Fall 2005 Volume 6 - Number 4

European Perspectives
Leader in Focus
Cover Story
Special Report: Turkey and the EU
Finance and Banking
Opinion
Agriculture
Energy
Industry and Technology
Book Reviews

Letter from the Publisher: Don’t Wait for the Last Judgment

European Perspectives

France Agonizes Over Its European Future
Patrick Jarreau, Deputy Editor, Le Monde

The EU Needs a U.S. Input on Iran
Volker Perthes, Director, German Institute for International and Security Affairs, Berlin

Leader in Focus

Malta Is Expanding the EU’s Mediterranean Dimension
Lawrence Gonzi, Prime Minister of the Republic of Malta

Malta has raised the EU’s profile in the Mediterranean and given the Union a new focus on maritime issues since it became a member in 2004. Malta’s unique cultural links to the Arab world can help build a bridge between the Mediterranean’s Northern and Southern shores. It is important both to help and to be patient with the Arab countries in order to increase their prosperity, improve their social and governmental systems, combat terrorism and reduce the flow of illegal immigrants to Europe.

Cover Story:
Curing Germany’s Economic Ills

“Grand Coalition” Must Create a Vision of a Modern Germany
Alexander C. Dibelius, Managing Director, Goldman Sachs, Frankfurt

The new German “grand coalition” linking Christian Democrats and Socialists will have a tough time governing, but will probably last the four years until the next elections. Its main tasks must be to convince the German people that the state cannot continue to look after its citizens unless necessary, if unpopular, economic reforms are enacted, and to sketch a positive new vision of how Germany can adapt to globalization.

Special Report: Turkey and the EU

Now It Is Up to Ankara to Deliver
Olli Rehn, European Commissioner for Enlargement

Now that Turkey has officially opened entry negotiations with the EU, Ankara must work to meet the conditions for membership in full. While the European Commission acknowledges that Turkey has made considerable progress, it still has serious concerns in many political areas, including freedom of expression, torture and the rights of women, labor unions and religious minorities. If progress in such areas were to stall, the entry negotiations could come to a halt.

We Need an Option Short of Full Membership
Karl-Theodor zu Guttenberg, Member of the German Parliament

As the EU starts entry negotiations with Turkey, it needs to have a plan for an alternative, but still strong relationship with Ankara if the negotiations fail. There are many reasons, on both the EU and the Turkish side, why the negotiations may not ultimately lead to Turkish EU entry. If the EU had a back-up plan for a close “privileged partnership” with Ankara, failure of the entry negotiations would not lead to Turkey’s complete rejection by Europe, the worst possible scenario.

Turkish Entry Will Help Make Europe a Global Power
Cengiz Aktar, Director, EU Centre, Bahcesehir University, Istanbul

Some opponents of Turkish EU entry argue that it would dilute Europe’s identity so much that the European Union would be unable to fulfill its ambitions of becoming a global power. But the opposite is true. Europe will acquire no wider influence if it restricts itself to its old geographical, mental and cultural limits. European ideals will gain universal validity only if they form the basis of a new political identity, expressing the post-national, post-religious values of European integration and enlargement.

Many Turks Are Unsure What Membership Will Mean
David Tonge, Managing Director, IBS Research & Consultancy, Istanbul

For more than 80 years Turkish leaders have sought closer links with the West, and most Turks appear to support EU entry. But many do not fully understand what membership will actually involve in practice. Public opinion is likely to become more volatile as the negotiations proceed, and opposition could grow if the EU’s demands are seen as threatening Turkish national interests.

Why Cyprus, Perhaps Surprisingly, Wants Turkey to Join the Club
Euripides L. Evriviades, Ambassador of the Republic of Cyprus to the United States

Cyprus could have vetoed the opening of EU entry negotiations with Turkey in October 2005, but decided not to. Despite the contentious issues outstanding between Cyprus and Turkey, the Cypriot government concluded that its longer-term interests lay in the economic and political transformation of Turkey that EU membership will require. The Cypriot government also believes that as Turkey progresses toward EU accession it will have to withdraw its troops from Northern Cyprus and accept a just solution to the three-decade-old dispute over the island’s division.

Finance and Banking

It Is Not Just up to Washington to Correct Global Imbalances
Rodrigo de Rato y Figaredo, Managing Director, International Monetary Fund

Many Europeans believe that the way to remedy global trade and financial imbalances is for the U.S. to cut its fiscal deficit and perhaps for China to revalue its currency. But European, Asian and oil-producing countries also need to share the burden. Europe’s key economic challenge is to raise its growth and employment performance, with an aging population – particularly through social and labor market reforms, more integration of financial markets and deregulation of trade in goods and services.

Greece Is Benefiting from the Euro and Helping its Neighbors
George Alogoskoufis, Minister of Economy and Finance of Greece

The euro has increased economic efficiency and led to sounder economic policies among its 12 member countries. Euro zone governments should now focus on making their economies more competitive rather than pressing the European Central Bank to lower interest rates. Greece is making big efforts to reduce its budget deficit, increase competitivity and implement long-needed reforms. Greece is also helping its poorer neighbors in Southeast Europe to open their markets and join the wider international economy.

Will Europe’s Flat Tax Revolution Spread from East to West?
Daniel J. Mitchell, McKenna Senior Fellow in Political Economy, the Heritage Foundation

Nine countries of the former Soviet bloc, including Russia and four new EU member states, have adopted flat tax systems that are helping them stimulate economic growth and improve tax compliance. Their success is putting competitive pressure on older EU member states in Western Europe to reform their own tax systems. Flat taxes face strong political opposition in many Western European countries, but they could still cross the “Tax Curtain” from East to West in the foreseeable future.

Opinion

With the Euro, the EU Put the Cart before the Horse
Daniel Guéguen, CEO, Clan Public Affairs, Brussels

Instead of converging as they should, the economies of the euro zone are diverging, not least because member states are flagrantly breaking the rules. The euro may have been introduced too soon, before the EU has become a federal state with a genuine single market. EU leaders should agree on ways for countries to leave the euro if necessary.

Agriculture

EU Farmers Will in Future Look to the Market, Not to Subsidies
Mariann Fischer Boel, European Commissioner for Agriculture and Rural Development

Many people, both in the United States and Europe, are unaware of the fundamental shifts that have recently taken place in the EU’s Common Agricultural Policy. The policy is no longer subsidizing production but supporting farmers directly, and EU farmers will in future be encouraged to compete in fast-expanding markets for high-quality food. The reforms also aim to protect the rural environment, improve the quality of country life and promote crops that can be converted into energy.

Energy

The U.S. and Europe Must Cooperate on Energy Strategy
David L. Pumphrey, Deputy Assistant Secretary for International Energy Cooperation, U.S. Department of Energy

The U.S. and Europe together account for 43 percent of world energy consumption and face many of the same challenges and opportunities in their energy policies. It is not surprising that they are pursuing similar global energy strategies, especially by seeking greater energy efficiency and more diversification of energy supplies and suppliers. Both favor close cooperation with other countries and regions and greater efforts to transfer their energy experiences to those countries.

Industry and Technology

The EU Wants to Unleash the Full Potential of Information Technologies
Viviane Reding, European Commissioner for Information Society and Media

The European Commission has adopted a policy strategy for information and communications technology that aims to develop a modern, limited regulatory system for the EU, boost investment in research to U.S. levels and provide better services to European citizens. The EU will also work with the U.S. to increase Transatlantic trade and investment, especially by removing regulatory obstacles, and to bring the benefits it seeks for its own citizens to the rest of the world.

Book Reviews

Europe: Superpower or Land of Dreams?

The Next Superpower?
The Rise of Europe and Its Challenge to the United States
by Rockwell A. Schnabel with Francis X. Rocca

Cowboy Capitalism: European Myths, American Reality
by Olaf Gersemann

Reviewed by James Harding

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