Friday, September 16, 2005

In the Heart of Europe: Social Models and Geopolitics

Drafted By: Federico Bordonaro

In an interview with the French daily Le Monde, E.U. Commission Vice President Guenther Verheugen from Germany said on September 3 that a unique "European social model" -- so often mentioned by observers -- simply does not exist. National legacies in Europe, Verheugen explained, are visible in social and public policies, and different approaches to the welfare state, industrial policy and labor markets are evident throughout the old continent's main states.

As the German elections approach, the social model is increasingly perceived as the largest election issue and the pivotal subject for voters who are used to a generous public spending policy and a set of guarantees in the labor market. Not only in Berlin, where Chancellor Gerhard Schroeder rapidly eroded much of last summer's lag behind the conservative C.D.U./C.S.U. candidate Angela Merkel by attacking her "pro-business" and allegedly neo-Thatcherite program, but in France too, where Prime Minister Dominique de Villepin is engaging in a difficult and ambitious neo-Gaullist industrial and energy policy. [See: "Intelligence Brief: French Energy Policy"]

The future of French and German public and social policy, however, will not be determined by economics alone; geopolitics also plays a major role. Believing that the British model can be implanted in the two continental countries is a doubtful prospect.

The German Election Campaign

After two successive wins, the Social Democratic candidate Gerhard Schroeder appears to have lost the upper hand in favor of the C.D.U.'s new leader Angela Merkel. However, although in July the C.D.U.'s alliance with the F.D.P. liberals seemed likely to win an absolute majority, recent polls show that the preferences of German voters are becoming increasingly balanced. A "Grand Coalition" is no longer unthinkable, and is even probable according to many observers. The C.D.U./C.S.U. plus F.D.P. coalition's share of votes is predicted to rest at 48.5 percent by the latest polls taken on September 13, according to which Schroeder's S.P.D. has risen from 29 percent last July to 33.5 percent now, which, with the Greens at seven percent, gives them a total of 40.5 percent of the national vote.

The eight years of Schroeder's rule have coincided with the poor performance of the German economy; paradoxically, the S.P.D.'s attempts to introduce the liberal reforms that Merkel and her liberal allies promise to accelerate are probably going to hinder the chancellor's chances of re-election. In fact, the S.P.D.'s flirtation with liberal-moderate policies have produced a schism in the German Left, as former S.P.D. leader Oskar Lafontaine has formed a Left alliance, known as W.A.S.G., with the former East German Party of Democratic Socialism (P.D.S.). As a result, this harder and more socialist-oriented Left will be leaving the S.P.D. and its Green allies without a crucial eight to nine percent of the vote, thus opening the way for Merkel's win. [See: "Intelligence Brief: Germany"]

Apart from big business and liberal factions, German voters do not seem to be punishing Schroeder's policy for its alleged lack of economic liberalism. On the contrary, as soon as Schroeder started continuously attacking Merkel's liberal agenda, linking her policy to Anglo-American neo-liberalism, the polls started to show a trend reversal. In fact, German citizens do not appear to be out to penalize Schroeder's allegedly state-centric economic policy. Instead, as in the other Euro-zone countries, they will merely be voting against the government because they view it as incapable of adequately protecting their prosperity and social guarantees against globalization while engineering new society-friendly methods of creating new jobs. Many among the S.P.D.'s disappointed voters will therefore choose the W.A.S.G. and not the C.D.U. Should Merkel come to power, she will have to cope with a complex political power-sharing environment.

Moreover, by abandoning the S.P.D.-Green majority, the Germans would certainly not be striking a blow against Schroeder's Middle East policy and his steadfast refusal to provide German troops to the U.S. in Iraq. Nor would they be negatively sanctioning his strategic partnership with Russia. If Merkel is elected as the new chancellor next week (with a clear majority, or in a Grand Coalition), she will hardly be able to drastically change the orientation of German foreign policy. On the contrary, she will probably opt for a balanced mix, first and foremost by trying to decrease friction with the United States, and to upgrade Germany's role in a revised transatlantic relationship -- making Berlin Washington's chief continental partner.

Secondly, she will probably try to adopt a prudent stance in regards to the E.U.'s further enlargement (with Turkey being the main issue), taking care not to treat newcomers as irrelevant minor powers but also negotiating more realistically to promote German interests. Finally, Merkel will attempt to avoid anti-U.S. and pro-multipolarity rhetoric when attending to Berlin's energy policy projects with Moscow.

France's Right Wing Dilemma: Villepin or Sarkozy?

While Germany is heading toward elections, its main continental ally, France, is witnessing an interesting internal political battle. After the E.U. Constitutional Treaty's rejection in the referendum on May 29, 2005, a new prime minister, de Villepin, was chosen by President Jacques Chirac as Jean-Pierre Raffarin's successor. While Villepin is thus getting the chance to launch new and ambitious policies, another right-of-center politician, Nicolas Sarkozy, is rapidly emerging as the champion of a more pro-American, neo-liberal alternative in the fragmented French political landscape. Sarkozy is today the interior minister and can count on growing popular support for his business-friendly agenda, coupled with a strict domestic security policy. To Sarkozy and his supporters, France is suffering from insufficient liberalization and heavy bureaucracy, and consequently flawed with high unemployment and hindered competitiveness.

Presidential elections in France are scheduled for 2007, and until then, two competing right wing agendas will be in the forefront of the country's attention. One is that of Villepin, whose core is the revitalization of a Gaullist legacy based on economic patriotism, the protection of strategic markets such as the defense and technology sector, and an ambitious energy policy predicated upon a strong research and development effort, with the aim of cutting oil and gas dependency as much as possible and promoting further exploitation of nuclear power, bio-fuels, solar energy and hydroelectricity. The other is Sarkozy's approach, based upon an enhanced reformist program of privatization and the opening up to foreign investors, liberalization and the reduction of state social spending, in line with the policies implemented in the previous decade by British conservative and labor governments in different, yet similar flavors. [See: "Economic Brief: French Protectionism"]

A third component of the French Right also appears to be rapidly on the rise, headed by the sovereignist candidate Philippe de Villiers, whose main political goal is a radically different European policy, aimed at transforming the E.U. into a confederation of reinvigorated nation-states. De Villiers opposes Turkey's admission into the E.U., favors a very restrictive immigration policy, and considers French sovereignty the indispensable foundation for launching a new industrial policy, protecting French agriculture and enhancing France's role in the world.

All these examples in Germany and France -- the E.U.'s core states -- clearly show how difficult it is to speak about a "European social model."

Geopolitical Constraints and the Construction of Europe

Social models are in fact historically shaped, and mutually interact with foreign policy orientations. The latter, however, are inextricably linked with geopolitical constraints. France, Germany and Great Britain are today's most influential Western European powers because of their geographic, demographic, economic and military characteristics. It is wrong to state that Britain is the inventor of economic liberalism in Europe. Liberal democracy and juridical institutions did not conquer England because of inscrutable psychological factors, but instead because of the country's position in Europe.

As an island, Britain could base its security upon a strong navy, without need of centralized efforts to build a strong army of soldier-farmers like in Prussia, or to continuously engage powerful neighboring armies like in France. Therefore, the U.K. could afford a less demanding fiscal policy than that of other great powers such as France, Sweden, Prussia, or Russia. London's propensity for trade is also a consequence of its enviable security context, and so are the incessant British efforts to prevent continental powers from uniting and dominating the entire European geopolitical landscape.

France and Germany also differ profoundly from one another, in terms of both human geography and physical geography. Their access to wealth, power, energy, security, and technology could not follow the same lines as in British history. Their respective, and in certain respects similar, social models have nonetheless been able to foster both democracy (and domestic stability) and security. Therefore, decision-makers like de Villepin maintain that it still remains to be proved that importing the British style of liberalism, as revived by former Prime Minister Margaret Thatcher in the 1980s, is their only chance of boosting their economy. Politicians such as Merkel and Sarkozy will constantly have to face internal resistance to their programs because factions in the French and German elites prefer the reformist agenda to be coupled with "economic patriotism" rather than with a globalization-inspired policy of opening up to foreign capital. [See: "Economic Brief: French Protectionism"]

As some German social democrats such as Franz Muentefering, and some French Gaullists have recently argued, adopting the Anglo-Saxon social model in Germany and France would give powerful economic and financial foreign groups (but especially American) the chance to take over assets of vital importance for the national economy. Economic competitiveness often conceals power struggles among states, and the recent wave of economic nationalism in the U.S. and E.U. proves this once again. [See: "Economic Brief: Textile Quotas"]

Social models, in the end, will be decisive for the geopolitics of Europe's construction. Should the Anglo-Saxon liberal way triumph in Germany and France in the next ten years, the E.U. can be expected to become an enlarged, business-friendly federation that will stick to a neo-transatlantic security agenda. Nevertheless, this course appears fraught with difficulties even if Merkel and Sarkozy win their elections due to the presence of powerful counter-forces deeply rooted in their countries.

If, instead, neo-Gaullist and neo-Social Democratic policies are revived in the two European core states, a strengthening of the nation-state is to be expected, and a "variable geometry" E.U. will probably see the light of day in the next decade. This will presumably go together with a more decidedly pro-multipolarity stance by Paris and Berlin, which will enhance strategic partnerships with Russia, China and other extra-European powers.


Social models and labor policies are not just the result of economic ideologies. They are also the effect of history and geopolitical constraints. In Europe, economic liberalism triumphed in Great Britain for several reasons, not simply due to the persuasion of certain influential individuals.

France and Germany have gradually absorbed some "Anglo-Saxon liberalism" prerogatives due to American power and influence, and thanks to the post-WWII world configuration, at a time when they needed strong relationships with the U.S. and Britain. However, they have also retained some of their respective traditions of strong state intervention in the economy, and often perceive economic globalization as an American strategy to impose U.S. economic power.

Both countries still maintain their most enduring foreign policy goals -- i.e. controlling the heart of Europe and projecting their power globally after having securitized their original geopolitical environment. A balanced multipolar world is what they perceive as in their global interest. In this sense, they oppose Anglo-American hegemony over the West, but their ruling classes are split between those who believe it is necessary to copy the current British social model in order to compete more effectively, and those who maintain that their country can effectively compete only if it can revive its own specific national model.

This internal battle among Paris' and Berlin's decision-makers will be one of Europe's most delicate issues in the next decade and one that will prove once again the power of history and geography.


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