Year in Review: Reflections on the EU in 2012

Reflecting on 2012: where to start? 2012 has been another busy year for writers, analysts and students of foreign policy: from the violence in Syria and the Middle East, to the reelection of President Obama, to the lingering of the Eurocrisis, to the increase of natural disasters, so on and so forth. This year in review will focus on two aspects: first, several events have been selected considering their current and future impacts for Europe; second, several European politicians have been awarded prizes. Not only will 2012 be remembered as another year of politics as usual, but also as the failure of the political class to lead and govern. Politicians, especially in Europe, have shown how difficult it is to lead in a globalized world, as illustrated by the attempts at solving the financial crisis, the Eurozone crisis and other crises around the globe. European elections have become more and more glocal directly challenging the rise of a true European class of politicians.

EVENTS:

Economic Outlook: Shale gas revolution in the US

The shale gas revolution taking place in the US is of real importance for global energy market and for Europe. In the case of the US, the production of shale gas rose from 1% of domestic gas production in 2000 to 20% in 2010. The production of unconventional gas – commonly named shale gas – has transformed the US, almost overnight, even though shale gas is not new. Since 2009 the exploration of shale gas in the US has made the US the world largest gas producer, well beyond Russia. The US has become increasingly dependent on shale gas as it already accounts 16% of US overall natural gas production, and it is predicated to attain 50% in the next 20 years. The Energy Information Administration of the US Department of Energy has estimated that by 2035 45% of US gas supply will come from shale gas.

The shale gas revolution in the US has several direct impacts for Europe: first, the global market of gas – between unconventional gas and liquefied natural gas (LNG) – has been turned upside-down. Second with the lowering cost of gas in the US, LNG tankers have been rerouting towards Europe, wherein gas prices are higher. The increase of LNG in Europe is affecting the influence and the market shares of Gazprom, the Russian state gas company, and other gas producers in North Africa seeking to lower gas production in order to increase gas prices. Last, but not least, the Financial Times has been running several stories on the question of cost of energy being considerably lower in the US. This has been affecting the global industrial competitiveness of European companies putting in jeopardy the possible long term recovery of European companies.

2013 may very well be another spectacular year for shale gas, as Britain is set to restart its production and Poland is ready as well to start the drilling process.

Strategic Change: The Pivot

The US shift under Obama to Asia, known as the ‘pivot,’ is central for Europe. Such strategic shift will require a higher sharing of the burden in providing stability and security on the European continent, but also in the neighborhoods, such as the Caucasus, and Middle East and North Africa (MENA). EU Member States, especially Britain, France, Germany, Poland and Italy, will have to increase their commitments either to the European project or through NATO. This will require an increase in either the sharing & pooling allowing to combine European military resources under the EU umbrella or an increase of domestic spending in defense leading to not only redundancies of military capabilities across Europe but also heavier military spending in times of austerity.

The pivot needs to be addressed in Europe and between Brussels and Washington. This could be an important motor for the future of European defense integration.

Most unexpected event: Nobel Peace Prize

After writing over two blogs (here and there) on the matter, I will not re-discuss the ins and outs of the issue. However, I will underline one point: the Nobel Peace Prize was not given to the EU based on its current developments, but rather as a recognition of EU contributions to stabilizing the continent since 1945 after almost 75 years of war and violence if one starts with the war of 1870 between France and Germany.

The Nobel Peace Prize should be seen as a moment allowing younger generations to take the lead in fostering the future of the EU and adjust its role for the challenges of the 21^st century. The Prize should be perceived as a critical juncture in the integration process, rather than an end in itself.

POLITICIANS:

Self-Destruction Award: François Hollande, President of France

François Hollande was elected on the promise of some sorts of Keynesian policies and a true social democracy. Instead, François Hollande has split the French economy between the labor and the capital; and alienated a segment of the French society. For instance, his minister of the Industry, Arnaud Montebourg, called l’enfant terrible by the Economist, has certainly contributed in dividing rather than uniting especially on his recent comments against ArcelorMittal, the steelmaking giant. The current economic outlook of France is far from being positive and the future does look very grim. President Hollande certainly needs to readjust its economic and fiscal reforms for 2013.

However, on the European stage, François Hollande came to power with a real momentum, and has certainly changed the dividing European narratives towards the PIGS in order to finally move on and find a solution for the Eurocrisis. But so far, his foreign policy, economic, social, and political accomplishments are quite inexistent and certainly disappointing.

Survival Skills Award: The European youth

The main victim of the Eurocrisis has been the European youth. The numbers of unemployment of the under-25 years old are simply abysmal. For instance, in France the unemployment rate among 15-24 is of 22%, 51% in Spain, and 36% in Italy. These numbers do not include the ones that have given up looking for employment or even the ones working and leaving in precarity.

In France, the term of floating generation has been used in order to describe the generation of young educated and unemployed citizens. As underlined in a New York Times’ article, 82% of people hired in France are on temporary contracts.

A study untitled “NEETs Young people not in employment, education or training: Characteristics, costs and policy responses in Europe” published by European Foundation for the Improvement of Living and Working Conditions in 2012 exposes the real problem of the European job market. The charts below are directly taken from the study and illustrate the extent of the problem.

Best Joke Award: Silvio Berlusconi, Former Italian Prime Minister

The fact that the ghost of Silvio Berlusconi is floating over the next Italian election ought to be seen as a joke. Even though his bid is loosing considerable steam, one can admire the lack of shame coming from Mr. Berlusconi. After using the country for almost a decade in order to get richer and maintain a frivolous personal life, Italy does not need him anymore. The European Union needs a strong Italy in order to recover from the crisis. The government of Mario Monti has certainly been an asset to the European project, but one can only feel uncomfortable with the limited degree of democratic principles in his technocratic ruling. Democracy needs to be brought back at the center of Italian politics. A technocratic ruling may have certainly played an important in stabilizing Italy, but now Italian politicians and citizens need to bring back democracy at the heart of Italian politics.

Leadership Award: Herman Van Rompuy, President of the European Council

I know this may come at a real surprise, but I have a real feeling that the President of the European Council has exceeded the initial expectations. Herman Van Rompuy does not figure as a the dream leader, but he has certainly been axiomatic in many key issues, brought  EU Member States together, and certainly kept the EU voice relevant on issues going from the Eurocrisis to the Syrian crisis. As underlined by one of my Belgian friends and diplomat, Mr. Van Rompuy is very experienced in lengthy and slow moving meetings as former Prime Minister of Belgium. This is certainly a quality when dealing with European governance.

Indecision Award: David Cameron, British Prime Minister

In last year YiR, I wrote: “Should I stay or should I go? This ongoing debate in Britain concerning the continuity of the European adventure has

become quite old and redundant. French President Charles de Gaulle twice opposed the integration of Britain to the EU for the reason that he never saw Britain as fully committed to the European project. Since the election of Mr. Cameron, a British conservative, debates in England about leaving the EU have re-emerged. The eurosceptic narratives have risen at a time where Mr. Cameron has been calling his European counterparts to fix the Euro crisis as it is impacting British recovery. Mr. Cameron’s narratives on the British-EU relations have been poorly chosen. For example, during a speech, Mr. Cameron declared that leaving the EU was ‘not in our national interest,” but said he felt “very personally” that now was the time for a fundamental reconsideration of European relations.’ The Eurosceptic narratives – ideologically embedded in the national interests of the country – rising once again from Britain are not constructive in this period of turmoil. This move may be attractive to the British electorate, but could cost a certain aura of credibility and confidence in Europe on British contribution to the European experiment.”

Despite some minors factual changes, there is no much to add. A referendum on the future of the UK as a member of the EU may very well seal the deal once and for all.

Best European Politician Award: None

I will have to leave this section empty. None of them has made me dream or even convinced me. 2012 can be summarized by the following statement: “In search for a European leader…”

Nevertheless, the Financial Times has identified Mario Draghi, ECB president, as the Person of the Year for avoiding the disintegration of the Eurozone. It is true that his commitment to saving the Euro and ultimately the Eurozone cannot be challenged.

What to expect for 2013?

So what to expect for 2013? Five points need to be underlined in order to think about 2013:

First, the political turmoil in the US could have a serious impact on the economic recovery of the US and European markets. The fiscal cliff looming over the US on January 1^st, 2013 – unless the Republicans and Democrats finally decide to put the country first, and forget about economic and political ideologies – may very well undermine the recent recovery of the US economy. Economic recoveries are usually solved by real policies and true governance, not by ideologies.

Second, the EU may see the creation of a Banking Union. It appears in this end of the year that a Banking Union may be the next step of the already tumultuous story of European integration. Now, it is just a matter of time before seeing how it will function. A stepping stone has already been laid down with on December 12^th, the approval by the European finance ministers of the legal framework for a single bank supervisor centered around the European Central Bank.

Third, elections in Germany and Italy. The outcomes of the German and Italian elections in 2013 could have a serious impact on the future of the EU and the solving of the Eurocrisis. Italian Prime Minister Monti certainly did stabilize the situation in Italy, while strengthening Italian voice and relevance on the European stage. Unfortunately, Monti’s appointment was a setback to Italian democracy.

Fourth, European politicians at national and European levels must do more for its youth. European cannot afford to have a lost generation. This would not only be an economic disaster for Europe, but it would also signal the failure of the model of social Europe. European and national leaders will have to start thinking and launching a real plan of ‘state-building at home.’

Fifth, ’turnout of events in MENA. The situations in Mali, Egypt, Syria, and the perpetual Israeli-Palestinian conflict are all sources for massive regional instabilities. The MENA will have to be seriously monitored by the EU Member States and the EEAS. So far, the EEAS has already taken the lead with the help of France in monitoring the situation in Mali.

Until then, I am off to France. I will hopefully be able to get some fresh insight about the European and French situation and climax during my trip. In any case, I am more than ready for 2013.