THE SEARCH FOR EUROPE Contrasting Approaches THE SEARCH FOR EUROPE Contrasting Approaches TRANSVERSALITY AND TERRITORY SUMMARY THE ECONOMIC FOUNDATIONS EUROPE AND ITS NATIONS: OF THE EUROPEAN PROJECT POLITICS, SOCIETY AND CULTURE 20 Francisco 100 Indermit 202 Christopher 288 Robin González Gill, Martin Bickerton Shields Europe, between Raiser and From Nation- From the “Ima- Stagnation and Naotaka States to Member gined” to the Technological Sugawara States: European “Post-bureaucra- Revolution: Digi- Europe’s Growth Integration as tic” Region: The tal Banking as a Model in Crisis State Transfor- Search for Europe Driver of Econo- mation in Higher Educa- mic Growth 128 Colin tion Policy Crouch 216 Vivien Ann 46 Peter A. Hall European Em- Schmidt 302 Bichara The Euro Crisis ployment and The Impact of Khader and the Future Labour Market European Integra- Muslims in of European Policy tion on National Europe: The Integration Democracies: Construction of a 150 Bart Democracy at “Problem” 68 Alberto Van Ark Increasing Risk Alesina Contrasts in Eu- in the Eurozone 326 Julia Rules, Coopera- rope’s Investment Crisis Kristeva tion and Trust in and Productivity Homo Europaeus: the Euro Area Performance 238 Nieves Pé- Does a European rez-Solórzano Culture Exist? 80 Barry 168 Philip Borragán Eichengreen Cooke Civil Society and The European Transversality EU Enlargement Central Bank: and Territory: On From Problem the Future Dyna- 268 Kees Van to Solution mics of Regional Kersbergen Knowledge, The Welfare Innovation & State in Europe Growth 4 THE ECONOMIC FOUNDATIONS OF THE EUROPEAN PROJECT THE UNRESOLVED LIMITS OF BIBLIOGRAPHY EUROPE AND THE NEW GLOBAL POWERS 342 John Peet 402 Thomas The UK and Christiansen Europe The Strength of Distant Ties: 356 Daron Europe’s Rela- Acemoglu and tions with Asia Murat Üçer in a Changing The Ups and World Downs of Tur- kish Growth, 422 Javier 2002–2015: Politi- Solana cal Dynamics, the European Foreign European Union, Policy and Its and the Institutio- Challenges in the nal Slide Current Context 386 Orlando Figes Russia and Europe 5 PROLOGUE This book, The Search for Europe, is the eighth instalment in the annual series published by BBVA as part of its OpenMind project, an initiative dedicated to the dissemination of knowledge on the key issues of our time. Continuing our now consolidated editorial policy, we turned to leading experts around the world with different perspectives on the European question and asked them to provide a simple, straightforward exposi - tion of their ideas that any layperson could understand. Once again, this year we were able to enlist the participation of twenty-three immense - ly prestigious authors, influencers of global opinion in their respective fields, proudly adding their names to the list of more than 150 individuals who have already written essays for our books. In short, our project is predicated on the originality, quality, and popular appeal of our authors’ contributions, and I would therefore like to thank each and every one of them for generously agreeing to join our ambitious mission of spreading knowledge and contrasting ideas. This project was launched in 2008, and since then it has experienced what can only be described as an extraordinary growth. Our books re - ceived a tremendous boost in terms of visibility and impact after 2011, when we created our online community OpenMind (www.bbvaopenmind.com), designed as a space for sharing knowledge. In addition to all of the books we publish, OpenMind contains articles, interviews, videos, and infographs, all available in Spanish and English. In our constant quest to find fresh material and reach an increasingly wider audience, we have partnered with academic institutions and specialized publications of the highest calibre—such as the MIT Tech Review and the Harvard Business Review—as well as with leading online publications de- voted to popularizing science and technology. By the end of 2015, some 1.3 million users will have read, commented on, debated, or downloaded our fully accessible contents free of charge. The fundamental idea behind this project is a desire to help people under- stand the forces that are shaping our world and influencing—sometimes PROLOGUE quite obviously, and at other times in a much more subtle yet equally pow- erful way—our daily lives and future prospects. We firmly believe that the improvement of this understanding is important because it will allow us all to make better decisions, thereby expanding the horizons of our own lives and those of generations to come. The last two books in the series were dedicated to analysing the impact of the technological revolution we are going through: the first focused on how it affects our daily lives, and the second examined its repercussions for companies and the way we work. This year we have changed tack to offer an analysis of the present and future of Europe and its integration project. This process has profound implications for our lives, affecting not just Europeans but every citizen of the world, because Europe, as a whole, is still the world’s first economic and trade power—and, perhaps more impor- tantly, because it is the most ambitious economic and political integration project ever attempted in the history of humanity, setting an example for similar processes in other regions. THE FUNDAMENTAL IDEA THAT FUELS THIS PROJECT IS A DESIRE TO HELP PEOPLE UNDERSTAND THE FORCES THAT ARE SHAPING OUR WORLD Since the first steps were taken in the 1950s, the process has experienced five decades of success. Proof of this success is the expansion from six original founding members to the current total of twenty-eight—with over a dozen more seeking to join—and the European Union’s evolution from a free trade zone to a full monetary union by the late 1990s. For five decades, European integration has been a driving force of eco- nomic growth in the region and has clearly helped to strengthen the insti- tutions of the countries that have joined the process along the way, many of which were newly-fledged democracies still struggling to find their footing. This astonishing growth spurt has had its share of problems and dispar- ities. However, the key to this success is undoubtedly the fact that, when faced with any major crisis, the European Union has always stepped up to the plate, tackling difficulties by strengthening the ties between its members. At this time, the European integration process is facing the impact of the economic and financial crisis that began eight years ago now. The crisis has had a very negative effect on growth throughout the area, though some PROLOGUE member states have been hit harder than others, and it has highlighted the flaws and weaknesses in the present stage of the European integration process, principal among them the fact that a monetary union was created without a banking union or appropriate mechanisms to ensure the com- patibility of the member states’ respective economic policies. In addition, the monetary union has divided the EU into countries with a common currency and countries outside the Eurozone, further complicating the already difficult task of the European Union’s governance. Yet undoubtedly the area’s most serious shortcoming is the relatively low level of political integration compared to the strides made on the economic front. This has created an imbalance between the democratic processes for electing na- tional leaders, whose powers and scope of action are increasingly limited, and the much more distant—at least from the citizens’ perspective—de- cision-making processes at the European level. These decisions, whose impact on the lives of ordinary citizens is growing day by day, are made in the course of relatively opaque negotiations among a large number of national governments and handled by a technocracy that does not have the direct support of the electorate. As has occurred in the past, the latest crisis acted as a powerful catalyst for further European integration, particularly with regard to achieving a banking union and coordinating national economic policies. However, these steps are being taken in a context marked by the conflicting interests of countries that want to take the process to the next level and those reluc- tant or unwilling to yield greater sovereignty to supranational institutions. Meanwhile, social tensions and nationalistic attitudes are on the rise in different member states, and until the Union solves its current internal problems, it has little chance of overcoming the increasing difficulties of attending to other countries that aspire to EU or Eurozone membership. Finally, the EU now finds itself involved in an escalation of geopolitical tensions in neighbouring regions: the biggest concern is Russia, which is highly suspicious of the EU’s influence on former Soviet countries; but we must also keep a close eye on the Middle East and North Africa, where wars and political instability are creating intense migratory pressure and a rising tide of refugees. All of this has exposed yet another shortcoming of the European Union: the lack of a truly common foreign policy. These are the central themes addressed in this book, which is divided into three sections: In the first, “The Economic Foundations of the European Project”, the au- thors review Europe’s current economic situation and outlook and propose PROLOGUE different alternatives in the area of economic policy and institutional re- form for getting Europe back on the track of sustained growth and job creation, essential ingredients for the project’s economic, political, and social success. The second section, “Europe and Its Nations: Politics, Society and Cul- ture”, examines the problems inherent in the political coordination of the European supranational project with current national realities, and dis- cusses what can be done to help citizens identify more with that project.