European Affairs

Global highlights and local sidelights culled from the media (June – August 2008)     Print Email

BRUSSELS: New EU Law Against Illegal Immigrants is Passed Despite Some Criticism

The European Parliament approved new EU-wide regulations with tougher measures against illegal immigrants – a population thought to number eight million (compared to an estimated 12 million in the U.S.). The EU law, a “return directive,” is intended to harmonize laws and policies on the politically explosive issue in all 27 member states by providing a common framework for each country’s national laws. A central point in the directive is a provision under which illegal immigrants that refuse to go home may be detained for up to 18 months and then deported – and not allowed reentry into the EU for five years. Parliamentary assent marked the final step in instituting the new set of regulations. The rules in the return directive exempt asylum-seekers. But they apply to foreigners who have overstayed their visas.

Critics of the new measure brand it as an abuse of migrants’ human rights, arguing that the length of detention is disproportionate and unwarranted. But proponents retort that the directive will actually improve immigrants’ protection in EU countries where the laws currently allow indefinite detention of illegal immigrants. In a statement, the European Parliament said that “member states will be banned from applying harsher rules to illegal immigrants, but allowed to keep or adopt more generous rules.” It adopted the legislation as a step forward in EU integration that will help governments cope with the threat of a rising tide of illegal immigrants, notably from Africa. Human-rights activists warned that the new law will be exploited by some EU countries alarmed by inter-ethnic tensions as Europe’s demographic make-up shifts with the arrival of Muslims from the Middle East and Africa, and with Eastern Europeans moving west.

Criticism of the new directive has also come from Latin America. Venezuela’s president, Hugo Chavez, threatened to disrupt oil exports to Europe over the issue. Some Latin American countries apparently are afraid they might lose remittances from their emigrants to Europe. The EU Observer notes, “last year immigrants in Europe, the U.S. and Japan sent money back to their families in Latin America and the Caribbean amounting to just under €43 billion, more than the region receives from foreign direct investment or development assistance combined.”

The U.S. is wrestling with similar problems of immigration without yet finding a national consensus. Many American business sectors depend heavily on immigrants, some of them illegal.

Analysts predict that immigrant labor will be increasingly important to Europe given the pejorative economic effect of its aging indigenous populations. Additionally, it has become increasingly evident that the EU lacks the skilled migrant labor it needs in order to stay competitive in the global economy. Europe needs help filling the void left by the highly educated workforce that has emigrated – primarily to the U.S. Using Census data on education and income, French economist Gilles Saint-Paul of Toulouse University explained to the Wall Street Journal that “a disproportionate number of European immigrants in the U.S. were among the brightest prospects in their fields…the people who are most important for innovation and entrepreneurship.”

The Washington Post, July 19th 2008

DETROIT: Detroit Learns Car Business from Europe

Commentators eager to seize on transatlantic differences, legitimate as they can be, often miss the broad existence of synergies between the two sides of the Atlantic. Together, America and Europe produce innovations and profits in many non-political sectors such as investment, research, technology and business. This ongoing partnership, so basic and normal that it is taken for granted, leads to successes that otherwise would have taken longer to materialize or been missed entirely.

For example, the last decade has been marked by a divergence in the auto industries of Europe and the U.S. Americans’ enthusiasm for SUV’s and other spacious gas-guzzlers thrived in a situation where gas was cheap. In contrast, most Europeans, living in countries where taxes maintained a floor preventing low gas prices, remained accustomed to the much smaller, more economical vehicles designed and produced by manufacturers in Europe.

When the surge in the price of oil overturned American motorists’ calculations almost overnight this year, car designers in “Motor-town,” as Americans call Detroit, started scrambling to come up with smaller, more energy-efficient designs to replace their old models and old approach.

At Ford Auto Company, car designers and production engineers didn’t have to look any further than Europe, according to The Globalist, an online magazine on the global economy, politics, and culture. Ford has been building European-style cars there in a half-dozen countries for decades. The investment in Europe has enabled the company to build up a fund of design and production expertise about smaller, more fuel-efficient cars that the company now hopes to transfer to the U.S. – fast. In fact, the Wall Street Journal recently reported that Ford has launched a drive to introduce six of its made-in-Europe models into the U.S. as small, fuel-efficient cars, perhaps by the end of 2008.

As Ford struggles to stay solvent, its product engineers don’t have to go back to the drawing board. They have essentially done all that already, and now merely need to transfer the production know-how and plant designs to the U.S. manufacturing facilities. It is a reminder that “while Europeans and Americans are at times at opposite ends of whatever the issue in question may be, there is a veritable learning community in place.”

The Globalist – July 31, 2008.

BRUSSELS: Despite Rising Immigration, EU Still Graying with Pensioners

Despite new projections of rising immigration and even population surges in some EU countries, little seems to be changing about the familiar point that Europe as a whole is ageing and the ratio of retirees continues rising compared to the number of working-age people to pay the retirees’ pensions. The EU as a whole is set for very slight growth in population the coming half-century, with significant national growth in Britain, Sweden and several smaller member states (see chart), according to a BBC report. Despite these trends, officials said that the EU-wide ratio of pensioners to working-age people is set to increase from 25 percent in 2008 to 53 percent in 2060.

In the UK, the debate over the impact of immigration has brought to light a new trend for migrants from the new member states in Eastern Europe to return home now that they have better and more permanent job prospects there. Another paradox about intra-Europe population movements emerged at a recent meeting sponsored by American University in Washington, D.C.: EU officials reported that countries with strict border controls (e.g., Germany) often register higher rates of immigration than countries (such as Sweden) reputed to have more relaxed border regimes. One suggested explanation was that some migrants are seeking not just asylum but a step toward a long-term situation in their countries of destination.

Projected Population Change in EU Countries 2008-2060

Responding to these trends, some EU countries are pushing back their retirement age (in Germany, from 65 to 67). French President Nicolas Sarkozy has been quoted saying that if French people “want to retire at 53, go ahead, but don’t expect the state to pay for it.”

BBC world news, August26, 2008

BRUSSELS: Golden Arches Triumph in Europe

McDonald’s, the fast-food chain reviled in Europe as the symbol of American crass, has conquered an enthusiastic crowd of consumer fans...in Europe.

The company reports that the European market is its most lucrative region in terms of revenue: last year’s sales were approximately one billion dollars higher in Europe than in the United States.

“Europe is now McDonald’s largest region by revenues, despite having roughly one-quarter the number of outlets as the U.S. Last year, revenues from company stores and royalties from franchisees topped $8.9 billion in Europe, compared with $7.9 billion in the U.S,” a company statement said.

Can the surge in European enthusiasm be explained entirely by the strength of the euro compared to a comparatively weak dollar? The disparity helps, of course, but there is more to it than that, according to the man credited with engineering the turnaround in McDonald’s fortunes and image, Denis Hennequin, president of the company’s operations in Europe.

He attributes the chain’s new popularity with European consumers to a massive remodeling that overhauled the look and feel of one out of three McDonald’s in Europe. The idea was to capture cultural differences between Europeans and Americans and then fit the fast food into “golden arches” that have had a makeover to European styles. For example, many Americans “eat on the go” (70 percent of McDonald’s U.S. sales come from its drive-throughs) whereas Europeans tend to look for more of a “restaurant experience.” And of course price matters: many European countries levy lower value-added taxes on establishments categorizes as “fast food” rather than full-service restaurants.

Nowadays McDonald’s, founded in the U.S. in 1940, generates over half of its income from outside of the United States. In Russia, which boasts the company’s highest sales and profits worldwide on a per-restaurant basis, McDonald’s plans to have 230 outlets in operation by the end of 2008.

Meanwhile, Starbucks, another giant international American chain, can take inspiration from the success it has had in Europe and apply it to the U.S., where it will be forced to close some 600 stores due to declining revenue.

Business Week, July 22nd, 2008

LISBON: World’s Biggest Solar Farm

Without its own source of oil, coal or gas and lacking nuclear capabilities, Portugal has invested its hopes – and money – in renewable energy sources for power. Later this year, it will commission the world’s largest solar farm, and since 2005 it has tripled its hydropower capacity, quadrupled its wind power and worked to develop the world’s first commercial wave farm

The solar farm, located on the Alentejo plain in eastern Portugal, is nearly twice the size of London’s Hyde Park and will produce enough energy to power 30,000 homes a year by generating electricity straight from sunlight. Although hydropower and solid biomass continue to be the primary sources of renewable energy in Portugal, the new solar park represents another Portuguese effort to move away from a carbon-based economy in response to high oil prices and climate change. If the frenzied pace and enthusiastic support from the government continues,
private firms are expected to invest nearly £100 billion (approx. $175 billion) by 2020 in renewable energy. The government’s work with developing clean energy has also generated more jobs in the new manufacturing industry affiliated with renewables; at a new plant that produces turbines for wind farms, half of the workforce is made up of women who were left unemployed by the declining textile industry.

EU Renewable League Rankings

It looks like the joint efforts of the government and private investments are paying off. Portuguese officials expect their country to not only surpass its 2020 target goal of generating 31 percent of all its energy from renewable sources, but also jump to the top of the EU renewable league rankings. The Portuguese focus on renewable energy is part of a larger EU-wide initiative to have renewable energy sources make up 20 percent of gross inland energy consumption by 2020.

The Guardian, June 6, 2008

MADRID: Economic Turbulence in Eurozone

Spain’s central government recorded a $7.39 billion budget deficit for the first half of 2008, following an $8.2 billion surplus for the same period last year. This news comes in the midst of a housing crisis in Spain, whose unstable market has the potential to further unbalance the rest of the financially turbulent eurozone.

Following years of low interest rates and unprecedented levels of demand for housing in Spain, early 2007 witnessed the housing market drastically taper off, straining the Spanish economy and skyrocketing unemployment, which is expected to reach 11 percent by 2009 – the highest rate in the eurozone.

The summer of 2008 witnessed soaring costs of both food and fuel that pushed the country’s inflation rate above 5 percent. In response, the Spanish government has approved a €20 billion (approx. $30 billion) stimulus package to help the country out of its slump.

“Spain’s troubles have their roots in one of the fundamental challenges facing the eurozone: the extreme improbability of devising a single fiscal policy to harmonize 15 very different economies.”

Hence, while Spain’s economy needs lower interest rates to spur economic growth, the European Central Bank is trying to stave off inflation for the rest of the bloc. Eurozone manufacturing and service sectors are in decline across Europe. A strong euro accompanied with high energy costs is devastating export-driven economies.

Various surveys across Europe all indicate a lack of business confidence and point to the economic slowdown of the eurozone. If these trends continue through September, the eurozone will technically have reached the point of an economic recession – it would be the first of its short life.

BBC News, August 14th, 2008

WASHINGTON: Agenda of the American News Media Continues to Narrow, Not Broaden

It has become a commonplace observation that U.S. media – both print and electronic – are providing less and less news coverage about political and other aspects of Europe in their reporting. It is part of a wider trend in which the American public is being exposed to declining amounts of international news from most regions of the world. Some of the technical reasons that help explain this trend are set out in a study by the Pew Center, a highly regarded U.S. “fact tank” that includes a program entitled Project for Excellence in Journalism.

The report traces the shrinkage in the amount of foreign news to some underlying effects of the spread of digital technology and the Internet – developments that now make much of the “news” available almost instantaneously on the web. The impact has deprived the mass media of their longstanding central focus, shrinking many of them and forcing them to pursue narrower, more specialized topics. More broadly, the media has been left to redistribute a great deal of its resources away from international affairs.

Counter-intuitively, digital technology – which theoretically ought to expand the scope of reporting from around the world – has had the paradoxical effect of reducing the amount of input while multiplying the number of outlets. In other words, more and more “news” is being pumped out, but this apparently bigger “output” is in reality coming from fewer and fewer sources. And the emphasis in newsrooms is shifting from the old goal of providing a “finished product” in the form of a news story to constantly updating an initial report to provide an impression of immediacy and timeliness.

Even as the media world has fragmented into more outlets and options, reporting resources have shrunk according to trends on the State of News Media website:

“Newer media seem to have an even narrower peripheral vision than older media. Cable news, talk radio (and also blogs) tend to seize on top stories (often polarizing ones) and amplify them. The Internet offers the promise of aggregating ever more sources, but its value still depends on what those originating sources are providing.”

The project showed that “nearly half [of the newspapers surveyed] say they are devoting fewer resources to covering [foreign news]; the Boston Globe, Philadelphia Inquirer and Baltimore Sun have closed their remaining overseas bureaus in the past three years. A mere 10 percent say foreign news is ‘essential.’”

This cutback in foreign news “reduces the marketplace of ideas,” and may also have a pejorative impact on future transatlantic relations. The report concluded that the narrowed capacity of American news media has left it in a volatile position vis-à-vis its once internationally-oriented scope.

PEW Study on Journalism

WASHINGTON: Do Europeans Have a Secret Ambition to Become Comfortably “Irrelevant”?

The Irish “no” to the European Union’s modernization has fueled a new round of skeptical American commentary about Europeans’ real goals for the future. “In Europe, a Slide Toward Irrelevance” was the title of an opinion piece in the The Washington Post by Robert Kagan, a foreign-policy adviser to Republican presidential candidate John McCain.

“The danger of this latest blow to European confidence is that our allies, including Britain, could gradually sink into global irrelevance,” Kagan said. This view – stressing an alleged pattern in which Europe seems to shun opportunities to gain unity for action – contrasts with a longstanding concern in Washington about the risks of seeing the EU seek to become a counter-balancing power to the United States in international affairs.

Now, Kagan says in his article, Europeans seem hesitant to gird themselves to face a growing array of challenges. The outcome of the Irish ballot has left the EU less equipped to face such problems as Western economic slowdown, the highly competitive Asian sector, dependence on monopolized Russian energy, concerns about immigration and assimilation. The Treaty of Lisbon – now in limbo – was intended to address a number of these problems, notably by restructuring the EU’s leadership institutions to provide a stronger voice on the international level.

The proposed treaty now is threatened with unraveling. Ireland was the only country where it was put to a popular vote, and many believe that it would have been voted down in any other EU member state that had accepted a referendum rather than simply passing the treaty via parliamentary approval.

The ensuing questions about Europeans’ deepest (perhaps unconscious) motivations are not confined to Washington. In a similar tone, Gideon Rachman, a leading commentator of the Financial Times in London, seems to concur with Kagan’s skepticism about Europeans’ political will: in a recent story, Rachman said that Europeans may actually prefer a kind of “nirvana” based on weakness rather than having to shoulder the burdensome responsibilities of a global political and economic power. Europeans, Rachman said, may ultimately want nothing more than to become a kind of super-safe Switzerland, with no real voice in world power politics. (See also EA interview with Hubert Védrine, former French foreign minister, page ____).

Kagan, whose views seem likely to color U.S. attitudes in any McCain administration, has spent the last four years in Europe. He famously created the figurative comparison that “Americans are from Mars and Europeans are from Venus” – meaning Americans are more inclined than Europeans nowadays to see force as a solution to international crises. That was the theme of his book, Of Paradise and Power. His subsequent Dangerous Nation, about American historical readiness to undertake international intervention, was reviewed in the Summer/Fall 2007 issue European Affairs (V8N2-3, pp.118-20) and he has just published a new treatise, The Return of History and the End of Dreams, which warns about possible threats to global stability from Russia and China.

The Washington Post, June 15, 2008

MOSCOW: Solzhenitsyn

Alexander Solzhenitsyn, the Russian writer and historian who died in August, laid the intellectual foundations for the fall of Soviet communism – and also for the Russia that is now emerging. His writings, and in particular his book One Day in the Life of Ivan Denisovich, laid bare the nature of the Soviet regime and the lives of Soviet concentration camps, where the guilty and innocent alike were sent to have their lives squeezed out of them in endless and hopeless labor. It was a topic Solzhenitsyn knew well, having been a prisoner in such a camp following service in World War II. The book was published in the Soviet Union during the reign of Nikita Khrushchev who allowed its publication because it suited his own goals. Khrushchev wanted to detail Stalin’s crimes graphically, and Solzhenitsyn’s portrayal of life in a labor camp served his purposes

It also served a dramatic purpose in the West, where the Soviet Union had been mythologized, particularly among Western intellectuals, who had been taken by not only the romance of socialism, but also by the image of intellectuals staging a revolution.

These intellectuals had missed not only that the Soviet Union was a social catastrophe, but that, far from being ruled by intellectuals, it was being ruled by thugs. Solzhenitsyn, on the other hand, held the view that the labor camps were not incidental to communism, but at its heart. He argued in his Gulag Archipelago that the systemic exploitation of labor was essential to the regime not only because it provided a pool of free labor, but because it imposed a systematic terror on those not in the gulag that stabilized the regime. His most telling point was that while Khrushchev had condemned Stalin, he did not dismantle the gulag; the gulag remained in operation until the end.

In the West, he was seen as a hero by all parties. Conservatives saw him as an enemy of communism. Liberals saw him as a champion of human rights. Each invented Solzhenitsyn in their own image. He was awarded the Noble Prize for Literature, which immunized him against arrest and certified him as a great writer. Instead of arresting him, the Soviets expelled him, sending him into exile in the United States.

When he reached Vermont, the reality of who Solzhenitsyn was slowly sank in. Conservatives realized that while he certainly was an enemy of communism and despised Western liberals who made apologies for the Soviets, he also despised Western capitalism just as much. Liberals realized that Solzhenitsyn hated Soviet oppression, but that he also despised their obsession with individual rights, such as the right to unlimited free expression.

From Solzhenitsyn’s point of view, Western capitalism and liberalism are in their own way as horrible as Stalinism. For Solzhenitsyn, the American pursuit of economic well being was a disease destroying the Western soul.

He viewed freedom of expression in the same way. For Americans, the right to self-expression transcends the content: that you speak matters more than what you say. To Solzhenitsyn, the same principle that turned humans into obsessive pursuers of wealth turned them into vapid purveyors of shallow ideas. With the fall of the Soviets, he could return to Russia — where he witnessed what was undoubtedly the ultimate nightmare for him: thugs not only running the country, but running it as if they were Americans. Now, Russians were pursuing wealth as an end in itself and pleasure as a natural right.

In all of this, Solzhenitsyn had not changed at all. Solzhenitsyn believed there was an authentic Russia that would emerge from this disaster. It would be a Russia that first and foremost celebrated the motherland, a Russia that accepted and enjoyed its uniqueness. This Russia would take its bearings from no one else. At the heart of this Russia would be the Russian Orthodox Church, with not only its spirituality, but its traditions, rituals and art.

The state’s mission would be to defend the motherland, create the conditions for cultural renaissance, and — not unimportantly — assure a decent economic life for its citizens. Russia would be built on two pillars: the state and the church. Most important, it would be a state not ruled by the market, but a market ruled by a state.

Think now of the Russia that Prime Minister Vladimir Putin and President Dmitri Medvedev are shaping. The Russian Orthodox Church is undergoing a massive resurgence, the market is submitting to the state, free expression is being tempered and so on. Today’s Russia is very slowly moving in the direction that Solzhenitsyn wanted. And that could make Russia extraordinarily powerful. Imagine a Soviet Union not ruled by thugs and incompetents. Imagine Russia ruled by people resembling Solzhenitsyn’s vision of a decent man. It is an idea that ought to cause the world to be very watchful.

BERLIN: Merkel’s Stature

An interesting update on Chancellor Angela Merkel’s political standing in Germany comes from the French newspaper, Le Monde. With reporting from Berlin and Brussels, the paper said her fortunes are on the rebound.

The paper reported that Germans recognize that she emerged as a winner in the new Lisbon treaty now being ratified by the European Union. It retains Germany’s position with a strong voice proportional to its size in key decisions and votes by the Council of Ministers. Similarly, the enlarged European Parliament of 750 members will give Germany the largest national delegation – 96 members, with no other country likely to have more than 75.

Merkel’s enhanced stature in Europe has been reinforced domestically by improvement of the German economy and its public finances – many of them direct consequences of reforms initiated by her predecessor, Chancellor Gerhard Schroder. The effect has been to enable Merkel’s government to reclaim the traditional German position of pursuing strict budget controls and defending the independence of the European Central Bank. The ECB is currently under public pressure from French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi to move away from its anti-inflation mandate and envisage economic stimulus with interest-rate cuts in periods of crisis.

Merkel’s recovery of some of her earlier strength and stature enabled her to block the main thrust of Sarkozy’s proposal for a Mediterranean Union – a concept now much watered down.

Even so, she has not been able to avoid domestic contradictions in Germany: she had convinced her EU partners to accept an ambitious plan to fight global warming, but then had to cut back on the proposed measures to appease German industry. The governing coalition of Merkel’s Christian Democrats and the center-left Social Democrats is split on several key issues such as a possible return to positive policies on nuclear energy and the question of Turkey’s admission to the EU, and these divisions still weaken the influence of Germany in the broader international context, Le Monde said.

Le Monde
 
 

This article was published in European Affairs: Volume number 9, Issue number 3 in the Fall of 2008.

 
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UMD Jean Monnet Research Project

Infrastructure Planning and Financing: Lessons from Europe and the United States

The University of Maryland has received a Jean Monnet grant from the EU to conduct a series of policy exchanges between Europe and the US on filling infrastructure needs and the utility of public/private partnerships as the financing mechanism. If interested in participating in or receiving more information about these exchanges, please contact Rye McKenzie (rmckenzi@umd.edu).

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The Bertelsmann Foundation is an independent, nonpartisan and nonprofit think tank in Washington, DC with a transatlantic perspective on global challenges.

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