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Book review

Review from Bloomberg

"Why Europe Will Run the 21st Century'' is the somewhat improbable title of a 170-page essay published this month by, of all people, a Briton. At a time when punditry points to China as tomorrow's global powerhouse, Mark Leonard - foreign-policy director at the Centre for European Reform, a pro-European, London-based think tank - insists Europe is the coming giant. It simply depends on how you define power.

By the obsolete definition, the U.S. continues to dominate through guns and glitter: an invincible military machine and a ubiquitous popular culture. Yet that influence, Leonard writes, is "shallow and narrow.'' Europe, meanwhile, dominates by posing as a peaceful, prosperous conglomerate of nations that others either join or emulate. Its reach is "broad and deep: once sucked into its sphere of influence, countries are changed forever.'' Leonard sings the praises of the European Union's bottom-up model. Sheer hope of membership has brought ex-dictatorships in southern, central and Eastern Europe peacefully into the fold by making them shape up for fear of being left out. Turkey is now following in their footsteps. In Leonard's sly formulation, ``Europe doesn't change countries by threatening to invade them: its biggest threat is having nothing to do with them at all.''

Wishful Thinking

Trouble is, Leonard goes too far in his positive appraisal, counting as strengths what many, including some in Europe, would list as weaknesses. The result, while thought-provoking, often reads like an exercise in wishful thinking. After all, the EU is, as a policy-making body, less than exemplary: a 25-country colossus that rules by consensus and suffers from inertia. In today's pitiless world, where capital craves virgin markets, low costs and minimum regulation, how much of a millennial model can Europe be?

The author sets out by paying tribute to Jean Monnet, mastermind of European integration, whose "vision of how not to have a vision'' ushered in "a political system that shies away from the grand plans and concrete certainties that define American politics.'' To Leonard, that lack of vision is central to the EU's appeal as a bare-bones political structure where power rests with the component states. So, he argues, is the EU's lack of a unified military arm. The EU, Leonard writes, has learned from its "autism'' over Bosnia, where it watched as massacres were committed on its doorstep. Today, it takes preventive action, such as in Macedonia in 2003, when it saved lives - and money - by breaking up the warring camps before it was too late.

Bush Doctrine

Leonard contrasts that preemptive approach with the so-called Bush doctrine, named after U.S. President George W. Bush, which "attempts to justify action to remove a `threat' before it has the chance of being employed against the United States,'' a thinly veiled reference to U.S. intervention in Iraq. Yet is it legitimate to compare, as he does, Poland's peaceful mutation into an EU democracy and Iraq's troubled path out of tyranny? Poland's dictatorial rulers were gone by the time the EU came along; Iraq's Saddam Hussein was firmly in place when the U.S., rightly or wrongly, intervened. On a broader level, as Robert Kagan argues in his book "Paradise and Power'' - to which Leonard's opus seems a riposte - Europe has had the luxury of playing the peace card because the U.S. was around to deter attack. It was able to play good cop to the U.S.'s bad cop by standing under the U.S. nuclear umbrella. Or, as Kagan himself puts it, "American power made it possible for Europeans to believe that power was no longer important.''

Germany

Turning to economics, Leonard again finds cause for cheer. He reminds those who think U.S. companies rule the world that 61 of the world's top 140 companies in the Global Fortune 500 are European, compared with 50 from the U.S. He dismisses talk of the U.S. outgrowing Europe as follows: Take away U.S. population growth, slice Germany out of the European Union, and the two growth rates are in fact comparable. Trouble is, Germany generates a quarter of the EU's gross domestic product. Take it away, and you're left with an EU that's a quarter smaller, which defeats Leonard's purpose of downplaying U.S. size and superiority. As for demographics, they may turn out to be the undoing of Europe. According to Kagan, on current trends, by 2050, the median age in Europe will be 52.7 in Europe, against 36.2 in the U.S. That gap is hard to battle, and will carry ever more punishing costs in a world where cheaper is increasingly considered better. Still, Leonard goes on to give three reasons why Europe will rule the economic roost. One is the euro, which he says is set to dethrone the dollar as the reserve currency of choice. The second is Europe's diminishing reliance on oil. The third is the EU's economic potency, both to outside investors and as a generator of domestic wealth.

Thirst for Oil

The investment argument holds. Take France, which has among the highest taxes and costs in Western Europe, as well as a 35- hour work week. It regularly tops the ranking of the continent's foreign-investment recipients. Billions of euros pour in each year, lured by the country's transportation networks, its well- functioning public services and its central place, both geographically and among EU and euro member states. Less clear is Europe's non-reliance on oil. For now, each time the oil price spikes up, inflation in Europe spikes up with it. The continent shows no signs of shedding the habit. As for the euro becoming more and more of a reserve currency, there are no signs of that either. The Bank of Korea last month said that if its reserves were to rise in the future, it would buy British pounds and Canadian dollars as well as U.S. dollars -no mention of euros. "In terms of stability and profitability, there is no substitute for the dollar,'' Bank of Korea Governor Park Seung said.

Paper Model

Ultimately, Leonard is right to hold up Europe as an ideal society. Its allure is obvious, its democratic institutions solid and its aversion to war a hard-earned lesson. The needy enjoy the shelter of the welfare state, and the rest, a much-envied quality of life. Practically speaking, though, can the world afford to copy that model? Until prosperity and wealth are shared out more evenly and the gap between the haves and the have-nots is thus substantially bridged, world peace and universal welfare will be just that: ideals. And Europe will be a model - on paper.