How to Outfox a Euro-skeptic: The Challenges of European Defence Cooperation

How to Outfox a Euro-skeptic: The Challenges of European Defence Cooperation:

By Paolo Enrico Favino

Usually, the current debate around the EU is characterized by a great struggle between Europeanists and Euro-skeptics, where the former say that a supranational Union between European countries represents the better solution towards an ill-defined ‘enlightened future’, and the latter talk back that the nation-state still is the real and only possible subject of the international relations. Every one remains confined to his own theories, while Europe continues to be an issue of minorities.

But the idea of a ‘European Union’ cannot be an intellectual property of just a section of the academic and political audiences, as a flag in the hands of some.

So, here we start deliberately with a realist position, to find out if the EU could be considered a concrete factor of international stability and security also from a ‘Euro-skeptic’ point of view, and to conclude that in the contemporary balance of power the safety of European countries depend mainly on the cooperation among them: to survive and protect their national interests, Member states need to invest in the EU framework, looking towards a sustainable security perspective, as well as a more stable economic growth (supporting commercial policies with a concrete foreign policy).

Now, here is the question: how to promote the Schuman’s suggestion right into the ‘Euro-skeptics and realist side’ of the political battle-field using their own arguments? Going over the academic subdivisions, and looking at the EU not as someone’s dream, but as a real necessity for all?

As realists do, we begin presuming that political stability is a paradox because uncertainly is the inner nature of international relations, and to reach a stable condition every political system must continuously change, following adjustments in the balance of power. Hence, an unchanging system is unstable, and consequently unsafe. This results, for every single player, in a ‘need for governance’ of these continuous transformations, in order to protect their own interests.

As a matter of facts, ‘Global Governance’ is one of the main targets of the European Commission, which reads positively the link between stability and security, firstly because of the progress in economic integration. The idea of a concrete EU involvement in international politics originated together with the same EEC, but this perspective could be concretely explored only after the end of the Cold War and the German reunification. Nonetheless, the failure of the Constitutional treaty left a lack of legitimacy on foreign policy matters and, as a consequence, EU’s worldwide role needs a ‘dual legitimacy: not only external (from the other international players), but also internal (from the same EU countries).

Again: could the European nations alone survive?

Firstly, single EU countries does not have the resources to compete with international actors like the US or China.

Secondly, current threats have global dimensions, softening the distinctions between internal and external security, as well as between defence and security strategies. Therefore, potential destabilizations occurred in other regions of the World will result in a matter of internal security for every Member state.

At the same time, defending European countries cannot still be considered, as in the past, an obligation on the part of the United States towards a Europe unable to protect itself.

Or, at least, a task they will perform for free.

Therefore, the increase of the ‘internal legitimacy’ dimension should be likely expected to follow an upward trend, as hinted also by a comparative analysis between Defence White Papers issued by Germany, France and the UK between 2003 and 2008, on one hand, and the European Security Strategy – ESS [2003], with the Report on its implementation [2008], on the other hand, in relations to the thread identified by each country and their comparative correspondence with those highlighted by the ESS.

UK, France and Germany represent the main contributors to the European military capabilities, and if the pivotal element is national sovereignty any credible common security policy should match the political objectives expressed in the national strategies of the most influent EU Members in order to obtain a ‘national legitimacy’. And while the alliance with the USA in the NATO framework remains as a key feature, especially in the papers approved by London and Berlin, all these documents find a common frame of reference in the EU.

According to the ESS, the contemporary threats to the international security are: 1- Terrorism; 2- Proliferation of WMD; 3- Regional Crisis & Failed States; 4- Energy Security; 5- Climatic Changes; 6- Organized Crime.

Firstly, the ‘British Defence White Paper’ [2003] describes terrorism and WMD proliferation as the main threats to the UK national security. Fragility of the Countries together with demographic and environmental pressures is considered as the principal causes of these problems. The paper underlines the global nature of these threats, looking for the security of the whole of Europe together with the safety of the UK.

Secondly, the French ‘Livre Blanc sur la Défense et la Sécurité Nationale’ [2008] highlights seven global risks: a) terrorism; b) ballistic and cruise missiles; c) information warfare attacks; d) foreign intelligence activities; e) organized criminality; f) threats to public health; g) threats for French people abroad. The response system consists in intelligence, early warning, nuclear deterrence, protection and military intervention.

Finally, the ‘Vorwort zum Weißbuch 2006 zur Sicherheitspolitik Deutschlands und zur Zukunft der Bundeswehr’ [2006] highlights new asymmetric and unconventional threats as terrorism and WMD proliferation. At the same time, due to the new global nature of the challenges, the Bundeswehr has been reconfigured as an ‘expedition army’ (force projection capability is one of the main issues in all documents).

The integration process appears as a matter of national security in these national papers, which offer a sort of ‘national endorsement’ to the EU strategic agenda expressed in the ESS.

But an ‘internal’ legitimacy is not enough: the EU needs an international recognition.

For this reason, it is very important to highlight the already existing different co-operations between the EU and many other global players.

Firstly, over a series of EU resolutions, acts and projects promoted within the UN bodies, an effective legitimation of the EU’s international role by the United Nations emerges in initiatives like the EU-UN Special Committee. Moreover, this relationship has been concretized within a series of CSDP operations: in many theatres, the EU acts under a UN mandate and/or in cooperation with its officials.

Secondly, the relations with the NATO: defence cooperation started in 1992, from the “Petersberg tasks” and the introduction of the “combined joint tasks forces” [1994] to the “Berlin PLUS” Agreements [1996] and the EU-NATO Capability Group [2003], which represents a frame of reference for the European Defence Agency. Moreover, the EU-NATO partnership has lead to various PSDC operations.

Finally, there has been a multi-level global recognition of the EU also by other players as the OSCE, the Council of Europe, the African Union and the ASEAN. Moreover, the European global role has been recognized also by individual countries outside the EU: many CSDP missions have been realized following national requests.

Nonetheless, the EU suffers from political and structural limitations.

Politically, national sovereignty remains the primary obstacle to an EU’s international role: the European Governments are reluctant to concede the control on their own national defence to a supranational administration.

Additionally, singular national perspectives generate dissimilar policies: the European defence core countries are the UK and France, but during the integration process Paris and London held repeatedly different positions. France saw the EU as a sort of ‘multiplier’ of the French power itself, while the UK looked more at the Atlantic Alliance than to a European self-governing security space. This situation is well exemplified by the negotiations during the Washington NATO Summit [1999] on the idea of a European military capability autonomous from NATO: the same term ‘autonomous’ has been the result of a tough negotiation between the UK and France (the British proposal was ‘complementary to NATO’, while the French proposal was ‘independent from NATO’).

Finally, the Lisbon Treaty seems to give targets more than solutions: principles are clear, but it is not exactly explained ‘who is supposed to do what’, and in what terms, although the institutional framework of the CFSP has been enhanced.

Structural gaps are mainly a consequence of this political status quo, and a brief overview of the EU capability background compared with that of the US could be useful to understand the dimension of the European difficulties.

First of all, on 2005 the difference between the EU and USA expenses on defence was around 213 billion of euro, with a US budget equal to 406 billion of euro, and a European budget that reached only 193 billions of euro. This disparity results from different public policies: the US Per Capita Expenditure was approximately 1.370 Euro, while the European Per Capita Expenditure was around 425 Euro. In other words: 4.06% of the US GDP against 1.81% of the EU aggregate GDP.

Moreover, while the US spends 32% of their defence budget in Research & Development, the Europeans spend on average 18.4%. As a consequence, the US military spending is worth ten times more than the European investments.

Additionally, market fragmentation causes additional problems. In particular, the European industrial complex is unable to give the CSDP the necessary means: while the US defence system can count on an overall market, the EU common defence potential is confined to small national sub-markets, and in none of them there is a company able to cover the whole defence industrial sectors.

Among the concrete consequences on the military ground, EU’s problems on chain of command, interoperability and technological level are indeed determined by inadequate ‘3CI’ (Command, Control, Communication and Intelligence) skills. But since our security depends on a common framework, an undermined CSPD corresponds to a loss of safety for every Member state.

Although this situation has led in many cases to a lack of responsibility – leaving to the US the defence of our security – the EU has developed its ‘strategic vision’, expressed in the cited ESS, planning a series of goals here summarized:

A – Facing the identified threats

During the Cold War, the main risk was an armed invasion by the Soviet Union, but today the front line will be often abroad. And so, the EU approach is to avoid that the identified threats become element of conflict.

B – Building security in the neighborhood

The integration processes has strengthen the European security, but – at the same time – it has brought the EU’s borders very close to many instability areas. Therefore, the EU commitment should be to promote accountable democracies with which to cooperate, from Eastern Europe to the Mediterranean area.

C – Promoting an “effective multilateralism” in all the World

In a World of global threats, global markets and global Medias, our security and prosperity depends even more on a multilateral system. Among the partnerships, the EU-US relations are considered as a crucial element, while the United Nations are considered the apex of the international system (all the CSDP efforts have been intended and realized into the UN framework).

The questions about how a ‘Civil power’ could coherently promote this ‘effective multilateralism’ found a first answer in the developing by the EU of a global commitment into the CFSP framework, in order to achieve the same ESS objectives: a range of EU operations has been deployed in the last ten years while the CSDP commitment has been even more considerable, although the highlighted difficulties persist.

In the end, Europeans have common needs, and should look for common strategies, towards international stability and, at the same time, their own safety. This is not a wishful thinking, but a tough political duty for all the EU governments, towards their fellow citizens and in the interests of their own countries. Therefore, answering to the opening question, European defence cooperation is a primary matter of national security, while the EU embodies a factor of international stability as far as the defence and security issues are inserted in a more inclusive integration process.

In other words, if State survival is the target, Europeanism is Realism.

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Greece near default, EU in trouble – Six facets of the euro crisis

Greece near default, EU in trouble – Six facets of the euro crisis:

The six facets are the Greek crisis, Greek euro exit, the EFSF, the self-fulfilling recession in the eurozone, the contagion in Italy and Spain and France’s AAA credit rating. Strategy needed.

Image Source: Tundratabloids

Things are only getting worse as time passes in the eurozone. With every moment of inaction the systemic crisis deepens and worsens. Greece is on the verge of a formal default or a massive debt restructuring, while the rest of the euro countries are all facing their own spiralling problems which are interconnected once seen with a clear eye. Within this bleak environment it is important to lay down a number of issues in order to understand the reality that surrounds us. The focal point of the crisis is reasonably and justifiably Greece yet the crisis is much broader and deeper than what some would like to believe. It is not just about Greece, but ultimately about the euro. I have identified six facets of the current economic reality in the euro area. The first two are directly related to Greece. The rest are about the rest of the euro countries.

1. Greece will default. Greece is practically bankrupt since May 2010, when it lost market access. The only reason it remains above water is thanks to the European bailouts that allow the country to pay back its creditors and cover all the necessary expenses to run the state. Everyone knows that Greece is laboring under an immense mountain of debt which will sooner or later lead to default given four parameters (1) the internal malignancies of the Greek economy that have over the years created all sorts of rigidities that prevent supply-led growth in the short-to-medium term, while the uncertainty that new emergency taxes create does not provide any safe ground for investment, (2) the monolithic, self-defeating austerity that the so-called “troika” (EU-ECB-IMF) asks for, has serious contractionary effects on the economy, (3) the bailouts to Greece though added on the national debt, are not used to invest in structural projects that would benefit the economy by stimulating much-needed growth and creating externalities for the private sector to invest, but are only utilized for covering fixed costs of the state and paying back creditors (European banks in their vast majority), (4) the overall self-fulfilling crisis of the euro that leads to depression in the euro area which is deeply rooted in the structural flaws of the single currency and all the political rigidities of the EU decision-making processes.

The latest inability of the Greek government to meet the budget targets set by the troika, which is the end-result of first an overall slowdown of the global economy, second a miscalculation of the contractionary effects of strict austerity, third the continuous strikes in almost every sector of the Greek economy; all imply that the situation in the Greek interior is not going to change for the better. Hence Greece will certainly default, yet what remains uncertain is the exact manner of this process (orderly – disorderly) and the exact timing. These will depend on the decisions of European leaders and on other variables – however a disorderly default coupled with early elections and social unrest remains as a possibility.

Greece faces two crises in one. On one hand it has a mountain of debt and an unsustainable fiscal deficit that can only be dealt with fiscal consolidation policies (austerity), on the other hand it has an uncompetitive economy plunged in years of malinvestment and maladministration together with all sorts of obstacles to trade, that need deep reforms to be revitalized. If each of these issues was dealt with separately then Greece would have the capacity to successfully complete its objectives. But attempting to solve both issues at once, only leads to disaster, since what is a solution to one crisis is a problem to the other.

2. Greek euro exit not feasible. In an ideal world, Greece should have the option to temporarily exit the euro in order to reconstitute its national currency (drachma), in an attempt to regain competitiveness by inflating its way out of the crisis. Alas in the real world of the euro this is impossible due to the way the euro is structured. An exit of any country would be tantamount to collective suicide as the country in question would not go back to its pre-euro standards but to a much lower level.

Once all parameters are taken into consideration anyone can see that an exit from the euro will lead to hyperinflation and stagnation (thus a deep stagflation). Additionally Greece’s exports amount to around 20-25% of the value of its imports, thus offsetting whatever gains in competitiveness the national currency could have brought. Greece imports way more than it exports. This is a non-sustainable trade deficit, but will become even worse if Greece reconstitutes the drachma, since the new Greek currency will depreciate to such extend that practically no import will be possible. Consider the ramifications this would have on technology, health, agriculture (yes even agriculture), national security etc. On local production and growth in general.

On top of that the rest of the euro countries would witness an avalanche of chain events that would eventually tear apart the euro (see analysis Currency union and Greek Euro Exit). Therefore the option of exiting the euro is not feasible within the existing environment neither for Greece nor for the rest. The only way this could be possible is if a mega-plan to contain the shock wave of a Greek default was devised and if Greece was provided with all necessary assistance to be able to stand on its feet after a default and a euro exit. For the time being such a plan does not exist and does some seem likely to exist.

3. The euro area is trapped in a self-fulfilling cycle that leads to depression. Both unemployment and inflation are rising (see analysis Evaluation of inflation and unemployment amid the Euro Crisis). Events are showing what I and many others have been saying since day one, that the crisis is systemic and not an amalgamation of perfectly separable national crises as European leaders wish to present it. Amid this systemic crisis there cannot be state solvencies without any solution to the three dimensions of this systemic crisis: (a) debt crisis in all Euro countries, (b) quasi-bankrupt European banking system, filled with zombie-banks, (c) under-investment in all the euro area with very few exceptions.

4. The EFSF is a flawed mechanism. The new expanded EFSF will not be able to arrest the crisis but only to temporarily provide safety to private banks. The EFSF is basically a common fund in which all member-states provide part of their taxpayer’s money, to bail out countries in need. As this mechanism is currently structured the best economy guarantees the second best, which guarantees the third and so on (see The seven classes of the eurozone). This means that all states are practically tied together and to the countries that have received the bailouts. Those who know how the toxic CDO’s (Collateralized Debt Obligations) that largely caused the Great Recession were designed, know that the EFSF is in fact a huge toxic CDO right at the heart of the Euro (see the analysis of Prof. Varoufakis on the toxicity of the EFSF). It is composed of slices of debts with different credit rating with a total outcome of a triple-A rating. For as long as France and Germany cling on to their AAA rating then the EFSF will remain stable, but if France’s credit rating is downgraded then the EFSF will be over.

5. Italy and Spain are practically gone. The only reason they are still able to borrow from the markets is thanks to the constant ECB intervention in the bonds market to keep rates at “affordable” levels. Alas the ECB is fighting a losing battle, because it does not have the political legitimacy to buy the mountains of debt of the 3rd and 4th largest European economies that amount in total to nearly 2.5 trillion euro. Also the ECB was carrying out the same policy with Ireland and Portugal by buying approximately half of their own debts (which are far less compared to Spain and Italy), yet it massively failed to prevent them from coming to the need for bailouts. The markets are aware that the ECB is fighting a war of attrition that it cannot win, thus they only await the right chance to strike back with immense speculative vengeance.

6. France faces the threat of losing its triple-A credit rating. The spiraling recession in the euro area, together with the worsening of the position of the entire European periphery in which French banks are seriously exposed, put France into trouble. France is now facing the serious threat of losing its tripe-A credit rating, should it have to directly bail out its private banks who are in grave need for capital, in order to avoid a complete collapse of the economy. Such an unpleasant event for France would have massively negative ramifications for the whole Euro area. The winds of recession will blow with much greater force, as the EFSF which depends on the triple-A rating of France and Germany will fall into jeopardy, thus leading to a collapse of the programmes in Ireland and Portugal. Once that happens the euro will have passed the point of no return and will fall apart as Germany and the other triple-A economies (Netherlands, Austria, Finland) will not be willing to put their own finances in danger for the sake of saving the entire European periphery.

These are the six main facets of the current economic reality in the euro area. Reforms are necessary both in countries and in the architecture of the euro itself. Solutions exist but come with their costs. However above everything else, what Europe is in desperate need of, is a coherent strategy to decisively address the crisis before its destructive force tears apart the euro and brings down with it all its constituent economies. None can escape out of this unharmed and the sooner we realize it, the better.

Greece near default, EU in trouble – Six facets of the euro crisis | Protesilaos Stavrou.