By Patricia H. Kushlis
(Here follows is the text of a talk I gave to the Kiwanis Club of Albuquerque on November 29, 2010. This text includes additional statistics and background that I did not include in the speech itself.)
Europe and the US in the Aftermath of the Financial Crisis
Thank you for inviting me to speak to the Kiwanis Club of Albuquerque today.
When discussing possible topics, your program chair and I talked about my Foreign Service background. Much of that was spent on the fringes of Europe. I also said that I had been in London and Paris in August and September visiting family, friends and reacquainting myself with these two great cities that I had not visited in nearly twenty years.
So if you’re planning a trip to either or both, let me assure you that the London stage and Parisian restaurants are as terrific as ever, public transportation – unless you need to lug suitcases – is excellent, and London’s New Millennium Bridge and Paris’ Musee d’Orsay are not to be missed. Toss in for good measure, a rugby game at Wembley, the Eurostar experience through the Chunnel, the National Gallery at Trafalgar Square and the Parthenon Marbles at the British Museum.
When we talked, we agreed that I would talk about Europe and that I would attempt to put into context the demonstrations, the economic near-catastrophes and the terrorist threats that we hear, see and read about in our media. I will conclude with a synopsis of the state of the US-European relationship as it stands today. Then I’d be pleased to take your questions and comments. All that in twenty minutes – so be prepared for a whirlwind tour.
Immigration, Islam, the Economy and the Euro-zone are the most difficult and complex issues that I think challenge Europe today.
The I words: Immigration and Islam
The most striking difference between what I saw in London and Paris just a couple of months ago and my memories of those cities from times past is that both are far more multi-ethnic and multi-racial than previously.
This has done wonders for British cooking. Every High Street or Main Street has restaurants, curry stalls and kebab shops run by immigrants from Asia and the Middle East. One of the best Indian dinners I ever had was in a small restaurant in Bromley, now a suburb of London. In Jane Austen’s day, Bromley was the market town where Elizabeth Bennett in Pride and Prejudice changed horses at the village inn. Pubs, not curry restaurants, were the order of that day.
The traditional English pub is reportedly in decline. 39, according to The Financial Times, close every week – but there’s still no lack of them. In any event, they are being replaced by places serving different and more varied fare.
This transformation in British cuisine has been underway for some years. The "new" include the ubiquitous Costa Coffee shops that began in 1971 and now grace almost every London street corner. Costa was the brain child of two Italian immigrants and their coffee houses – now owned by the Whitbread Corporation - are far more numerous in London than Starbucks or McDonalds.
In both Paris and London – many immigrants have come from the former colonies but London, in particular, has been a magnet for immigrants from new EU countries as well as Russians and Chinese. In 2009, about 8% of the British working population came from outside the EU but of those only about 6 percent were not European.
Far more people moved to the UK to study than to work. Perhaps because of the economic downturn in 2008, immigration slowed. During the 1990s, it is estimated that as many as 500,000 Poles moved to the UK but now that the Polish economy has improved, reports suggest that one-half have gone home.
The UK now has a 14% unemployment rate which may also contribute to out migration and the new Tory/Liberal government’s economic austerity measures bite hard - and university students whose tuition will triple are the angriest.
Some, but not all, of Europe’s immigrants are Muslims. In the UK, most Muslims come from South Asia and Somalia – but some from the Middle East. Yemenis were the first – or among the first - Muslims to move to the UK beginning in the 1950s. They often took the lowest and dirtiest jobs. When Yemini retired some, at least, moved back home where the living was easier, cheaper and the weather warmer.
I had the chance to see Tim Smith’s photography exhibition: Coal, Frankincense and Myrrh: Yemen and British Yemenis at the Horniman Museum in London. It’s on display in the Balcony Gallery until February 27, 2011. Smith’s photographs poignantly depict the lives and fates of Yemeni who made that journey, worked in the coal mines and then returned home to family, friends and a better climate near the end of their lives.
But many immigrants choose to stay in their adopted countries especially those who bring their families - contrary to what Europeans expected when they began importing guest workers for their factories in the 1960s.
In Paris, many immigrants come from France’s former African colonies but Vietnamese have also been there for years. The high percentage of North Africans among the immigrants in France is striking when over 10% of the entire population comes from elsewhere. Many North Africans emigrated for economic reasons but others left for France to flee political instability and authoritarian governments at home.
Over the years, immigrants have been a mixed blessing. Between 1989 and 2009, immigration to 15 western European countries totaled 26 million people – far more than the populations of the EU’s smallest countries. They have been welcomed because they do menial jobs the Europeans themselves will not do. They also fill a youth niche in societies where birthrates are low.
Today, a day without an immigrant would likely play as much havoc with the transportation, commerce and health care systems in London and Paris as a day without a Mexican in Los Angeles. Nevertheless, not all immigrants fill the lowest-paying jobs. A far smaller number are found in the professions including financial services, sports and the media and some South Asians, for example, are third generation British citizens.
In reality, the percentages of immigrants throughout much of Europe are similar to or lower than in the US (12.8%). They range from 8.9% in the UK, 10.18% in France to 12.3% in Germany and a high of 22.89% in Switzerland. Immigrants are younger – their average age is in the early 30s. In comparison the average age of native-born Europeans ranges from the late thirties to 44.5 in Germany.
(In Germany immigrants represent 12.3% of the population (US 12.8%). In the UK 8.9%, Sweden 12.3%, France 10.18%, the Netherlands 10.5% and Switzerland 22.89%.)
Contrary to popular belief, immigrants are not all Muslims although Muslims compose anywhere from 1.7 percent of the population in Italy to between 6-10 percent in France. Many arrived in the two decades after World War II and have lived in Europe for decades. In Germany, despite all the fuss, Muslims total only about 3.6% of the population. In the UK Muslims too represent about 3% of the population and many of them came during the 1950s. Unlike in France and the UK where many immigrants came from former colonies, the Muslims who went to Germany were mostly Turks or Kurds and they’ve been primarily working in blue-collar manufacturing jobs for decades.
I think that the British have been more successful at assimilating immigrants than the French. I saw, for example, many more biracial couples and racially diverse neighborhoods in London – a collection of villages thrown together over centuries with no real center - than in Paris. Paris, in contrast, was a planned city. Today, for the most part, the wealthy live in the affluent city center while the poorer immigrants are confined to the suburbs or banlieux.
Many North African immigrants live a ghetto, segregated existence. Discrimination and poor early education keep their children out of France’s “Grande Ecoles,” that is, France’s elite public universities and institutes that are prerequisites for upward mobility and economic success. It was this frustration that sparked the riots in the Paris banlieux (suburbs) in 2005. That violence had all to do with economic, social and educational barriers - not religion.
It also had to do with that fact that Europeans are not used to dealing with second and third generation “newcomers” from very different cultures. These banlieux youth are torn in terms of their own identities as they try to adapt to the difficult environment in which they live. Because of their poor education, minimal skills, and high unemployment, rage erupted on the streets. These young people too are recruiting grounds for potential foot soldiers for Islamic terrorism.
The controversy over Muslim women wearing the head scarf, burqa or hijab is real. But most Muslim women in Europe do not cover their faces. In France, a prohibition against face-covering veils appeals to the political center right in its political struggle with the far right for votes. Meanwhile, the far right throughout Europe has become increasingly anti-immigrant.
In Sweden, the far right (Sweden Democrats) just gained representation in parliament for the first time in good part because of its anti-immigrant appeal. Yet with the exception of France there is little, if any, correlation between percentages of Muslims or even non-Muslim immigrants in a European country with that of popular support for the political far right.
Nevertheless, troubled economies and economic insecurity have made anti-immigrant bashing popular among some of the native born.
The most recent demonstrations in France ostensibly over a raise in the retirement age from 60 to 62, however, had more to do with the testing of political strength by the center left in the run-up to the 2012 Presidential elections than the actual retirement issue itself. These demonstrations did not relate to immigration.
The E words (Economy, the EURO-Zone and the European Union)
My first, second and third impressions of the UK as an American traveler with an income in dollars was big time stick-shock. Paris and the ERUO were also expensive – in dollar terms – but nothing like the British pound.
You’d hardly know it from the headlines, but Europe is pulling out of the global recession faster than predicted. It is being led by a strong German recovery especially of its industrial base but investment and employment are picking up too. Until this past month, the German recovery was built on exports but the latest data show that the Germans too are beginning to spend again and that unemployment in Germany has decreased from 7.8 in 2008 to 6.8 percent today.
This is important because most German exports are within the Euro-Zone and an increase in German domestic spending should also help reduce the country’s balance of trade surplus.
You also wouldn’t know it from the media, but the largest economy in the world is not the US, China or Japan – it is the European Union.
(Note in 2009: $14.4 trillion GDP/PPP for the EU; $14.1 trillion GDP/PPP for the US; $8.8 GDP/PPP for China; $4.1 GDP/PPP for Japan.)
What too many people fail to realize is that the EU is far more than just a free trade zone. It is a confederation of 27 partially integrated countries with free flow of labor, a bank, a President, a foreign minister, a bureaucracy, multitudes of laws and regulations, a constitution, a court, a center based in Brussels and a web of defense relationships – which should not be seen as threats to NATO.
16 of the EU 27 are members of the EURO-Zone which means they all use the same currency backed by the European Central Bank (ECB). The EURO-Zone will gain its 17th member (Estonia) in January.
The global recession has highlighted Euro-zone weaknesses because monetary policy is controlled by the European Central Bank but fiscal policy is the purview of each member state and some members have been better at controlling their budgets than others.
An uneven recovery, the high sovereign indebtedness of three EURO Zone members – Greece, Ireland, and Portugal - and German recalcitrance to help are major problems for Europe. Unlike previous German leaders who were from West Germany and thought in terms of anchoring Germany in an increasingly integrated Europe, Angela Merkel is an Ostie. Her orientation is more German centered and she treads a thin line politically at home and abroad. At the moment, she has managed to alienate just about everyone on all sides of the current difficult and acrimonious debate.
The sovereign debt crisis began autumn 2009 in Greece. The country has been rescued from bankruptcy, at least for now, by a coordinated Euro-Zone and IMF bailout in response to the imposition of strict austerity measures and the creation in May 2010 of a temporary European Financial Stability Facility due to expire in 2013.
This help, however, came at the eleventh hour and a far greater cost than had Germany acted earlier. Meanwhile Greek unemployment has increased to 12.2% up from 7.7% in 2007 before the beginning of the recession and endemic tax evasion remains a major revenue problem.
To avoid a similar sovereign debt problem with Ireland, the EURO-zone insisted two weeks ago that Ireland accept loans and stringent debt restrictions from the ECB and the IMF to back up its indebted economy. Although the causes of the Irish debt crisis were very different from Greece's, this time Europe did act in a more timely fashion. It did this to forestall a run on the Irish banks and spread the contagion to other European countries. Portugal could well be next but reasons - slow growth, low productivity and a large budget deficit - for Portugal’s financial problems likewise differ from Greece and Ireland.
Taken together, however, these three small countries represent only 6.2% of the Eurozone GDP. The real problem for the EURO-Zone is if the Spanish government comes under pressure from the bond markets. The Spanish economy represents 11.4% of the EURO-Zone GDP, and its official unemployment rate is over 20%. Like in Ireland and the US Spanish banks helped finance a property bubble and bust. The dilemma for the EURO-Zone and the IMF is that Spain has been characterized as “too big too fail, and too big to rescue.”
The US and Europe
The US-West European relationship has long been based on NATO and its mutual defense guarantees. NATO now has 28 members. These countries encompass much of what used to be the Eastern bloc including the three former Baltic republics of the Soviet Union. NATO’s eastward expansion was and is opposed by the Russians who see it in Cold War terms (to keep the Germans down, the US in and the Russians out) and in post-Cold War terms as encroachments into their sphere of influence.
Meanwhile, the new members see NATO membership as protection from the Russians. The US has long opposed the concept of spheres of influence even though in practice that’s precisely what the Monroe Doctrine was all about.
European-US relations and Russian-US relations were at a nadir throughout much of George W. Bush’s presidency. There were three principal reasons: many Europeans opposed his administration’s unilateralist foreign policy; Europeans opposed his decision to invade Iraq in 2003 because they saw the invasion as, illegal, counter-productive, costly and unnecessary. And many disliked the administration’s proposal to erect pieces of a Missile Defense Shield on European soil. As a consequence, US favorability ratings among Europeans were at all time lows until President Obama was elected in 2008. *(See Pew comparative statistics at end of this post.)
Obama still remains personally popular in Europe – with the exception of Turkey – because 1) he is not George Bush; and 2) he has steered US foreign policy back onto the multilateral, pragmatic approach to international problem solving that has served this country well since the end of World War II - regardless of party in power.
Obama’s early decision to negotiate and ratify the New START Treaty with the Russians is widely supported by the Europeans. So too is the widening and changing of a proposed Missile Defense Shield as agreed to at the November NATO Summit that could extend to Russia.
The US needs Russian cooperation in dealing with Afghanistan and Iran and as Russia’s military capabilities shrink, the country needs a good relationship with the West. Continuing contentious issues between the US and the Europeans have much to do with the Middle East, European skepticism over the continued war in Afghanistan, traditionally low defense spending by almost all European governments (from the US perspective) and the mundane, but nagging problems surrounding America’s continuing inability to get its visa operations right.
I think I will stop here. I would like to hear from you.
*Note: 2010 Pew Surveys of US and Obama favorability ratings in response to the question: "Will do the right thing in world affairs."
|
Country |
2000 |
2007 |
2010 |
|
UK |
83% |
51% |
65% |
|
France |
62% |
39% |
73% |
|
Germany |
78% |
30% |
63% |
|
Russia |
37% |
41% |
57% |
|
Turkey |
52% |
9% |
17% |