive insult invented by the French civil servants in a vain attempt to “shame” opponents to the rampant bureaucracy. Europe will be forced eventually to unite in order to survive a changing world, even under religious pressures, but the current system is delaying that day.
#10 by daniel on December 29, 2010 - 2:37 pm
You failed to predict the winner of the world cup. ha! So much for your insight into events to come
#11 by Betterworld Now on December 29, 2010 - 4:39 pm
I see Moodys are making similar predictions to mine:
http://www.independent.co.uk/news/business/news/austerity-may-not-be-enough-to-save-the-eus-weakest-links-2171096.html
The difference is that they just haven’t worked out the downstream political implications of their financial predictions. If the German constitutional courts rule out German support for peripheral Euroland economies (almost certain), the only solution to the developing peripheral crisis will involve a referrendum in Germany to remove that blockage and allow the ECB to finally take charge of the Euro crisis.
The peripherals may even form a club to hold a gun to the heads of the German chancellor: bail out or get out. The only other option is a capital flight away from the Euro and a plummet in its value with consequent political upheaval in Germany. The peripherals have the power to pull the Euro down to (at least) their level and no constitutional provision can stop them.
#12 by Deepak Chauhan on December 30, 2010 - 4:48 am
I am not a xenophobe, an isolationist, a democracy loathing monarchist (an insular, arrogant isolationist), I am over the second world war, and I appreciate Germany for what it is today (I’m not stuck in the 1930′s and/or 40′s).
#13 by Deepak Chauhan on December 30, 2010 - 1:47 pm
Europe will be forced eventually to unite in order to survive a changing world, even under religious pressures, but the current system is delaying that day.
#14 by eslaporte on December 30, 2010 - 10:21 pm
I predict that the European Union – and its Member States – will eventually have to make a choice continue to cling to the old Cold War, American hegemonic order of “transatlantic relations” – or strive to be on its own, represent its own values, norms and standards – which often conflict with US values, norms and standards. Being on its own the EU will, no doubt, have interests that conflict with the US on issues, such as Middle East peace, security and terrorism, war v. diplomacy — and this conflict with between the EU and US should be regarded as OK – or normal for an independent EU.
Conflict between the EU and US is OK, you know!
Currently – the EU continues follow the US without question of values and human rights. This can be seen through the diminishing of human rights standards in the EU in the aftermath of the CIA renditions – and other “war on terrorism” policies of the US-EU “partnership.”
The EU will face this choice … and we should hope it chooses independence from the Cold War subservient “transatlantic relations” that chain the EU down to selfish US interests and prevents a truly independent European foreign policy of human rights, peace and diplomacy.
However – the EU could have an crisis of legitimacy so as long as the radical right, like Wilders in the Netherlands, continue to be get legitimacy and credibility by allowing hate groups as “political parties.” In modern Europe – people’s human rights, especially of minorities, should not be threatened on election day and at the mercy of election outcome.
If Geert Wilders gets to be minister-president and the PVV the largest political party in the Netherlands – the EU will have a full blown security crisis that could be a fatal blow to its legitimacy.
I also predict that the Netherlands will slip into even more of a basketcase than it is now, and we will see even more insane insane silliness out the so-called “anti-Islam” extremist actors.
This insane silliness will be culminated in the Defenders Tulip being award someday to an obscure “human rights’ defender” that “stood up to Muslim aggression.”
Never underestimate the insane silliness of the Dutch these days…
#15 by Hoover on December 31, 2010 - 10:06 am
Erik asks “Why do people continue to complain the EU is not democratic?” and points out that the EP and Council are elected.
Well, Erik, my local Women’s Institute also has an elected committee, but that doesn’t make the EU democratic.
Firstly, the European Parliament cannot initiate law. That’s a major disability. The peoples’ representatives are unable to propose then pass the laws the people want.
Secondly, turnout at elections has been falling. So the legitimacy of anything the Parliament does and says has been shrinking. It might be true that this is the peoples’ fault for not voting, but accusations won’t change the reality that EP decisions lack formal popular backing.
Thirdly, the quantity of delegated legislation and the EU’s decision-making style means a deficit in transparency and accountability. Comitology is just the elites agreeing measures in secret while excluding the people. The dozens of quangos such as the European Health Agency are unaccountable.
Fourthly, the centralisation of power creates a gulf between the people and their servants. When Commission technocrats ponder the wording of the latest environmental legislation, they have no idea what ordinary people think of it. Sure, they have the odd Eurobarometer poll and consultation to look at, but consultations are invariably dominated by industry interests such as businesses and trade associations. The effect is to isolate technocrats entirely from their masters.
Centralisation is a great evil.
Finally, the institutions generally dislike democracy and will do their best to avoid it. So a year after Lisbon, we see them still dragging their feet on the European Citizen’s Initiative which would begin the process of referendums on measures requested by the citizenry. The institutions talk about transparency, and do little about it. A series of opinion polls shows consistent popular support for a measure such as CAP reform, and the technocrats ignore it.
Not to mention getting no votes in France and Holland, then just changing the name of the constitution to the Lisbon Treaty and forcing it through regardless.
In short, the European Parliament may be elected, but that doesn’t mean the EU is democratic.
#16 by Marcel on December 31, 2010 - 3:44 pm
I see the usual Europhile rubbish is being posted again, as in ‘those who oppose EU are against the future’ and ‘we must unite to face the big bad outside world’.
Diarmaid is espousing the typical EU-phile arrogance as in ‘those who disagree with the grand plan are nazis/idiots etc…’. It is the typical condescending attitude of the pro EU crowd.
People like Diarmaid seem to miss that the trend is going to reverse, increasingly things will be decentralized (20th century lesson: centralization is NOT good) and the EU is not needed at all. Diarmaid wants ever more CENTRALIZATION.
The #1 argument against EU is that it is undemocratic, but also it is reactionary as it is the ‘solution’ to the problems of 50 years ago. International cooperation does NOT need supranational enforcement. And another major problem, EU elites want ‘more EU’ as an end in itself, not a means to an end.
And finally, lets destroy the lie that cooperation, trade, international friendship etc are not possible without EU. In fact, we’d be better off without EU (though EU phile politicians would not be).
And as for countries forcing Germany out if Germany refuses to hand over more money: fat chance. No Germany = no euro.
Who else is gonna pay so corrupt countries like Greece can profiteer? The net recipients do not have any bargaining strenght at all. And why should Germany cut more benefits to its own people just so corrupt Greeks and Italians can have more? What the EU elites forget is that the ordinary people haven’t benefitted at all. Why would they agree with more transfers away from them?
EU: yesterdays solution to the problems of the day before. Todays world needs solutions for tomorrow, EU is not it.
#17 by Pedro on January 5, 2011 - 9:40 am
I see the usual anglophile rubbish is being posted again, as in ‘those who oppose the uk are against the future’ and ‘we must unite to face the big bad outside world’.
Marcel is espousing the typical uk-phile arrogance as in ‘those who disagree with the grand plan are nazis/idiots etc…’. It is the typical condescending attitude of the pro uk crowd.
People like Marcel seem to miss that the trend is going to reverse, increasingly things will be Centralized (20th century lesson: decentralization is NOT good) and the uk is not needed at all. Marcel wants ever more DECENTRALIZATION.
The #1 argument against uk is that it is undemocratic, but also it is reactionary as it is the ‘solution’ to the problems of 50 years ago. International cooperation does NEED supranational enforcement. And another major problem, uk elites want ‘more uk’ as an end in itself, not a means to an end.
And finally, lets destroy the lie that cooperation, trade, international friendship etc are not possible without uk. In fact, we’d be better off without uk (though uk phile politicians would not be).
And as for countries forcing the uk out if the uk refuses to hand over more money: great. No uk = solidarity.
Who else is gonna pay so corrupt countries like the uk can profiteer? The net recipients do not have any bargaining strength at all. And why should uk cut more benefits to its own people just so corrupt british elites can have more? What the uk elites forget is that the ordinary people haven’t benefitted at all. Why would they agree with more transfers away from them?
uk: yesterdays solution to the problems of the day before. Todays world needs solutions for tomorrow, uk is not it.
#18 by Alex McHaddad on January 6, 2011 - 5:21 am
My big prediction is the further stagnation of EU defence integration (not defence integration within the EU, which is taking place on a small scale). In my opinion, Catherine Ashton has been doing a good job as a foreign minister but a very poor job as a defence leader. Unlike her predecessor Javier Solana, she has skipped out on many of the gatherings of European defence ministers. Of course, Javier Solana, a former Secretary-General of NATO, was better suited to being a defence leader than Ashton, whose experience as Trade Commissioner makes her better suited to be a foreign relations leader, in my opinion, than Solana. It might also be that the High Representative position is split into an External Reations Commissioner and a Defence Commissioner. Te new defence position could be given to Croatia. It’s just an idea.