The Challenges that will have to face the new EU leadership

After the May 26th Elections and the July decisions, as the whole of the EU leadership will change in the autumn, the new EU leadership will have to address urgent for solving situations for the next five years in a more general economic, political and geopolitical context.

The first challenge

The first set of challenges facing the new EU leadership and always considered within a general framework are the changes that exist in the fluid global power system and the impact that will be caused by them in the economic field.

by Thanos S. Chonthrogiannis-https://liberalglobe

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The fact that the US has waged a trade war against China proves that the US has and follows their own policy of how they should cope with China’s ever-increasing economic power.

The US assumes that China ‘s direct treatment from the US and not through the international institutional organisations such as World Trade Organisation (WTO) as they would for other countries gives them comparative advantage in the implementing policy of dealing with China.

Essentially, the U.S. through the trade war is trying to regain any losses and lost ground they have so far suffered in the economic and commercial field of China’s unfair competition practices.

In addition, the USA is blocking Chinese companies in their territory and denying them to undertake a major role in the critical communications infrastructure and regardless of whether China is a pioneering technology in this area.

For its part, the EU continues to maintain an ambivalent stance on this subject, holding a “Pontius Pilate” stance between the US and China. On the one hand announces that it is against trade wars (collateral damage in the trade war between the US and China is the exports of the EU and especially German exports to China).

On the other hand, the EU does not appear in its stance to adopt the US complaints regarding security issues in the communications sector by not following a common political line, but the critical decisions in this matter leave them to be taken at national level member-country level, and not at EU level.

Of course, this EU stance is explained by the fact that the EU is suffering from huge lack of direct gigantic investment in its territory, and given the forthcoming new global recession, making it all the security above subjects to ignore them due to the welcome and support of gigantic Chinese investments in critical infrastructure such as airports, ports, communication infrastructures in its ground.

Therefore, a clear, stable policy and common coordination at EU level will be the challenge for the new EU leadership, while at the same time downgrading any independent decisions taken separately at member country level.

The second challenge

The second major bundle of challenges facing the new EU leadership is the ever-increasing economic divergence between its member countries. The financial stability hitherto experienced by the EU is based on the ECB’s decisions on a colossal quantitative easing program which implemented by the ECB in the mid-2010.

The EU must make decisions at fiscal (budgetary) level that encourage ever-increasing fiscal, economic and tax convergence between its member countries.

For detailed fiscal and economic policies to be implemented in the EU so that they can lead to a common federal type budget in the euro area, making it possible and effective for a common fiscal, economic and tax policy throughout the euro area you must read the analyses titled «The Sustainable Solution for the Eurozone Economy I, II, III, IV» and «The Proper Way to achieve the Single Operating Budget of the Eurozone I, II», category: Economics & Finance, subcategory: Fiscal Economics.

Such advanced decisions will create the basis and trigger for the consolidation of many EU industries in all its member countries, creating in each case highly competitive industries in every economic sector. As an example, we could mention the fragmented European defense industry to date.

A common federal type and operational budget in the euro area, which will define a common fiscal, economic and tax policy respectively, is the only one that will force all the companies i.e. in the defense industry of the EU to unite so that, for example, for each type of weapon system there are three large companies.

The size of the projects that the specific federal type budget of the Eurozone i.e. for example will qualify for each weapon system, will force companies to merge in order to meet its requirements.

In addition, the drastic increase in defense spending in such a type of budget will drastically increase Europe’s overall participation in NATO spending.

The gradual rehabilitation from the US military umbrella and not from the NATO military umbrella, on the one hand, will give military and political autonomy to the EU within NATO and will, on the other hand, will allow the US to unleash huge amounts from their annual federal budget that are now committed to the security of the EU which can be redirected to other more productive sectors of their economy.

In essence, the challenge facing the new EU leadership will be the systematic and effective promotion of economic and fiscal convergence measures to achieve a common federal type budget for the implementation of a common and fiscal, economic and tax policy throughout the EU, which will be always in line with the ECB’s monetary policy.

The third challenge

The third set of challenges facing the new EU leadership concerns the implementation of an effectively coordinated, at EU and not at national (member-country) level, a joint action/policy on climate change, but by implementing such measures as to not affect economic growth rates throughout the EU.

For policies of this type related to climate change without affecting the growth rates you must read the analysis titled «The Challenges of Climate Change and Global Growth» category: Social.

For example, we will mention Germany. Germany cannot decide for itself on its territory the complete shift towards the production of clean energy from RES while eliminating nuclear power plants in its territory, becoming energy dependent on Russia at the same time.

The result of this political decision is to create a second gas pipeline (Nord Stream 2) between Russia and Germany to cover the deficit demand for energy in Germany. In fact, Germany is “tied” as much in energy as in geopolitical terms with Russia through cheap and clean energy, while the rest of the EU depends on oil imports. Essentially, the EU is divided in energy and geopolitical terms by the type of energy it uses.

This makes Germany at least indifferent to the fluctuations that exist internationally in the price of oil and which fluctuations adversely affect the budgets and development of the other EU member countries. This “indifference” is reflected in both Germany ‘s decisions at national level and in the EU’s decisions, for example, on the EU’s stance towards the US sanctions imposed against Iran. 

So, a common energy policy should encourage the creation of an energy market involving many energy suppliers with aim to compete each other. The profit-benefit would be the ever-reduced fuel prices for both the EU industry and its citizens.

In addition, the EU should encourage its member countries that have lignite reserves on their territory not to abolish them but to use them for the production of synthetic petrol and oil equally by applying the well-known Fischer-Tropsch method which implemented by Germany in the Second World War (WWII) in order to move its motorized troops.

This means huge savings in the annual central governments’ budgets of member countries and gradual recovering from oil imports from third countries.

The fourth challenge

To date, the EU was determined by the regular gathering of national leaders to discuss EU issues and policies that would then be applied by each of them to their member countries who they lead.

Therefore, the EU’s national (member-countries) leaders used to care primarily and foremost to address the challenges that arise in their member-countries that each of them exercised his power. 

The fourth set of challenges that the new EU leadership will have to face is how much pressure it is prepared to exert for the implementation of joint coordination and policy of its member countries, and whether it is prepared to reach the point of it is strongly conflicted with the right of national leaders and by extension with the right of its member countries to make sovereign decisions.

Thanos S. Chonthrogiannis