January 2011 | € 5.

00 Issue # 916 A New Europe Special Edition

NEW EUROPE
Our World in 2011

Tony Recep T. Ban Yang Dominique Wolfgang Javier Joseph E.

Blair Erdogan Ki-moon Jiechi Strauss-Kahn Schauble Solana Stiglitz
Featuring:

More than 60 leading thinkers visualise our world in 2011

Thorbjorn Peter Gunther Rodi Sebastian Hamrokhon Nirupama Nouriel

Jagland Singer Oettinger Kratsa Pinera Zarifi Rao Roubini
Page 2| New Europe
New Year Special | January 2011
CONTENTS

Politics Politics over economics or chaos?

•Our World
The year 2010, which is heading for the history books, reveled to the world that whatever ide-
•The European Union ology the spheres of influence may want to force on the world, the truth is that politics re-
•Speaking for The People mains the primary tool which societies use to shape their future, while the economy is always
subordinated to the needs of the conjuncture. In reality the free market theories that even the
•Focal Points Swedish Nobel Academy honored by bestowing to its prophets the highest of prizes for econ-
omists, bowed to the current crisis and leaving political leaders to take the reigns of the econ-

03-28 omy in their hands, using taxpayers money and central banks to lead their societies to safer
waters.

All of a sudden, the European Union and more so the Eurozone’s political leaders discovered
last spring that the most valuable asset of our economy, the single European currency, the Euro,
was in the gravest danger since its birth ten years ago. First it was Greece, then Ireland and
when the crisis became omnipotent, the European political leaders took the economy into their
hands. In the United States of America, the White House had already walked the path of sav-
ing “free” markets from their own built-in sins, of which the deadliest is the classical overca-
pacity crisis. This time it was the real estate sector; at the beginning of this Millennium, the
‘dot.com’ crisis.

Economy And now what? Is it possible to restore the functioning of the markets without taking percus-
sions for the future? Many say yes, especially in the other side of the Atlantic. In New York, cap-
ital markets are functioning again using free central bank finance and most people pretend that

& Finance nothing has happened. In Europe it is not like this. For one thing most of the world market
players and all rating agencies are exclusively American. On top of this the vast majority of the
Europeans are not as mad as the Americans in their belief and faith in the idealistic self-reg-
ulating powers of free markets. And so, next year the European Union is planning to set new
rules and controls.

29-44 Unfortunately Europe cannot do it alone. It has to be global or it will not work. In view of this,
the next twelve months, the year 2011, will also remain in history books as the year when the
western world decided to reappoint politics as the primary social function. The alternative, is
another crisis, sooner rather than later. Next year will be crucial in every way.

Our
Societies
•Society and Culture
•Innovation
•Information Paradigms Dennis Kefalakos, Editor Alexandros Koronakis, Director
•Human Rights

45-62 This special 2011 Edition of New Europe is produced in Association with Project Syndicate

EDITOR DIRECTOR BRUSSELS HEADQUARTERS

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 New Europe | Page 3
CONTENTS New Year Special| January 2011

POLITICS: OUR WORLD

Tony Blair
Ban Ki-moon Jaswant Singh Yuriko Koike George Thabo Mbeki
Faith in a Readings
Globalized Age New Directions Asia’s Fragile Is Cold War II Sudan and
for the UN Special Underway? How to Africa’s Future
Relationship Respond to
Al-Qaeda ?

Sam Nunn, Igor

Ivanov, and
5 6 7 8 9
Wolfgang
Ischinger
A Post-Nuclear
Euro- Atlantic
Security Order

EU: SPEAKING FOR EUROPEANS

POLITICS: THE EUROPEAN UNION Rodi Kratsa Joseph Daul

Bringing
Lothar
Bisky
Rebecca
Harms
Timothy
Kirkhope
2011: A Our The EU
Javier Solana Yang Jiechi Brian Hido Biščević Year of Eu- Resources Putting the Europe in Needs
Simpson ropean Together to EU on its the eye of a Greater Value
A Window of China-Europe South East Potential Work More feet storm for Money
Opportunity Ties on Steady Transporting Europe Turns Effectively
for European
Defense
Course in a
Fluid World
Europe into
2011
to Future
14 15 16 17 18
10 11 12 13

POLITICS: FOCAL POINTS

Recep Tayyip Hamrokhon Christopher Richard N. Fernando Shahid Krzysztof Sebastián Tzvetan David
Erdoğan Zarifi R. Hill Haass Henrique Javed Burki Lisek Piñera Vassilev Alton
Cardoso
The Iran: The Bulgaria’s Sudan,
Turkey: The Message Another Endgames in Ending the Whither Georgia – Chile and Potential for Trade and
New Indis- from the Problem Iraq and Never- Pakistan? Reactivation the Third Sustainable what Lies
pensable Roof of the from Hell Afghanistan Ending War Wall Growth Beneath
Nation World on Drugs

19 20 21 22 23 24 25 26 27 28
Page 4 | New Europe
New Year Special | January 2011
by Sam Nunn, Igor Ivanov, and Wolfgang Ischinger
Sam Nunn, for 24 years a Democratic US Senator from Georgia, is Co-Chairman of the Nuclear Threat Initiative. Igor Ivanov was Russia’s foreign minister
from 1998-2004. Wolfgang Ischinger, a former German ambassador to the United Kingdom and the United States, is chairman of the Munich Security Confe-
rence. They are Co-Chairmen of the Euro-Atlantic Security Initiative commission.
ASHINGTON, DC – As we
W enter 2011, the Euro-Atlantic
region is a study in strategic
contrasts. Over the past 20 years, no geo-
political space has undergone as dramatic
a transformation as that between the At-
lantic and the Urals. In our lifetimes, we
have seen a welcome change from the dar-
kest days of the Cold War, when a deva-
stating conventional and nuclear war in
Europe was a real possibility, to a new era
in which no state faces this type of exi-
stential threat.
But, despite these positive develop-
ments, the two largest powers in the re-
gion – the United States and Russia –
each still possesses thousands of nuclear
weapons, accounting for more than 90%
of the world’s nuclear inventory. Many of
these weapons remain deployed or desi-
gned for use within the Euro-Atlantic re-
gion.
Reduction and elimination of this
Cold War-era nuclear infrastructure is the
largest piece of unfinished business from
that bygone time. The continuing exi-
stence of large strategic nuclear forces de-
ployed on high alert, and of tactical
nuclear weapons deployed in certain
NATO states and Russia, creates a risk of
accidental, unauthorized, or mistaken use,
and of terrorist groups acquiring these as-
sets. So security vigilance is essential.
To meet this challenge, the three of us
– building on the action plan adopted by
consensus at the 2010 Non-Proliferation
Treaty (NPT) Review Conference – have
endorsed a series of urgent, practical steps
towards the long-term goal of a world free
of nuclear weapons. These include:
• increasing assured warning and deci-
sion times for the launch of nuclear-
armed ballistic missiles;
• developing cooperative missile-de-
fense and early-warning systems;
• ensuring the highest possible stan-
dards of security for nuclear weapons and
materials;
• beginning a dialogue on tactical nu-
clear weapons involving Russia, the US,
and NATO;
• adopting a process to bring the Com-
prehensive Test Ban Treaty into effect;
• developing international and multi-
lateral approaches to manage the risks of
fuel production for civilian nuclear power;
and
• further reductions in US and Russian
nuclear forces.
As former US Secretary of State Ge-
orge P. Shultz, former US Secretary of
Defense William J. Perry, former US Se-
cretary of State Henry A. Kissinger, and
former US Senator Sam Nunn put it in
2007, “Without the bold vision [of a nu-
clear weapons-free world], the actions will
not be perceived as fair or urgent. Without
POLITICS: OUR WORLD
A Post-Nuclear Euro
-Atlantic Security Order
A closed missile silo at Russia's Tatishchevo missile base, some 1,000 kilometers south of Moscow,
where the first 10 new Topol-M missiles were deployed, 27 December 1998 |ANA/ EPA PHOTO/AP POOL
> Quote
the actions, the vision will not be percei-
ved as realistic or possible.”
Perhaps the most crucial step toward
realizing this vision is to redouble our ef-
forts to resolve regional confrontations
and conflicts that give rise to new nuclear
powers. The great swath of states stretch-
ing from North America across Europe
through Russia has a vital role to play in
stabilizing an increasingly fragmented and
stressed international order.
These states can play this role, howe-
Copyright: Project Syndicate, 2010. www.project-syndicate.org
ver, only if first they transform this geo-
graphic space into a genuinely inclusive
and vibrant security community. Failing
that (and we are failing today) the Euro-
Atlantic states and their organizations will
settle for suboptimal – and too often ut-
terly inadequate – responses to the
twenty-first century’s security challenges,
including the threat of nuclear prolifera-
tion. Lately, several national leaders, in-
cluding the Russian and US presidents
and NATO secretary-general, have em-
braced the idea of a Euro-Atlantic secu-
rity community, and begun stressing the
importance of fashioning a stronger and
more inclusive European security order.
The timing could not be better, as the
Euro-Atlantic family has entered a criti-
cal period. On November 19-20, NATO
heads of states approved a new “strategic
concept” to guide the organization for the
next decade At the same time Russian
President D. Medvedev and his NATO
counterparts issued a joint statement, en-
dorsing the first Joint Review of 21st
Century Common Security Challenges
and deciding to resume Threat Missile
Defence Cooperation. Two weeks later,
the Organization for Security and Coope-
ration in Europe (OSCE) heads of state
assembled in Astana, Kazakhstan, to help
shape the OSCE’s next stage of develop-
ment.
Joint action on nuclear-threat reduc-
tion must be a critical element in moving
the Euro-Atlantic nations toward a level
of stability and strength and allow them
to exercise badly needed global leadership.
Achieving a genuinely collaborative ap-
proach to missile-defense matters will ad-
dress a common threat and help remove
misgivings that are blocking progress to-
ward a common security space.
Similarly, the Euro-Atlantic states can
mobilize behind efforts to strengthen the
International Atomic Energy Agency’s sa-
feguards system, which ensures the non-
diversion of peaceful nuclear programs, in
order to foster cooperation on countering
the threat of nuclear terrorism, and to de-
velop new mechanisms to protect jointly
critical infrastructure from cyber attack.
Such actions are crucial to these states’ na-
tional security and global efforts to miti-
gate threats.
Pursuing arrangements that increase
warning and decision-making time for all
countries in the Euro-Atlantic region
would introduce stability into the NATO-
Russia relationship. Adjustments in ope-
rational doctrine, as applied to strategic,
tactical, and conventional forces, would
constitute a giant step toward ending the
relationship’s militarized framework.
This is only a partial list of what must
be done if governments are serious about
building a stronger, inclusive European se-
curity order, one where the roles and risks
of nuclear weapons are reduced, and ulti-
mately eliminated. The three of us are
working with a distinguished group from
all corners of the Euro-Atlantic region to
develop these and other concrete steps
that are essential to creating a genuine se-
curity community, including its economic,
energy, and environmental dimensions.
NATO, OSCE, and other key regional in-
stitutions must give this concept and pro-
cess their essential support.

New Directions for the UN
by Ban Ki-moon
Ban Ki-moon is the Secretary-General of the United Nations.
EW YORK – The United Na-
N tions today leads what seems at
times like a double life. On the
one hand, pundits criticize it for not sol-
ving all the world’s ills. On the other hand,
UN member states and people around the
world are asking it to do more, in more
places, than ever before – a trend that will
continue in 2011.
It is not hard to see why. We have only
to read the newspaper, turn on the televi-
sion, or go online to appreciate the sheer
scale of the need. Conflicts rage in too
many places. Natural disasters strike with
greater fury, and in greater numbers, than
ever before.
On top of all this, we face a new gene-
ration of threats, unlike any in history,
which spill across borders and have global
reach. No single country or group, howe-
ver powerful, can deal with them alone.
All must work together – in common
cause for common solutions – to address
challenges like climate change, poverty,
and nuclear disarmament.
But there is profound skepticism that
we can do so. The world looks to the UN
as never before, yet the conventional wis-
dom is that we are not up to the job. The
problems are too complicated. Resources
are too few. The UN itself appears too di-
vided to make the vital difference.
The conventional wisdom is, however,
wrong; worse, it is dangerous, for we have
all seen how quickly it can take hold, di-
stort reality, and then harden like cement.
For example, four years ago, when I came
to office, only a handful of global leaders
POLITICS: OUR WORLD
Ethiopian Veterans Kagnew Battalion who served alongside US Soldiers during the Korean War share ex-
periences with US Army Africa instructors in Addis Ababa, Ethiopia |www.flickr.com
> Quote
knew enough even to talk about climate
change – the defining challenge of our
times, whose effects we see every day, all
around us. Today, we have moved climate
change to the top of the global agenda.
But make no mistake: it has been a dif-
ficult road.
In December 2009 in Copenhagen,
world leaders talked far into the night, and
emerged, according to the conventional
wisdom, with virtually nothing. In fact, th-
ough we did not get a comprehensive, le-
gally binding treaty that would usher in an
era of sustainable, low-carbon prosperity,
as we had hoped, there were significant
achievements in Copenhagen.
For the first time ever, developed and
developing countries acknowledged their
responsibility to curb emissions of gree-
nhouse gasses and agreed on the goal of
Copyright: Project Syndicate, 2010. www.project-syndicate.org
limiting global temperature rise to below
two degrees Celsius. And, for the first
time ever, countries made large pledges to
finance mitigation and adaptation efforts:
$30 billion over the next three years for
fast-start financing, and $100 billion per
year by 2020.
The lesson is that we should not dream
of overnight breakthroughs, or allow our-
selves to fall into despair in the absence of
immediate progress.
Let us work, instead, to build on many
smaller advances, wherever we can make
them – by mobilizing support, creating
broad alliances, building coalitions, and
taking into account a web of moving parts
and complex issues – because that will set
the stage for the eventual breakthroughs
of tomorrow.
Collective action has never been easy,
New Europe | Page 5
New Year Special| January 2011
but it has never been more necessary than
in achieving the UN’s Millennium Deve-
lopment Goals – the world’s blueprint for
ending extreme poverty. The conventional
wisdom will tell you that the MDGs tar-
gets – reducing poverty and hunger, im-
proving the health of mothers and
children, combating HIV/AIDS, increa-
sing access to education, protecting the
environment, and forging a global part-
nership for development – are simply
unattainable. In fact, we are controlling di-
sease – polio, malaria, and AIDS – better
than ever before, and making big new in-
vestments in women’s and children’s
health – the key to progress in many other
areas.
Nevertheless, on climate change, po-
verty, and other issues, the conventional
wisdom is that the UN should cede re-
sponsibility to the G-20.
But the G-20, by itself, is not the an-
swer. Despite strenuous debate about cur-
rency issues and trade imbalances at its
summit in Seoul in November, the sole
area of agreement concerned an issue on
the G-20’s agenda for the first time – eco-
nomic development. Recognizing that
global recovery depends on the emerging
economies – that is, the developing world
– G-20 leaders embraced investments
aimed at lifting the world’s most vulnera-
ble people out of poverty.
That is why G-20 leaders accept the
need to work closely with the UN – after
all, no organization does development bet-
ter. The G-20 and the UN are finding new
ways to work constructively together – not
as rivals, but as increasingly close partners.
And that is the way it should be.
Forty years ago, a great American sta-
tesman, Dean Acheson, looked back at the
excitement he felt in helping to build the
post-World War II order. “Present at the
Creation,” he called his memoir.
Today, we find ourselves at an equally
exciting moment, no less critical to the fu-
ture of humankind.
We, too, are present at a new creation.
And the UN must constantly re-create
itself as well. We must evolve and keep
pace with a rapidly changing world. We
must be faster and more flexible, efficient,
transparent, and accountable. In an age of
austerity, resources are precious; we must
make every dollar count. These are testing
times for everyone. People everywhere live
in growing anxiety and fear.
There is near-universal loss of trust in
institutions and leaders.
Amid such uncertainty, our future de-
pends on a UN that brings together the
countries of the world not only to talk and
debate, but also to agree and to act; that
mobilizes civil society, business, philanth-
ropists, and ordinary citizens to help the
world’s governments solve current pro-
blems; and that delivers peace, develop-
ment, human rights, and global public
goods – in a word, hope – to people aro-
und the world every day.
Page 6 | New Europe
New Year Special | January 2011
Asia’s Fragile Special Relationship
by Jaswant Singh
Jaswant Singh is a former Indian finance minister, foreign minister, and defense minister, is the author of Jinnah: India – Partition – Independence
EW DELHI – “Tzu-Ch’in said to
N Tzu-Kung: …Our Master gets th-
ings (done) by being cordial, frank,
courteous, temperate, deferential. That is
our…way.” But will Chinese Premier Wen
Jiabao live up to that standard, as conveyed
in the Analects of Confucius, on his cur-
rent visit to India?
The world has a variety of “special rela-
tionships.” The United States’ partnership
with the United Kingdom is one forged in
war – and a pillar of the West for more
than a half-century. The US-Soviet rivalry
of the Cold War era was special in that re-
lations between those two countries shaped
the fate of the world until the USSR im-
ploded. The US and China are said to be
forging a new special relationship.
But, in looking toward the future of
Asia – and, indeed, the future of world di-
plomacy – it is the relationship between the
world’s two most populous countries and
largest emerging economies, India and
China, which will increasingly set the glo-
bal agenda. Japan’s change of military doc-
trine for the first time since the start of the
Cold War – a shift that implicitly makes
China the greatest threat – suggests that
the Chinese leadership needs to take a hard
look at its regional grand strategy.
Wen’s priorities for his trip to India are
clear: trade, security, and, far behind, the
territorial disputes between the two coun-
tries. Such an approach might make tacti-
cal diplomatic sense, as long as there is no
background clatter. But it lacks a sense of
strategic urgency, which, given rising inter-
national tensions across Asia, amounts to a
serious strategic blunder.
POLITICS: OUR WORLD
Russia's President Dmitry Medvedev (L) meets with Indian President, Pratibha Devi Singh Patil
(R) at Presidential Palace in New Delhi, 21 December 2010 |ANA/EPA/INDIAN PRESIDENT HOUSE
> Quote
The sources of those tensions are clear:
North Korea’s shelling of South Korea’s
Yeonpyeong Island and its flaunting of a
modern, previously unknown, nuclear
plant; the US-led armada now cruising th-
rough the South China and Yellow Sea;
and China’s claim that the South China
Sea is an area of vital national interest akin
to Tibet.
In its bilateral relations with India, Ch-
ina’s shift in focus from its claims on the
Northeastern Indian state of Arunachal
Pradesh to Jammu and Kashmir is enor-
mously worrisome. Indeed, around Gilgit
in Kashmir, China’s People’s Liberation
Army has greatly enhanced its troop pre-
sence. Small wonder that, on the eve of
Wen’s visit, China’s ambassador in New
Delhi finds relations between the two co-
untries to be “very fragile, easily damaged,
and difficult to repair.”
But, despite all this diplomatic friction,
Wen’s entourage for his visit is dominated
by a large business delegation. Currently,
Copyright: Project Syndicate, 2010. www.project-syndicate.org
both countries’ economies are thrusting
confidently forward; both are thirsty for
more and bigger markets.
India is growing at an annual rate of
around 9%; China at around 10%. So the
opportunities for trade between the two
are certainly enormous. But, for both co-
untries, economic growth is not hurdle-
free.
India’s economy is continuing to grow,
but faces rising inflation, fiscal and cur-
rent-account deficits, a slowdown in agri-
cultural growth, and infrastructure
bottlenecks. China’s problems arise mainly
from widening income disparities, which
are inciting hitherto unheard of levels of
labor unrest – though this should not be
viewed as a precursor to change of the sort
that marked the rise of the Solidarity trade
union and the end of communism in Po-
land.
But labor unrest and the desire to
maintain 10% growth suggest that China
should be taking the lead in ensuring peace
on the Korean peninsula and preventing
other political developments from derai-
ling its economy. After all, as the Chinese
leadership knows, only continued strong
growth will provide the government with
the wriggle room it needs to begin to reva-
lue the renminbi.
Revaluation of its currency is necessary
in part because the undervalued renminbi
has become yet another a source of friction
in Asia, as many in the region now believe
the Chinese are using their currency as a
“policy weapon.” To untangle the complex
policy web surrounding the renminbi’s
value will demand greater regional stabi-
lity, not less.
Yet China’s international grand stra-
tegy does not appear to reflect this. Instead,
it remains focused on Northeast Asia,
Tibet, Taiwan, and on its aspirations to
move into the Indian Ocean, that great
global highway of trade in the twenty-first
century.
China’s leaders recognize that their co-
untry needs time, space, and peace for eco-
nomic development. Yet their pursuit of a
dominant position on the strategic choke-
points in the Indian Ocean undermines
these goals by raising tensions not only
with India, but with Asia’s other powers
and the US. Their focus on inhibiting
India seems particularly misguided, given
that China’s core interests (Tibet, Taiwan,
and the heartland of the Chinese main-
land) are far beyond the reach of most of
India’s military capabilities.
By contrast, India’s most important na-
tional security concerns – the unsettled
border between the two countries, and Bei-
jing’s ties with Pakistan, which often ope-
rates as a Chinese surrogate – are closely
connected to China: Both factors are di-
rectly linked to China’s perceived threat to
India’s Himalayan territory and its rapid
development of strategic infrastructure in
that region. India’s concerns also focus on
China’s ongoing supply of arms, including
missiles and nuclear weapons technology,
to Pakistan.
No amount of discussion over trade can
obscure the true issues of vital concern bet-
ween China and India. China may take
comfort in remaining focused on non-core
issues, because such an approach suggests
tactical cooperation with India. That is a
convenient international ploy, but it leaves
the sources of bilateral discord unattended.
The idea of collaboration only in areas
of interest to China while neglecting issues
of substance to India is untenable, even in
the short term. Indeed, neglect of the core
disputes is what has resulted in the rela-
tionship’s “extreme fragility.” India cannot
and will not abandon its territorial soverei-
gnty, or its pursuit of secure land borders or
a greater balance in trade.
These are challenges that cry out for
clarity, not diplomatic fudges. But surely
two great and ancient civilizations can find
their way to the type of “cordial, frank, co-
urteous, temperate, deferential…” relations
that would have pleased Confucius.

Is Cold War II Underway?
by Yuriko Koike
Yuriko Koike, Japan’s former Minister of Defense and National Security Adviser, is now Chairman
of the Executive Council of the Liberal Democratic Party.
OKYO – Mesmerized by China’s
T vast military buildup, a new constel-
lation of strategic partnerships
among its neighbors, and America’s revitali-
zed commitment to Asian security, many sh-
rewd observers suggest that 2010 saw the
first sparks of a new Cold War in Asia. But
is “Cold War II” really inevitable?
Although appeasing China’s drive for
hegemony in Asia is unthinkable, every rea-
listic effort must be made to avoid militari-
zation of the region’s diplomacy. After all,
there was nothing very cold about the Cold
War in Asia. First in the Chinese civil war,
and then in Korea, Indonesia, Malaysia, and
Indochina – particularly Vietnam – the
Cold War raged not as an ideological/pro-
paganda battle between rival superpowers,
but in dogged, often fratricidal combat that
cost millions of lives and retarded economic
development and political democratization.
It is this grim history that makes China’s
current disregard for Deng Xiaoping’s
maxim that China “disguise its ambition and
hide its claws” so worrying for Asian leaders
from New Delhi to Seoul and from Tokyo
to Jakarta. From its refusal to condemn
North Korea’s unprovoked sinking of the
South Korean warship Cheonan and shel-
ling of South Korean islands, to its claims of
sovereignty over various Japanese, Vietna-
mese, Malay, and Filipino archipelagos and
newly conjured claims on India’s province of
Arunachal Pradesh, China has revealed a
neo-imperial swagger. So it should surprise
no one that “containment” is coming to do-
minate Asian diplomatic discourse.
But it is wrong – at least for now – to
think that a formal structure of alliances to
contain China is needed in the way that one
was required to contain the Soviet Union.
Containment, it should be recalled, was or-
ganized against a Soviet totalitarian regime
that was not only ideologically aggressive
POLITICS: OUR WORLD
A tourist takes a picture of two military guided missiles displayed at a Navy military museum in Qingdao city, eastern China's Shandong province, 19 April 2010. The
two active duty guided missiles HHQ-16 and YJ-83 which took part in the grand military review of 60th National Day on October 1st, 2009 have been displayed for
tourists on 19 April |ANA/EPA/WU HONG
> Quote
and in the process of consolidating its colo-
nization of Eastern Europe (as well as Ja-
pan’s Northern Territories), but also
deliberately sealed off from the wider world
economy. Today’s China is vastly different.
Overt military imperialism of the Soviet sort
has, at least historically, rarely been the Ch-
inese way. Sun Tzu, the great Chinese theo-
rist of warfare, focused on the weakening of
an adversary psychologically, not in battle.
Until recently, much of China’s bid for re-
gional hegemony reflected Sun’s concepts.
More importantly, China abandoned
economic autarky three decades ago. Today,
its economic links in Asia are deep, and – it
is to be hoped – permanent. China’s export
machine sucks in vast quantities of parts and
components for final assembly from across
Asia – Thailand, Malaysia, the Philippines,
and Indonesia, as well as richer Singapore,
Taiwan, South Korea, and Japan. Member-
ship of the World Trade Organization has
helped to bind China to highly sophisticated
pan-Asian production networks. Everybody
has benefited from these ties.
Throughout China’s three-decade rise
from poverty to economic juggernaut, trade
within East Asia has grown even faster than
Copyright: Project Syndicate, 2010. www.project-syndicate.org
the region’s trade with the rest of the world,
suggesting deeper specialization and inte-
gration. Indeed, China’s rise has profoundly
altered the course of Asia’s trade flows. Japan
no longer focuses on exporting finished
goods to Europe and North America, but on
exporting parts and components for assem-
bly in China. In turn, Japan now imports
from China finished goods (such as office
machines and computers) that once came
from America and Europe.
Given that as many as half of China’s 1.3
billion people remain mired in abject po-
verty, it is in China’s interest to ensure that
these economic relationships continue to
flourish. In the past, China has recognized
the vital need for good neighborly relations.
During the Asian financial crisis of 1997-
1998, Chinese officials did not engage in
competitive devaluation of the renminbi.
Unfortunately, such clear-sighted and re-
sponsible policymaking is a far cry from
what we are seeing today.
China’s dizzying increase in its military
capacity is another obvious source of con-
cern in Asia. But, even according to the hi-
ghest estimates, China’s military budget is
only now about equal to that of Japan and, of
New Europe | Page 7
New Year Special| January 2011
course, much less than the combined mili-
tary budgets of Japan, India, and Russia, all
of which border China – not to mention In-
donesia, South Korea, and a militarily mo-
dernizing Taiwan. Moreover, Russia and
India possess nuclear weapons, and Japan
has the technological wherewithal to recon-
figure its defense posture to meet any regio-
nal nuclear threat.
So the challenge that China poses today
remains predominantly political and econo-
mic, not military.
The test of China’s intentions is whether
its growing economic and, yes, military ca-
pacities will be used to seek to establish
Asian hegemony by working to exclude
America from the region and preventing re-
gional partnerships from flourishing. The al-
ternative is a China that becomes part of a
cooperative effort to bind Asia in a rules-
based system similar to that which has un-
derpinned long-term peace in Europe.
In this sense, Asia’s rise is also a test of
US competitiveness and commitment in
Asia. America’s historical opposition to he-
gemony in Asia – included as a joint aim
with China in the Shanghai Communiqué
of 1972 – remains valid. It will have to be
pursued, however, primarily by political and
economic means, albeit backed by US power.
Before 2010, most Asian countries
would have preferred not to choose between
China and the US. But China’s assertiveness
has provided enormous incentives to em-
brace an Asian multilateral system backed
by America, rather than accept the exclusio-
nary system that China seeks to lead. In
2011 we may begin to see whether those in-
centives lead China’s rulers to re-appraise
their diplomatic conduct, which has left
them with only the corrupt, basket case eco-
nomies of Burma and North Korea as relia-
ble friends in Asia.
Page 8 | New Europe
New Year Special | January 2011
How to Respond to Al-Qaeda ?
George Readings
George Readings is a Research Fellow and Communications Officer for Quilliam, the world’s f irst counter-extremism think tank
ONDON - How should democra-
L tic, liberal countries respond to the
terrorist threat posed by al-Qaeda?
In order to stop terrorism, should govern-
ments be prepared to work with people
who support many of al-Qaeda’s end
goals, for example the creation of an ex-
pansionist ‘Islamic state’, but who oppose
al-Qaeda’s terrorist methodology? Should
such critics of al-Qaeda’s terrorist acts be
treated as allies or should they be challen-
ged as people whose ideas are ultimately
harmful to free and pluralist societies?
In a year when a British citizen tried
to assassinate a British Member of Parlia-
ment, citizens of many European coun-
tries were reported to be attending
terrorist training camps in Pakistan and
several European capital cities were war-
ned of potential ‘Mumbai style’ terrorist
attacks, these questions could not be more
pertinent.
As on many other issues, however,
there is little consensus across Europe.
One school of thought considers non-vio-
lent extremists to be a valuable bulwark
against terrorist violence, whilst another
school argues that the promotion of Isla-
mists of any variety - violent or non-vio-
lent - risks making Islamist terrorism
more likely. Moreover, the second school
warns, the spread of non-violent Islamism
within a society is divisive and ultimately
undermines cohesion and creates long-
term instability.
The Danish Security Services sub-
POLITICS: OUR WORLD
US Sergeant Brandt (L) of 4th Squad 73rd Cavalry Regiment of the 82nd Airborne Division makes a biometric control on a potencial suspect during
a search operation at a ex-Taliban compound in Shewan, Farah province, Afghanistan, 31 May 2010 |ANA/EPA/TIAGO PETINGA
scribe to the first school of thought: that
non-violent Islamists are the people best
placed to stop youngsters from engaging
in terrorist violence. On the other hand,
in Germany, the security service’s view ap-
pears to be that, whilst non-violent Isla-
mist groups do not recruit for terrorism,
their focus on preserving an ‘Islamic iden-
tity’ may intensify the fragmentation of
society and help create a breeding ground
for further radicalisation.
That is to say, although such non-vio-
lent Islamist groups may be opposed to
the tactic of terrorism, their divisive mes-
sage nonetheless lays the ideological gro-
undwork for violent groups. The Dutch
security services seem to agree, warning
that “despite its non-violent form, this
ideology is still disrupting the relationsh-
ips within and between ethnic groups.
This can result in radicalisation, polarisa-
tion and social isolation.”
In Britain, advocates of the first sch-
ool of thinking cite the ousting of the
Egyptian extremist preacher ‘Abu Hamza’
from Finsbury Park Mosque in London
in 2003. Throughout the late 1990s, the
famously hook-handed preacher turned
this mosque in North London into a hub
for violent Islamism. According to some
reports, the building was even used for
weapons training. Moreover, al-Qaeda
operatives Richard Reid and Zacarias
Moussaoui are known to have prayed
there, while other regular attendees at the
mosque ended up travelling to join mili-
tants in Chechnya, Bosnia and Afghani-
stan.
In 2003, the Metropolitan Police evic-
ted Abu Hamza and his followers from
the mosque, installing individuals from
the Muslim Association of Britain, an Is-
lamist group with links to the Muslim
Brotherhood, in their place. As such,
those who see non-violent Islamists as the
best opponents of militant Islamists con-
sider the Finsbury Park case to be a
triumph: supporters of al-Qaeda were
supplanted by supporters of the Muslim
Brotherhood. But the events are not as
clear cut as they appear.
In the same year as London’s police
force put the Muslim Association of Bri-
tain in charge of the Finsbury Park Mo-
sque, the group also arranged a series of
talks by an American Muslim cleric. In
particular, they organised a speaking tour
for him at various universities around the
UK, allowing him to become a popular
and respected preacher in some circles of
British Muslim youth. His name was
Anwar al-Awlaki.
Al-Awlaki has since been linked to se-
veral terrorist attacks, including the Fort
Hood shooting, the Christmas Day ‘un-
derpants bomber’ and the attempt to de-
tonate a bomb in New York’s Times
Square. From his hiding place in Yemen,
al-Awlaki has more recently called on
young western Muslims to carry out ter-
rorist attacks against their home coun-
tries.
Some who have heard his talks, inclu-
ding the attempted assassin of British MP
Stephen Timms, have taken up his call. So
dangerous is al-Awlaki considered to be
that his killing has been authorized by
President Obama.
In 2003, removing Abu Hamza from
Finsbury Park Mosque and replacing him
with supporters on the Muslim Brotherh-
ood seemed to make sense. In the long
run, however, this decision has turned out
to be deeply problematic.
Admittedly, al-Awlaki’s publicly stated
views were less openly violent in 2003
than they are now, but his extreme views
were nonetheless still apparent. The fact
that the Muslim Association of Britain
and various other Muslim Brotherhood
linked Islamist organisations in the UK
were, until relatively recently, happy to
host or sponsor events featuring talks by
him illustrates the risks posed by entering
into alliances with non-violent Islamists.
Such individuals and groups are often
unable or unwilling to identify and chal-
lenge militant Islamists in their midst.
Given that the threat of Islamist
terrorism shows no signs of abating,
European governments need counter-
radicalisation strategies now more than
ever. Empowering non-violent Islamists
against militant Islamists may sound like
a hard-edged and cost-effective strategy,
but not only is it likely to be highly
ineffective, it may be dangerously
counter-productive in the long run.

Sudan and Africa’s Future
by Thabo Mbeki
Thabo Mbeki, a former President of South Africa, is Chairperson of the African Union High
Level Implementation Panel for Sudan (AUHIP).
A resident of Kalma camp, for internally displaced persons (IDPs). in Nyala, South Darfur, with a child in an admi9nistration room before beginning their
journey to return to their homes of origin in West Darfur on 6 December 2010 |ÁÍÁ/ÅÐÁ/ÁËÂÅÑÔ ÃÏÍÆÁËÅÆ ÖÁÑÑÁÍ / ÈÍÁÌÉÄ
OHANNESBURG – It has been said,
J correctly, that Sudan is a microcosm of
Africa. For this reason, the entire conti-
nent will follow events in Sudan over the
next few months with the greatest interest.
On January 9, 2011, the people of
South Sudan will vote in a referendum to
decide whether they will remain part of a
united Sudan or form a new independent
state. If they choose the latter option, the
new state will come into being on July 9,
2011.
During the same period, even as Sudan
is addressing the issue of its North-South
relations, it will also have to arrive at a
comprehensive agreement to end the con-
flict in Darfur.
During its nearly 55 years of indepen-
dence, Sudan has experienced a succession
of violent conflicts, in the South, the West
(Darfur), and the East. It is commonly ac-
cepted that what lay at the root of these
conflicts was the failure of independent
Sudan – one of Africa’s most racially, eth-
nically, religiously, and culturally diverse
countries – to construct a polity informed
by the principle and practice of unity in
diversity.
This challenge faces almost all African
countries as they seek to construct stable
and peaceful societies. Virtually all civil
wars and other violent conflicts in post-
colonial Africa have occurred because of
the failure to manage properly the diver-
POLITICS: OUR WORLD
>
Quote
sity that characterizes these countries.
These conflicts have taught Africa
that, in order to contain the centrifugal
pressures that encourage fragmentation
within our relatively new states, a consci-
ous effort must be made to nurture and
entrench national unity, which must in-
clude democratic practices. Conflict has
also communicated the unequivocal mes-
sage that unity cannot be secured and
maintained by force alone.
Rather, it is only by respecting our di-
versity – ensuring that each social group
enjoys a shared sense of belonging, rather
than feeling marginalized and excluded –
that the state’s unity and peace can be gua-
Copyright: Project Syndicate, 2010. www.project-syndicate.org
ranteed. Sudan has learned these lessons
through harsh practical experience, inclu-
ding war.
As long ago as 1975, Gafaar al-Ni-
meiry, Sudan’s military head of state, sta-
ted with great prescience what Sudan and
Africa needed to do to achieve peace and
stability. “Unity based on diversity has be-
come the essence and the raison d’être of
the political and national entity of many
an emerging African country today. We
take pride in that the Sudan of the Revo-
lution has become the exemplary essence
of this new hope.
The Sudan is the biggest country in
Africa. It lies in its heart and at its cross-
New Europe | Page 9
New Year Special| January 2011
roads. Its extensive territory borders (nine)
African countries. Common frontiers
mean common ethnic origins, common
cultures, and shared ways of life and envi-
ronmental conditions. Trouble in the
Sudan would, by necessity, spill over its
frontiers, and vice versa. A turbulent and
unstable Sudan would not therefore be a
catalyst of peace and stability in Africa,
and vice versa.”
Unfortunately, failure to implement
policies based on genuine respect for this
perspective plunged Sudan into its second
costly North-South war, fueled the violent
conflicts in Western and Eastern Sudan,
and created the possibility of the South’s
secession. Given this history, it is clear that
the governments of Sudan and South
Sudan, as well as the overwhelming majo-
rity of the Sudanese people, have had eno-
ugh of war and passionately desire peace.
The processes in which the Sudanese
parties are currently engaged – the prepa-
rations for the South Sudan referendum,
negotiations on post-referendum arrange-
ments, and the search for a negotiated
settlement in Darfur – are all informed by
this desire for peace.
For this reason, Africa is following Su-
dan’s evolution with intense interest – and
is eager to see this country “at the heart
and crossroads of Africa” give substance to
al-Nimeiry’s vision.
But, regardless of the outcome of the
South Sudan referendum, the impending
developments in Sudan will result in im-
portant changes to the structure of the Su-
danese state. In this context, the Sudanese
parties – North and South – have accepted
the important principle of establishing
“two viable states” if the South secedes.
As happens during periods of major
and rapid change, the country will expe-
rience social tension, uncertainty, and une-
ase. Africa is keen that the Sudanese
leadership cooperate effectively to manage
this delicate situation, in the interest of
the continent as a whole.
This requires that Sudan’s various lea-
dership collectives have sufficient strength
and cohesion to bring their constituencies
into the settlement, and therefore that no
one, from near or afar, does anything to
weaken any of these collectives.
It is in Africa’s interest to see Sudan’s
people living together in peace and coo-
perating with one another for their mutual
benefit – fully respecting one another’s di-
verse but not mutually exclusive interests,
whether they live in one country or two. A
Sudan that truly embodied “the exemplary
essence” of respect for diversity of which
al-Nimeiry spoke would serve as a catalyst
for peace and stability on our continent.
It is to be hoped that the sustained and
enormous international focus on Sudan
has as its objective providing the necessary
support to the Sudanese people to help
them achieve this goal, including building
two viable states, as may be necessary.
 POLITICS: THE EUROPEAN UNION
Page 10 | New Europe
New Year Special | January 2011

A Window of Opportunity for European Defense

by Javier Solana
Javier Solana, President of the ESADE Center for Global Economy and Geopolitics, is a former EU High Representative for Common
Foreign and Security Policy and a former Secretary-General of NATO.

Union, the United Nations, or other opera-

tions.”
Solidarity and agreement on political ob-
jectives are the pressing concerns of our age.
The new pact between France and the UK
could be a historic step toward rationalizing
defense spending rather than toward demili-
tarizing Europe. It all depends on the path ch-
osen. In times of financial crisis, EU member
states are unlikely to increase defense spending.
But if France and the UK understand how
much their projection of power is linked to
that of Europe, if they make cooperation reci-
procal and expand it to other European coun-
tries – according to the formula foreseen in the
treaties – we could eventually see an EU with
the ability to assume the defense role expected
of it by the global community. By forcing gre-
ater efficiency and collaboration, misfortune
can yield benefit. This path can also ease US
concerns about lower European defense spen-
ding. The Franco-British treaties do not ad-
dress commitments to NATO, a key US
interest, because any reduction in the number
of European troops deployed abroad inevitably
implies a greater economic burden for the US.
The Franco-British agreement does, ho-
wever, imply progress toward joint European
Two Eurofighter fighter planes fly past the Ernst-Happel-Stadium in Vienna, one of the EURO military action, both in Europe and on the in-
2008 soccer tournament venues, Vienna, 4 June 2008 |ANA/EPA/BMLV/ ZINNER
ternational scene, which will encourage the US.
ADRID – With budgets exceptio-

M nally tight in Europe nowadays,

worries about European defense
So will the fact that the initiative comes from
Europe’s two major military powers (whose
combined defense spending represents half of

>
have been growing. Paradoxically, however, de-
velopments in 2010 offer hope for the future. Quote the Continent’s total), both of which have per-
manent seats on the UN Security Council.
The defense agreement signed in Novem- All of this is part of the transatlantic com-
ber by France and the United Kingdom is munity’s continuing transformation from a set
composed of two treaties, which cover joint of organizations designed to defend territory
deployment of their armed forces, nuclear de- against a known aggressor to something more
terrence, and improved equipment and com- flexible and dynamic. Establishing joint ma-
munications. This initiative has the firm nagement and overhauling conventional de-
political backing of both countries’ leaders, and fense capacities will be a two-pronged
expresses a clear determination to unite against challenge: functional, owing to the traditional
common threats. schema of defense organizations, and political,
Implemented correctly, these treaties could inasmuch as a cession of state sovereignty will
become a hopeful precedent for the entire Eu- be required.
ropean Union. By transcending strictly natio- Another, equally important challenge is
nal limits, these treaties chart the future path of cooperation between NATO and Russia,
European defense and will help determine the which agreed at NATO’s Lisbon summit in
Indeed, the EU has undertaken 24 missions in tions, increasing interdependencies, and global
course of Europe’s relations with the United November to collaborate on the Alliance’s
Europe, Africa, and Asia, differing in nature, threats – from terrorism and nuclear prolife-
States and NATO. anti-missile defenses. This relationship must
scope, and aims, and combining military and ration to climate change, resource scarcity, and
To better judge the treaties’ worth, we must be based on cooperation that benefits both
civilian means. epidemics – that are impossible to tackle uni-
remember the context in which they were con- sides, and that respects certain common prin-
Today, the EU is being asked to conduct laterally. It also sets a precedent for the UK,
ceived. In 1998, the Saint Malo Declaration by cipals of governance and non-interference. But
complex missions in adverse circumstances. In preparing the way for future prime ministers
French President Jacques Chirac and British coordinating and sharing capacities can help
doing so, Europe must draw on the lessons of to make advances in this direction.
Prime Minister Tony Blair indicated both co- both partners deal with the new nature of con-
its past successes. We Europeans need to re- Reinforcing both countries’ military capa-
untries’ determination to reinforce the EU’s se- flicts. Here, the EU can exercise leadership, for
spond favorably, quickly, and effectively. De- cities indirectly reinforces those of the EU. The
curity and defense capabilities. Originally this is a political process that has only just
fense missions must be more adaptable, quest for synergies and efficiency that is im-
reluctant to accept a Europe with autonomous begun. As British Prime Minister David Ca-
prompt, multinational, and multi-instrumen- plied by the agreement could well become a
military capacity, the United Kingdom had le- meron said of the agreement with France:
tal. They must be focused on stability and se- driving force for the European Defense
arned from the intervention in Kosovo that the “This is the beginning of something new, not
curity, regardless of the security situation or the Agency. The British may now consider the
EU must be able to respond to crises rapidly an end in itself ” – words that echo those of
nature of the conflict. EDA a defense expenditure, but, when better
and efficiently. Jean Monet, one of the Union’s founding fa-
Yet it is clear that European defense is now defined, it could represent a source of savings
The Saint Malo Declaration signaled that thers, on cooperation in the West. “This is not
struggling mightily with public financing. Mo- for every EU country. Moreover, the agree-
the EU’s leading military powers were prepa- an end in itself,” Monet said. “It is the begin-
reover, the latest Eurobarometer poll shows ments foresee cooperation on cyber-security,
red to develop their own defense policy, though ning of the path toward a more ordered world
that defense is the last thing that Europeans terrorism, satellite communications, and ma-
one not fully autonomous of NATO. Indeed, that we must attain if we want to escape de-
are worried about. ritime security, which are also key elements of
through the Berlin Plus agreements, which fa- struction.”
It is precisely here that the Franco-British the Lisbon Treaty. Likewise, the joint expedi-
cilitate use of NATO resources for missions The Franco-British agreement in 2010
agreement becomes vitally important. The tre- tionary forces established under the treaties
undertaken under the European Defense and was one hopeful sign for 2011 and beyond: a
aties mark an attempt to balance action and could lead to the eventual creation of a wider
Security Policy (ESDP), NATO recognized step along the arduous but necessary path to-
ambition in a context of economic crisis, fiscal structure, as they already contemplate “bilate-
the ESDP’s maturation over the past decade. ward greater European security.
consolidation, large-scale defense transforma- ral cooperation with NATO, the European
Copyright: Project Syndicate, 2010. www.project-syndicate.org

China-Europe Ties on Steady
Course in a Fluid World
by Yang Jiechi
Yang Jiechi is the Minister of Foreign Affairs of the People’s Republic of China
EIJING - The international landscape
B in 2010 has been rather fluid. The mo-
mentum of the global financial crisis
has been curbed, yet its impact has been dee-
pening and it has triggered profound changes
in international relations and the global pat-
tern. The world economy has continued with
its slow recovery, but more fragility and imba-
lance have been exposed. Global economic and
financial risks have persisted, and protectio-
nism has further exacerbated. The issue of de-
velopment has become more prominent, with
major economies pondering adjustments to
their economic growth and management mo-
dels. The global power configuration has be-
come more balanced. A number of emerging
economies have risen rapidly in succession, and
shown strong momentum of growth as a
group, further closing the gap with developed
countries. And groupings like BRIC and
BASIC countries have grown in strength.
Reform of the international economic sy-
stem has made headway. Developing countries
are now participating in global economic go-
vernance mechanisms in a more equal fashion
than the past. The G20 is evolving from a cri-
sis response mechanism to one focusing on
long-term economic governance, and its role
POLITICS: THE EUROPEAN UNION
José Manuel Barroso, Hu Jintao, President of the People's Republic of China, and Liu Yongqing, wife of Hu Jintao (from left to right) | Credit
© European Union, 2010
> Quote
and influence is receiving wide attention.
There has also been positive progress in IMF
and World Bank reforms.
The international security picture has be-
come more complicated. Although peace is ta-
king greater hold in the world, the
intertwining of traditional and non-traditional
security issues has made security threats more
diverse and complex. While Asia enjoys gene-
ral stability on the whole, security challenges
are on the rise and the hotspot issues heat up
from time to time. Some Asian countries have
experienced political instability and factors af-
fecting security have become more complex.
More currents of thought have come to the
fore. A lot of exchanges, reflection and changes
are going on in the international cultural field.
New ideas and proposals have been put for-
ward by various countries.
And there has emerged a clearer trend of
New Europe | Page 11
New Year Special| January 2011
more mutual learning and exchanges between
different civilizations and different develop-
ment models.
Thanks to concerted efforts, China and
Europe have achieved steady growth in our
strategic partnership in 2010.
There have been more frequent exchan-
ges in the political field, closer economic ties
and more active people-to-people exchanges
between the two sides. In the current situation,
the case for China-Europe cooperation is
stronger than ever. Our cooperation will bene-
fit not only the development of our two sides
but also stability and sustainable development
of the world.
China and Europe may have different
views on some issues due to our differences in
social system, development stage and cultural
tradition. This is natural. It is important for us
to rise above ideological differences, respect
and treat each other as equals, seek common
ground while setting aside our differences, and
strive for a win-win situation. In the coming
new year, China is ready to work with Europe
to strengthen dialogue and cooperation, incre-
ase mutual understanding and trust, and pro-
mote sustained, sound and steady growth of
our relations.
Page 12 | New Europe
New Year Special | January 2011
POLITICS: THE EUROPEAN UNION

Transporting Europe into 2011

by Brian Simpson EUROPEAN
Brian Simpson is Chair of the European Parliamentʹs Transport Committee PARLIAMENT

View from the cockpit of highspeed train Railjet arriving to Berlin, Germany, 18 September 2008. The train operating the route Munich, Germany to Vienna,
Austria is a joint venture of German and Austrian Railways and arrived to Berlin for a test ride for the media |ANA/EPA/ARNO BURGI
RUSSELS - Developments in

B Transport policy and the activities

of the Parliament's Transport and
originally suggested by Council) to 8 years
After tough negotiations with Council

> Quote
Tourism Committee in 2010 contradict there are grounds for hoping that there will be
the "bruits de couloir" which suggest that a real strengthening of passenger rights in this
in general terms the new Parliament and area, mirroring what we achieved in previous
Commission have been less active than years on air and rail passenger rights.
their predecessors. Another area where the work of the
In fact in some ways 2010 has been a committee will have a major impact is in the
decisive year with particularly important ch- adoption of "eurovignette" legislation allo-
allenges for European transport policy. Of wing Member States to charge for freight
course policy development and the adoption using road infrastructure. The Parliament
of legislation do not fit into handy annual completed its first reading in 2009. Our
chunks and 2011 will see the fruits of much persistence through the Spanish and Bel-
work done this year and last. gian presidencies has got us ever nearer to
Let me begin with a major programme an agreement on a difficult file. Not every
and investment item, Trans-European Net- Member State is in favour of this proposal
pted by the Parliament efficient co modality Regulation. Pending Parliament's adoption of
works. The debate is underway on how to do to be at a point where exploratory talks
was placed at the heart of Europe’s future the agreement reached in Conciliation, the EP
ensure actors other than the EU, principally with the Belgian Presidency with a view to
transport policy. In maritime transport the managed to include within the scope all regu-
the member states, who push for their pro- Council moving forward on this proposal is
committee proposed strategic goals and called lar services above a scheduled distance of more
jects inclusion in the programme but are already an achievement.
for a cross-sectoral strategy in the context of than 250km.
sluggish on follow through, can be encoura- Finally I should mention tourism, espe-
an integrated maritime policy. This is not ideal but way better than the
ged to be consistent. At the same time, how cially as, post Lisbon, the Parliament now
But as well as taking a strategic overview 500km initially offered by the Council. More
can we enhance the added value of TEN-T? has a legislative role in this policy area. To-
we have addressed particular issues which importantly however, the EP managed to ne-
The Parliament's Transport and Tourism urism accounts for 5.2% of our workforce
have an immediate impact on the man and gotiate an extended list of basic rights for pas-
committee is leading this debate. We ado- and 5% of Europe's GDP after all. We are
woman in the street. senger of all services including those below the
pted in 2010 the recast guidelines for TEN- preparing an own initiative report on Eu-
The Committee and Parliament have 250km distance. These are mainly rights for di-
T. We have monitored progress in rope as the worlds premier tourist destina-
sought to maximise where possible bus and sabled persons and persons with reduced mo-
conjunction with the TEN-T coordinators tion in the light of a Commission
coach passenger rights as the regulation on bility. They include the right to travel
for key priority projects and have now prio- communication and the need for a new po-
this topic goes through first and second re- information in accessible formats throughout
ritised the major problem of TEN-Ts, litical framework for tourism in Europe,
ading. Throughout 2010 Parliament fought the journey, compensation for lost and dama-
which is getting the infrastructure across stressing sustainable tourism and our indu-
hard for the rights of bus and coach passen- ged wheelchairs and disability-related training
national borders. strial heritage.
gers, first during second reading negotia- for the personnel of bus companies.
Our input to the Policy Challenges com- The above of course is merely a short
tions under the Spanish presidency and But the EP also managed to improve
mittee (SURE) and the general debate on the summary of the activities of Parliament's
later in Conciliation with the Belgians. In some of the general provisions, for instance
future financial perspective, now in prepara- Transport and Tourism committee in 2010
the Council there has been a great deal of the introduction of right to compensation
tion, will frame how TEN-T is considered. and leaves aside issues like aviation security,
reluctance on this issue - some delegations as well as the reimbursement of accommo-
There are other areas where we have taken a for example, which are almost constant con-
would have preferred the negotiations to dation expenses in the event of a long delay
broader view and looked to the future. In the cerns. We have had a busy year. 2011 will
fail. or cancellation. Finally the transition pe-
resolution on a Sustainable Future for Tran- probably be busier.
The main issue has been the scope of the riods were brought down from 15 years (as
sport proposed by the committee and ado-

POLITICS: THE EUROPEAN UNION
Building on the Ashes of the Past with Cooperation
and Dialogue: South East Europe Turns to Future
by Hido Biščević
Hido Biščević is the Secretary General, Regional Cooperation Council
ARAJEVO - As 2010 comes
S to a close, the time is right for
tacking stock of developments
in the south-eastern corner of Eu-
rope over the last year and, perhaps
even more intriguing, to try to shed
some light on the period ahead.
Looking back, stocktaking offers
much more then routine and ritual
overview, since this year was marked
by truly positive drives in many seg-
ments of political and social life in
South East Europe. In a word, the
region continued to advance along
the path towards European Union –
importance of this progress cannot
be overstated as the EU enlargement
perspective and related reforms are
still the most solid anchors of stabi-
lity and cooperation in South East
Europe. Visa liberalization is proba-
bly the most vivid and illustrative
example, just as this progress was
clearly reflected in the latest asses-
sments by the European Commis-
sion regarding the status of each of
the aspiring countries, pointing to
the final stages of negotiation pro-
cess of Croatia, granting a candidate
status to Montenegro, appreciating
the progress of Serbia and delivering
it the Commission’s questionnaire,
and setting out roadmaps for deli-
very in other enlargement countries
of the region.
Indeed, the very fact that they
are termed “enlargement countries”
testifies to the strategic persistence
of the EU and a true commitment
to the enlargement policy as a key
pillar of the most needed process of
“completing peace” in Europe’s sou-
theast. Given the broad challenges
on EU agenda, this reinvigorated
commitment is certainly the most
commendable input from Brussels
to the Balkans in the year 2010.
Alongside the progress in institutio-
nal relations between the enlarge-
ment countries and the EU, the year
was marked also by an unpreceden-
ted improvement of bilateral rela-
tions and general relaxation of
political and social atmosphere in
> Quote
A man rakes the embers during a traditional roasting of St. George's whole lamb
'Cheverme' in the village of Patalenicha some 110km from Sofia, Bulgaria, 6 May
2009 |ANA/EPA/VASSIL DONEV
the region. As political leaderships
undertook a number of vitally im-
portant steps related to tragic deve-
lopments over the past decades of
animosity, hatred, alienations and
wars, the spirit of genuine reconci-
liation has taken root. Even in some
“difficult cases” – from relations bet-
ween Belgrade and Pristina to Bos-
nia and Herzegovina’s constitutional
debate – one could note gradual
shift towards moderation and prag-
matism that should create a stimu-
lating framework for future develop-
ments on both issues. A new win-
dow of opportunities for tolerance,
coexistence, mutual understanding
and appeasement is in sight. Recon-
ciliation and rapprochement are fi-
nally the call of the day.
With these two achievements,
EU advancement and rapproche-
ment within the region, South East
Europe, and the Western Balkans in
particular, now needs to build upon
the positive trend and translate it
into a comprehensive and irreversi-
ble tendency, by defining precisely
the role of every possible contribu-
tor to this process – parliamenta-
rians, business community,
academia, civil society, etc. – and by
focusing on regional cooperation in
the most needy areas of economic
and social life.
Since the current economic cri-
sis has brought enormously harsh ef-
fects on all countries in the region –
with only a few exceptions – and re-
vealed deep structural challenges for
many national economies, it became
evident that no country can resolve
these problems without turning
New Europe | Page 13
New Year Special| January 2011
across the border.
South East Europe, especially
the Western Balkans, needs a com-
prehensive regional recovery and de-
velopment platform, in particular in
the areas of evident underdevelop-
ment, such as physical infrastructure,
transport and energy, where it lags
behind EU standards.
In this sense, regional coopera-
tion will continue to be an indispen-
sable platform for elaborating such
regional “development master plan”,
with support from the EU and in-
ternational partners, by taking ad-
vantage of the Regional
Cooperation Council, the South
East Europe Investment Committee
and other fora to identify concrete
and region-specific projects and ini-
tiatives that would put to a better
and proper use many neglected or
underdeveloped natural and human
resources of the region. With these
lessons learned and achievement
made in 2010, what could be expec-
ted from 2011?
First, one would hope that the
enlargement countries will continue
to advance – namely, that in the first
quarter of the year Croatia would
complete or be given a date for com-
pletion of the negotiations, Monte-
negro would qualify to get the date
for the start of the negotiations, by
the end of the year Serbia would
qualify for a candidate status, and
progress would be achieved in rela-
tions between the EU and the rest
of the Western Balkan countries and
Turkey.
This will largely depend on the
will and the ability of political lea-
derships from the region to keep
the pace of reforms, upgrade insti-
tutional capacities, and ensure good
governance and the rule of law
against the backdrop of economic
crisis and accompanying social ten-
sions. Furthermore, there is a dan-
ger that troublesome challenge of
economic slowdown and disturbing
social consequences in several criti-
cal cases match the remaining un-
resolved issues of political nature,
thus potentially creating an envi-
ronment of instability, renewed ten-
sions, and “pockets of turbulence”.
It will be critically important
that 2011 bring about further enh-
ancement of the EU drive in South
East Europe, that the region address
economic recovery and develop-
ment, and that political leaders find
a way to resolve the remaining open
issues by building on the current
new spirit of rapprochement, thus
boosting stability and “predictabi-
lity” in the region, enabling the EU
enlargement policy to keep the mo-
mentum.
Page 14 | New Europe
New Year Special | January 2011 EU: SPEAKING FOR EUROPEANS
2011: A Year of
European Potential
by Rodi Kratsa
Rodi Kratsa is vice-President of the European Parliament, from Greece, member of the European People’s Party
RUSSELS - In 2011 Europe has to
B be smart, great and ambitious to ach-
ieve quick recovery from the crisis,
fiscal discipline and international competi-
tiveness, whereas all the Eurozone countries
focus on safeguarding the stability of the
common currency. The recent financial and
economic crisis has clearly indicated a num-
ber of inadequacies of the current legal and
political framework, which are currently
being tackled by the EU. Hence, 2011 is ex-
pected to be a year of challenges for the Eu-
ropean Union in developing a new
framework that will improve financial su-
pervision, enhance economic governance
and establish a permanent crisis mechanism.
In parallel, the challenges imposed by the
ageing population, climate change and the
lack of innovative funding instruments re-
main at the forefront of European, as well
as international discussions.
2011 marks the beginning of the new
European framework for financial supervi-
sion. The measures include a European Sy-
stemic Risk Board to oversee the health of
Europe's economy, while other supervisory
bodies will overlook banking, financial mar-
kets, insurance and pensions. It is expected
that the new framework, adapted to the
level of financial market integration, will
enhance financial stability in the European
Union and, consequently, contain potential
risks to the real economy and public finan-
ces. The system will safeguard the interests
of consumers, investors, and other users and
stakeholders of financial services, or at least
prevent the magnitude of the effects of a
potential crisis. Eventually, it aims to make
EU financial markets more competitive and
General view of the Clock Tower, displaying a projection of the EU flag during New Year's Eve celebra-
tions at Puerta del Sol square in downtown Madrid, Spain, early 1 January 2010 |ANA/EPA/KOTE RODRIGO
> Quote
foster integration, while supporting their
sustainable development. It is clear that in
the future there will be no place for frag-
mented, national responses, with a lesser ef-
fect to the globalized markets, but rather a
single and clear answer to external risks. In
addition, the recent economic crisis has in-
dicated that national policies have to be bet-
ter coordinated to avoid similar crises in the
future. 2011 will be a decisive year regar-
ding the exact form of the new economic
governance package, as well as its effective-
ness. This new legislative framework is ex-
pected to deliver increased fiscal discipline,
broader economic surveillance, deeper co-
ordination and stronger institutions. It is
worth mentioning that budgetary consoli-
dation alone cannot ensure neither sove-
reign debt sustainability nor the correction
of the observed imbalances.
There are fears that expenditure cuts
and higher corporate taxes may discourage
investment, reduce demand and raise unem-
ployment. Moreover, the tough sanctions
proposed may exacerbate the situation of al-
ready heavily indebted countries and thus
the degree of automaticity is being debated.
Europe needs a strategy that will allow gro-
wth acceleration both in the core and the
periphery. Hence, European leaders are
confronted with the challenge of achieving
fiscal discipline without hampering growth.
2011 will also be a year of decision for
the establishment of a permanent mecha-
nism which will replace the temporary Eu-
ropean Financial Stability Facility and aim
at preventing, managing and resolving fu-
ture crises, although it will probably not be
implemented before mid-2013.
The purpose of such a mechanism is to
safeguard financial stability in the euro area
and its implementation requires a limited
Treaty change. It has to be stressed that this
proposal encompasses two new features; the
potential participation of private creditors
in the financial assistance programs and the
possibility of debt restructuring or "control-
led default".
EUROPEAN
PARLIAMENT
The implementation of such proposals
has to take into serious consideration the
development agenda and the social and eco-
nomic specificities of Member States which
are facing fiscal problems and above all the
European solidarity and cohesion.
In this direction, the internal market's
advantages should be fully exploited for it
to achieve its potential. The extent of eco-
nomic and political integration lies behind
the efforts of EU leaders in supporting the
common currency. It is the right time to
push market integration to new levels tar-
geting the significant persistent imbalances
across Member States as a well-functioning
Single Market is the only way to ensure
long-term growth for jobs. In this context,
opening up market access for European -
particularly small and medium sized - busi-
nesses, modernizing public procurement ad-
ministration rules, reforming tax systems
and regulating cross-border debt recovery
are all necessary steps that have to be taken.
Structural reforms, such as liberalizing the
services sector, can promote productivity, in-
novation and investment as well as attract
valuable human resources. Furthermore, it
is essential that European institutions and
national governments put increased efforts
into designing and implementing an ambi-
tious agenda for economic, social and terri-
torial cohesion that supports a
well-balanced development of regions and
localities. 2011 also calls for greater emph-
asis on the "knowledge triangle" of educa-
tion, research and innovation which can
speed up recovery and employment in a
time of globalization and growing inter-
national competition. Combining high
growth rates with poverty reduction is the
major challenge in achieving "inclusive
growth".
The consolidation efforts by Member
States put further pressure on public ex-
penditure during an era of population
ageing and rising cost of healthcare provi-
sion and social protection. Hence, delive-
ring adequate and sustainable pensions for
European citizens is a critical issue. In
conclusion, dealing with the economic cri-
sis and building the momentum of reco-
very, sustainable development and jobs
requires well thought-out solutions at
both national and European level in addi-
tion to building an area of freedom, justice
and security, launching negotiations for a
modern appropriate EU budget and pul-
ling EU's weight on the global stage. Uni-
lateral approaches seem not be sufficient
in overcoming the difficulties countries are
facing in establishing sound public finan-
ces and growth, finding innovative sources
of funding the national and European
projects and facing the strong internatio-
nal challenges.
2011 is expected to be a promising year
for European citizens and states, and ma-
king the best use of the opportunities ahead
will allow Europe to broaden its horizons
and move towards new directions.
 New Europe | Page 15
EU: SPEAKING FOR EUROPEANS New Year Special| January 2011

Bringing Our Resources

Together to Work More Effectively EUROPEAN
PARLIAMENT
by Joseph Daul MEP
Joseph Daul, MEP, is Chairman of the European People’s Party Group in the European Parliament

MEPs vote for the general 2011 budget during the Plenary Session at the European Parliament
in Strasbourg, France, 15 December 2010 |ANA/EPA/MATHIEU CUGNOT
RUSSELS - In May 2010, we cele- will never subscribe to, for instance, Prime

B brated the 60th anniversary of the

Schuman declaration. Both Schu-
man and most of the other great visiona-
Minister David Cameron's minimalistic
vision of Europe.
Naturally, I am not so naive as to claim
ries who made Europe's reunification
possible came from the centre and centre-
right political family which we today call
> Quote that spending all we have on Europe would
solve all our problems. And I am certainly
not deaf to justified criticism. Unfortuna-
the EPP. We are proud of that. We can tely, the EU has not yet benefited fully
also be proud of the progress made over from the new tools and resources which we
the years: 60 years of peace and the esta- have at our disposal with the new Treaty.
blishment of a single currency are great Just to quote a few examples: we need
achievements. However, the various crises more from Europe on migration issues,
which Europe is going through at the mo- more from Europe to ensure our security,
ment call for new ideas, new visions and but also to create growth and employment,
new solutions. to regulate the markets and to reduce ine-
For a long time, we in the EPP, Euro- qualities. And we also need Europe to pro-
pe's most influential political family, insi- vide citizens with a better representation
sted that the EU institutions must be in the world. How can we justify our ab-
the Parliament and the Council in No- spent in a national budget is to a large ex-
reformed and improved through what sence at the negotiating table between Is-
vember. As this article goes to print we are tent eaten by huge national debts which
eventually became the Lisbon Treaty, in rael and Palestine when we are the biggest
still not sure whether a 2011 budget will have to be serviced before whatever is left
order to be able to respond better to new donors in the region? The answer is sim-
be adopted or whether we will have to can be spent on something useful. One
challenges. ple: we can't. Europe is not over its many
enter the new year with provisional and Euro spent together in the EU is worth a
The creation of a more permanent Co- crises, but we have made progress in tac-
deeply unsatisfactory monthly appropria- full Euro because the European Union
uncil President, elected for two and a half kling the challenges. Our citizens, and in
tions.To many, the budget crisis is just does not have debt, nor do we have bud-
years, and a High Representative for Fo- particular the younger generations, for
another row over technicalities between gets in the red. Neither is allowed in the
reign Policy and Security was no doubt whom the EU and the advantages it offers
the EU's two lawmaking institutions. Not EU Treaties.
seen as the most tangible novelty in the Li- have become self-evident, expect more and
true. The problem is fundamentally politi- Moreover, Europe's national govern-
sbon Treaty. faster action from us. These are justified
cal. It is not a question about how much ments have decided to give an ever-incre-
However, when the history books of expectations. We have got the right tools
public money Europe should spend, but asing number of tasks and responsibilities
this period are written in a decade or less, to work with, both in the current group of
how to spend the money in the most effi- to the EU. The EPP Group therefore asks
I am sure that the new powers vested in 27 Member States, but also in a further en-
cient way. To me, there is no doubt: the ministers to make sure that the new EU
the European Parliament, the democrati- larged EU. We cannot afford not to use the
more the 27 Member States work together programmes they call for and adopt also
cally elected body of the Europeans, will opportunity offered to us to bring together
on common actions and projects, the more get the funding which is necessary to im-
once again prove to have been the most as many resources - political, financial,
efficiently do we spend the taxpayers' plement them.
spectacular change to the way European educational, scientific, cultural and social -
money. Should we pool fewer resources I am always puzzled at the demand for
cooperation functions as we can. If we succeed, history might one
and work less together because there is a less, not more Europe which some of Eu-
The last quarter of 2010 has been mar- day be able to look back on our era and say
deep economic crisis which has hit hard in rope's politicians and even some of its lea-
ked by the fight over the European that we managed to make the most of the
many Member States? I don't think so. ders are pleading for. The EPP Group
Union's budget for next year. The negotia- heritage we got from the Founders of the
The fact of the matter is that one Euro which I chair in the European Parliament
tions culminated with a stalemate between European Union.
Page 16 | New Europe
New Year Special | January 2011
"Vom Kopf auf die Füße stellen"
Putting the EU on its feet
by Lothar Bisky MEP
Lothar Bisky is President of the GUE/NGL Group in the European Parliament
RUSSELS - 2010 has certainly been
B
an exciting and exhausting year. But
none of the challenges we face in the
EU and beyond have been fully addressed, so
far.
Basically, there are still three things to do:
Tackle the crisis;
Find agreement on the mode of political
decision making in the EU;
Seek out a modern and inclusive long
term vision for the EU.
All over Europe, people are demonstra-
ting against austerity policies: against wage
cuts, cuts to social benefits and public servi-
ces, while they see corporate taxes and con-
tributions to the welfare systems reduced.
They are resisting paying the cost of the on-
going financial and economic crisis; a crisis
caused by neoliberal deregulation in the fi-
nancial and banking sector and misleading
economic strategies of privatisation and libe-
ralisation.
On the institutional level, Member Sta-
tes' governments are not willing to accept the
principle of Parliamentary co-decision and
scrutiny in major policy fields, particularly as
regards the budget, a core competency of any
parliament in the world. Some Member Sta-
tes “initiate” summit decisions, including bil-
lion Euro packages, among themselves, huis
clos, without any involvement from the Eu-
ropean or national parliaments.
The EU2020 strategy, the so-called eco-
nomic recovery plans as well as external rela-
tions policy are mostly based on failed
building blocks:
Almost no Member State has been able
to adhere to the Stability and Growth Pact.
The principles of competitiveness and
flexicurity delivered nothing for the 84 mil-
lion people in the EU who live in poverty
EU: SPEAKING FOR EUROPEANS
(L-R) Greek Prime Minister George Papandreou, Germany Federal Chancellor Angela Merkel and Italian Prime Minister Silvio
Berlusconi during the European head of states summit in Brussels, Belgium, 16 December 2010 |ANA/EPA/OLIVIER HOSLET
>
Quote
(among them 19 million children) and nei-
ther for the 1 billon people worldwide who
live on less than 1,25$ per day.
Freedom of movement and equal trea-
tment has been extended for capital and (Eu-
ropean) goods, but not for workers, let alone
refugees.
These issues as well as proposals are alre-
ady on the table.
2011 will be a year of important debates,
of striving for majorities and decisions.
For example:
Cohesion policy must remain a centre-
piece of EU policy. Do we need what is cur-
rently called a “transfer union”? Yes, I think
so! Can cohesion policy work if it is subordi-
nated to the priorities of “competitiveness”,
“deregulation”, “adaptability” and “entrepre-
neurship”? No, most probably not!
The same goes for CAP reform (and for
the fisheries sector): It must guarantee ap-
propriate support for socially fair and envi-
ronmentally sustainable agricultural
production that creates and secures employ-
ment. At the same time, the EU should fi-
nally halt export subsidies that deprive far-
mers in developing countries of their local
markets and livelihoods.
Not surprisingly, the social question re-
mains the key issue for the Left – first and
foremost because it is the key issue for the
people. We will underline the need to revoke
the Stability and Growth Pact replacing it
with a pact for sustainable development, full
employment, social security and environ-
mental protection. Such a pact could be
based on a social progress clause that could
be introduced into EU primary law.
It would aim at fostering public inve-
stment, boosting internal demand by setting
up appropriate minimum wages and other
economic, social and environmental criteria.
They must be tailor-made to the particular
needs of each Member State or region. Such
a pact must hold out against any attempt to
weaken existing standards (such as the wor-
king time directive).
If the question of social justice – a core
value of the EU – is at stake, the multiannual
financial framework 2014-2020 has to be
EUROPEAN
PARLIAMENT
adapted accordingly. This does not only
imply that sufficient money will be needed, it
also means that Parliament must be fully in-
volved in the decision making process. This is
nothing beyond what the Lisbon Treaty pro-
vides for on the co-legislative and powers of
scrutiny of the European Parliament.
As an old saying goes; “money is not eve-
rything”.
But the best policy strategies will not
function without money.
Bearing in mind the complicated nego-
tiations on the 2011 budget, the austerity po-
licies of Member States and – not to forget –
the challenge of creating a more “European
image" for the EU, the debate on the exten-
sion of EU own resources is at stake.
In each and every case, stringent rules are
needed that prevent banks from taking ex-
cessive risk or externalising risk to the sha-
dow bank sector. Among others, it is
indispensable to regulate and cut back hedge
funds, to strengthen rules on rating agencies,
and to create a European public credit rating
agency. Why not introduce taxes on currency
transactions and stock exchange transactions
(Tobin and/or financial transaction tax), star-
ting at the EU level – one possible “own re-
source”?
Yes, financial market regulation and su-
pervision of rating agencies should be im-
proved worldwide but as with – more
ambitious and binding - climate protection
policy, we can and should start in the EU.
And why not debate a special EU-VAT
for those enterprises that profit the most
from the internal market freedoms?
In short, the challenge of the day is to
overhaul the EU policy strategies and, para-
phrasing Marx, the EU vom Kopf auf die
Füße stellen - to put the EU on its feet.

Europe in the eye of a storm
by Rebecca Harms
Rebecca Harms MEP is Co-President of the Greens/EFA group in the European Parliament
RUSSELS - Many of the challen-
B ges that the European Union has
faced in 2010 will continue to do-
minate over the coming year. This is cle-
arly the case for Europe's economic and
fiscal situation, but also the nationalisa-
tion of European politics and concerns
about basic rights, as Europe's govern-
ments lurch more to the right.
While European leaders sleepwalked
through the brewing economic crisis, clai-
ming the worst was over, it is now clear
that the European economy is in the eye
of a storm. Given the scale of the solvency
difficulties facing national exchequers and
European banks, it was clear that a blin-
kered focus on austerity measures would
fail to address the problems and risked
making matters worse. We need a reality
check on austerity.
The obsession with using public
money to recapitalise banks and protec-
ting bondholders at all costs has been ca-
lamitous and threatens the solvency of
many Eurozone members. The banking
crisis has morphed into a fight for the
survival of the Eurozone. Even still at this
point, the response of European leaders is
dithering.
Clearly, we need to put into place a
permanent and legally-watertight crisis
mechanism, which foresees debt restruc-
turing to which bondholders also contri-
bute. However, with the risk of a domino
effect on the solvency of Eurozone mem-
bers now clear and present, we urgently
need additional emergency measures, as
the current crisis mechanism is at its li-
mits. This must also include provisions on
restructuring and bondholder liability.
Of course, the political situation at
EU: SPEAKING FOR EUROPEANS
French Police looking on as Roma evacuate an illegal squat in Saint Martin d'Heres,
France, 19 August 2010 |ANA/EPA/MAXPPP/MARC GREINER
> Quote
EU-level has not facilitated coherent po-
licy-making. There is an ever-clearer
trend towards the nationalisation of Eu-
ropean politics, with member states coun-
terproductively defending their own
narrow interests at the expense of the
wider European interest.
Nowhere has this been more evident
than in discussions on the EU budget for
2011. The intransigent posturing of a
handful of member states has lead to a
stalemate. Money is not the problem, with
the European Parliament having agreed
to the demands of the Council. Unfortu-
nately, the blocking minority of member
states seems to think it can just put its fin-
gers in its ears and fail to implement the
provisions of the Lisbon Treaty on forma-
lising the role of the Parliament in future
negotiations on the EU's financial per-
spectives.
The UK and Dutch governments may
want to play to their domestic grand-
stands but they are being dishonest to
their electorates and ultimately acting
against their own national interests. The
Council must not let itself, and the EU
budget, be held hostage to this populism.
We need to reach a pragmatic agreement
as soon as possible.
The ongoing situation in France, Italy
and other member states, where the na-
tional authorities are actively discrimina-
ting against the Roma (and other
minorities) is completely at odds with the
fundamental rights on which the EU is
founded. Regrettably, the Barroso II
Commission seems to retain a preference
for kowtowing to member state govern-
ments, rather than living up to its role as
guardian of the treaties and defending the
rights of its citizens.
The Roma expulsions must be viewed
in the context of growing lurch to the
right in European politics. In this context,
and with the fundamental rights of EU
citizens under growing threat, the need
for a strong European Commission to en-
force the European treaties and legislation
is more important than ever.
New Europe | Page 17
New Year Special| January 2011
EUROPEAN
PARLIAMENT
The EU has also slipped back in its ef-
forts to transform our dated and flagging
economy to a green, sustainable economy.
In the aftermath of the EU's ignominious
failure in Copenhagen, Europe should
have seized the opportunity to push ahead
with more ambitious climate policies ne-
cessary to pursue green growth.
The current 2020 greenhouse gas re-
duction target of 20% is clearly obsolete
and there is plenty of evidence to suggest
it is, in fact, holding back green inve-
stments. The EU urgently needs to take
the belated step-up to a 30% reduction
target to spur green growth. Making its
target of reducing energy consumption
20% by 2020 binding would also be a cru-
cial step to this end. We can no longer
wait for the outcome of the UN climate
talks or hide behind US inaction: pushing
ahead is in the European interest and the
EU should lead by example.
In the context of the UN climate talks,
the EU needs to play a much more proac-
tive role in putting the negotiations back
on track. Decisions on key areas like cli-
mate aid and forestry emissions must be
achieved in Cancun if we are to achieve a
final binding UN deal in 2011. To this
end it is both regrettable and embarras-
sing that the EU is falling short of its pro-
mised climate aid pledges for this year,
and that much of this aid is not new and
additional, and is made up of loans. This
will do little to rebuild the much-needed
confidence of developing countries.
Europe has risen to meet daunting ch-
allenges in the past and it can still do so,
but only if its member states act together
and realise that the European interest is
the national interest.
Page 18 | New Europe
New Year Special | January 2011
EU: SPEAKING FOR EUROPEANS

The EU Needs
Greater Value for Money EUROPEAN
by Timothy Kirkhope PARLIAMENT

Timothy Kirkhope is the Deputy Chair of the European Conservatives and Reformists Group in the European Parliament.

Great Britain Prime Minister David Cameron pictured during the second day of the European Top Summit in
Brussels, Friday 17 December 2010 |ANA/EPA/JULIEN WARNAND

RUSSELS - The highlight of this that, as we enter our second full year with

B year for me has to be the change of

government in the United Kin-
these new powers, we will ensure that we
exercise our mandates forcefully but with
gdom and the election of my party leader
David Cameron as Prime Minister.
After thirteen years of a tired old La-
> Quote a sense of responsibility and proportiona-
lity.
The EU faces a crisis on many fronts.
bour party, we have seen the impact that Most worrying for me is the political cri-
our coalition government is having not sis of confidence in the EU. The Lisbon
just at home but also around the world. Treaty was meant to provide more stre-
The previous government's approach to amlined procedures and a clear objective.
the EU was one of retreat and bleat (i.e. Instead, it has led to more confusion and
do nothing in Brussels to stand up for power struggles. 2011 needs to be a year
your nation but then posture and declare of reform: not necessarily to the EU's in-
great victory in the British press). Our co- stitutions but to its policies. I want the
alition's policy has been one of positive EU to succeed which is why I want it to
and constructive engagement but strong reform.
defence of the national interests. The EU will have an excellent oppor-
This was also the year when Europe The UK did not sign up to it but we need
I was also very pleased to see that sh- tunity to demonstrate it is in touch with
struggled to articulate a response to the fi- it to succeed.
ortly after his election, David Cameron the people next year when debate surro-
nancial crisis, recession and subsequently Inside the European Parliament, I will
was joined by another European Conser- unding the next medium-term EU bud-
the Eurozone crisis that engulfed it. The remember this year as the year in which
vatives and Reformists group leader in the get really gets going.
EU's response seemed to be somewhat the institution gained new powers with-
European Council when Petr Necas of We must provide far greater value for
knee-jerk to the financial crisis, seeking to out necessarily understanding the level of
our sister ODS party was elected Prime money, to redirect resources to projects
point the finger at any scapegoat it could responsibility that must come with them.
Minister of the Czech Republic. that add value to national governments,
find: hedge funds, Credit Rating Agen- The vote on the Terrorist Finance Trac-
The ECR group has continued to and to substantially trim the fat of the in-
cies, you name it. We managed to amend king Programme, which was initially re-
grow in strength and stature and to esta- stitutions so that the EU does less but
the hedge funds directive to make it ma- jected by the parliament, left a massive
blish itself as a credible force in the Eu- does it better.
nageable and we will have to do the same transatlantic data gap.
ropean Parliament for all those who want As we in the UK begin to feel the ef-
with further EU financial services regula- Voting for a six percent increase in the
the EU to take a different path, away from fect of the unavoidable austerity measures
tion coming down the pipeline. EU budget at a time of swingeing natio-
the inexorability of federalism and to- at home, it will be simply unacceptable if
The crises across the Eurozone saw nal austerity was seen by many people as
wards a reformed EU that respects subsi- we are asked to hand over more of our
previous policy failures of a number of ad- out of touch. Creating further uncertainty
diarity. money to Brussels .
ministrations come back to haunt all of us. in the markets by failing to agree a budget
Our group did suffer from a terrible Our EU contributions must not incre-
It is in all of our interests that the Euro- unless the parliament was given assuran-
tragedy in the Spring when the President ase and we must keep our rebate. If the
zone does not fail; but stopping specula- ces on future budgets, particularly regar-
of Poland, from our sister Law and Justice EU wants to avoid shooting itself in the
tion seems to be beyond the powers of any ding EU Own Resources (AKA Taxes)
party, was killed along with his wife and foot yet again, it should seriously reconsi-
politician or institution. I, for one, would was not the most responsible action of a
94 other major figures in Poland . Our der any efforts to increase the budget or
take no pride in seeing the Euro collapse. grown-up parliament in my view. I hope
whole group mourned the loss. to give itself tax-raising powers.
 POLITICS: FOCAL POINTS
Turkey: The New Indispensable Nation
by Recep Tayyip Erdoğan
Recep Tayyip Erdoğan is the Prime Minister of the Republic of Turkey
NKARA – Turkey put its imprint
A as one of the most influential coun-
tries not only on 2010, but on the
first decade of the third millennium. At the
start of the new decade, too, Turkey’s geo-
political position, rich historical heritage,
cultural depth, well-educated young popu-
lation, ever-strengthening democracy, gro-
wing economy, and constructive foreign
policy make it an indispensable country in a
world transformed by rapid globalization.
By making use of all of its assets, Tur-
key is contributing to regional stability and
peace and working towards a global order
based on justice, equality, and transparency.
As an emerging power, Turkey will conti-
nue to realize its own potential and simul-
taneously contribute to global peace.
The chaotic conditions of the post-Cold
War world have made civil wars, occupa-
tions, nuclear armament, and human traf-
ficking chronic problems. While
globalization offers new opportunities, it
also causes new global problems and dee-
pens the inequalities embedded in the
world order. It is no longer possible to su-
stain the current world order, which, based
as it is on a skewed notion of center-peri-
phery relations, merely produces injustice
and inequality.
Turkey seeks to contribute to regional
and global peace by facilitating democratic
reforms domestically and implementing a
principled foreign policy. As a NATO
member, Turkey aims to become a full
member of the European Union and esta-
blish cordial relations with all of its south-
ern and eastern neighbors. Turkey’s posture
– looking both East and West – is neither
paradoxical nor inconsistent. On the con-
trary, Turkey’s multidimensional geopoliti-
cal position is an asset for the region.
The Bosporus bridge (L) and the Ortakoy Mosque (R) seen as the Bosporus is covered by heavy fog dur-
ing a sunny day in Istanbul, Turkey. Istanbul was one of the three European Capitals of Culture in 2010
along with Essen, Germany, and Pecs, Hungary |ANA/EPA/TOLGA BOZOGLU
>
Quote
There are few countries that can play
such a critical role. Turkey constitutes a new
synthesis because of its ability to link such
diverse qualities and backgrounds. Turkey is
thus capable of overcoming the dichotomies
of East-West, Europe-Middle East, and
North-South.
Indeed, this capacity is essential because
we need to leave behind the Manichean di-
sagreements, conflicts, and fears of the Cold
War era. Those who see the world through
those old, fearful lenses have difficulty un-
derstanding Turkey’s rising profile and dy-
namism. But the realities of the twenty-first
century necessitate a multi-dimensional and
inclusive political perspective.
Acting on these principles, Turkey is
following a proactive foreign policy stretch-
ing from the Balkans to the Middle East
and the Caucasus. This geography is Tur-
key’s natural historical and cultural hinter-
land. Turkey’s cultural and historical links
with the peoples of these regions are deep
and conducive to regional peace.
Copyright: Project Syndicate, 2010. www.project-syndicate.org
Turkey cannot remain indifferent to this
geography, for it stands at the center of it.
History clearly shows that it is impossible
to establish and sustain global peace with-
out ensuring peace and stability in the Bal-
kans and the Middle East. Turkey is
following a constructive and inclusive po-
licy for these regions, which are marked by
remarkable models of cohabitation, science,
arts, culture, and civilization.
Due to our recent efforts, the wounds of
the Bosnian war are being healed, facilita-
ting peace and stability among Balkan peo-
ples. Turkey’s efforts are also helping to
prevent wars in the Middle East, and our
intense efforts have helped keep a diploma-
tic track open on the Iranian nuclear issue.
Moreover, we are helping to facilitate
political stability in Iraq and helping the
NATO mission in Afghanistan. And, of pa-
ramount importance, Turkey is making
enormous efforts to help establish an inde-
pendent and sustainable Palestinian state –
efforts that are appreciated by Turkey’s We-
New Europe | Page 19
New Year Special| January 2011
stern and Eastern friends alike.
Today, Turkey is following a policy that
represents a sense of justice in the Middle
East, and is working toward the removal of
artificial borders and walls among the re-
gion’s peoples. We desire to live in a region
where the dignity of every person is respec-
ted. That is why we have objected to Israel’s
aggression in and blockade of Gaza, and
will continue to do so.
We know that it is not possible to attain
global peace unless we establish sustainable
peace in the Middle East, which requires
resolving the Palestinian question. There-
fore, we urge Israel and all other countries
involved to follow constructive and peaceful
policies.
Motivated by these principles, Spanish
Prime Minister José Luis Rodríguez Zapa-
tero and I showed through our “Alliance of
Civilizations Initiative” in 2004 that cultu-
ral, historic, and religious differences are no
reason for conflict. The basis for our appro-
ach to humanity is the following principle
of the famous Turkish poet Yunus Emre:
“We love and respect the created because of
the Creator.”
As a result, we stand firmly opposed to
discrimination against any society, religion,
sect, culture, or country. I consider anti-Se-
mitism, Islamophobia, and prejudice against
Christianity crimes against humanity,
whose common values and ethical rules
oblige us to confront and reject all forms of
discrimination.
Besides its cultural, historic, and diplo-
matic values, Turkey’s vibrant economy has
become a source of stability and welfare.
When my party took office in 2002, the
Turkish economy totaled around $250 bil-
lion. Today, Turkey’s annual GDP has rea-
ched $800 billion, making it Europe’s sixth
largest economy and the 17th largest in the
world. It has also been one of the least im-
pacted by the global economic crisis, with
growing foreign trade, a strong banking sy-
stem, and diverse and prospering small and
medium-size enterprises. Thus, the Turkish
economy returned to its pre-crisis levels in
2010.
All of these qualities have transformed
Turkey into an attractive place for business,
media, artists, diplomats, students, and non-
governmental organizations from around
the world. Turkey’s ever-increasing soft
power is becoming one of its most signifi-
cant traits, which we will continue to use to
enhance regional and global peace.
The impact of globalization has brou-
ght about a rebalancing of power, but the
demand for justice, transparency, and legiti-
macy remains constant. The global pro-
blems of our times necessitate cooperation,
political will, and sacrifice. That is why we
are following a proactive policy in multila-
teral institutions to facilitate an equitable
sharing of our world’s resources.
Turkey will continue to work toward a
just and equitable global order in 2011 and
beyond. This is a responsibility emanating
from our history, geography, and the uni-
versal values that we hold.
Page 20| New Europe
New Year Special | January 2011
POLITICS: FOCAL POINTS

The Message from the Roof of the World

by Hamrokhon Zarif i
Hamrokhon Zarifi is the Minister of Foreign Affairs of the Republic of Tajikistan

(EIDHR), non-State actors (NSA) and

SME development (CA-Invest), and di-
saster preparedness (DIP-ECHO).
Tajikistan first among the Central
Asian countries signed the framework
Agreement on cooperation with the Eu-
ropean Investment Bank. We hope that
after its entry into force (1st December
2009), the EIB will be actively involved in
investment of projects in Tajikistan, parti-
cularly in the hydropower sector.
The good example is the reconstruc-
tion project of Kayrakum Hydropower
station. It is planning to be started during
2010 by the European Investment Bank
in cooperation with the EBRD and the
European Commission.
Since the adoption of the European
Union and Central Asia: Strategy for a
New Partnership in June 2007, bilateral
relations between the EU and Tajikistan
have intensified in a number of fields.
One particular area is that of human ri-
ghts, where the EU and Tajikistan ente-
red into an enhanced dialogue in October
2008. The EU-Tajikistan human rights
dialogue offers a platform for discussion
on questions of mutual interest, and ser-
ves to enhance cooperation on human ri-
ghts.
Russian President Dmitry Medvedev (L) speaks withTajik President Emomali Rakhmon (R) during their Under current circumstances, gaining
meeting in the Black sea resort of Sochi, Russia, on 18 August 2010 |ANA/ EPA/DMITRY ASTAKHOV/RIA NOVOSTI/KREMLIN POOL energy independence and releasing the
USHANBE - The Republic of country from communication isolation is

D Tajikistan attaches great impor-

tance to the development and ex-
tension of relations with the European
a vital necessity for Tajikistan. For these
purposes the EU assistance is important
in conducting feasibility study on hydro-

> Quote
Union. Relations with the EU are among power and communication projects in Ta-
priority directions of the foreign policy of jikistan.
our country. There 64 km3 of water stock out of an
The official visits of the President of aggregate volume of 115 km3 of the Aral
the Republic of Tajikistan H.E. Emomali Sea basin generates in Tajikistan. In addi-
Rahmon to Brussels and several European tion, Tajikistan has abundant unexhausted
countries in February 2009 have confir- sources of hydro-energy ranking the 8th
med the adherence of the Republic of Ta- in the world on total amount and the 2nd
jikistan to comprehensive development of on specific volumes.
partnership and cooperation with the EU. Total hydropower potential of the co-
The President of Tajikistan H.E. untry is estimated at 527 billion
Mr.Emomali Rahmon submitted the pac- kWt\hours of electricity per year.
kage of the priority projects of regional si- Nature, picturesque and skyscraping
trade and investments. in particular hydropower, transport and
gnificance to the leadership of the mountains, as well as unique landscape in
It provides a comprehensive and am- communications, industry and agriculture.
European Commission. We hope that the Tajikistan remind of a small Switzerland
bitious framework for joint EU-Tajikistan In relations with the EU the Republic
European Commission after thorough in Central Asia. Wild nature, high moun-
work, in all key areas of reform. of Tajikistan proceeds from the need to
consideration of these projects will make a tains, fresh spring water and ancient hi-
The first meeting of the Cooperation cover the most important trends and areas
positive decision. storic sights make Tajikistan attractive for
Council was held on December 13th, of interaction, including the process of de-
Tajikistan believes that the implemen- tourists.
2010 in Brussels. The Co-operation Co- mocratization, rule of law, border mana-
tation of the EU Strategy will contribute We are confident that today more than
uncil provided a good opportunity to re- gement, combating drug trafficking,
to the integration process in Central Asia ever before the vitalization of the activity
view recent economic and social reforms transport and energy, particularly renewa-
and will improve the bilateral relations of the European Union in Central Asia
in Tajikistan. ble energy, water management, environ-
between countries in the region. The Stra- for solution of issues related to the pro-
Cooperation between Tajikistan and mental protection, education, trade and
tegy covers the most significant and im- cess of further achievement of stability
the EU has been actively and intensively investment, support of Tajikistan’s acces-
portant trends and areas of cooperation and sustainable economic development of
developed during the last years. Tajikistan sion to WTO.
between Central Asian countries and the the region is important.
is pursuing a closer relationship with the The economic cooperation between
European Union. Only with common consolidated ef-
European Union, targeting its co-opera- the Republic of Tajikistan and the EU
Bilaterally, an EU-Tajikistan relation forts of the European Union and the co-
tion, to facilitate economic transition, pro- needs to be elevated to the level of politi-
is governed by the Partnership and Coo- untries of the region we would be able to
moting inclusive, sustainable human and cal relations.
peration Agreement, which was signed in solve those problems and challenges
economic development. Tajikistan also receives regional and
late 2004 and expected to enhance bilate- which our governments and the people
Tajikistan is interested in maximum thematic assistance in areas like border
ral relations and heighten the EU profile face today.
use of the bilateral economic cooperation management and drug control
in Tajikistan, as it sets out the parameters The Republic of Tajikistan, on its turn,
potential with the EU, attraction of Euro- (BOMCA/CADAP), education (TEM-
for increased political dialogue and coo- is always open for effective and construc-
pean investments to the development of PUS, Erasmus Mundus), water / environ-
peration and aims to promote bilateral tive cooperation, both with the European
priority areas of the country's economy, ment, human rights and democracy
Union, as well as with other countries.

Iran: Another Problem from Hell
By Christopher R. Hill
Christopher R. Hill, a former US Assistant Secretary of State for East Asia, was US Ambassador to Iraq, South Korea, Macedonia, and
Poland, US special envoy for Kosovo, a negotiator of the Dayton Peace Accords, and chief US negotiator with North Korea from 2005-
2009. He is now Dean of the Korbel School of International Studies, University of Denver.
ASHINGTON, DC – Throu-
W ghout 2010, the pattern for ne-
gotiations over Iran’s nuclear
program held to form. With just about
every diplomatic effort failing to yield re-
sults, international efforts have increasin-
gly given way to discussions about
sanctions – and what mix of them would
be needed to bring Iran to heel. In 2011,
a renewed focus on comprehensive econo-
mic sanctions could turn out to be the bad
idea whose time has arrived.
Sanctions, of course, have a dismal hi-
storical record in achieving their aims. In-
deed, they have often been more useful in
proving the law of unintended conse-
quences. So it might be useful to step back
and take one more look at our disagreea-
ble negotiating partner – Iran – to see
what should, and should not, be emphasi-
zed diplomatically.
There is nothing easy about negotia-
ting with Iran. It is one of the oldest sta-
tes in the broader Middle East, with a
deep culture. Despite its leaders’ grim pu-
blic image, Iran has a sense of humanism,
as any Kurd who fled from Saddam Hus-
sein’s chemical-warfare attacks along the
Iranian border can attest. Bending, much
less breaking, will not come naturally to
such a prideful country.
Iran also doesn’t “play well with oth-
ers.” Most Americans remember it as the
country that abducted US diplomats soon
after its Islamic revolution in 1979, hol-
ding them for no apparent purpose for
444 days. No American diplomat has been
stationed in Tehran since. American atti-
tudes toward Iran are probably far more
conditioned by that episode than people
realize.
Iran is also internally divided. Its mul-
POLITICS: FOCAL POINTS
Iranian march during a protest demonstration against the Koran-burning initiative in the US, in
Tehran, Iran, 17 September 2010 |ANA/EPA/ABEDIN TAHERKENAREH
> Quote
lahs bicker constantly, seeming to reflect
the country’s broader cleavages. Iran’s ci-
vilian authorities apparently have limited
control over the military and the dreaded
security services, which seem to answer to
no one but themselves.
Iran’s Islamic Revolution, moreover,
has run into a familiar contradiction: it
cannot further its aims without accepting
Westernization and modernization. Iran’s
youthful population – a product of the
massive post-revolution baby boom – is
increasingly frustrated and depressed; not
surprisingly, young Iranians are having
fewer children than ever. As the June 2009
election protests showed, Iran’s urban
youth desperately want to end the coun-
try’s isolation, but they have increasingly
found that the only way out of isolation is
to study or work abroad – and never re-
turn.
Iran does not live in a great neighbo-
rhood, either. Turkey can be a good nei-
Copyright: Project Syndicate, 2010. www.project-syndicate.org
ghbor, but otherwise Iran is bordered by
inhospitable states to the east and the
north. And, while its western neighbor
Iraq is a fellow Shia-majority state, Iraq’s
Arab Shia make no secret of their distaste
for the Persians and their claim to Shia
prominence. While most of the world
may have missed it, there is an ongoing
competition between Iraq’s Najaf and
Iran’s Qom over which city is holier.
Iran has virtually no friends among the
Sunni Arab states. As the world recently
learned from the WikiLeaks release of US
diplomatic cables, Sunni Arab leaders are
no more tolerant of an Iranian nuclear
bomb than is the US or its allies. The
Sunni reaction to Iran may reflect deep-
seated suspicions about the Shia (witness
the cold shoulder given by most Sunnis to
Shia rule in Iraq). Iran’s only friends, it
seems, are those – like the Chinese – who
are more interested in its natural resources
than its people.
New Europe | Page 21
New Year Special| January 2011
While sanctions may deepen Iran’s
predicament, they are unlikely to break
the diplomatic impasse on nuclear wea-
pons. But, given the Iranian government’s
increasingly unhelpful reactions to diplo-
matic overtures, there is unlikely to be any
interest in toning down sanctions. Indeed,
just the opposite response is likely – ef-
forts to tighten sanctions still further.
Yet, just as the US adopted a “bomb
and talk” approach with the Serbs during
the dénouement of the Bosnian war,
America must be willing to “sanction and
talk” when it comes to Iran, thereby crea-
ting greater space for an eventual diplo-
matic strategy.
First, the US should consider establi-
shing diplomatic relations with Iran and
putting diplomats on the ground. This
would not be an easy process, and could
well meet considerable Iranian resistance.
But the Iranians have diplomatic relations
with other members of its main interlo-
cutor in talks on its nuclear program, the
sanctions-minded P-5+1 Group (China,
France, Germany, Russia, the United Kin-
gdom, and the US), and restoring Iran-US
diplomatic ties would shorten lines of
communications and close the 444-day
chapter of 1979-1981.
Second, even if a stronger bilateral
mechanism is forged, it should not be al-
lowed to displace the P-5 approach. The
ability of this group to work together is
critical to resolving this and future crises.
Third, the US should continue its ef-
forts to encourage action by Iran’s neigh-
bors. While Turkey’s lurch into the fray in
2010 may have been unwelcome, its inte-
rest in calming a situation involving an
immediate neighbor is understandable.
More problematically, the Sunni Arab sta-
tes should also give more serious thought
to addressing the situation, and should
seek to reconcile their private and public
postures.
Iran, after all, is not building an Isla-
mic bomb. It is building an Iranian bomb,
or, worse yet, a Shia bomb that Arab lea-
ders must be more resolute in trying to
stop. Private expressions of deep concern
do not compensate for public nonchalance
(or changing the topic to Israel), and are
hardly a basis for a successful policy to-
ward a country whose nuclear ambitions
could have a catastrophic impact on the
region.
Finally, the Chinese and the Russians
have been brought along principally by
the US to a more robust policy, yet they
remain reluctant.
They need to convey through their
own bilateral approaches to Iran a sense
of urgency – and perhaps even express a
little anger – at Iran’s unwillingness to ne-
gotiate seriously.
Sanctions should be a tool of diplo-
macy, not the other way around. Even as
we look to tighten sanctions on Iran in
2011, we must strengthen our efforts to
establish a strong political and diplomatic
track.
Page 22| New Europe
New Year Special | January 2011
The Endgames in Iraq and Afghanistan
by Richard N. Haass
Richard N. Haass, a former Director of Policy Planning in the US State Department and currently President of the Council on
Foreign Relations, is the author of War of Necessity, War of Choice: A Memoir of Two Iraq Wars.
EW YORK – For nearly a de-
N cade, American foreign policy
has been dominated by the wars
in Iraq and Afghanistan. As 2011 begins,
with 50,000 US soldiers still in Iraq and
another 100,000 in Afghanistan, it may
not look like that era is coming to an end.
But it is.
Iraq, the second most expensive “war
of choice” (after Vietnam) in American
history, is for the United States reaching
a level of effort that will no longer absorb
substantial military and economic reso-
urces or garner significant domestic po-
litical attention. All US troops are due to
leave Iraq by the end of 2011.
Even if, as seems likely, several thou-
sand soldiers remain, the number will be
small and their role limited to advising
and training Iraqi military and police for-
ces and conducting missions against ter-
rorists. Eight years, 4,300 lost American
lives, and more than a trillion dollars
later, it will be, for better or worse, mo-
stly Iraqis who determine their country’s
future.
The initial performance of an Iraq
run by Iraqis is less than encouraging. To
be sure, there have been a number of re-
latively fair elections, political life is ac-
tive, and the economy is growing. But
Iraqi leaders’ difficulty in forming a go-
vernment following last spring’s elections
bodes poorly.
Indeed, a political culture of compro-
mise has not taken root, and the country
continues to be divided by geography,
ethnicity, religion, and politics. There is
no consensus on how to share the poten-
tial wealth from Iraq’s vast energy reso-
urces. The Kurdish north is largely
autonomous; where its writ ends and the
central government’s begins is unsettled.
Iranian influence is pervasive in the south
and extensive in the center.
POLITICS: FOCAL POINTS
Two Iraqi policemen stand guard at a checkpoint in central Baghdad, Iraq, 25 November 2010 |ANA/EPA/ALI ABBAS
>
Quote
Moreover, the country still experien-
ces regular bombings, and millions of Ira-
qis are either internally displaced or
refugees. In short, conditions in Iraq,
while significantly better than five years
ago, are more likely to deteriorate than
improve.
Afghanistan is moving at a much slo-
wer pace when it comes to US troop re-
ductions. The Obama administration is
likely to remove a small number of US
soldiers in July, the date selected by the
president for the beginning of the Ame-
rican military drawdown. But it will be
only the beginning of an extended, gra-
dual process of American military reduc-
tion, one that looks like it will take four
years – and quite possibly longer.
What the US will have to show then
for more than a decade of sacrifice and
investment in Afghanistan is anybody’s
guess. The sum total of the US effort in
terms of American money and lives will
likely be less than in Iraq, but still sub-
stantial.
And it is difficult to be optimistic
Copyright: Project Syndicate, 2010. www.project-syndicate.org
about Afghanistan, given the Taliban’s re-
silience, the weakness and corruption that
plague the government, and the reality
that Pakistan will continue to be a sanc-
tuary for the Taliban and other armed
groups seeking to gain a foothold (or
more) in Afghanistan. An Afghanistan
that resembles a normal country is vir-
tually impossible to foresee.
Nevertheless, the decisions to scale
back American involvement decisively in
Iraq, and gradually in Afghanistan, will
ultimately have significant consequences
for the US – many of them welcome. One
is financial. Current US policy toward
Iraq and Afghanistan costs roughly $150
billion per year, which is more than 20%
of total US defense spending. Cutting
this sum will free up much-needed
money for other defense needs and for
deficit reduction, arguably the principal
national security challenge facing the US.
Troop reductions in Iraq and Afgha-
nistan will also allow the US military to
begin to recover from these two conflicts.
Neither soldiers nor equipment can su-
stain the performance that has been de-
manded of them. Recruitment and reten-
tion of highly skilled individuals in the
US armed forces will increase as the level
of effort in the two conflicts winds down,
and a great deal of deferred military mo-
dernization will occur.
More fundamentally, reducing US in-
volvement in Iraq and Afghanistan will
permit a rebalancing of US foreign and
defense policy. The two conflicts have ab-
sorbed a disproportionate share of the
country’s resources – military and econo-
mic to be sure, but also the time and at-
tention of policymakers and diplomats.
In the short run, doing less in Iraq
and Afghanistan will allow the US to
concentrate on the two most immediate
external threats to US interests: Iran and
North Korea.
In the long run, the US needs to ge-
nerate domestic and international sup-
port for regional and global arrangements
designed to manage the defining pro-
blems of this era, from the spread of nu-
clear materials and terrorism to
maintaining an open world economy and
slowing climate change. This will require
a foreign policy that focuses on the emer-
ging powers of the twenty-first century,
many of which are in Asia.
The US largely squandered the op-
portunity to shape the international sy-
stem in the first decade of the new
century. Iraq and Afghanistan proved to
be strategic distractions, and, particularly
in Afghanistan, the US should resist
pressures to prolong a substantial military
presence.
There is now an opportunity to reo-
rient American foreign policy to concen-
trate on what matters most. It is in the
interest of the US and the world that this
opportunity not be missed.

Ending the Never-Ending War on Drugs
by Fernando Henrique Cardoso
Fernando Henrique Cardoso, a former President of Brazil (1995-2002 ), is Co-Chair of the Latin American Commission on
Drugs and Democracy, and convener of the Global Commission on Drug Policy.
AO PAULO – The war on drugs is
S a lost war, and 2011 is the time to
move away from a punitive appro-
ach in order to pursue a new set of poli-
cies based on public health, human rights,
and common sense. These were the core
findings of the Latin American Com-
mission on Drugs and Democracy that I
convened, together with former presi-
dents Ernesto Zedillo of Mexico and
César Gaviria of Colombia.
We became involved with this issue
for a compelling reason: the violence and
corruption associated with drug traffic-
king represents a major threat to demo-
cracy in our region. This sense of urgency
led us to evaluate current policies and
look for viable alternatives. The evidence
is overwhelming. The prohibitionist ap-
proach, based on repression of production
and criminalization of consumption, has
clearly failed.
After 30 years of massive effort, all
prohibitionism has achieved is to shift
areas of cultivation and drug cartels from
one country to another (the so-called
balloon effect). Latin America remains
the world’s largest exporter of cocaine
and marijuana. Thousands of young peo-
ple continue to lose their lives in gang
wars. Drug lords rule by fear over entire
communities.
We ended our report with a call for a
paradigm shift. The illicit drug trade will
continue as long as there is demand for
drugs. Instead of sticking to failed poli-
cies that do not reduce the profitability
of the drug trade – and thus its power –
we must redirect our efforts to the harm
caused by drugs to people and societies,
and to reducing consumption.
Some kind of drug consumption has
existed throughout history in the most
POLITICS: FOCAL POINTS
Spanish customs agents oversee the unloading of 20 tonnes of cannabis pollen seized by Spanish po-
lice from a Dutch-flagged fishing boat 120 miles off the southern coast of Spain, at the port of
Cadiz, Spain, 12 November 2010 |ANA/EPA/ROMAN RIOS
> Quote
diverse cultures. Today, drug use occurs
throughout society. All kinds of people
use drugs for all kinds of reasons: to re-
lieve pain or experience pleasure, to
escape reality or enhance their perception
of it.
But the approach recommended in
the Commission’s statement does not
imply complacency. Drugs are harmful to
health. They undermine users’ decision-
making capacity. Needle-sharing spreads
HIV/AIDS and other diseases. Addic-
tion can lead to financial ruin and dome-
stic abuse, especially of children.
Cutting consumption as much as pos-
sible must, therefore, be the main goal.
But this requires treating drug users not
as criminals to be incarcerated, but as pa-
tients to be cared for. Several countries
are pursuing policies that emphasize pre-
vention and treatment rather than re-
pression – and refocusing their repressive
measures on fighting the real enemy: or-
ganized crime.
The crack in the global consensus
around the prohibitionist approach is wi-
Copyright: Project Syndicate, 2010. www.project-syndicate.org
dening. A growing number of countries
in Europe and Latin America are moving
away from a purely repressive model.
Portugal and Switzerland are compel-
ling examples of the positive impact of
policies centered on prevention, trea-
tment, and harm reduction. Both coun-
tries have decriminalized drug possession
for personal use. Instead of leading to an
explosion of drug consumption, as many
feared, the number of people seeking tre-
atment increased and overall drug use
fell. When the policy approach shifts
from criminal repression to public health,
drug users are more open to seeking tre-
atment. Decriminalization of consum-
ption also reduces dealers’ power to
influence and control consumers’ beha-
vior. In our report, we recommend eva-
luating from a public-health standpoint
– and on the basis of the most advanced
medical science – the merits of decrimi-
nalizing possession of cannabis for per-
sonal use.
Marijuana is by far the most widely
used drug. There is a growing body of
New Europe | Page 23
New Year Special| January 2011
evidence suggesting that the harm it ca-
uses is at worst similar to the harm cau-
sed by alcohol or tobacco. Moreover, most
of the damage associated with marijuana
use – from the indiscriminate incarcera-
tion of consumers to the violence and
corruption associated with the drug trade
– is the result of current prohibitionist
policies.
Decriminalization of cannabis would
thus be an important step forward in ap-
proaching drug use as a health problem
and not as a matter for the criminal ju-
stice system.
To be credible and effective, decrimi-
nalization must be combined with robust
prevention campaigns. The steep and su-
stained drop in tobacco consumption in
recent decades shows that public infor-
mation and prevention campaigns can
work when based on messages that are
consistent with the experience of those
whom they target. Tobacco was de-gla-
morized, taxed, and regulated; it has not
been banned. No country has devised a
comprehensive solution to the drug pro-
blem. But a solution need not require a
stark choice between prohibition and le-
galization. The worst prohibition is the
prohibition to think. Now, at last, the
taboo that prevented debate has been
broken. Alternative approaches are being
tested and must be carefully reviewed. At
the end of the day, the capacity of people
to evaluate risks and make informed ch-
oices will be as important to regulating
the use of drugs as more humane and ef-
ficient laws and policies. Yes, drugs erode
people’s freedom. But it is time to reco-
gnize that repressive policies towards
drug users, rooted as they are in prejudice,
fear, and ideology, may be no less a threat
to liberty.
Page 24| New Europe
New Year Special | January 2011
Whither Pakistan?
by Shahid Javed Burki
Shahid Javed Burki, a former Finance Minister of Pakistan and Vice President of the World Bank, is currently Chairman of the
Institute of Public Policy, Lahore.
AHORE – Pakistan remains the
L world’s never-ending question. As
2010 concludes, several outstan-
ding issues continue to bedevil the coun-
try. How they are managed in the year
ahead will determine not only Pakistan’s
immediate future and long-term pro-
spects, but also the security of its region
and, indeed, much of the world.
It has been said – without exaggera-
tion – that Pakistan faces an existential
threat. The country has not defined a
coherent approach towards those who are
resorting to terrorism to advance their
agendas, both within Pakistan and
abroad. It remains uncommitted to the
idea of denying sanctuaries on its terri-
tory to Taliban fighters battling Ameri-
can and NATO troops in Afghanistan.
Relations with India have soured in re-
cent months, because Pakistan’s govern-
ment is once again lending diplomatic
support to the insurgency in Indian-con-
trolled Kashmir.
Domestic terrorism in Pakistan has
taken a heavy human and economic toll.
It is no longer aimed at official support
of United States-led anti-terrorism acti-
vities. Sunni Islamic extremists now tar-
get minority groups as well as other
Muslim sects. Some 800 liberal and Sufi
Islamic scholars have died in targeted kil-
lings by extremist groups who receive fi-
nancial assistance from like-minded
people in the Middle East, and some
well-known and much-visited Sufi shri-
nes have been bombed.
The economy is in shambles, and
POLITICS: FOCAL POINTS
Elders of the Mehsud tribe, attend a Jirga, a centuries old tribal mechanism to resolve disputes, in Tank, a
town neighboring south-Waziristran tribal region near the Afghan border in Pakistan, 20 December 2010
|ANA/EPA/SAOOD REHMAN
> Quote
unable to meet the International Mone-
tary Fund demands for its continued sup-
port. If the IMF terminates its current
program, Pakistan will be unable to ser-
vice its foreign debt. Indeed, a senior ca-
binet minister suggested recently that the
international community should write off
Pakistan’s debts – an amount estimated at
$40 billion. The minister of finance for-
cefully repudiated the suggestion the fol-
lowing day, indicating that the
government has not developed a consi-
stent approach towards the faltering eco-
nomy.
The economy was also badly hurt by
the massive floods of 2010, which caused
damage estimated at $10 billion. This da-
mage could lower annual GDP growth by
1-1.5% for several years to come. In the
2010-2011 fiscal year, the IMF estimates
Copyright: Project Syndicate, 2010. www.project-syndicate.org
that economic output will increase by less
than 3% – one-third the rate expected in
neighboring India and less than half that
of Bangladesh.
Slower economic growth will cause a
shortfall of jobs for new entrants to the
workforce, thereby increasing the inci-
dence of poverty. Indeed, the number of
people living in absolute poverty is likely
to increase by 10 million, bringing the
total to more than 70 million, or 40% of
the population. Pakistan thus ends 2010
as the sick man of South Asia.
The political system also remains un-
settled. Despite passage in July of the
18th amendment to the Pakistani consti-
tution, which restored it to the form in
which it was promulgated in 1973, poli-
tical and executive authority remains in
the hands of President Asif Ali Zardari.
The changes are supposed to make the
executive branch accountable to the elec-
ted parliament, expand the prime mini-
ster’s authority, devolve more power to
the provinces, and ensure independence
to the judiciary. In late 2009, the presi-
dent also approved the seventh National
Finance Commission, which will allocate
to the provinces a larger share of the re-
venues collected by the central govern-
ment. But a significant transfer of power
from the presidency to parliament, or
from the central to provincial govern-
ments, has yet to be brought about.
Worse yet, the military remains ou-
tside civilian control. General Ashfaq
Pervez Kayani’s term in office, which was
set to expire in November, was extended
by three years. Thus empowered, the ge-
neral has been able to exert his influence
over foreign policy, in particular in defi-
ning the country’s relations with the US,
India, and Afghanistan. Even though the
US offered $2 billion of assistance to the
military to be disbursed over a period of
3-5 years, Kayani has resisted American
pressure to move against the Taliban’s
sanctuary in North Waziristan, used to
stage operations against US and NATO
troops in southern and eastern Afghani-
stan.
So, is a further increase in violence by
various extremist groups likely? Will the
economy collapse if the IMF withdraws
its support? Will the US increase its pres-
sure by intervening militarily if Pakistan
continues to harbor Taliban fighters ope-
rating from the tribal areas? Will the mi-
litary subvert the constitutional changes
aimed at reforming the political system?
Despite all the grim news and augu-
ries, there is some hope, owing to the in-
creased political mobilization of
Pakistan’s middle classes, whose members
have finally begun to question those
espousing extremism. The judiciary is
also more active, and is attempting to
force the executive to remain within the
bounds of the constitution.
Moreover, a trade agreement with Af-
ghanistan that allows Afghan goods to
cross Pakistan en route to India may be
one step towards an improvement of eco-
nomic relations with that large and ra-
pidly growing neighbor.
Indeed, an able economic team that
has been installed in the government
seems – at long last – to be addressing
some of the economy’s deep structural
flaws. As India in the 1990’s and Brazil
in the early 2000’s showed, economies in
deep distress can recover quickly once the
right policies are implemented. It could
also happen in Pakistan, which would
help to solve other, seemingly intractable
problems.
So all hope is not lost in Pakistan. On
the contrary, 2011 may well prove to be a
better year for a battered economy and a
political system under stress.
 New Europe | Page 25
POLITICS: FOCAL POINTS New Year Special| January 2011

Georgia – Reactivation
by Krzysztof Lisek
Krzysztof Lisek is a Member of the European Parliament from the election list of the EUROPEAN
Civic Platform, standing reporter for Georgia in the European Parliament PARLIAMENT

RUSSELS - Georgian President Mi- ment. The European Union Monitoring Mis-

B kheil Saakashvili held a speech in the

European Parliament recently. This
came apparently as no surprise because heads
of states and prime ministers speak at the Eu-
ropean Parliament virtually every month. Ho-
wever, this was Mikheil Saakashvili’s second
visit to the European Parliament. So far, only
the Dalai Lama has had this privilege. M. Sa-
akashvili was also a guest in the Foreign Affairs
Council and showed unprecedented pro-Eu-
ropean openness to discussion and an in-depth
debate with MEPs from many countries. Wi-
thout doubt, this is an interesting signal of a
European offensive in Georgian foreign policy.
The European Parliament welcomes such si-
gnals with undisguised satisfaction, especially
as Europe shows lively interest in the situation
in the Caucasus. The European Parliament has
been the first and foremost forum for Geor-
European Council President Herman Van Rompuy (R) welcomes Georgian Presi-
dent Mikheil Saakashvili prior to a meeting at the EU council headquarters in
Brussels, Belgium, 18 November 2010 |ANA/EPA/OLIVIER HOSLET
sion (EUMM) – currently the only internatio-
nal mission in Georgia – contributes to ensure
security and stability in the region. The EU ac-
tively participates in the Geneva negotiations,
stands firmly behind Georgia’s territorial inte-
grity and supports a non-recognition policy
with regard to the territories of South Ossetia
and Abkhazia under Russian control. It is bro-
adly accepted that Georgia is a part of Europe
in terms of culture, history and politics, as it re-
spects European values, rules and goals. There-
fore, it comes as no surprise that Georgia’s full
integration into the European Union has be-
come the country’s long-term and strategic ob-
jective. Also from our viewpoint, Georgia’s
prospective EU membership would undoub-
tedly support democratic processes, economic
reforms, security and stability in Georgia itself
and among its neighbours. Georgia deserves a

gians intending to demonstrate their effort in
reforming their country and convince Europe
about their political arguments. One notewor-
thy fact is that in his speech the Georgian Pre-
sident has dramatically changed the rhetoric
and priorities in international policy. The image
of an anti-Russian warrior has changed into
that of a proficient manager, consistently pur-
suing to change his country and introducing re-
forms with an effectiveness to be envied by
many countries in the world. The solemn de-
claration to refrain from using force in relations
with Russia and the declaration of full readi-
ness for peace talks may be a milestone on the
road to peace in the Caucasus.
Country of the economic revolution
Georgia’s economy, which survived the
Russian military invasion in 2008, compared to
other countries of similar size, proves to be hi-
ghly robust and it has handled the worldwide
financial crisis surprisingly well so far.
Since the time of the Rose Revolution, Ge-
orgia has introduced a number of liberal, de-
mocratic and business-friendly reforms aimed
at creating a free market economy and a demo-
cratic society. Since 2004, Georgia has freed bu-
siness from the red tape in an unprecedented
fashion, simplifying the formalities linked to
establishing business to the maximum extent.
A company can be registered in just 1 day,
which is unprecedented even in some Euro-
pean countries, and the rules are the same for
domestic and foreign entrepreneurs. The same
applies to purchasing and registering real pro-
perty. The tax system has been reformed by the
introduction of a flat personal income tax rate
of 20% (15% from 2013 onwards). The state
budget’s income has increased fivefold, despite
the dramatic decrease in taxation. The govern-
ment is planning to reduce the number of li-
cences and permits required to run business by
85%. With one of the lowest customs duties in
the world, Georgia has opened to free and uni-
nhibited trade. There are no quantitative re-
strictions on the export of goods or transit.
What is more, the customs system has under-
gone a radical reform: simplified export and
import procedures and modernised customs
clearance points have been put into practice.
Within 3 years, Georgia has changed from
a country where power shortages used to be
>
Quote
commonplace into an exporter of electricity,
supplying it to all its neighbours, including
Russia. Finally, an achievement President Saa-
kashvili can be truly proud of: Georgia has
practically eradicated corruption in state insti-
tutions and the civil service by introducing a
number of reforms in the public sector (public
prosecutor’s office, court system and police) and
politics. As a result, in contrast to many Eastern
European countries, bribery is exceptionally
rare in Georgia. According to the 2009 Corru-
ption Barometer prepared by Transparency In-
ternational, Georgia ranks among the least
corrupt countries in the world.
Georgia is currently viewed as a country
with a dynamically developing economy.
During my visit in the Ukraine, I heard
some noteworthy words from Prime Mini-
ster Azarov: “When it comes to economy,
we want to follow the footsteps of Georgia”.
Investors continue to show increasing inte-
rest in Georgia. The planned tourism inve-
stments in the Batumi region are
impressive. The group of Georgia’s econo-
mic partners is diversified, including com-
panies from the EU, USA and Turkey.
Between 2004 and 2007, the Georgian eco-
nomy grew by an average of 9% annually. At
present, the forecast GDP growth for 2010
is 5 to 6%. Most neighbouring countries
and even EU members can only envy these
results. All this makes Georgia number one
on the list of the most business-friendly lo-
cations in Central and Eastern Europe.
Western-style democracy
Reports from Western observers, Georgian
NGOs and even the opposition regarding the
last municipal elections praise Georgia. In con-
trast to other CEE countries, there are no major
reservations about the election procedure, can-
didate registration procedure, election cam-
paign, access to the media or supervision over
the vote counting process. Observation mis-
sions sent by international organisations have
all agreed that Georgia has recorded substantial
progress in developing democratic procedures
and civil society. The opposition operates fre-
ely in and outside the parliament, and the di-
verse media ensures pluralism of opinions.
According to expectations, the President’s party
won the elections; president Saakashvili bears
no responsibility for the fact that the opposi-
tion – plagued by internal divisions and disa-
greement between the factions – put up nine
candidates against the ruling party’s candidate
in the elections of the mayor of Tbilisi.
Interestingly, Georgia has also changed its
constitution, based on the Constitution of the
Republic of Poland. The new constitution will
move Georgia in the direction of a parliamen-
tary and cabinet system, with more powers for
a government elected and monitored by the
parliamentary majority.
Georgia in the European Union?
In spite of the unresolved issue of occupa-
tion of Abkhazia and South Ossetia, we have
witnessed substantial progress in the develop-
ment of relations between the EU and Georgia
in recent years. This country actively participa-
tes in bilateral and multilateral forms of part-
nership within the Eastern Partnership,
proposed by Poland and Sweden. Georgia has
commenced negotiations over the Association
Treaty, it has signed an agreement on visa faci-
litating measures, the readmission treaty, the
agreement on marking agricultural products
and other food, and the Common Airspace
Treaty. Georgia’s government has taken some
major steps at home regarding a prospective
free trade agreement.
On the other hand, the European Union
has played an important role in ensuring stabi-
lity and security in Georgia, primarily by acting
as a mediator in achieving a ceasefire agree-
clear European perspective. The Eastern Part-
nership should ensure any tools required to se-
cure this goal, taking into consideration an
individual approach towards each of the six
member countries.
Resolution of the conflict between Georgia
and Russia – Mission Impossible?
Georgia has no chances of approaching EU
membership with the current status of its rela-
tions with Russia. Many European politicians
declare the recognition of Georgia’s territorial
integrity but do not risk a worsening of rela-
tions with Moscow by supporting Mikheil Sa-
akashvili. It is good that Georgia seeks
partnership with the EU for a peaceful resolu-
tion of the conflict. Only this step can ensure
the implementation of the six-point ceasefire
agreement of 12 August 2008 and the subse-
quent withdrawal of Russian military forces
from occupied Georgian territories. Georgia’s
government has devised a national strategy for
the occupied territories and an action plan for
building trust between communities divided by
war. The strategy is intended to ensure that the
residents of Abkhazia and South Ossetia can
enjoy the same rights and privileges as all Ge-
orgian citizens.
A large majority of residents in these re-
gions have left their homes and have become
refugees, living in temporary housing built by
Georgia’s authorities with international assi-
stance. At present, the European Union plays a
key role in ensuring security and stability in
Georgia. The EUMM is currently the only in-
ternational monitoring mission present in this
country. The mission has managed to achieve a
clear success in ensuring peace and preventing
armed incidents, despite being unable to fully
exercise its mandate on territories controlled by
the Russian military. Geneva talks provide an
opportunity to convince Russia to support the
development of the EUMM into an interna-
tional peacekeeping force which would replace
Russian soldiers in Abkhazia and South Osse-
tia. This plan sound like a mission impossible,
but its success would be one of the European
Union’s greatest foreign policy achievements in
history. The speech which I heard yesterday
from Georgia’s President as well as my MEP
colleagues’ response give reasons to believe that
it is doable.
Page 26| New Europe
New Year Special | January 2011
Chile and the Third Wall
by Sebastián Piñera
Sebastián Piñera is President of the Republic of Chile.
ANTIAGO – Chile celebrated 200
S years of independence in 2010. Only
20 of the 198 countries on Earth
have reached that age. Therefore, it has
been, for Chileans, a time of assessment
and of asking ourselves a very simple, yet
profound, question: have we done things
right or wrong?
If we compare ourselves to the rest of
Latin America, the truth is that we have
done things very well, especially in the last
25 years, during which we went from
being one of the poorest countries on the
continent to having the highest per capita
income in the region. Yet if we compare
ourselves to the more exclusive group of
developed countries, the truth is that we
still have much to learn from them.
The great goal, the grand mission, the
overarching challenge of our generation,
the Bicentennial Generation, is just one:
for Chile to be the first country in Latin
America to be able to say, before the end
of this decade, with pride and humility,
that it has overcome poverty and become
a developed country with real opportuni-
ties for material and spiritual advancement
for all its children.
Of course, this is a dream that has been
extraordinarily elusive in our first 200
years of independence. So why should now
be different?
First of all, unlike any time in the past,
this goal has become fully attainable, and
is, as a result, a moral imperative. Chile
currently has a per capita GDP of
$15,000, after adjusting for purchasing
power. We have set the goal of growing at
an average of 6% annually, in order to at-
tain, by 2018, the per capita GDP now en-
joyed by European countries such as
Portugal and the Czech Republic.
We are also working on doubling the
POLITICS: FOCAL POINTS
Chilean miner Osman Araya (R), embraces his wife, Angelica, after leaving the Fenix rescue capsule during the rescue operation at the San Jose mine near
Copiapo, Chile, 13 October 2010 |ANA/EPA/HUGO INFANTE/GOVERNMENT OF CHILE/HO
>
Quote
job-creation rate of recent years, with the
aim of adding one million jobs in the pe-
riod 2010-2014.
All indicators demonstrate that we are
on the right path. Despite the devastating
effects of the earthquake and tsunami of
last February, Chile’s economy is already
growing at close to 6%, and we have crea-
ted nearly 300,000 new jobs in the first
nine months of my administration – the
highest in our country’s history.
Secondly, these goals are attainable be-
cause the world has changed. The Iron
Curtain, which for decades irreconcilably
divided the East from the West, is gone.
And globalization and new technologies
have torn down the wall that for centuries
separated the rich and prosperous coun-
tries of the North from the poor and un-
derdeveloped countries of the South.
Yet a third wall remains, less visible
than the others but just as harmful, if not
more so.
This wall has been with us always, se-
parating rusting spirits who live in nostal-
Copyright: Project Syndicate, 2010. www.project-syndicate.org
gia, fear the future, and believe that only
the past was better, from youthful, creative,
and entrepreneurial spirits who fearlessly
embrace the future and believe that the
best is always yet to come.
This wall kept Chile and Latin Ame-
rica from joining the nineteenth-century
Industrial Revolution, which is why we re-
main underdeveloped to this day. But we
need this wall to tumble if we do not want
to miss today’s revolution, which is delive-
ring societies based on knowledge, tech-
nology, and information. This revolution
will be tremendously generous to those
countries that embrace it – and utterly in-
different, even cruel, to those that ignore it
or let it pass by.
How will Chile breach this wall? First,
by strengthening the three basic pillars wi-
thout which development cannot germi-
nate or opportunities flourish: a stable,
vital, and participatory political demo-
cracy; a social market economy that is free,
competitive, and open to the world; and a
strong state that is effective in the fight
against poverty and in promoting greater
equality of opportunities.
Yet not even this will suffice if we are
to build on rock and not on sand. In this
twenty-first century, emerging countries
like Chile must invest in the pillars of mo-
dern society.
I mean developing our human capital,
which is our greatest resource; encoura-
ging innovation and entrepreneurship,
which are the only truly eternal resources
we have on hand; investing in science and
technology, which will open up unsuspec-
ted opportunities in the future; and pro-
moting more dynamic and flexible
markets and societies that will put us
ahead, and at the helm, of change, rather
than always lagging behind and trying to
comprehend and adapt to change.
Those are the pillars that our admini-
stration is emphasizing. As Chile deepens
its integration with the world, we are also
moving forward with structural reforms
through which we will be able to improve
substantially the quality of education re-
ceived by millions of our children and
youths; retrain three-quarters of Chilean
workers over the next four years; grant
universal access to broadband Internet
service; double our investment in science
and technology; promote innovation and
entrepreneurship in the public and private
sectors; and reduce the time needed to
start up a company to one day – and the
cost to zero. These are some of the many
measures that form the goals – and foun-
dation – of my administration. They are
grand, noble, and ambitious goals, but
fully attainable for today’s Chile, the Bi-
centennial Chile, a Chile now viewing the
twenty-first century with more optimism
and enthusiasm than ever before.

Bulgaria’s Potential for Sustainable
Growth & How to Enhance it in 2011
by Tzvetan Vassilev
Tzvetan Vassilev is the Chairman of the Supervisory Board of Corporate Commercial Bank AD
OFIA - In the last twenty years Bulga-
S
ria has unfortunately established a re-
putation as a country of economic
turmoil and permanent crisis. Undoubtedly,
its recent past has been quite turbulent and
characterized by chaotic development in the
various sectors and industries. Politicians pro-
moted senseless reforms just for the sake of
reforming without setting clear goals for the
future and without considering the impact of
their actions on the economy and on society.
Indeed, most reforms were too fragmentary
and sporadic to target the core of Bulgaria’s
problems or to provide a long-term strategy
for sustainable development.
Hence it is not surprising that the inter-
national community is concerned about Bul-
garia’s economy and role on the global scene.
Nonetheless, they should be aware that Bul-
garia is a country with a lot of potential that
is yet to be exploited. Bulgaria has always
been a competitive player on the global mar-
ket and has established traditions in many
strategic sectors of which I will present the
three I consider of utmost importance. Bul-
garia’s growth, however, is inhibited by the
lack of a consistent and viable national stra-
tegy—an uneasy task that should be the co-
untry’s priority in 2011.
Where does the potential for sustainable
growth lie?
First of all, Bulgaria has been and still is a
regional energy power with notable expertise
in the full spectrum of energy production.
Bulgarian NPPs, HPPs, and TPPs not only
abide by international security standards, but
also sell energy at a significantly lower price
than their counterparts in most EU countries
(approximately 55 €/MW). Bulgaria has al-
ways produced more energy than it consu-
med and has traditionally exported to Turkey,
POLITICS: FOCAL POINTS
>
Quote
Greece, and the rest of the Balkan Peninsula.
In addition, due to its geostrategic location,
Bulgaria is a desired partner for international
pipeline projects such as Nabucco and South
Stream which are meant to foster the energy
security of Europe and which are to be nego-
tiated in the near future.
Bulgaria has also turned into an impor-
tant tourist destination that attracts visitors
from as far as Japan. The roots of Bulgarian
tourism can be traced back to 1896 when the
first mountain resort was established and
1908 when the first resort on the Black Sea
coast was founded. Today, for a country of its
size, Bulgaria can offer an impressive array of
tourist options: sea, mountain, and balneolo-
gical resorts as well as a considerable cultural
heritage. While in the past Bulgaria was pri-
marily the choice of East Europeans, in re-
cent years it has attracted the attention of EU
tourists as well due to the good price-quality
ratio. In 2008 the country received more fo-
reign visitors than the size of its population:
almost 8.6 million. This sector is to be fur-
ther developed since there are numerous na-
tural and archaeological sites that have not
been discovered by the general public.
A woman walks by the golden dome of the St Alexander Nevsky Cathedral during a rain fall in Sofia, Bul-
garia, 28 March 2010 |ANA/EPA/VASSIL DONEV
Agriculture is another major sector which
is often underestimated, but which could turn
into a worthy engine of economic growth.
Bulgaria has 6.2 million ha of agricultural
land of which 4.8 million ha is arable. On one
hand, this land is valuable because of the cli-
mate advantages and the omnipresence of
water sources. On the other hand, the price
of land in Bulgaria is much lower than in
other EU countries. For instance, while in
Italy arable land can be purchased at 20 000
€/ha, in Bulgaria it could be bought at 2000
€/ha. Moreover, Bulgaria currently receives
only 110 €/ha in European subsidies whereas
Austria and Greece obtain as much as
500€/ha. Even though agriculture represents
only 7.5% of Bulgarian GDP, it has the po-
tential for major expansion particularly in the
field of organic farming since the country has
neither taken full advantage of its agricultu-
ral production capacity nor of European fun-
ding.
Why is the potential for growth exploi-
ted inefficiently?
It is not a secret that Bulgaria needs a
profound administrative reform, but its bene-
fits should outweigh its costs and its side ef-
New Europe | Page 27
New Year Special| January 2011
fects. For a long time Bulgaria simply lacked
politicians with a clear vision and strategy on
promoting Bulgaria’s most valuable assets.
More specifically, Bulgarian politicians rarely
analyzed the needs of Bulgarian business and
seldom consulted representatives of the Bul-
garian industries in order to hear the real pro-
blems which they encountered in the span of
their ordinary business activity. In traditional
market economies, however, the opinion of
business counts.
Furthermore, most Bulgarian govern-
ments dedicated more time and energy on
blaming their predecessors about the state of
Bulgaria’s economy instead of concentrating
on the country’s future. Neither dwelling on
the past nor witch-hunting is a policy that
gives results or promotes economic growth. It
is more strategic and fruitful to demonstrate
how bad the predecessors were by the exam-
ple of hard work and sound leadership.
Bulgarian governments also need to dee-
pen their relationship with the Bulgarian
scientific community. Although good advice
is just a door away, Bulgarian politicians have
a tendency to ignore the voices of leading
Bulgarian professors and researchers in the
field of economics. Many of them have called
for optimization of administrative structures
and cutting down of public expenses. While
these ideas can improve the country’s macro-
economic outlook, they have been ignored.
Finally, the EU has a decisive role in in-
tegrating Bulgaria as an equal member of the
European family. Sadly, there are numerous
European projects that have been completed,
but have not been refinanced by EU authori-
ties. This phenomenon hinders development
in multiple sectors, interrupts Bulgaria’s pro-
gress towards a better future, and jeopardizes
EU credibility before Bulgarian business.
Page 28| New Europe
New Year Special | January 2011
Sudan, Trade and what Lies Beneath
by David Alton
Lord David Alton is Secretary of the UK All Party Group on Sudan
ONDON - These are momentous
L times for Africa's largest nation. At
the beginning of 2011, on January
9th a referendum will determine if Sudan
will become two countries. For the people
of South Sudan, many of whom are Chri-
stian, it is an historic chance to break free
of the northerners who have brutally op-
pressed them for centuries.
Ten years ago, during Sudan's civil
war, when 2 million people died in the
south, I saw first-hand the scale of deva-
station and misery caused by systematic
aerial bombardment. In 2004 I visited and
published a report on the genocidal cam-
paign which was then unleashed on Dar-
fur. Earlier this year I was back in
southern Sudan - where more people have
died in the past twelve months than even
in Darfur.
William Hague was consistently vocal
in supporting Bashir's indictment on ge-
nocide charges by the International Cri-
minal Court. The Foreign Secretary - as
befits the biographer of William Wilber-
force - has called for a foreign policy with
a conscience. But there is always a danger
that, in trying to balance the UK's com-
mercial interests in a time of recession,
that not all of his team are singing from
that same hymn sheet.
In October, with US trade sanctions
against Sudan still in place, UK officials
welcomed a high level Sudanese trade de-
legation, and Foreign Office Minister
Henry Bellingham MP said on a visit to
the Sudanese capital, Khartoum, "We
want to see more UK banks taking a po-
sitive view toward Sudan," adding that it
would be "wrong" for Britain "not to en-
courage the trade."
POLITICS: FOCAL POINTS
British Ambassador to the United Nations (UN) Mark Lyall Grant (R) addresses a joint press conference with US Ambassador to the the UN Susan Rice (L) and
Uganda'a Ambassador to the UN Maurice Peter Kagimu Kiwanuka (C) in Khartoum, Sudan, 9 October 2010 |ANA/EPA/PHILIP DHIL
>
Quote
I do not take issue with the need to in-
crease UK trade: it is the timing that is
questionable. In the run up to the refe-
rendum, it is crucial that the Khartoum
regime is kept under pressure to deliver on
its promises to the international commu-
nity, and its obligations under the Com-
prehensive Peace Agreement.
So far, the opposite has happened, si-
gnaling the West's lack of seriousness.
Khartoum has repeatedly broken its word,
with no consequences.
UN resolutions on Sudan remain
unimplemented, and the regime has con-
tinued to bomb its own civilians in Darfur
with impunity. The international commu-
nity is so keen to get Sudan out of its "in
basket' that it turns a blind eye to increa-
sing human rights abuses, vote rigging,
and the decimation of any free media.
Now is the time to redouble the pressure
on Khartoum, rather than appeasing it to
secure a peace that will disintegrate within
months.
At the core of the UK government's
"new epoch" of relations with Sudan are
490,000 barrels of oil a day, driving an
economic boom that benefits the mainly
Muslim and Arab ethnic groups along the
Nile that have dominated Sudan for cen-
turies. In a highly centralised and totali-
tarian state, the regions remain shockingly
poor and undeveloped: a fifteen-year-old
girl in South Sudan is statistically more
likely to die in childbirth than she is to
complete primary school. Since a coup
brought him to power in 1989, Bashir, has
manipulated and armed Arab nomads to
dispose of those who disagree with his Is-
lamist ideology. Bashir, who sheltered
Osama bin Laden during the 1990's, is
still using ethnic proxies to wage wars
against the people of South Sudan and
more recently Darfur, causing the death
and displacement of millions.
In September, in Southern Sudan, I
repeatedly heard allegations that arms
were being provided to Joseph Kony's le-
thal Lord's Resistance Army - responsi-
ble throughout the region for hundreds of
thousands of deaths, abductions and
rapes.
If the forthcoming Southern referen-
dum is free and fair, it will produce a mas-
sive majority in favour of independence
from Khartoum. But at stake are huge oil
reserves, 80% of which lie beneath what
will be the new South Sudan. Many Sou-
therners are convinced Khartoum will not
surrender these revenues without a fight,
which is why thousands of them are alre-
ady fleeing to neighbouring countries.
Sudan-watchers believe Khartoum is
deliberately creating a situation in which
the South must declare unilateral inde-
pendence, thereby giving Khartoum a pre-
text to take possession of the oil fields. It
is doing so in several ways, including reo-
pening debate on aspects of the peace
agreement, wearing down all those invol-
ved in negotiations, and putting procedu-
ral obstacles in the way of a peaceful
referendum. In this way it is demanding
and getting concessions such as a higher
percentage of oil revenues.
None of this bodes well for a peaceful
referendum, or for a lasting and peaceful
divorce. The regime is already cracking
down on opposition parties, media and
civil society in what will be North Sudan.
Amnesty International recently documen-
ted the fate of those daring to speak out;
kidnapping, torture, disappearances and
closed newspapers and radio stations.
Bear in mind that Freedom House alre-
ady ranks Sudan as among the nine most
repressive nations in the world.
Bashir's regime is keen to develop clo-
ser economic ties with Britain, and it
wants the UK's help in getting its $30 bil-
lion debt cancelled.
Now is exactly the moment when we
must use our leverage to hold Khartoum
to its commitments. The brave and resi-
lient people of Southern Sudan deserve
nothing less from us.
 New Europe | Page 29
CONTENTS: ECONOMY & FINANCE New Year Special| January 2011

THE REAL ECONOMY

Joseph Stiglitz
Dominique Yu Yongding Daniel Gros Nirupama Rao N Chandrasekaran Malcolm
Strauss-Kahn What Lies Harbour
Ahead in 2011? China Going Dream House The Emerging- Delivering India’s Driving the
New Policy Forward No More? Market Growth demographic Single Market
Paradigms for a Engine dividend ahead in 2011
New World

30 31 32 33 34 35 36

THE REAL ECONOMY

Mercedes Bresso Staffan Nilsson Cillian Donnelly Foteini Kalantzi

Regional Europe Needs 2010: falling The Euro-

authorities: Civil Society economies and Mediterranean
caught in the rising nationalism Partnership in the
middle of the new financial era
economic crisis

37 38 39 40

FINANCE
Wolfgang Nouriel Sharon Dionysios (Dennis)
Schäuble Roubini Bowles Kefalakos

Conquering Fiscal Follies The problems of The real money war

Europe’s Debt marching in step is not over
Mountain devaluations

41 42 43 44
Page 30 | New Europe
New Year Special | January 2011
New Policy Paradigms for a New World
by Dominique Strauss-Kahn
Dominique Strauss-Kahn is Managing Director of the International Monetary Fund.
ASHINGTON, DC – Over
W the last quarter-century, the
global economy enjoyed a re-
markable stretch of stable growth and low
inflation. The so-called “Great Modera-
tion” lulled many policymakers into a false
sense of security about their ability to ma-
nage the economy and deal with financial
crises. But, as the Great Moderation me-
tastasized into the Great Recession, fatal
flaws in conventional thinking came to
light. One of the most notable was just
how poorly we grasped the linkages bet-
ween the financial system and the broader
economy – as well as the linkages between
countries.
Today, as policymakers seek new para-
digms for managing the economy in 2011
and beyond, a better understanding of
these linkages will be essential to promo-
ting economic growth and reducing the
risk of crises. Equally important is the re-
alization that by working together, we can
build a more successful and more stable
global economy, for the benefit of all co-
untries.
Let me spell out what this means for
three policy objectives: building a stronger
and safer financial sector, achieving more
balanced and more stable growth, and ma-
naging large and volatile capital flows.
A stronger and safer financial system is
the bedrock of a successful economy. This
requires strong regulation, with a sensible
rulebook for financial markets and institu-
tions. And, to ensure that everyone plays
by the rules, financial institutions must be
supervised intensively.
Now, even with the best rules and su-
pervision, crises will still occur – which is
why we need effective resolution mecha-
nisms to deal with institutions that get into
THE REAL ECONOMY
Members of the G24 meet at the IMF headquarters in Washington, US, 22 April 2010 |ANA/EPA/ASTRID RIECKEN
> Quote
trouble. And, finally, given powerful inte-
ractions within the financial sector and
across the broader economy, we need an
overarching framework to manage risks in
the financial system as a whole.
Much has already been done to ad-
vance regulatory reform, notably the recent
agreement to strengthen bank capital
(Basel III). Yet we are far from having the
supervision needed for proper implemen-
tation of the rules. Effective resolution me-
chanisms and systemic frameworks remain
even more elusive.
Moving to the broader economy, we
have learned that growth must be balanced
in order to be healthy. At the national level,
this requires tools to prevent excesses in
one sector from bringing down the entire
economy. At the global level, it requires a
better distribution of growth across coun-
tries, in order to prevent destabilizing im-
balances.
What are the implications for macroe-
conomic policy?
Copyright: Project Syndicate, 2010. www.project-syndicate.org
Monetary policy needs to look beyond
its core focus on low and stable inflation
and pay much greater attention to finan-
cial stability. The debate now is how,
exactly, to factor this imperative into mo-
netary policy, and how to coordinate the
work of monetary and regulatory authori-
ties.
For fiscal policy, the crisis showed the
value of maintaining low public debt and
deficits during good times: countries with
healthier public finances have more space
to cushion the economic impact of crises.
But the Great Recession has caused public
debt and deficits in many advanced econo-
mies to soar.
How quickly fiscal retrenchment sh-
ould be launched – and the right balance
between higher taxes and lower spending –
will vary by country, reflecting factors like
the strength of the economic recovery, the
market’s appetite for debt, and initial spen-
ding and revenue ratios. But the common
objective for fiscal policy must be to sup-
port durable medium-term growth and job
creation.
The distribution of income is another
important issue.
In the years leading up to the crisis,
inequality rose in many countries, with
worrisome consequences for social cohe-
sion. Rising inequality may also have in-
creased vulnerability to crisis: with fewer
people able to dip into savings during bad
times, the impact on growth is even larger.
Turning to the international dimen-
sion, understanding better how policies
adopted in one country spill over onto
other economies is key.
This approach lies at the heart of the
G-20’s efforts to achieve strong, stable, and
balanced global growth. The International
Monetary Fund is also stepping up its
work in this area, through “spillover re-
ports” on China, the euro zone, Japan, the
United Kingdom, and the United States.
Gaining a better appreciation of the fi-
nancial linkages between countries is also
important. During the crisis, we saw how
quickly capital fled from countries previ-
ously considered safe bets. Today, many of
these countries are reeling from a veritable
tsunami of returning money.
Policymakers in many emerging-mar-
ket countries worry that surging capital in-
flows will drive up the value of the local
currency, destabilize financial markets, and
fuel economic overheating.
Their reactions range from buying up
the foreign money to prevent currency ap-
preciation to adopting capital controls,
and, in extreme cases, to keeping the
money out altogether. The situation has
become quite tense, with talk of “currency
wars” and a real risk of financial protectio-
nism. Clearly, we need to get a better
handle on what is driving these capital in-
flows. We also need to identify the best po-
licies for dealing with them – keeping in
mind the impact of these policies on the
global economy as a whole. And we should
explore whether a system of global rules
aimed at reducing the volatility of capital
flows would be useful.
Global financial insurance is an impor-
tant related issue. Just as a family backstops
its savings with insurance, countries should
be able to tap into a global financial safety
net. Much has already been achieved since
the crisis, through more resources for the
IMF and new financing instruments. But
more is needed, and the Fund is exploring
cooperation with regional financing mech-
anisms, as well as new ways to use its in-
struments in a systemic crisis.
Let me tie all of this together.
One principal policy failure in the run-
up to the crisis was a lack of imagination:
we failed to appreciate just how intricate
the global economic and financial web had
become. Let our next failing not be the re-
sult of a lack of cooperation. We must
reach across old dividing lines – both wi-
thin economies and between them – and
work together to build a stronger, more re-
silient global economy.

What Lies Ahead in 2011?
by Joseph Stiglitz
Joseph E. Stiglitz is University Professor at Columbia University and a Nobel laureate in Economics. His latest book, Freefall:
Free Markets and the Sinking of the Global Economy, is now available in French, German, Japanese, and Spanish.
EW YORK – The global eco-
N nomy ends 2010 more divided
than it was at the beginning of
the year. On one side, emerging-market
countries like India, China, and the Sou-
theast Asian economies, are experiencing
robust growth. On the other side, Europe
and the United States face stagnation –
indeed, a Japanese-style malaise – and
stubbornly high unemployment. The pro-
blem in the advanced countries is not a
jobless recovery, but an anemic recovery –
or worse, the possibility of a double-dip
recession.
This two-track world poses some unu-
sual risks. While Asia’s economic output
is too small to pull up growth in the rest
of the world, it may be enough to push up
commodity prices.
Meanwhile, US efforts to stimulate its
economy through the Federal Reserve’s
policy of “quantitative easing” may back-
fire. After all, in globalized financial mar-
kets, money looks for the best prospects
around the world, and these prospects are
in Asia, not the US.
So the money won’t go where it’s nee-
ded, and much of it will wind up where
it’s not wanted – causing further increa-
ses in asset and commodity prices, espe-
cially in emerging markets.
Given the high levels of excess capa-
city and unemployment in Europe and
America, quantitative easing is unlikely to
trigger a bout of inflation. It could, howe-
ver, increase anxieties about future infla-
tion, leading to higher long-term interest
rates – precisely the opposite of the Fed’s
goal.
This is not the only, or even the most
important, downside risk facing the global
economy. The gravest threat comes from
the wave of austerity sweeping the world,
as governments, particularly in Europe,
THE REAL ECONOMY
A visitor stands on the bund with the Pudong Financial District in the background in Shanghai, China
on 05 December 2010. China and India are both dynamic, and proved their resilience in their response to
the Great Depression |ANA/EPA/QILAI SHEN
>
Quote
confront the large deficits brought on by
the Great Recession, and as anxieties
about some countries’ ability to meet their
debt payments contributes to financial-
market instability.
The outcome of premature fiscal con-
solidation is all but foretold: growth will
slow, tax revenues will diminish, and the
reduction in deficits will be disappointing.
And, in our globally integrated world, the
slowdown in Europe will exacerbate the
slowdown in the US, and vice versa.
With the US able to borrow at record-
low interest rates, and with the promise of
high returns on public investments after
a decade of neglect, it is clear what it sh-
ould do. A large-scale public-investment
program would stimulate employment in
the short term, and growth in the long
term, leading in the end to a lower natio-
nal debt. But financial markets demon-
strated their shortsightedness in the years
preceding the crisis, and are doing so once
again, by applying pressure for spending
Copyright: Project Syndicate, 2010. www.project-syndicate.org
cuts, even if that implies reducing badly
needed public investments.
Moreover, political gridlock will en-
sure that little is done about the other fe-
stering problems confronting the
American economy: mortgage foreclosu-
res are likely to continue unabated (legal
complications aside); small and medium-
sized enterprises are likely to continue to
be starved of funds; and the small and
medium-sized banks that traditionally
provide them with credit are likely to con-
tinue to struggle to survive.
In Europe, meanwhile, matters are un-
likely to be any better. Europe has finally
managed to come to the rescue of Greece
and Ireland.
In the run up to the crisis, both were
governed by right-wing governments
marked by crony capitalism or worse, de-
monstrating once again that free-market
economics didn’t work in Europe any bet-
ter than it did in the US.
In Greece, as in the US, a new go-
New Europe | Page 31
New Year Special| January 2011
vernment was left to clean up the mess.
The Irish government that encouraged
reckless bank lending and the creation of
a property bubble was, perhaps not sur-
prisingly, no more adept in managing the
economy after the crisis that it was before.
Politics aside, property bubbles leave
in their wake a legacy of debt and excess
capacity in real estate that is not easily
rectified – especially when politically con-
nected banks resist restructuring mortga-
ges.
To me, attempting to discern the eco-
nomic prospects for 2011 is not a parti-
cularly interesting question: the answer is
bleak, with little upside potential and a lot
of downside risk. More importantly, how
long will it take Europe and America to
recover, and can Asia’s seemingly export-
dependent economies continue to grow if
their historical markets languish?
My best bet is that these countries will
maintain rapid growth as they shift their
economic focus to their vast and untap-
ped domestic markets.
This will require considerable restruc-
turing of their economies, but China and
India are both dynamic, and proved their
resilience in their response to the Great
Recession.
I am not so bullish on Europe and
America. In both cases, the underlying
problem is insufficient aggregate demand.
The ultimate irony is that there are si-
multaneously excess capacity and vast
unmet needs – and policies that could re-
store growth by using the former to ad-
dress the latter.
Both the US and Europe, for instance,
must retrofit their economies to address
the challenges of global warming. There
are feasible policies that would work wi-
thin long-term budget constraints. The
problem is politics: in the US, the Repu-
blican Party would rather see President
Barack Obama fail than the economy suc-
ceed. In Europe, 27 countries with diffe-
rent interests and perspectives are pulling
in different directions, without enough
solidarity to compensate. The bailout pac-
kages are, in this light, impressive achie-
vements.
In both Europe and America, the free-
market ideology that allowed asset bub-
bles to grow unfettered – markets always
know best, so government must not in-
tervene – now ties policymakers’ hands in
designing effective responses to the crisis.
One might have thought that the crisis
itself would undermine confidence in that
ideology. Instead, it has resurfaced to drag
governments and economies down the
sinkhole of austerity.
If politics is the problem in Europe
and America, only political changes are li-
kely to restore them to growth.
Or else they can wait until the overh-
ang of excess capacity diminishes, capital
goods become obsolete, and the econo-
my’s internal restorative forces work their
gradual magic. Either way, victory is not
around the corner.
Page 32 | New Europe
New Year Special | January 2011
China Going Forward
by Yu Yongding
Yu Yongding, currently President of China Society of World Economics, is a former member of the monetary policy committee of the
Peoples' Bank of China, and a former Director of the Chinese Academy of Sciences Institute of World Economics and Politics.
EIJING – China’s per capita in-
B come, at $3,800, has now surpassed
the threshold for a middle-income
country. But, even as economists and stra-
tegists busily extrapolate China’s future
growth path to predict when it will catch
up to the United States, the mood inside
China became somber and subdued in
2010. Indeed, Premier Wen Jiabao sees
China’s growth as “unstable, unbalanced,
uncoordinated, and ultimately unsustaina-
ble.”
Economic growth, of course, has never
been linear in any country. Throughout hi-
story, there are countless examples of
middle-income countries becoming stuck
in that category for decades and/or even-
tually falling back to low-income status.
The Nobel laureate economist Michael
Spence has pointed out that after WWII,
only a handful of countries were able to
grow to a fully-industrialized level of de-
velopment.
China’s progress over the past three de-
cades is a successful variation on the East
Asian growth model that stems from the
initial conditions bequeathed by a planned
socialist economy. That growth model has
now almost exhausted its potential. So
China has reached a crucial juncture: wi-
thout painful structural adjustment, its
economic-growth momentum can sud-
denly be lost.
China’s rapid growth has been achie-
ved at extremely high cost. Only future ge-
nerations will know the true price. The
country’s investment rate now stands at
more than 50% – a clear reflection of Ch-
ina’s low capital efficiency. There are two
worrying aspects of this high rate. First,
local governments influence a large pro-
portion of investment decisions. Second,
investment in real-estate development ac-
counts for nearly one-quarter of the total.
THE REAL ECONOMY
A worker preparing cotton for spinning at Shanghai Textile mills in the suburbs of Shanghai, China,
10 November 2010 |ANA/EPA/STRINGER
>
Quote
Some local governments are literally
digging holes and then filling them in
order to create GDP. As a result, there are
simply too many luxurious condominiums,
magnificent government office buildings,
and soaring skyscrapers. Hotels in China’s
provincial cities can make five-star hotels
in Western capitals looked shabby.
China has become one of the most pol-
luted countries in the world. Dust and
smog choke its cities. All of the country’s
major rivers are contaminated. Though
progress has been made, deforestation and
desertification are still serious. Drought,
floods, and landslides have become com-
monplace. Relentless extraction is quickly
depleting China’s resource deposits.
With China’s trade-to-GDP ratio and
exports-to-GDP ratio already exceeding
60% and 30%, respectively, the economy
cannot continue to depend on external de-
mand to sustain growth. Unfortunately,
with a large export sector that employs
scores of millions of workers, this depen-
dence has become structural, which implies
Copyright: Project Syndicate, 2010. www.project-syndicate.org
that to reduce China’s trade dependency
and trade surplus is much more than a
matter of adjusting macroeconomic policy.
After decades of rapid expansion,
China has become the workshop of the
global economy. The problem is that it is
no more than a workshop: lack of innova-
tion and creation form the economy’s Ach-
illes’ heel. For example, in volume terms,
China now is the largest car producer in
the world, churning out 17 million this
year. But the share of models developed by
Chinese carmakers is negligible.
In an era of rapid technological pro-
gress, creativity, and innovation, the global
economic landscape can change rapidly.
Without a strong capacity for innovation
and creativity, even a giant has feet of clay.
And when a giant falls, many are hurt.
Indeed, while China’s living standards
have risen dramatically over the past 30
years, the gap between rich and poor has
widened sharply. Income distribution has
skewed in favor of the rich for too long,
and the government has failed to provide
decent public goods. With the contrast
between the opulent lifestyle of the rich
and the slow improvement of living con-
ditions for the poor fomenting social ten-
sion, a serious backlash is in the making.
If China fails to tackle its structural
problems in a timely fashion, growth is un-
likely to be sustainable. Any structural ad-
justment is painful. But the longer the
delay, the more painful it will be. China’s
strong fiscal position today gives it a win-
dow of opportunity. But that window will
close fast, because beneficiaries of specific
reform policies have morphed into vested
interests, which are fighting hard to pro-
tect what they have.
What the Chinese public resents most
is the collusion between government offi-
cials and businesspeople, described by the
respected Chinese economist Wu Jianglian
as “capitalism of the powerful and rich.”
Breaking this unholy alliance will be the
big test for China’s leadership in 2011and
beyond. Under China’s current institutio-
nal arrangements, meritocracy is a prere-
quisite for good governance. But
meritocracy has been eroded by a political
culture of sycophancy and cynicism. So
once again, the dialectics of economic de-
velopment has brought political reform
back to the fore.
Abroad, China’s rise has caused admi-
ration, envy, suspicion, and even outright
hostility in some corners. No matter how
often Chinese leaders repudiate any hege-
monic ambition, wariness about China’s
true intentions will remain. That is under-
standable: the rise of new powers has al-
ways disrupted the established
international order. When this new power
is a nation of 1.3 billion people living
under an alien political system and ideo-
logy, its rise is bound to cause even more
uneasiness.

Dream House no More?
by Daniel Gros
Daniel Gros is Director of the Center for European Policy Studies.
RUSSELS – The financial crisis that
B began in 2007 had its roots in exces-
ses in the housing market that re-
mained unresolved in 2010 – and that will
continue to roil economies in 2011 and
beyond. Everybody now knows about Ame-
rica’s dodgy “sub-prime” mortgages (the
term says it all). But it is all too easy to for-
get that the development of this market was
initially welcomed, because it enabled even
people who would not normally qualify for
a mortgage loan to aspire to homeowner-
ship. Sub-prime mortgages made the Ame-
rican dream come true.
Of course, billions of others around the
world share the same dream. But the way
housing finance is organized differs enor-
mously from country to country, and these
differences explain the recent global imba-
lances and financial crashes.
In developed economies, construction
can add only a relatively small amount each
year to the existing stock of housing. With
populations stagnating (or declining in
many parts of Europe and Japan), the exi-
sting stock of housing is exchanged among
different parts of the population, and typi-
cally bequeathed from old to young.
The situation is different in emerging
economies, where the quantity and quality
of the existing stock of housing is woefully
inadequate. Moreover, most of the existing
housing tends to be in rural areas, whereas
most of the jobs are in the cities. This is why
urbanization means a huge building boom
in emerging economies. China, as usual, is
the most extreme example, now accounting
for more than one-half of global cement
consumption. The dream of homeowner-
ship is thus very much alive – and is a po-
werful economic force – in the emerging
world. But mortgage markets remain un-
THE REAL ECONOMY
A house for sale in London, Britain, 29 October 2007 |ANA/EPA/ANDY RAIN
> Quote
derdeveloped in most emerging economies.
This means that young Chinese couples will
first have to save a large part of their income
as a down payment for their dream house
(typically an apartment in a high-rise). The
absence of “no money down” mortgages
might be more important than Confucian
ethics in explaining China’s high savings
rate. One sure way to reduce the savings rate
in China would be to develop an American-
style mortgage market there.
The Chinese and others should, howe-
ver, bear in mind that an increase in hou-
sing prices does not make a country richer.
Of course, every homeowner will feel richer
if his property’s price goes up. But if the
price of all housing goes up, the country as
a whole is no better off; after all, people
have to live somewhere, so, other things
being equal, cashing in on higher house pri-
ces would merely mean paying more for
one’s next home. Housing booms thus cre-
ate only an illusion of wealth, though it is
compelling enough to induce excessive con-
sumption, as occurred in the United States
over the last decade.
Copyright: Project Syndicate, 2010. www.project-syndicate.org
Conversely, a crash in house prices does
not destroy any real wealth (the houses still
stand). On the contrary, a crash makes the
dream of ownership more affordable, which
benefits first-time buyers – typically the
young and less well-off.
But, from an economic point of view,
the share of homeowners versus tenants is
not very important. If the rental market is
well developed (as in, say, Germany), most
families might elect not to own. But Ger-
mans still own indirectly the houses they
live in through their investments with life-
insurance companies and savings societies,
which own and manage a large proportion
of the country’s housing estates.
By contrast, from an economic point of
view, many American households really rent
their homes from the Chinese government.
They might be proud homeowners on
paper, but their mortgage was probably un-
derwritten by quasi-governmental institu-
tions like Fannie Mae and Freddie Mac,
which in turn rely heavily on capital from
China for their own refinancing.
The real danger arises when everyone is
New Europe | Page 33
New Year Special| January 2011
convinced that investing in real estate is the
best way to secure one’s own future because
house prices can only go up. This induces
lenders to provide not only NINJA (no in-
come, no job, no assets) mortgages, but also
generous loans to real-estate developers to
build ever larger mansions and housing
estates. As long as a boom lasts, everybody
benefits. But when the bubble bursts, the
NINJAs cannot service their debt and buil-
ders go into bankruptcy. Lenders find that
the collateral (half-finished or empty hou-
ses) is worth almost nothing, resulting in
huge losses in the banking system (as the
US found out in 2008). In extreme cases, as
in Ireland (one hopes not in Spain), the
need to save the banking system can ban-
krupt an entire country.
Housing booms can last a long time, ty-
pically more than a decade. The downside is
that housing busts last equally long, beca-
use houses are such a durable good. Once
too many houses have been built, the exi-
sting overhang depresses the market for a
very long time, and unemployed construc-
tion workers are usually unable to find jobs
elsewhere. The last decade saw the peak of
an unprecedented housing boom in most of
the rich world. The bust, with its banking
problems and unemployment, is likely to
last for most of the coming decade, depres-
sing growth in all those countries which lo-
oked so strong in 2008. By contrast, the
emerging economies have barely started
their own boom, which is underpinned by
the spillover of liquidity from the US. The
emerging world’s boom might well stretch
over the entire next decade, as hundreds of
millions of homes are built. The next bust
can be avoided only if emerging markets
manage the dream of homeownership bet-
ter than the US and Europe.
Page 34 | New Europe
New Year Special | January 2011
The Emerging-Market Growth Engine
by Nirupama Rao
Nirupama Rao is India’s Foreign Secretary.
EW DELHI – The key role of
N emerging and developing coun-
tries – including India, China, and
Brazil – in sustaining world economic gro-
wth was brought into sharp focus during
the recent global crisis, and has been well
documented. This trend is likely to conti-
nue in 2011 and beyond.
Indeed, the IMF expects that emerging
and developing economies will grow by 6%
in 2010 and 6.3% in 2011. Emerging-mar-
ket economies have not only cushioned the
global impact of the recent crisis, but have
also helped industrialized countries reverse
the recessionary trend of 2008-2009. But
recovery remains fragile in the developed
world, with unemployment remaining at
crisis levels.
But, while emerging economies are
proving to be drivers of global demand, the
right mix of government initiatives and
policies is still required to ensure that they
continue to provide the impetus for faster
world economic recovery in the short term
and be the engines of sustainable growth
in the medium and long term. There is also
a strong need for supporting long-term ca-
pital flows to emerging economies to sti-
mulate investment further, particularly in
their infrastructure sectors, thereby injec-
ting much-needed additional demand into
the global economy.
In this regard, another important deve-
lopment is the increasing number of emer-
ging-market middle-class consumers, their
growing purchasing power, and thus their
potential impact on global demand. Ac-
cording to one estimate, middle-class con-
sumers in a dozen emerging economies
today wield annual purchasing power to-
taling approximately $6.9 trillion.
Indeed, projections from McKinsey &
THE REAL ECONOMY
>
Quote
Company suggest that the purchasing
power of this rising middle class in emer-
ging markets may rise to $20 trillion over
the next decade – twice the current level of
consumption in the United States. The
four biggest emerging economies – Brazil,
Russia, India, and China (the BRICs) – are
large producers and consumers of goods
and services, and will also be important in
shaping the pace, direction, and sustaina-
bility of global economic growth.
Let me turn to India specifically. In the
five years preceding the 2008-2009 crisis,
the Indian economy grew at an average
rate of nearly 9% annually. During the cri-
sis, annual growth slowed, but only to
6.7%, reflecting the economy’s inherent re-
silience. The growth rate subsequently re-
covered to 7.4% in 2009-2010, and we
expect 9% growth by 2011-12.
The strength of the Indian economy is
underpinned by a high saving rate and ro-
bust investment. The government’s prompt
action to counter the crisis – fiscal stimu-
(The author is the Chief Executive Officer of Tata Consultancy Services, Asia’s largest IT company)
Indian Roupies |www.flickr.com eurok
lus, growth packages, and monetary easing
– proved effective. A sound financial and
banking system with limited exposure to
global markets, together with the impor-
tance of domestic consumption in sustai-
ning demand, has also helped. But what
distinguishes India from other emerging
economies, in particular China and the So-
utheast Asian countries, is that domestic
demand, rather than exports, is the pri-
mary driver of growth. A return to high
growth rates globally will require a broa-
der revival of demand. Needless to say, this
will occur only gradually, particularly in the
developed countries. Thus, India’s high
growth rates will have to remain depen-
dent on strong domestic demand. In order
to meet this challenge, we are focusing on
investments in infrastructure sectors such
as power, telecommunications, roads, ports,
and airports.
While the public sector will continue
to play an important role, given the mas-
sive investment required, substantial pri-
vate investment – including foreign inve-
stment – would be needed to address In-
dia’s huge “infrastructure deficit” and the
financing gap that accompanies it. A stra-
tegy of private-public partnership has been
adopted to address the infrastructure chal-
lenge. At the same time, we need to invest
in our human capital, supporting the de-
velopment and upgrading of the workfor-
ce’s skills and capacity for innovation.
At its summit in Seoul in November,
the G-20 firmly placed development at the
core of its agenda. Indian Prime Minister
Manmohan Singh, underlining the impor-
tance of infrastructure investment, made
the following proposal, which several lea-
ders endorsed: “Recycling surplus savings
into investment in developing countries
will not only address the immediate de-
mand imbalance, it will also help to ad-
dress developmental imbalances. In other
words, we should leverage imbalances of
one kind to redress imbalances of the other
kind.”
As we head into the second decade of
the century, innovative ideas like using glo-
bal savings or surpluses to finance infra-
structure in emerging and developing
countries should be pursued seriously.
Doing so would not only sustain the gro-
wth momentum of these economies, but
would contribute to global recovery by ge-
nerating much-needed additional demand
in the developed countries.
While the emerging economies’ global
role will inevitably grow in the coming
years, this shift will need to be anchored in
a cooperative partnership with the develo-
ped world. As for India, our resilient de-
mocratic values, ability to manage diversity,
and strong economic fundamentals under-
pin our country’s current global posture.

Delivering India’s Demographic Dividend
by Natarajan Chandrasekaran
Natarajan Chandrasekaran is the Chief Executive Officer of Tata Consultancy Services, Asia’s largest IT company
EW DELHI – By the year 2020,
N 136 million Indian youngsters
will join the global workforce.
Compared to this enormous number
which accounts 17% of total global work-
force, China will add only 23 million pe-
ople and the USA will increase its
working age population by 11 million du-
ring this period. In contrast, there will be
a decrease in the number of people bet-
ween working ages of 18-60 in Europe
and Japan by 21 million and eight mil-
lion respectively.
Between 2000 and 2020, India’s total
population (currently a little over 1.2 bil-
lion) is projected to grow by as much as
the total current population of the US.
This “Demographic Dividend” or the
large increase in India’s working popula-
tion is forcing changes in the world eco-
nomic order.
It is changing the perception of the
country and redefining India’s role in the
global economic order. Not only is it
emerging as one of the fastest growing
consumer markets in the world, but also
a critical pool of supply for some of the
best scientific and technological talent on
a scale no other country can match in the
long-term.
The United Nations estimates that
India will account for almost 26% of the
increase in global working-age popula-
tion over the next 10 years. If the country
is able to increase its focus and inve-
stment in the education sector, over the
next decade India could emerge as the
global leader is producing high-school
THE REAL ECONOMY
Tourists walks outside the Taj Mahal Palace hotel in Mumbai India, 28 October, 2010
|ANA/EPA/DIVYAKANT SOLANKI
> Quote
and university graduates.
The demographic dividend presents
enormous challenges and opportunities
for India. As a nation, we need to further
step up our growth rate which will help
lift millions more out of poverty. In the
past two decades, the country has been
able to increase its historical rate of 3.0-
3.5% GDP growth per annum to the cur-
rent 8.0-9.5% range through a
combination of economic reforms, globa-
lization and demographics. But it has the
potential for more: to increase and su-
stain its economic growth rate at double
digits for the next decade and more. The
opportunity to do so is clear and present,
if India as a nation can harness the po-
tential of its young people.
It is critical that this potential is un-
locked because a large population alone
is not a sufficient condition to spur gro-
wth. Growth can only accelerate if the
country can ensure that its young citizens
are made productive professionals in the
global economy.
Supportive government policies are
helping put building blocks in place. En-
rollment rates at primary schools have
risen sharply to 90% and 113% on a net
and gross basis respectively.
The key driver of this trend has been
social sector programs like Universal
Education and Free Midday Meal sche-
mes, where free lunches are provided to
students to incentivize their parents to
send them to school. As a result, the
number of children in the primary age
group out of school dropped to less than
New Europe | Page 35
New Year Special| January 2011
six million in 2007 from around 18 mil-
lion in 2000, estimates the World Bank.
On the other end of the spectrum, more
students are now completing their edu-
cation. Three-fourths of all students now
complete their education as opposed to
just over half in 2004.
If we assume this supportive policy
will continue and we are able to create
more education infrastructure and better
the current student-teacher ratios, India
could well emerge as the global leader in
producing educated talent by 2020. This
will benefit not only India but the entire
world.
The numbers are staggering. Morgan
Stanley estimates that from around 3.7
million graduates in 2009, the number
will almost double to 7.2 million b 2020,
with 25% coming from science and engi-
neering. This would imply an increase in
India’s university educated workforce size
from around 50 million in 2009 to 114
million by 2020.
Information technology (IT) and
other IT-enabled industries provide
among the best opportunities to absorb
this scale of talent.
India’s IT and IT-enabled services in-
dustry revenues are predicted to reach $
225 billion by 2020 from the current $70
billion. The industry has managed to ge-
nerate significant employment in the
previous decade, growing six-fold from
just 430,000 employed in 2001 to directly
employing about 2.3 million people in
2010. In the past 12 months, the indu-
stry has added an additional 200,000
professionals.
Even more impactful is the indirect
employment it has created. Estimates
suggest that 8 million people are indi-
rectly employed by the sector, providing
ancillary services to the sector such as
real estate, catering and transportations
services. It is this multiplier-employment
effect and its future potential that above
all has policy makers following the suc-
cess of the IT-BPO industry with close
interest.
India’s software association NAS-
SCOM estimates that the IT-BPO sec-
tor will end up creating direct
employment of 10 million and indirect
employment of 20 million by 2020.
While this would represent an unprece-
dented five-fold growth in direct and 2.5
times growth in indirect employment, it
is clearly not the single magic pill that
will solve the larger issue of creating em-
ployment for the estimated 100 million
who will enter the labor force in the next
decade. Hence, while the IT-BPO indu-
stry is an essential part of the solution, it
cannot be the only solution.
India must also have a larger strategy
to generate jobs in other service-inten-
sive sectors like real estate, financial ser-
vices, telecommunications and retail to
ensure that its “demographic dividend”
gets cashed.
Page 36 | New Europe
New Year Special | January 2011
Driving the Single Market
Ahead in 2011
by Malcolm Harbour
Malcolm Harbour MEP is the Chair of the Internal Market and Consumer Protection Committee in the European Parliament
RUSSELS – 2011 will be an extre-
B mely important year for the Single
Market. The draft proposal for a
Single Market Act, now in the consulta-
tion phase, will be approved by Prime Mi-
nisters in March at the Annual Economic
Summit. 2011 will put the revitalisation
and reappraisal of the Single Market at
the centre stage, as the measures in the
Single Market Act starts to be implemen-
ted. A Single Market Forum in Poland,
during the Polish Presidency, will give all
participants the chance to take stock of
the new initiative.
The guiding idea behind the Single
Market Act is to generate political energy,
and obtain Member State commitment
behind a new drive to create a more holi-
stic and citizen-oriented Single Market.
Its concept was an action plan of 50 legis-
lative and non-legislative initiatives aimed
at creating a highly competitive social
market economy. A big challenge for the
Internal Market and Consumer Protec-
tion Committee in 2011 is to define the
priorities in the three chapters of the
Commission's proposal: (I) Single Market
for Enterprises, with an emphasis on
SMEs and including the European pa-
tent, Services, Public Private partnerships
and concessions, Public Procurement for
Innovation, and Standardisation; (II) A
Single Market for Europeans (consumers
and citizens) with proposals on Services
of General Interest, Social Services, figh-
ting discrimination against consumers, a
European savings account, mobility of ci-
tizens; and (III) Governance and Partner-
ship and the launch of a large annual
event, the 'Single Market Forum'.
THE REAL ECONOMY
A stock broker talks on the phone on the trading floor at the stock market in Frankfurt,
Germany, 06 December 2010 |ANA/EPA/ARNE DEDERT
> Quote
Alongside the big picture, work must
continue to update and improve existing
Single Market instruments, with small
enterprises demanding special attention.
In 2010, the IMCO Committee brokered
agreement on the recast late payments di-
rective.
This is a serious problem affecting
hundreds of thousands of businesses
across the EU, demonstrated by the fact
that European written off debt – monies
owed to a business but never paid – has
reached the record level of €300 billion.
The new legislation, which will be tran-
sposed by 2013, introduces, at the behest
of Parliament, a 60 day cap for payments
by public authorities. The Parliament was
also instrumental in securing a statutory
interest rate payable on outstanding debts,
of at least 8% above the European Cen-
tral Bank’s reference rate.
Agreement was reached at the end of
2010 on significant legislation aimed at
overcoming the current barriers that im-
pede the free circulation of construction
products across the EU. This included a
cross reference to the hazardous substan-
ces covered by the REACH regulation, to
ensure for workers using construction
products and of users of construction
works. Standardisation will also be a key
topic for 2011 with the Commission pro-
posing a new ‘Standardisation Act', which
will unite all the existing legal instruments
into one Regulation. We expect this in the
first half of 2011. In 2010, standardisation
was the subject of a well-received and ti-
mely initiative report by the Committee,
which put the subject high on the politi-
cal agenda. The report analysed the chal-
lenges and provided strategic
recommendations for the improvement of
the existing system. Standardisation is an
increasingly important component not
only of innovation and competitiveness
but as a way to improved protection and
welfare of consumers.
In 2011, we hope to make progress on
the Consumer Rights Directive, which
has been the subject of a record 1600
amendments in Committee and well as
vexed discussions on the level of harmo-
nisation needed. It is still too early to pre-
dict, but the legislation can potentially
bring added-value in new, future-proof
rules on distance and off-premises selling.
The action programme of the Single
Market act and seven blueprints for action
set out in the EU 2020 flagship proposals,
will undoubtedly determine the course of
debates and political action in the coming
year. IMCO will work to further e-com-
merce and e-procurement, to stimulate
the still modest cross-border activity in
these areas. At the same time, the IMCO
Committee will continue its work with
national parliaments, exploring new me-
thods such as the committee-to-
committee video-conference held with the
Assemblée nationale. It will give sharp
focus to its work on implementation, and
examine whether the Services Directive
and the Mutual Recognition of Professio-
nal Qualifications are delivering for citi-
zens. Neither will we neglect the external
aspect of a single market in a globalising
world, whether it be the safety of products
coming for China, convergence and regu-
latory cooperation with the United States
or co-innovation with India.
In 2011, we must build on the political
success of getting the completion of the
Single Market recognised as a key foun-
dation of Europe's Competitiveness.
The new raft of Flagship Projects all
depend on completing the Single Market
foundations. 2011 is a chance to make real
progress.

Regional Authorities: Caught in the
Middle of the Economic Crisis
by Mercedes Bresso
Mercedes Bresso is the President of the Committee of the Regions
RUSSELS – In these times of eco-
B nomic crisis, austerity has become
the latest buzzword. National go-
vernments seem to be focused on cutbacks
and savings above all else, and they expect
Europe to follow suit. In turn, austerity me-
asures have given rise to public unrest in
many countries – from Greece to the UK,
from Ireland to Spain – as citizens voice
their concerns about the potential threat to
jobs, pensions or services.
Caught in the middle of all this are local
and regional authorities. Not only are they
the first to suffer when budgets are cut by
central government, leaving them without
the means to guarantee front-line services
such as healthcare, but they are also the ones
that have to pick up the pieces from the
protests. And with the same financial au-
sterity now being imposed on EU budgets
as well, there is also uncertainty over their
long-term access to European funds for key
infrastructure and other projects.
Let's not underestimate the importance
of local and regional authorities (LRAs) wi-
thin the wider economic context: they ac-
count for one third of public expenditure
and two-thirds of public investment in Eu-
rope. Yet recent studies suggest that 80% of
LRAs have seen their revenues fall since the
start of the crisis, 67% have increased their
expenditure on social costs such as unem-
ployment benefit and 38% of them have
been forced to reduce their own staff num-
bers. The Europe 2020 strategy, with its
focus on building smart, sustainable and in-
clusive growth, which offers the best hope
for driving the European economy out of
recession. The Committee of the Regions,
through its Europe 2020 Monitoring Plat-
THE REAL ECONOMY
A general view of the banks at Canary Wharf in London, Britain |ANA/EPA/ANDY RAIN
> Quote
form, a network of regions that report back
to the CoR on the implementation and ef-
fectiveness of the strategy on the ground,
has been closely following the impact of the
strategy in its first year, focusing in particu-
lar on the involvement of LRAs in the cre-
ation of each country's national reform
programme (NRP), the 'roadmap' for gro-
wth in each country.
Given the central role that LRAs play in
stimulating the local and regional economy,
it would seem sensible to include them in
the development of NRPs at the national
level, but the CoR's first annual report on
the Europe 2020 strategy shows that this is
still far from being the case. Just 10 coun-
tries have thus far involved LRAs in the de-
velopment of their programmes, although
there are encouraging signs that more will
be involved in other countries before the
final deadline for submission of the plans
comes in April 2011.
The Committee of the Regions believes
that this process should be taken a step fur-
ther, with the development of Territorial
Pacts – effectively, contracts between natio-
nal, regional and local government in each
member state that would enable NRPs to
be drawn up and implemented much more
effectively, for example through setting re-
gional as well as national targets. These
pacts would in turn help the European in-
stitutions to prioritise their policy actions
aimed at achieving the Europe 2020 goals,
for example through cutting the red tape
surrounding access to and management of
EU funds, or through a better coordination
of the Europe 2020 strategy with cohesion
policy funding priorities.
For LRAs to cope with the current cri-
sis, and to ensure that they can meet their
commitments within the framework of Eu-
rope 2020, they also need to know that they
can rely on the funding necessary to com-
plete long-term projects.
This is why the debate over the future
of the EU budget is so important, and why
the Committee calls on national govern-
New Europe | Page 37
New Year Special| January 2011
ments to look beyond the current economic
difficulties to ensure a stable, long-term
budget that is sufficient to achieve the EU's
common goals.
Indeed, while Member States have cal-
led for a reduction in the EU budget, in line
with austerity measures at home, Europe
has a greater need than ever before to raise
its own resources, which is why I have sup-
ported calls for the creation of a Eurobond,
which would give Europe the funds it needs
without increasing debt levels by national
governments. But the European Commis-
sion's proposal to withhold funds from co-
untries with excessive public deficits is a
dangerous one, for it would be LRAs – the
main beneficiaries of structural funds – who
would suffer for the profligacy of their na-
tional governments. I do, however, welcome
the move towards a 10-year timeframe with
a mid-term review for the EU budget,
which is something that the Committee has
itself been pushing for in order to give more
long-term assurance and greater flexibility
than the current system.
For the CoR, cohesion policy can help
LRAs face the crisis head on, but for that
it needs to adapt. It must be better focused
on helping to create more sustainable jobs
and businesses. It needs to remain accessi-
ble to every region of Europe, and not just
those considered to be the least well off.
For if there is one thing that the current
crisis has shown us, it is that no-one is safe
from the vagaries of recession, and that,
now more than ever, Europe's local and re-
gional authorities need the support of the
EU and their national governments, wor-
king together towards the same goal of
serving their communities.
Page 38 | New Europe
New Year Special | January 2011
Industrial Policy Comes Out of the Cold
by Justin Yifu Lin
Justin Yifu Lin is Chief Economist and Senior Vice President for Development Economics at the World Bank.
ASHINGTON, DC – One of
W the best-kept economic secrets
was strongly reconfirmed in 2010:
most countries, intentionally or not, pursue
an industrial policy in one form or other. This
is true not only of China, Singapore, France,
and Brazil – countries usually associated with
such policies – but also for the United Kin-
gdom, Germany, Chile, and the United Sta-
tes, whose industrial policies are often less
explicit.
Given that industrial policy broadly refers
to any government decision, regulation, or law
that encourages ongoing activity or inve-
stment in an industry, this should come as no
surprise. After all, economic development and
sustained growth are the result of continual
industrial and technological change, a process
that requires collaboration between the pu-
blic and private sectors.
Historical evidence shows that in coun-
tries that successfully transformed from an
agrarian to a modern economy – including
those in Western Europe, North America,
and, more recently, in East Asia – govern-
ments coordinated key investments by private
firms that helped to launch new industries,
and often provided incentives to pioneering
firms.
Even before the recent global financial
crisis and subsequent recession, governments
around the world provided support to the pri-
vate sector through direct subsidies, tax cre-
dits, or loans from development banks in
order to bolster growth and support job cre-
ation. Policy discussions at many high-level
summits sought to strengthen other features
of industrial policy, including public financing
of airports, highways, ports, electricity grids,
telecommunications, and other infrastructure,
improvements in institutional effectiveness,
an emphasis on education and skills, and a
THE REAL ECONOMY
Visitors attend Bauma China 2010, the leading international trade fair in Asia for all sectors of the con-
struction-machinery industry at the New Shanghai Exposition Centre in Shanghai, China, 23 November
2010 |ANA/EPA/QILAI SHEN
> Quote
clearer legal framework.
The global crisis has led to a rethinking
of governments’ economic role. The challenge
for industrial policy is greater, because it sh-
ould assist the design of efficient, govern-
ment-sponsored programs in which the
public and private sectors coordinate their ef-
forts to develop new technologies and indu-
stries.
But history also tells us that while go-
vernments in almost all developing countries
have attempted to play that facilitating role at
some point, most have failed. The economic
history of the former Soviet Union, Latin
America, Africa, and Asia has been marked
by inefficient public investment and misgui-
ded government interventions that have re-
sulted in many “white elephants.”
These pervasive failures appear to be due
mostly to governments’ inability to align their
efforts with their country’s resource base and
level of development. Indeed, governments’
propensity to target overly ambitious indu-
stries that were misaligned with available re-
sources and skills helps to explain why their
attempts to “pick winners” often resulted in
“picking losers.” By contrast, governments in
many successful developing countries have
focused on strengthening industries that have
done well in countries with comparable fac-
tor endowments.
Thus, the lesson from economic history
and development is straightforward: govern-
ment support aimed at upgrading and diver-
sifying industry must be anchored in the
requisite endowments. That way, once con-
straints on new industries are removed, pri-
vate firms in those industries quickly become
competitive domestically and internationally.
The question becomes how to identify com-
petitive industries and how to formulate and
implement policies to facilitate their deve-
lopment.
In developed countries, most industries
are advanced, which suggests that upgrading
requires innovation. Support for basic rese-
arch, and patents to protect successful inno-
vation, may help. For developing countries,
Célestin Monga and I have recently develo-
ped an approach – called the growth identi-
fication and facilitation framework – that can
help developing-country governments incre-
ase the probability of success in supporting
new industries.
This framework suggests that policyma-
kers identify tradable industries that have per-
formed well in growing countries with similar
resources and skills, and with a per capita in-
come about double their own. If domestic
private firms in these sectors are already pre-
sent, policymakers should identify and re-
move constraints on those firms’
technological upgrading or on entry by other
firms. In industries where no domestic firms
are present, policymakers should aim to at-
tract foreign direct investment from the co-
untries being emulated or organize programs
for incubating new firms.
The government should also pay atten-
tion to the development by private enterpri-
ses of new and competitive products, and
support the scaling up of successful private-
sector innovations in new industries. In co-
untries with a poor business environment,
special economic zones or industrial parks can
facilitate firm entry, foreign direct investment,
and the formation of industrial clusters. Fi-
nally, the government might help pioneering
firms in the new industries by offering tax in-
centives for a limited period, co-financing in-
vestments, or providing access to land or
foreign exchange.
Our approach provides policymakers in
developing countries with a framework to
tackle the daunting coordination challenges
inherent in the creation of new, competitive
industries. It also has the potential to nurture
a business environment conducive to private-
sector growth, job creation, and poverty re-
duction.

2010: Falling Economies
and Rising Nationalism
by Cillian Donnelly
Cillian Donnely is an EU Affairs Editor at New Europe newspaper
RUSSELS - 2010 was a year domi-
B nated by the economy. The year saw
tough austerity measures introduced
throughout the EU in a government-wide
drive to stem the tide of complete fiscal col-
lapse. The second half of the year, in parti-
cular, was dominated by the threat of
contagion; an old word resurrected for mo-
dern times. Contagion, as everyone must
surely know by now, is the contamination of
one country's economy by another, like the
old domino theory; when one country col-
lapses, its neighbour will follow. Market
speculators focussed on the so-called PIGS
– Portugal, Italy, Greece and Spain – but it
was Ireland that ended the year bottom of
the class. Elsewhere, in the United Kin-
gdom a change of government brought with
it a new direction and Prime Minister
David Cameron's volunteer-heavy 'Big So-
ciety', a thinly-veiled attempt to disguise the
fact there is a major shortage of paying jobs,
in the same way that his assertion that "we
are all in it together" was simply a way of
deflecting from the fact that the bankers are
to be let off the damage they have caused
society, but at everyone else's expense. The
coalition government did face some civil di-
sobedience in the form of student prote-
sters, who took to the streets over a planned
raise in tuition fees, and who had the ta-
bloids fuming over a hairy encounter with
the Duchess of Cornwall, but overall, Ca-
meron and co got off lightly compared to
Greece, where rioting was a regular occur-
rence, as angry demonstrators patrolled the
streets of Athens and other cities in a show
of displeasure, and 24 news channels were
awash with footage of the head-cracking
activities of the Greek police.
As the European Union mobilised itself,
slowly and with habitual infighting, and
THE REAL ECONOMY
Consumers walk in the main shopping area in Athens, Greece, on 19 December 2010
|ANA/EPA/PANTELIS SAITAS
> Quote
came up with the permanent crisis mecha-
nism, its strategy was clear: save the single
currency at any cost.
New reports of contagion began to sub-
side in December, but some speculation
continues. Belgium, which managed to
complete its six-month presidency of the
EU without actually having a government,
is still the focus of unwanted attention; po-
litical instability, the naysayers have it, will
bring the country down, and the EU wat-
ches nervously. Time will tell, but the sub-
text of this, that the Union is tacitly
demanding a quicker resolution of situa-
tions like the Belgian one is something that
will not help its cause, as European citizens
resentful of outside interference start to
look inwards.
As well as the failing economy, the rise
of nationalism was also a dominant feature
of the year, as the far-right won electoral
gains in various member states across the
Union, leading to a renewed resentment of
the EU on the one hand and a kind of rear-
guard action from governments on the
other; in France and Germany for example,
both governments tried to stem the far-
right by a dubious kind of divide-and-
conquer, incorporating some of the
arguments of the extremists in an attempt
to win their votes in an underhand way ra-
ther than facing them head-on in a political
debate. The centre-right in those countries,
it seems, do not want to be seen as soft in
the face of rising economic and social pres-
sures, but the lack of political courage is
startling.
Although it has yet to see a significant
rise in the far right, Ireland, perhaps unsur-
prisingly, also saw the rise of nationalist sen-
timent in the latter half of 2010. As the
International Monetary Fund (IMF) impo-
sed crippling loans on the country, and the
government introduced the toughest bud-
New Europe | Page 39
New Year Special| January 2011
get in the history of the state, fears of a loss
of sovereignty were widely expressed in the
media and on the streets.
The once pro-European nation was tur-
ning its back on its former benefactor, as a
curious conservative-nationalist force began
to rise. Along with the far-left, long-term
opponents of the European Union, they will
be the most vocal during the general elec-
tion, expected in March, which will see an
expected and resounding defeat for the cur-
rent Fianna Fáil-Green Party coalition.
Oddly, on 16 December, the same day
the European Council was finalising its per-
manent crisis mechanism, Ireland suffered
another international defeat, as the Euro-
pean Court of Human Rights ruled that the
government had failed to correctly imple-
ment the constitutional right to abortion.
Ireland will now have to adjust its laws, so-
mething that will not be taken well by the
current government who have been cour-
ting the religious constituency of late in an
attempt to secure what they can of the elec-
torate. Arguing their position, the govern-
ment said that the current laws were based
on "profound moral values deeply embed-
ded in Irish society".
This is something of a dubious conten-
tion, but it does raise a question similar to
that which will is set to feature heavily in
the first few months of 2011 in relation to
Europe's dealings with African, Caribbean
and Pacific (ACP) states; namely how can
we define the particular values of a country,
and if those values are deemed to be some-
how against the prevailing trend of, say, the
EU, then does the EU the right to impose
change on a third country.? It wouldn't do it
in the case of a member state like Ireland,
but will it pressurise an African country?
2011 may hold the answer.
Page 40 | New Europe
New Year Special | January 2011
The Euro-Mediterranean Partnership in the New
Financial Era: Challenges and Trade Opportunities
by Foteini Kalantzi
Foteini Kalantzi is a research associate, specialising in economic aspects of the UfM, at Euro-Mediterranean Observatory
(EuroMedO), part of Hellenic Centre for European Studies
ONDON - The Euro-Mediterra-
L nean Partnership was created in
November 1995 and its goal was to
form a Mediterranean region, where
peace, security and prosperity would pre-
vail. The founding stone was the so-cal-
led Barcelona Declaration, after the
launch of Barcelona Process by Ministers
of Foreign Affairs from 15 European
member-states and 14 Mediterranean
partners. The main specific goal was the
creation of a political and security part-
nership, where a common area of peace
and stability would be established. Also,
the members of the Partnership were in-
terested to create an economic and finan-
cial partnership for shared prosperity,
through a free-trade area, economic coo-
peration and concerted action. Additio-
nally, they wished to be partners in social,
cultural and human affairs, by developing
human resources, promoting understan-
ding between cultures and exchanges bet-
ween civil societies.
The Euro-Mediterranean Partnership
was re-launched in 2008 with 43 members
this time under the name Union for the
Mediterranean (UfM). The French presi-
dent Nicholas Sarkozy suggested the re-
launching of the Partnership, which was
part of his presidential election campaign.
The enlarged partnership added more
scope to the free trade in the area. The in-
stitutional arrangements (creation of the
permanent Secretariat based in Barcelona
and the two rotating presidencies) attri-
buted more gravity to the Union. The
new ideas and the specific new projects
were received with a lot of enthusiasm
from the participating countries. The
main areas of UfM focus have been: the
THE REAL ECONOMY
Greek Prime Minister George Papandreou (L) talks with his Turkish counterpart Recep Tayyip Er-
dogan (R) during the 'Mediterranean Climate Change Initiative' held in Athens, Greece, on 22 Oc-
tober 2010 |ANA/EPA/SIMELA PANTZARTZI
>
Quote
environment (especially the cleanup of the
Mediterranean Sea), transportation, civil
protection, alternative energy sources
(Solar Mediterranean Plan), high-level
training and research (establishment of
the Euro-Mediterranean University) and
development of small- and medium-sized
enterprises (Mediterranean Business De-
velopment Initiative).
Despite the enthusiastic climate at the
creation of the UfM, there has been a lot
of pessimism with regards to the bilateral
relationships in the wider Mediterranean
area. The cancellation of the last two sum-
mits (mainly because of the Arab-Israeli
conflict) underlines the latter.
Moreover, the latest negative develop-
ments in the financial sector make the
prospects even more difficult. The sove-
reign debt crisis in south-European eco-
nomies has threatened the very monetary
stability in the Eurozone. Also, the posi-
tion of FEMIP Mediterranean countries
(FMCs) in the global financial arena has
changed. Although FEMIP countries
have reacted well to the crisis, they felt the
shock in exports, transfers of income, to-
urism and direct investment . The afore-
mentioned serious challenges that the
UfM members face could mean a tran-
sformation in the Euro-Mediterranean
relations. For example, the much-wanted
trade integration in the Euro-Mediterra-
nean area could be at stake. In addition to
that, the economic crisis has affected the
hope that UfM can receive financial sup-
port from the private sector and other fi-
nancial organisations; especially
considering the fact that the main donator
of the Secretariat is the European Union.
However, the need for new structural
policies in the framework of the global
crisis can be seen as a chance for growth;
as the European Investment Bank and
FEMISE study suggests: ‘the global con-
text of emergence from the crisis provides
an opportunity for the Mediterranean
partner countries to improve their compe-
titiveness but also poses a challenge, na-
mely that of developing new forms of
growth (7 to 8% per annum), in order to
drive both the modernisation of their eco-
nomies and the creation of some 60 mil-
lion new jobs’.
Furthermore, the new goals set by the
UfM are a sign of the willingness by its
members to strengthen the EuroMed
trade partnership.
At the November 2010 meeting bet-
ween EU Trade Commissioner Karel De
Gucht and Trade Ministers of the UfM in
Brussels, ministers endorsed measures to
facilitate the trade of Palestinian products
to Euro-Mediterranean markets and set
priorities for bringing the partnership clo-
ser to economic operators, such as a Trade
and Investment Facilitation mechanism to
provide centralised information on trade
and investment flows, regulations and
conditions in the Euro-Mediterranean re-
gion. They also set the goal of jointly
combating piracy and counterfeiting.
The financial crisis is undoubtedly a
challenge for the EuroMed partners; it
can be observed as an opportunity for in-
creasing the levels of trade links between
southern and eastern Mediterranean co-
untries and achieving full trade liberalisa-
tion in the wider area.

Conquering Europe’s Debt Mountain
by Wolfgang Schäuble
Wolfgang Schäuble is Germany’s Federal Minister of Finance.
ERLIN – The International Mo-
B
netary Fund estimates that the cri-
sis-induced net cost of
financial-sector support provided by G-20
countries in 2009 amounted to 1.7% of
GDP ($905 billion), while discretionary
fiscal stimulus amounted to 2% of GDP
in both 2009 and 2010.
All the eurozone countries, except Lu-
xembourg and Finland, reported fiscal de-
ficits in excess of 3% of GDP in 2009,
while Greece, Spain, and Ireland ran defi-
cits of more than 10%. Within a single
year, eurozone governments’ general debt
increased by almost 10 percentage points
(78.7% of GDP in 2009, compared with
69.3% in 2008).
As for Germany, the 2010 federal bud-
get features a record-high deficit of well
above €50 billion. Public-sector debt will
surpass €1.7 trillion, approaching 80% of
GDP. Interest payments, which consume
more than 10% of Germany’s federal bud-
get, will grow along with the mounting
debt burden – and even faster if interest
rates rise.
Yet the financial crisis and the ensuing
recession go only so far towards explai-
ning these high levels of indebtedness.
The truth is that many European and G-
20 countries have lived far beyond their
means – including Germany, despite its
reputation as a paragon of fiscal rectitude.
Even in good times, governments have
for too long been spending more than
they received.
Perhaps worse, some also spent more
than they could easily repay, given their
economies’ declining long-term growth
potential because of the aging of their po-
pulations. Such profligacy has led to levels
of debt that will become unsustainable if
we do not act.
FINANCE
German Chancellor Angela Merkel (L) and French President Nicolas Sarkozy (R) smile and wave
as they inspect a guard of honor as they arrive for the German-French Summit in Freiburg, Ger-
many, 10 December 2010 |ANA/EPA/ROLF HAID
>
Quote
This is why Germany decided in 2009
to enshrine strict fiscal rules in its consti-
tution. The Schuldenbremse, or “debt
brake,” requires the federal government to
run a structural deficit of no more than
0.35% of GDP by 2016, while Germany’s
Länder will be banned from running
structural deficits at all as of 2020. The
current federal government will certainly
abide by these rules, which implies redu-
cing the structural deficit to approxima-
tely €10 billion by 2016 – a reduction of
about €7 billion a year.
Welfare benefits account for more
than half of Germany’s federal spending
this year. So there is little choice but to cut
welfare spending, at least moderately. But
this sort of fiscal consolidation can be
achieved only if a majority perceives it as
being socially equitable. Recipients of so-
cial and corporate welfare alike, as well as
civil servants, must share the sacrifice.
Thus, German corporations will have
to contribute to fiscal consolidation thro-
ugh reductions in subsidies and additional
Copyright: Project Syndicate, 2010. www.project-syndicate.org
taxes on major energy companies, airlines,
and financial institutions. Similarly, civil
servants must forego promised pay incre-
ases, and the government is looking for
annual savings in the federal armed forces
of up to €3 billion through structural re-
forms.
Germany’s binding fiscal rules set a
positive example for other eurozone co-
untries. But all eurozone governments
need to demonstrate their own commi-
tment to fiscal consolidation in order to
restore the confidence of markets – and of
their own citizens.
Recent studies show that once a go-
vernment’s debt burden reaches a thresh-
old perceived to be unsustainable, more
debt will only stunt, not stimulate, econo-
mic growth.
Greece’s debt crisis was a clear war-
ning that European policymakers must
not allow public debt to pile up indefini-
tely. The EU was right to react decisively
to ensure the euro’s stability by providing
short-term assistance to Greece and esta-
New Europe | Page 41
New Year Special| January 2011
blishing the European Financial Stabili-
zation Mechanism. But, while the EFSF
is a necessary step towards restoring con-
fidence, the Greek crisis has revealed
structural weaknesses of the European
Monetary Union’s fiscal-policy framework
that cannot, and should not, be fixed by
routinely throwing other countries’ money
at the problem.
Indeed, I consider the EFSF to be a
stopgap measure while we remedy the
fundamental shortcomings of the Stabi-
lity and Growth Pact, whose fiscal rules
lack both substantive and formal bite.
This is why we need a more effective cri-
sis-prevention and crisis-resolution fra-
mework for the eurozone, one that
strengthens the Pact’s preventive and cor-
rective provisions. Sanctions for eurozone
countries that seriously infringe EMU
rules should take effect more quickly and
with less political discretion, and also sh-
ould be tougher.
Germany and France have proposed
stricter rules on borrowing and spending,
backed by tough, semi-automatic sanc-
tions for governments that do not comply.
Countries that repeatedly ignore recom-
mendations for reducing excessive deficits,
and those that manipulate official stati-
stics, should have their EU funds frozen
and their voting rights suspended.
Monetary union was intended to be
neither a panacea for eurozone members
nor a get-rich scheme for financial specu-
lators. Nor was it meant to be a system of
redistribution from richer to poorer coun-
tries via cheaper borrowing for govern-
ments by means of common Eurobonds or
outright fiscal transfers. It won’t succeed
if some countries persistently run deficits
and weaken their competitiveness at the
expense of the euro’s stability.
EMU was designed to encourage
structural reforms. Profligate members
were supposed to be forced by the Stabi-
lity and Growth Pact, as well as by their
peers, to live within their means and thus
strengthen their competiveness. Instead,
Germany’s former social-democratic go-
vernment weakened the pact when doing
so was politically convenient, while less
competitive eurozone members allowed
wages to rise and the public sector to be-
come bloated, and then looked away as
easy credit fueled both debt and asset
bubbles.
We cannot foster sustainable growth
or preempt a sovereign-debt crisis in Eu-
rope (or anywhere else) by piling-up more
debt. European countries need to reduce
their deficits in a growth-friendly fashion,
but reduce them they must.
It can be done: Germany is reducing
its debt burden to sustainable levels while
strengthening its long-term growth pro-
spects. Its course of pro-growth deficit re-
duction, together with its suggestions for
strengthening Europe’s fiscal framework,
could serve as a blueprint for European
economic governance.
Page 42 | New Europe
New Year Special | January 2011
FINANCE

Fiscal Follies
by Nouriel Roubini
Nouriel Roubini is Chairman of Roubini Global Economics (www.roubini.com), Professor of Economics at New York University’s
Stern School of Business, and co-author of Crisis Economics.

Pedestrians reflected in the doors of the Royal Bank of Scotland in Bishops Gate, London|ANA/EPA/ANDY RAIN

EW YORK – The fiscal stimulus netary policy is too tight; and Germany is

N that most advanced economies and

emerging markets implemented
front-loading fiscal austerity. Thus, the pe-
riphery is destined to a destructive defla-

>
during the 2008-2009 global recession – tionary and recessionary adjustment that
together with monetary easing and the
backstopping of the financial system – pre-
Quote will exacerbate the risks of recession, in-
solvency, eventual defaults and, possibly,
vented the Great Recession from turning exit from the euro.
into another Great Depression in 2010. At In the United Kingdom, the new go-
a time when every component of private vernment gave several reasons for front-lo-
demand was collapsing, the boost from hi- ading fiscal consolidation. The bond
gher government spending and lower taxes vigilantes might have woken up if early au-
stopped the global economy’s free-fall and sterity was not implemented; the deficit
created the basis for recovery. was very large and the public sector bloa-
Unfortunately, stimulus spending and ted; and it is always politically easier to im-
the related bailout of the financial system, plement tough measures early in an
together with the recession’s effect on re- administration, when popular support is
venues, contributed to fiscal deficits on the still high and the next election is far off.
the next decade as the economy recovers. tugal, Spain, and Italy front-load fiscal
order of 10% of GDP in most advanced Certainly, the UK was playing with fi-
That way, if the economy needed another consolidation or watch their borrowing
economies. According to the International scal fire and needed some commitment to
targeted fiscal stimulus in the short run, fi- costs go through the roof, risking them
Monetary Fund and others, these econo- earlier austerity. But phasing in austerity
nancial markets would not respond by dri- their market access and triggering a public-
mies’ ratio of public debt to GDP will sur- more gradually, and thus back-loading the
ving up borrowing costs. Unfortunately, debt crisis. Markets don’t care that front-
pass 110% by 2015, compared to 70% adjustment, would have posed less risk to
the fiscal policy currently adopted by vari- loaded fiscal consolidation is exacerbating
before the crisis. Aging populations in the economy’s anemic recovery while
ous advanced economies deviates sharply recession and thus making the goal of re-
most advanced economies imply additio- maintaining a credible commitment to fi-
from this path of credible medium-term ducing debt and deficits as a share of GDP
nal public debt in the long term, owing to scal consolidation. Instead, the government
consolidation combined with short-term near-impossible to achieve.
non-fully-funded pension schemes and ri- could well end up with no plan B in case
additional stimulus. To avoid a persistent and destructive
sing health-care costs. plan A – massively front-loaded austerity –
In the US, we have the worst of all pos- recession, the fiscal and structural reforms
Thus, in most advanced economies, leads to a double-dip recession.
sible worlds. On one hand, stimulus had imposed by the bond vigilantes should be
deficits need to be reduced to avoid a fi- In short, an optimal path of fiscal au-
become a dirty word – even within the accompanied by other euro-zone policies
scal train wreck down the line. But much sterity would, in most countries, imply a
Obama administration – well before the that restore growth and prevent vicious
research, including a recent study by the back-loaded but credible commitment to
Republicans’ mid-term election victory debt dynamics. The European Central
IMF, suggests that raising taxes and redu- medium-term consolidation, together
ruled out another round altogether. On the Bank should ease monetary policy in order
cing government spending has a negative with short-term additional stimulus
other hand, medium-term consolidation to weaken the value of the euro and boo-
short-term effect on aggregate demand, when necessary and allowed by market
will be all but impossible in America’s cur- tstrap the periphery’s growth. And Ger-
thereby reinforcing deflationary and re- conditions, thereby avoiding the prospect
rent atmosphere of hyper-partisanship, many should cut taxes temporarily – rather
cessionary trends – and undermining fi- of a deflationary and recessionary spiral.
with Republicans blocking any tax incre- than raising taxes, as planned – in order to
scal consolidation. Unfortunately, the main advanced econo-
ase and Democrats resisting reforms of en- increase disposable income and stimulate
In an ideal world, where policymakers mies are following a divergent path –
titlement spending. Nor is there any German demand for the periphery’s goods
could credibly commit to medium- to which, in some cases, will lead them in
pressure from bond markets to concentrate and services.
long-term fiscal adjustment, the optimal the opposite direction in 2011. As a re-
the minds of policymakers. Alas, neither of the two biggest players
and desirable path would be to commit sult, the risks of debt deflation and even-
In the periphery of the eurozone, the in the euro zone is pursuing policies consi-
today to a schedule of spending reductions tual disorderly sovereign and
problem is the opposite: bond vigilantes stent with restoring sustained growth in
and tax increases, phased in gradually over private-sector defaults are rising.
are demanding that Greece, Ireland, Por- the euro zone’s periphery. The ECB’s mo-
Copyright: Project Syndicate, 2010. www.project-syndicate.org

The Problems of Marching in Step
by Sharon Bowles
Sharon Bowles, MEP, is Chair of the Economic and Monetary Affairs Committee in the European Parliament
R U S S EL S -Right now you could
B say that legislators have never had
it so good: mention ‘crisis’ and eve-
rything seems to be justified. Yet politi-
cians complain - about banks in particular
- that they think nothing has changed and
it is business as usual.
In fact quite a lot has changed, and the
problem with everything changing at once
is that it is difficult to predict the interac-
tions, and all too easy to lose sight of some
of the fundamentals of existing legislation,
which has not all been proved wrong.
In Europe we have been following the
global G20 agenda which has largely
coincided in time with the scheduled re-
view of the legislation of the Financial
Services Action Plan. The crisis has crea-
ted risk aversion, one consequence of
which is that, at least in Europe, safety
now ranks above efficiency.
Part of the reason for the safety first
approach is that everyone is interested in
the crisis and this has driven the rhetoric
of politicians in particular, but also others.
There is no doubt some have seen it as an
opportunity to connect with citizens and
- in my opinion - have fallen into popu-
lism on some matters that are too serious
for that.
In times past the interconnection of
macroeconomic policy and financial regu-
lation was left to academic debate. Now
the connection is in the mainstream - at
least as far as the setting up of systemic
risk boards is concerned. But there are al-
ready examples around us that show this is
a matter for current consideration.
One of the first crisis responses was to
hit out at securitisation, the vehicle that
had spread the contagion of subprime
mortgages and, so it seems, dissipated the
FINANCE
European Council President Herman Van Rompuy (R), and European Commission President Jose Manuel Barroso give a news conference at the end of the first day at
the European head of states summit in Brussels, Belgium, 16 December 2010 |ANA/EPA/OLIVIER HOSLET
> Quote
interest of supervisors. Despite a few lone
voices indicating the dangers of dispro-
portionate measures, we are now in the si-
tuation of trying to find measures to
encourage and restore securitisation for
the benefit of the economy.
In similar vein rules in markets will
have a direct effect on the prudential side,
on capital in banks and other institutions
and also on sovereign debt, growth and
deficits. Likewise prudential rules on qua-
lity of capital as well as quantity will have
knock on effects.
Already underway is the consideration
of EMIR (European Market Infrastruc-
ture Regulation - which covers central
clearing for OTC derivatives) and the role
of central counterparties. Recently we saw
that LCH, a central counterparty, raised
its margin requirement on Irish sovereign
debt, and quite rightly too for they must
have margins that reflect risk. In some
ways this had the same effect as a rating
downgrade and the markets responded in
a pro-cyclical way. Previously we've had
Commission utterings condemning a
Greek sovereign downgrade as inconve-
nient – and my repost that I did not want
ratings that were ‘convenient’ be that for
investment banks or central banks – so is
a future target for political wrath the mar-
gining requirements of CCPs? I would say
it is important not to have political inter-
ference but ensure that margining models
are robust and encompass a range of vola-
tility prior to needing adjustment.
All margining – on CCPs and in bila-
teral collateralised trading – will probably
have this pro-cyclical behaviour, and will
need to be watched, but the effect in
CCPs may well be more systemic. This
should remind us that in regulation there
is never a win-win position, we can not
eliminate risk we can only aim for better
management, and that is why understan-
ding is paramount.
The crisis shows us how markets, so-
vereign debt and deficits are interlinked
and of course sovereign bonds are at the
heart of capital requirements.
New Europe | Page 43
New Year Special| January 2011
EUROPEAN
PARLIAMENT
There are some serious things to con-
sider with regard to maintaining their li-
quidity, not escalating their cost on
governments, and the special situation of
the Euro. We may be in the position that
regulation forces banks to purchase some-
body’s sovereign bonds, but other buyers
in the market can not be forced, and if
they are absent then liquidity suffers with
all that that implies.
On sovereign bonds I have been dra-
wing attention to the fact that when there
is a currency union such that printing
money is not an option, the assumption of
zero risk weighting for sovereign bonds is
incorrect.
Now, the European Council decision
on bail-in reinforces this view, effectively
putting beyond reasonable doubt that
there is in future credit risk in the debts
of Eurozone governments. Of course what
has been a problem, if corrected and har-
nessed as part of a discipline measure in
economic governance, can become useful.
All regulation is aimed at reducing risk,
but if we do it in such a risk averse way
that it is impossible – via bans – or unaf-
fordable – via cost – to take a different
view from the majority, then we can not
get the smoothing of cycles that is made
possible by those who are prepared to take
the opposite view from the herd. So we
are at a definitive moment these next few
months when the choices that are made
might make our risk-averse world more
rather than less pro-cyclical.
History reminds us how an army must
break its step to cross a bridge - otherwise
the bridge resonates and collapses. Is our
micro-prudential marching in step put-
ting at risk the macroeconomic bridge?
Page 44| New Europe
New Year Special | January 2011
The real money war
is not over devaluations
by Dionysios (Dennis) Kefalakos
Dennis Kefalakos is the Editor-in-Chief of New Europe newspaper
R U S S EL S -Come the spring of the
B
year 2013 and Eurozone would be a re-
born first rate world economic entity,
have the Franco-German plans for the euro so-
vereign debt rearrangement is successful. Until
that time the money war would be ranging,
with the English language print and digital
press having declared on many occasions the
end of the euro money. It is not about highly
competitive but officially demonized devalua-
tions as many believe, but the very existence of
the monies. The truth is that the euromoney
right from its appearance at the turn of the
Millennium has created a lot of problems to the
British pound and to a lesser degree it has un-
dermined the world dominate position of the
dollar. In any case the euro has changed the way
financial markets function. For one thing every
financial firm based in New York or London
could not any more take it for granted that its
dealings in the main European markets, being
it stocks or bonds, are to be always profitable.
Mainland Europeans are no longer willing to
let others take advantage of their economic gro-
wth, without paying an “entry fee”. There were
two incidents that make this pretty clear to eve-
rybody outside Europe. The first incident had
to do with the stock of the famous German car
manufacturer Porsche, which also owns around
thirty percent of the much larger car producer
Volkswagen. Some US “investors” thought to
earn some easy euro and tried to play with the
stock of those firms. At the end they paid a dear
price and their losses amounted to billions of
dollars. The other important incident is around
the sovereign bonds issued by Greece. Here
again a number of American and British fi-
nancial “players” tried to make billions out of
playing short those bonds. The outcome of this
operation is not yet clearly decided but it looks
like those “investors” are again to write large
losses instead of profits. Today the investor re-
lations www site of Porsche warns everybody
FINANCE
The euro sculpture in front of the European Central Bank (ECB) in Frankfurt Main, Germany
>
Quote
with the following announcement: “The Por-
sche Automobile Holding SE is responsible for
the stock of the operating subsidiary, Dr. Ing.
h.c. F. Porsche AG, and for the investments in
Volkswagen AG. With the new structure, Por-
sche ensures that the autonomy and indepen-
dence of the traditional Stuttgart-based
company remain fully protected. This is the
main purpose of separating holding and opera-
ting activities. At the same time, the holding
also represents a single company responsible for
the management of stock”.
So the terms of the new financial play in
the worldwide arena are now rewritten with the
euro is fighting for a prime position. What
New York and London fear most is that Euro-
zone’s economic expansion all over the world,
can be financed with bond and stocks issued in
euro, with the US and Britain being left entirely
outside from huge regional markets, like East
Europe and Russia, both in the financial and
the industrial facets.
For example the modernization of the Rus-
sian railways is a huge project in itself that can
be exclusively designed, engineered and finan-
ced from west European industrial and finan-
cial centers in Frankfort, Paris and Milano.
New York and London may be left out, just to
watch the successes of Eurozone’s economic
might. All those issues are now being fought
for, in the midst of the world gravest sovereign
debt financial crisis. New York and London
want this crisis to unfold solely on mainland
European soil. And this despite the fact that
the dollar’s and the pound sterling’s value is not
based on the solid ground of exports as in the
case of the euro but on the political help of Bei-
jing and the oil producers Kingdoms of the
Persian Gulf. On the other hand euromoney’s
position in the world markets is wan with the
sweat of German metal workers, Paris hoteliers
and Roman restaurateurs, despite the fact that
the European PIGS do not entirely share this
mainland European vision of the future.
In the everyday facet now, the euro has pre-
sently to prove that it can self finance the
PIGS’s problems, because there will be no help
from elsewhere. The IMF’s involvement in the
support mechanisms for Greece, Ireland and
probably tomorrow Portugal does not repre-
sents American or British money because it is
more than analogically financed by the Euro-
zone member countries contributions to IMF’s
capitalization. All along this exercise, Eurozone
authorities will be having to also make face to
the rest of the world antagonism. Even certain
Russian quarters are not at all happy to see the
euro coming out unscratched from this battle.
In any there will be for sure some scratches in
the face of the euro, because such fights are not
without victims. Average Irish and Greeks in-
come earners are already felling this cost deep
in their family budgets. The same is true for the
Duisburg and Lyon metal workers and the
Dutch, the Austrian and the Finish taxpayers.
It is actually a pan European effort to save the
euro money.
In reality there is no danger whatsoever for
a total collapse of the European single money.
On the other hand though Washington, Lon-
don and why not Beijing does not want to
watch the euro just losing some of its foreign
value, thus make the European exports of
goods and services more competitive. That is
why the English language press and certain
think tanks in Britain and Washington openly
speak of the extinction of the euro. It seems that
now some percentage losses in foreign value are
not at all within the targets of the other side.
The total victory is the sole purpose of the con-
frontation. At the point we have arrived in this
war, things are so advanced that everybody is
trying to cut a piece of the cake. For example
China did not hesitate to help Greece finan-
cially, in exchange of secure and low price foot
hole on Eurozone’s real soil. Beijing knows very
well that by helping Greece it helps the euro
gain in value vis-à-vis the dollar. And Beijing
goes along with its Greek plans despite the
huge Chinese investments in dollar denomina-
ted assets. Obviously at this level decisions are
not taken with short term criteria. Decision
makers think not only globally but have before
their eyes a long time horizon. The time of the
New York dealers who plaid in every market
with a few hours horizon has being a trait of
the past. Now all major financial houses have
remembered the existence of the Political Eco-
nomists and even the Swedish Academy’s
Nobel Prize award board in Economics forgot
the perfect market mathematicians and choo-
ses socially minded economic analysts, even if
their major is that they work as analysts in…
newspapers, American of course.
As in any war however none of the adver-
saries is to disappear. It will be so crippled th-
ough so as not to present a threat to the other.
That is why Germany and France have placed
all the reserves they have in the European Fi-
nancial Stability Mechanism (EFSM around
60 billion euro) and the European Financial
Stability Facility (EFSF around 440 billion
euro). And this is real money not counting the
practically unlimited quantities of it, that the
European Central Bank can produce by buying
Eurozone sovereign bonds from holders of
such assets. No doubt all arms are to be used in
the money war, but Europe has better chances
than the US and Britain because Germany,
France, Holland, Finland and Austria have ac-
cumulated real reserves through past trade sur-
pluses. On the other side of the fence US and
Britain have more political clout over the entire
planet than Eurozone. And the players are to
put in this battle, whatever they have in their
arsenal.
 New Europe | Page 45
CONTENTS: OUR SOCIETIES New Year Special| January 2011

SOCIETY & CULTURE

Ian Buruma Tony Blair Staffan Nilsson Nikiforos Louise Kissa Dmitry Tom Spencer
Diamantouros Chernyshenko
Changing
Needed But Not Faith in a Europe Needs How do EU Citizens Reality in The Vitality of Of people & the
Wanted Globalized Age Civil Society Benefit from the 2011 and Sporting events public affairs of
Lisbon Treaty beyond for BRIC the remembrance
countries

46 47 48 49 50 51 52

INFORMATION PARADIGMS
Peter Singer Alexandros Andy Carling Alia Papageorgiou
Koronakis
Is open diplomacy The hidden meaning Wikigov and
possible? The Information of the WikiLeaks Facebook Diplomacy
Revolution story

56 57 58 59

INNOVATION
Athanassios Kotsis Jan Mühlfeit

The Role of ICT Fast forward into

Services Providers in Europe’s future
Gov 2.0 and
WeGovernment

54 55
HUMAN RIGHTS
Thorbjørn Jagland Laima Andrikiene Nicolas Berger
Democratic Security On human rights in EU diplomacy must
and Respect for the world and the
Human Rights in the EU's policy on the put human rights
21st century matter centre stage

60 61 62
Page 46 | New Europe
New Year Special | January 2011
Needed But Not Wanted
By Ian Buruma
Ian Buruma is Professor of Democracy and Human Rights at Bard College. His latest book is Taming the Gods: Religion and Democracy
on Three Continents.
EW YORK – Baruch Spinoza,
N the seventeenth-century Dutch
philosopher, Benjamin Disraeli,
the nineteenth-century British prime mi-
nister, and Nicolas Sarkozy, the twenty-
first century French president, have one
thing in common: all were sons of immi-
grants. People have migrated to other co-
untries for thousands of years – to escape,
prosper, be free, or just to start again. Not
a few enriched their adopted homelands
by achieving great things, or producing
children who did.
New waves of immigrants are rarely, if
ever, popular. But they are often needed.
Many people have migrated to Western
European countries from North Africa
and Turkey during the last half-century,
not because of Western generosity, but be-
cause they were required for jobs that na-
tives no longer wanted. They were treated
as temporary workers, however, not as im-
migrants.
Once the job was done, it was assumed
that the migrants would go home. When
it became clear that most had elected to
stay, and were joined by extended families,
many were grudgingly allowed to become
citizens of European states, without ne-
cessarily being treated as such.
Xenophobes, as well as leftist multi-
cultural ideologues, regarded these new
Europeans as utterly different from the
native born, albeit for different reasons.
Multi-culturalists saw attempts to inte-
grate non-Westerners into the Western
mainstream as a form of neo-colonialist
racism, while xenophobes just didn’t like
anything that looked, talked, or smelled
foreign.
We who live in rapidly aging societies,
such as Western Europe or Japan, still
SOCIETY & CULTURE
Four sub-Saharan illegal immigrants rest in Fuente Caballo beach, in the Spanish North African en-
clave of Cueta, after six sub-Saharan people were rescued by Spanish authorities drifting off Ceuta
coast on board a rubber dinghy, 10 November 2010 |ANA/EPA/REDUAN
>
Quote
need immigrants. Without them, neces-
sary institutions, such as hospitals, would
be unstaffed, and more and more elderly
people would have to be supported by
fewer and fewer young people.
And yet many politicians, especially in
Europe, now treat immigration as a disa-
ster. New populist parties garner large
numbers of votes simply by frightening
people about the supposed horrors of
Islam, or of clashing civilizations. For the
populists, however, the real enemies – pe-
rhaps even more nefarious than the im-
migrants themselves – are the
“cosmopolitan elites” who tolerate and
even encourage these horrors. Mainstream
politicians are so afraid of this populist
demagoguery that they often end up mi-
micking it.
The failure of integration of non-We-
stern immigrants in such countries as
France, Germany, or The Netherlands is
often exaggerated by hysterical alarmists;
Copyright: Project Syndicate, 2010. www.project-syndicate.org
Europe, after all, is not about to be “Isla-
mized.” But the fact that some young pe-
ople of African, South Asian, or Middle
Eastern descent feel so alienated in the
European countries of their birth that
they are happy to murder their fellow ci-
tizens in the name of a revolutionary reli-
gious ideology, means that something is
amiss. Children of immigrants in the past,
however unwelcome they were made to
feel, rarely wished to blow up the places
to which their parents had chosen to
move.
Politics in many Muslim countries is
partly to blame. Islamist extremism is a
handy revolutionary creed for vulnerable
young people to latch onto, to gain a sense
of power and belonging. Hindus, Chri-
stians, or Buddhists lack such a cause,
which is why political terrorism is largely
confined to Muslims.
But, as the occasional riots in French
immigrant areas show, violence is not con-
fined to Muslims. National policies have
something to do with this, but so do the
deeply flawed immigration policies in all
European Union countries.
Apart from EU citizens, who in theory
are allowed to seek work anywhere in the
Union (Romanian gypsies in France
might argue otherwise), three other cate-
gories of people have been allowed to
settle in Europe: former colonial subjects,
such as Algerians in France, Indians and
Pakistanis in Britain, or Surinamese in
The Netherlands; “guest laborers” who ar-
rived in the 1960’s and 1970’s; and politi-
cal refugees, the so-called asylum-seekers.
Unlike in Canada or the United States,
economic immigrants are not allowed to
become citizens in exchange for their ne-
cessary labor.
Immigrants – not “guest workers” –
who come for work are more likely to
want to integrate to some degree, and to
be treated as fellow citizens, than people
who come with the baggage of empire, or
simply as refugees, or, worse, people pre-
tending to be refugees because they have
no other way to gain access to wealthy co-
untries’ job markets.
But European welfare states are better
equipped to deal with asylum-seekers and
other newcomers as needy dependents
than as people in need of a job.
When European politicians claim that
France, Britain, or The Netherlands are
not traditional “immigrant countries” like
the US, they are right only up to a point,
as the examples of Spinoza, Disraeli, and
Sarkozy show.
What is true is that large numbers of
de facto immigrants have accumulated in
many countries in a very short time, in a
haphazard way that makes it seem as th-
ough no government was ever in control.
Children of guest workers feel unwan-
ted. Refugees languish helplessly in wel-
fare nets, or are suspected of being cheats.
And former colonial subjects, though in
many cases remarkably well integrated,
still bear the scars of troubled imperial hi-
stories.
Japan, and even the US, is not immune
to these problems, either. The Japanese
government simply got rid of its Iranian
guest workers when jobs dried up. But it
won’t be as easy to deal with the hundreds
of thousands of Chinese who live in Japan
without the rights of citizenship. The
same is true of Mexicans working in the
US, often illegally.
Millions of people around the world
remain in limbo – often needed, or pitied,
but nonetheless unwanted.
There is no quick or easy way out of
this problem, especially in bad economic
times. But Europe – and Japan, for that
matter – should start by making economic
migration legitimate.
This means working out what jobs
need to be filled, and welcoming those
who will fill them, not as guests, but as
equal citizens.

Faith in a Globalized Age
by Tony Blair
Tony Blair is a former Prime Minister of the United Kingdom
ONDON – For years, it was assu-
L med, certainly in the West, that, as
society developed, religion would wi-
ther away. But it hasn’t, and, at the start of a
new decade, it is time for policymakers to
take religion seriously.
The number of people proclaiming their
faith worldwide is growing. This is clearly so
in the Islamic world. Whereas Europe’s bir-
thrate is stagnant, the Arab population is set to
double in the coming decades, and the popu-
lation will rise in many Asian Muslim-majo-
rity countries. Christianity is also growing –
in odd ways and in surprising places.
Religion’s largest growth is in China. In-
deed, the religiosity of China is worth reflec-
ting on. There are more Muslims in China
than in Europe, more practicing Protestants
than in England, and more practicing Catho-
lics than in Italy. In addition, according to the
latest surveys, around 100 million Chinese
identify themselves as Buddhist. And, of co-
urse, Confucianism – a philosophy rather than
a religion – is deeply revered.
There is a huge Evangelical movement in
Brazil and Mexico. Faith remains for many in
the United States a vital part of their lives.
Even in Europe, the numbers confessing to a
belief in God remain high. And, of course
there are hundreds of millions of Hindus and
still solid numbers of Sikhs and Jews.
Those of faith do great work because of it.
Around 40% of health care in Africa is deli-
vered by faith-based organizations. Muslim,
Hindu, and Jewish relief groups are active the
world over in combating poverty and disease.
In any developed nation, you will find selfless
care being provided to the disabled, the dying,
the destitute, and the disadvantaged, by peo-
ple acting under the impulse of their faith.
Common to all great religions is love of nei-
ghbors and human equality before God.
Unfortunately, compassion is not the only
context in which religion motivates people. It
can also promote extremism, even terrorism.
SOCIETY & CULTURE
Iraqi Shiite Muslims take part in Ashura celebrations outside the tomb of Imam Hussein in
the holy city of Karbala, southern Iraq on 17 December 2010 |ANA/EPA/KHIDER ABBAS
>
Quote
This is where faith becomes a badge of iden-
tity in opposition to those who do not share it,
a kind of spiritual nationalism that regards
those who do not agree – even those within a
faith who live a different view of it – as unbe-
lievers, infidels, and thus enemies.
To a degree, this has always been so. What
has changed is the pressure of globalization,
which is pushing the world’s peoples ever clo-
ser together as technology advances and sh-
rinks the world. Growing up 50 years ago,
children might rarely meet someone of a dif-
ferent cultural or faith background. Today,
when I stand in my ten-year-old son’s play-
ground or look at his friends at his birthday
party, I find myriad different languages, faiths,
and colors.
Personally, I rejoice in this. But such a
world requires that mutual respect replace
mutual suspicion. Such a world upends tradi-
tions and challenges old thinking, forcing us to
choose consciously to embrace it. Or not.
And there is the rub: for some, this force is
a threat. It menaces deeply conservative socie-
ties. And, for those for whom religion matters,
globalization can sometimes be accompanied
by an aggressive secularism or hedonism that
makes many uneasy.
Copyright: Project Syndicate, 2010. www.project-syndicate.org
So we must make sense of how the world
of faith interacts with the compulsive process
of globalization. Yet it is extraordinary how
little political time or energy we devote to
doing so. Most of the conflicts in today’s world
have a religious dimension.
Extremism based on a perversion of Islam
shows no sign of abating; indeed, it will not
abate until it is taken on religiously, as well as
by security measures.
This extremism is, slowly but surely, pro-
ducing its own reaction, as we see from Isla-
maphobic parties’ electoral gains in Europe,
and statements by European leaders that mul-
ticulturalism has failed.
Of course, throughout time, religion has
often been part of a political conflict. But that
doesn’t mean that religion should be discoun-
ted. On the contrary, it requires a special focus.
I see this very plainly spending so much time
in Jerusalem, where – East and West – there is
an emphatic increase in religiosity.
I started my Faith Foundation precisely to
create greater understanding between the fai-
ths. My reasoning is simple. Those advocating
extremism in the name of religion are active,
well resourced, and – whatever the reactionary
nature of their thinking – brilliant at using
New Europe | Page 47
New Year Special| January 2011
modern communication and technology. We
estimate that literally billions of dollars every
year are devoted to promoting this view of re-
ligion.
So my Foundation has a university pro-
gram – now underway in nine countries – that
is designed to take religion out of the sole pre-
serve of divinity schools and start analyzing its
role in the world today.
We have another program – in 15 coun-
tries, with others set to join – that links high
school students across the world through in-
teractive technology to discuss their faith and
what it means to them. And we have an action
program through which young people work
with those of another faith to raise awareness
of the Millennium Development Goals, the
United Nations-led program to combat world
poverty.
We are just one organization. There are
others starting. But governments should start
to take this far more seriously. The Alliance of
Civilizations, begun by Spain and Turkey, is
one example.
The King of Saudi Arabia has also shown
great leadership in this sphere. Yet this is not
just about bringing high-level people together.
It has to be taken down into the grassroots of
nations, especially into the media of their
young people.
Finally, religious leaders must accept a new
responsibility: to stand up firmly and resolu-
tely for respecting those of faiths different
from their own. Aggressive secularists and ex-
tremists feed off each other. Together, they do
constitute a real challenge to people of faith.
We must demonstrate the loving nature of
true faith; otherwise, religion will be defined
by a battle in which extremists seize control of
faith communities and secularists claim that
such attitudes are intrinsic to religion.
This would be a tragedy. For, above all, it
is in this era of globalization that faith can re-
present reason and progress. Religion isn’t
dying; nor should it. The world needs faith.
Page 48 | New Europe
New Year Special | January 2011
Europe Needs Civil Society
by Staffan Nilsson
Swedish farmer, a long-standing European advocate, and an EESC member in the Various Interests Group since 1995, has just been elected
President of the EESC for two-and-a-half year term. In his programme, he makes sustainability a strategic imperative for all EU policies
RUSSELS - Engaging people for
B a sustainable Europe is the main
political message of my term as
President of the European Economic and
Social Committee (EESC).
At a moment when the EU has to
make long-term strategic choices, and to
opt for realistic, yet ambitious policy re-
sponses to Europe's economic and social
challenges, I have decided to make su-
stainability and engagement with Euro-
peans the flagships of my programme for
the next two and a half years. Sustainable
growth to finance our European social
models and promote our interests and va-
lues on the world stage, as well as regai-
ning citizens' trust in the EU and their
governments are keys for the future of
Europe.
More civil society involvement at EU
level through dialogue and participation,
sustainability and green growth, and soli-
darity with the developing world are my
priorities. I want the organized civil so-
ciety to be able to play a bolder role in the
decision-making process of the EU. This
is most likely to happen as the new Tre-
aty compels all EU institutions to engage
in structured dialogue with civil society.
Not all of the EU institutions are equip-
ped to do it, nor are all willing to do it.
But the EESC, with more than half a
century of experience in consultation and
consensus-building, is ready to help. This
would not only make the EU more de-
mocratic, but also keep the vision of a
common Europe alive.
How can the EESC have a stronger
say in EU policy-making affairs? The an-
SOCIETY & CULTURE
With the Europe 2020 strategy, citizens will see a better Europe in terms of employment, innovation, education, social inclusion and climate/energy. It is hoped that
this will be the drive a stronger European civil society; the ultimate guage for which is the EU Election turn out | www.flickr.com | GeS
> Quote
swer is – EU institutions need to use
more our membership's expertise! The
Committee's members not only have the
know-how to analyse particular policy is-
sues from all angles and to propose con-
crete policy recommendations, but they
can also carry out a reality check of Eu-
ropean initiatives and ideas to ensure that
they do not miss their goals.
With members from all walks of life
who spend most of their time with their
own organisations in their home coun-
tries, the Committee brings together eco-
nomic, social and civic organisations in
the 27 Member States: employers' asso-
ciations and trade unions, the professions,
farmers' organisations, SMEs, and other
non-governmental organisations working
for the environment, consumer protec-
tion, human rights, social inclusion etc.
For me, sustainability should be the
umbrella strategy embracing all policy
areas. The source for jobs and green eco-
nomic growth is entrepreneurship. In-
centives and regulatory simplification are
needed to make people more willing to
start and run businesses. I define sustai-
nable businesses as those that aim at
more than just the maximum profit, such
as the social economy companies – e.g.
cooperatives, mutuals and associations.
These often offer more sustainable busi-
ness models than the traditional listed
ones. My vision for a recovered Europe
also includes its ability to act effectively
and with one voice on the world stage. It
is clear that the competitive global eco-
nomic environment is also about out-th-
inking others. For instance, the EU has
the potential to lead global sustainable
development. Under my presidency, the
EESC will draw up a European organi-
sed civil society's position in preparation
for the 2012 World Summit on Sustaina-
ble Development Rio+20. The Rio+20
Summit is about mobilising not only go-
vernments but also civil society.
My work programme fully supports
the concerted work of the EU institu-
tions and Member States on the Europe
2020 Strategy. I have just initiated a EU-
ROPE 2020 Steering Committee in the
EESC, a horizontal strategy group, coor-
dinating all the thematic work of the
EESC and getting the national economic
and social councils involved in it. The
aim is to identify and promote particular
initiatives and best practises in the on-
going reform process in the Member Sta-
tes. Only with the civil society on board,
can the Europe 2020 Strategy deliver
concrete results and make Europeans
happier than they are now under auste-
rity measures.
The European Commission has asked
the EESC to play a major role in the re-
form process implied by the Europe2020
Strategy. In my view, besides tackling the
crisis effects, we need to look towards the
future. We need both a social and a com-
petitive Europe and the EU is capable of
making the impossible possible.
EUROPE 2020 should go beyond
goodwill to action. The EESC can come
up with concrete proposals for making
the EU reform strategy a reality in all
Member States. This claim is based on
the EESC's strong links with the natio-
nal civil society stakeholders. I have just
started a series of visits to the Member
States to discuss cooperation strategies
between national economic and social co-
uncils and governments on the reform
process. I urge national civil society in-
cluding social partners to take full ow-
nership of the economic and social
reform process.
 New Europe | Page 49
SOCIETY & CULTURE New Year Special| January 2011

How do European Citizens

Benefit from the Lisbon Treaty?
by P. Nikiforos Diamandouros
European Ombudsman

German Chancellor Angela Merkel (L) and German Defence Minister Karl-Theodor zu Guttenberg (R)
chat at the German parliament Bundestag in Berlin, Germany, 15 December 2010. Merkel said that she ex-
pected small changes to the Lisbon Treaty to be ratified by the end of 2012 |ANA/EPA/WOLFGANG KUMM
RUSSELS - Almost twenty years States will have the possibility to call on the

B ago, the framers of the Maastricht

Treaty introduced the concept of citi-
Commission to bring forward new legislative
proposals. The Ombudsman participated in the
zenship of the European Union, whereby
every national of a Member State shall be a
citizen of the Union. Among the rights linked
> Quote
public consultation on this initiative, with a
view to making sure that it will function in the
most transparent way and with a minimum of
to Union citizenship are the right to complain bureaucracy. Once the relevant Regulation is
to the European Ombudsman, to petition the adopted, there may well be complaints to the
European Parliament, and to vote and to Ombudsman if citizens are dissatisfied with the
stand in local and European Parliament elec- Commission’s handling of a citizens’ initiative.
tions. Also of major importance is the right
to move and reside freely within the territory Conclusion
of the Member States. The European Union is often perceived
The entry into force of the Treaty of Li- as a remote bureaucracy, detached from the
sbon and the decision to grant the Charter of every day life of its citizens. The new provi-
Fundamental Rights equal legal value as the greater transparency. It provides that citizens sions in the Lisbon Treaty and the Charter of
Enhancing transparency
Treaties mark the latest stage in the long, shall have a right of access to documents of Fundamental Rights allow citizens to moni-
Every year, by far the most common alle-
evolving process of empowering European ci- the Union institutions, bodies, offices and tor more effectively the work of the EU in-
gation examined by the Ombudsman is lack
tizens. The Charter, in particular, gives a agencies. This provision constitutes a signifi- stitutions, as well as of the governments they
of transparency in the EU administration.
strong signal regarding the importance the cant improvement with respect to the past, have elected as national citizens. Furthermore,
This allegation arises in more than one third
Union attaches to citizens' rights. since it extends the application of the right of European citizens have obtained the right to
of all inquiries and includes refusal of infor-
The section of the Charter entitled ‘Citi- access to documents to all EU institutions, an open and transparent EU administration
mation or access to documents. The Ombud-
zens’ Rights’ contains, of course, the right to bodies, offices, and agencies, including, for the that takes their views into account.
sman remains concerned about this high
complain to the European Ombudsman. first time, the European Council, and not just One of the Ombudsman's main priorities
number, since an accountable and transparent
Every year, the Ombudsman receives more to the European Parliament, Council and for the coming years is to help citizens make
EU administration is key to building citizens'
than 3000 complaints from citizens, busines- Commission, as was the case until now. full use of their rights, as provided for under
trust in the EU.
ses, NGOs, associations or other organisa- the Treaty of Lisbon and the Charter of Fun-
The Lisbon Treaty provides for greater
tions and opens inquiries into over 300 cases Citizens' participation damental Rights.
transparency in the activities of EU institu-
alleging maladministration in the EU admi- The Lisbon Treaty also strengthens the He is committed to informing citizens
tions, bodies, offices, and agencies. It includes,
nistration. right of citizens and associations to participate about these rights and to working with the
for instance, a provision for the Council to
The Charter also contains the right to in the democratic life of the Union. It requires European Parliament and with national and
meet in public when it deliberates and deci-
good administration, a right which lies at the the Union institutions to maintain an open, regional ombudsmen in the Member States
des on draft legislation - an improvement the
heart of what the European Ombudsman transparent and regular dialogue with repre- in order to achieve this goal. A better infor-
Ombudsman has long called for. The Treaty
does. Elements of the now legally binding sentative organisations and civil society. Broad med citizenry knows what its rights are and
also requires the Union administration to
right to good administration which are speci- public consultations have to be carried out with how to use them effectively. Such a condition,
conduct its work as openly as possible, in
fically mentioned in the Charter include, for parties concerned in order to ensure that the which strengthens accountability and contri-
order to promote good governance and to en-
example, the right to have one’s affairs hand- Union's actions are coherent and transparent. butes to greater transparency, substantively
sure the participation of civil society.
led "impartially, fairly and within a reasonable Thanks to the "European Citizens' Initiative", enhances the quality of democracy at both the
Article 42 of the Charter of Fundamen-
time by the institutions, bodies, offices and one million citizens from a number of Member national and the European levels to the be-
tal Rights is especially important as regards
agencies of the Union". nefit of all.
Page 50 | New Europe
New Year Special | January 2011
Changing Reality
in 2011 and Beyond
by Louise Kissa
Louise Kissa is a Fashion & Life Style Editor at New Europe newspaper
lkissa@neurope.eu
REAL LIFE
Stephen Stickler
© Getty Images
ARIS - As 2010 comes to its end, we
P
turn back in an attempt to recollect
the undeniable changes that marked
this year. As the curve steepens and we fall
deeper into recession with no hope of
escape before a long, still undetermined
time, consumers under pressure are faced
with the necessity of making long-lasting,
life-changing choices. On the one hand the
trivialization of society, notably through
common reality television programs, reflects
the image of passive citizens who are ex-
pected to be gullible consumers. On the
other hand, the accessibility and variety of
services offered by the web reveal and mul-
tiply the number of active, opinionated, and
autonomous thinkers.
Don’t know how to eat, clean your house
or feed your dog? No matter what your pro-
blem is, you’ll definitely find a well-groo-
SOCIALIZING
John Lund
© Getty Images
SOCIETY & CULTURE
med and well-intentioned television guru
who’s got it all figured out for you. Pushing
the boundaries of what has ever been so-
cially tolerable (showing nude infected parts
or giving birth on TV!) reality programs
‘offer a voice’ to the most disadvantaged sec-
tion of the population, that are too often
unemployed, left out of the educational sy-
stem and deprived of any social welfare
cover. In Great Britain, ‘health-oriented’
shows defy the National Health System by
claiming that they offer help that the state
can no longer provide…so much for the di-
screet text on the show’s website declining
any medical or ethical responsibility.
Why use the poor as scapegoats? To
feed the voyeuristic need of observing the
weaknesses and vices of human nature?
Maybe, but it could be so much more.
The fragile, frightened and pessimistic
middle classes could be led to wonder:
What will it take for me to not end up like
this? A private medical insurance? A life in-
surance? The new Pilates machine? A heal-
thier diet? Whatever it takes to keep your
GOOD FOR YOUR SELF
Martin Barraud
© Getty Images
WELL WHO WOULD KNOW?
Colin Anderson
© Getty Images
social dignity, to fit in, to be more produc-
tive; roughly, to continue consuming pro-
ducts. An avenger of these popular shows
would say: ‘the candidates don’t see anyth-
ing wrong with explaining their problems
on television. After all, they’re happy to be
looked after, cared for.’ Indeed, poverty does
mean social isolation, a lack of information
and a lack of recognition, and that’s the real
taboo.
In this culture of disaster and misery, di-
scrimination and prejudice are justified by
the conviction that the intellectual and so-
cial level of ‘the people/the spectators’ is very
low. However, this pessimistic view is con-
tradicted by the amount of activity on the
web and the dynamism of its ever-young
users.
The web offers a new form of huma-
nism through its free-sharing spirit, its
praise of knowledge, participation, opinion
sharing, anonymity and freethinking. With
all its faults, saturation, lack of selection,
tones of unfiltered junk and invasion of pri-
vacy, the net restores our independence and
© Getty Images
YES WE CARE
Chayo Mata
© Getty Images
dignity, knowing that access to higher edu-
cation will become increasingly expensive,
as was clearly noted this year.
Modern web users are demanding citi-
zens who can polish and edit their profiles
according to their desires and ambitions and
maintain their rank, as they avoid the ten-
sion and requirements of real social compe-
tition. These all-mighty clients take their
time to appreciate the quality, reparability
and sustainability of an item while bargai-
ning for the best price and exchanging opi-
nions with other fellow consumers.
Recently shaken by the reduction of
their incomes and the progressively chan-
ging mentality of living in a healthier, safer,
fairer and more sustainable environment,
consumers now rediscover the benefits of
lentils (cheap and nutritious), cycling, elec-
tric cars or chlorine rather than expensive
scented detergents, announcing the return
of good old values. Bio home-cooking, do-
it-yourself hairdressing and makeup kits
show the rational need for having more
control over what one buys and consumes,
as well as reflecting a general feeling of di-
sbelief.
It would seem that this air of purifica-
tion has come to clean out the damage ca-
used by conspicuous consumption and its
disappointments.
ENOUGH
John Lund

The Vitality of Sporting Events for BRIC Countries
by Dmitry Chernyshenko
Dmitry Chernyshenko is the President and CEO of Sochi 2014 Organizing Committee
OSCOW - In little more than
M
3 years, 45,000 people represen-
ting more than 100 nationalities
will come to Sochi to watch athletes per-
form, to share in an extraordinary expe-
rience and to discover Russia and the
Sochi region itself, still largely unknown
to most people.
In addition to those 45.000 live spec-
tators, hundreds of millions will watch the
events and ceremonies on their TVs, com-
puters, smartphones, iPhones or any of the
new revolutionary devices which will un-
doubtedly have been invented by then and
which will allow even more people to fol-
low the event.
Organizing an international sporting
event such as the Olympics therefore
means having hundreds of millions of pe-
ople look at you from all angles, literally
and figuratively. I should immediately
take the opportunity to address one mi-
sconception before going any further: no
nation uses sporting events to showcase its
power and tries at the same time to hide
the injustices going on within its borders.
That trick simply couldn’t survive the
world’s scrutiny for even a day. That’s not
to say that all host nations are perfect; but
they must be sincerely willing to commit
themselves to improvements in order to
take the risk of two weeks of intense ob-
servation by millions of spectators, not to
mention the years of preparations closely
supervised by official and unofficial inter-
national experts.
That said, one might wonder why any
country would spend money and energy
on a one-time event. It is common kno-
wledge that sporting events provide host
countries with modernized infrastructu-
res, marketing revenues, increased tourist
appeal; it is thus generally assumed that
huge potential profits lie behind countries’
SOCIETY & CULTURE
Russian President Dmitry Medvedev (R) and Prime Minister Vladimir Putin (L) during a break in their ski-
ing activities at Krasnaya Polyana mountain ski resort near Black sea resort of Sochi, Russia 26 March 2010. In
a little more than 3 years, people around the world will come to Sochi to watch athletes perform|ANA/EPA/MIKHAIL
KLIMENTYEV/RIA NOVOSTI/KREMLIN POOL
eagerness to organize them. And it’s true:
sporting events can be a source of short
and long term revenue. But much more
than that, they help bring people together
behind one shared goal and unite a coun-
try’s population in a mood of positivism,
one which makes individuals want to wel-
come the world to their homeland, share
its culture and traditions and offer a uni-
que, unforgettable experience to visitors
and spectators.
This intangible legacy is the most im-
portant reason why sports events are so
crucially important for the BRIC coun-
tries. It is no surprise that Brazil, Russia,
India and China have all recently hosted,
or are about to host, major international
sporting events. We need those events to
help project an accurate image of our co-
untries, far removed from the clichéd per-
ceptions people have which often cause us
to be viewed with a mix of amazement
and disquiet, and which tend to be based
on stereotypes, and projected fears and
desires. We need the events to strengthen
our identity as spearhead countries lea-
ding global economic growth and our sta-
tus as reliable and relevant partners. This
is the best way for us to give our people a
platform for economic and social deve-
lopment while enhancing their sense of
individual and collective pride, thus rein-
forcing their confidence and their ability
to develop new relationships with the rest
of the world.
By putting its trust in the BRIC coun-
tries capacity to honour its brand, the
IOC effectively changes the way the
world sees us and makes it more willing
to listen to what we have to offer, from an
economic and cultural perspective. Of co-
urse the risk the IOC is taking is balan-
ced with a huge benefit which lies in the
opening up of new markets; but by doing
so it goes way beyond simply changing the
worldwide geography of sports - it chan-
ges the very perception people have of this
geography, making whole new cities ap-
pear on their mental map and building
new bridges between them.
New Europe | Page 51
New Year Special| January 2011
The IOC and other sports organisa-
tions help us develop new expertise in a
variety of areas, and their endorsement
helps us appear as credible partners for fo-
reign organizations. For instance, working
with the IOC’s International Partners,
who are all global leaders in their own
field, is highly profitable, and helps us de-
velop new partnerships with companies
from France, Germany, the UK, the Uni-
ted States and many more. We trust these
companies to help us benefit from their
know-how and assist us in creating events
of the highest possible quality, and in re-
turn we help them develop their presence
in our markets.
This is why it is perhaps not giving the
full picture to say that Russia, which I ob-
viously know best, is organizing the Sochi
2014 Games completely on its own; Rus-
sia is certainly shouldering the primary re-
sponsibility, but the Organizing
Committee, in cooperation with the IOC,
International Sports Federations, Interna-
tional and National Partners and all the
companies which are part of the project,
all have important roles to play in making
the Games happen.
The actual hosting of the Games on
the other hand will be uniquely Russian.
The energy and enthusiasm of the Rus-
sian people will build a unique atmosph-
ere at the event and offer an extraordinary
experience, even for those who will only
experience it via their TV screens. It is by
offering this experience that Russians will
change the understanding other people
have of their country.
This applies to the other BRIC coun-
tries just as much as it does to Russia: a
sporting event’s most precious legacy do-
esn’t lie in making the world come to the
event; it lies in making them want more,
after the event has finished.
Page 52 | New Europe
New Year Special | January 2011
Of People & the Public
Affairs of the Remembrance
By Tom Spencer
Tom Spencer is the Executive Director of the European Centre for Public Affairs
RUSSELS - “The remembrance of
B things past is not necessarily the re-
membrance of things as they were.”
Marcel Proust. It is raining. There is no
bugler. The names of the fallen of two
world wars are read out by the Anglican
woman Priest in Charge. The Roman Ca-
tholic Church has re-timed its service so
that the whole village can attend. The
main road is closed for the two minute si-
lence. These are Burke’s “small battalions”
acting out a ceremony that has remained
unchanged since 1919, but whose details
reveal exactly how much has changed in
the last generation of Englishmen. Ten
days before the local Church of England
had held its first service on All Souls Day.
A commercialised Halloween has come to
replace the Bonfire Night burning of Guy
Fawkes the Catholic conspirator of the
Gunpowder Plot. As if to echo the mood,
the BBC shows a long documentary re-
evaluating Elgar and comparing him to
Mahler. Rather than the imperial marti-
net of the Pomp and Circumstance mar-
ches, he is revealed as a passionate and
tortured Catholic intellectual, who found
ways of giving expression to an English-
ness that endures. The sermon contains
praise for David Cameron’s Big Society, if
only in contrast to Margaret Thatcher’s
assertion that there is “no such thing as
society”. It also contains the gardening
insight that poppies grow best on distur-
bed land. The villagers leave their poppies
on the War Memorial and walk home th-
rough the rain.
What can poppies teach us about Eu-
ropean public affairs in the twenty first
century? I have for some years felt ill at
ease wearing my poppy in the European
Institutions in the week before Remem-
brance Day, 11th November. This year
SOCIETY & CULTURE
Canadian Provincial Reconstruction Team (PRT) of NATO's International Security Assis-
tance Force (ISAF) prepare to distribute food ration to Afghanis, in volatile Kandahar,
Afghanistan, 26 September 2008. Canadian losses in Afghanistan are 152 out of a popula-
tion of 34 million |ANA/EPA/HUMAYOUN SHIAB
>
Quote
British MEPs seemed to be wearing their
poppies as a badge of difference rather
than of remembrance. UK Independence
Party members seemed to have found a
supply of bigger than normal poppies. I
much prefer the discreet lapel badge worn
by Jim Nicholson the Ulster Unionist
Member for Northern Ireland. Perhaps it
is time for English super-patriots to fol-
low the lead of the Ulster Unionists? I re-
alise that I have been here before. In a
November in the early 1970s the Young
European Federalists held a committee
meeting in Luxembourg on Remem-
brance Sunday. I and other British colle-
agues suggested that we should recognise
that Europe’s civil wars in the first part of
the twentieth century were the wellspring
of European unity. We proposed therefore
that the eleventh day of the eleventh
month should be a holiday for all Europe-
ans. Jo Leinen, then leader of the German
Young Federalists and now President of
the European Parliament Environment
Committee, smilingly pointed out that
11/11 was the start of Carnival in Colo-
gne. We abandoned the idea and with-
drew to contemplate our strange British-
ness during a two minute silence looking
out over the ravine.
So where do poppies come from in this
context? They grew in huge numbers on
the disturbed ground of First World War
battlefields. They came to be seen as re-
presenting the blood of the fallen. In May
1915 a Canadian surgeon, Lieutenant Co-
lonel John McCrae wrote the poem “In
Flanders fields”. John McCrae was born
in Guelph in Ontario. In October I spoke
on the handsome campus of the Univer-
sity of Guelph. I was struck by the paucity
of our collective memory that has mana-
ged to forget how many service men from
the British Empire died in the mud of
Flanders: sixty thousand Canadians and
as many from the Indian Empire. That
failure of empathy continues to this day.
Canadian losses in Afghanistan are 152
out of a population of 34 million. By
comparison the British have lost 322 out
of a population of 61 million. To this day
remembrance and poppies are a big event
in the Canadian calendar. Indeed, just as
in the UK, Remembrance Day has para-
doxically become more enthusiastically ce-
lebrated despite the passing of the
generations which fought both World
Wars. There has to be a suspicion that re-
cent Canadian and British governments
are keen to glorify past sacrifice as a nudge
that they are “strong on defence and secu-
rity”. The BBC makes no reference to
Canadian losses in Afghanistan. They, and
the rest of the British media, have shown
a maudlin concentration on the grief of
individual families. I find it faintly unple-
asant that business in the House of Com-
mons should have to stop for the reading
of the latest death toll. This is “Princess
Diana” politics culminating in ill-spelt
handwritten letters from Gordon Brown.
Traditionally we celebrated our victories
and set aside certain days to remember the
fallen. Lest we forget …
Such forgetfulness can only lead to
trouble as when members of the UK Go-
vernment, led by the Prime Minister, insist
on wearing their poppies in the Great
Hall of the People in Beijing, provoking
the entirely justifiable Chinese observa-
tion that it was tactless for the British,
who had started the Opium Wars, to insist
on wearing opium poppies in today’s
China. No doubt similar thoughts may
have crossed the minds of our gallant Af-
ghan allies as British and Canadian forces
proudly displayed their poppies in No-
vember. The key to peace in Afghanistan
lies through dealing honestly with the he-
roin trade that finances the Taliban and all
the other war lords. Instead of sourcing
the West’s need for the medical derivatives
of opium from ring-fenced plantations on
Tasmania, could we not buy up all the
poppies in Afghanistan?

The wisest and gravest of my Central
European friends, Pavel Bratinka the foun-
der of the Civic Democratic Alliance Party
(ODA) in Czecho-Slovakia, has long insi-
sted on the importance of remembrance.
He believes that an easy sliding away from
the truth about the Communist regimes of
Eastern Europe could only set up problems
for the future. The Polish poet Czeslaw
Milosz maintained that “the man of the
East cannot take Westerners seriously” be-
cause they had not experienced the extraor-
dinary mass violence that had been imposed
by Hitler and Stalin on Poland, the Baltics
and the Ukraine. “Their resultant lack of
imagination is appalling”. I was reminded
of this by Anne Applebaum’s review of Ti-
mothy Snyder’s new book “Bloodlands: Eu-
rope between Hitler and Stalin”. Anne
writes “Historians of the region certainly
know that three million Soviet soldiers star-
ved to death in Nazi camps, that most of the
Holocaust took place in the East, and that
Hitler’s plans for Ukraine were not different
from Stalin’s. Snyder’s original contribution
is to treat all of these episodes – the Ukrai-
nian famine, the Holocaust, Stalin’s mass
executions, the planned starvation of Soviet
POWs, post war ethnic cleansing – as dif-
ferent facets of the same phenomenon. In-
stead of studying Nazi atrocities or Soviet
atrocities separately, as many others have
done he looks at them together. Yet Snyder
does not exactly compare the two systems
either. His intention rather, is to show that
the two systems committed the same kinds
of crimes at the same times and in the same
places, that they aided and abetted one ano-
ther, and above all that their interaction
with one another led to more mass killing
than either might have carried out
alone”……… “To look at the history of
mid-twentieth-century Europe in this way
also has consequences for Westerners.
Among other things, Snyder asks his rea-
ders to think again about the most famous
films and photographs taken at Belsen and
Buchenwald by the British and American
soldiers who liberated those camps. These
pictures, which show starving, emaciated
people, walking skeletons in striped uni-
forms, stacks of corpses piled up like wood,
have become the most enduring images of
the Holocaust. Yet the people in these ph-
otographs were mostly not Jews; they were
forced laborers who had been kept alive be-
cause the German war machine needed
them to produce weapons and uniforms.
Only when the German state began to col-
lapse in early 1945 did they begin to starve
to death in large numbers ………. “Under
German rule, the concentration camps and
the death factories operated under different
principles. A sentence to the concentration
camp Belsen was one thing, a transport to
the death factory Belzec something else.
The first meant hunger and labor, but also
the likelihood of survival; the second meant
immediate and certain death by asphyxia-
tion. This, ironically is why people remem-
ber Belsen and forget Belzec.”
By adopting the poppies of the First
World War to represent what happened in
the Second World War, we entrenched a
very Western European view of the mid-
twentieth century. By concentrating on
Franco-German reconciliation and the saga
of Alsace-Lorraine, we managed to forget
the nightmares of genocidal killing to the
East. As Anne Applebaum puts it “we li-
berated one half of Europe at the cost of
enslaving the other half for fifty years. We
really did win the war against one genocidal
SOCIETY & CULTURE
Installation representing clean energy sources seen outside the Delhi Pavilion at the 2010 India International Trade Fair in New Delhi, India, 14 November 2010.
Many Indians are slightly nervous of the speed with which they are being pulled into a global role | ANA/EPA/ANINDITO MUKHERJEE
dictator with the help of another”. Then we
allowed Russian diplomats after the Second
World War to define genocidal in a way
that excluded Stalin’s mass murders. I like
to think that I understand the impact of
memory on modern politics. Yet at the very
least I have clearly been culpable of a very
Western view of recent European history.
Working in the Balkans in the 1990s I
could logically argue that the success of the
European idea on the Rhine could be ex-
tended to the countries of the Danube.
Even then however I failed to fully grasp
the nightmare of the Bloodlands.
This whole story is a salutary reminder
to all of us not to jump to conclusions about
the judgment of history. The baby boomer
generation look increasingly to have lived in
the sunny uplands of an Augustan age, with
the collapse of the Berlin Wall and the So-
viet Union as its apogee. Yet it is this gene-
ration which has unleashed, from 1970
onwards, the vast majority of the greenh-
ouse gasses which look set to bring the sun-
lit Age to a close. Viewed from this
perspective the great dramas of de-colonia-
lisation and American exceptionalism look
like mere surface eddies on the river of time.
How appropriate therefore that societies ca-
pable of thinking in millennia rather than
decades, such as India and China, should be
emerging from their three hundred year
eclipse by the brilliance of European achie-
vement just as the planetary mood darkens
once again. Truly the Chinese and Indian
attitudes to climate change will determine
the fate of humanity. Their attitudes will of
course be shaped by what they chose to re-
member. For the Chinese their memory is
of national humiliation at the hands of Eu-
rope after millennia in which the Middle
Kingdom lay in the centre of a uni-polar
world. Increasingly there are those in Asia
who believe that “China rising” anticipates
just such uni-polarity in Asia. Indian me-
mories are of millennia of invaders coming
through the mountains from the North, fol-
lowed by subjugation by Europeans who
came from the sea. Chinese support for Pa-
kistan, its continued pressure on India’s mo-
untain border and its cultivation of allies
around the Indian Ocean thus manages to
trigger Indian suspicions on all points of the
compass. Many of the tensions would eva-
porate if India and China’s dependence on
hydrocarbons were not so pronounced. Ho-
wever while China’s autocratic government
can decree action and concentrate resources,
India’s democracy takes longer.
Many Indians are rightly nervous of the
speed with which they are being pulled into
a global role that they have not sought with
anything like the ambition of their Chinese
neighbours. Indeed “Incredible India”,
which dates from the end of Licence Raj in
the early 1990s, is a very sudden develop-
ment for an old and conservative society. In
New Delhi to deliver a lecture on Environ-
mental Security to the Centre for Air Po-
licy Studies and senior officers in the Indian
Air Force, I tried to argue that the elephant
was a better symbol for India than the tiger.
After all India is old, wise, huge and very
hard working. Perhaps unaware of the un-
fortunate precedent of the Celtic Tiger, my
military audience were resolutely in favour
of the aggressive and mobile Tiger when
confronting the Dragon to the North. In-
dians, and especially their military, are proud
of their democratic traditions, while deeply
regretting what some refer to as the “crimi-
nalisation of Indian politics”.
The growth of corruption at all levels of
Indian society threatens to cast doubt on
exactly how “credible” India is as a global
power. Today’s corruption of both the bu-
reaucracy and politics is contrasted with the
remembered purity of the struggle for inde-
pendence.
The Indian military however remember
uncomfortably that defeat in the Sino-In-
dian war of 1960 was, at least in part, cau-
sed by neglect of sensible requirements for
self- defence. I am impressed by the speed
of development since my last visit to India
two years ago and by the energy and intel-
ligence of military officers and public affairs
practitioners, both of which find themsel-
ves pitch-forked into global complexity. In
talking to the Public Affairs Forum in
Delhi, I was initiating a conversation about
how global public affairs may evolve in the
next ten years. In talking to the Indian mi-
litary about their role in a world of floods,
erratic monsoons and melting glaciers, I was
similarly only looking ten years ahead.
Abrupt change is sure to mark both econo-
mic and environmental developments in the
next decade.
Public memory is a strange animal even
New Europe | Page 53
New Year Special| January 2011
when required only to reach back twelve
months. There is already a lively debate
over what we remember of last year’s Cope-
nhagen Climate Summit. There is a school
of thought which now wants to place the
blame almost entirely on the Danes. This
seems to me grossly unfair. The failure in
Copenhagen was due to three roughly equal
forces. The negotiations are genuinely te-
chnically difficult.
They are bedevilled by a brilliantly con-
ducted spoiler campaign by the fossil fuel
industry, and they are further complicated
by the immaturity of the multi-polar system
which has taken over from American hege-
mony. The process undoubtedly put im-
possible strains on the negotiators. It is
notable that the debate since Copenhagen
has been much more frank in identifying
that “political problems” are usually the re-
sult of public affairs pressure from vested in-
terests.
Any success for the UNFCCC process
before the Kyoto Protocol lapses in 2012
will depend on greater transparency about
the extent to which science has been pollu-
ted and a broader political focus that allows
an expanded deal to take precedence over
the zero sum game of negotiators. Both
India and China are what old fashioned hi-
storians used to regard as societies organised
around the provision and control of water.
Both have an instinctive understanding of
the cycles of history. Paradoxically they may
lack the sense of urgency that comes with
the sense of “end times” common to the
Abrahamic religions. It is devoutly to be
hoped that both India and China will not
be so entranced with the cycles of their past
that they fail to understand that humanity is
capable of rendering our planet uninhabita-
ble.
Engraved on many Western European
war memorials is the so-called Kohima
prayer - “When you go home, tell them of
us and say, for your tomorrow, we gave our
today.” Kohima is close to the border bet-
ween India and Burma and marks the point
where the Japanese invasion of India failed
in 1944. As the ministers drag themselves
home from Cancun, with minimal gains
and little sense of inter-generational equity,
they might like to consider that they have
reversed the Kohima prayer. “For our today,
we stole their tomorrow”.
Page 54 | New Europe
New Year Special | January 2011 INNOVATION
The Role of ICT Services Providers
in Gov 2.0 and WeGovernment
by Athanassios Kotsis
Athanassios Kotsis is the CEO of INTRASOFT International
THENS - In the past 20 ristic of Gov 2.0 information exch-

A years ICT services provi-

ders working for govern-
ment customers focused on the
development of computerized so-
lutions in support of all kinds of
public functions and systems. Such
were initially developed for inter-
nal use by Civil Servants, and were
eventually extended to serve a bro-
ader audience of a nation’s citizens
and businesses. As time goes by
the interaction between citi-
zens/business and Public Services
has thus evolved from conventional
paper based exchanges (using di-
stribution vehicles such as telex,
fax, postal services) to online Inter-
net based submissions and infor-
mation exchange (Web, email,
FTP). The new interactions even-
tually developed in various types
depending on target audiences;
Government to Citizens (G2C),
Government to Business (G2B)
and Government to Government
(G2G). Generically, this became
widely known as eGovernment and
has enjoyed broad adoption in vir-
tually all the nations of the Free
World.
In the advent of Web 2.0 that
we have seen in the last five to ten
years, we have gradually witnessed
highly visible representatives of
Public Functions become partici-
pants in a number of externally run
social networking platforms (You-
Tube, Twitter, Facebook, MySpace,
Flickr…).
The trend further extended to
many more new participants from
Public Services, often representing
formal Bodies of Government, who
in torrential fashion joined the
hundreds of millions of social net-
working users aiming at higher
transparency of information provi-
sion towards citizens and busines-
ses (Gov 2.0 or Open
Government). The basic characte-
ange is the direction in which it ty-
pically flows: from Government
(one) to its citizens (many). No in-
teractions among citizens themsel-
ves exist in any significant form,
only between Government and its
citizens (one-to-many).
In recent years a new growing
trend emerged. It has been defined
as an area, where Government and
its citizens co-create new forms of
collaboration and service that use
technology, public data, citizen-ge-
nerated data and the social web to
address vital issues and solve public
problems (source : Personal demo-
cracy Forum). In such interactions
information can originate at the
level of individual citizens and be
equally important as the informa-
tion provided by a Government
Body, being one of the many parti-
cipants of the collaborative commu-
nity. In other words, such Internet
‘social’ interactions become many-
to-many. Several such initiatives are
active and broadly in use today, and
have been geographically observed
in all corners of the world.
Simply explained, any typical
computerized information system
involves two key aspects/compo-
nents: the user interface (UI), used
for data creation and retrieval, and
the Database (DB) design and ph-
ysical storage (of critical business
data) that will guarantee scalable
and efficient retrieval, integrity and
security.
Although the UI is what end-
users eventually experience in their
man-machine interactions, and it is
basically what they think of as the
‘application’, it is the DB Manage-
ment that is the most business cri- zed solutions. Traditionally third partner ICT Services organizations
tical component, and consumes party ICT services providers, who will in the near future assist their
most resources (intellectual, so- have been selected to develop and Public Services customers in ope-
ftware/hardware and financial) du- maintain Public Services systems, ning-up legacy environments to
ring the development and are quite knowledgeable of the ar- the outside world by means of,
maintenance process of computeri- chitecture and design options in- among other, the so-called Appli-
volved in the related DB cation Program Interfaces (APIs),
Management components of those conform established standards and
systems. This knowledge places protocols.
those same providers in a strategi- Finally, quite a few among ICT
cally advantageous position to as- services providers, active in Go-

> Quote sist Governments and their Public

Services bodies when systems ini-
tiatives as we described above are
involved, namely Gov2.0/Open
Government and WeGovernment.
It is also a well-known fact that
from a technical point of view most
Government projects leading to
Gov 2.0/Open Government and
WeGovernment systems consist in
developing appropriate ‘platforms’
based on current (legacy) systems
and infrastructure. To enable sy-
stem access to third parties (com-
munities, commercial solution
providers, open software projects)
vernment business, are also expec-
ted to undertake initiatives towards
the creation of simple, functionally
focused, UI applications that are
typically offered to the Public for
‘free’. Those (will) run on new po-
pular ‘Internet Things’, like the
many trendy mobile devices and
tablets that seem to gradually re-
place conventional desktop and
portable PCs. This is a new area of
development that on the long run
is also expected to substantially im-
pact existing business models that
most known ICT services provi-
ders currently use and operate.

Fast Forward into Europe’s Future
by Jan Mühlfeit
Jan Mühlfeit is Chairman of Microsoft Europe
rague - What will life be like for
P Europeans in 2020? Faster, I hope.
This may come as unwelcome
news to those who blame technological
progress for the already frantic pace of
their lives. But look at what technology
is achieving now and think about what all
this speed could mean for the way human
beings spend their time in future.
Consider Europe’s research commu-
nity. When Marie Curie began her pio-
neering work into radium-isolation she
did not know what she was looking for,
or that it would take 4 backbreaking years
of stirring pitchblende to yield just eno-
ugh radium to cover the tip of a teaspoon.
Marie’s vision and diligence eventually
earned her two Nobel prizes and paved
the way for the radiotherapy used to treat
cancer. Fast forward 100 years and com-
pare the drudgery of Marie’s experience
to that of the European scientists who
are building on her legacy. Today, resear-
chers working on breakthrough drug
trials at the University of Newcastle have
used cloud computing to cut the amount
of time it takes to achieve research results
by 99%.
Similarly, an image segmentation te-
chnique developed by Antonio Crimini
from Microsoft Research is showing
huge potential for speeding up radiation
treatment, with some estimates sugge-
sting that as much as 4 million hours
could be saved globally in particularly
complex cases.
Months and years spent undergoing
research or radiotherapy could soon be
compressed into a matter of weeks or
days. Just think what both these advan-
INNOVATION
A guest tries out the new Microsoft operating system Windows Phone 7 on a handset during the
launch in Singapore 12 October 2010 |ANA/EPA/STEPHEN MORRISON
>
Quote
ces could mean not only for medical pro-
gress, but also for the quality of life for
cancer sufferers and their families.
The breakneck speed at which tech-
nology changes means no one can truly
know how great its social impact will be
in 2020. But I do know that the pace at
which it metamorphoses means that re-
gulation must leave room for the industry
to breathe if Europe is to recover and flo-
urish. Online privacy and security are just
two examples of thorny issues regulators
must get right – both in relation to per-
sonal data but also cloud computing and
its impact on science and business. The
debate may seem complex and the an-
swers often elusive, but the fact it even
exists is a reflection of the freedom and
power technology has brought to mil-
lions.
For technology to remain the life-
blood of European business, science and
innovation, it needs a regulatory frame-
work that is both visionary and instruc-
tive. And it must be genuinely European.
That’s why we are fully supportive of
the Commission’s Innovation Union and
its aspiration to make Europe an exciting
and easy place to break research frontiers
and produce new products. There is
much to be praised in the Commission
blueprint, which builds on the Europe
2020 economic strategy and calls for a
multi-pronged approach to creating a
single market for innovation by 2020.
But progress in this area must be built on
the free and flowing exchange of ideas
that can only come from an ongoing con-
versation between policymakers, busines-
ses, academia and other stakeholders.
In the 21st century, Europe’s prospe-
rity will be built on her ability to remain
competitive, flexible and an incubator of
exceptional talent. But she must also have
workers who are able to execute the vi-
sion of her entrepreneurs and scientists.
New Europe | Page 55
New Year Special| January 2011
At present the gap that persists between
employers’ needs and workers’ skills is
growing.
In 5 years 90% of European jobs will
require some form of computing skills.
They will no longer be the domain of ex-
perts but the non-exchangeable currency
for the European worker who will work
longer and change jobs many times in his
or her life. Digital skills will be the rea-
ding and writing for 21st century: with-
out them Europe’s workers will be the
illiterates of the global labor market. Th-
at’s why it’s so important that Europe
takes the vital steps to invest in its future
even at a time of crisis.
Even when budgets are tight there is
a role for us all to play. Governments and
policymakers must maintain appropriate
levels of investment if Europe’s work-
force is to get the education and ICT
skills it so badly needs. The private sector
can also help by sharing its expertise and
knowledge, particularly with older wor-
kers, the disabled or those to whom tech-
nology and its applications do not always
come automatically.
The European Commission and the
Member States need to design the incen-
tives and instruments for up-skilling and
training to prepare the youth and the
workforce for the jobs of tomorrow. The
long-term prosperity of Europe’s next ge-
neration is dependent on her ability to
remain competitive.
Without adequate investments into
research and mechanisms to support in-
novation that will help Europe’s talents
thrive, there will be no fast-forward into
the future.
Page 56 | New Europe
New Year Special | January 2011 INFORMATION PARADIGMS
Is Open Diplomacy Possible?
By Peter Singer
Peter Singer is Professor of Bioethics at Princeton University and the author, most recently, of The Life You Can Save: Acting Now to
End World Poverty
RINCETON – At Princeton Uni-
P versity, Woodrow Wilson, who was
president of the university before he
became president of the United States, is
never far away. His larger-than-life image
looks out across the dining hall at Wilson
College, where I am a fellow, and Prospect
House, the dining facility for academic
staff, was his family home when he led the
university.
So when the furor erupted over Wiki-
Leaks’ recent release of a quarter-million
diplomatic cables, I was reminded of Wil-
son’s 1918 speech in which he put forward
“Fourteen Points” for a just peace to end
World War I. The first of those fourteen
points reads: “Open covenants of peace
must be arrived at, after which there will
surely be no private international action
or rulings of any kind, but diplomacy shall
proceed always frankly and in the public
view.”
Is this an ideal that we should take se-
riously? Is Wikileaks founder Julian As-
sange a true follower of Woodrow
Wilson?
Wilson was unable to get the Treaty of
Versailles to reflect his fourteen points
fully, although it did include several of
them, including the establishment of an
association of states that proved to be the
forerunner of today’s United Nations. But
Wilson then failed to get the US Senate
to ratify the treaty, which included the co-
venant of the League of Nations.
Writing in The New York Times ear-
lier this month, Paul Schroeter, an emeri-
tus professor of history, argued that open
diplomacy is often “fatally flawed,” and
gave as an example the need for secret ne-
gotiations to reach agreement on the Tre-
aty of Versailles. Since the Treaty bears
substantial responsibility for the resurrec-
tion of German nationalism that led to
the rise of Hitler and World War II, it has
US Secretary of Defense Robert Gates (C) listens to US Secretary of State Hillary Clinton
(R) deliver remarks on the Afghanistan-Pakistan annual review during a press conference at
the White House in Washington DC, US, 16 December 2010 |ANA/EPA/MICHAEL REYNO
>
Quote
a fair claim to being the most disastrous
peace treaty in human history.
Moreover, it is hard to imagine that if
Wilson’s proposals had formed the basis
of the peace, and set the tone for all future
negotiations, the history of Europe in the
twentieth century would have been worse
than it actually was. That makes the Tre-
aty of Versailles a poor example to use to
demonstrate the desirability of secrecy in
international negotiations.
Open government is, within limits, an
ideal that we all share. US President Ba-
rack Obama endorsed it when he took of-
fice in January 2009. “Starting today,” he
told his cabinet secretaries and staff,
“every agency and department should
know that this administration stands on
the side not of those who seek to withhold
information but those who seek to make it
known.” He then noted that there would
have to be exceptions to this policy to pro-
tect privacy and national security.
Even Secretary of Defense Robert
Gates has admitted, however, that while
the recent leaks are embarrassing and
awkward for the US, their consequences
for its foreign policy are modest.
Copyright: Project Syndicate, 2010. www.project-syndicate.org
Some of the leaked cables are just opi-
nion, and not much more than gossip
about national leaders. But, because of the
leak, we know, for example, that when the
British government set up its supposedly
open inquiry into the causes of the Iraq
war, it also promised the US government
that it would “put measures in place to
protect your interests.” The British go-
vernment appears to have been deceiving
the public and its own parliament.
Similarly, the cables reveal that Presi-
dent Ali Abdullah Saleh of Yemen lied to
his people and parliament about the so-
urce of US airstrikes against al-Qaeda in
Yemen, telling them that Yemen’s military
was the source of the bombs.
We have also learned more about the
level of corruption in some of the regimes
that the US supports, like those in Afgh-
anistan and Pakistan, and in other coun-
tries with which the US has friendly
relations, notably Russia. We now know
that the Saudi royal family has been ur-
ging the US to undertake a military attack
on Iran to prevent it from becoming ca-
pable of producing nuclear weapons.
Here, perhaps, we learned something for
which the US government deserves cre-
dit: it has resisted that suggestion.
Knowledge is generally considered a
good thing; so, presumably, knowing more
about how the US thinks and operates
around the world is also good. In a demo-
cracy, citizens pass judgment on their go-
vernment, and if they are kept in the dark
about what their government is doing,
they cannot be in a position to make well-
grounded decisions. Even in non-demo-
cratic countries, people have a legitimate
interest in knowing about actions taken by
the government.
Nevertheless, it isn’t always the case
that openness is better than secrecy. Sup-
pose that US diplomats had discovered
that democrats living under a brutal mili-
tary dictatorship were negotiating with
junior officers to stage a coup to restore
democracy and the rule of law. I would
hope that WikiLeaks would not publish a
cable in which diplomats informed their
superiors of the plot.
Openness is in this respect like paci-
fism: just as we cannot embrace complete
disarmament while others stand ready to
use their weapons, so Woodrow Wilson’s
world of open diplomacy is a noble ideal
that cannot be fully realized in the world
in which we live.
We could, however, try to get closer to
that ideal. If governments did not mislead
their citizens so often, there would be less
need for secrecy, and if leaders knew that
they could not rely on keeping the public
in the dark about what they are doing,
they would have a powerful incentive to
behave better.
It is therefore regrettable that the most
likely outcome of the recent revelations
will be greater restrictions to prevent fur-
ther leaks. Let’s hope that in the new Wi-
kiLeaks age, that goal remains out of
reach.

An Information Revolution
by Alexandros Koronakis
Alexandros Koronakis is the Director of New Europe newspaper
UROPE - If 2010 could take labels,
E one could be ‘the year of the diploma-
tic leakage’. Like a sewage system
after a storm, overflowing at the structurally
weakest points in the network, diplomatic cir-
cles, international institutions, the highest le-
vels of governments and security agencies
showed us that there is no such thing as ‘con-
fidential’.
The digital facilitation of revolution
Many have suggested that the next revo-
lution will be a digital revolution. The inter-
net, as a platform is one which lends itself to
a large public forum with no borders, boun-
daries, and no problems of distance; in fact,it
is the perfect platform for starting a revolu-
tion. However, platforms do not start revolu-
tions; information does. And we are in an era
where critical information is becoming more
accessible, less obscure, and can nowadays be
found in abundance.
Abundance of leakage
More than 640,000 non-public US docu-
ments were put into the public domain by
controversial organisation Wikileaks in 2010.
These included nearly 400,000 reports
known as ‘The Iraq War Logs’, and more
than 250,000 secret US Embassy Cables
from with information from around the
world (being leaked slowly but gradually). For
the first time, people from around the world
got a glimpse into what goes on behind the
closed doors of politics and military situation
rooms. The US was shown to be spying on
the United Nations, from top to bottom, ga-
thering intelligence on ally and foe, making
backroom deals with countries, and even pro-
moting interests of US companies. To a go-
vernment: simply embarrassing; to the
government of what is labelled the number
one power in the world: a disaster.
The operation that ensued, to take down
INFORMATION PARADIGMS
the Wikileaks website, and to take the ‘head
of the snake’ Julian Assange, co-founder and
spokesperson of WikiLeaks out of the pic-
ture was an elaborate plan to muffle one of
the only voices of truth left on the planet.
American joke/hero, Republican Sarah
Palin demanded that Assange be hunted
down like Osama bin Laden. Meanwhile
another Republican, presidential hopeful
Mike Huckabee has called for the people be-
hind the leak of the 250,000 diplomatic ca-
bles to be executed.
Leaks of information should of course
not happen. Those who handle sensitive in-
formation, whether at the government level
or the corporate level are both compensated
well for their trust, and face dire legal conse-
quences should they let even an inconse-
quential piece of classified information leak
out; let alone the ethical implications of be-
traying your country.
And had the information that was leaked
contained only information threatening to
US and international security, no one would
be supporting the dissemination of this in-
formation. Unfortunately, some of the infor-
mation was embarrassing to US
government(s) and administrations, and to
governments around the world. It was the
kind of information that empowers “the pe-
ople”, and brings clichés like “who is protec-
ting us from the protectors?” to the forefront.
The US government however did try and
contain the uncontainable, by explaining to
government employees that they are not in
fact permitted to read anything coming out
of Wikileaks as it remains classified informa-
tion. Meanwhile US college students were
advised that they should not post Wikileaks
information and comment on such material
on social media if they are considering go-
vernment positions. In the eyes of the federal
government, the documents remain classified,
"thus, reading them, passing them on, com-
www.flickr.com| tetedelacourse
menting on them may be seen as a violation
of Executive Order 13526, Classified Natio-
nal Security Information," said Maura Kelly,
Boston University law assistant dean for ca-
reer development and public services, in an e-
mail to students.
In my personal opinion, any intelligence
officer, or government official should have at
least as much information about his govern-
ment as is available on the public domain.
When classified documents enter the public
domain, disallowing access to them is a liabi-
lity, and not an asset; of course a government
carrying out such censorship also faces other
kinds of PR backlash, but that’s an entirely
different matter.
Cablegate, civil unrest, and all out attack
The global dislike to some of the disco-
veries made as a result of “cablegate” echoed
through some articles in the press, and com-
ments on websites, but initially did not trans-
late to protests on the streets. In today’s world
of political apathy, people seek to defend ca-
uses when they are linked to particular people
the can relate to and cases which impact them
directly, rarely nowadays seeking to protest
generic policies that should outrage them as
a matter of principle.
And so, through a combination of go-
vernments’ desires, and extremely counter-
productive timing, the attack on Wikileaks,
and its spokesperson and co-founder, Julian
Assange, took off.
Initially, civil feedback was in the charac-
ter of a non-activated response, a sentiment
of global distrust started to build against the
US Government. The work and message of
Wikileaks started to become increasingly un-
derstood and sympathised with by the public;
less government officials from around the
world and big companies who also fear they
may one day be uncovered.
New Europe | Page 57
New Year Special| January 2011
Pwnage and martyrdom
The offensive started with the DNS pro-
vider revoking their cooperation with Wiki-
leaks, which left the world without access to
the Wikileaks.org website. Amazon followed
suit, terminating their agreement to provide
server space, while Paypal discontinued the
facilitation of donation to Wikileaks through
their platform. Visa and even Mastercard pul-
led their support, leading to popular discon-
tent and defacing of the ‘Priceless’ advertising
campaign of Mastercard.
“Freedom of speech: Priceless. For every-
thing else, there is Mastercard”.
At the same time, old sexual assault char-
ges for Julian Assange resurfaced after politi-
cal forces became involved. The initial
charges were reportedly dropped within 24
hours after review from Sweden’s most senior
prosecutor, yet Assange was jailed in the UK,
and later released on strict bail conditions
once the charges were resurrected.
And so, the counterattack started. Th-
ough the Wikileaks.org site was not reacha-
ble in the first days of December , within 24
hours, over 100 mirror sites were launched.
By the end of the year, thousands of mirror
sites (more then 3000 in fact) were available.
Visa, Mastercard, Paypal and other Wi-
kileaks critics were attacked by its supporters
in the social media, while hackers also took
their turn in assaulting the organisations that
acted against Wikileaks and Julian Assange
with some success.
Assange’s arrest gave Wikileaks a figure
the general public could relate to. Assange
took on the characteristics of a martyr. And as
is the case with martyrdom, this made acti-
vated people to take the streets in protest; of
both Assange’s arrest and the attacks on Wi-
kileaks. Around the world, several protests
amassing hundreds of people in some cases
took place in December.
By no means is this a revolution. It is ho-
wever, an indication, that we, the people, still
have capacity for revolution. And if such a re-
volution ever comes, a revolution born of in-
formation, it has the potential to reach
international magnitude.
In every single way that the interested go-
vernment(s) tried to kill Wikileaks, they fai-
led. They even managed to make a martyr out
of a man that is still alive. It is safe to say that
so far; and it is fitting considering the chil-
dish political and administrative reactions we
have come to witness in the last months, the
US government and administration and
other governments, as well as companies who
have acted against Wikileaks, have been
‘Pwn3d’.
*Wikipedia: Pwn is a leetspeak slang term
derived from the verb own, as meaning to
appropriate or to conquer to gain ownership.
The term implies domination or humilia-
tion of a rival, used primarily in the Inter-
net-based video game culture to taunt an
opponent who has just been soundly defeated
(e.g., "You just got pwned!").
Page 58 | New Europe
New Year Special | January 2011
INFORMATION PARADIGMS

The Hidden Meaning of

the WikiLeaks Story
by Andy Carling
Andy Carling is a European Affairs Editor at New Europe newspaper

RUSSELS - When the scathing about journalists:

B Economist’s Brussels corre-

spondent, David Rennie, fi-
nished his time in the city, he
“The history of journalism is
not a glorious history, it is a history
of cover up punctuated by some
wrote a final article with a telling fine journalists who actually get the
description of a discussion with the truth out... It should be remembe-
Brussels elite: red that while newspapers are de-
“I found myself at a gala dinner creasing in their profitability and
in Brussels. Sitting on a gilt armch- their ability to project journalists to
air in a panelled stateroom, I was different places, the communica-
told by the head of a Brussels tion of knowledge is also happe-
think-tank that the Irish result pro- ning outside of the press and it
ved the idiocy of putting EU trea- includes email, You Tube, Twitter,
ties to the people. “F***ing voters,” and the most difficult information
he declared, languidly extending of all, which is what WikiLeaks
one arm so the hovering steward deals with. So that decrease in the
could refill his champagne glass. “I celebrated values of some of the
mean, f***ing voters, what do they press, is in fact being offset, not en-
know?” tirely but importantly, by the com-
Reading this anecdote, many in munication of knowledge outside
the Brussels bubble shifted uncom- the press.”
fortably in their seats, recognising Since our encounter, WikiLeaks
that attitude. What has this to do has unleashed an unimaginable
with WikiLeaks and Julian As- number of documents, many expo-
sange, the e-martyr? More than you sing the everyday duplicity and
may think. horror of wars we have initiated. In
The internet is one of the stran- return, the US has thrown away the
gest inventions of mankind. Ini- rulebook, bullying companies into
tially conceived as a method to blacklisting the whistleblowers and
have a cold war defence mecha- are plotting to have Assange extra-
nism, one that could re-route aro- dited, even though none of his de-
und damaged control centres and tractors have an idea of exactly
survive even a nuclear assault, it what law was broken by the noma-
was quickly co-opted by people and dic Australian behind the site.
used in unlikely and unpredicted It gets worse, many leading
ways. commentators and politicians in
It quickly became a web of con- the self-described Land of the Free,
nections between users, which soon including a recent Vice-Presiden-
pushed further and faster than the tial candidate, appear to be calling
'official' web of serious scientists. for Assange’s murder.
Facebook is called a social network, The Logo of the London-based organization WikiLeaks which leaked hundreds of On the side of WikiLeaks are
thousands of US State Department documents on 28 November 2010 which re-
but that term accurately describes vealed a hidden world of backstage international diplomacy |ANA/EPA/WIKILEAKS / HANDOUT
the thousands of mirror sites,
what the entire internet has be- which replicate their entire con-
come. I suggest that one way of lo- tents and a mysterious, heavily en-
the citizens and building a new fu- Perhaps the worst example of
oking at WikiLeaks is as a crypted file, put on bit torrent sites
ture? this split between the public and
human/machine symbiosis that has by WikiLeaks, called ‘insurance’.
One measure of their progress private faces of our leaders has been
re-routed against a damaged demo- We can only guess at what that
is just how different Europe is now, the examples of Afghanistan and
cracy. contains.
how more aware and educated the Iraq. But it is not just the political
Although it is rarely discussed, What WikiLeaks does, is inha-
citizens are. ideologues who are to blame, the
the EU is a damaged democracy. bit the cracks in our democracy and
Times have changed and the media are also at fault.
The founders were shell shocked their revelations hold up a mirror to
paternalistic attitude of the Euro- In the last few years, reporters
after a war that had seen people those in authority and shows us all
pean elite now seems, as in the and newspapers have fallen over th-
flock to demagogues, to ideologies their true selves, speaking truth to
Rennie anecdote, outdated, unde- emselves apologising for their de-
and leaders who can only be descri- power. For those, such as Rennie’s
mocratic and a little sinister. reliction of duty as war approached
bed as evil, whose thought, words dining companion, who inhabit the
The Brussels bubble has yet to and ran its course.
and deeds had a sulphurous stink to world of the elite, courtesy of the
make the psychological change to Dan Rather, the venerable CBS
them. Compared to that, who can taxpayer, we can see just how arro-
today’s world. journalist said recently that if the
blame them for ‘thinking ahead’ of gant and out of date they are. Apart
media had asked the tough que-
from the obvious, that if these guys
stions it should have, the war may
were so good, we wouldn’t be in the
not have happened. Rageh Omar,

>
mess we are in.
Quote
the BBC’s ‘Scud Stud’ winces as his
The WikiLeaks saga has a mes-
reporting is played back to him.
sage for them. Your day is over.
Others, such as Fox News still
There needs to be a better, more
cheer from the sidelines, conti-
open, more transparent way of con-
nuing to turn fact into fiction and
ducting policy and politics. Because
vice versa.
wherever democracy is broken, the
These gaps became the birth-
social internet will find a way aro-
place of WikiLeaks. When I inter-
und. In China, in Iran and yes, even
viewed Assange in June, he was
in our precious European Union.

Wikigov and Facebook Diplomacy
by Alia Papageorgiou
Alia Papageorgiou is New Europe’s Eurocentrique columnist, and a former EU Affairs Editor at
New Europe newspaper
European Commission President Jose Manuel Barroso arrives for the second day of the European head of states summit
in Brussels, Belgium, 17 December 2010. All but Barroso seem to be tweeting whether full time or part time and even he
has his spokespeople tweeting away |ANA/EPA/JULIEN WARNAND BELGIUM OUT
RUSSELS - When I came to
B Brussels just over three years now,
European Politicians were not on
Facebook, election ads were not made or
broken by one’s twitter adeptness and no
one in the European Commission had
been told that any of these should be an
option.
In the European Parliament I remem-
ber not more than one year ago having a
discussion with a Parliamentary Assistant
on whether their high profile MEP sh-
ould even consider twitter as I was cham-
pioning it and they had seen their
employer’s reluctance, not irrelevance to
politics.
On a recent blog post of Jon Worth’s I
rediscovered the concept and unexpected
results of Change.gov the Obama admi-
nistration’s attempt at inviting opinion
into the legislation process ‘for the first
time’ or at least the means.
Fast forward to the end of 2010 and
what we have is an electronic shift, politi-
cians are taking the challenge – all but
Jose Manuel Barroso seem to be tweeting
whether full time or part time additionally
added to by a press team and even Barroso
has all spokespeople tweeting away to
make the process of being in touch with
the Commission that much quicker if ne-
eded. And it works – they don’t need more
than that. Open Government is not only
necessary but being established by the last
Belgian Presidency conference of the year
(I believe) which was the Lift Off towards
Open Government Conference where
INFORMATION PARADIGMS
>
Quote
Herman Van Rompuy made a funny
about Wikilieaks and Neelie Kroes anno-
unced the European eGovernment Action
Plan 2011-2015.
One of my favorites has been open-
gov.gr and one of their labs where the in-
troduction of a fixmystreet.co.uk
(obvi ously to be fixmystreet.gr) was di-
scussed as an upcoming project in Athens!
I cannot tell you how many times I com-
plain about the footpaths in Greece – this
would be a Christmas miracle! But, I di-
gress..
Back to Mr Van Rompuy and the Wi-
kileaks aside… I don’t want to also jump
on the bandwagon and try to get an extra
200 clicks by putting Mr Assange’s fame
next to mine – that’s not the point – nor
do I want to get into the debate of whe-
ther he’s a terrorist, an unethical freedom
fighter or the best thing to happen to di-
plomacy since Fareed Zakaria was editing
Foreign Affairs, but, what I do want to
give him Kudos for is taking over the
media for the last month or so.
Touche.
I do see a space for an overhaul of pu-
blic documents and their structure for a
barrier breakdown between what journa-
lists and the public see and what actually
gets reported. But now that it has begun I
also marvel at the simplicity of such a site
as opengov.gr for example – and similar
projects in governments around Europe
and the world.
Listening to Vivek Kundra at the
Open Government Conference, the first
information Officer appointed by Presi-
dent Obama in the US in March of 2009
to streamline all digital projects was an eye
New Europe | Page 59
New Year Special| January 2011
opener. But then the Obama administra-
tion has not only appointed officers on
ICT but also on Innovation and tries to
look a the holistic picture.
As one Commission official explained
to the audience at the same conference in
Brussels in Europe we try to revive even
the dead policies that you know should be
left alone and prolong non workable pro-
jects as much as possible.
The Cloud could be the future of it all,
the US could be a template of it all, and
although seemingly heavy and immovable
even the Commission has managed to
tweet its way into 2011 (not to mention
the treaty changes that just seem to hap-
pen left right and center these days at the
European Council, but that’s another co-
lumn). I’ll leave all these thoughts with
you and wish you an abundant 2011 (Year
of the Rabbit where we’ll all have a great
time according to the Chinese) and with
Neelie Kroes’ (Vice President of the Eu-
ropean Commission Responsible for the
Digital Agenda) closing remark at the
Open Government Conference.
“Europe should be the world’s labora-
tory for innovation in the public sector.
We have the talent, the imperative and the
technologies. We must be very concrete.
Find the real problems in our pilots and
experiences and deal with them. That is
the recipe for getting Every European Di-
gital,” Commissioner Kroes said.
That is the recipe for the next steps
ahead.
I’m heading to the kitchen.
Page 60 | New Europe
New Year Special | January 2011
On Human Rights in the World
and the EU's Policy on the Matter
by Laima Andrikiene
Laima Andrikiene is a Member of the European Parliament from Lithuania representing the largest political group in the EP -
the European People's Party (EPP). Apart from being the EP's Rapporteur on the Annual Report on human rights and the
European Union's policy on the matter, she is also a Vice-Chair of the EP's Sub-Committee on Human Rights
People hold posters depicting former Yukos chief Mikhail Khodorkovsky (R) and former Menatep head Platon Lebedev (L) during a protest against the pro-
nouncement of the verdict, near the Khamovnichesky courthouse in Moscow, Russia 15 December 2010. The pronouncement of the sentence on the second
case against Mikhail Khodorkovsky and former Menatep head Platon Lebedev was postponed to 27 December |ANA/EPA/MAXIM SHIPENKOV
RUSSELS - Human rights serve as
B
the guiding principle in the European
Union's (EU's) external action. Hardly
are there other state-actors in the world that
would place such an emphasis on the spread
and protection of human rights abroad.
This is also the area where normally the
EU finds a common position and is able to
take a consolidated stance. In this regard the
European Parliament (EP) is one of the most
important players, as it normally takes a strong
and principled position on human rights vio-
lations wherever they would occur. The fa-
mous EP Sakharov Prize for Freedom of
Thought, which went to Cuban dissident
Guillermo Fariñas this year, has gained repu-
tation as one of the most prestigious human
rights awards in the world. In the same way
the EP's Annual Report on Human Rights in
the World and the European Union’s policy
on the matter is a tool to assess the overall si-
tuation of human rights in the world and to
exert control over the actions and decisions
taken by the EU Council and the European
Commission. I was the EP’s Rapporteur for
the latest Report that was adopted in the EP
plenary on 16 December. This Report, cove-
ring the period from the middle of 2008 until
the end of 2009, was adopted by an overwh-
elming majority of MEPs. It was preceded by
a discussion with the EU’s High Representa-
tive for Foreign Affairs and Security Policy
Catherine Ashton.
European and international context
Being the EP’s Rapporteur I had to take
into account a number of turbulent and game-
changing developments that had an impact on
the situation of human rights in the world and
also on the EU's action in this field.
One of them was certainly the global fi-
nancial and economic crisis which started at
the end of 2008 and which had an especially
HUMAN RIGHTS
>
Quote
negative impact on economic, social and cul-
tural rights. In this year's Report we have cle-
arly recognized that the rights of the poorest
people were affected most and because of ri-
sing global prices, millions have been strug-
gling to meet basic needs in a number of
countries in Africa, Asia and Latin America.
Another macro-trend was the ongoing fight
against terrorism which continues to cause
problems when it comes to reconciling the
anti-terrorist measures with the respect for
human rights. This year we also stressed the
lasting and long-term negative impact climate
change has on human rights, especially for
vulnerable groups in the developing world,
such as indigenous peoples.
Another major development for the EU
has been the adoption of the Treaty of Lisbon
and the creation of the European External
Action Service (EEAS). The EP has high
hopes that the EEAS, headed by Baroness
Catherine Ashton, will place a strong emph-
asis on the mainstreaming of human rights
throughout the EU’s external action.
I made this point clear to EU’s High Re-
presentative during the denate in the EP ple-
nary. I told Baroness Ashton that primary
attention within the EEAS should be focused
on strengthening democracy and protecting
human rights in the world and this should be
reflected both in terms of structure of this ser-
vice, as well as its funding. It may be a Direc-
torate for Human Rights and Democracy
(International Law) or another structure but
with the same content. What we should avoid
is reducing or sidelining human rights from
the main agenda of the EU and the structure
of the EEAS. We have also suggested creating
within the EEAS the posts of Special Repre-
sentatives for Human Rights, who would
work in different countries or regions, espe-
cially where the EU does not have its diplo-
matic representations. These Special
Representatives should have full mandate to
defend human rights in places of their work.
Horizontal issues vs specific cases
One of the dilemmas I had to face was
whether to concentrate on horizontal issues or
to engage in "naming and shaming". At the
end a middle track was chosen where we con-
centrated on major horizontal issues but did
not shy away from mentioning the most con-
spicuous cases of human rights violations.
A special attention in the Report was
given to such horizontal issues as death pe-
nalty, freedom of religion and the situation of
human rights defenders. The EP reiterated its
EUROPEAN
PARLIAMENT
tough stance against any form of capital puni-
shment and condemned countries like China
or Iran, which represent respectively first and
second positions in the league table of coun-
tries with the highest number of executions in
the world. The EU also expressed its deep
concern that discrimination based on religion
or belief still exists in all regions of the world,
and that persons belonging to particular reli-
gious communities, including religious mino-
rities, continue to be denied their human
rights in many countries. MEPs from diffe-
rent political groups also congratulated the
upgrade of EU Guidelines on human rights
defenders which should ensure that human ri-
ghts defenders (NGOs or individuals) in any
country would be provided with training, fi-
nancial assistance or physical protection in the
case that they might be threatened by local au-
thorities. EP’s Report is complemented by an
extensive supplementary list of specific human
rights violations across the world, which was
taken into consideration while preparing the
Report. These are specific names, specific co-
untries and real cases of human tragedy and
lost lives. One such case – the death of a Rus-
sian lawyer Sergei Magnitsky on 16 Novem-
ber 2009, caused considedarable controversy
within the EP. Apart from stating that this
case is an outstanding example of the serious
shortcomings within the country's judicial sy-
stem, the EP also called on the Council to
“consider imposing an EU entry ban for Rus-
sian officials involved in this case” and encou-
raged EU law enforcement agencies to
“cooperate in freezing bank accounts and
other assets of these Russian officials in all EU
Member States”.
MEPs also strongly condemned the on-
going second trial of former YUKOS oil com-
pany chief Mikhail Khodorkovsky and his
business associate Platon Lebedev. In the view
of the EP, this trial is "representative of unfair
trials in Russia" and MEPs therefore called
upon Russian authorities to ensure that fun-
damental norms of due process and human ri-
ghts are respected in the prosecution of these
and all other defendants in the country’s ju-
stice system. The EP, as a scrutinizing institu-
tion, also did not shy away from criticising the
Council and the Commission about the lack
of results from their actions and even the lack
of benchmarks to assess whether actions in the
human rights area have given any results. In a
strong message, MEPs expressed their disap-
pointment at the "lack of progress achieved by
the human rights dialogues and consulta-
tions", which are conducted by both Com-
mission and Council officials.
The EP has come a long way to find a
common ground on human rights issues,
especially the most sensitive ones. This shows
that the EP stands united on human rights is-
sues. It also shows that the days when the EP
would just applaud the Commission or the
Council are over. The EP is now a serious
player in the area of human rights and all the
stakeholders operating in the field will have to
take note of that.

Democratic Security and Respect for
Human Rights in the 21st century
by Thorbjørn Jagland
Thorbjørn Jagland is Secretary General of the Council of Europe
TRASBOURG - Europe has witnes-
S
sed dramatic changes in recent years ,
which gave Europe more peace and
unity than ever before in its history, as well as
a constant economic growth which - combi-
ned with a colossal technological revolution -
afforded to European societies an unprece-
dented high level of affluence. The financial
crisis of recent months now threatens to un-
dermine general stability and self-confidence,
creating serious uncertainty. The task is big-
ger than just to pull Europe out of the eco-
nomic predicament. Our societies are
changing. Immigration flows are modifying
international population trends.. In several
European States the number of people with
the immigration background constitute more
than 10 % of the population. At the same
time the demographical tendencies show cle-
arly that the European societies are aging.
More and more people look with concern at
the sustainability of the European model of
social welfare. European security, respect for
human rights, and the rule of law are surely
facing new challenges. The international
agenda in the last several months has been
dominated by the economic issues. The world
has been going through the most serious eco-
nomic recession in many years. Globalization
hasn’t been a universal formula providing an
answer to all challenges. It is natural that for
both the politicians and the ordinary people
the most important imperative has become to
protect the economic conditions of the life of
the society - jobs, wages, pensions, cost of li-
ving. Politics becomes more pragmatic. Aspi-
rations gravitate down to the earth.
Yet, as the world and Europe are now re-
covering from the crisis, we should remind
ourselves of the key lesson of the past 60
years: that the sustainability of the civilizatio-
nal progress can only be based only on uph-
olding the universal values of the human
civilization – the respect for human rights and
fundamental freedoms.
HUMAN RIGHTS
Human rights activists protest in front of the Brandenburg Gate in Berlin, Germany, 10 December
2010 |ANA/EPA/STEPHANIE PILICK
>
Quote
At the global level, the Universal Decla-
ration of Human Rights, proclaimed by the
General Assembly of the United Nations in
1948, entails essentially political commi-
tments, whereas the European Convention
on Human Rights is a legally-binding char-
ter with a specific Court judging on human
rights violations. The recent 60th anniversary
of the European Convention served as an op-
portunity to send an important signal – the
Convention has become unalienable part and
parcel of the European identity. Its provisions
are the compass for the progress of the Euro-
pean project. Perhaps not a model for other
continents, but it should serve as the source
of inspiration to our partners across the globe.
The Council of Europe continues to pur-
sue normative standard-setting and monito-
ring of legislation in our 47 Member States,
in order to prevent violations happening. Our
mission is democratic or “soft” security : pro-
tection of fundamental rights, tolerance, in-
tercultural dialogue, social cohesion, respect
for minorities, prevention of extremism, ra-
cism and torture, combined with intergo-
vernmental co-operation against crime,
terrorism, corruption, money laundering, and
trafficking of human beings.
The Strasbourg hemicycle is the only
pan-European forum where the 27 European
Union countries are on an equal footing with
20 other European nation states such as Rus-
sia, Turkey, and states in the Balkans, and the
Caucasus.
Europe is looking back on sixty years of
human rights and fundamental freedoms
provided by the Convention. We can be
proud of the achievements: the concept of a
liberal society rooted in democracy with rela-
tive peace and prosperity has been developed
and broadened to ever more countries on the
European continent.
Today, I believe, international politics has
come to a crossroads. We need a strong mul-
tilateralism, rooted in the idea of human ri-
ghts and sustained by a rational and critical
debate, and adapted to the challenges of the
21st century.
Peace and stability need new approach to
security - a political innovation and a com-
plementary element to traditional military
“hard security”. And “innovation is key to any
success”, wrote Austrian economist Joseph
Schumpeter. Today our societies are changing
from within. Main threats to security origi-
nate within States rather than between them.
The democratic acquis of Europe are at stake.
The European response to the challenges
should be based on what I call the deep secu-
rity concept. Deep security is built only by
New Europe | Page 61
New Year Special| January 2011
upholding the values upon which the society
is based and not by sacrificing them. Security
should be fostered through more democracy.
The democratic principles and practices can
make it stronger. The deeper the common va-
lues are rooted in the society, the stronger its
security. Deep security implies the need to ch-
ange our mindset, to make it adaptive to ch-
ange and to cultivate the culture of being
open to change and diversity. The concept of
deep security means building security by par-
ticipation and not simply by passive protec-
tion.
To be a European citizen is to be a mem-
ber of a community based on full enjoyment
of individual rights – guaranteed by demo-
cratically elected governments and protected
by an impartial and independent judicial sy-
stem – as well as tolerance, mutual respect and
acceptance of diversity. It also means acce-
pting certain responsibilities in respect of oth-
ers, complying with the rules of democracy
and contributing to the development of a fair
and cohesive society. The European system of
the protection of human rights will be signi-
ficantly strengthened by the accession of the
European Union to the European Conven-
tion of Human Rights. Mandated by the Li-
sbon Treaty, the accession negotiations have
acquired promising dynamics. Hopefully they
would come to the successful conclusion in
2011. The “European model” is under scru-
tiny due to a resurgence of intolerance and di-
scrimination. Many Council of Europe
member states have seen a deterioration of
social ties, growing religious radicalism and
inter-ethnic tensions leading too often to vio-
lence. Distrust, doubt and fear have increased
divisions between different communities and
are entering our hearts and minds. We must
have confidence in our democratic core va-
lues – the values for which we have fought.
Europe is a continent of minorities. The im-
portant question now – key to the concept of
“soft security”, is how are we going to “live to-
gether”?
A group of nine eminent persons, chaired
by former German Minister of Foreign Af-
fairs, Joschka Fischer, is helping the Council
of Europe, under the current Turkish Chair-
manship, to advise on how we can best ad-
dress the new challenges and safeguard our
core values of democracy, human rights and
the rule of law. The purpose of the Group is
fundamentally to look deeper beneath the
surface of current political developments in
Europe and examine their root causes. I am
persuaded that it is necessary to take a closer
look at what is happening to our societies,
analyse the anxieties of the people, their
needs, and their preoccupations. Without un-
derstanding the changes occurring in our so-
cieties, without listening attentively to the
expectations of European citizens, no organi-
sation will be able to provide relevant answers
and be judged as useful in times of rapid ch-
ange. The pace with which European socities
are changing will not recede. The Council of
Europe will be busy for the years ahead. Its
role as the guardian of the common values is
as important as ever.
Page 62 | New Europe
New Year Special | January 2011
EU Diplomacy Must
Put Human Rights Centre Stage
by Nicolas Berger
Nicolas Berger is the Director of Amnesty International’s European Institutions Office in Brussels
High Representative for Foreign Affairs and Security Policy Catherine Ashton in Brussels, Belgium, 17 December 2010. Worryingly, Baroness Ashton’s vague assurances do little to reassure us that her new wunderkind
will deliver on her promises |ANA?EPA/JULIEN WARNAND
RUSSELS- The European Union’s
B spanking new diplomatic service,
known officially as the European
External Action Service (EEAS), finally
saw the light of day on 1 December. It was
a subdued birth. Neither the mother nor
the midwife had a lot to say on the big
day. But however restrained the Service’s
start in life has been, Amnesty Internatio-
nal is concerned that if its parents’ dreams
are to be fulfilled, the Service will need to
place human rights at the very heart of the
EU’s foreign policy. Worryingly, Baroness
Ashton’s vague assurances do little to re-
assure us that her new wunderkind will
deliver on its promises. Indeed, it seems
all too likely that if the Service develops
in the direction we have been encouraged
to believe, the EU’s capacity to work on
human rights will be drastically slashed.
When the Lisbon Treaty finally came
into effect a year ago, after a long and ex-
cruciating wait, we were assured that its
guiding spirit would dramatically dyna-
mise the EU’s impact on human rights
policy around the world. To meet these
audacious but laudable goals, the EEAS
clearly needs to have the passion and ca-
pacity to defend human rights and inter-
national law. But this can only happen if
we have a major spring clean of the fo-
reign policy house. We need to shift
human rights out of the attic and into the
living room, ensuring that no visitor can
avoid bumping into it. For this to happen,
the EEAS must have a workable structure
and staff, whether at its Brussels head-
quarters or in its diplomatic missions (de-
legations) across the globe. What worries
HUMAN RIGHTS
> Quote
me on this count is that the Service has
been far from transparent nor has it spe-
cified how it will become a human rights
heavy-hitter, and key stakeholders, inclu-
ding ourselves, have been essentially igno-
red. So do we fear that the EU will see
only a modest increase in its human rights
reach? If only we had such mild misgi-
vings.
Mainstreaming isn’t dilettantism
Unfortunately Baroness Ashton has
done nothing to deny the growing suspi-
cion that the EEAS will be taking a major
step backwards, further marginalising
human rights. There is nebulous talk of
‘mainstreaming’ human rights throughout
the Service. Is this an attempt to claim
that every official will be thinking of
human rights throughout his or her wor-
king day? How will anyone measure the
impact of all this part-time pondering if
there are no specialists to monitor it, take
the initiative or set goals? Thirty years of
gender mainstreaming experience have
shown that experiments of this type are
useless if there is no central body to set
policy and oversee its implementation.
A Directorate for human rights
The answer is clear. The EEAS needs
a strong and well-staffed human rights di-
rectorate. Anything less and it won’t be
able to fulfill the EU’s human rights am-
bitions and obligations. The directorate
must have the resources to assess the ex-
ternal human rights impact of all EU po-
licies. Mainstreaming simply cannot work
without the support of a strong, well-re-
sourced team of experts. The directorate
would also ensure that human rights con-
siderations are central to decision-making
in other key areas like climate change, po-
verty reduction, trade, energy, health, and
Common Security and Defence Policy
(CSDP).
A human rights focus in
EU delegations
Amnesty International is also concer-
ned that the current plans for the EEAS
will mean that the EU’s diplomatic mis-
sions, (delegations), will lack human ri-
ghts know-how on the ground. It would
be a retrograde step if only a few delega-
tions had human rights focal points. Why
should we allow the existing, far-from-
perfect, standards to deteriorate? If the
bulk of delegations in countries with
major human rights abuse don’t get the
necessary resources and expertise the EU
won’t be able to bolster the vital work of
local human rights defenders, and would
find it hard to identify early warning signs
and head off abuses before they occur.
High-level responsibility
In closing, I should add that Amnesty
International firmly believes in the need
for explicit human rights portfolios at all
levels of the EEAS to ensure that human
rights experts are fully integrated into its
decision-making. It follows that proper
consideration of human rights in the Ser-
vice’s decision-making is unlikely to occur
unless there is a high-level official in the
management team, a deputy secretary ge-
neral or higher, who holds specific re-
sponsibility for human rights. In the
season of miraculous births, the attributes
I have listed would do Baroness Ashton’s
newborn, and Europe’s human rights
clout, a power of good.
 New Europe | Page 63
CONTENTS: ENERGY New Year Special| January 2011

ENERGY & CLIMATE KASSANDRA

Les Faits Sont Têtus
Günther Oettinger Joe Leinen Kostis Geropoulos

Securing Europe’s
Energy Supply
Europe’s Environmen-
tal Responsibilities
Gazing through the
Energy Crystal Ball
68
for 2011

64 66 67

ADVERTISEMENT
Page 64 | New Europe
New Year Special | January 2011
Securing Europe’s Energy Supply
The priorities for European energy policy in the coming years
by Günther H. Oettinger
European Commissioner for Energy
Icicles hang on a pipeline forwarding Russian natural gas from Ukraine at the receiving station of Mol Natural Gas Transporting Corp. in Beregdaroc, 302 kilome-
ters east of Budapest, Hungary, near the Ukrainian border, 3 January 2009. The gas crisis of 2009 and the power cuts in Italy in 2003 and Germany in 2006 show
that Europe’s network is too weak to deal with interruptions |ANA/EPA/ATTILA BALAZS
RUSSELS - Energy is the heart of our
B economy and our society. If we invest
in our energy system, we are investing
in the future. If, however, we neglect our energy
supply and energy efficiency, the consequences
could be profound and irreversible. In this re-
spect, our plans regarding energy technology
and infrastructure are crucial.
The market guarantees our energy supply.
But the proper regulatory framework is vital
for the functioning of the energy market. The
third package on the internal energy market
has created this new framework at EU level.
However, energy supply and technology deve-
lopments are not just closely linked to our daily
life but also to major geopolitical events in the
world. Political signals have a direct influence
on the decisions of the energy industry.
The need to invest in new energy infra-
structure, technologies and sources of energy
is enormous. It is estimated that by 2030 up to
one trillion euros will have to be invested in the
European electricity grids and electricity ge-
neration and 150 billion euros in the gas net-
work, excluding import pipelines from third
countries.
We must not forget that investments in the
energy industry work on a long-term basis. In-
vestments made today date back to decisions
made years ago and determine the structures
of our energy supplies for the period up to
2030 and 2050. The players in the energy arena
thus have a major responsibility vis-à-vis fu-
ture generations.
As the European Commissioner's new
Energy Commissioner, I can confirm that in
recent years the EU has succeeded in develo-
ping a comprehensive European energy policy.
This was a process that was pursued jointly and
ambitiously by the Member States (and the
German Länder in particular), the industry
and the European Institutions.
The EU’s energy policy sets out clear re-
quirements and targets for sustainable, compe-
titive and secure energy. Our main aims are to
ENERGY & CLIMATE
>
Quote
achieve a 20% reduction in greenhouse gases,
to provide EU consumers with a supply that
includes a 20% share sourced from renewable
energies and a 20% improvement in energy ef-
ficiency by 2020.
The January 2008 legislative package for
energy and climate binds the Member States
to these ambitious objectives in the area of re-
newables and emission reductions. The EU
will not be able to realise its ambitious goals
without making important and immediate ch-
anges to energy networks and comprehensive
investments in new technologies and in a wide
energy mix from emission-free and domestic
energy resources, including nuclear technology
if a Member State has decided in favour of it.
The energy industry plays a significant role
in this respect, as it is obliged to undertake and
finance projects to secure the energy supply
and new initiatives for research and develop-
ment. The most important condition affecting
the private sector's willingness to invest is a
clear and stable regulatory framework. One of
the main goals of the energy and climate pac-
kage and the third internal market package for
energy to complete the internal market for gas
and electricity was to create this framework.
Implementing the third internal market
package for energy will involve considerable
changes in terms of network planning, inclu-
ding requirements on unbundling, coordina-
ting the regulations through the European
Agency for the Cooperation of the Energy
Regulators and reorganising how the Euro-
pean networks of transmission system opera-
tors (ENTSO-E and ENTSO-G) work
together. Another key point is the develop-
ment of the Community-wide ten-year net-
work development plans and increased
transparency to promote an efficient and se-
cure network.
In order to send the right signals to the
energy market, we must now begin laying the
foundations for a more sustainable Europe. My
first priority as Energy Commissioner is to im-
plement the new European regulatory frame-
work promptly and properly. This will also
considerably improve the conditions for the se-
curity of our energy supply. We must also, ho-
wever, work together with the Member States
and the European Parliament to develop Eu-
ropean measures to foster new energy net-
works and innovations and improve the
investment climate. The challenge for us is to
attain a low-carbon economy, with the ulti-
mate objective of achieving emission-free
energy generation and transport sectors.
I would like to specifically highlight three
topics that are of fundamental importance for
the proper functioning of the internal market
in energy and our future energy supply, namely
technology, infrastructure and finances.
Infrastructure
Infrastructure is the circulatory system of
the internal market in energy. It is intrinsically
linked to the security of the energy supply. It is
vital for a successful decarbonisation policy,
which requires adjusting the network to more
renewable and decentral production.
The European Commission has been exa-
mining the security and sustainability of our
energy networks since 2006. The new focus in
the European Union’s energy strategy is thus
on energy networks and transport.
The gas crisis of January 2009 and the
power cuts in Italy in 2003 and Germany in
2006 show that Europe's network is too weak
to deal with such interruptions. In 2009, many
of the new Member States had no alternatives
to compensate for the Russian gas supply
being cut off. And the situation in Europe will
most likely get even worse, as our gas pipelines
are antiquated in places and there are inade-
quate links between the Member States. Do-
mestic resources are also in continual decline.
At the moment, around 61% of the EU’s
domestic consumption of natural gas comes
from imports. 42% of these imports come from
Russia, 24% from Norway, 18% from Algeria
and around 16% come from other countries,
the latter mainly in the form of liquefied natu-
ral gas. At national level, some Member States
get their natural gas from a sole supplier for hi-
storical reasons. With regard to natural gas, we
therefore need to increase import capacities
and diversify sources. New gas pipelines are ne-
eded, particularly in the new Member States,
and the import sources and channels must be
diversified. We must consider new possibilities
for storing gas and new ‘reverse flow’ projects.
The Nabucco pipeline in southeast Europe
and the Nord Stream gas pipeline will play an
important rule in securing gas supplies for Eu-
rope in the future and our policies must sup-
port these.
Liquefied Natural Gas is particularly im-
portant. It promotes not only the liquidity of
the gas market, but also competition on the in-
ternal market in energy.
As far as the electricity industry is concer-
ned, we need new, modernised and smart grids
to achieve our climate objectives. Our current
network is not geared towards decentral elec-
tricity production at a remove from the user.
This is an opportunity to develop sustainable
and flexible smart grids. Increased use of rene-
wable energy sources requires cross-border so-
lutions. Wind, water, solar and geothermal
energy are dependent on local conditions. The
lack of suitable grid connections is an obstacle
to investments in renewable energies and de-
central production.
In the electricity sector we need a greater
diversification of production and more flexibi-
lity in consumption. For this we need to be able
to feed offshore wind energy and renewable
energies into the European network to a gre-
ater extent. The European network must be
flexible enough to allow this. We need a plan
for creating a European smart and high-per-
formance grid system. We must also discuss
and decide how to finance it (though subsidies
or transit charges).

We must also exploit the potential of the
smart grid in combination with smart electri-
city meters. By better managing demand, net-
work operators could better manage peaks and
troughs in production and reduce the need for
considerable surplus capacities (often from
coal, gas or oil) by up to 50%. By better con-
trolling electricity use, consumers could reduce
their energy consumption by 20% and thus
contribute to reducing the total demand,
energy costs and CO2 emissions. An electri-
city network with more information and com-
munication technology will be important for
this transformation. The convergence between
information and communication technology
and energy production is a central element of
a smart grid.
Thus, it is critical to address the challenges
(such as the need for financing, technical un-
certainties with regard to data protection and
standardisation) for using smart grids at Eu-
ropean level.
Technology
We must develop a new generation of te-
chnologies with regard to achieving the '20-
20-20' goals and a C02-free energy sector by
2050. Even if some of these technologies can-
not be used in the medium term, it is very im-
portant to launch them as soon as possible. It
often takes decades before new technologies
become established and achieve a significant
market presence. It is estimated that the global
market for renewable energies will generate
over $500 billion (or €418 billion) in the next
four years. It is clear why investors from all
areas want to profit from this market.
Energy technologies and services that are
low in CO2 will undoubtedly be the biggest
growth sectors in the coming decades. The best
way to grow this market is through European
cooperation. The European Strategic Energy
Technology Plan (SET Plan) has paved the
way for this. European policy must make it ea-
sier to introduce new and proven technologies.
Many technologies, such as photovoltaics, off-
shore wind, network technologies or carbon
capture and sequestration, are still too expen-
sive and not yet efficient enough. At present,
research and development are chronically un-
derfunded in the EU. We risk missing the boat
if there is a boom in the markets for new
energy technologies. The Commission is assu-
ming that in the next ten years another €50
billion must be invested in energy research.
This would almost triple the annual volume of
investment in the EU, by increasing it from
ENERGY & CLIMATE
three to eight billion euros.
It is clear that the Member States, compa-
nies and research centres must combine their
efforts to advance the technologies required for
future energy supplies by the year 2020. The
Commission’s new EU2020 strategy will be
highly relevant for this.
Despite – or perhaps because of - the eco-
nomic crisis, there is a greater need than ever
for both public and private-sector investment
in energy technologies.
Finances
Strategic goals and political commitment
alone will not build any infrastructures or place
any new technologies on the market. Money
is needed for that, but that is a significant ob-
stacle in the current economic crisis. The In-
ternational Atomic Energy Agency has
established that following the financial and
economic crisis, in 2009 investments in the oil
and gas infrastructure decreased by around
21% worldwide in comparison with the previ-
ous year. This means that the amount globally
invested fell by around 100 billion US dollars
(83 billion euros).
In their economic recovery plan, the Com-
mission and the Member States committed
themselves to boosting infrastructure inve-
stment in the European economy in 2009 and
2010. In May 2009 the European Parliament
and the Council adopted an energy financial
package of €3.98 billion as part of the Euro-
pean Economic Recovery Programme. Never
before has the EU made such a contribution
to the energy sector. This stimulus financing
boosts investment projects in the gas and elec-
tricity connections sector (€2 365 million), off-
shore wind farms (€565 million) and carbon
capture and sequestration (€1 050 million). In
this way, the economic recovery package will
contribute to regenerating the European eco-
nomy, improving the security of the energy
supply and reducing greenhouse gases.
In spring 2010 the Commission produced
an initial report on the European economic re-
covery package and reported on the progress
in energy interconnections, carbon capture and
sequestration and offshore wind farms. Some
of the package's projects are also priority pro-
jects in the Trans-European Energy Network
(TEN-E) programme.
As far as the financial framework for
energy technologies is concerned, demonstra-
ting and marketing carbon capture and seque-
stration (CCS) will continue to be a high
priority. Demonstration of the technology at
an early stage is an important prerequisite for
its commercial use. In recent years, we have
seen a lot of positive developments in this area,
particularly in the business sector. Some CCS
projects also received support from the econo-
mic recovery package. Other financial incen-
tives for demonstrating CCS will be provided
by the new European emissions allowance tra-
ding scheme.
Without considerable funds, we will not
improve the security of supply and reach our
climate and energy targets. Securing the
energy supply has a price and the earlier we in-
vest in it, the lower this price will be. It is, the-
refore, particularly important not to allow the
recession to restrict our efforts to invest. The
European measures will not just stimulate the
economy. They will also decrease our depen-
dency on fluctuating oil prices in the future.
New European Energy
Infrastructure Instrument
We can also use the experience from the
economic recovery package for the develop-
ment of the new infrastructure package reque-
sted by the European Council.
By the end of the year the Commission
will present a package showing the challenges
and specific requirements for developing new
electricity networks to facilitate the integration
and extension of renewable energy sources.
We must proceed with a broad scope and,
for example, also include the promotion of sto-
rage capacities, of smart European high-per-
formance grids and networks and low-carbon
energy sources (renewable energy sources and
CCS). The public sector will not be able to pay
for everything, but it will be able to offer an in-
centive. New financing possibilities must also
be fully utilised in the future, for example th-
rough a combination of financing with grants
and low-interest loans (calls for tender: EIB).
Nuclear energy
We note a growing increase in nuclear
energy worldwide. Around 60 States have
asked the International Atomic Energy
Agency for help in developing this technology.
Within the EU, most countries already use nu-
clear energy. Other Member States are taking
concrete steps to start nuclear energy pro-
grammes, resume them or develop them fur-
ther.
With around 150 reactors, which produce
around a third of Europe’s electricity, the EU
has the greatest park of nuclear power plants
worldwide. The nuclear companies in the EU
New Europe | Page 65
New Year Special| January 2011
are world leaders. This goes for all stages of the
fuel cycle: from the construction and opera-
tion of nuclear power plants to enrichment and
reprocessing. Nuclear energy can thus be an
answer to both climate change and securing
the energy supply, and also help make the EU
more competitive. As an important source of
low-carbon electricity, it is now a key techno-
logy in Europe’s energy mix. While public opi-
nion in Europe does recognise its advantages,
it is also aware of the risks of nuclear energy.
This calls for a continuing policy to ensure that
maximum standards are set and kept with re-
gard to safety and security requirements. And
this is the challenge that the EU is setting
itself.
The EU is therefore trying to stimulate a
public debate on nuclear energy and the pos-
sible actual contribution to the EU’s energy
policy goals, while leaving the Member States
free to choose their own energy mix. Keen to
ensure transparency, the Commission has set
up a 'European nuclear energy forum' with the
support of the European Council, to discuss
the advantages and disadvantages of nuclear
energy with all stakeholders and with no holds
barred.
The EU is also prepared to use the instru-
ments of the Euratom treaty to ensure the best
framework for radiation protection, safety and
non-proliferation. Last year in the Council the
Member States unanimously adopted a Di-
rective on the safety of nuclear installations.
And we remain ambitious.
Showing that we can dispose safely of the
waste produced by nuclear power plants or re-
sulting from medical procedures is vital to en-
sure a higher level of acceptance of this source
of energy. This is particularly evident in Ger-
many, where on the one hand, the Asse nuclear
waste storage facility shows what should not
be done and, on the other hand, valuable time
was wasted by halting the exploratory work in
Gorleben. In this light, I intend to present a
Directive on nuclear waste later on this year.
The aim is a common framework for the safe
disposal of radioactive waste and spent fuel
rods throughout the Community. If we use nu-
clear energy, we must also develop a plausible
solution for its final storage. With an effective
legal framework for safety and non-prolifera-
tion, nuclear energy in Europe can make a
long-term contribution to securing the energy
supply, competitiveness and climate protection.
Ambitious but realistic
Our vision of achieving a carbon-free
energy and transport system by 2050 is indeed
ambitious but entirely realistic. Besides a con-
siderable increase in energy efficiency, we want
to produce electricity exclusively from sources
with the lowest possible CO2 emissions. We
are talking about a future energy mix produced
predominantly from renewable and nuclear so-
urces, but also fossil fuels with carbon capture
and storage.
For these reasons, the EU must above all
create the necessary energy policy stimuli and
incentives for investment to boost investments
in infrastructure, technology and energy effi-
ciency. The above-mentioned smart grids and
networks and alternative fuels play a major role
in this regard. Ultimately it comes down to the
energy mix and market players’ behaviour.
The internal market in energy, energy sup-
ply security, energy efficiency, renewable ener-
gies, infrastructure and low-emission energy
networks for tomorrow: there are the main is-
sues for Europe's energy policy. Together with
the development of an external European po-
licy for energy, they are also my priorities as
Energy Commissioner for the coming years.
Page 66 | New Europe
New Year Special | January 2011
Europe’s Environmental
Responsibilities
by Jo Leinen
Joe Leinen is Chair of the Environment Committee in the European Parliament
Domino stones made of ice fall and reveal a -30 behind a -20 percent number in Berlin, Germany, 6 December 2010 |ANA/EPA/TOBIAS KLEINSCHMIDT
RUSSELS - Being responsible for
B environment, climate, health and
food safety issues the agenda of the
environment committee (short ENVI) of
the European Parliament is always busy.
With the Lisbon Treaty the responsibili-
ties of the Parliament and its committees
have grown even more, e.g. regarding new
co-decision competences, a consent pro-
cedure for international agreement inclu-
ding those on environmental and climate
issues, but also the approval of commis-
sioners. There is now a new balance of
power between the EU institutions.
2010 was the international year of bio-
diversity. The ENVI committee was very
active on this issue with a report on the
EU's own biodiversity action plan 2000-
2010, a resolution for the UN Convention
on Biodiversity (CBD) and legislation on
illegally logged timber. In this regulation
the Parliament achieved the objective of
prohibiting the import of illegally logged
timber and introduced a strong due dili-
gence system.
For the UN conference on the con-
vention for biodiversity (COP 10) in Na-
goya, Japan in October 2010 ENVI
welcomed a resolution asking for progress
in the global fight against biodiversity
loss, including a clear roadmap for the
next decade, a fair solution on access and
benefit sharing and the necessary finan-
cial support, from public as well as from
private sources. At previous conferences,
EU Member States got caught up in in-
ternal discussions and missed their chan-
ces to influence or even steer the
negotiations in the desired direction.
Against this background MEPs appealed
to the EU Member States to reduce in-
ternal debates and focus on promoting the
EU's position with one voice. Not least
because of a united EU, the Nagoya con-
ference was brought to a successful end
ENERGY & CLIMATE
> Quote
and gives hope for the future protection
of biodiversity.
In 2010 the environment committee
dealt with a broad legislative agenda. Par-
ticularly important was the agreement
with the Council on the prevention and
control of pollution of the air, water and
soil resulting from emissions from indu-
strial installations (IPPC Directive), such
as sulphur and nitrogen compounds, dust
particles, asbestos and heavy metals. The
Parliament succeeded in reducing the ex-
tent of exemptions regarding the com-
pliance with the directive and in
introducing the application of current best
available techniques for new large combu-
stion plants earlier than foreseen by Co-
uncil and Commission. Less pollution,
cleaner air and the promotion of new te-
chnologies will have substantial positive
impact on health of citizens and on the
competitiveness of European industry.
This is also the goal of the proposed
legislation on Co2 reduction for light
commercial vehicles. The ENVI commit-
tee has proposed 140g Co2/km as a long-
term target for 2020 and is now in
negotiations with the Council on the
matter. Road transport is a major contri-
butor to the high Co2 emissions in Eu-
rope. After self commitment pledges by
the industry did not yield tangible success,
the introduction of a regulatory frame-
work, spanning from car emissions via
light commercial to heavy duty vehicles
has become necessary. The Co2 require-
ments for cars have already produced first
successes. MEPs now aim at a similar out-
come for the light commercial vehicles.
Reducing the burden on the environ-
ment and on human health by using less
hazardous chemicals in electric and elec-
tronic equipment such as computers or
mobile phones is the goal of the so called
Rohs directive.
The debate on the use of further sub-
stances, e.g. halogenated flame retardants,
on an open scope and on the alignment
with the chemicals directive REACH has
been high on the political agenda throu-
ghout the year. Parliament tried to strike
a balanced deal between the protection of
environment as well as human health and
the interests of producers.
In the second big policy field of
ENVI, namely public health policy, the
EUROPEAN
PARLIAMENT
year 2010 has also been busy. MEPs ma-
naged to advance negotiations on the ph-
arma and health package, thus
information to patients, falsified medici-
nes, pharmakovigilance, cross-border
health care and safety of organ tran-
splantations. The Parliament's focus is on
the patient, putting their safety and their
rights first. Against this background
MEPs are striving to put the possibilities
of patients to get independent informa-
tion on medicines and treatments before
the interest of industry to promote cer-
tain products and to advertise for specific
cures. Furthermore they aim to ease
cross-border treatment for patients in
need, to strengthen the control mecha-
nisms for pharma products, also after
they have been put on the market and by
closing loopholes, such as unsupervised
internet trade, in the fight against falsi-
fied medicines.
Climate policy is an area the ENVI
committee is following very closely. The
implementation of the climate and energy
package remains on the agenda for regu-
lar checks and control.
In November a resolution on the COP
16 conference in Cancun/Mexico, by the
committee was passed by the plenary.
MEPs demand the move to a 30% EU
Co2-reduction target by 2020. This will
increase the credibility of the EU during
the current negotiations talks and send
clear signals to the industry that the tran-
sformation of Europe towards a low car-
bon economy by 2050 has started, setting
the regulatory framework for investments
in climate and environment friendly tech-
nologies.
An EP delegation attended the Can-
cun climate summit, informing about and
promoting the EU's commitments regar-
ding emission reductions and financial
contributions.

Gazing through the
Energy Crystal Ball for 2011
by Kostis Geropoulos
Kostis Geropoulos is the Energy and Russian Affairs Editor of New Europe newspaper
THENS - As the latest massive
A snow storm wreaked havoc across
Europe, disrupting Christmas
plans for hundreds of passengers in Paris,
London, Frankfurt, and the rest of the
world, it seems demand for natural gas is
not likely to fall significantly in 2011.
Justin Urquhart Stewart, director and
co-founder of Seven Investment Manage-
ment, a UK fund management house, told
New Europe by phone from London that
there is still going to be a lot of demand
for gas coming through. “In Europe they
are very weather-affected for gas rather
than necessarily industry affected,” he said.
“There will be more increased demand for
gas because obviously of the bad winters,
the concern over some of the pipelines,
even the new ones coming on,” he said.
“You have got the Qatari LNG (liquefied
natural gas) coming quite significantly th-
rough Milford Haven in Wales so there is
going to be more supply there available,
but it will be interesting to see if we have
the annual lets-tread-on-the-Russian-
pipelines discussion,” he said.
Gas relations between Russia and
Ukraine have significantly improved since
the election of Ukrainian President Viktor
Yanukovych in February 2010. “The que-
stion is if the Russians need to show any
flexing of muscles at the moment. I don’t
think they do. But there certainly going to
be an increased demand from Europe at
the moment. The winter is going to be
long and cold,” Urquhart Stewart said.
An issue that could disrupt Russia-
Ukraine relations is the proposed merger
of Russian gas monopoly Gazprom and
state-owned JSC Naftogaz Ukrainy. “Rus-
sia and especially Gazprom is dreaming
about this process, but it is not in the inte-
rest of Ukraine and of Naftogaz especially
because in such situation Ukraine will lose
all its importance in the gas chain,” Mi-
khail Gonchar, director of energy pro-
grams at the Ukraine-based Nomos
Center, told New Europe by phone from
Kiev. He noted that gas relations between
Russia and Ukraine are good, but he did
not rule out another gas crisis given that
there is “no willingness of the Ukrainian
side to go into deeper cooperation with
Gazprom.”
There is a fierce struggle for the Euro-
pean gas market. The EU portrays an opti-
mistic scenario of growing competition
between producers: there is much talk
about a sharp increase in LNG supplies,
the beginning of shale gas production, the
coming of new producers from the Ca-
spian and Central Asia to the EU market
and the EU’s energy efficiency policies, ac-
cording to Russia's National Energy Secu-
rity Fund (NESF).
In 2011 the struggle between the EU,
Russia and China to develop deposits of
hydrocarbons from the Caspian Sea region
and Central Asia is likely to continue.
Turkmenistan wants to pave the way for its
gas to Europe but the legal status of the
ENERGY & CLIMATE
Russian Prime Minister Vladimir Putin (CL) visits the Solitaire ship, which lays pipes for
the Nord Stream pipeline in the Finnish gulf, 200 kilometers west of St Petersburg, Russia,
20 September 2010 |ANA/EPA/ALEXEY DRUZHINYN RIA NOVOSTI
>
Quote
Caspian Sea is not defined yet, making
transportation of hydrocarbons a problem.
China is willing to boost its consumption
of Turkmen gas but the EU can offer a
much higher price for Caspian gas. “In the
completion for Caspian gas, the EU sh-
ould be a bit more active, because the cur-
rent policy is not sufficient to achieve this
goal and if it will continue China will have
this gas,” Gonchar said.
There will also be a real battle for sup-
plies of Azeri gas with pipeline consor-
tiums playing a high-stakes poker game,
wondering who is going to blink first. Na-
bucco, ITGI (Italy–Turkey-Greece Inter-
connector), TAP (Trans Adriatic Pipeline)
and the Azerbaijan–Georgia–Romania In-
terconnector (AGRI) are proposed projects
of Europe’s Southern corridor competing
for Azerbaijan’s gas because it’s the only
gas available to be produced and exported
in the short term. Shareholders in TAP
and ITGI are in ongoing talks and some
sort of cooperation seems likely. TAP sha-
reholders are heavyweights Norway’s Sta-
toil, Swiss EGL Company and Germany's
EON Ruhrgas.
“It is a matter of synchronization,” an
Azeri diplomat told New Europe. “We ex-
pect to come up with some sort of decision
in the first part of 2011.” It is up to the
projects to prove their feasibility and that
they will be constructed as gas from Azer-
baijan’s Shah Deniz 2 field comes on
stream. He stressed that the issue of tariffs
is also important. He said Azerbaijan can
provide 10 billion cubic meters (bcm) of
gas but Azeri state oil company SOCAR
could increase this amount, using its own
resources.
Directly competing with Nabucco, the
Gazprom-led South Stream project would
bring gas from Russia to Southeastern Eu-
rope. “Russia is strictly against Nabucco
because it would like to hinder the deve-
lopment of Nabucco and Russia sees South
Stream as a killer of Nabucco,” Gonchar
said, urging the European Commission to
make “not declarative but real push” for
Nabucco in terms of securing gas supplies
from Azerbaijan. “We see some progress in
relations with Azerbaijan and Turkmeni-
stan and it gives us some hopes to have a
bit more progress in that project,” Gonchar
said.
Vladimir Chkhikvishvili, Russian Am-
bassador in Greece, told New Europe in
Athens that Russia is quite prepared to
start work on South Stream in 2013 and it
could become operational some time in
2015. He also said that the consumption
of gas will probably increase in Europe.
“Europe will need a lot of new gas so that
is why we are planning this pipeline,” he
said. The Russian ambassador noted that
ITGI and South Stream are not compe-
New Europe | Page 67
New Year Special| January 2011
ting. “Different sources of energy, different
sources of gas,” he said.
Meanwhile, Nord Stream, the planned
gas pipeline from Russia to Germany
across the Baltic Sea, will move ahead in
2011 as planned. On 16 December, Nord
Stream signed an agreement with 24 banks
for a new tranche of €2.5 billion. Backed
by such giants as the Russian Gazprom,
German Wintershall Holding and E.ON
Ruhrgas, French GDF Suez and Dutch
Gasunie, the project offers investment se-
curity. The project consortium said on 16
December that everything is going as
planned for the construction of the pipe-
line. The first branch of the pipeline was
on schedule to deliver gas to Europe by
late 2011. The first line of the 1,224-kilo-
meter pipeline was more than half com-
plete by early December. Construction on
the dual pipeline started in April and it
will pass through economic zones in Rus-
sia, Finland, Sweden, Denmark and Ger-
many. The cost of the pipeline is around
$10 billion. Both lines are expected to be
completed in 2012.
Regarding oil, Bulgarian Prime Mini-
ster Boyko Borisov has been balking at the
construction of the Burgas-Alexandroupo-
lis oil pipeline that would bypass the crow-
ded Bosporus straits. Asked if Burgas
Alexandroupolis is dead, Chkhikvishvili
said: “No I don’t think so, let’s wait and see
because my understanding is that we have
sent the Bulgarian government and the
Greek government an assessment of the
environmental protection as far the Bur-
gas-Alexandroupolis pipeline is concerned
and the Bulgaria side promised us to give
the answer as far as this assessment is con-
cerned sometime in March next year so
probably in March we will hear from them.
But I will be very frank. Mixed signals are
coming from Sofia so I’m not sure, we are
not sure. Just wait and see.” He noted that
Greece is completely on board.
The construction of the Samsun-
Ceyhan oil pipeline through Turkey is seen
as the major competitor and alternative to
the oil pipeline through Bulgaria and Gre-
ece. But Chkhikvishvili cited Russian ex-
perts as saying that both pipelines are
needed to accommodate additional Russia
and Kazakh oil to come to the Black Sea.
Regarding oil prices, Organization of
Petroleum Exporting Countries (OPEC)
ministers meeting in Quito, Ecuador, on
11 December did not raise oil production.
Oil prices have been bouncing between
$87 and $90 a barrel. Oil price may rise
initially but later in 2011, it may fall again
as demand starts to slow, Urquhart Stewart
said, adding: “There will still be able to see
demand in the development nations, but
with China may be slowing down to 5 per-
cent, India slowing down as well, overall
demand will be weaker and United States
recovery will be seen as anemic.”
KGeropoulos@NEurope.eu
follow on twitter @energyinsider
 KASSANDRA
New Year Special | January 2011
Kassandra@NEurope.eu
Les Faits Sont Têtus
As Europe is sinking deep in the
biggest systemic crisis ever and al-
though alarming fears for an imminent
collapse of the Euro are looming all over
the Eurozone, governments are ignor-
ing the facts, and are trying to give so-
lutions to new problems with old
recipes.
Twenty three centuries ago, Pericles of
Athens said, “We can see Gods, we can see
Demons, but we cannot see our nose, oh
men of Athens.” Taking the argument
further, “ordinary people look at the
trees but leaders look at the forest.” I
dare say, no, “leaders do not look at the
forest, only managers look at the forest;
leaders rise above the forest and look for
the ocean.”
The Crisis is Systemic
and non-Linear
Today, Europe is led by celebrities like
Angela Merkel, Nickolas Sarkozy, Sil-
vio Berlusconi, Jose Luis Rodriguez
Zapatero, David Cameron and others
and their best ability is to communicate.
With or even without managerial abil-
ities, our leaders were appointed
through democratic election procedures
by media, lobbying and public relations
firms. Real leaders are not appointed;
they emerge from confrontations,
whether wars, barricades or other
chaotic situations. Francoise Mitter-
rand was a leader, so was Konrad Ade-
nauer and Winston Churchill. The lack
of leadership in Europe is a serious
shortcoming because managers capable
of handling “linear” situations, yet inca-
pable to foresee “black swans,” are re-
quired to handle an unprecedented
“chaotic” socio-political systemic crisis.
Every phenomenon, whether physical,
political or social, has an interpretation.
Today, everybody looks at Germany as
being responsible for the crisis. Yet,
Germany has only accelerated the
process.
The German Case
Germany, after being defeated twice in
two world wars by Britain and its Allies
is now fighting the third world war with
the Euro. Shortly after Prof. Zeliu
Zhelev was elected President of the
Follow me on twitter @Kassandra_NE
post-communist Bulgaria and for the
first time met the then German Chan-
cellor Helmut Khol, he blandly asked
the Chancellor: “Tell me, how you feel
after your country was defeated in two
world wars?” With a disarming smile
Kohl replied: “I have no problem with
Lorenzo de Medici (1449-1492), said “il Magnifico” the uncrowned ruler of
Florence in violent times, leading personality of the true “Renaissance,” statesman,
poet, philosopher and one of the founding fathers of our banking system, system
still in use today.
that because we will win the third world
war with the Deutsch Mark!” In the
same context comes the Berlin-
Moscow energy axis which secures on
the long-term cheap energy (natural
gas) to Germany from Russia thus dis-
allowing the development of alternative
sources of supply for Europe. In this
matter, the three major political parties
of Germany, CDU, SPD and CSU are
aliened since decades. All this has upset
Anglo-Americans who decided to reply
in their way. Does anyone believe that
Britain and the United States, two
countries who fought one next to each
other on the same side of the barricades
in two wars in the past century will let
Germany go this time?
Re-Inventing the System
However, the crisis we are facing goes
beyond the economy, the Eurozone
and the German ambitions. It is a sys-
temic crisis with non-linear evolution.
Our economic system is based on rules
invented many centuries ago and was
de facto obsolete by two new elements
which entered our lives since three
decades ago, globalisation and digital-
Once upon a time in Brussels...
“Jesus Christ resurrected because if He
didn’t, our faith is in vain,” said Apostle
Paul. If we do not believe that our eco-
nomic system is obsolete all stimulus
packages will be in vain.
isation. European leaders, however, ig-
nored new realities and continue to
rule on the assumption that “business is
as usual.”
Banks and enterprises still operate on
principles institutionalized by Lorenzo
de Medici of Florence in the fifteenth
century, principles which today, under
the new realities are obsolete. There-
fore, to get through this crisis, we have
to re-invent the system. We need new,
completely new, financial structures
and we need a completely new entre-
preneurial framework. Such innova-
tions will give room for new
citizen-state relations, a redefinition of
roles in a new social context, new
labour relations and a new banking
system while abolishing all mecha-
nisms producing wealth out of noth-
ing. This is unavoidable to happen.
The question is when and how. The
sooner we realize this reality, the less
painful the transition will be.
The Way Out
Our socio-political system is in the in-
tensive care unit under life support and
stimulus packages through cheap fi-
nancing to banks and recession gener-
ating assistance to needy countries will
not solve the problem. On the contrary,
such actions lead to the depletion of
Europe’s middle class, creating a fast
growing class of neo-poor. At this
point and time, chances for a smooth
transition are limited.
Our situation is quite similar to the last
days of Pompeii, when Vesuvio was for
days erupting ashes and the people of
Herculaneum were enjoying a frenetic
valueless decay in apathy, waiting for
the volcano to explode.
Les Faits Sont Têtus, if Vladimir Ilyich
Ulyanov were alive would have said
which means that we are close to the
point of no return. The ruling elite of
Europe must stop acting as managers
and become leaders. It is not easy be-
cause, among others, they will have to
defeat two huge monsters they have cre-
ated, “the markets” and the “nomen-
clatura of the administration.” The
only way to succeed will be under a
wide popular consensus, to violate ex-
isting rules and legitimacy. It is difficult
but it is all political and worth trying.
BC