Marko Papic is a Senior Eurasia Analyst at the geopolitical analysis house STRATFOR, in charge of assessing the geopolitical impact of breaking developments, shaping forecasts, and maintaining flows of intelligence from human and open sources. He also tailors special reports for clients around the world, keeping them apprised of events of vital interest to their businesses and organizations.
Before joining STRATFOR in September 2007, Papic was instrumental in the creation of the Center for European Union Studies at the University of Texas at Austin for the Lyndon Baines Johnson School of Public Affairs, and served as the Center’s Associate Director. He holds a master’s degree in Government from the University of Texas and a master’s in European Studies from the University of British Columbia in Vancouver, Canada. He has lived in Serbia, Iraq, Jordan, Switzerland, the Czech Republic, Belgium, and Canada.
You have analyzed the way the geography of the continent of Europe has been formative in the fact that Europe, from ancient to modern times, has not been able to achieve the kind of unity of government and institutions that the United States, for example, enjoys. You point out that it is the geopolitics of Europe that in many ways is responsible for the contradictory state of affairs that gives us a Europe with a common currency but without a common fiscal institution to back that currency. Can you explain this briefly?
We have said before that the trouble with the euro is that it attempts to overlay a monetary dynamic on a geography that does not particularly lend itself to a single economic or unified political “space.” The fundamental geographic problem of the euro is that one single institution, the European Central Bank, generates a single monetary policy for 16 member states, with no central fiscal institution to support its efforts, and it has to find this common approach in the teeth of centuries of independent policy making on the part of all the countries involved.
The Financial Stability Pact, laid down in the Maastricht Treaty, attempted to create a unified framework to make up for the absence of any central fiscal power, through each state voluntarily agreeing to limit its fiscal deficit, for example, to no more than 3% of GDP. However, with no real sanctions in place to compel obedience to the Pact, all members have broken it with impunity, even Germany and France.
To understand how this state of affairs has come about, you have to look at the fact that despite being the second smallest continent on the planet, Europe has the second largest number of states packed into its territory. Europe is rich in peninsulas, large islands, mountain chains, and large navigable rivers, each independent of the other, so there is no dominant river or sea network. This naturally gives rise to independent countries and the difficulty of the terrain has had a key role in dooming unifying wars of conquest to failure. Julius Caesar, for example, got as far as the north German plain and found himself unable to defend further progress. French and German armies broke themselves against the vastness of Russia.
On the other hand, the continent’s plentiful navigable rivers, large bays and serrated coastlines have facilitated the easy flow of goods and ideas across Europe which, in turn, has encouraged the accumulation of capital. Technological advances have moved swiftly across the continent, with the end result being that five of the top 10 economies in the world are European.
However, capital accumulation has proceeded in sequestered economic centers, each independent of the other. The navigable rivers have each generated their own capital centers and, by extension, their own, jealously guarded banking systems. The Danube has Vienna, the Po has Milan, the Baltic Sea has Stockholm, the Rhineland has Rotterdam, Amsterdam, and Frankfurt, and the Thames has London. There is simply no equivalent in Europe of New York, the undisputed financial capital of the United States.
Staying with this geographic analysis for a moment longer, it is worth pointing out that southern Europe lacks a single river for commerce, apart from the Po Valley of northern Italy and, to some extent, the Rhone. As a result we have greater accumulation of capital over time happening in northern Europe, leading to it being more urban, industrial, and technocratic, while southern Europe tends to be capital-poor and more agricultural.
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- Next section You see the euro project as, in large part, an attempt by the rest of Europe to get Germany “on board” and on side, so that it would see its post-Second World War future as one of cooperation with Europe rather than as some “glorious” separate German attempt to impose some vision of “German destiny” on the continent—the pursuit of which had already generated two World Wars.