London Summit 2015 - The Future of Europe (I)

Panel Context and European Demographics

• The session, moderated by CNBC anchor Louisa Borgeson, explores the future of the European Union (EU) against a backdrop of political and economic instability.
• Europe currently houses approximately 12% of the global population (775 million) but faces demographic stagnation compared to 37% in China/India and 15% in Africa.
• Panelists reference historical 20-year cycles of global power shifts (e.g., US dominance in 1960, Soviet rise in 1980) to suggest current crises may be transient.
• Thomas Friedman is cited regarding the unpredictability of the future, advising a "practical" approach to "expecting the impossible."
• The discussion frames the EU's current crisis as a reversal of historical migration patterns, noting that decades ago Greeks fled to Syria, whereas now refugees flee to Europe.

Germany's Role and the "Two-Speed" EU

• Peter Beyer argues Germany should exert political leadership but only in tandem with France and Poland (the "Weimar Triangle"), rather than unilaterally.
• Beyer references a 1994 paper by Wolfgang Schäuble advocating for a "European Union of two speeds" to accommodate differing integration levels.
• He notes that the EU has likely expanded too quickly, questioning if member states can "digest" new entrants like Serbia, Kosovo, and Montenegro within the next 5–10 years.
• Currently, the EU operates as a fragmented entity with the Schengen regime and Eurozone comprising fewer than 28 members.
• Beyer warns that future enlargement without meeting strict democratic and anti-corruption standards could repeat the errors made with Bulgaria, Romania, and Greece.

Divergent Views on the EU's Viability

• Juan Maria Nin Genova (Spain) predicts the current EU project is "game over":
  • He cites three primary failure factors: ineffective multilateralism in external policy, a "reputation shock" due to the rise of populism, and the inability to mutualize risk among 28+ member states.
  • He asserts that due to vast economic and cultural differences, a banking union or fiscal union is currently impossible.
  • Nin Genova warns of a "black swan" event, where internal and external shocks could lead to total system collapse.
• Howard Shore (UK) describes the EU as a "failed structure" needing radical reform:
  • He argues the current social welfare model discourages assimilation and creates a dependency trap where people do not need to work to survive.
  • Shore claims the UK can leverage its referendum threat to pressure Germany into significant reforms, noting Angela Merkel is politically weak regarding the Greek crisis and refugee costs.
  • He predicts the UK will likely vote to stay due to a negotiated deal, but this will still drive the EU toward a "two-speed" model where non-Eurozone nations opt out of various regulations.
• Nigel Farage (UK/EU Parliament) rejects the concept of reform as "baloney":
  • He contends the EU leadership (Merkel, Hollande) seeks more centralization and power, not reform, paralleling the Soviet approach of responding to failure with more of the same.
  • Farage predicts the British referendum will trigger a domino effect, leading other nations (Austria, Sweden) to seek withdrawal from political union.
  • He advocates replacing the EU with the Council of Europe, a 1948-based forum for civil cooperation without a supranational army or flag.
  • Farage argues that the EU is a "non-military empire" that has gained power precisely because it has failed, citing the forced mandatory migrant quotas against Hungary and Poland.

Economic Performance and SME Concerns

• Howard Shore cites a UK study showing 60% of the private sector workforce (SMEs) believes the EU hinders business, with 80% wanting employment and health/safety laws returned to national jurisdiction.
• Shore notes that 100% of the UK economy is regulated by EU rules, yet only 15% of UK GDP is derived from exports to the EU.
• Nin Genova emphasizes that bad economics in Europe (stagnation, no growth drivers) will inevitably lead to bad politics and rising populism.
• He argues that without a return to fiscal discipline and the cessation of quantitative easing, the system cannot recover full employment or stability.
• Shore highlights that the UK has created 2 million jobs in five years, driven primarily by SMEs, contrasting this with high youth unemployment in Southern Europe.

The Migration and Refugee Crisis

• Panelists agree that the refugee influx has shifted public sentiment in Germany from support to skepticism due to the tangible costs and social disruption.
• Nin Genova points out that 80% of those arriving in Germany are economic migrants, not genuine refugees, blurring the definition of asylum.
• Nigel Farage argues the UK's high numbers are due to EU freedom of movement laws allowing Eastern European economic migration, which crowds out capacity for genuine refugees.
• Farage proposes an Australian-style border enforcement model (stopping boats at source) to deter illegal migration while allowing genuine refugees to be processed.
• Peter Beyer clarifies that while Germany has immigration laws, enforcement is difficult because asylum seekers are distributed nationwide before status is determined.
• Juan Maria Nin Genova notes that Spain received 7 million economic immigrants between 2002–2012; while causing short-term unemployment, these demographics promise long-term pension and social security stability.
• Howard Shore disputes the idea that refugees will solve Germany's skilled labor shortage, calling it an "illusion."

Trade (TTIP) and Future Outlook

• Peter Beyer defends the Transatlantic Trade and Investment Partnership (TTIP) as a crucial geostrategic project to bind the EU and US, despite 100,000+ protesters in Berlin.
• Beyer argues TTIP will benefit SMEs and prevent Europe from falling back into isolationism.
• Nin Genova warns that without a cohesive block and a shift away from multilateral "fiascos," Europe risks missing the opportunity to align with US values.
• Beyer suggests that while Germany may not have enough time to integrate refugees into the workforce immediately, the short-term economic impact of refugee-related spending could act as fiscal stimulus.
• The panel concludes with a query to the audience regarding Angela Merkel's handling of the crisis versus David Cameron's, with a roughly 50/50 split in opinion.