# NIC Europe, 2020

**SCENARIOS**

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**The views expressed in this and other papers associated with the NIC
2020 project**

**are those of individual participants. They are posted for discussion
purposes**

**only and do not represent the views of the US Government.**

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# NIC Europe, 2020

**SCENARIOS**

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**Workshop Date:** April 28-29, 2004

**Venue:** Budapest, Hungary

### Contents

1.  Four scenarios for Europe, 2020.

    1.  From stagnation to decline

    2.  Multi-speed Europe

    3.  Reforms to economic growth

    4.  A rift between the US and Europe

2.  Four global scenarios, 2020.

    1.  Global insecurity

    2.  Increasing regionalism

    3.  Successful globalization

    4.  Europe between the US and China

> Conclusions: Some combinations

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# 1. FOUR SCENARIOS FOR EUROPE, 2020

Four **European scenarios** have been presented to the group for
discussion.

1.  From stagnation to decline

*The **first scenario** describes **low or no economic growth** as well
as **lack of political changes** because the missing financial resources
make economic and social **reforms impossible**.* This leads to growing
frustration and criticism toward the EU institutions. Terrorism can be
an element that hinders progress. Immigration is also an important
factor potentially leading to ethnic strife especially in Germany and
the Balkan regions.

Political extremism may occur in case of no growth and no reform.
Revolts and riots in cities and urban centers are increasingly probable.
Both political extremism and inner city riots might be more likely to
happen in the less developed countries (i.e. newer member states of the
EU), because the large gap between the EU's ability to deliver and the
new members' expectations can cause dissatisfaction. In addition,
problems of energy resources and water scarcity, as environmental
factors, might stand behind such happenings. If the EU does not deal
with environmental problems in the short run because of lack of
financial resources, they will have to pay a tremendous price in the
long run.

However, a chance of a revolution scenario is limited because usually
young not aging societies revolt.

In these conditions some member states may exit the EU as a result of
dissatisfaction. This might be the U.K. on the one hand, or some of the
new member states, on the other. (However, the idea of a future Central
European Federation has been discarded.)

1.2 Multi-speed Europe

*The **second scenario** forecasts **small and slow economic growth** of
one to two percent. This is **a multi-speed Europe*** where the big
countries would go in front and some of the new members would grow up to
the big ones by reducing the gap between them. Responses to immigration
issues or democratic challenges would be inconsistent. An enlargement
toward Turkey and the Ukraine is done.

This scenario has resulted in a consideration of what countries are
expected to join the EU by 2020. This scenario suggests that Turkey, the
countries of the Balkans will join the EU, and, perhaps, Ukraine may
join too. It seems reasonable to expect this on grounds of economic
relations but the authoritarian structure of some of these countries
would bring some substantial consequences: Either their accession would
lead to a very different EU, or serious political change must occur in
these countries. In this scenario, the expansion of the EU is an
important factor inasmuch the size of the EU is thought to influence the
direction in which it develops.

The nature of the reforms has also been pondered. Some have envisioned a
slow dismantling or slimming down of the welfare state. This could occur
so that rightist governments are elected and they carry out Thatcherite
reforms. Some have seen Thatcherite reforms as a failure of the welfare
state not a reformation of it.

1.3 Reforms to economic growth

*The **third scenario** forecasts **significant economic growth based on
major reforms**.* The impetus for reform may come as a response to
political crisis, the collapse of the Euro or external challenges. It
involves a redefinition of the social contract. The issue of migration
is dealt with which is facilitated by economic growth. There is a change
in economic direction, which would transform Europe as we know it today.

Environmental crises and the state's breaching of the social contract
(inability to pay pensions etc.) can be as likely crises leading to
reform.

However, to successful reforms a change in the political elite is
needed. The need for the rise of an effective leader might be a
necessary condition to reform. Yet, the fact that European systems are
parliamentary ones seems to indicate that one person is not enough to be
converted to the cause of reform but the whole political elite must be
won over. (Even then, as some voiced their pessimism, it is doubtful
whether the willingness to reform would actually lead to successful
reforms.)

The idea that the problem of Europe is really a problem of the German
economy resurfaced again. If so, then reform should be sought by the
German elite but not necessarily by other EU members.

1.4 A rift between the US and Europe

*The **fourth** scenario describes **a rift between the US and Europe**
within the framework of a multi-polar world system.* The sources of the
rift might be the result of disagreement over how to deal with weapons
of mass destruction, the continuing war on terror, Russia and energy
policy, China's emergence as a partner or rival, or the Middle East
peace process. This scenario is compatible with the three previous ones.

One view has been that such a rift would be a part of a larger global
collapse. Nonetheless, it may effect the EU and European unity in
various ways:

(1) If the rift happens now, then there will also be a rift in the EU.
    The advantages of bilateralism as a result of a rift may also lead
    to European disputes.

(2) If the rift happens later, then socialization of the new EU members
    into the 'EU culture' and the Iraqi experience of the West can
    strengthen European unity.

The present cooling in the relationship is seen as a result of the costs
of exporting commonly agreed democratic values. A missionary American
approach may make the price to support the US too high for the EU. In
other words, unilateralism may negatively influence European attitude
toward US policies and would also mean a dissolution of the
international security institution, which would remove one further
barrier for the US to act freely according to her own wishes.

However, America would be forced to act multi-laterally if faced with a
large external threat (excluding terrorism) such as the rise of another
great power (possibly China) in which case, her interest lies in
cooperation. In other words, in this respect, EU-US relations will
largely depend on American behavior.

However, as it has been added, beyond security and geopolitical
considerations, common economic, environmental, energy problems can
bring the US and Europe together so as to seek common answers to common
problems. It is disputable to what extent these issues can set the two
sides against each other, leading to rivalry. In addition, the emergence
of China and India as great powers will not necessarily have unifying
effect on the transatlantic relationship. China may be a strategic
competitor for the US but an important trading partner for Europe.

There has been no agreement on whether economic or geopolitical factors
should be the primary cause of a rift.

Economic isolationism seems to be too costly because the European and
American economies are very much intermingled. Indeed, there is a
possibility of a united free trade area of the EU and the NAFTA
countries on the condition of French and German prosperity.

On the other hand, a rift does not have to be sudden but can occur as
slow dissolution of cooperation and mutual trust. In this case the US
would shift its focus to Asia, because of faster growth in that region,
the growing Asian population in the US, and problems with NATO. Such a
negotiated disengagement might lead to a new division of labor and then
a sudden break in the relationship.

The issue whether Europe would develop its own army and cease to depend
on the US for security guarantees has been discussed. As a conclusion,
it is unlikely to take place in the next 15 years. The CFSP is going to
continue but European capabilities will remain limited. A European rapid
reaction force has been born already in the EU, but it is unclear if it
is financially sustainable in the long run.

A European army can only be the consequence of the appearance of some
major threat (terrorism has not been seen as such a threat). Weapons of
mass destruction, organized crime and state failure has been named the
primarily security threat.

In spite of Central and Eastern European countries' demand that the EU
guarantee their security, and partly because of the British opposition
to enter into a common security structure, which however is not feasible
without Britain, no other factors seems probable to bring a European
Army come about. Even a transatlantic rift has been seen unlikely to
lead to the development of a common army.

An alternative view of the development of a European army has been that
it depends on whether it is more effective to be a soft or a hard power.
Europe would choose the more beneficial route.

Current Anti-Americanism in Europe seems to be overemphasized in the
public discourse and it may not last long. It is rather anti-Bushism
than anti-Americanism. (However, it is true that anti-American
demonstrations happened in Europe during the Clinton administration as
well.)

A Russian threat is not expected until 2020 but the current NATO
structure is forecasted being able to fight such a threat should it
occur.

# 2. FOUR GLOBAL SCENARIOS, 2020.

European scenarios of development cannot be separated from the rest of
the world. Therefore, the workshop concluded with a discussion of a few
**global scenarios**.

2.1 Global insecurity

*The **first** such **scenario** is **global insecurity** that includes
the **spread of terrorism**.* Failed states are exploding recurrently.
There will be an erosion of global security institutions as well as the
erosion of bilateral security guarantees that prevent states from
aggressors. Hence, this is more of a self-help situation in relations to
both the security of the states and that of the individuals.

Such an international situation might change the nature of European
institutions by 2020. There is a complicated balance between the global
ambitions, both political and economic, and the capabilities of the EU.
A vision of how to bring the two together is missing. There would be a
lot of pull effects from local crises. The stress is on early
intervention in failed states, which is a very sensitive issue. It will
bring more controversy even within Europe.

2.2 Increasing regionalism

# *The second scenario is regionalism or multipolar mercantilism.* The world is going to be divided to regional blocks. There will be troubled trading relations between the regions. Countries will be turning their attention toward regional cooperation, which will be reinforced by strategic realities, namely, the resistance to American power. The WTO will still be there, but it may cease to be a strong or pushing factor.

While the EU will continue to support regionalism, it also will prefer
to create agreements with various regions. It is assumed that Internet
technology will not change the world fundamentally, thus economic
regionalism will remain in place.

2.3 Successful globalization

*The **third scenario** foreshadows a return to **successful
globalization** of the early 1990s.* Regionalism would not go away and
there would be high European growth. Countries adapting to globalization
will be successful and the same can be said about individuals.
Globalization is meant to be heterogeneous (i.e. countries may not copy
the US). The EU will continue to exist and trigger globalization through
its trade relations.

As for the likely influence of these three scenarios, it seems that in
the first scenario some EU countries have problems, but some are
successful. In the second the EU is affected as a whole. And in the
third the EU can be a strong force.

Europe will, however, face tremendous challenges especially in
agricultural questions. This is especially so, because permanent return
to a pre-Maastricht level of cooperation is not feasible.

2.4 Europe between the US and China

*The **fourth scenario** takes a look at possible **European reactions
to growing tensions between the US and China.*** The US and China
currently have a rather harmonious relationship, can avoid disagreements
and the Chinese are cooperative. However, at the end of the period as a
result of internal change or the issue of Taiwan and Korea etc. might
bring a crisis and it might make the US realize that the relationship
changed for the worse with worsening trade relations (tension and
competition). A military conflict may be part of this scenario, but not
necessarily. Russia remains neutral in the dispute.

European reactions might lead to two directions: Europe will either stay
out of the game or it will work to create institutions to moderate
and/or tame the conflict. However, EU-China confrontation is not
entirely impossible, as China is the second largest competitor for
energy, which may make China a rival of Europe.

It cannot be excluded that Europe may be closer to China in such a
rivalry that to the US because for Europe China seems less of a rival
than an important trading partner.

European and America protectionism is expected to push China into
stronger regional domination in Asia.

The likelihood of American-Chinese tensions will depend on how strongly
China will push for a role in Central Asia and the strength of the
Chinese Diaspora in Europe. Chinese-Indian relations may also have a
destabilizing effect. Because of the expected increase in Chinese
oil/energy use in the short run, China may wish to become an active
participant in the Middle Eastern affairs. A possible area of
confrontation with China may come with Russia over the resource rich
Siberia.

# Conclusions: Some combinations

The European and global scenarios do not necessarily make a fully
exclusive system of categorization in a two-dimensional table. Some
scenarios might go parallel in the future. Nevertheless, it is worth
considering the possible combinations of future development, even if in
a simplified manner (See Table 1).

##### Table 1. The effects of European and global processes combined

(A, B, C, D = European scenarios)

(1, 2, 3, 4 = Global scenarios)

1\. 2. 3. 4.

Global Increasing Successful EU btw. US

insecurity regionalism globalization and China

A. Stagnation to decline A1 A2 A3 A4

B. Multi-speed Europe B1 B2 B3 B4

C. Reforms to growth C1 C2 C3 C4

D. Rift (btw EU and US) D1 D2 D3 D4

The *best* possible scenario for Europe by 2020 would be the case of C3,
a combination of successful European economic reforms, restructuring,
and growth with a successful globalization led (or partly led) by
Europe. Similarly, C2 and C4 would be favorable for Europe, while B3
would be a sub-optimal, but still favorable, case.

The *worst* possible scenario for Europe by 2020 would be the case of
A1, a combination of European stagnation and decline with global
insecurity. The cases of A2, A4, B1, D1 would also be very bad.
Similarly, Europe would suffer from the realization of A3 and D4 cases,
but, perhaps, to a less extent.