Saturday, November 22, 2014

Europe’s Nobel Wake-Up Call

MADRID – In a decision criticized and praised in equal measure, the Norwegian Nobel Committee awarded this year’s Peace Prize to the European Union in recognition of its contributions “to the advancement of peace and reconciliation, democracy and human rights in Europe” over the past six decades. But, to what extent is Europe preoccupied with “perpetual peace” at the expense of its current, vastly different ailments? Is this award a swan song –confirmation of the moribund state of the European project, as the 2001 Nobel Prize was for the United Nations?

In announcing the prize, the committee explained how “the work of the EU represents fraternity between nations.” While it acknowledged that “the EU is currently undergoing grave economic difficulties and considerable social unrest,” it highlighted the EU’s role as a beacon of hope – a democratic anchor, particularly meaningful for peoples who have lived through the horrors of dictatorships.

But it is precisely the mismatch between the EU’s past achievements and its current distress that has fueled anger and led to its rejection by many Europeans. That is why the prize has invited comparisons to an Oscar lifetime achievement award that comes only when the recipient is nearing death.

The decision to establish the EU was an ingenious response to the biggest challenge of the day – war and conflict. And, of course, the resurgence of nationalism and extremism of all kinds around the world is a potent reminder, as if any were needed, that peace is not to be taken for granted. But the prospect of war in Europe now seems like a remote threat, and the varnish of the EU’s past success seems to have faded, even to those who have not forgotten the bloodstains beneath.

Instead, it is Europe’s lack of a vision and narrative for the future – with which it could address issues like chronic unemployment, capital flight, and the ever-tightening grip of austerity – that keeps people awake at night, and that fosters populism, dismay, and internal disarray.

The EU’s ability to capitalize on – or even justify – the award hinges on its prospects for overcoming the sovereign-debt crisis and reestablishing trust among its member countries. But, more important, the EU needs to restore its allure, an integral part of which has always been economic prosperity. Aside from the eurozone’s design flaws, the pressing items on Europe’s agenda concern competitiveness, jobs, innovation, and technology.

Europe’s first order of business should be to accept reality: the emerging economies are catching up in terms of innovation while the EU is losing traction, with China on the cusp of surpassing Europe as the second-largest hub for venture capital globally, behind only the United States. In fact, a 2012 study by Ernst & Young reveals that one US hub (Silicon Valley) alone boasts almost $12.6 billion in cumulative venture capital, while the United Kingdom, first among European countries, accounts for roughly $1.75 billion and Germany for $665 million.

A similar study, conducted in 2012 by Javier Santiso, a professor at the ESADE business school in Barcelona and a managing director at Telefónica, found that Europe’s per capita investment in venture capital in 2011 was a meager $7, compared to $142 in Israel and $72 in the US. An equally telling statistic is that only one company in the eurozone, Spain’s Inditex (ZARA), has made it to the FT Global 500 since 1996.

Research and development offers little consolation. Although European research has given rise to many new technologies used in industries worldwide, its recent record is wobbly at best, owing mainly to the difficulty in translating basic science into industrial advantage. Europe is losing its technological edge, whether in telecoms, technology, or the Internet, with its companies being displaced by those from emerging markets, while the US remains dominant. The NASDAQ index confirms this disturbing trend: only 15 European companies are listed, compared to 498 for the US, 43 for China, and 23 for Israel.

Looking to the future, Europe should take note of the potential consequences revealed by the latest Program for International Student Assessment, a worldwide comparison of student performance. In mathematics and science, PISA’s latest report card puts Asia at the head of the class, with China, Singapore, and South Korea on top. Meanwhile, with some exceptions – most notably Finland – Europe has slipped into riding in the peloton.

The EU is, at last, beginning to understand that betting its future on services will not be enough to safeguard the European socioeconomic model. Member states’ governments and the European Commission’s last communication, “A Stronger European Industry for Growth and Economic Recovery,” display an awareness of the need to revive Europe’s industrial policy. Such efforts should promptly translate into legislative changes in areas ranging from insolvency to patents, from CO2 emission-reduction schemes to “smart” electricity grids.

Europe urgently needs to devote its energy to revitalizing the building blocks of its economy – industry, human capital, and a policy framework that enables healthy growth and future prosperity. One hopes that this year’s Nobel Peace Prize provides a boost in pride that allows Europeans to look beyond their immediate financial problems, consolidate the Union’s strengths, and establish a coherent vision of the future. Otherwise, the EU’s finest achievements will remain in the past.

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    1. CommentedSugandha Pahwa

      potential in differences, no one has to be united as EU. when partnerships fade, not promoting faded partnership model as broken partnerships, but faded partnerships as where there is standard of regulated banking without trade regulations and multiple currency derivatives could be a middle route where debts of "foreign" EU nations can form channel partnerships to write off the financial debt.

    2. CommentedTsuda Shoken

      Dear Sir,
      It is important to have good Economy but to make the world peaceful is much more important for EU. In the international politics, the bad effect of US has been spread, who can keep US safe? Not China. Not UN. Only EU can.
      As the effects of private military companies become bigger and weapon developments have been kept going, world peace have been in danger more.
      Weak and small terrorists can sometimes get big attentions but they can't make big casualties.

    3. Portrait of Ana Palacio

      CommentedAna Palacio

      I completely agree that there has been too much focus in the media on the financial and economic drivers of the crisis. And while responsibility falls upon all segments of Europe’s socio-economic fabric, the deeper underlying problems are, in fact, political. Given that, as you rightly point out, partial unions have little chance of survival, the issue of articulating Europe’s path becomes even more critical. Against the backdrop of Europe’s lack of able political leadership, commentators are right to question who would be up to that important task. The Nobel Peace Prize would hopefully serve as the catalyst that will bring to bear the duty that comes with it.

    4. CommentedZsolt Hermann

      We should consider the Nobel Peace Prize as an award given to the potential of what Europe could become in case of taking on the full measure of the structure that was originally planned.
      It is not true that Europeans are rejecting the European Union, it is the politicians and main interest groups that have chickened out, or decided against it due to individual, or group benefits, they are stopping the pursuit of a deeper integration that could have fulfilled the original potential.
      And now it is the same politicians and interest groups who sway the public against this full integration again.
      Partial unions, common structures have absolutely no chance of surviving, thus the present economical, financial structure or the planned banking union are just futile attempts, and they are so illogical that one has to wonder if those at the top are doing it on purpose to prove a full union is not possible, because they themselves are not willing to go for it as it does not serve their own interest.
      On the other hand after all the past and present failures, and with the very obvious threats of national and international breakups and violent confrontations in case of a collapse, there is clearly no other solution but to move for a full integration, creating a single, united socio-economic system all over Europe, which later on can provide and example, a template for the whole of humanity. All the politicians need to do is instead of inciting hatred against each other, instead of pointing fingers in all directions they would need to explain to people through the countless scientific examples and daily events of the crisis that we actually have no free choice about it: in a global, interconnected and interconnected reality we evolved into, only a single, mutually connected and cooperating human network is capable surviving and building a sustainable future.
      This potential, single living human organism, that could grow out of a united Europe received the Nobel Prize.

    5. CommentedFrancesco Pigozzo

      Everybody noticed the paradoxical meaning of the Nobel Prize bestowed to the EU: it seems to encourage the further development of European Unity, more than to celebrate its grand but nowadays shaky achievements.
      It's not usual to publicly declare to european mass-medias that the current crisis is not a financial or economic one - it's basically political and institutional. That's nonetheless the truth about what we are seeing in Greece and in Germany, in Spain and in Finland, in Portugal and in the Netherlands, in Italy and in France and so on.
      This crisis deals with Europe's weaknesses in the globalized world. It deals with our lack of responsibility in the global arena. It deals with our (already) lost sovereignties and with our (desirably) recovered sovereignty through a wholly constitutionalized political union - the United States of Europe.
      Now, with the Nobel Prize ceremony European leaders have the biggest occasion to fulfill their duty (the duty clearly outlined by Europe's Founding Fathers): Europe desperately needs the active support and participation of its citizens if it is to accomplish its unity and make peace irreversible - no technical solution will otherwise save it from the structural crisis it's facing, because from the fiscal and budget union to the foreign and security union the peoples' sovereignty is clearly at stake and no Council can be thought to fully and legitimately represent it alone - nor even predominantly.
      We therefore need a mass-mediatic re-tuning of the european political discourse with european citizens. That's what the Nobel Prize provides us with.
      Altiero Spinelli was the most prominent Founding Father who dedicated his entire life to reach exactly this goal: since the Fourties he struggled for the implementation of a fully democratic method to accomplish the European political unification process. That's why European leaders should acknowledge the extraordinary success of the "Let Pier Virgilio Dastoli pick up the Nobel Prize in Oslo" online campaign during the last week (averaging 1000 signatures a day) and, more deeply, to revive in Oslo the European Dream of Spinelli inviting his collaborator and successor to pick up the prize.
      We ought to prevent the current political rhetoric to cross off sixty years of unprecedented results against methodological nationalism.

    6. CommentedJulien Saillard

      I am missing something here: who's supposed to be in charge of developing this "vision and narrative for the future"? I don't see too many people at the top with both a voice and a willingness to go beyond national ambitions. Or are we planning to crowdsource our future, let it emerge? Seems like a governance issue... or potentially a fatal flaw depending how you look at it.

    7. CommentedProcyon Mukherjee

      Ana Palacio has rightly pointed out the edifice on which European prosperity lies in the future and the Peace Prize could be a vindication of the efforts taken by the EU to create the building blocks for a lasting prosperity that is broad-based on economic reconstruction through shared sacrifice.

      One would be particularly drawn to Ana’s praises for the venture capitalists’ investment excesses in U.S. while it is not in evidence in EU zone; although we have seen how such extreme financialization of the technology sector created a plethora of problems in Palo Alto (minus such excesses Palo Alto could have done better), but the pace of change driven by VCs has no other better example for the technology sector.

      The data from the Competitiveness Index that Geneva based agency circulates every year, actually shows that on innovation score the EU combined scores over U.S. So the question is one of channelizing innovation to economic gains and here the corporate sector lags far behind U.S., the problem is not one of absence of capital alone; the deeper question is that innovation is so much in evidence in university backed labs and centers of research then why would corporate sector be no way connected with such research? Has EU given up on technology and innovation areas altogether, while all the factors that enhance competitiveness on innovation are very much there in EU?

      Procyon Mukherjee

        CommentedWayne Barker

        Perhaps the United States' focus on freedom and individual initiative actually allows good ideas to be successful and not be crushed by bureaucratic meddling and mediocrity.