To Veto, or not to Veto?

Radoslav Sikorski, the Polish foreign minister, says two important things. He fears German inactivity more than more conventional threats because it would lead to a Eurozone collapse. He also says it must be possible to govern Europe and suggests that the veto right of individual countries should be removed. This would mean that Germany, which Sikorski calls an indispensible nation in Europe, could form coalitions and vote through their decisions, ie govern. Other powerful members could do the same later if things would change. If it becomes possible to govern Europe, markets would be pleased and interest rates would go down to alleviate the debt crisis.

I did not find the information that Europe should be governable through the removal of the veto in Sikorski’s recent Financial Times paper but in today’s editorial, he might have said it at his talk on Monday. It would of course be a fundamental change where more influence would be ascribed to the countries in Europe which do well rather than to all countries equally. More function, less solidarity. An “economic government” could be formed with such a 17 or 27 “party” system. Majority coalitions would form and be subject to revision according to country performance.

I submitted a post in January this year on my blog that discussed a theoretical construct of “influence points” in the EU that would give incentives to participate in a transfer union, ie you get “paid” for contributing money to the EU. It would perhaps be easier to remove the veto function for members? In practice the veto function was removed already for Greece and Italy which just had to do what they were told in order for the Eurozone to survive. Right now it does not seem like a transfer union is possible, Germany does not have that much money anyhow, but rather a pact where fiscal control and austerity was enforced harder. One thing is clear, it is difficult to find solutions with the current set-up of the Union. It is rather like it is constructed not to work and the markets don’t believe in it anymore.

If I have understood the concept of an “economic government” of the type proposed by Nicolas Sarkozy in 2008, it would be superimposed onto EU in the Eurozone. That means it would be independent of the Commission, The Council and the Parliament. The question is then how many countries of the original 17 that will remain there after the smoke clears. Spain has gotten the good word lately. Italy is on/off and Greece is likely to disappear.

A system for the Eurozone where you get something extra for good performance would create a national goal that would help motivate people more than just doing well for their own country. Participation would be more serious and competitive. Paying large sums of money without getting anything for it does not seems to work, although people are speaking for solidarity in times of crisis.

American Exceptionalism turns Universalism then What?

Samuel P Huntington’s epos from 2004 Who Are We? is an interesting read even for Europeans. The Jews have claimed that they are God’s chosen people, which of course have irritated quite a few,  but if 300m Americans claim the same thing this must be considered preposterous, or? After the fall of the Soviet Union Francis Fukuyama, a student of Huntington, wrote a book called The End of History and the Last Man. We had, according to Fukuyama reached a point where liberal democracy was the Universal remedy for world politics. With the rise of China, without God and democracy, we have seen that East Asia can create prosperity as well. That leaves the Western Civilization divided: Europe, the cradle of Western Civilization and the Scientific Revolution, which could also be called exceptional, and the New World now led by Obama, the first Pacific President, no longer universal.

The attitude to the economy and the respective solutions to the financial crisis is different between the US and Europe. The US want to stimulate and Europe choses austerity. The welfare state is more developed in the EU. The US population is growing whereas the European countries are contracting relatively speaking. Immigration takes place in both with the US filling up with Mexicans and Asians and Europe with Africans and Muslims. The US is highly religious whereas Europe is more secular. Americans work harder than the Europeans, at least more hours per year, and are genetically from adventurous, more risk prone, Europeans. Americans have involved themselves more in world security and have a significantly larger military force. Since World War II the Americans have excelled in science and technology but the Europeans are catching up.  I will always work for maintaining good relations between the US and Europe but have seen during the last years that they are distancing themselves from each other more and more.

There is, however, one big difference: America is the United States of America but the EU can’t make up its mind about federalizing. When I started out in Political Science a few years ago, I thought the United States of Europe was a good idea. I thought English as a second language for all EU states was commendable and would keep a common culture alive trans-Atlantically. Then I realized that this was unattainable due to public nationalism. The European debt crisis gives Europe a push in the United States of Europe direction. How strong this push is going to be is an obvious question? Greeks are out demonstrating for World War II money from Germany so tensions have evolved to a malign degree.

The Davos Men or economic transnationals, that Huntington discusses, live in a global world already where they have less nationalism to start with but they might not actually need the Western Civilization either because they do a lot of business in Japan, India and China as well. However, they might just have to start thinking about getting the public with them a little considering for example the Occupy Wall Street movement. In this sense I am very Huntingtonian. They used to say there is more trans-Atlantically that we have in common than separating us. I still think this is true. The lesser evil is probably to keep the EU together, despite democracy deficit, to develop this market as a global competitor. We are going to need people around us that do business our way and that continue developing science as we started. In this way southern immigration into our civilization becomes a good thing that maintains the Western world in an amiable relationship with this world.

Which culture will make the next major move?

Took a walk down to the Ersdal Bay and back via the harbor today again, as I did yesterday. 15 to 17 degrees Celsius, thus perfect. Time to make some plans for the fall. The overall subject that I am researching is which culture should carry mankind into the future. Into the unknown. It is not going to be just one. East and West will probably continue to run parallel. The two party system of the world. The main hypothesis is that the West has found out a path of higher fidelity than the East with a more mature political development. Thus assuming that there are no genetic differences between the two populations. The political system of the West is more mature for the simple reason that people are allowed to think and act politically. From Ian Bremmer’s book The End of the Free Market form 2010 it is possible to extrapolate that there is about 25% state capitalists in the world currently which is offsetting the balance and currently causing a slump in the West. Since the rich in the West are making money in the East as austerity is mandated in the West for ordinary people, notable billionaires are talking about paying more in tax for the sake of stability. Personally I think it is not wise with too progressive tax tables since the rich allocate money better than the state for the performance of the economy. Bremmer brings up this point, while claiming that the state is not that good as the shareholders in allocating funds, why state capitalism risks being less efficient economically.

Although I’m not so sure myself, it seems like most people think the power of science and innovation on all levels is going to play out equally well in the East as in the West. That would remove Joseph Nye’s argument of the higher recruitment of talent to the US than to China and leave Gideon Rachman’s focus on the economy more pertinent. The economy will depend on how people organize themselves in the functioning parts of the world and how areas like the Middle East and North Africa develops from lower levels. The fight on how to build up Libya has started and the obvious question is if it’s going to be free-market or state capitalism which is important since Libya’s development could become a blue-print for the entire area. State capitalism is probably easier to apply to a country of Libya’s type, Algeria is already state capitalist to a certain degree and also runs on oil, but I hope they will convince the Libyans to choose free-market capitalism due to the better harmony possible with the EU in this case. Bremmer has a series of comments in his book as to the prognosis of state capitalism and he seems to think that it represents a dead end, which I tend to agree with. Improvements of free-market capitalism are a more probably path of development. In an era where the economists have problems understanding the economy it is troublesome that we ask politicians to regulate it, understanding it even less, but it seems to be necessary.

Technology dependent states--China and the EU?

The first unified China, the Qin Dynasty, lasted only fourteen years, from 221BCE. It was a highly suppressive affair that alienated everyone in society although there was a unification of the spoken and written language. It was replaced by the Han Dynasty, 202BCE to 220CE, where Confucianism came back and the moral of the emperor ruling for the benefit of the ruled moral came back from the Legalist tradition under Qin. In 5BCE there were 60m people in China together with 130,000 bureaucrats.

Today there are 1,350m people in China and it occurred to me that Deng Xiaoping in 1978 would never have embarked on the Chinese miracle if it had not been for the technology that no one dares to speak of. Controlling such an amount of educated Middle Class Chinese the way the party wants to would not have been possible. If I am right in my conjecture, this would mean that the protocol used by the 80m people in the Communist Party is a prerequisite for the state whereas the West is using the technology on preexistant functioning states.

This would mean that governing such large conglomerates as China and the EU needs the technology. Francis Fukuyama discusses how China’s development compared with that of Europe and it is interesting to note that the seemingly blind alley that the Chinese already embarked on in 221BCE with the first modern dictatorship is something they might have cemented with the technology today making it virtually impossible for a democratic development. Fusing Europe in the EU is also something that has reversed democratization.

The frustrating discussion that have been ongoing since the financial crisis in 2008 on the fate of the EU then in all probability to a certain extent revolves around the question if national states are going to let go of their regular governance to the governance aided by the technology and thus emulation of China. Historically Europe never mustered the coercion needed by Qin to unify China. The geography was configured so as to promote different cultures and languages and the brute force of unification never materialized. Furthermore, the Catholic Church induced a social development that never happened in China which lacks the rule of law and an accountable government still today.

The latest gossip on the EU is that a two-speed super-state will form on the Continent with Britain on the side. The question then is if Germany will lead the Continent in the Chinese technology dependent fashion and that democracy with functioning governments using the technology will remain in Anglo-America?

Katas in Industry?

I'm working on the problem on which culture is best suited to harbor the future and an interesting thing occurred to me.

The Japanese did very well in making cars. This probably depended on the fact that performing motorical sequences assempling a car resembles performing so called katas in martial art. A kata is a series of motions executed to practise a sham fight. They are practised by repetitive performances and it is known today that some 10,000 repetitions is necessary to optimize a motion program. Katas are part of Zen Buddhism and it is religion for many Japanese.

However, the assembly line was invented in the individualistic USA where free spirits probably suffered more in straight jacketing themselves into repetitive motion schemes. It would appear that the Japanese could have had an easier path to inventing the assembly line by just setting up a series of katas to make a car? Today the Japanese assemble cars faster than the Americans. They also write more patents per capita. They are doing worse on the GDP per capita though. They lost ground against the Americans on this parameter lately.

Perhaps it is time to start talk about what you innovate and not how much you innovate?

I'm beginning to feel that the political culture is very important for the quality of research. Therefore it is very hard to be Swedish globally speaking because what Hobbes, Locke, Jefferson, Madison, and Hamilton did was trendsetting and very mature early on, still going strong. If Germany is going their own way now, it is also very hard to be a European because they will part philosophically and value wise. If this split becomes real in the wake of the euro-zone debt crisis this might have effects on coordinating research EU wise but it might be good for the competition in Europe.

What happens if the US pulls out of NATO?

The US Secretary of Defense Robert Gates gave a talk recently that has been commented today by Gideon Rachman on his FT.com column. Jan Kallberg also writes on his blog about the change in US preferences "after" the war on terrorism. Kallberg says that nuclear weapons are going to make a comeback.

What we observe now is a US that might lower their defense costs a bit and a Europe that is substantially lowering theirs. China is significantly increasing their costs yearly. This obviously reflects how these different power centers view the global risks and the projection of global power. Although I think that the difference in risk taking within NATO is more severe than the actual amounts the countries are contributing, I am not sure why the European countries downplay military risks in this fashion when the economically booming China is thinking otherwise. China is apparently not content with economical weaponry.

Kallberg argues that what is going to become important is the actual military capability. If the European countries cannot even keep up a fight in Libya for a few weeks, as Gates pointed out, there is no capability. So if NATO falls, Europe will be dangerously alone. A country like Sweden would have problems paying for the benefit of being under the US nuclear umbrella and in practice be without defense. I hate to bring this up in this apparently risk-free era but I simply do not trust Russia.

Tony Blair pointed out the other day that the EU for the sake of power should join the US to defend Western values. He also said that he advocated for an elected EU president to minimize the democratic deficit, although he did not see this as realizable but spoke of it as a goal. The president he discussed should not be above the national heads of states in this case. I think it is statesman-like to speak up for the West in light of the above discussion. It is highly reasonable.

However, reasonable or not it does not seem to reflect what is happening even if the EU could need common views on common problems these days of debt problems and polarity in the future of an ever closer union. Proponents against military matching with the US probably say that we can't do much in Libya or Syria anyhow. The fact remains though that a country that crash Iraq in a matter of days has a different leverage on events given a unified West that is not divided on itself.

Returning to the reason for why Europe does not spend much on military defense, it may be very difficult to invade EU with soldiers. However, if nuclear weapons will be in vogue a country like Iran would want to get some and can thus threaten the EU with severe damage, something the EU might have to act upon. If European countries run out of munitions after a few weeks, it would seem like a coordinated raid to eliminate a nuclear threat from Iran would be highly hypothetical?

The trans-Atlantic alliance?

The ft.com ran an article about Robert Gates, the US secretary of defence, on Friday. Gates claimed that NATO alliance was at risk. The reason was the bad performance of allies in Libya. It is the old problem having some people doing the light work and others doing the hard work and the difference in how much resources they spend per capita.

I reread the book Of Paradise and Power by Robert Kagan from 2003 for the occasion. Henry Kissinger said of this book: "Though in the past we have often disagreed, I consider this essay one of those seminal treatises without which any discussion of European-American relations would be incomplete and which will shape the discussion for years to come".

Kagan says the following: "One of the things that most clearly divides Europeans and Americans today is a philosophical, even metaphysical disagreement over where exactly mankind stands on the continuum between the laws of the jungle and the laws of reason. Americans do not believe we are as close to the realization of the Kantian dream as do Europeans."

Furthermore, Kagan does not think the Europeans want to strive for a unified "West". So what have happened since 2003? Well, Obama turned out to be very popular in Europe compared to Bush but this does not seem to have bridged the difference in how Europeans and Americans view their security. The Arab Spring, however, in my humble opinion, should make the Europeans more willing to view things the American way.

The Global Position?

I see that some people claim that they are global liberals or that Sweden is a global country. Is this an escape from the real people "verklighetens folk"? I must admit I feel a little guilty myself but the question is what such a stratification does to a country. The global postion is a little fuzzy.

As I noted before, the Libya debacle is a case in point. Swedes and Danes share the same base in Italy but do not do the same job and Germany is not doing anything. This is examples of different penetration of the stratification problem.

As a global liberal it is necessary to take a strand for helping the so called rebels in Libya which means you get in trouble supporting Germany's new anti-nuclear line as the path forward for Europe especially when you get 40% of your electricity from nuclear power. Again it is possible to escape as a global liberal with global values but such values are theoretical. They don't exist in reality in a country. I wonder if calling Sweden a global country is not the same as declaring it neutral in all conflicts and keeping one's options open? Saying that we do what the EU does is not true either. We are not even part of the euro-zone.

Then again how homogenous is the global position. Is it the position of global peace? Or the position of global finance? Is it the defunct G20? Jeffrey D. Sachs suggested the world should be divided into self-sustaining regions instead of a G20 mechanism where the regions take care of economical and security questions. Our region would then be the Nordic countries. Some 25m people. Since Norway is not part of the EU and Sweden and Finland not part of NATO we are not even ready to take care of our immediate environment.

With our language education we are part of the Anglo-American culture domain. But apart from security issues, Great Britain and the US are not so close anymore. Germany just took a path that seemed unpalatable for Sweden and thus an ever closer Union does not look potentially good right now, which is what is necessary to save the Euro. You see, neutrality politics becomes tempting again.

Where is the future forming right now? 1523 when Gustaf Vasa got financial help from Lübeck to take back Stokholm from the Danes and then help to organize Sweden saw a development where Holland slowly took over control from Lübeck and thus formed the Western civilization with England during the 16th and 17th centuries. Sweden became on their own then from their benefactor, independence, but did not get part of the real action until later. Are we doing the same mistake today?

Money Comes to You

A few days ago I stated that the US and China seem too preoccupied with the "economy, stupid" for being in the mood for creating great science and that Europe with their more laid back style might be in this position instead. Here in Sweden government is singing their mantra about creating jobs.

With the risk of being blamed to be non-competitive, I want to say that what I rather meant was that "Money Comes to You" as the saying goes.

I thought about this when our president in the EU said that Europe is a great place to live in, and I say this again, that it would be a great pity if the best place to live does not produce the best results being the place where the ideas and creativity of people find the most fertile soil.

Nietzsche is supposed to have claimed, I don't like him by the way, that the equivalence of the European welfare state means that a slave mentality has arrived and that no one wants to achieve anything anymore. I guess what we have to prove here in Europe is that Nietzsche was wrong.

Europe Day or Schuman Day

Carin Jämtin, the social democratic press secretary, wanted to have a Muslim holiday in Sweden the other day. She apparently changed her mind. Perhaps she realized that a holiday for the peace of Europe would be more appropriate. Wolfgang Münchau at the Financial Times claimed on Sunday that Europe has a political crisis, not a debt crisis. You need a political union for having a financial union. Today Herman van Rumpuy has a column in the Svenska Dagbladet, one of Sweden's top dailies.

When I started out reading up on the EU project a few years ago I began idealistically with the idea of a United States of Europe with English as a common second language with TV channels and everything. As the years went by I realized, however, that this seems to be unrealistic even if top information recently claimed that its going to be ever closer union or large problems.

Having economics as the measure rod comparative history nowadays stratifies Europe in a way that complicates the concept of an ever closer union. Many don't want to bail out economies that do not perform. If you want an ever closer union it is not possible to have the economy as the value measurement. The political crisis Münchau is talking about is depending on this problem: what is important? In a union where defense is not important you wonder why the economy would be. The economy is today's defense, perhaps. Van Rompuy, however, states that Europe is the best place to live. Not the most progressive. It is strange that this would not mean the same thing. The same man is pessimistic on European innovation, though.

A holiday for the peace in Europe would be a good thing, however. I would not celebrate a Muslim holiday if it would be instated. Judeo-Christianism is more than a religion for me. It formed the basis for Western Civilization. Therefore our present holidays should be safe.

Euroland

It is very difficult to write something new about the situation in Europe with the debt crisis and the Euro-zone problem. However, according to the Financial Times Otmar Issing, a highly respected German economist, who participated in the set up of the Euro, have said that it is not good if a so called transfer union is formed, ie, when rich countries gives to the poor in the EU. He also did not like that an almost consensus had formed around the notion that more strict rules would not help countries keep their budgets.

It seems to me that this would be new information if heeded by the German public. Because it would be one step closer to the D-mark reinstatement. There is one way out that probably is so unpopular that it is unreasonable but it would be possible to peg the salary levels in government to the GDP/capita for each nation. Private companies would follow suit. They could then compete nation for nation to improve their situation and would be more competitive due to lower salaries. I don't see another solution, but then again I am not an economist. Issing ruled out a political union brought about by the necessity for saving the Euro and the idea of such a solution would be to use transfers to equalize the economy.

The fact that lowering salaries, raising pension age and other austerity changes are so unpopular that they seem to induce instabilities is actually quite serious. Because there simply is no other way if a transfer union is not installed. It would be interesting to know if Swedes would be interested in a transfer union? One idea could be to give "influence points" to countries that give transfers. A small country like Sweden could therefore get more to say which would make sense because they have a functioning economy. This might make transfers more popular. It is very quiet in Swedish media on the Euro/debt crisis, by the way. It is actually quite a fuss on the Continent. Is this because there is no solution?

Does Sweden want a European Germany or a more German Europe?

"Today, a lack of political courage is endangering the euro. Germany is not innocent in this regard. For the first time in decades, German isolation has become a real concern. Now we need a signal that Germany wants a more European Germany, rather than a more German Europe."

The above was published in The Financial Times today by former Merkel coalition partners Frank-Walter Steinmeier, foreign minister, and Peer Steinbrück, minister of finance. In other words the SPD is attacking the ruling CDU coalition by being decisive on Europe. I'm getting a feeling that the future of EU is being decided in a current debate in Germany.

If a state in the US is doing well, my guess would be that others tries to copy their way if the character of their states allows this. This would speak for a more German Europe. However, the above authors argue for a more European Germany? The populace in Germany seems to say that they don't want to pay for others any longer. Interviews advocating this way was recently aired on Swedish television from Germany and the debate turned vicious during the Greek bailout crisis this spring.

Sweden is also a net contributor to EU and a surplus country highly dependent on exports. We lack a debate such as the one in Germany on whether or not we want to stay in the EU or break away. Perhaps because we are not members of the EMU but we are still involved and will definitely be involved now when tighter control and federalization is being performed on the EU.

There has been a continuous debate in the press lately with an overweight on federalization since the original critique of the Euro was that a lack of a political union would make the currency impossible. Wolfgang Schäuble, the current minister of finance in Germany recently said that there will be something like a political union in ten years time. Markets are apparently waiting for a "signal" of political will. How will other countries than Germany interpret such a signal? Is such a signal in reality possible?

Why it is not 1935

Well, it seems like Ian Buruma is speculating in the possibility that we are facing a new 1935 situation where the aggression this time is towards the Muslims in his debate article in Dagens Nyheter called Därför hatar frihetens fiender liberalismen or This is why the enemies of freedom hate liberalism today. I must however admit that the non-timely exit of the Sweden Democrats from the sermon prior to the opening of the Swedish Riksdag the other day made me feel for the first time that the problem of alienation towards foreigners is going to really become a problem.

Helle Klein, former political editor at the social democratic paper Aftonbladet and priest, says in her blog that a preacher must take sides as he or she preaches. The general problem with this approach is that the priest then might only speak to half the congregation if she is not the battalion priest. Even if this might not have been the case above where bishop Eva Brunne, a social democrat, made the Sweden Democrats irritated enough to leave because she referred to a meeting the day before where violent left activists had been present. These people regularly harass the Sweden Democrats when they stage meetings on town.

Strangely enough Buruma does not bring up Thilo Sarrazin, the former German central bank board member and social democrat (SPD) that published a book recently that became more popular than the politically correct might have whished. In other words the anti-Muslim ideas are not only a right-wing problem. In fact the Sweden Democratic Party got votes from all parties and can perhaps more correctly be called a party of discontents than far right even if they have troublesome roots in neonazism.

Will the unpopularity of Muslims and the fear of Islam lead to fascistic methods to rid Sweden of such believers? I really hope not because as Fredrik Reinfeldt, the Swedish Prime Minister, said in his speech to the Riksdag a few days ago they have contributed to the prosperity of our nation and I would add that they don't have a "home" to go back to in general. There are however methods today that makes the possibility of coerced returns a grim possibility. A risk that could be averted by more transparency into the matter.

Well, it is not 1935 because of the EU. Therefore continued collaboration between the member states is of essence. One question, however, that I wonder if it does not have to be formally addressed is what will happen when some states do much better than others in the EU? Territorial gains are not possible but will aid to other nations lead to something like influence? I guess this is why Germans now feel that they have paid enough. We are facing a development stage in the EU where people are not mature enough for federalization but no mechanisms exist for handling different tracks of development. This could lead to problems.

EU and Russia?

The European Council on Foreign Relations A crisis of values?: "People may become more assertive in demanding better from their political masters, emphazising what Angela Merkel termed in her meetings with the Russian government last month the “inseparable link between modernizing the economy and making civil society more democratic”."

Merkel's conclusion is the same as people in Sweden have when they think of the development of China, ie that human rights follow in the wake of a trade relations. However ECFR also feature a discussion of What Russia Thinks. Here one finds a corroboration of Leon Aron's, at the American Enterprise Institute, conclusion a while ago that Russia wants to build their own consensus and not imitate the EU. Democracy, EU style, is simply not the Russian cup of tea.

Another conclusion that can be drawn from this article is that the Russians view the balance of power between three different blocks, Russia, the EU and Turkey, all dissimilar. This might be good to now when considering an enlargement of the EU involving Turkey. They simply might not fit, like Russia, in the EU.

The institutions of the EU has taken a beating as of late. However, in comparison they are twice as popular among the people than is the government of Vladimir Putin, although Putin himself enjoys a 70% approval rate. Putin means Russia to the Russians. There is no politician in Europe with a similar approval rate and even Obama is down to 43%, again displaying how different Russia is to the EU. Russia is coming alive again now when the oil prize is over $70.

Thus the "dominant discourse on Russia among Western liberals focus on what Russia lacks -- be it Western-style democracy, the rule of law and property rights". The point again is that Russia is developing their own model. where these values from John Locke and others simply are not admired. Manouchehr Mottaki, the Iranian foreign minister, said the other day in an interview conducted by the German paper Der Spiegel that in Iran they think that the West is politically immature. They probably refer to their own 2,500 year old authoritarian rulings by various potentates. Russia has their own history of Czars.

The so called "Putin Consensus" is formed by the double failure of Soviet authoritarianism and the anarchic democracy of Yeltsin during the last 20 years. It is modernization supposedly based on innovation rather than on imitation. Russians want to free themselves from the West. Putin calls it "sovereign democracy". Putin decides and the people like it? So far the Putin Consensus is a negative phenomenon. Intellectuals can agree on what they don't want but not on how Russia would look like in the future.

I have earlier written about the developing relationship between Germany and Russia and the take home message of the cited article What Russia Thinks is probably that economic collaboration would work but there would not be a consensus on the political development. Russia will never become the Texas of EU.

Why did the people of Germany and France chose such different leaders?

Europe's 'Opposite Twins' Clash Over Future - WSJ.com: "In Paris, Mr. Sarkozy sometimes referred to the German chancellor as the 'woman from the East' during cabinet meetings, a spokesman let slip. Aides to the president say he was often frustrated because Ms. Merkel didn't show enthusiasm for his initiatives"

The cited article is a must read for anyone trying to understand the status of the current Europe. Angela Merkel and Nicolas Sarkozy are so different that they might be able to collaborate just because of this but, of course, each leader have chosen an administration of people they get along with and these two teams have been fighting it out for a while now after the debt crisis of Greece.

Yesterday there was an article by Hans-Werner Sinn, apparently one of Germany's heaviest economists who writes for Project Syndicate, where he blamed president Sarkozy for the unnecessary bail-out on €750bn of the "Club-Med". Sinn does not agree but the political elite in Germany speak in terms of separating northern Europe from southern where they want to place France. Polls are down for both Sarkozy and Merkel but most worries are for Merkel whose coalition with FDP, that have gone from a 15% support at the election to 5% now, is in apparent danger. Bo-Inge Andersson at SVT claims the animosities are real between CDU and FDP.

Right now there is an ongoing process of establishing an economic government for the EU. According to observers, France and Germany differ in the proper understanding of what this steering mechanism actually would entail. The Economist reported a while ago that 50% of the people of France think capitalism is kaput vs. 8% for the people of Germany. The export machine of Germany is therefore running full steam while the French ponder what to do next.

I'm not sure but there might be a polarization in Europe on whether there will be more integration or not. Charlemagne made an interesting note on the difference between politicians in member countries and the Eurocrats in terms on how they value money. The Eurocrats anticipate a bright future with increasing revenue for their trade whereas the nationals worry on how to make ends meet, being the ones that actually are the bread winners.

State sponsored Ship-to-Gaza flotilla challenges Israel

Skepp fullastade med charlataner - Debatt - Expressen.se: "I likhet med sina medorganisatörer liknar Mankell Hamas terrorister vid antinazistiska motståndsrörelser och Israel vid det nazistiska Tyskland"

Caroline B. Glick, from the Jerusalem Post via Expressen gives an interesting background to the attempt to land 8 ships with aid in Gaza and thus break the blockade Israel is doing on Hamas' criminal ruling of Gaza that in all probability aims to attack Israel anew. Hamas is against the existence of Israel and instead of building a peaceful commune with foreign aid they three years ago started to turn Gaza into a rocket ramp.

This is probably an attempt to generate an international response against Israel like the one after Operation Cast Lead where Israel lost a lot of its political capital although they had the right to defend themselves. There is now, as there was then many Israelis that want the blockade to end. However, as long as the government stands I think they should determine what the best course of action to take on Israel's security is.

According to shiptogaza.se Carl Bildt, the foreign minister of Sweden, and Caroline Ashton, EU's High representative, have supported ending the blockade. Having an opinion is one thing but causing trouble for the Israeli government I guess is another. As Lady Ashton recently visited Gaza, two rockets were fired on Israel one of which killed an Israeli.

It is going to be interesting to see what the impact is of the new National Security Dotrine of the US. Because the US are going to deal with Europe country by country and think the EU can be good for aiding the Eastern European countries. It remains to be seen what influence the opinions of the high representative will have in the future. Peter Wolodarski writes today on DN.se about the importance of EU for the international voice of Sweden. I would not be surprised if the voice of Sweden alone is not more influential than that of Lady Ashton's.

Dramatizing Europe

EUobserver / Barroso says German calls for treaty change are 'naive': "Referring to the German trade surplus of €134 billion, the commission president asked: 'Does the German public know that nearly 86 percent of these 134 billion, i.e., 115 billion, comes from trade in the EU?'"

This an interesting piece of information, if true, it seems a little high. It seems like this can be interpreted to mean that Germany's export is generating the deficits and debts of Southern Europe? These countries borrow to their public expenses while they consume German products. Now Germany wants these countries to cut their public expenses to be able to maintain their import of German goods? Barroso is against hard measures for Southern Europe.

Another interesting parameter of the debt crisis is that France's finance minister Christine Lagarde and a prominent German economist that I overheard on the Swedish radio says that there is no euro crisis. Because the lowering of the Euro value relative the US dollar and the Chinese renminbe facilitates German export to these countries. China exports more to EU than the US and is apparently worried about decreased competitiveness because of this.

Perhaps Obama that called Merkel that €750bn night for her to make up her mind also was worried that US competitiveness in Europe would go down. The US has longstanding claims on China for running an overvalued currency. Barroso says that the crisis has been good for Germany and I guess this is an additional reason to those delineated in his interview in Frankfurter Allgemeine Zeitung today.

Germany is Sweden's largest export nation and we would not like an euro that falls relative the krona either. However, Sweden would probably benefit from a strong and 'free' Germany that checks Russian power in the North East of Europe. If the moral from the above is that this development now rest on bleeding Southern Europe dry and suffering, causing undue societal unrest and tensions, such a wish might not be optimal.

United States of Europe?

Op-Ed Contributor - Europe’s Birth Pangs - NYTimes.com: "The birth of a state is no less difficult. Indeed, what pessimists — including many here in Germany — see as an existential crisis for the continent is really just the latest stage in the birth pangs of a new country."

These are the words of Gabor Steingart, Chief Editor of the German financial daily Handelsblatt, and a person that has figurated often in a fierce anti-American mood in Spiegel Online International.

Joschka Fischer, the former foreign minister of Germany, and a Green Party member, a party that has gained 70% in the pollls, ie, from 10% to 17%, sings approximately the same song in an anti-Merkel mood. The Free Democrats and the CDU are going down in the polls.

Andrew Stuttaford writes on WeeklyStandard.com about the possibility of a federal Europe enforced by the abyss alternative of euro zone dissolution: "This might have mattered less in economically more comfortable times, or in the times when Brussels was not stretching so far, blithe times when voters (foolishly) and Eurocrats (realistically) could, for the most part, pretend that the other did not exist. That's over now. Building an economic union is messy and intrusive. It'll be hard to slip it through on the quiet. The PIIGS are being ordered to take a long hard road. The peoples of Northern Europe will be told to pay for its paving. What if either says no?"

Boris Johnson, the mayor of London, argues that the Euro zone is going down.

I guess this is it. The EU has been built so far as it goes without the sovereignty of nations suffering. Now people want to create a fiscal federal state without sharing politics as if this was possible. It boils down to a face saving maneuvre of grand dimensions or a successful United States of Europe. Pondering a post-EU/EMU Europe might be more realistic.

Today's guess on the future of Europe

There has been a lot written on Europe concerning the Euro crisis lately. It is safe to say that the spread on opinions is large which means that uncertanity for the situation is great.

Just because it is fun, I'm going to guess what will happen. The best odds are on a muddle through, high regulation, less fiscal sovereignty EU.

However, I fancy a situation where now Germany tries to see if other countries will follow their lead. When they are not, they will say we tried but failed to lead the EU and then they will leave the Euro zone. Then France also leaves Euroland. Finally, Britain leaves the EU.

This is a combo of what it sounds like in the press on the internet currently.

European growth perspectives?

BBC News - EU prepares to vote on new hedge fund rules: "The European Parliament's economics committee is set to vote on the legislation on Monday evening, then EU finance ministers will discuss it on Tuesday. The parliament and member states' governments have equal powers to shape the new regulations."

The above article discusses how Great Britain differs from the Continent in how they want their financial markets to operate. I vouched for risk taking and fulfilling dreams the other night so I guess I am British on this one. But I am not sure I understand the logic behind the wanted change since Europe needs growth more than most and because the suggested changes limit these prospectives.

Angela Merkel and Nicolas Sarkozy went against George Bush almost immediately after the financial crisis 2008 and wanted more regulations. I guess it has taken this long for this change to percolate down to the current suggestion by the European Parliament Economics Committee. I remember Bush's argument against was that Germany's market was more regulated but they also ran into the same trouble.

Olle Schmidt, a European MP from the Swedish People's Party, says in an article in Svenska Dagbladet: "Firmer regulations of Risk Capital Funds will strangulate Europe from capital and among other things give pension fund investors less opportunities to invest." Schmidt argues that this might have negative consequences for pensions and venture companies in Sweden. Schmidt, a member of the liberal ALDE group, will vote against the suggestion whereas conservatives and socialists are expected to vote for it.

The Cameron government just installed a EU moderate as EU minister to soften concerns of the EU. Cameron had taken his party out of the EPP group to the EU parliament fringes. Apparently Merkel and Sarkozy are united against Great Britain on this issue which is very important for the City of London financial centers that has generated a lot of income to Britain. Wall Street earned 30% of the US GDP and thus the City of London has felt that they are attacked by the Continent on their ability to get future revenue.

I guess I'm sitting around waiting for the new economics to be suggested from France, where 50% think the capitalist system is broken, and Germany. We don't seem to be there yet in terms of a global sustainable economics. For Britain to lose revenue due to such a regulation must be serious under its present economical conditions. Will they leave the EU?