It is difficult to be positive after the G20 in Cannes but let's get things in perspective.
We can choose to be positive. After decades injecting ourselves with credit and the economic Nazism that was Chicago School "God is The Market" Economics, we have woken from the dream world and see things as they really are for the first time. If parts of Europe are still rubbing their eyes to the new light (Italy, France) it is now obvious they will be wide awake to the new reality before long.
The Eurozone crisis, who is in and who is about to leave, is a distraction. It is safe to say after G20 in Cannes the monetary side of the crisis will resolve itself one way or another without outside interference. It is now a sled hurtling downhill, the only thing we can do is hang on and brace ourselves for the bottom. Maybe enjoy the ride as well. Robert Peston will be interesting reading for some time.
The real underlying issue is the lack of growth within Europe alongside overinflated Germany. This prompted the Euro currency crisis and following on from the inevitable sovereign debt shake-up we needn't be gloomy. Things can only improve and we can see a slightly brighter future for the EU even from here.
We are a heading toward an EU Inner Zone, comprising the remains of the Eurozone, with a single currency, free movement across borders and centralised economics and increasingly, centralised politics (out of necessity). This will give the Inner Zone the power they need to restructure and the protection needed for cherished historical institutions like the Common Agricultural policy.
Outside this, but not necessarily on the margins, will be a far more economically liberal EU Outer Zone, likely driven by economies such as UK, Poland and Scandinavia. With the UK driving this this is likely to be far closer to the old Common Market, but without some of the protectionism and restriction required, politically, by the Inner Zone countries.
This might seem like a backward step for the Outer Zone, but could actually be the saviour of the European project and perhaps the West, for as the Inner Zone becomes more integrated, the Outer Zone can be loose and accommodating enough to allow increased membership, as trading partners, to economies on the borders of the EU.
The most obvious candidate for new members on the Outer Zone is Turkey."Turkey’s story is remarkable against the backdrop of the economic crisis. Prior to the recession, the country’s growth rate was among the highest in the OECD world. Its aspiration to join the European Union led to several structural reforms that helped strengthen the country’s macroeconomic framework, including the financial and banking sectors."
Interestingly, one of the reasons Greece was so enthusiastically admitted as a member of the EU was partly to keep Turkey out. Here you can sympathise. Adding Turkey's 89 million to the current tight EU membership rules is unthinkable, but will that old EU last much longer anyway?
The main objection to Turkey being admitted to the old EU was the millions of Turkish workers which would flood over the open border but in more liberal but more domestically controlled environment defined by the EU Outer Zone, without free movement of labour, this would be less of a concern. Human rights issues within Turkey are more of a problem, but such concerns hardly prevented the admission of Bulgaria and Romania. With Turkey actually in the EU economy the problem of illegal immigration from the region might improve, or at least would be easier to control. It could hardly get worse.
Turkey would also be vital as a new element to the Outer Zone economies, in that she could be the first formal example of what could be called a Bridge Economy. With the opportunity for new membership and innovation the Outer Zone could use its geographical advantages to further open up the wider EU market to states beyond EU membership. Turkey could be the EU bridge to the Middle East.
The UK has often been talked about as Europe's bridge to the economies of North America. ("We are stronger with the US because we are in Europe, and a bridge between the two" said Tony Blair in 2002). For the EU Outer Zone this 'bridge' could be formalised in an economic sense, with certain countries of the Outer Zone such as Britain and Turkey designated as "Bridge Economies". Bridge economy status would allow an outer zone EU economy to sign bilateral trade agreements outside EU control assuming trade with the rest of the EU remained unaffected.
Bilateral trade deals between the UK and the similarly less restricted economies of North America (and perhaps previously neglected parts of the Commonwealth, Singapore and Hong Kong for instance) can only be good for the Euro Inner Zone assuming the EU as a whole stays together.
In a similar fashion, ailing Spain and Portugal would be encouraged to act as the EU bridge economies with the booming economies of Latin America.
Are we really serious about helping North Africa get back on its feet? Italy and Greece, assuming their situations have stabilised, would have privileged access to would be the new markets in North Africa. Selling Fiats in Tripoli might be easier than selling Fiats in Hamburg.
What's in it for them? The BRIC nations need markets but also the influence of the rule of law, social justice and human rights. Being lectured from an ivory tower by people with whom they have no social historic connection provokes nothing but ridicule, particularly in the current crisis. Should the British be lecturing the Russians on human rights from London when the Finns can display it first hand across their common border with all the benefits of local diplomacy and tact?
I have no specifics, I am not an economist. Perhaps each bridge economy would evolve into a bridge market, and could feature a sub-currency, in which say a "Euro-sterling" used alongside the £ and the Dollar in the Anglozone/Commonwealth EU bridge market, and with the Euro-Peseta in Spain and South America. Lessons learned from the euro would ensure the sub currencies in the bridge markets would be pegged at a level which balances the strengths of the nations using it. Euro-Lira could depreciate at a level to aid the Italian economy to compete but would be strong and stable enough alternative for North Africa to use as an alternative to their own.
Perhaps the sub-euro currencies could even be introduced sooner rather than later, to offset the damage of states leaving the euro.
Like I say, I'm not an economist, but we are in a dark place now and any future is better than no future.
Earlier this year I drove from Gibraltar, a booming bridge between Spain and North Africa, up to Finland, the Eurozone's booming frontier with Russia. Along the way I fell in love with the beauty of Spain, France, Germany and Scandinavia. It is a magnificent project we have created in Europe and we should be proud of it despite the current difficulties. If we are not prepared to share it perhaps we don't deserve it anyway.
No comments:
Post a Comment