TREND- UND ZUKUNFTSMANAGEMENT

European Union 2015 E U i
From a systemic view to scenarios

António Alvarenga - 18th May 2006

ant_alvarenga@yahoo.com

Project Planning + Team & Experts

Clients & Stakeholders

Rationales

Focus Creativity Imagination g Factors

Time Horizon Intelligence Scanning & Gathering g Actors
Interpretation Diagnosis Exploration & Analysis A l i

Structuring Categorization Antecipation Vision Communication Appropriation
Planning Launch Prog./ Proj. Management Strategic Definition Strategic Implementation Strategic Monitoring Quantification Feedback Adaptation
António Alvarenga / Paulo S. de Carvalho

Synthesise Visioning

Mobilization

1

Project Planning + Team & Experts

Clients & Stakeholders

Rationales

Focus Creativity Imagination g Factors

Time Horizon Intelligence Scanning & Gathering g Actors
Interpretation Diagnosis Exploration & Analysis A l i

Structuring Categorization Anticipation Vision Communication Appropriation
Planning Launch Prog./ Proj. Management Strategic Definition Strategic Implementation Strategic Monitoring Quantification Feedback Adaptation
António Alvarenga / Paulo S. de Carvalho

Synthesise Visioning

Mobilization

PRESENTATION OF THE SCENARIO-BUILDING SCENARIO BUILDING PROCESS FOR THE EU

António Alvarenga

2

FINAL GOAL To reach a set of Alternative Futures for the EU allowing for better identification of risks and opportunities

António Alvarenga

ROADMAP

1.The EU Today 2.Working with an EU System 3.The EU Future – Group Projections 4.The EU Future - Scenarios
António Alvarenga

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1. THE EU TODAY

António Alvarenga

FATNESS

www.ccs.ornl.gov.bmp

4

THE INSTITUTIONAL MODEL

http://slonews.sta.si

FINANCIAL FRAMEWORK

http://www.rlg.nl

5

ENLARGEMENT

http://rodapedaleira.com.sapo.pt

& BUDGET COORDINATION

6

LISBON & ECONOMIC MODELS
www.portugalvirtual.pt

www.lissabon-umgebung.de foto: Johannes Beck

in www.dw-world.de

IMMIGRATION

7

www.reefrunner.com

EXTERNAL POLICY & DEFENSE

http://en.wikipedia.org/wiki/Weapon

GLOBALIZATION, CHINA & INTERNATIONAL POSITION
China 30%

De ve loping Asia e xcluding China 14%

Re st of De ve loping W orld 18%

Asian NIC 's 4%

Developed excluding USA, Euroland & As ian NIC's 6%

Eurozone 5%

USA 19%

W e ste rn He misphe re 4%

Contributions to global real GDP growth (ppp), 2001-2004 - Primary

Source: WEO Database; Secondary Source: Política Económica, 2004 (adapted by Marques & Alvarenga)

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2. Working with an EU System

António Alvarenga

EU
Complex superposition of processes whose existence/development is highly influenced by two global driving forces:

António Alvar renga / José F. Ribeir ro

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ECONOMIC GLOBALIZATION - KEY DYNAMICS
Emergent Economies

Global Investment

ECONOMIC GLOBALIZATION – WHERE TO LOOK?

Economic growth of the main EU economic partners Emergent economies with a key role Dollar stability Evolution of the process initiated with the Kyoto protocol Internationalization of companies and outsourcing dynamics Supply and prices of oil and natural gas Asia and OPEC foreign exchange reserves policy Commercial Openness
António Alvarenga / José F. Ribeiro

Free circulation of capital

António Alvarenga / José F. Ribeiro

Mutation of Technologies

Internationalization of Companies

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GEOPOLITICAL FRAGMENTATION – TENSION AREAS AND THE ARC OF CRISIS
Russia North Korea South Korea

Japan

USA

Caucasus

Balkans Turkey

Central Asia/ Afghanistan

China

Taiwan

Palestine

USA

Israel

Syria Iraq

Iran

Pakistan Thailand Malaysia

Egypt

Saudi Arabia Yemen India

Australia

USA

Arc of Crisis Tension zones - China Tension zones - India Tension zones - Islam

Key actor in energy supply

GEOPOLITICAL FRAGMENTATION – WHERE TO LOOK?

Global Terrorism

Tension level in the Arc of Crisis

Reform of the UN system

Privileged relations between the US and regional powers Global re-positioning of US military forces

António Alvarenga / José F. Ribeiro

Relations between the US and Islamic countries

António Alvarenga / José F. Ribeiro

Sudan Eritrea Somalia

Vietnam Indonesia

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EU Enlargement

The Balkans

JHA

East Mediterranean

NATO

Commercial and Cooperation Policy

Institutions Reform

CFSP

EMU Common Policies Reform EU Budget Budgetary Strictness Structural Reforms Growth Potential

Aeronautic, Aerospace and Defence Industries Investment in Defence

Demographics

21 22 EU Enlargement 20 The Balkans 15

JHA

East Mediterranean 19

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NATO

23 Commercial and Cooperation Policy 25 Common Policies Reform 4 EU Budget Structural Reforms Growth Potential 28 Institutions Reform

13 18 CFSP 12 Aeronautic, Aerospace and Defence Industries

24 EMU Budgetary Strictness

5 Investment in Defence
António Alvarenga / José F. Ribeiro

Demographics

António Alvarenga / José F. Ribeiro

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21 EU Enlargement 22 20 16 East Mediterranean 19 23 Commercial and Cooperation Policy 27 25 24 Common Policies Reform 4 EU Budget 3 1 EMU 8 2 Budgetary 5 Strictness 6 Structural Reforms Growth Potential 7 28 26 Institutions Reform 18 17 The Balkans 14 NATO

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JHA

13 CFSP 11 12

Aeronautic, Aerospace and Defence Industries Investment In Defence 10
António Alvarenga / José F. Ribeiro

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Demographics

EU Enlargement

The Balkans

F
JHA

NL UK

East Mediterranean

NATO

U UK
Institutions Reform

F
CFSP

Commercial and Cooperation Policy

G

EMU Common Policies Reform

UK F UK

G NL
Budgetary Strictness Structural Reforms Growth Potential

Aeronautic, Aerospace and Defence Industries Investment in Defence

G

EU Budget

NL

F

Demographics

António Alvarenga / José F. Ribeiro

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3. The EU Future - Group Projections

António Alvarenga / José F. Ribeiro

Name

Enlargement & Internal Security / JHA processes (Group II)

CFSP / Relations with the US (Group III)

Demographics

António Alvarenga / José F. Ribeiro

EMU, Structural Reforms & Economic Growth / Common Policies & Budget processes (Group I)

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Hypothesis for the Evolution of Economic Globalization 1. Pacific-based Globalisation
(i) Growing integration of the American and Japanese economies with Japanese savings massively placed in American financial assets, instead of a privileged use on the sustainability of Japan’s public debt; (ii) Follow up of Chinese economic reforms with strong growth, always in a peaceful international context; (iii) Strong growth of India and Russia; (iv) Intense involvement of American and Japanese companies in China’s and Asia’s economic growth; (v) Strong investment in increasing the supply of oil with greater involvement of private companies and centred in ex-USSR and the Gulf; (vi) Climate change matters dealt through the use of regulatory market mechanisms, involving from the start emergent economies and giving priority to the development of “green and clean” technologies.

2. Retreating Globalisation
(i) Prolonged crisis of the Japanese economy and a retraction of capital’s exit towards the US due to the capital s utilization of savings (reduced as a consequence of an older population) in the financing of the Japanese public deficit; (ii) Energy crisis resulting from the incapacity in replenishing reserves and increasing production from current reserves (because of difficulties created by Gulf countries); (iii) Delay in the economic transformation of China due to political drawbacks in reforms, a consequence of an incapacity to develop predominantly rural zones and of managing the social consequences of reorganizing the entrepreneurial state sector; (iv) Recession in the US followed by a period of slow growth; (v) Reduction in the perspectives of growth at a world level.
António Alvarenga / José F. Ribeiro

Hypothesis for the Evolution of Geopolitical Fragmentation
1. Maintenance of the “Centre”
(i) Relative calm along the “Arch of crisis” during the beginning of the 21st Century; (ii) After initial difficulties, the change of regime in Iraq occurs with a lot less drawbacks than expected thanks to a new regime that is able to manage several politico-religious tendencies of the country and to trigger a process of modernization; (iii) North Korea abandons the development of its nuclear programme in exchange for greater international economic cooperation; (iv) The Gaza pull-out by Israel unfolds in a rather peaceful manner and allows for a new negotiation phase to begin; (v) NATO remains the central security organization in Europe and of transatlantic cooperation outside Europe; (vi) US/Russia approximation, allowing Russia ( i) US/R ssia appro imation allo ing R ssia to foc s on its economic de elopment value its energetic potential and stabili e focus development, al e stabilize its internal Islamic arch, in return for its support to the anti-terrorist and rogue states struggle spearheaded by the US; (vii) Reform of the UN towards a better adaptation to anti-terrorist actions and the proliferation of weapons of mass destruction, with an enlargement of the Security Council; (viii) Moderation of the emerging powers – China, India and Iran – concentrated in internal problems related to the stability and/or the functioning of the respective regimes and/or the economic reform agendas that stimulate moderation in terms of foreign relations.

2. Reformulation of the “Centre”
(i) Great instability in the Arab World with a profound crisis in the Saudi monarchy and a strong activity of Al Qaeda (which reinforces its stance on Pakistan/Kashmir); (ii) Controlled geopolitical tension between China and the US; (iii) US/Russia approximation at the geopolitical and strategic level; (vi) Cooptation by the US of new allies, namely India.

3. Fragmentation of the “Centre”
(i) Succession of crisis in the Gulf, Central Asia and the Northwest of the Pacific, leading up to a weakening of US’s position (due to the impossibility of avoiding the crisis and afterwards of being able to provide effective answers in military terms); (ii) Uncontrollable civil war in Iraq with a withdrawal of American troops;; (iii) Coming into power in Pakistan of pro Al-Qaeda military and great instability in Kashmir; (iv) US/Russia approximation difficulties; (v) Worsening of US’s conflicts with (increased nationalist) China, culminating in a crisis surrounding Taiwan; (vi) Growing conflicts of interest between the US and Germany/France; (vii) China/Saudi Arabia alliance centred around the exchange of oil and gas for nuclear weapons and missile technology; (viii) Total paralysis of the UN
António Alvarenga / José F. Ribeiro

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Hypothesis for the Demographic Evolution

1.

Continuity

“Normal” migratory fluxes not altering any of the three identified cases of ageing population;

2. From the South and from the sphere of the ex-USSR
“Exceptional” migratory fluxes (particularly of extra-communitarian origin) which alters both the general ageing of the population and the ageing of the active population, also placing European Immigration Policies under new demands;

António Alvarenga / José F. Ribeiro

Hypothesis for the Evolution of Group I – EMU, Structural Reforms & Economic Growth / Common Policies & Budget
1. Reforms and Economic Growth
In a context of advancing Structural Reforms in EMU’s central countries (France, Germany and Italy) and of gains when it comes to Growth Potential, the UK, now more convinced of the sustainability of the project, joined the eurozone. The gains in confidence arising out of the success of reforms and out of the UK’s accession to the eurozone has facilitated the sustainability of the process of flexibilization of the SGP criteria. These criteria now take into account budgetimpacts of the first phase of Structural Reforms and the MS’s different needs in terms of public investment. A greater solidity of the budget consolidation process has given, in turn, greater leeway for reinforcing expenses with defence whilst maintaining a refusal of the main liquid contributors in accepting the expansion of the communitarian budget when it comes to traditional EU policies.

2. Core Nucleus
In a context characterized by the refusal of the UK to integrate the eurozone, by the political impossibility to carry out converging Structural Reforms in the eurozone and by permanent difficulties in Growth Potential, the tensions around national Budget Policies have deteriorated. In face of this panorama, reducing the market credibility of the euro and threatening the EMU in its initial configuration, France and Germany decided to advance towards greater integration (including in terms of Defence), a movement that was only accompanied by a small group of MS. The imperious need to contain national budget expenses has led to a franco-german refusal in increasing the Communitarian Budget, unleashing a series of tensions between them and the liquid beneficiaries of traditional EU common policies.

3. Crisis
In a context characterised by the low endogenous growth potential in Europe, it has been politically impossible in the core EMU countries to carry out Structural Reforms destined to share the burdens of an ageing population between State and families, aggravating the differences in budget performance between the UK, Netherlands and Scandinavian countries and the core nucleus of the EMU (which the UK had decided not to integrate). At the same time, the growing costs of a non-reformed “Welfare State” in the core EMU countries has rendered impossible an increase of investments in defence. Successive conflicts surrounding the SGP’s targets and persistent arguments between Germany and France, mutually accusing each other of the euro’s failure in the exchange rate markets and of the abandoning of joint efforts in the defence sector, has brought about, halfway through the decade, a serious crisis in the EMU.

António Alvarenga / José F. Ribeiro

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Hypothesis for the Evolution of Group II – Enlargement & Internal Security / JHA
1. Good Enlargement with Consolidation of the JHA Pillar
The process of enlargement initiated in 2004 contributed towards the arrival of an agreement in the question of Cyprus and for the success of CAP’s reform. While the process of enlargement was ongoing we witnessed a consolidation of the JHA - Common Policy of Immigration and creation of European police forces involved in border controls.

2. Turkey’s quick accession with a Reinforcement of the JHA Pillar
The process of enlargement initiated in 2004, besides having contributed towards reaching an agreement in the question of Cyprus and for the success of CAP’s reform, it also assumed an unexpected direction, with the European decision of facilitating a fast-track integration of Turkey (as means to rewarding the behaviour of this country during the Cyprus negotiations and also for facilitating its internal democratic and secular evolution). Turkey’s accession has made a reinforcement of the JHA imperative and has brought about new opportunities in terms of organized fighting to drug trafficking, namely the one that is processed through the Balkans.

3. Bad Enlargement and Great Difficulties in JHA
The communitarian institutions face successive blockades as a consequence: of the entry into the EU of a divided Cyprus and of consequent growing tensions with Turkey, of the EU’s growing internal resistances to an effective freedom of circulation of people of the new MS, of the incapacity to reform CAP in time and of the discontentment of the populations of several candidate countries towards the conditions imposed by the EU. Simultaneously, the difficulties in reaching a consensus about JHA have worsened, with some countries opting for a nationally-based approach to the Immigration Policy, and some even deciding to give up Shengen.
António Alvarenga / José F. Ribeiro

Hypothesis for the Evolution of Group III – External Positioning of the EU and Relations with the US
1. Transatlantic Axis
In a context of relative calm in the world, the US have maintained interest in the evolution of the Balkans and have reinforced trust in the intervention of its European allies in the region (with the EU’s progressively greater responsibilities in managing the problems in the region), keeping up with the European preference for a stability of borders and multi-ethnic States in a framework of continuity of NATO. This Alliance was reinforced with means and structures for military interventions “outside the area”. CFSP has evolved towards an affirmation of an European voice in the transatlantic relation, not free of tensions but always structuring European security. The improvement in transatlantic relations h opened up new collaboration opportunities i th area of th d f t tl ti l ti has d ll b ti t iti in the f the defence i d t i industries b t between American and European companies, including French ones.

2. The EU put aside
In the context of a strategic collaboration with Russia, the US, interested in reducing its “strategic expenses with Europe”, specially with the Balkans (where crisis were frequent), have proposed a new security architecture based on a revision of borders and on the articulated resolution of the main focus of tension in Eastern Europe, in the Black Sea and in the Caucasus. In this new context, NATO has evolved towards a pan-European security structure of which the EU and Russia were integral parts of and CFSP has lost a great deal of “use” (condemning efforts of putting together an European Aerospatiale and Aeronautics Policy), since one of the factors that gave it cohesion – preference for stability of borders and multi-ethnic states – has been abandoned. The US has opted for reinforcing bilateral relations (e.g with the UK and Turkey).

3. Core Nucleus
In the beginning of the decade, pressed on by the demands of engagements in other regions of the world, the US has drastically reduced their troops in the Balkans. In this context, the difficult equilibriums in which the policy of “protectorates” had been sustained in the region fell apart and the European troops, sent in the beginning of the decade substituting the American troops, proved themselves incapable of imposing respect, with a re-ignition of the struggles between ethnic factions. Given the exit of the American troops, NATO had lost its most important active in the most turbulent region of Europe. CFSP in turn, had failed its first big test, leaving the countries of the Union disoriented when it comes to future actions in the international scene. Germany and France answer to this evolution with a project of greater integration in the area of defence and (almost) with an alliance with Russia and China.
António Alvarenga / José F. Ribeiro

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4. The EU Future - Scenarios

António Alvarenga / José F. Ribeiro

1. What if everything went well?

Good Enlargement with Consolidation of the JHA

Transatlantic Axis

Reforms and Economic Growth
António Alvarenga / José F. Ribeiro

Continuity

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What if everything went well?

Concessions/Ruptures Victories

Political context

F

• Gradual reduction of CAP’s weight • Structural Reforms towards growth and a

• Dynamism of the European defence industry • Effective European Defence identity within

transformation of the French Capitalism Model • International role in opposition to the US

NATO’s nucleus

G

• Maintenance of its role as the largest liquid

• Greater international protagonism with an

contributor towards the communitarian budget • A deepening of Structural Reforms

entry as a permanent member of the UN Security Council

UK

• Accession to the eurozone • Gradual reduction of the rebate

• Proximity of the EU to the US

NL

• Acceptance of the JHA (although with more

• UK’s entry into Euro • Reduction of the liquid contribution towards

efficiency in terms of controlling immigration and with some leverage for MS)

the budget

António Alvarenga / José F. Ribeiro

2. Two in One

Bad Enlargement and Great Difficulties in JHA

Core Nucleus

Core Nucleus

From the South and from the sphere of the ex-USSR

António Alvarenga / José F. Ribeiro

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3. Redesigning Europe

Bad Enlargement and Great Difficulties in JHA

The EU put aside

Crisis

From the South and from the sphere of the ex-USSR

Atlantic Europe

Turkey s Turkey’s quick accession with a Reinforcemen t of the JHA

Transatlantic Axis

Reforms and Economic Growth
António Alvarenga / José F. Ribeiro

Continuity / From the South and from the sphere of the ex-USSR

António Alvarenga / José F. Ribeiro

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Reviewing Ambitions

Good Enlargement with Consolidation of the JHA

Transatlantic Axis

Core Nucleus

Continuity

Welcome to Russia

Good Enlargement with Consolidation of the JHA

The EU put aside

Reforms and Economic Growth
António Alvarenga / José F. Ribeiro

Continuity

António Alvarenga / José F. Ribeiro

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Two by two

Bad Enlargement and Great Difficulties in JHA

The EU put aside

Core Nucleus

From the South and from the sphere of the ex-USSR

TREND- UND ZUKUNFTSMANAGEMENT

European Union 2015 E U i
From a systemic view to scenarios

António Alvarenga - 18th May 2006

ant_alvarenga@yahoo.com

António Alvarenga / José F. Ribeiro

22

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