A European Future?

Parag Khanna has a monster screed – eight pages – in the NYT on the subject of “turning away from hegemony”. The hegemony concerned is that of the United States; the argument is that US power will decline relative to that of China, India, big second-tier powers, and Europe. This is a topic that cannot fail to elicit trolls; but it’s worth looking to, perhaps just for that reason alone.

Khanna, interestingly, bases part of the piece on demographics; Russian demographics. We’ve broached this before – it certainly looks like Russia is going to get more and more like one of the small Gulf states, an authoritarian petroleum exporter with a small population and a significant dependence on immigrants from a poor periphery. Further, we’ve also argued that Russian power is constrained by mutual dependence on the EU as a downstream market for energy and a source of investment; interestingly, a financial source of AFOE’s recently told us that he doubted the Russian sovereign-wealth fund spoke for anywhere near as much money as is sometimes claimed.

But the core of this row will probably be the US and Europe; it’s hard to imagine the US maintaining a hegemonic role in the world economy when it’s a massive importer of both goods and capital. Just as the UK’s financial hegemony didn’t make it past the First World War for the same reasons. Similarly, when Societe Generale had to dump the Kerviel overhang last week, they don’t seem to have bothered to tell the Federal Reserve; naturally, the French central bank and regulator were informed on day one (although Finance Minister Christine Lagarde seemed to deny she knew in advance on the BBC last week), and one presumes they clued-in the ECB.

Tony Karon calls it the Incredible Shrinking Davos Man. Well, their organisation is slipping; for the second year running, AFOE’s invite hasn’t turned up. But I’m not so sure, at least on the definition. If a multipolar world is going to work it’ll have to be more like, well, the European Union; all Khanna’s talk about playing by other people’s rules just drives home the point that they are rules, and rules mean institutions.

Institutions imply membership; which means the EU. Meanwhile, also at Karon’s, we see this in action. In Gaza, peaceful mass action to re-connect with the wider world has just capsized several world powers’ policy; the idea of locking up and refusing to engage with Gaza is now absurd, and it’s no surprise that it leads to concessions. If you can get out to the backbone, economically, suddenly all kinds of choices become available. It’s certainly very different from the days of George Habash, whose signature airline hijackings were directed precisely at separating from the rest of the world.