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Europe’s crisis and its global power position
Some thoughts from Ph.D. Chief Economist at MIG Bank
Luciano Jannelli panel discussion at the
St. Petersburg International Economic Forum
Geoff Cutmore (left), CNBC anchor of “Squawk Box” speaks with Dr. Luciano Jannelli (right),
at the Saint Petersburg International Economic Forum 2013.
Dr. Luciano Jannelli, discusses the European crisis at
the Saint Petersburg International Economic Forum.
On June 20, I attended the St. Petersburg International Economic Forum where I had the honour to participate at a panel discussion on the
European economic crisis, the way out and how it affects Europe’s standing on the geo-economic sphere. This was a great opportunity to gain
direct insights from senior policymakers and business leaders, and thus sharpen our view on markets and currencies.
In this note, I will summarise some of my own views as to where I see the “Old Continent” heading to. The reader will forgive me if, in this specific
note, I will make more assumptions than usual and, at times, oversimplify. I will also omit the usual direct investment implications. The purpose of
this note is, after all, to indicate “talking points” on a broad theme, such as Europe’s crisis and her position in the world.
* First talking point: is the euro really accelerating Europe’s decline?
- It is today very tempting to blame Europe’s single currency for all the continent’s
problems. Of course, Europe’s relative decline is not – in and by
itself – a problem: it is only normal, and actually reassuring, that other
regions are enjoying naturally higher growth rates than the “Old Continent”.
Europe’s challenge is to maintain, in absolute terms, satisfactory growth.
From that point of view it is far less reassuring that Europe’s growth rate
has, over the last decades, also been systematically lower than that of the
United States. Yet, when addressing this first “talking point”, I would
observe that this specific underperformance predates both the euro and the
euro-crisis.
* Second talking point: what is really missing in Europe?
- It is often said that Europe has no vision. I ask myself, do other regional
powers have one? I am not sure.
They do have a more clearly defined cultural identity. A very clear and precisely
defined cultural identity may lead to a sense of “exceptionalism”.
Some Americans belief that the United States is a unique and new nation
that has the mission to spread globally liberty and democracy and, as such,
is somehow exempt from the historical forces that have affected (the rise
and decline of) other countries. Whilst such notions are debatable at least,
it is a fact that many long-established nations, such as Russia and China,
also have their own variety of cultural “exceptionalism”. And of course
Europe, at the level of its constituent members, is not exempt from this phenomenon.
Indeed, how else should we define France’s insistence to
exclude certain cultural items (mainly movies) from the negotiations on the
putative trade agreement between the
European Union and the United States.
When answering the “second talking point” it is fair to say, however, that
Europe as a whole does not have a cultural identity that can be as easily
characterised. This is a serious shortcoming because such cultural identity
is a strong binding force. In fact, if you think that somehow you are (culturally)
exceptional, you
don’t need a vision (to unite the country). Or, perhaps, your vision is simply
to protect and preserve your exceptional characteristics.
* Third talking point: what is particularly bothersome in Europe?
- This “talking point” deserves a straightforward and sad answer: high youth
unemployment. Yet, although a true tragedy in Europe’s periphery, high
youth unemployment rates are not a typically European phenomenon.
Then again, one should partly qualify this answer: America’s population has
grown much faster than Europe’s. Arguably such superior population
growth – be it organic or through immigration – is also a sign of health. Yet,
it does imply that in per capita terms America has hardly done better than
Europe.
٩١ AL BAYAN ECONOMIC MAG - ISSUE 500 - AUGUST 2013