European Global Strategy ProjectEurope and the World in 2030                               Charles PowellEuropean Union: W...
Europe and the World in 2030                    EUROPE AND THE WORLD IN 2030It is virtually impossible to predict what the...
Europe and the World in 2030The 2008 crisis is already having a major impact of the EU, leading to:1. Tension between debt...
Europe and the World in 20304. The crisis is aggravating previously-existing centre-periphery tensions within   some membe...
Europe and the World in 2030 The EU’s short-to-medium term future will largely depend on how it manages                   ...
Europe and the World in 20303. More favourable scenarios: a European renaissance     Might come in two possible formats:  ...
Europe and the World in 2030   In turn, the EU’s answer to the current crisis will depend on the broader                  ...
Europe and the World in 2030                              Conclusions• EU’s future will depend on its own ability to respo...
Europe and the World in 2030        Likely scenarios for Europe and the WorldGlobal Contexts      Scenarios for          I...
Europe and the World in 2030                    Major Global Trends in 2030 *                          Demographic Pattern...
Europe and the World in 2030                       Food, Water, Energy Nexus• Demand for these resources will grow by 35%,...
Europe and the World in 2030                      Individual EmpowermentWill accelerate due to:• poverty reduction rapid g...
Europe and the World in 2030                            Diffusion of power• World in 2030 will be diffusely multipolar (or...
Europe and the World in 2030                Shift of economic power to the East and SouthBy 2030, China will have become w...
Europe and the World in 2030             Shift of economic power to the East and South (cont.)India’s population (1.5 bill...
Europe and the World in 2030 What impact will these and others trends have on role of the EU as a                         ...
Europe and the World in 20303. The neighbourhood The EU will be facing an increasingly unstable neighbourhood.If EU is not...
Europe and the World in 20304. Our only indispensable strategic partner: the US   Relative decline of US and EU means we w...
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Europe and the World in 2030

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Presentation by Charles Powell, director of the Elcano Royal Institute at the Seminar 'The European Union: What Kind of Global Actor? held from 25 to 26 February 2013 in Madrid (Spain) and organised by the institute. / Presentación de Charles Powell, director del Real Instituto Elcano, en el Seminario "The European Union: What Kind of Global Actor?", organizado por el instituto del 25 al 26 de Febrero de 2013 en Madrid (España).

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Europe and the World in 2030

  1. 1. European Global Strategy ProjectEurope and the World in 2030 Charles PowellEuropean Union: What Kind of Global Actor? Madrid, 25 February 2013
  2. 2. Europe and the World in 2030 EUROPE AND THE WORLD IN 2030It is virtually impossible to predict what the EU and the wider world willlook like in 2030.Fortunately, this is not what our governments have asked us to do.Our aim is to identify the broad trends, drivers and shapers of change thatthe EU should keep in mind when trying to define its strategic options.The EU’s future global role will largely depend on its economic strengthand internal cohesion.Unfortunately, even the task of predicting the EU’s relatively short-termfuture development has been rendered almost impossible due to the depthand breadth of the current financial and economic crisis.
  3. 3. Europe and the World in 2030The 2008 crisis is already having a major impact of the EU, leading to:1. Tension between debtor and creditor states. There is a growing cleavage between core and periphery; the two have very different, often irreconcilable narratives about the causes of the crisis, and how it should be dealt with.2. Tension between Eurozone and non-Eurozone members (“Ins and Outs”). This is generating concern about the EU’s ability to maintain minimum levels of internal cohesion (as seen in debate about a separate budget for Eurozone). It is also fuelling the debate in Britain about continued EU membership; it is impossible to predict whether the UK will still be a member in 2030.3. Growing concern about the EU’s political legitimacy. The crisis has raised fresh doubts about the legitimacy of the EU’s decision-making process, particularly in southern European member states. This may even undermine democracy in the weaker debtor states, leading to the rise of populist alternatives.
  4. 4. Europe and the World in 20304. The crisis is aggravating previously-existing centre-periphery tensions within some member states: Scotland, Flanders, Catalonia.5. More generally: the crisis has brought to the fore already-existing concern over sustainability of our European socio-economic model.• ageing populations; growing pressure on pension, health and welfare systems;• high levels of unemployment and underemployment; due to dysfunctional labour markets;• inabilty to make best of our human capital: rigid education systems; innovations discouraged;• extreme energy dependence; absence of a common energy policy• vulnerabilty to climate change;
  5. 5. Europe and the World in 2030 The EU’s short-to-medium term future will largely depend on how it manages the current crisisDifferent scenarios as defined by the AUGUR project (“Europe in 2030”).1. Eurozone break up; collapse scenario • Will lead to financial instability, and weaker European institutions. • Impact: loss of 16% of EU’s GDP in the period up to 2030. • Black Swan: ‘Grexit’ could cause eight times the collateral damage resulting from the collapse of Lehman Brothers.2. Struggling on; slow decline scenario • Resulting from an attempt to maintain Eurozone intact without addressing long- term problems of government finance, regional inequalities and unemployment. • Economic convergence put on hold; political cohesion difficult to maintain; • In this scenario: EU growth over 2010-30 would be 0.8% per annum.
  6. 6. Europe and the World in 20303. More favourable scenarios: a European renaissance Might come in two possible formats: a) a multi-speed Europe; Eurozone divided into several currency areas (North; West, UK, South, East); EU growth over 2010-30 would be 2% per annum. b) towards a federal Europe: powerful central bank; central budget; EU treasury. Again, 2% growth per annum.
  7. 7. Europe and the World in 2030 In turn, the EU’s answer to the current crisis will depend on the broader global context The AUGUR project (“Europe in 2030”) identifies four different possible scenarios:1. Reduced government Marked by a decreased government role in the economy and a retreat from multilateralism.2. US-China accommodation (a G-2 world, if you will).. Two biggest powers respond with interventionist policies in their own interests.3. Regionalisation A strengthening of regional groupings in Europe, North America and Asia. Regional institutions and policies replace attempts at universality.4. Multi-polar cooperation Concerted transnational action to meet major global challenges.
  8. 8. Europe and the World in 2030 Conclusions• EU’s future will depend on its own ability to respond; crisis could turn out to be wake-up call we badly needed; conversely, could represent beginning of end of European project.• Just as important as what EU does, the global context in which it does it.
  9. 9. Europe and the World in 2030 Likely scenarios for Europe and the WorldGlobal Contexts Scenarios for Impact EU Growth Europe 2010-2030Reducedgovernment EU break- up Loss - 16% EUUS-China GDP to 2030accommodationReducedgovernment Struggling on EU growth 0,8 %US-China per annumaccommodationRegionalisation Multi-speed Europe EU growth 2% per annumRegionalisation Towards Federal EU growth 2% per Multi-polar Europe annumcollaboration Source: Augur Project, FP7 2012
  10. 10. Europe and the World in 2030 Major Global Trends in 2030 * Demographic Patterns• The demographic arc of instability will narrow.• Population growth will rise from 7.1 billion to estimated 8.3 billion.• Economic growth may well decline in ageing countries.• 60% of the world’s population will live in urbanised areas.• Africa will replace Asia as region with highest urbanisation growth rate.• Migration will increase substantially. * Source: Global Trends 2030, National Intelligence Council, 2012
  11. 11. Europe and the World in 2030 Food, Water, Energy Nexus• Demand for these resources will grow by 35%, 40% and 50% respectively.• Fragile states in Africa and Middle East will be most vulnerable to food and water shortages.• EU Energy dependence is extreme: 90% of the oil, 80% of the gas and 50% of the coal we consume.• US energy independence in 2030: due to the unconventional (shale) oil and gas ‘revolution’ will have significant geopolitical consequences.• Tackling the problems pertaining to one commodity will affect supply and demand for the others
  12. 12. Europe and the World in 2030 Individual EmpowermentWill accelerate due to:• poverty reduction rapid growth of global middle class (up to 4.9 billion by 2030);• greater gender equality;• greater educational attainment (90% literacy in 2030);• widespread use of new communication and manufacturing technologies; health-care innovations; Consequences: these changes will increase the autonomy ofindividuals and powerful non-state actors vis-à-vis the state
  13. 13. Europe and the World in 2030 Diffusion of power• World in 2030 will be diffusely multipolar (or ‘apolar’) and polycentric. No country will be hegemonic power. It will be ‘no one’s world’ (Charles Kupchan)• There will be a change in the nature of power itself: power will shift away from bureaucratic structures of sovereign states, towards multifaceted and amorphous networks of non-governmental actors. This process will be driven by rapid urbanisation and the ICT revolution.• The world will experience the rise of regionalism as a vector of power, reflecting an increase in regional trade. This regional cooperation will be driven mainly by emerging powers (South Africa, Indonesia, Nigeria, Egypt…).
  14. 14. Europe and the World in 2030 Shift of economic power to the East and SouthBy 2030, China will have become world’s major economic power andalso the country with largest share of material power (though still a verydistant second to US in military power);But China will have to face major socio-economic and political challenges.Key issue: how will it deal with a rapid increase in population ageing?Will it become old before it becomes rich?Also: how will it address welfare, energy security and environmentalchallenges?There is a real danger that China may be trapped in middle-income status.Political uncertainty: China will pass the $15.000 per capita PPPthreshold in next five years. Currently, all countries with that income level arefree/partly free (FH).
  15. 15. Europe and the World in 2030 Shift of economic power to the East and South (cont.)India’s population (1.5 billion) will overtake China’s (1.4 billion) by 2030.Comparative advantage: will remain relatively young.But other daunting challenges: rapid urbanisation, uncontrolled ruralurban migration and poverty.Russia has dropped out of BRIC paradigm altogether.Characterised by: ageing and shrinking population; absence of reforms;centre-periphery tensions.Russia’s future will largely depend on evolution of energy markets.Major protagonists of this shift to the East and the South: risingmiddle powers with greatest growth potential.In particular: those that combine economic growth and politicalstability. Turkey, South Korea, Indonesia, Mexico ….
  16. 16. Europe and the World in 2030 What impact will these and others trends have on role of the EU as a global actor?1. Growth in individual empowerment • rise of global middle class is good news; will demand education, cultural products, luxury goods, all of which EU can offer; • may lead to a convergence of values; those of the EU? • will ‘rise of the rest’ challenge this? Alternatives to democratic model?2. Diffusion of power raises spectre of fragmentation and instability; mutipolarity may not strengthen multilateralism.But let us not overlook potentially positive outcomes: • EU is particularly well suited to a new “world of networks”; member states good at cooperation between state and non-state actors; • EU has unparalleled expertise in regional integration; • EU is well suited to benefit from greater multilateralism.
  17. 17. Europe and the World in 20303. The neighbourhood The EU will be facing an increasingly unstable neighbourhood.If EU is not influential in its immediate neighbourhood, it will not be credible anywhere. Difficulty: neighbourhood concept is expanding: we need to look out for neighbours, but also our neighbours’ neighbours. • Eastern Neighbourhood: uncertainty due to Russian prospects; a failing petrostate? • Arab awakening: mixed expectations. Egypt: a member of the ‘Next Eleven? (Goldman Sachs) or radicalised and impoverished Closely related to Arab awakening: what to do about Turkey? Stalled negotiations are dangerous; given its growing economic importance and regional protagonism, EU must offer something new: a virtual EU membership. Not a substitute for membership; rather, a framework for policy convergence to supplement the accession process.
  18. 18. Europe and the World in 20304. Our only indispensable strategic partner: the US Relative decline of US and EU means we will need each other more than ever. Obama’s Asian ‘pivot’ is not incompatible with this; on the contrary, points to a new division of labour. We need something that will go beyond a mere Trans Atlantic Free Trade Area (TAFTA); perhaps, a new Atlantic Community.5. Global governance EU needs to be modest, or at least realistic, about its ability to shape future global governance. Even speaking with a single voice will not always guarantee greater influence. Big question, and hardest to answer: will the EU be able to contribute effectively to a ‘new deal’ or ‘grand bargain’ between established and newer powers? Some consolation: in future, human development challenges will be more prominent than traditional international security concerns. This may allow the EU to display its greatest asset: its abundant normative power (‘soft power’).

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