Several recent publications have been quite euphoric about Europe\u2019s prospects, leaving little room for doubts about the continent\u2019s future trajectory. The director of foreign policy at the Centre for European Reform predicts, astonishingly, that Europe will economically dominate the twenty-first century (Leonard 2004). The former London bureau chief of the Washington Post maintains that the rise of the United States of Europe will end U.S. supremacy (Reid 2004). And Rifkin (2004) is impressed by the continent\u2019s high economic productivity, the grand visions of its leaders, their risk-sensitive policies and reassuring secularism, and the ample leisure and high quality of life provided by caring social democracies.<\/p>\n
Such writings make me wonder whether the authors ever perused the continent\u2019s statistical yearbooks, read the letters to editors in more than one language, checked public opinion polls, walked through the postindustrial wastelands and ghettos of Birmingham, Rotterdam, or Milan, or simply tried to live as ordinary Europeans do. A perspective offered by the author, a skeptical European who understands the continent\u2019s major languages, who has lived and earned money on other continents, and who has studied other societies should provide a more realistic appraisal. Of course, this does not give me any automatic advantage in appraising Europe\u2019s place, but it makes me less susceptible to Euro-hubris and gives me the necessary Abstand to offer more realistic judgments.<\/p>\n
Russia, too, is part of my Europe. Arguments about Russia\u2019s place in (or outside of) Europe have been going on for centuries (Whittaker 2003; McCaffray and Melancon 2005); I have never understood the Western reluctance or the Russian hesitancy to place the country unequivocally in Europe. Of course, Russia has an unmistakable Asian overlay\u2014there must be a transition zone in such a large land mass, and centuries of occupation by and dealing with the expansive eastern nomads had to leave their mark\u2014but its history, music, literature, engineering, and science make it quintessentially European. On the other hand, its size, resources, and past strategic posture make it a unique national entity, and there is a very low probability that Russia will be integrated into Europe\u2019s still expanding union during the coming generation. For these reasons, I deal with Russia\u2019s prospects in a separate section.<\/p>\n
The argument about Europe being the leading economy of the twenty-first century is inexplicably far off the mark. The reality, illustrated by Maddison\u2019s (2001) millennial reconstruction of Western Europe\u2019s GDP and population shares, shows an unmistakable post-1500 ascent that culminates during the nineteenth century and is followed by a gradual descent that is likely to accelerate during the coming decades. In 1900, Europe (excluding Russia) accounted for roughly 40% of global economic product; 100 years later it produced less than 25% of global output, and by 2050, depending above all on growth in the GDPs of China and India, its share of global economic product may be as low as 10%. By 2050, Europe\u2019s share of global economic product may be lower than it was before the onset of industrialization, hardly a trend leading toward global economic dominance.<\/p>\n
In addition, the continent has no coherent foreign policy or effective military capability. As Zielonka (2006) argues, the current European Union is simply too large and unwieldy to ever act like state; rather than a coherent actor on an international scene, he sees a \u201cmaze Europe.\u201d The European Union\u2019s member states do not see eye to eye even on a major issue whose excesses and burdens simply cannot continue: the bloated, trade-distorting agricultural subsidies that have been swallowing about 40% of the EU\u2019s annual budget. Europeans, so eager to sermonize about their superior economic and social policies and higher moral standards, and so ready to voice anti-Americanism, could do with some introspection in all of these respects. Europe\u2019s labor productivity and ample leisure time have been bought by mass (and in some countries, persistent) unemployment, roughly twice the U.S. rate for the entire work force (\u223c10% vs. \u223c5%). In some parts of the continent more than 25% of people younger than 24 years are jobless, and in 2005 the peaks were above 50% in three regions in Italy, two in France, and Poland (Eurostat 2005b).<\/p>\n
Just two months after the self-congratulatory comments on the United States\u2019 ineptitude in dealing with the hurricane Katrina (\u201csomething like that could never happen here\u201d), banlieus were burning all across France, the flames of thousands of torched cars and properties illuminating segregation, deprivation, and neglect no less deplorable than the reality of New Orleans\u2019 underclass exposed by Katrina\u2019s breached levees. (The torchings of about 100 cars a day have continued ever since.) As for the EU\u2019s morally superior risk-sensitive policies (as opposed to what Europeans see as unsophisticated, brutal, and blundering U.S. ways), they allowed EU member states to watch the slaughter of tens of thousands of people and the displacement of millions of refugees in the Balkan wars of the 1990s. Only the U.S. interventions, on behalf of Muslim Bosniaks and Kosovars, prevented more deaths (Cushman and Mestrovic 1996; Wayne 1997).<\/p>\n
As for the grand visions of professional politicians, they have been rejected in a referendum even by France, the European Union\u2019s pivotal founding nation. Many managers as well as ordinary citizens would characterize the EU\u2019s modus operandi as bureaucratic paralysis instead of caring social democracy. Additionally, and sadly, the continent\u2019s ever-present anti-Semitism is undeniably resurgent (requiring the repeated assurances of political leaders that it is not); it surfaced in some stunningly direct comments during the Israeli-Hizbullah war of August 2006. Finally, a multitude of national problems with European integration will not go away.<\/p>\n
The presence of a supranational entity like the EU has the effect of weakening ancient national entities. Spain has its Euskadi (Basque) and Catalunyan (and Galician) aspirations. Combined challenges from devolution (Scotland, Wales, Northern Ireland), European integration, multiculturalism in general, and large Muslim populations add up to a trend that may see the end of Britain (Kim 2005).<\/p>\n
Germany, France, and Italy, the continent\u2019s three largest nations whose unity is not threatened by serious separatist movements (episodic Corsican violence or Lega Nord are not going to dismember France or Italy), have their own deep-seated challenges.<\/p>\n
The German and French economies underperformed during the last two decades of the twentieth century. In the German case there was the partial excuse (or terrible miscalculation) of the economic cost of absorbing the former East Germany (DDR) (Bentele and Rosner 1997; Zimmer 1997; Larres 2001; Bollmann 2002). The French situation is a textbook illustration of failures arising from an overreaching dirigisme, economic planning and control by the state. Neither country offers a model for a dynamic reinvention of Europe during the coming two generations.<\/p>\n
As for Italy, the EU\u2019s third-largest economy, I can do no better than to quote an acute observer of his patria (Severgnini 2005, 77\u201378): \u201cLife in Italy is so pleasant it becomes narcotic. . . . Italy, it would seem, suffers from a \u2018squirrel syndrome\u2019: everybody fi nds a comfortable hole, and hunkers down. The problem is that there are so many holes in the national tree that it may topple unless something is done soon.\u201d But this comfort cannot last. Italy\u2019s economy suffers due to the combined impact of rapid aging (rivaled only by Japan), precipitous destruction of traditional smalland mid-scale artisanal manufacturing by Chinese imports, and growing numbers of immigrants. The deep economic and cultural breach between the Nord and Centro on one hand, and Mezzogiorno on the other, has not diminished. Decades of massive (and largely wasteful) investment have not lowered chronic unemployment. And the Mafioso culture of violence and corruption still operates (Gambetta 1992; Cottino 1998 and 1999; P. Schneider and J. Schneider 2003).<\/p>\n
Even if one were inclined to see the post\u2013WW II path of Western European as an undisputed success story and assumed that recent economic problems could be addressed fairly rapidly by suitable reforms, there is one inescapable factor that will determine the future of Europe\u2019s most affl uent western and central parts and poorer eastern regions: a shrinking and aging population. After many generations of very slow demographic transition (Gillis, Tilly, and Levine 1992), Western Europe\u2019s total fertility rates slid below replacement level (2.1 children per mother) by the mid- 1970s. A generation later, by the mid-1990s, the total fertility level of EU-12 was below 1.5; the new members did nothing to lift it: by 2005 the average fertility of EU-25 was 1.5 (Eurostat 2005b). Europe\u2019s population implosion (Douglass 2005) now appears unstoppable.<\/p>\n
Naturally, the reliability of long-term population projections declines as the projection\u2019s fi nal date advances, and a new trend of increased fertility cannot be categorically excluded. However, it is unlikely that it would last very long. The last notable regional rebound lifted the Nordic countries from an average of about 1.7 in 1985 to almost 2.0 by 1990, but by the end of the decade fertility was back to the mid-1980s level. More important, it is unlikely that a meaningful rebound can even begin once the rate had slipped below 1.5. That is the main argument advanced by Lutz, Skirbekk, and Testa (2005).<\/p>\n
Once the total fertility rate reaches very low levels, three self-reinforcing mechanisms can take over and result in a downward spiral of future births that may be impossible to reverse. First, delayed childbirths and decades of low fertility shrink the base of the population pyramid and produce sequentially fewer and fewer children.<\/p>\n
Second, as fertility plummets, its norms will be even lower during subsequent generations, and even the perception of ideal family size (the number of children wished for under ideal conditions) shifts below the replacement level (already the case in Germany and Austria). Third, low fertilities, aging population, and shrinking labor force lead to cuts in social benefits, higher taxes, and lower expected income, working against higher fertility.<\/p>\n
The economic consequences of population aging have been examined in considerable detail, and none of them can be contemplated with equanimity (Bosworth and Burtless 1998; England 2002; McMorrow 2004). Many of them are self-evident.<\/p>\n
Older populations reduce the tax base, and hence they lower average per capita state revenues and increase the average tax burden. Falling numbers of employed people push up the average dependence (pensioners\/workers). Europe\u2019s already high pensioner\/worker ratios (Britain being the only exception among the continent\u2019s largest economies) mean that old-age dependence ratios will typically double by 2050 (Bongaarts 2004). And in some countries most of this rise will happen during 98 Chapter 3 the next generation; for example, in 2001, Germany had 44 retirees (60+ years old) per 100 persons of working age, but the Federal Statistical Office (2003) predicts that the rate will jump to 71 by 2030.<\/p>\n
As most countries finance the current retirement costs of their workers by current contributions from the existing labor force (pay-as-you-go arrangement), increasing retiree\/worker ratios will bankrupt the entire system unless current contributions are sharply raised, pensions substantially cut, or both. Older workers may be more knowledgeable, but they still tend to be less productive because of physical or mental restrictions, higher disease morbidity, and a greater tendency toward workplace injuries and hence more frequent absenteeism. Higher dependence ratios and a higher share of very old people (>80 years old)\u2014for example, every eighth person in Germany will be that old by 2050\u2014will put unprecedented stresses on the cost and delivery of health care.<\/p>\n
But as health care and pension expenditures rise, the average savings rates of the aging population will fall. This will affect capital formation, change the nature of the real estate market, and shift retail preferences for commodities ranging from food to cars. Despite the tightening labor market, many younger people may find their choice of jobs limited as some companies prefer to relocate their principal operations to areas with plentiful and cheap labor. Most new companies are started by individuals 25\u201344 years of age, and the shrinking share of this cohort will also mean less entrepreneurship and reduced innovation.<\/p>\n
In addition to these consequences, which aging Europe will share with low fertility societies in other parts of the world, the continent faces a specific problem whose resolution may crucially determine its economic and political future. As Demeny (2003) has noted, the process of moving toward a smaller and older population could be contemplated with equanimity only if Europe were an island, but instead \u201cit has neighbors that follow their own peculiar demographic logic\u201d (4).<\/p>\n
This neighborhood\u2014Demeny calls it the European Union\u2019s southern hinterland\u2014 includes 29 states (counting Palestine and Western Sahara as separate entities) between India\u2019s western border and the Atlantic Ocean, all exclusively or predominantly Muslim.<\/p>\n
By 2050, EU-25 is projected to have 449 million people (after losing some 10 million from the present level and an assumed net immigration of more than 35 million, 2005\u20132050), half of them older than 50 years. The population of its southern hinterland is projected to reach about 1.25 billion by 2050. Immigration to the continent from this hinterland is already the greatest in more than 1,000 years.<\/p>\n
During the previous period of mass incursions, intruders such as Goths, Huns, Vikings, Bulgars, and Magyars destroyed the antique order and reshaped Europe\u2019s population. So far, the modern migration has been notable not for its absolute magnitude but for five special characteristics.<\/p>\n
First, as is true for immigrants in general, the Muslim migrants are much younger than the recipient populations. Second, the migrants\u2019 birth rate is appreciably (approximately three times) higher than the continent\u2019s mean. Third, the immigrants are disproportionately concentrated in segregated neighborhoods in large cities: Rotterdam is nearly 50% Muslim; London\u2019s Muslim population has surpassed 1 million, and Berlin has nearly 250,000 Muslims. Fourth, significant shares of these immigrants show little or no sign of second-generation assimilation into their host societies. A tragically emblematic illustration of this reality is that three of the four suicide bombers responsible for the July 7, 2005, attacks in London\u2019s underground were British-born Pakistani Muslims. Fifth, whereas Christianity has become irrelevant to most Europeans, Islam is very relevant to millions of these immigrants.<\/p>\n
Europe\u2019s traditional ostracism has undoubtedly contributed to the lack of assimilation, but more important has been the active resistance by many of the Muslim immigrants\u2014whose demands for transferring their norms to host countries range from segregated schooling and veiling of women to the recognition of shar\u0131a law.<\/p>\n
What would happen if this influx of largely Muslim immigrants were to increase to a level that would prevent declines in Europe\u2019s working-age population? In many European countries, including Germany and Italy, these new Muslim immigrants and their descendants would then make up more than one-third of the total population by 2050 (United Nations 2000).<\/p>\n
Given the continent\u2019s record, such an influx would doom any chances for effective assimilation. The only way to avoid both massive Muslim immigration and the collapse of European welfare states would be to raise the retirement age\u2014now as low as 56 (women) and 58 years in Italy and 60 years in France\u2014to 75 years and to create impenetrable borders. The second action is impossible; the first one is (as yet) politically unthinkable. But even if a later retirement age were gradually adopted, mass immigration, legal and illegal, is unavoidable. The demographic push from the southern hinterland and the European Union\u2019s economic pull produce an irresistible force.<\/p>\n