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A Grande Estratégia da União Europeia

Trabalho de estudantes de Oxford para a competição sobre “estratégia” organizada pela Wikistrat, dirigida por Tom Barnett. Um documento muito elogiado por Barnett, apesar de ter uma marca de “estudo universitário” e deixar transparecer um toque ‘naif’. Mas muito completo e inovador, como nota Barnett. De leitura (quase) obrigatória

The following entry has been excerpted from the ongoing work of students from Oxford University as part of Wikistrat’s 2011 International Grand Strategy Competition.

European Union Grand Strategy 2

The following entry has been excerpted from the ongoing work of students from Oxford University as part of Wikistrat’s 2011 International Grand Strategy Competition. Writers include: Zach Miller, Timothy Nunan, Orlando Zambrano, Elizabeth Betterbed, Roxanne Bras and Will Clegg


The EU’s grand strategy consists of three prongs: “Housekeeping at Home” (preservation of the European monetary union with more fiscal centralism), “Zero Problems in Eurasia” (deeper partnerships with Russia and China as a triangulation around the USA), and “Go South” (seeking unorthodox partnerships as a provider of military equipment and other advanced technologies, scientific sponsor, and agricultural partner with a variety of countries across the Global South).

Strategy Outline

  • In order to achieve its objectives, the EU intends to build a stronger monetary and political union across western Eurasia, to pursue strategic triangulation around the USA as it seeks to create, with Russia and China, a Eurasia that works for all three partners, and to use its non-threatening image to forge strong partnerships with Global South countries that at once avoids exacerbating rivalries with other international powers (like the USA and China).

The main theme of the EU Grand Strategy is a nontraditional and innovative approach. Although since the inception of the European Union strategists have theorized that it meant to challenge the supremacy of the United States and China as a global Leviathan, this is not the approach of our strategy. The structure and capabilities of the Union uniquely suit it to act as an effective intermediary between the so-called great powers. Furthermore, the EU can fill the role of SysAdmin, not just for the United States but for a number of nations that seek to retain and grow Leviathan capabilities. In addition to this role, the EU can reach out to a large variety of states that for various reasons have been considered unattractive partners or even rougues by other important actors. The diverse capabilities organic to the multi-member EU ensures that each member state has the potential to contribute uniquely to the whole of the strategy. That said, in order to coordinate the efforts of its individual states towards ambitious goals the EU must first integrate further in order to ensure that the Union itself remains viable, to reduce distractions from outward looking goals, and to ensure “buy in” from member states into its overarching strategic goals.

This first portion of the strategy requires “Housekeeping at Home.” Pundits have questioned the possibility of establishing a fiscal union in the EU. However, the sovereign debt crises in Greece, Ireland, and Portugal have demontrated the dangers of widely incoherent fiscal policies within member states. These crises place an enormous burden on other members and require bailouts with huge opportunity costs. The first step in housekeeping will be the integration of EU fiscal policies. This will include standards on taxation, borrowing, and eventually extend into labor policies. While not ignoring the individualized needs of member states, the policies include enforcement mechanisms in order to incentivize abiding by them.

The second step in the strategy calls for strengthening EU relationships across Eurasia. While the memories of the Cold War my still linger in the minds of EU citizens, the future of the Union will be determined in great part by its neigbors on the Eurasian continent. In order to safeguard this future, the EU will reach out it’s eastern neighbors. This will require the delicate balance between making inroads into former Soviet rebublics and ensuring overtures are not viewed as intrusions into Moscow’s sphere of influence. This trans-Eurasian strategy also includes closer partnerships with Russia itself, China, and more nontraditional partners such as Pakistan. This final approach undergirds the third phase of our grand strategy.

In the third phase, the EU will seek out dynamic partners in non traditional spaces through innovative means. These means include weapons sales, high tech cooperation, and cultural knowledge transfers. The epistemic power associated with these three appraches could potentially make further inroads into and extract more significant concessions from peripheral states than coercive actions. Again, the delicate balance will be reaching out to seemingly marginalized states such as Venezuela or Iran with out scuttling the important stategic partnerships that the EU will have built with the major powers and sustained over the course of decades.


  • While the EU cannot aspire, as can China or the USA, to be a global hegemon or even one of two or three major superpowers, it can and should aspire to play the role of global meeting place and facilitator between any number of powers in a globalized, multi-polar world.

Doing so requires a few things. It requires surviving the immediate threat of monetary disintegration in the face of sovereign debt crises. It requires forming long-term partnerships that “go with the flow” of security, capital, and energy across the EU’s closest neighborhood of northern Eurasia. And in the long term, it requires finding creative ways to insert the EU into areas not traditionally within its purview, whether this means exploiting the arms trade, space tech, SysAdmin help, or other opportunities.

The main rationale behind pursuing this strategic path is an opportunistic one. The EU, with its breadth and depth of member states, corresponding cultures and languages, can fill the SysAdmin gap that no other major power is seeking. Though the assumption of such a role the EU can obtain indispensable status amidst the contest to become and remain the preeminent Leviathan state. The internal housekeeping portion of the strategy is simply necessary for the continued growth and credibility as a political and economic entity. Without integrating fiscal policies to prevent the possible fragmentation of the Union none of the subsequent strategies will be possible. The Trans Eurasian partnership strategy hinges on the global image of the EU and internal discord over issues such as government spending and taxation significantly impacts its ability to cast itself as global facilitator and SysAdmin.

The pursuit of deeper and wider Eurasian partnerships represents a pragmatic recognition that good politics and diplomacy moving into the 21st century requires a view to the East in addition to the West. An adversarial view towards Russia and China is not conducive to the furthering of EU influence. Rather by engaging Russia, China, Pakistan, and even Iran the EU can demonstrate its ability to navigate complex relationships and emerge as a purveyor of key support services to traditionally peripheral states. Lastly, this strategy presents a careful hedge against overreliance on the U.S. in the long-term. By carving its own important position on the Eurasian content the EU can take leadership on initiatives without constantly looking behind them for U.S. backing.

By engaging the Global South to a wide extent the EU can seek out partners that complement its own unique capabilities. Rather than competing head to head with the Leviathan powers for influence in peripheral states, the Union can export influence in a few specialized niche markets. Arms sales provide a key example of niche opportunities. While the U.S. defense industry prices itself out of most markets and the Russian and Chinese develop and market products of questionable durability, the EU can fill the gap providing products of high quality and good value that fit the needs of many potential customers. This move to the periphery is not meant as a direct affront to pre-existing spheres of influence, but rather it is an opportunity to provide the Global South with partnership alternatives.

Collectively, this strategy positions the EU very well for global leadership in a non-traditional sense. By seeking to fill a gap among strong states and leveraging unique capabilities to build unique partnerships this strategy fits very well with the policy objectives and character of the EU.

Phases of Implementation

Sub-strategic components that enable the comprehensive implementation of the strategy across multiple domains.

Political Sub-Strategy

  • By establishing itself as an independent “strategic pole” in the international community and then pursuing a policy of “strategic triangulation” that abandons traditional, inflexible alliance-based approaches in favor of pragmatic and dynamic issue-based collaboration, the EU can maximize its influence in global affairs. Particularly in the Global South, the EU can deploy its substantial soft power resources as the most successful regional bloc in the world today, serving as a mentor for similar projects in other regions as well as an honest broker and institution builder between and amongst nations.

The EU’s future – as events in Libya and the comments of American Secretary of Defense Robert Gates have shown – lies less with playing junior partner to a single Leviathan whose top foreign policy analysts deride it, than with reinventing itself in new ways that assert an independent European position on the international stage in which the EU can develop policy on a more pragmatic, creative, and flexible basis. It also lies with taking advantage of the EU’s geographic location – a natural hub and meeting place between the America, Eurasia, and Africa – as well as its prestige in international organizations both to encourage other powers to use Europe as a forum for discussing their differences, and as a way to insert itself into other regions of the world in which it has more peripheral, but still important, interests.

Exploiting the OSCE – the Organization for Security and Cooperation in Europe, originally created as a Cold War Forum for East-West cooperation – represents one potential avenue for pursuing this goal. A classic Trans-Atlantic organization with operations all over the former Soviet world and Southeast Europe, the OSCE has played an important role in helping member states develop state capacity for policing, combatting drug trafficking, improving education, and encouraging the development of civil society. As a gesture of goodwill and in order to increase the relevance of the organization, member states could invite the newly democratic countries of the Arab Middle East – Tunisia and Egypt, along with reformers like Kuwait, Jordan, and Oman, and (contingent on constructive reforms) Bahrain and Syria – both to contribute resources and manpower to the organization as well as to receive support from the OCSE and its existing staff of 3,500 professionals with extensive experience in aiding democratizing countries.


Leverage Kazakhstan’s ambitions into an EU strategic triangulation, all while using established institutions

The EU could seek out support for this approach from important neighbors, thus facilitating the diplomatic outreach itself and opening new areas of cooperation with key regional players. Turkey is a member of the OSCE with a critical interest in the stability and prosperous development of its Arab neighbors. Regardless of the fears expressed by some analysts that the rising power might have “neo-Ottomanist” designs on the region as a whole, it should be clear that more transparent elections, better policing, and better education – in short, the foundations for capitalist development under liberal institutions – would play to the shared interests of the Middle East, Turkey, and the EU. Kazakhstan is another potentially interesting partner. As its recent chairmanship of the OSCE suggests, Kazakhstan, in spite of its numerous problems with human rights at home, is eager for more global influence and integration into Euro-Atlantic institutions, as part of Kazakh President Nazarbayev’s “multi-vectoral” foreign policy. Expanding the OSCE into the Middle East would give both Kazakhstan and Turkey – two Turkic powers with ambitions for more regional leadership – a chance to flex their muscles in a way that makes them more independent from Russia without actually threatening to Russia itself. Giving our Kazakh and Turkish partners a chance to exert more influence in the Muslim world – but within the framework of existing European institutions like the OSCE – is a perfect example of the role the EU will play in the future multipolar world: no longer the center of the action, granted, but the ideal facilitator of other powers’ peaceful rise as they seek legitimate institutions and pathways that avoid unnecessary alarm to more entrenched powers. Given the US’ presence in OSCE, its own desire to improve relations with Kazakhstan and Turkey, and its need to rehabilitate its image in the Muslim world, this approach also represents an opportunity for “strategic triangulation” that does not threaten the US.


Various free trade and economically integrated areas around the globe: an alternative to the Core/Gap Model

This represents just one specific thrust of a broader political strategy that would see the EU seek to expand its influence as an honest broker and institution builder on the international stage. Moving beyond its own regional neighbors, the EU could extend this outreach agenda to other parts of the world. Facilitated by its position as the most successful regional bloc in history – with the attendant expertise and outlook to support similar efforts – the EU should consider extending the possibility of cooperation and capacity-building support to groupings that have been inspired by the European effort, from ASEAN to MERCOSUR.

Finally, Europe’s unique ability to pursue a more flexible foreign policy than some of its allies – particularly the US – and to communicate with a large and diverse group of actors can be an asset in more conventional diplomatic settings. Wrangling over Iranian nuclear ambitions represents just one recent and poignant example of this opportunity. Several analysts have noted that American sanctions on Iran have been unsuccessful in part because they do not address all of the relevant regional players, with American diplomacy limited by a number of constraints in this regard. Now that there is general consensus about the impotence of American sanctions, Europe has the opportunity to play an important role in mitigating risk of nuclear proliferation, which would be beneficial to its own security, as many European countries would be within the range of nascent Iranian weapons, as well as to the EU’s future strategic prestige, as successful negotiations with regional players would highlight Europe’s unique ability to negotiate solutions. Indeed, this represents an opportunity for the EU to demonstrate its utility and continued commitment to supporting American interests. To put it plainly, Europe can do things in the diplomatic sphere that, for domestic political reasons, the US cannot. To cite additional examples, France can negotiate with Palestinian groups, while Germany still retains close diplomatic ties to Israel. Meanwhile, though no EU countries currently have close diplomatic ties with Iran, Turkey could change that equation. Even stopping short of EU membership, Turkey could be engaged to support a diplomatic push as one part of the effort to build the sort of regional partnership outlined earlier in this section.

Military Sub-Strategy

  • By capitalizing on the military advantages afforded by its internal diversity – and mitigating the attendant drawbacks – the EU should take advantage of a relative lack of traditional military threats and use the military sphere as yet another forum for partnership-building and international cooperation.

The EU neither wants nor is able to pursue direct military confrontation with any powers in its region of the world, or on a global stage. Simply put, security now occupies – as it should in the Old Core – a decidedly small portion of the total attention of European policymakers, who are primarily concerned with improving trade, the quality of life of their citizens, and peaceful integration in order to manage the rising tides of globalization. However, this hardly means that the EU lacks a military sub-strategy; on the contrary, by finding a suitable niche for itself that accords with its interests and capabilities, the EU can and should play an important role in global military affairs.

Recent headlines – from the crumbling of NATO to the apparent impotence of European force projection in Libya – would seem to suggest the inevitable decline of the EU as a military power.These, however, are misleading, as the focus of the analysis is misguided. The strategic rationale for NATO, in addition to the ability of its member states to foot the bill, may indeed be declining, and there can be little doubt about the diminished capabilities of a European Leviathan force to shape the course of world events at the point of a gun. Nevertheless, this matters less in a globalizing, 21st-century world in which the primary security threats to the EU are transnational in nature, and, as such, require international collaboration and coalition-building rather than unilateral force.

It should be noted that Europe, with a collective defense budget of $300 billion supporting about two million troops, remains amilitary heavyweight in relative terms. The problem, as in the diplomatic and economic spheres, stems from a lack of coordination that leaves this force disjointed and fails to capitalize on potential synergies. However, European pretensions to international power and preeminence – particularly in places like France and Britain – will likely drive a pragmatic reappraisal of this disjointedness, as recent events appear to imply. Working towards greater coherence would allow the EU to capitalize on its internal diversity, both in terms of equipment and capabilities (from entrenched British counterinsurgency know-how to budding Estonian cyber security expertise).

This range of capabilities, along with its experience in counterinsurgency, peace-keeping, and capacity-building, make the EU an ideal SysAdmin force. Meanwhile, its flexibility in its foreign relations give it the capacity to “triangulate” between old and new Leviathan forces, from the US to China and Russia. If Turkey becomes fully integrated into the EU, Europe will also be able to sever its triangulating position with Iran, possibly assisting in an alternative to the sanctions program that has not significantly deterred Iranian nuclear progress, despite its marginal impact on Iranian GDP. This will greatly increase Europe’s strategic relevancy to the US, thus mitigating concerns that US financing of NATO is not worth the costs. The scope for cooperation in places like Africa and Central Asia – as we have analyzed here, here, and here – is great. Nevertheless, in accord with our policy objectives, the EU should not limit its interactions to traditional – or even new – Great Powers. With a solid and stable national and regional outlook, it should seek to build military alliances farther afield, where it has fewer core interests at stake but still stands to gain economically, politically, and strategically.

A Military-Industrial Outreach program

An innovative elements of this agenda in the military realm could come from a more entrepreneurial and strategic approach to arms production and sales. While being explicit about not seeking to undermine the safety or stability of other powers, the EU can leverage its advantage in the defense industry to become the preferred supplier of military aid to Global South countries seeking an alternative to American or Russian weapons systems, building new political partnerships and securing new economic benefits in the process. Proceeding down this path necessitates caution and constant vigilance in order to avoid providing fire power to potentially repressive regimes. However, as we have outlined with regard to China, the flexibility that allows the EU to engage with new partners can also provide a source of diplomatic leverage to extract concessions, particularly in terms of human rights and improved democratic governance.


10,000 tons of diplomacy

As the EU aims to flex its soft power smile in more benign ways throughout the world (consider the analysis below of media and PR strategy), this proposition stems from the realistic and clear-eyed recognition that soft power is not just something that comes to populations on television screens. Soft power can also come in the form of military-military cooperation stemming from platform interoperability (GPS technology, for example), from foreign militaries more familiar with European hardware (like the G-36 rifle), and from commercial and military ties to other nations’ militaries and intelligence organizations that can be achieved with exporting high-value equipment to rising powers. The EU aims to fill the vacuum that lies between American manufacturers (who still produce the best equipment, but will not sell to potential rivals to the United States) and Chinese and Russian ones (who can compete on cost and may be able to dominate sales to less developed countries, but who also have many more potential enemies to worry about and cannot triangulate the market in the way EU makers can and should).

The EU is already home to some of the top weapons manufacturers in the world, and these corporations are doing a booming trade, despite depressed domestic spending on new hardware. BAE Systems, which produces the Typhoon, Tornado, and Hawk aircraft, is the biggest defense contractor in the world and a leading technology developer. EADS, a European conglomerate, includes Airbus, Airbus Military, and Eurocopter (the largest provider of helicopters in the world). Finmecannicca, an Italian group with annual sales of around $13 billion, is one of the leading providers of airport, radar, and high-tech aerial scanning solutions. At the same time, there remains huge room for growth, as these EU producers still primarily service NATO-friendly consumers: Saudi Arabia (a key partner for countering Iran and assuring the continued flow of oil out of the Middle East) is the main consumer outside of the EU.

Not for international consumption: the US remains the boss when it comes to military equipment, but don’t build what you can’t sell to others.

On the whole, while it remains true that US firms like Raytheon, Boeing, Honeywell, and Lockheed Martin tend to dominate this sector globally, the fact that they provide so much for a Leviathan is not only a strength (the sheer number of contracts) but also a weakness. The B-2 Stealth Bomber and Nimitz-class carrier may be impressive pieces of equipment that give US forces an overwhelming advantage over most foes in combat theaters, but their advanced nature make it impossible, or at the least, politically toxic, to sell B-2s to any potential buyer. Even the United States’ closest allies, such as Israel, Australia, Japan, and Saudi Arabia, do not and will not have access to cutting-edge equipment like the F-22 Raptor jet fighter; the leviathan force depends on its technological edge. Meanwhile, even if these political barriers could be overcome, the US remains unique in its ability to contemplate spending $1 billion on a single aircraft.


Outmanuevering Russia on global arms markets when it produces top aircraft like the Sukhoi-35, pictured here, will be a challenge, but one that can help redefine the EU as a global actor.

Russia, traditionally a supplier of choice after the USA, faces different opportunities and challenges. On the one hand, Russian firms have strong ties with historical Soviet allies like India: the Indian Air Force makes use of Sukhoi and Mikoyan (as well as French) jets in its air force, and while India’s new Vikrant-class submarine will be home-made, the Indian Navy still relies on oneKiev-class aircraft carried procured from Russia in 2004. Venezuela, too, is a major purchaser of Russian arms, having purchasedseveral Sukhoi-35s to complement its F-16s. But with Russian power declining and much of the Russian middle class eager to find ways to move the economy from what still looks like a Brezhnev-era arrangement – gas and guns – Russia may realize it needs to divert investment and capital away from the defense industry if it is to prosper as a knowledge economy, rather than a creaky petro-arms-state. Pressure may come on the demand side, too: where India purchases Sukhoi-35s, Pakistan, Uzbekistan, Indonesia, Singapore, and others will want to counter by beefing up their own forces to achieve superiority over their neighbors. Fortunately, the EU is in a prime position to out-innovate Russian defense firms, with superior educational institutions, better flows of human capital into the region, and fewer strategic competitors when it comes to selling their products around the world.

Indeed, undercutting Russia in global arms markets will be a crucial area for the expansion of the EU’s influence. Most Central Asian states, for obvious historic reasons, rely on Russian-manufactured equipment, but Kazakhstan has indicated its desire to pursue a more “multi-vector” procurement strategy, given its strategic position between Russia, China, and NATO. Uzbekistan, while more isolationist and much more repressive than Kazakhstan, could potentially become a customer – contingent upon political reforms – as Kazakhstan rises and Iran becomes more dangerous in the neighborhood. While one cannot tread too lightly with a country known for boiling dissidents the unfortunate truth of power politics is that the EU will have to take advantage, as it has already done by lifting arms embargos on Tashkent, of the new security landscape in Eurasia. Indeed, it would be fatalistic and defeatist to ignore this potential source of diplomatic leverage – however unorthodox – to support human rights in the region.

By helping to modernize the Russian economy (below) at the same time that it, along with China and the USA, contributes to re-arming the currently decrepit Kazakh and Uzbek militaries, the EU can pursue a dynamic strategy of triangulation while building regional partnerships that will contribute to a “zero problems in Eurasia” approach to the region. Indeed, while some of the Central Asian states provide the best examples of the tack the EU can take here, a similar strategy might be pursued with traditional Soviet allies trying to reduce their military dependence on Sukhoi, Tupolev, and Ilyushin spare parts – places like Vietnam, Angola, Eritrea, Ethiopia, and, to a lesser extent, Indonesia. With the possibility for political change looming on the horizon, Venezuela could be yet another new European partner if relations between Moscow and Caracas deteriorate and the EU is especially daring.

Economic Sub-Strategy

  • The status of the Euro as the only alternative to the Dollar as an international reserve currency assures the continued relevance of the EU in international economic and financial governance. It should leverage this and its deep pools of capital and technology to begin building a series of strong economic partnerships with China, Russia, India, and Southern Powers (Sub-Saharan Africa, Chile and South Africa), investing both short-term in conventional energy and established markets, while also hedging long-term in developing markets, green energy, bio- and space-technology.

Domestic Housekeeping

In the short-term the preservation and strengthening of the Eurozone is key to safeguarding the progress of the EU, and indeed to positioning the EU as a solvent and viable power with the economic stability to pursue the other strategies included on this page. The bailouts of the peripheral economies highlight the need additional mechanisms and rules that will prevent debt crises in member states. This underscores the need for greater fiscal centralism, the absence of which will put ascendant status of the Euro will be in jeopardy. If member states continually threaten to break the Eurozone as a consequence of localized fiscal mismanagement and require other members to bail them out, at best, the permanence of the EU as an important and cohesive power will be questioned. At worst, the sovereign debt crisis will grow to unmanageable proportions, weak member states will be force to withdraw and the Euro will fail as a currency.

The full centralized control of fiscal matters in individual member states would be both unwieldy and greatly resisted by members. The implication that Brussels can navigate the macroeconomic asymmetries, diverse demographic landscapes and varying domestic values and priorities is unlikely to be accepted my many members. However, greater coordination of policy on labor reforms, spending, and taxation provide the first steps towards staving off future crises. By establishing a system of parameters that more closely coordinates fiscal activities and by providing members with the tools and expert knowledge to fix and reform the inefficiencies in their domestic policies the Monetary Union will move toward socializing the idea of centralized fiscal policy. In order to coherently pursue this Grand Strategy all the members must have some proverbial “skin in the game.” This not only provides an important legitimation function but it also incentivizes participation in implementing the strategy. To ensure that members states “buy in” the EU must develop some degree of authority to mandate certain line items in domestic budgets. While providing such a power to the EU may be perceived as an erosion of member state sovereignty it greatly increases the possibility to for coordinated strategic efforts as it guarantees funding to important initiatives.

Russia: Investment and Gas

Economic cooperation with Russia is at the core of our strategy for “zero problems in Eurasia.” As we have outlined in our recent analysis, and as President Medvedev himself acknowledged in one of his major policy addresses, it is crucial for Russia’s long-term success that it find a way to wean itself off of its “humiliating dependence” on natural resources. It is not surprising that all three Russia teams in this competition placed economic modernization at the center of their vision for economic rebalancing. Indeed, as recently as last week, President Medvedev vowed to run as the “change” candidate in the 2012 Russian Presidential elections. The only question is how it will do so. We argue that the EU (arguably in concert with China) will play the role in recapitalizing Russia. Only recently did we learn that Russian capital outflows are likely to increase by 50% this year on fears of corruption and drops in oil pirces, mostly to the City of London and Zürich. This outflow of capital is arguably healthy neither for the financial services industry in Europe (too much money to be made simply from transaction costs of this capital), nor for Russia (too much capital escaping from an undercapitalized region into global capital markets where banks are often reluctant to lend given the economic insecurity, especially in Europe.


Our man in the Kremlin?

In the long term, it will be crucial that Russians themselves lead the charge for economic reform in their own country. In the meantime, however, European and investment banks should put as much leverage as possible on the Russian policy apparatus to reform bizarre rules regarding ownership that prevent the economy from being more dynamic than it could be. Russia recently announced that foreigners could not own property in border regions, a devastating prospect given the artificiality of post-1991 borders, especially between Russia and Ukraine, and as this recent report by Knight Frank and Citibank emphasizes, buying farmland is literally impossible in Ukraine (where there is a moratorium on foreigners buying farmland) and extremely difficult in Russia. Given the richness of the Russian and Ukrainian “black earth” soils and the role they could play in a global food economy that will make several countries rich, this is bad for the world, bad for Russians and Ukrainians, and bad for the EU. Needless to say, encouraging Russia’s accession to the WTO (which might have to be greased by increased EU-American assistance to Georgia to prevent a veto) will have to play a crucial role here.

Iran: Hedging Our Bets

Cooperation with Iran could be a gutsy move to triangulate away from the USA in the event that the NATO alliance breaks down more quickly than anticipated. While collaborating with a regime whose leadership appears publicly committed to the destruction of Israel is clearly unlikely for, say, Germany, for other EU member states the flexibility of the organization will give them space to maintain ties with Germany while also inserting themselves into the conversation in Southwest Asia and creating a better working relationship with Iran.

Not the kind of flow we like: why not flow SysAdmin assistance back to Sistan and Baluchistan to garner goodwill with Tehran?

One potential area of cooperation is the global drug trade. Iran is devastated by the outflow of opium from Afghanistan; as a proportion of its population, Iran has the greatest number of heroin addicts of any country in the world. Not only that, but much of this heroin flowing through Iranian veins and roads is destined for Europe. According to the same report linked above, “It is worth noting that seizures in Pakistan, Iran and Turkey alone accounted for 62 percent of global seizures in 2008 and almost half the European seizures in the same year were made by just three countries, namely the United Kingdom (18 percent), Italy (14 percent) and Bulgaria (13 percent). The combined volume of heroin estimated to enter Iran is some 140 tons, of which 14 tons is consumed in country and 32 tons is seized, giving Iran the best interception record at some 22 percent of its overall flow, compared to 18 percent in Pakistan and 10 percent in Turkey.”


Stamp it out with Persian and Turkish partnerships

This all creates a broad front for cooperation between Iran, the EU, and Turkey – three countries interested in stemming the global drug trade – and is also an opportunity for collaboration that will likely not hurt US-EU relations. In spite of all of its difficulties with Iran both historically as well as under Ahmadinejad, the global War on Drugs in one of the USA’s signature foreign policies. And while US interest in degrading the Taliban in Afghanistan appears itself to be declining following the assassination of Mr Bin Laden, opium cultivation in Afghanistan remains a major source of income for radical Salafi Islamist groups based in South Asia. To be more concrete, the EU might offer its assistance in training Iranian border guards, customs officials, and police who will serve on the Iranian-Afghan and Iranian-Pakistani border; the EU has, along with the US, the most experience of any country with border control and anti-narcotics operations, and it is an ideal way for the EU to flex itself as a SysAdmin to create new dynamic partnerships. If Iran is willing, this might be an ideal opportunity for OSCE, or national development agencies like the German GIZ (Gesellschaft für internationale Zusammenarbeit) to play a bolder role in assisting their Iranian counterparts with transnational governance issues.


A tragedy, but one not to be wasted: use anti-narcotics as the base for a broader partnership with Southwest Asian countries

While eliminating the flow of drugs from Afghanistan to Southwest Asia and the EU is in the interest of all relevant parties (the EU, Turkey, and Iran), such measures for cooperation might pay off in improving relations between Iran and the EU, again with Turkey as a potential deal-maker. The two sides might begin to see that, important as the nuclear issue and a peaceful resolution to the Palestinian Question are, there are other rich areas for cooperation. Iran would like to increase trade with Herat and Western Afghanistan, but it needs more foreign investment to intensify this partnership, and this could be a fertile venue for European investment. Fears of an Iranian empire are misplaced: Iranian business loves Afghanistan as a country with a growing population that still needs to import huge amounts of goods, but given that Iran is already stressed with attempting to care for millions of Afghan refugees from the wars, it is unlikely to go beyond trade relations with Afghanistan. Over the medium-term (10-15 years), the EU could leverage this limited partnership with Iran to have a more productive conversation with Iran on the nuclear issue, potentially playing the role of a more honest interlocutor on a USA-Israel-EU-Turkey-Iran nuclear deal.

Central Asia, Iran, Afghanistan, and Pakistan: On a Rail

Economic growth in its 21st century variety – improving free trade across the entire globe, enacting market reforms, and connecting different peoples, places and ideas from Kuala Lumpur to Seattle – has been so transformative and so widespread precisely because it is not a zero-sum game. Unlike the old days of “Great Games” and German-Soviet rivalry for control of Eastern European agriculture and populations, this new era, while competitive, contains many shared benefits for parties involved.

Still, certain regions of the world – particular what Thomas Barnett has called the Gap – stand outside of these processes. What Zbiginew Brzezinski called the “Global Balkans” – the area of Eurasia from the Levant to Xinjiang and Pakistan – is the core area of this problem. To list some of the historical problems here – post-Soviet corruption, the Taliban, Iranian isolationism, lack of democracy – would be repetitive.

But this entire region could be dramatically revitalized, and currently hot issues like the Taliban, Iranian nuclear proliferation, and Central Asian energy pushed to the side if economic integration took place across this space. So many of the region’s issues stem from a lack of economic opportunity, and the inability of talent from within this space to integrate with institutions, firms, and organizations in the Old and New Cores. We assert that young Tajiks, Uzbeks, and Pashtuns, if given the opportunity to earn some cash by driving trucks to shipping depots in Mumbai rather than into Indian and American embassies to blow them up, will take advantage of this opportunity. The bourgeois lifestyle and middle-class values hold tremendous appeal the world over. The 9/11 and 7/7 bombers, it is true, all came from Muslim societies and were more often than not alienated for a variety of reasons, but another common factor is that they were all single, had little opportunity for alternative legitimate employment to terrorism, and were not placed in an economic order that would give even low-skilled minority men the opportunity to improve themselves, get a job, and start a family. Not only that, but the region these legions of unemployed, largely under-educated men inhabit, sits at the middle of a continent whose two poles – the EU and China/East Asia constitute two of the biggest producing and consuming blocs in the world, with a huge interest in improving trade between one another. Not only that, but given the rise of India, the Arab Spring, and the persisting US influence in East Asian waters, China is eager to seek land-based alternatives to ship its goods across the Eurasian landmass. That’s why China has already invested half a trillion dollars in its own domestic rail infrastructure, particularly in its west, and has announced plans to build a high-speed rail line connecting London to Beijing in two days. In order to exchange more effectively with one another, as we have noted elsewhere, the EU and China will have to cooperate across Eurasia, from the Northeast Passage to helping keep the seas off the Horn of Africa safe. And while a majority of global trade still occurs via the sea, boosting land links could be a crucial area of participation both with China as well as other Eurasian partners – all part of a “Zero Problems” Eurasia strategy for the EU.


Central Asian industrial enterprises, like the notorious TALCO plant in Western Tajikistan, produce huge riches that could be destined for EU and Chinese markets. Cooperating with the Chinese both via the ADB and as part of a dual partnership could bring these treasures closer to Brussels and Beijing

Start with Central Asia, mostly known for its gas, but also a huge exporter of uranium, nickel, silver and zinc, as well as a major buyer of both American as well as European heavy machinery to get said materials out of the ground. Uzbekistan is the second largest exporter of cotton in the world, but is shifting its focus to wheat in light of global demand for food. Tajikistan is a major processor of Central Asian aluminium, and Afghanistan is said to have up to $1 trillion in untapped reserves. Still, infrastructure in the region remains unimpressive. Ships from Baku to Turkmenbashy on Turkmenistan’s coast routinely sit in port for days, andUzbekistan ranked 163 out of 179 countries in the Heritage Institute’s ranking of worldwide economic freedom. Still, there are huge possibilities for cooperation with the Central Asian states as well as China here. EU members of the Asian Development Bank, which has already made major loans of over $100 million to Cambodian for East Asian projects, might consult with other powers in the ADB to extend greater financing towards logistics investment in underdeveloped Central Asian partners to the ADB, like the post-Soviet Stans and Afghanistan, to get the ball rolling there. But this isn’t just going to be a simple negotiation. As in other areas, the EU will have to use the advantage of its flexibility to further the process. The EU could use its role as a potential arms dealer, energy buyer, and major funder (via the ADB and ECB) of the Uzbek and Kazakh economy to leverage a deal here: more weapons for a more open economy, for example. Given the intensely personal nature of Uzbek and Kazakh domestic politics, allowing mafia-owned shell companies like Zeromax (an Uzbek holding company owned by President Karimov’s daughter which itself was dissolved after a power struggle last summer) a freer hand to list themselves on European stock markets, or operate freely in European banks, could be a handy tradeoff. Afghanistan is even trickier and more dangerous, and capital lending there will require a new deal with both Iran and Pakistan.


Improving trans-Eurasian logistics is an area of potential huge interest to all parties, and it might be able to turn countries like Pakistan and Iran around, too. The EU has to play a leading role with China in developing this sphere.

Consider Iran first. As we have just noted above under narcotics, getting to a modus operandi ends with the nuclear issue andbegins on issues of shared interest. Indeed, if Iran could be integrated into a Southwest Asia regional solution where it has more to lose than to gain by throwing a bomb into the equation, the issue becomes moot. Counter-narcotics is a good place to start, but the best place to start to invest Iran in the region is cooperation in logistics. And perhaps the best place for Iranian logistics to start may be Afghanistan. Historically, Afghan cities like Kabul, Mazar-e Sharif, and especially (from the Iranian point of view) Kandahar and Herat played a central role in facilitating trade between South Asia and the Middle East. They were southern routes to a broader Silk Road that linked together East Asia and Europe. Iranian entrepreneurs have already played a hugely constructive role in rebuilding infrastructure in Western Afghanistan, and with the support of Iranian domestic capital as well as lenders like Japan, they have done excellent work in integrating Herat and Western Afghanistan, already historically close to Iran, into the Iranian domestic economy. What’s more, there exist plans to build a railway to Mashhad, the second-largest Iranian city in the northeast of the country, and from there on to Tehran, Istanbul, and, potentially, via the world’s deepest railway tunnel underneath the Bosphorus, European markets. Iran, which is a net food exporter (and a potential partner in solving long-term problems related to the flow of food), should have every interest in expanding Southwest Asian trade, particularly as members of the ruling élite like, most notably, Hashemi Rafsanjani control monopolies over key areas (Rafsanjani controls the pistachio import/export business in Iran) and stand to gain more than anyone with economic expansion. Turkey, meanwhile, is eager to extend its influence throughout the greater Middle East and to revitalize its flagging southeast Kurdish regions. Trade could be an option.

Connecting Iran to AfPak could be part of a broader logistics strategy for EU firms and development banks seeking improved trade and relations with the countries of “the Global Balkans.”

So what can the EU do about it, and why should they? On a national level, even if funds on an EU-level are scarce to come by given the crisis, a strong case could be made for Germany in particular to direct more funding from the GIZ (Gesellschaft für internationale Zusammenarbeit, Germany’s major foreign aid organization), KfW (the major German development bank) to Iran and, potentially Pakistan (more there below), extending two hands of technical and financial aid to Iranian and European firms working in the logistics sector in Iran. This doesn’t just make good diplomatic sense; it also pays. German firms like MAN, Volkswagen, Mercedes, ZF Group, and others, are already heavily invested into Iranian infrastructure and selling automotive and mechanical engineering products to the Iranian domestic market. Further down the road, Iran could even play the role of a low-cost production center for the European automotive industry, in much the same as Turkey has in the last twenty years. Not only this, but Iran’s leaders have voiced their desire for greater foreign investment in the transport sector. Stimulating more lending from private banks and development banks could be a win-win situation here, and a step towards a broader Eurasian logistics network. Needless to say, tradeoffs involving human rights, arms deals, or – most audaciously – the nuclear program could be part of a trade deal. In the long run, however, the EU’s goal should be to promote globalization and global trade and make it extremely irrational for countries, even those as eccentric as Iran, to divest from that order.

“Eccentric” is also a charitable description of the government in Pakistan, yet it, too, might be part of a grand deal involving logistics as a key to a breakthrough. Given our focus throughout on “flows,” Pakistan is a huge problem in the global system. It flows Salafi ideology and military support to Pashtun militias (Taliban) in Afghanistan. It constitutes a huge sink for American security flows when they might be directed towards other hot spots. And the ruling élites of the country flow capital to London, where they enjoy posh penthouses, flats, and better hospitals than even the Pakistani professional classes can find in Islamabad or Lahore. As far as global trade and globalization is concerned, Pakistan is a disaster: its negligible border and trade links with India halt the natural flow of goods and firms across Asia, which in turns isolates Iran from the global system in ways that give the Islamic Republic fewer incentives to go along with integrating tendencies. If Pakistan, however – a country with warm water ports at a crucial nexus between Central Asia, the Middle East, and East Asia – could be brought into global trade flows more robustly, this could alleviate much of the pressure Pakistan’s eccentricities currently place on globalization.


Today known as the logistical center, arguably, for global jihadism, Islamabad could have a vibrant future as a regional trade hub, connecting India to Iran, and China to the Arabian Sea.

The EU might play a positive role in helping to integrate Pakistan into this global order. Incentives exist on both sides, as well as on China’s end as a potential deal-broker. With huge populations of Muslims in the EU, and in particular Pakistani-British Muslims in the United Kingdom, the EU has a strong interest in Pakistan become part of a global integrated order, rather than shrinking into the role of autocracy holding the world hostage with Pashtun militias and nuclear weapons, one that generates huge flows of human capital around the world seeking to bring down the globalized world and the European countries that so often stand for this model of development. Simply on a PR end, the EU would do a huge favor for itself by investing in Pakistani logistics and seeking to serve the role of dealbroker when it comes to improve Pakistani-Iranian trade (not just for its own sake, however, but in order to improve the flow of goods from South Asia to Europe via a Eurasian transport corridor). Of course, goods can go in the other direction, too. Pakistan, as the UN has underlined, faces huge challenges in terms of infant mortality and women’s rights, but it stands to be, at any rate, a huge market of over 300 people by mid-century, one that European firms can stand to tap, whether in terms of buying or investing in land (contingent on land reform) or simply in terms of shipping consumer goods there. Either approach, however, will require an improved logistics structure to what Karachi – an underequipped, overcrowded, terrorist-filled cosmopolis – can offer today. In return for these investments, the EU and other outside actors (namely China, as we discuss just below), will demand the usual mix of packages: reform of the tax code, reduction in corruption, and no sponsorship of the Taliban or LEK. Pakistan has to be convinced that its future lies not in seeking “strategic depth,” but rather reaching out to regional and global markets, and that the EU and China are here to help it in a non-zero-sum tripartite partnership.


Gwadar Port in Balochistan, largely funded by China to this point, could generate 2 million jobs – in a region of Pakistan with only 6 million people and known for tribal warfare and its role as a staging ground for Pashtun militias in southern Afghanistan

It would probably be overly ambitious to claim that EU SysAdmin assistance developing trade in Pakistan via improved logistics could solve the overall crisis situation in the country. But then again, the EU might not have to do it on its own. China has poured in billions of dollars of investment, close to $9 billion as of May of this year into infrastructure and other projects in Pakistan, in particular rail, road, and port infrastructure. In particular, it has Beijing’s aim is clear: it wants to develop alternative trade and shipping routes to Singapore in order to give itself more options in formulating a Southeast Asia policy. (We might only add that assisting China in developing a Northwest trade route plays into this Chinese policy tradition.) Controversially, one of the Chinese rail lines is projected to run through the northern areas of politically sensitive Kashmir, which is partly why China balances its aid to Pakistan with aid to, for example, building nuclear reactors for India. But aid to Pakistan, with the dual aim of improving north-south flows of goods (for China, to the Indian Ocean) and the east-west flow of goods (from India to Turkey via Iran and Pakistan) could be an area of joint EU-Chinese cooperation. It might serve as a boon to boost India-Pakistan cooperation, improve trade between the two countries, and serve as a tentative step towards integrating the region and giving the policy actors fewer reasons to destabilize the region. In the end, we believe, the way to make the persistent Pakistani concern with “strategic depth,” India, and Kashmir less relevant is to integrate it more and invest it more in a regional order. If China and the EU together can create a regional world of trade where so many goods are already flowing through Kashmir to Islamabad and Pakistani ports that the status quo becomes, in some sense, that will resolve the situation more effectively than any top diplomatic team can. Likewise, if formerly unemployed youth in Quetta or, for that matter, Kandahar, learn of opportunities on the docks in Gwadar (a warm-water port in Baluchistan built with heavy Chinese investment and projected to generate two million jobs), we are willing to bet this will appeal more than living in mud huts and caves in utter poverty, not having regular access to women, and blowing themselves up. Naïve? Consider that the population of Pakistan is already scheduled to roughly double in the next forty years, primarily in urban areas. Any Pakistani government, regardless of its neuroses, simply cannot afford to spend this period ignoring unemployment and corruption in order to support Pashtun tribal militias out of a national psychosis. The EU and China should be willing to extend a helping hand to the Pakistanis, largely out of self-interest (improving North-South and East-West flows for themselves), but also to help resolve and turn what once was a cradle of civilization into a dynamic, job-generating, distinctly Muslim republic once more at the center of Eurasian trade crossroads.

South Africa and Chile: The Future is Now

Still, energy and logistics are just two areas where “Going South” an overlap with the economic interests of both the EU and its partners. Investment in science, in particular, astrophysics and astronomy, can be an area to forge longer-term scientific and commercial links with players in the Global South like South Africa (a traditional African link with Europe, as we note elsewhere) and Chile (an important country in South America, a hedge against Brazil but also too far from the USA to rankle one of the EU’s senior partners). For example, currently, the EU (along with the USA and the rest of the world as blocs) provides about one-third of the funding for an astronomy mega-project, the SKA (Square Kilometer Array), a 1.5 billion Euro project that will create the world’s most sophisticated radio telescope in either South Africa or Australia (the competition will not be decided until Spring 2012). (The optimal conditions for viewing the night sky are in high-altitude, dry climates, mostly in South America, South Africa, and Australia and New Zealand.)

Scanning the night skies, but powering EU-Global South innovation at the same time

As part of a long-term strategy, the EU needs to step up to make bigger investments in basic science in partnership with Southern university and academic centers, both for the sake of science itself, but also more strategically to have a greater hand in one industry vertical that has and will likely continue to produce big commercial dividends. The areas in which investment in this field could reap big dividends for the EU as a knowledge economy are numerous. According to estimates by IBM, the scans from the SKA could produce more than one exabyte (one quintillion bytes) of data a day. Compared to that, the total number of words ever spoken by mankind amounts to about five exabytes, and global mobile data traffic is around an exabyte a month circa 2011. Simply creating the machines or institutions to analyze this amount of data will require fundamentally new computing techniques and a massive expansion of data infrastructure: the only question is whether only American firms like IBM and Cisco will have a piece of the action, or whether European universities and firms can forge the links now with Chilean, South African, and Australian scientists and entrepreneurs to forge stronger cooperation in these spheres. Beyond the sheer scale of data management needed to handle the size of the project, research by scientists into the history of the universe (which radio telescopes can do by looking further away, and hence further back in time, into the night skies) could lead to fundamental discoveries in physics on topics like dark matter, which, more than interesting in their own right, have led to fundamental technological shifts in fields like mass spectrometry, which themselves are crucial to progress in biotech. Again, the only question is the extent to which Europe can help provide the university assistance and capital to help bring these projects to their new sites.

Research into dark matter could be just one part of a concerted tech/business partnership between the EU and the Global South

In addition to the potential commercial benefits, the soft power gains could be impressive, too. The EU is already culturally much closer to South Africa and Australia than any of the other powers with the technical know-how and capital to finance the project (the USA and China), but encouraging closer cooperation between European, Australian, and South African VCs, entrepreneurs, scientists, and others could be a huge step forward towards encouraging integration across much of what we might call the Commonwealth world. In addition to the strong ties of Commonwealth identity, the English language, and cultural events like Cricket that bind the three countries, cooperation in what we might call space tech, or astro tech, could be another way to bring the three countries closer together. Not only that, but finding ways to share the epic amounts of data generated between London, Cape Town, and Melbourne could itself lead to fundamental improvements in technology; ARPANet, the precursor to the Internet arose out of the need to transfer large amounts of data between Department of Defense-funded research projects all around North America. True, there remains some debate within especially South Africa as to the appropriateness of funding a multi-billion Euro project in a country where a quarter of the population is unemployed. But projects like SKA will not only create employment possibilities for the less-skilled (maintaining a network of satellites in the high desert is a huge challenge); they will also encourage that the EU is seen as strongly supporting not only subsistence anti-poverty efforts, but also imaginative projects to bring Africa into the global knowledge economy – albeit one still coordinated through traditional European and Imperial centers.

Covert Sub-Strategy

  • The EU should exploit its extensive global networks, technological-edge, and prime location as a large continental mass that straddles global communication networks and a wide range of overseas territories to establish a global intelligence network as extensive as the USA’s but with a different focus.

A legacy of the “age of empires,” the EU has had a finger in most of the world’s pies for a very long time. As a global hub for communications and commerce, a vibrant multi-ethnic society, a technological leader, and a soft-power force that can deploy world-class special forces and intelligence agents anywhere in the world, the EU is will positioned to use covert operations to advance its strategic interests. All it needs is a pro-active attitude, focused on identifying and exploiting emerging opportunities.

With the US intelligence community focused primarily on counterterrorism (as reflected, among other things, by its recently appointed CIA director), the EU will focus on strategically important markets, developing and deploying discrete capabilities to promote its economic and, therefore, domestic and global political position. The EU already has the capital, special forces, spooks, diplomats, stations, and technologists necessary to exploit opportunities throughout the world – all that is left is to identify them.

The EU should deploy these resources toward stabilizing important import/export markets, obtaining advance insight into global technology developments, securing information regarding major commercial deals, and obtaining the capabilities necessary to conduct financial forensics within the integrated currency area. Equally, the EU needs to defend its most valuable secrets – especially commercial intelligence – and counteract state and non-state actors (including transnational criminal networks) intent on undermining the economic and political stability of EU member states.

To achieve these objectives in a time of fiscal austerity, the EU will, as in the military arena, need to work towards developing more integrated intelligence and covert action capabilities – a task in and of itself.

Stabilizing Strategic Import/Export Markets

The EU has a vital interest in maintaining the stability and promoting the prosperity of important import/export markets, particularly in North Africa and Eurasia. European prosperity and energy security depend on stable partners that are able to deliver the resources that are vital to the EU, at least in the near-term. Meanwhile, the EU has a direct and indirect interest in monitoring, containing, and counteracting illicit transnational networks in order to mitigate the potential consequences of weapons proliferation, organised crime, drug trafficking, and illegal immigration. To achieve this, the EU can form partnerships throughout Eurasia and MENA focused on common security threats – such as the Central Asian drug trade – that would provide both a security benefit and, if well managed as part of our broader strategic policy outline, political and economic payoffs as well. By promoting licit trade and economic connectivity, Europe can use its economic might (in conjunction with our analysis in the economic strategy section) to pull its regional neighbors (and some countries further afield) into its sphere of influence.

Keeping Ahead in the Global Technology Race

Europe was once an unrivaled global technology leader. Those days are long gone. The USA, Japan, China, and other East Asian economies have experienced their own industrial revolutions, and while European firms are still at or near the front of many technological fields, they need to work hard to retain their position. Significantly, they need accurate commercial intelligence of up-and-coming technologies; both public and private agencies depend on this data when deciding where to place their technology development investments. Hitherto, Europe has been a target of commercial espionage. Hereafter, Europe will punch back. Covert resources should be devoted to protecting European secrets and stealing such secrets of others, especially in the East Asian economies that have become increasingly technologically sophisticated by virtue of stolen European (and American) ideas. Indeed, expanded capacity in this latter area can be used as a source of coercive leverage within our broader carrot-and-stick-based outreach to China.

Estonian hackers: the EU’s secret weapon?

Sealing the Deal

The next two or three decades will probably witness continued rapid economic growth throughout the global “Gap,” which will benefit from the sustained demand for primary commodities and – especially as China continues to develop – fresh demand for new pools of cheap labor. Europe can harness this growth to enrich itself, reaching out as a partner to developing economies in need of capital, technology, and expertise. Other Great Powers will want to perform this function as well, and Europe cannot expect to benefit from a monopoly market. European competitiveness will partially depend on cost and quality, but it will also depend on intelligence and leverage. African and Eurasian business is often corrupt and political and – however discretely – Europe will have to overcome moral indignity and get ready to play the game. Covert capabilities have a pre-eminent role to play in this arena, identifying opportunities so that Europe can press the right buttons at the right time. Not quite regime infiltration, the goal is regime information.

Managing the Market

The EU has successfully established a powerful common currency and integrated financial sector, and a strong and stable commercial banking sector is vital not only to European security and prosperity but also Europe’s ability to reach out and form partnerships throughout the world. Unfortunately, integrated systems are vulnerable to systemic risk and disruptions from outside actors capable of undermining investor confidence and, concomitantly, the financial and economic power that serves as a vital European strategic asset. Few states have an interest in destabilising the European economy because, in a globalized world, they couldn’t hope to manage the subsequent risks. However, non-state groups may well attack Europe’s monetary and financial institutions to achieve political objectives or simply engage in an act of extraordinary blackmail. More prosaically, transnational criminal and terrorist organizations can use financial institutions in one EU member state, laundering the funds through another. Unless these member states have bilateral intelligence sharing agreements the two pieces of the puzzle will not be joined. Thus, the EU needs an integrated European task force for financial forensics with the requisite jurisdiction to tackle the complicated nature of illicit financing in a globalized world. EUROPOL provides a good foundation, but it needs to be enhanced.

Protecting the most dynamic economy in the world will be a huge challenge for them.

Consolidating Capabilities

The EU’s covert capabilities are currently scattered and stove-piped, with each member state maintaining its own national agencies. It is not realistic to expect sovereign governments to consolidate all of their covert capabilities in a common European structure any time in the near future. However, as with economic and military reform, some degree of integration and collaboration should and will be needed by a combination of advantage and necessity. The EU can save money and enhance capability by promoting a European intelligence community that is better structured to exploit the comparative advantage of the intelligence and covert action capabilities of each member state. Part of the answer is technological, where the EU can work to integrate signals intelligence systems. Another element is cultural, and the EU should promote a ‘European’ ethos within the intelligence community, especially with regards commercial intelligence – a development made more likely by the European ‘integration’ of leading commercial entities, especially in the defense and commercial technology sectors. As the leading European states negotiate packages to bail out the PIGS while at once working to restructure national security posture of the union as a whole, they might point towards intelligence as an area where smaller member states might invest national resources in Europe-wide institutions with a promise of future commercial gain.


With the next wave of fiscal reform, keep the fresh fruit coming – but hold the redundant security agencies

PR / Psychological / Media Sub-strategy

  • The EU will seek to continue to dominate world tourism markets and other capitalizations of its rich traditional cultural heritage, while also seeking to become the most admired region of the world culturally through creative leverage of media/events like football (soccer), Eurovision, and the BBC World Service.

The tourism industry is one of the biggest of all sectors, with total receipts in 2009 of almost a trillion dollars. Europe, and especially countries like France, the UK, Germany, Italy, and Austria, get significant portions of their GDP (up to 6% in the case of France) from tourism. Not only that, but tourism is perhaps more central both to Europe’s sense of itself as well as to its role in the global economy than it is for any other region of the world. True, labor migrants pack the planes from Dushanbe and Khujand to Moscow, Yekaterinburg, and Khabarovsk every summer, and Singapore and Hong Kong are important regional hubs for closing deals. But few cities are as truly global as London as an international meeting place for business, education, and culture, and the sheer quality of life of most European cities, combined with their convenient position (and flight routes) between the Americas, Africa, the Middle East, and Asia, make places like Vienna, Paris, Zürich, Milan, and Berlin ideal for conferences and international summits. Most obviously, trips by tourists from Seattle to Beijing to cities like Pisa, Versailles, and Windsor, or even to sites like Auschwitz, Bilbao (home of the Guggenheim Museum), or, in the future, Sarajevo, help shape an image of the European idea in the heads of citizens around the world: sophisticated, with a rich history; international, but with a strong sense of local and national pride; avant-garde and on the cutting edge, but with a painful sense of responsibility towards the protection of the human rights, and to guarantee that the horrors of 1940s Eastern Europe and the Balkans in the 1990s “never again” repeat themselves.

How flexible can you get? Just like Frank Gehry’s Guggenheim Museum in Bilbao, a top tourist destination, the EU will need a flexible tourism, cultural, and public affairs policy.

Big changes are occurring in this crucial market for Europe – but ones that the EU can take full advantage of. In recent years, with the rise of an East Asian New Core, and fortuitiously encouraged by governments in Japan, South Korea, and China that encourage their citizens to vacation abroad, East Asian tourists have invaded Europe. Local and national governments need to act on a number of levels to stimulate and encourage what can be anything from deep ties (education) to shallower, but still meaningful ties (tourism and short-term travel) as the EU seeks to manage its policy of “strategic triangulation.” Towns like Metzingen, Germany, hardly know even to most Germans living in Baden-Württemberg, has become a major destination for the Chinese tour bus circuit due to its role as the home base of Hugo Boss and a major outlet mall center, where Chinese consumers can buy goods at 30-40% less than at home due to import taxes and other duties. While obviously not hedging entirely in the direction of outlet malls, national tourism and education councils need to be sensitive to the growing and subtle needs of the explosive East Asian market growth here, encouraging, say, zoning restrictions and commercial regulation to allow European businesses with global brands like Armani, Hugo Boss, Rolex, TAG Heuer, Burberry, etc. to expand commercially and deepen the cultural-commercial ties with East Asia. Looking further ahead, accommodating what should be explosive growth in the African tourism market as a middle class emerges further south of Europe will pose big opportunities as Africans see to experience and do business in Europe.

International higher education could be a huge advantage for the EU, as well as a way to fuel growth in the market for clothing totally useless outside of graduation ceremonies.

Education might not normally be thought of aside tourism, but with the growth in international education in recent years, as suggested by, for example, Yale’s collaboration in Singapore and NYU’s collaboration in Abu Dhabi, this is also a potentially huge area for global integration and making sure that European and Asian élites have especially close ties. Educational institutions and policymakers should think less in terms of the slash-and-burn approach epitomized by the Browne Review and the recent slashing of Fulbright-Hays scholarships in the USA, and more in the direction of models like INSEAD,a private international business school with campuses in Paris, Singapore, Abu Dhabi, and a partnership with the Wharton School. Access to poorer students and those from the “Gap” (rural regions, declining post-industrial cities) within countries will be key, but EU countries, which so stand abreast of Asia and the Americas, can encourage their already-impressive array of institutions of higher education to form more international links. Just as with defense policy, too, regional or national instances should choose to specialize: while institutions with enough capacity like LSE, the University of London, Oxbridge, or Sciences Po are most capable of handling global education with, say, Singapore, Hong Kong, and Tokyo, smaller educational clusters like those in Berlin and Prague or Coimbra and Salamanca, could focus on Central Asia and the Caucasus, or Latin America, respectively. As one endower of international scholarships and programs stated in his will, “educational relations form the strongest ties.” While not as good as the élite level as their American counterparts, European institutions of higher education are nimbler, less encumbered by debt and over-expansion, and, given their geographical position, more flexible to form international education ties with a rising New Core and integrating Gap.

Why settle for the Olympics when you could have 2022 as well?

Sport is another arena where the EU can boost its prominence and soft power around the world. More than revitalizing East London (good for the UK but also necessary if London is to become, as we want it to be, the most important city in the global economy), the 2012 London Olympics should be exploited to the max to promote an image of the UK (more broadly, London and the cosmopolitan Europe it now represents) as everything Beijing in 2008 was and more. It goes without saying that logistically handling the event, as well as protecting attendees and athletes from terrorist attacks will be crucial to stage managing what is probably the world’s most high-profile event. At the same time, not only the UK but also EU countries in general should take advantage of the summer of 2012 – when a tidal wave of visitors will be in the EU – to promote themselves vigorously as open societies (in contrast to China). London police should be extra-careful with political protesters present at the Games, and the organizers should place special emphasis on these being the most open and cosmopolitan games ever (as opposed to the emphasis on survival in Athens 2004 and national resurgence in Beijing in 2008). As investigations into FIFA proceed, and as it remains unclear whether Qatar will actually be capable of hosting the World Cup in 2022, London’s élite, hopefully with support from their counterparts in other EU countries with leadership in FIFA, should position themselves to be able to step in in the likely event that Qatari organizers meltdown while trying to host the world’s most logistically demanding event on a small island in 140-degree heat. A successful showing by London in the Olympics could go a long way towards this. Alternatively, if other powers pursue similar measure, London could well be in a position to help broker a deal to move the Cup to South Korea or Japan (two of the finalists along with the USA) to injet some good will into its East Asian relationships as it strategically triangulates towards China. At the same time, the EU’s FIFA players will have to be careful not to antagonize Russia, which will have its own problems of organization, as they seek to position London as a potential backup site to Russia or Qatar.

Salam aleykum, blokes

Another arena the EU can triangulate between rising powers in is television and radio. In recent years, media outlets such asRussian Today, Al-Jazeera, and Press TV have become useful tools for Russia, Qatar, and Iran to spin news in their favor using slick production techniques and advanced technologies. We ought remember that dominance in global media markets is not a zero-sum game; some of these outlets, especially al-Jazeera, arguably played into the EU’s interests in the Arab Spring, although the instability in the region makes it hard to judge for the long term. Still, as we have pointed out, a savvy media strategy should be part of the EU’s Grand Strategy. As (hopefully) EU leadership realizes that a fractured EU is, frankly, irrelevant to the global conversation and that, correspondingly, a fractured EU media voice, while useful in some contexts (differing German and British takes, say, or a more nuanced polyphonic media strategy), it is neither efficient nor effective for BBC, Deutsche Welle, and France Télévisions to attempt to “take on” China Central Television on its home turf. Creating a unified EU media voice via a unified media powerhouse, based in London, Paris, or Berlin, and broadcasting in, say, Spanish and Portuguese in Latin America, French and English in Africa, Arabic and Farsi in the Middle East, Urdu in South Asia, and Chinese and Bahasa in Asia, could do a lot in the long-term battle of ideas. Fortunately, the EU already creates some of the most popular cultural products in the world: if a European Broadcast Channel retained exclusive international broadcasting rights to Eurovision, Euros, Test Matches, and events involving the British Royal Family, for example, it could make a powerful step towards claiming a piece of the international media landscape.

We’ve already secured the rights to the reality show – coming to viewers in China soon

Strategy Evaluation

Advantages This strategy specifically seeks to exploit gaps which the EU’s unique capabilities and structure can fill. In essence it seeks out opportunities which the US, China, or other powers miss, fail to ascertain, or lack the disposition to take advantage of. This strategy exhibits an impressive recognition of the need to applyeconomy of force. By taking on niche roles in realms such as arms sales, space exploration, and media the EU can avoid unnecessary resource expenditures, a vital attribute in the context of more austere times. In addition, by pursuing initiatives that simultaneously build alliances and partnerships and transact distinctly European technologies, ideas, and values the EU increases it’s global reach. A further advantage of this strategy is its avoidance of direct challenges to the designs of potential major partners. The core of the strategy does quite the opposite as it develops advantages that can serve to make the EU and more attractive and viable partner for the major powers.
Disadvantages Despite the advantages that lie in a specifically targeted opportunistic approach the main disadvantages of this strategy may lie in this approach as well. The focus on targeted initiatives by a vast array of disjointed actors will require careful coordination and the establishment of effective incentives to act. The lack of organic capabilities within the EU architecture precludes the deployment of coherent state action. Because of this the EU Grand Strategy requires the orchestration of a large number of actors that though tied to the EU are not devoid of internal interests. Key examples of this include members of the defense industry, media establishment, and academic communities. Placing considerable weight on the ability to coordinate these disparate realms towards coherent strategic objectives increases the chances of this strategy failing. Despite this key disadvantage the challenges presented by it are not insurmountable. However, overcoming them will require substantial efforts by both policy makers and those tasked with implementing the strategy.


How well does this strategy serve its objectives?

  • This strategy serves its objectives in that it addresses internal EU issues, seeks strategic triangulation, and finally provides for innovative partnerships that can aid in safeguarding the future position of the EU.

This strategy serves its objectives in a number of ways. On the home front (which is crucial for the EU if it wants to be able to remain relevant in Eurasia and the Global South), we propose a compromise between fiscal centralism (undesirable given the radically different stages of development between EU countries and a nightmare to manage administratively) and monetary disintegration. We strive to impose tough reforms on the PIGS countries – reforms of the labor markets, privatization for public utilities, and, as a last resort, cuts in the most fundamental areas like education and early childhood development. We will seek to help out the PIGS countries recover from their debt crises, but we will also make clear to not only them but also to many European countries – Italy, Romania, Bulgaria, and, further afield, Ukraine and Moldova – that they will not survive in the long term if they do not make their labor markets more competitive globally. The days of early retirement at 50 on a full pension while being unfireable are – fortunately for European youth as well as the economies of their countries – now over.

In what we regard expansively as our “near abroad” (Eurasia, including Russia, Turkey, Iran, and Central Asia, plus North Africa), we seek to form a set of new partnerships that focuses less on the awkward talk of political integration into the EU (difficult to conceive of at this moment given the current troubles, but a possibility in the future) and more on building robust partnerships across a huge range of areas. We’re proud of what we regard as an ambitious agenda for cooperation across a number of issues with these countries: arms sales, help with improving logistics networks, foreign investment, scientific cooperation, developing a European media presence in these spaces, extending European higher education networks. In our medium term, the goal is this: move closer to China, invest in Russia, while using a strategy of slow distancing from the United States to leverage more investment and interdependence in a wide range of countries across the non-integrating Gap, furthering globalization and finding new ways for Europe to be relevant in this space. While we have not discussed it so much in this brief, we also discussed agricultural exchange with Africa extensively in our National Trajectory brief.

Finally, this strategy is imaginative in re-thinking Europe’s global role. Just as in the near abroad, this policy seeks audacious cooperation across a wide range of issues with a bevy of new partners: space tech and entrepreneurship in big data with South Africa and Australia; logistics investment with Pakistan and Iran; agricultural investment (as opposed to land grabs) with Sub-Saharan Africa; leadership and higher education exchange programs with Latin America; expanding the OSCE to North Africa in a way that brings Kazakhstan and other Central Asian countries into the mix. As we have emphasized throughout our briefs, the EU in the 21st century works best when it is not a military power (although its military capacity should not be understated), but when it takes on the role of global connector, using its myriad institutions and links with other countries through them (the IMF, G8, G20, ADB, EDB, ESA, and OSCE, to name a few) to take on the role of SysAdmin for the world. Outside of arms deals, we have discussed security relatively scantily in this draft, or at least it would seem. But this is only because the EU’s primary security threats are fundamentally transnational, and emanate from other issues that we take on in this draft. The drugs trade kills thousands of Iranians, Russians, and Europeans every year, and funds a brutal insurgency that has killed millions of Afghans and hundreds of Europeans. The economic catastrophe in Pakistan encourages young men to board airplanes to European cities to kill themselves. Facing these threats does not require a Leviathan force (which does not mean that partnering with one to police the South China Sea, the Gulf, the Horn of Africa, or the Caribbean might not be a good idea). But it does require a flexible response, from national governments and development agencies, but also from EU-level institutions keep to use the clout of the world’s largest economy to exchange ideology for free trade, markets, and human rights in places from Herat to Kashmir, as we outline below.


What are the costs of this strategy?

  • The greater coordination and integration of the European Union that this strategy requires will lead to substantial losses of individual sovereignty to its member states and, to some degree, the homogenization of European culture, and it will likely weaken the closeness of the European-American alliance.

The direction that this strategy takes hinges upon coherent efforts to break into innovative and unique realms of policy. In the short term the sovereingty costs will be highest as the EU seeks to engage in housekeeping at home. The viability of the Eurozone must be secured, even if it requires member states to lose a modicum of control over their fiscal planning and decisionmaking. These efforts will certainly produce friction between Brussels and member states who feel that the their autonomy under the Union is disappearing. This effect may be far more pervasive in smaller states who might view this as the product of German or French influence expansion. However, over time as the longter benefits of a stable fiscal union become more clearly evident the losses of autonomy are likely to be viewed as necessary contributions to the future of the region as opposed to merely bowing to the demands of the strong member states.


One part of our media outreach strategy for the street corners of Athens, Dublin, Madrid, Lisbon, and Dublin

Our strategy includes a large degree of cultural outreach. Though the strategy does not paint European culture as a monolith, coherent and digestable cultural outreach necessitates a level of streamlining, packaging, and simplifying that will present a sanitized view of Europe to the rest of the world. Though it will certainly not be a view devoid of nuance, that nuance will likely be provided by the major European states at the expense of more subtle cultural points of importance from smaller members.

The initiatives to engage the Global South and be the SysAdmin for various Leviathans are both forward thinking and radical. In the short term they could rapidly cool the European relationship with the United States. While the strtegy by no means seeks to scuttle the important transatlantic relationship, independent EU overtures to states like Iran, Venezuela, and China will be viewed warily by the United States. These efforts and corresponding American suspiscion will likely lead to more contentious diplomatic realtions as well as possibly more strained G8 and G20 meetings. Despite this, strong historical and cultural ties with the United States will likely preclude any tangible diplomatic crises. Still, the readiness of the United States to embark upon European led or centric adventures (military or otherwise) will likely be dimished by our efforts to seek more dynamic and nontraditional partners.


It might not be all smiles, all the time, anymore.

Opportunity Costs

What courses of action are made unavailable by implementing this strategy?

  • The central opportunity cost of these strategic objectives and our plan for achieving them grows out of our central concepts of establishing an independent European “strategic pole” and “triangulating” between traditional alliances and more creative, situational partnerships; as a result, the EU will have to break its habit of conducting policy in lockstep with the United States, and, in the process, give up some of the benefits that have made this an attractive approach in the past.

This strategy requires the EU taking a more independent stance towards the United States and NATO, instead seeking to market itself as a free agent of sorts between various Leviathans (the USA, China, and Russia). As such, it makes hunkering down under an American missile shield, or pursuing a more diffident stance vis-a-vis Russia and China much more difficult. Perhaps more tenuously, the strategy requires the EU giving up some of its stance as a protector of human rights (at best) and peacenik social democracy (at worst) by forming new partnerships with countries like Iran, Venezuela, China, and Kazakhstan (although these partnerships are of a limited, opportunistic character, rather than strategic, and may be more effective at achieving humanitarian goals in the end). Pursuing a broad alliance with the United States based on the rule of law and human rights becomes significantly more difficult under this strategy, although given the failure of the USA in this regard in recent years, we are more than ready to buck that Leviathan for more dynamic partners, while still seeking to promote human rights along the way. Indeed, noted in various parts of our analysis, this new European dynamism may actually make the EU a more useful partner for the US in areas of vital strategic importance.

Risk Management


What does this strategy depend on and what has to happen for it to fail or become redundant?

  • The primary dependencies in this strategic approach, which seeks to build regional and international partnerships from a solid base at home, stem from the willingness of other national actors – particularly Russia and China but also including smaller states – to entertain the possibility of mutally-beneficial cooperation and from the ability of the EU to work towards greater economic and political coordination and integration (though not necessarily unification).

This strategy depends on a couple of things. Perhaps the fulcrum of this strategy working is the willingness of Russia, and, to a much lesser extent, the post-Soviet Central Asian countries, to liberalize their economies to foreign investment and pursue a strategic partnership with the EU in order to guarantee their own long-term survival. However, as we emphasize above, and as the Russia teams have emphasized, Russia views it as in its own interest to liberalize and garner more foreign investment to avoid become an irrelevant petro-dinosaur. The strategy also depends on China’s continued pursuit of partnerships in the New Core and the Gap to legitimate and facilitate its “peaceful rise” and international strategic interests, rather than turning inwards to deal with domestic instability. However, we view the EU as an ideal partner to China in this regard: the two have a significant interest in boosting global trade, and China is almost the classic Leviathan partner that a SysAdmin like the EU needs to thrive. Finally – and most obviously – this strategy depends on the continued survival of the EU of a political project, which means the continued maintenance of the monetary union (with potential steps towards fiscal union). If Greece and the other PIGS drop out, this will be a major setback towards achieving coordination on other key issues like Iran, Pakistan, and arms/intelligence specialization.

Compounding Risks and Shocks

What potential unforeseen occurrences may affect the implementation?

  • Domestic political opposition to fiscal restructuring could destroy the implementation of our housekeeping program in the short term, while short-sightedness from partners like Russia, Iran, or Pakistan could derail our “zero problems” strategy.

We see two unforeseen consequences as risky potential shocks to this strategy. On the domestic front, while the vote of confidence for Papandreou’s government is a good sign that smaller European governments are still capable of seeing the upsides of the European project, given the huge presence of street protests in, among other places, Madrid, Athens, and London, it is not out of the question that European governments might give into the temptation of exit from the monetary union and devaluation in order to try to extricate their economies from the crisis. As we analyze below, this would almost certainly not be the right decision for these governments even on a national level, but what is certain is that it could be fatal to the European project. An EU of France, Germany, and the UK has far less space for dynamic partnerships than one that includes Greece, Romania, and Portugal, in terms of the potential for outreach and partnership with extra-European powers.

Might our new partners be too dynamic?

Another potential shock or unanticipated problem for our strategy could be intransigence on the part of potential partners. Many of our proposals revolve around posing medium-sized powers – Russia, Iran, and Pakistan, most prominently – with a fait accompli: you have growing urban populations and stagnant economies, now open up to European investment and liberalize your economy with our help. Given the undercurrents of dissastisfaction with the governments in Islamabad and Tehran, and, to a lesser extent, Moscow, we think the respective regimes will find this a reasonable proposition. We place our faith in the rationality of our Eurasian and South Asian partners. But it is by no means guaranteed that a Pakistan, even with a growing urban population and facing a severe humanitarian crisis, will see its future in continuing to be a sponsor of murderous terrorism in one of the poorest countries in the world and refusing to enact even basic land reform. Likewise, hardliners in Tehran might see the nuclear option as the only appropriate strategy given the possibility of US or Israeli aggression. This is where our proposal of an EU-centric news service, or less ambitiously outfits like BBC Persian and Urdu will have to come in, beaming into Lahore and Shiraz households pictures of the affluent European lifestyle and the benefits that free trade can bring.

Further, even if Iran does develop a nuclear weapon – or if Pakistan is shown to be directly responsible for providing assistance for staging a terrorist attack on European soil – while support for military intervention with American or Chinese help might be necessary in extreme circumstances (Iranian or Salafi aggression against European citizens, say) we do not think this fundamentally affects the possibilities for European cooperation with these countries on issues like anti-narcotics or infrastructure and trade development in Pakistan. Without stating the obvious, it is important to remember that both France as well as the UK have the capability to deploy nuclear weapons – a hedge against any acts of serious aggression or expansionism. In the long run, the future of countries like Iran and Pakistan will have to lie in integrating more robustly in the global system. Historically, even hardline mullahs in Tehran have recognized the threat the Taliban poses to their own security, as well as the problem of drug addiction and the narcotics trade. In spite of our vast differences in ideology and religion, the EU can still serve as a SysAdmin to help these two powers where it also benefits the economy of the European space and serves as an insurance policy against Salafi aggression or Iranian expansionism.

Consequences of Failure

What are the consequences of this strategy failing?

  • If this strategy fails, the EU may disintegrate as a monetary union, and, eventually, a political project. Greater European powers like Germany, France, and the UK may find a role in the global system as a vastly junior partner to rising countries like India, China, Brazil, and Turkey, but by and large Europe will stagnate as a region of the globe good for tourism and good wine, and perhaps as a financial hub, but otherwise a regional with uncompetitive markets and irrelevant small countries playing second fiddle to China, the USA, and other powers.

Europe will simply not be relevant forty years from now if all three elements of this strategy – housekeeping at home, zero problems in Eurasia, and the Southern Policy – fail. If the monetary union collapses, the short-term consequences may seem good for countries like Greece and Portugal (which would presumably default and try to export their way with a devalued currency out of their current woes), but any short-term optimism would miss these countries fundamental problems: they are too small to play a role in the global economy unless they move away from all forms of autarchy, and they have to reform their labor laws and public sectors if they want to dream of competing with China, let alone Turkey or Israel, on the global market. Failure to keep countries in the monetary union is crucial, not only for the sake of the European project per se but to make sure that Europe as a region can impose enough discipline on itself to remain competitive. Defaulting and devaluing would be an easy solution, but Greece and the other PIGS countries would, at best, look in the future like Italy looks today: rich in parts, but unequal and uncompetitive in global markets due to corruption and favoritism.

Once you go Kazakh, you never go back: we might not be quite so bold, but hedging against NATO and the US with a portfolio of partners including Kazakhstan might not be a bad idea

The other two prongs of the strategy (Zero Problems and the Southern Policy) are perhaps less crucial, but if they are carried out successfully, the EU will be in a prime-time position to capitalize on the shifting flows in the river of the 21st century. As US power declines, and as powers (even those outside of China and the other BRICS) grow in economic and demographic prowess, it would be a short-sighted mistake to hold onto NATO as the only guarantee for Europe’s security. A more robust strategy would involve pushing off into the now-still-calm waters of a shifting sea of smaller southern and Eurasian powers, exploiting the EU’s relative strength now as compared to forty years from now to forge new partnerships with countries like Venezuela, South Africa, Turkey, Iran, Pakistan, Kazakhstan, Vietnam, and Indonesia. With the United States looking increasingly inward-looking as it faces unemployment crises and worries over spending, is this really the senior partner that the EU wants? We propose a bold policy of testing the waters with a number of younger, smaller, nimble partners, while not totally jettisoning the NATO alliance while it still holds – but still being ready to move on into the vast global waters without it 5-10 years from now if need be.

Contingency planning

What contingencies can be built into the strategy to counter worst possible outcomes?

  • The EU, while focusing on new partnerships with powers like Russia and China, should attempt to be as promiscuous as possible in forming long-term partnerships with countries across the Global South.

We believe this policy is fairly robust to contingencies and shocks as is: we seek to hedge against NATO and a declining US in the direction of Russia and China, without tying ourselves to close to either of these powers, either. We will rely on Chinese force projection in certain areas (the Indian Ocean and the Horn of Africa), but we also seek to hedge against the possibility of a breakdown in the China partnership by seeking to develop alliances across land in Eurasia with aspirational powers like Turkey, Kazakhstan, and Russia. We take the possibility of a triangulation towards China as reasonable, since the EU is one of China’s biggest trading partners, and a China-America strategic alliance is unlikely given the long-term conflicts of the two countries: too much ambition to divide between two great powers, too much thirst for resources, and too much military might.

That said, in our mind the worst possible outcome is an exit by the PIGS from the European Union, which would constitute a huge setback for the European project. If that occurs, the EU should still, as we emphasized in our regional outlook analysis, concentrate on integrating the Balkan states into the European order while still contemplating what it can do to liberalize Ukraine and the Caucasus as part of an eventual membership plan. In the long term, we have emphasized, the future for European powers outside of Germany, France, and the UK will have to lie in specialization and more open labor markets.

Use his downfall to create a good example for how to reform Europe’s thrombotic labor markets and economies across the south

While we are inclined to believe the opposite, it may actually be the case that devaluation and competition on price is the best path to recovery for the PIGS countries. If PIGS drop out of the EU and default, while the short-term response from German and French investors may be to divest from those national bond markets and become skeptical towards investment in these countries at all, over the medium-term impetus will have to come to reintegrate these countries back into the project. The best way to do so will likely be through neighbors setting a good example: Italy will have a robust enough economy and enough political momentum after the downfall of Berlusconi to enact serious changes to the labor market, which could serve as a positive example for not only the PIGS countries but also the Balkans and other new member states.

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