Friday, July 15, 2011

The Atlantics: A Return to Arms-Length Continental Management

1) The Visegrad 4: Eastern Europe as a Major Player
2) The Re-Emergent Russian Bloc
3) Baltic Solidarity to an Emerging Russia
4) The EU Periphery: "Core" EU's Albatross
5) The Atlantics: A Return to Arms-Length Continental Management

Today we continue our 5-part series on the Blocanization of Europe by discussing the changes that will happen to the UK, US, Canada, and Iceland as the Continent splits into blocs.

The Atlantics are largely a classic story, and largely a bloc that has existed since the beginning of the second World War. The question of The Atlantics bloc has always been about just how much the Atlantic powers get distracted from each other.

To be clear, the Atlantics consist, fundamentally, of the United States, Canada, and the United Kingdom--I've (controversially, I supppose) tacked on Iceland due to perceived mutual benefit and a few historical interactions.

The United States, Canada, & United Kingdom have the exact same interest on the Continent: prevent any power from amassing enough wealth, power, and influence that it could project that power out of the Continent. For the UK, this threat is more immediate. But for the US & Canada, the fall of the UK to a Continental power would spell long-term disaster (if one consolidated the Continent from Moscow to London, its economy would be a bit larger than that of Washington & Ottowa combined).

We saw this during the first and second World Wars, as well as the Cold War--the US, Canada, and UK have a "special relationship" not despite geopolitics but because of it (which generally makes such a relationship more reliable and less fickle). It will continue to be so.

So why are we even discussing this? Trends looked, briefly, like they would turn awry for the North America / UK relationship in the 2000s, while Europe was upset with the US over Iraq and wildly enamored with its own experiment: a politically strong European Union. It appeared as if the UK had turned its attention towards the Continent, and would actually embrace a unified Continental power.

But this was never to be. The UK managed to sneak in a Eurozone deal in which it had the option of keeping the Pound as a currency for as long as it wanted (it will keep the Pound, for sure). The UK has lobbied against a stronger European military or foreign policy cooperation, preferring to limit its involvement to free trade, and a few domestically popular legislative concepts.

The UK has been skeptical of its involvement with the European Union, and has now grown exceptionally so. Unlike the United States, the European Union would not go to war with itself to maintain its cohesion--there is too much Nationalism at the level of each country, and the EU's tendrils of cohesion are already too weak, and getting weaker. As the UK pulls away, the European Union will do little to stop it.

The United Kingdom is very worried about recent Franco-Russo-German cooperation in military & economic matters. In the 19th and 20th centuries, it was usually 2 of these powers versus the other, and the United Kingdom always sided with the underdog to prevent Continental consolidation. But the UK shudders to think of facing all three at once, and will turn increasingly towards the US for support if this cooperative trend continues on the Continent among its major powers.

And of Iceland? Iceland has no military at all, and depends on NATO for protection. But if NATO's cohesion weakens (which it will), it will need to cling to one of the Blocs for security. Why the Atlantics, and why not the Baltics?

As we'll discuss in our final installment on The Blocanization of Europe, the Baltics are too preoccupied with defending their borders from Russia to reach out to protect Iceland. The US, UK, and Canada will pick up the slack--the US rarely backs off an opportunity to have a forward base of operations in exchange for military protection, and will take the opportunity here as Russia's power grows (as much as Iceland may hold its nose during the deal).

Ultimately, the US, Canada, and UK will work together to play European powers off each other and try to keep the continent divided. They will back the underdog (in this case, the Visegrad 4) against powers like Russia & Germany that are looking to expand their influence across larger swaths of the Continent. North American / UK cooperation will only grow into the future as the Atlantics return to their old strategy of managing Europe at an arms length.

Wednesday, July 6, 2011

EU Periphery: the "Core" EU's Albatross

1) The Visegrad 4: Eastern Europe as a Major Player
2) The Re-Emergent Russian Bloc
3) Baltic Solidarity to an Emerging Russia
4) The EU Periphery: "Core" EU's Albatross
5) The Atlantics: A Return to Arms-Length Continental Management

Today we continue our 5-part series on the Blocanization of Europe by skipping ahead to the EU Periphery, as it's currently of great interest to state leaders and armchair political scientists, alike. Rather than talking borders and weaponry, we'll be talking about money. It's just as important.
Standard & Poor's have cut the credit ratings of both Portugal and Greece to CCC, tied with a few other countries as the worst credit ratings in the world (see here for S&P credit ratings definitions). These, along with mediocre credit ratings for Italy, Spain, Belgium, and Ireland, put the Eurozone concept (and European unity in general) at major risk (see Wikipedia for an elaborated explanation of how the Eurozone and European Union differ).

The periphery states have become an albatross to the "core" EU states (for the "albatross" reference, please see Rime of the Ancient Mariner). Portugal and Greece have both already received bailouts, and Greece is likely to accept another in exchange for a modest austerity plan. Despite these bailouts, S&P (as well as Moody's, and other credit rating agencies) have tanked most of the periphery states in credit rating--indicating their likelihood to be able to pay back credit on time.

This is relevant for a few reasons:
1) Chronically weak periphery states will mean that the Euro won't overtake the US Dollar as the world's dominant currency. It will mean less influence for France and Germany on the world stage than they would otherwise have.

2) France and Germany may become tired of bailouts and allow defaults. The German & French taxpayers are subsidizing Portuguese & Greek deficits, and are likely to lose patience with it. If this occurs, Greece or Portugal may default, weakening both EU strength and solidarity.

3) France and Germany are looking for more financially stable partners. Generally, they are turning towards Russia, with little debt and significant earning potential (as well as few entitlement/welfare programs). Germany and France are likely to see much of the EU as a financial burden (rather than boon), and will focus on finding financial success elsewhere. This will drive Germany, France, and Russia closer together. Such a friendship has consequences beyond the EU Periphery--it will change the course of NATO, and US/UK strategy for a time to come (the latter of which will be discussed in our Atlantics section).

4) The continued struggle of EU periphery countries makes Eurozone obligations less attractive to potential members. Eastern Europe (technically obligated to join the Eurozone at some point) and the UK (with an option to join the Eurozone) are likely to balk at the idea of the financial burdens associated with Eurozone membership, and may try to find a way out.

Those who have read our previous posts are likely to see how this is a rather impressive compounding factor with other forces that are forcing Europe into blocs. The EU periphery is not going to become a bloc, perse--they are too weak to help each other--but the EU "Core" and V4 are likely to abandon the periphery at some point in hopes of better pastures elsewhere... and out of a fear of going down with the Eurozone ship, should it sink.