Though the market will be less buoyant, it will remain large — given the amount of wealth accumulated over centuries. The lack of competitiveness and increasing number of failing European companies will also provide more opportunities for acquisitions by Asian investors.
From a broader global perspective, it is important for Asia to assume a more active leadership role. An important element in Europe’s ‘benign’ impact has been its engagement in post-war global multilateral institutions involving the maintenance of peace, promotion of trade and investment, improvement of the environment and reduction of disease and poverty. As Europe becomes more inward-looking and abrasive, this commitment will wane. Asia will further become the centre of universal power and potential, and making sure the world has a robust rules-based multilateral regime will be increasingly critical.
The apogee of European power was reached a century ago. Charles Emmerson captures this in his book 1913: The World Before the Great War, stating that ‘a European could survey the world in 1913 as the Greek gods might have surveyed it from the snowy heights of Mount Olympus’. Europe remained global centre stage with the ravaging outbreak of two world wars. But on 6 June 1944, as the United States saved Europe from itself, for the first time in half-a-millennium Europe metamorphosed from global player to pawn, while achieving peace and prosperity.
While Europe in the first half of the 20th century was engulfed in barbarous ideological extremism, the second half witnessed the spread of liberal democracy. Fascism fell in Spain, Portugal and Greece in the mid-70s and just over a decade later communism collapsed in Central and Eastern Europe. The victory in the ideological battle was won not from the barrel of a gun, let alone through weapons of mass destruction, but through weapons of mass seduction. The crescendo of European inclusive democratisation came on 1 May 2004 with the expansion of EU membership to include eight former Soviet satellite states. Who could have dreamt, as late as the 1980s, that one day Lithuania would become a member of the European Union? This should have been a moment of great Euro-phoria!
Instead it turned sour. Just over a year later, in May 2005, France and the Netherlands overwhelmingly rejected a referendum to establish a European constitution. It was, albeit in the guise of a ‘treaty’ (the Lisbon Treaty) as opposed to a ‘constitution’, imposed nevertheless. From then on it has been downhill. Of course the recession, the ensuing Eurozone crisis, the economic stagnation, the policies of austerity, the high unemployment and the recent Ukrainian debacle have made matters worse. But Europe’s fundamental problem is the betrayal of its elites and their extinction of the ‘European dream’.
Europe’s leaders, with few exceptions, are mediocre non-entities. They have failed to foster a sense of European solidarity, identity and community. How can we have a single currency without communal solidarity? India, with far greater disparities than Europe, still manages to foster unity and identity — as well as a single currency! The EU parliament has failed to convey passion, conviction or aspiration.
The European dream has been shattered. Neither materially nor spiritually is the European outlook encouraging. European competitiveness will erode, though there are important and dynamic exceptions in the fabric of European business. But there is also apathy on the part of those who ‘have’ (jobs, security, holidays) toward those who ‘have not’.
Of course trends are reversible. The rot may stop. But realistically this seems unlikely.
The Euro may collapse, the EU may unravel, Britain will probably exit, economies will stagnate — with Germany and one or two others possibly bucking the trend — the political atmosphere will be more virulent and the social environment more hostile, especially vis-à-vis immigrants.
Europe caused havoc, exploitation and impoverishment throughout Asia and much of the world in the past. Since World War II, its impact has been, on balance, benign. The EU has been a reasonably constructive global stakeholder. This may be over. Though it will not necessarily become overtly malignant — Europe will not go to war — it is likely to become more closed, more protectionist, more defensive, aggressive, racist and rudderless.
As we enter the ‘Asian century’, Asia must ensure that it does not culminate in a disaster comparable to what occurred with the previous European century. It must not only learn the lessons of Europe, but put them into practice.
Jean-Pierre Lehmann is Emeritus Professor of IMD, Switzerland, Founder of the Evian Group and Visiting Professor at the Hong Kong University Faculty of Business and Economics.