Europe finally gets a phone number....
By Fernando Napolitano, President & CEO of NEWEST
Until 20 days ago the world’s confabulation was about what the post pandemic world would look like and how governments could counter global warming. While technologies have expanded connectivity, horizons, and productivity, the Covid pandemic brought the illusionary idea of a one-click utopian world of the avatar, ever easier and app-driven, to a brutal and sudden end.
At the same time, those same technologies have been an essential lifesaver for the millions of employees who learned how to work remotely, leading to such an unprecedented change in habits that we are still trying to discern what the “new normal” is, and to help shape it for the good of all.
The Pandemic, by all means, was a game changer. The war in Ukraine, however, relegates both the pandemic and global warming to second-order issues.
While hopes for a ceasefire are high based on the latest diplomatic developments, the world, definitely the western world, will never be the same. The old paradigm of decoupling politics – e.g. human rights-- from doing business has shown its limits. Experts are concerned, next, about a Chinese invasion of Taiwan. The same experts, while shocked by the war in eastern Europe, were not surprised. Hence, it was not a question of “if” but of “when” this showdown would occur.
The effects of this war are felt most by Europe and not necessarily in a negative way. Henry Kissinger’s ever-green joke “give me Europe’s phone number”, dryly remarking the lack of European centralized decision making, might become, at last, outdated. A united Europe unambiguously condemned Russia’s invasion. Economic sanctions were deployed swiftly and were, uncharacteristically, harsh. Traditional pacifist countries - such as Germany and Italy - have increased the defense budget at 2% of GDP or more. Sweden and even Finland are considering joining NATO. Turkey, after widening a rift with NATO and getting sanctioned by the US for acquiring Russian S-400 missile defense systems, has become a key negotiator between the belligerents. And China despite its ambiguities appears to be a must-have interlocutor: National Security Advisor Jake Sullivan met this week in Rome with Yang Jiechi, Chinese Communist Party Politburo Member and Director of the Office of the Foreign Affairs Commission.
So, while a more cohesive Europe in foreign affairs has ceased to be an oxymoron, it is the economic and business front that will be interesting. A positive domino effect is about to unfold. Nymbe syndromes, pacifism, Ostpolitik, leftism and the likes have, suddenly, become the boring, dogged slog of the distant past. There is a strong commitment to become energy independent from Russia’ natural gas and oil. This means more continental investments – on shore and off-shore-- and a reconsideration of nuclear energy. Germany and Italy will be in a leading position given their current Russian dependency. The idea of a common European defense system is back in vogue. France, the only country in the European Union owning the atomic bomb, has already shared its vision. European regulatory framework will be the next big chapter. As global supply chains are redesigned to reflect this scenario, Europe will have to consider mergers in virtually all industries, starting from the banks, to create players of size and scale in order to be less vulnerable and accompany this European awakening. French foreign minister Robert Schuman in 1950 declared: “Europe will not be made all at once, … It will be built through concrete achievements which first create a de facto solidarity”.
Here we are.