Europe, The International System and a Generational Shift

8/3/2019 Europe, The International System and a Generational Shift

1/4

Europe, the International System and a Generational Shift

By George Friedman

Change in the international system comes in large and small doses, but fundamental patternsgenerally stay consistent. From 1500 to 1991, for example, European global hegemony

constituted the worlds operating principle. Within this overarching framework, however, the

international system regularly reshuffles the deck in demoting and promoting powers,

fragmenting some and empowering others, and so on. Sometimes this happens because of

war, and sometimes because of economic and political forces. While the basic structure of the

world stays intact, the precise way it works changes.

The fundamental patterns of European domination held for 500 years. That epoch of history

ended in 1991, when the Soviet Union the last of the great European empires collapsed

with global consequences. In China, Tiananmen Square defined China for a generation. China

would continue its process of economic development, but the Chinese Communist Party

would remain the dominant force. Japan experienced an economic crisis that ended its period

of rapid growth and made the worlds second-largest economy far less dynamic than before.

And in 1993, the Maastricht Treaty came into force, creating the contemporary European

Union and holding open the possibility of a so-called United States of Europe that could

counterbalance the United States of America.

The Post-European Age

All these developments happened in the unstable period after the European Age and before

well, something else. What specifically, were not quite sure. For the past 20 years, the worldhas been reshaping itself. Since 1991, then, the countries of the world have been feeling out

the edges of the new system. The past two decades have been an interregnum of sorts, a

period of evolution from the rule of the old to the rule of the new.

Four things had to happen before the new era could truly begin. First, the Americans had to

learn the difference between extreme power (which they had and still have) and omnipotence

(which they do not have). The wars in the Islamic world have more than amply driven this

distinction home. Second, Russian power needed to rebound from its post-Soviet low to

something more representative of Russias strength. That occurred in August 2008 with

theRusso-Georgian war, which re-established Moscow as the core of the broader region.

Third, China which has linked its economic, political and military future to a global systemit does not control had to face a readjustment. This has yet to happen, but likely will be

triggered by the fourth event: Europes institutions which were created to function under

the rules of the previous epoch must be rationalized with a world in which the Americans

no longer are suppressing European nationalism.

With the benefit of hindsight, we know that the 2008 financial crisis initiated the last two

events. The first result of the financial crisis was the deep penetration of the state into those

financial markets not already under state influence or control. The bailouts, particularly in the

United States, created a situation in which decisions by political leaders and central bankshad

markedly more significance to the financial status of the country than the operation of the

market. This was not unprecedented in the United States; the municipal bond crisis of the1970s, the Third World debt crisis and the savings and loan crisis had similar consequences.
http://www.stratfor.com/analysis/20091014_eu_and_lisbon_treaty_part_1_history_behind_blochttp://www.stratfor.com/analysis/20091014_eu_and_lisbon_treaty_part_1_history_behind_blochttp://www.stratfor.com/weekly/real_world_orderhttp://www.stratfor.com/weekly/real_world_orderhttp://www.stratfor.com/analysis/20100910_looking_2012_china_next_generation_leadershttp://www.stratfor.com/weekly/20100503_global_crisis_legitimacyhttp://www.stratfor.com/analysis/20091014_eu_and_lisbon_treaty_part_1_history_behind_blochttp://www.stratfor.com/analysis/20091014_eu_and_lisbon_treaty_part_1_history_behind_blochttp://www.stratfor.com/weekly/real_world_orderhttp://www.stratfor.com/analysis/20100910_looking_2012_china_next_generation_leadershttp://www.stratfor.com/weekly/20100503_global_crisis_legitimacy


2/4

The financial crisis, and the resultant economic crisis, hurt the United States, but its regime

remained intact even while uneasiness about the elite grew.

But the financial crisis had its greatest impact in Europe, where it is triggering a generational

shift. Since 1991, the idea of an integrated Europe has been a driving force of the global

economy. As mentioned, it also has been presented as an implicit alternative to the UnitedStates as the global center of gravity.

Collectively, Europes economy was slightly larger than the U.S. economy. If mobilized, that

inherent power made Europe a match for the United States. In the foreign policy arena, the

Europeans prided themselves on a different approach to international affairs than the

Americans used. This was based on a concept known as soft power which relied on

political and economic, as opposed to military, tools an analog to the manner in which it

saw itself managing the European Union. And Europe was a major consumer of goods,

particularly Chinese goods. (It imported more of the latter than the United States did.) Taken

together, Europes strengths and successes would allow it to redefine the international system

and the assumption for the past generation was that it was successful.

In the context of the ongoing European financial crisis, the issue is not simply whether the

euro survives or whether Brussels regulators oversee aspects of the Italian economy. The

fundamental issue is whether the core concepts of the European Union remain intact. It is

obvious that the European Union that existed in 2007 is not the one that exists today. Its

formal structure appears the same, but it does not function the same. The issues confronting it

are radically different. Moreover, relations among the EU nations have a completely different

dynamic. The question of what the European Union might become has been replaced by the

question of whether it can survive. Some think of this as a temporary aberration. We see it as

a permanent change in Europe, one with global consequences.

The European Union emerged with the goal of creating a system of interdependency in which

war in Europe was impossible. Given European history, this was an extraordinarily ambitious

project, as war and Europe have gone hand in hand. The idea was that with Germany

intimately linked to France, the possibility of significant European conflict could be managed.

Underpinning this idea was the concept thatthe problem of Europe was the problem of

nationalism. Unless Europes nationalisms were tamed, war would break out. The Yugoslav

wars after the collapse of Communism comprised the sum of Europes fears. But there could

be no question of simply abolishing nationalism in Europe.

National identity was as deeply embedded in Europe as elsewhere, and historical differenceswere compounded by historical resentments, particularly those aimed toward Germany. The

real solution to European wars was the creation of a European nation, but that was simply

impossible. The European Union tried to solve the problem by retaining both national identity

and national regimes. Simultaneously, a broader European identity was conceived based on a

set of principles, and above all, on the idea of a single European economy binding together

disparate nations. The reasoning was that if the European Union provided the foundation for

European prosperity, then the continued existence of nations in Europe would not challenge

the European Union. Perhaps, over time, this would see a decline of particular nationalisms in

favor of a European identity. This assumed that prosperity would cause national identity and

tensions to subside. If that were true, then it would work. But there is more to Europe

politically speaking than an enhanced trading area, and the economics of Europe are hardlyhomogeneous.
http://www.stratfor.com/analysis/20090506_recession_and_european_unionhttp://www.stratfor.com/weekly/20110912-crisis-europe-and-european-nationalismhttp://www.stratfor.com/weekly/20110912-crisis-europe-and-european-nationalismhttp://www.stratfor.com/weekly/20110912-crisis-europe-and-european-nationalismhttp://www.stratfor.com/analysis/20090506_recession_and_european_unionhttp://www.stratfor.com/weekly/20110912-crisis-europe-and-european-nationalismhttp://www.stratfor.com/weekly/20110912-crisis-europe-and-european-nationalism


3/4

Germany and the Periphery

The German economy was designed to be export-based. Its industrial plant outstrips

domestic consumption; it must therefore export to prosper. A free trade zone built around the

worlds second-largest exporter by definition will create tremendous pressures on emerging

economies seeking to grow through their own exports. The European free trade zone thussystematically undermined the ability of the European periphery to develop because of the

presence of an export-dependent economy that both penetrated linked economies and

prevented their development.

Between 1991 and 2008, all of this was buried under extraordinary prosperity. The first crisis

revealed the underlying fault line, however. The U.S. subprime crisis happened to trigger it,

but any financial crisis would have revealed the fault line. It was not a crisis about the euro,

nor was it even a crisis about economics. It was actually a crisis about nationalism.

Europes elites had crafted and committed themselves to the idea of a European Union.

The elite of Europe, deeply tied to a European financial system as a principle, wereEuropeanists in their soul. When the crisis came, their core belief was that the crisis was a

technical matter that the elite could handle within the EU framework. Deals were made,

structures were imagined and tranches were measured. Yet the crisis did not go away.

The German-Greek interplay was not the essence of the problem but the poster child. For the

Germans, the Greeks were irresponsible profligates. For the Greeks, the Germans had used

the EU free trade and monetary system to tilt the European economy in their favor, garnering

huge gains in the previous generation and doing everything possible to hold on to them in a

time of trouble. For the Germans, the Greeks created a sovereign debt crisis. For the Greeks,

the sovereign debt crisis was the result of German-dictated trade and monetary rules. TheGermans were bitter that they would have to bail out the Greeks. The Greeks were bitter that

they would have to suffer austerity. From the German point of view, the Greeks lied when

they borrowed money. From the Greek point of view, if they lied it was with the conscious

collaboration of German and other bankers who made money from making loans regardless of

whether they were repaid.

The endless litany is not the point. The point is that these are two sovereign nations with

fundamentally different interests. The elites in both nations are trying to create a solution

within the confines of the current system. Both nations publics are dubious about bearing the

burden. The Germans have little patience for paying Greek debts. The Greeks have little

interest in shouldering austerity to satisfy German voters. On one level, there is collaborationunder way problem solving. On another level, there is distrust of the elites attempts to

solve problems and suspicion that it will be the elites problems and not their own that will be

addressed. But the problem is bigger than Greco-German disputes. This system was created in

a world in which European politics had been declared in abeyance. Germany was occupied.

The Americans provided security and inter-European fighting was not allowed. Now, the

Americans are gone, the Germans are back and European international politics are bubbling

up to the surface.

In short, the European project is failing at precisely the point that it had been attempting to

solve nationalism. The ability of leaders to make deals depends on authority that is

slipping away. The public has not yet clearly defined the alternatives, but that process is underway. It is similar to what is happening in the United States with one definitive exception: In
http://launchplayer%28%27d083m95v%27%2C%20%27http//www.youtube.com/watch?v=kBQqvE4obus%27,%20680,%20383)http://launchplayer%28%27m5qk6t37%27%2C%20%27http//www.youtube.com/watch?v=r5c5dYaSTEQ%27,%20680,%20383)http://launchplayer%28%27m5qk6t37%27%2C%20%27http//www.youtube.com/watch?v=r5c5dYaSTEQ%27,%20680,%20383)http://www.stratfor.com/geopolitical_diary/20100422_making_greek_tragedyhttp://www.stratfor.com/analysis/20100915_german_economic_growth_and_european_discontenthttp://www.stratfor.com/analysis/20100915_german_economic_growth_and_european_discontenthttp://launchplayer%28%27d083m95v%27%2C%20%27http//www.youtube.com/watch?v=kBQqvE4obus%27,%20680,%20383)http://launchplayer%28%27m5qk6t37%27%2C%20%27http//www.youtube.com/watch?v=r5c5dYaSTEQ%27,%20680,%20383)http://www.stratfor.com/geopolitical_diary/20100422_making_greek_tragedyhttp://www.stratfor.com/analysis/20100915_german_economic_growth_and_european_discontenthttp://www.stratfor.com/analysis/20100915_german_economic_growth_and_european_discontent


4/4

the United States, the tension between mass and elite does not threaten to disintegrate the

republic. In Europe, it does.

Europe will spend the next generation sorting through this. Whether it can do so remains to be

seen though I doubt it. We know the tensions between nations and between elites and the

public will redefine how Europe works. Even if things do not get any worse, the situationalready has been transformed beyond what anyone would have imagined in 2007. Far from

emerging as a unified force, the question will be how divided Europe will become.

Documents

Europe, The International System and a Generational Shift