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Further to my post on the remarkable failure of Scandinavian education systems to develop their students to anywhere near the levels indicated by their IQ potentials, a professor of mathematics at a Wisconsin university sent me data on the percentage of respondents in the TIMSS who gave the correct answer to the following question:

Which shows a correct method for finding 1/3 – 1/4?

A (1 – 1)/ (4 – 3)
B 1/ (4 – 3)
C (3 – 4)/ (3*4)
D (4 – 3)/ (3*4)

Below are the results. Do bear in mind that these are 8th graders we are talking about.

A B C D
Korea 2.7 6.9 4.2 86
Singapore 4.8 5.5 6.5 83.1
Taipei 2.9 7.7 7 82
Hong Kong 4 8.7 10 77
Japan 15.4 11.1 8.2 65.3
Russia 12.3 18.8 4.8 62.8
Average 25.4 26 9.4 37.1
US 32.5 26.1 10.7 29.1
Finland 42.3 29.5 8.7 16.1
Sweden 14.4
Chile 11.7

Finally, an international ratings list on which those smarmy, goody-goody Scandinavians don’t come on top! They barely do better than Chile, a country that got 421 (equiv. IQ ~88) in the PISA 2009 survey. Here is what he has to say on the matter:

One interesting fact is that among the 42 countries which tested 8th grade students, Finland had the highest percent of students who picked answer A and the third lowest percent correct. Chile had 11.7 correct and Sweden had 14.4 percent correct. The Finnish result is likely a surprise to the people who have praised the Finnish school system for their results on another international test, PISA. However university and technical college mathematics faculty in Finland will not be surprised. See [this] article signed by over 200 of them.

Anybody who suggests the progressive/neoliberal education policies of the Scandinavian countries are worthy of emulation should be presented with these figures and laughed out of the room.

The results for individual American and Canadian states:

A B C D
Mass. 21.4 20.8 9.9 44.4
Calif. 28.2 21.6 11 38
Minn. 23.5 26.3 14 35.1
Quebec 27.3 23 13 33
Ontario 27.7 22.4 14 32.5
Conn. 21.8 25.8 17.7 31.3
Alberta 34.7 23.7 12.3 27.8
(Republished from AKarlin.com by permission of author or representative)
 
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Editorial note: This article was first published at Arctic Progress in February 2011. In the next few weeks I will be reposting the best material from there.

The Arctic to become a pole of global economic growth? Image credit – Scenic Reflections.

Behold! Far north along the shores of the Arctic a quiver of upspringing settlements fringes the coast. Boats swarm around canning factories, smoke flutters above smelters, herds of reindeer dot the prairies… And here or there, on every street-corner, glimmer out the lights of theaters where moving-pictures entertain white people through the sunless weeks of the midwinter dancing-time, the singing-time, the laughing-time of Eskimo Land.

- Northward ho!: An account of the far North and its people.

In 2003, Goldman Sachs economist Jim O’Neill wrote the now famous paper Dreaming with BRIC’s, predicting that Brazil, Russia, India and China would overtake the developed G8 nations within a few decades and make astounding returns for faithful investors. The BRIC’s concept entered the conventional wisdom, spawning a host of related acronyms (BASIC, BRICSA, etc) – and if anything, realizing its promise well ahead of schedule. Last year, China’s real GDP possibly overtook America’s, and Russia’s approached Germany’s.

Yet for all their successes, the BRIC’s may not fulfill their expected roles as the stars of the global economy in the 21st century. The level of education is horrid in Brazil and atrocious in India; without the requisite human capital, these two countries will find it difficult to rapidly “converge” to developed world standards. China is much better off in this respect, but its high growth trajectory may in turn be disturbed by energy shortages and environmental degradation. China produces half the world’s coal, which is patently unsustainable given its limited reserves. But since coal accounts for 75% of China’s primary energy consumption and fuels the factories that keep its workforce employed, there is little it can do to mitigate this dependence. Meanwhile, China’s overpopulation, pollution and climate change predicament is so well known as to not require elaboration. Many other countries flirting around the edges of BRIC status – Indonesia, South Africa, Vietnam, etc. – face serious challenges in the form of low human capital, uncertain energy and food supplies and a rising incidence of AGW-induced droughts, floods and heatwaves.

There is one global region that may hold the key to resolving these intertwined problems – and even to become a major pole of global growth in its own right. For the most part, it is now an empty wilderness, but climate change is opening it up as potential living space. Its exploitation has the potential to halve the length of global freight transport routes while increasing their security, uncover sizable to gigantic new sources of hydrocarbons and minerals, and stabilize global food prices through the expansion of arable land. Its experience of management and conflict resolution may inspire a global model of cooperation – or it may degenerate into an economic, legal, or even military battlefield over shipping routes and sub-sea resources.

This global region is the Arctic Rim, and its adjoining ARCS: Alaska, Russia, Canada, and Scandinavia. The ARCS of Progress in the 21st century.

Arctic sea ice extent on September 1, 2010 – both the Northern Sea Route and the Northwest Passage are clearly open. Image credit – The University of Illinois Cryosphere Today.

From North Pole to Growth Pole

The core reasons behind the Arctic Rim’s bright prospects are global macro-trends: climate change; peak oil and resource nationalism; overpopulation in the South. These “push” and “pull” factors will induce a decades-long Arctic boom, starting with shipping, energy and mining, and culminating in a fundamental northwards shift of the center of the world economy. Let’s examine each of these in turn.

Breaking Ice For Shipping

Ah, for just one time I would take the Northwest Passage
To find the hand of Franklin reaching for the Beaufort Sea
Tracing one warm line through a land so wild and savage
And make a northwest passage to the sea.

- Northwest Passage song, Stan Rogers, 1981.

Typically, the cryosphere – the frozen part of the world – remains stable, because its snow and ice reflect much of the Sun’s heat, thus cooling itself. This process is called the ice-albedo feedback.

However, when the high-albedo ice melts, it leaves behind darker-hued earth, flora or sea that absorb far more heat. Local air temperatures soar and inhibit the reformation of the ice during cold seasons. From working to keep the system stable, beyond a critical threshold the ice-albedo feedback begins to reinforce a runaway dynamic of melting and warming.

The ice-albedo feedback largely explains why the Arctic is warming about twice faster than in the world as a whole.

In summer 2007, Arctic sea ice extent fell 38% below average since records began – an area the size of six Californias. The next year saw both the Northwest Passage and the Northern Sea Route clear of ice for a short period in late summer. As of December 2010, sea ice extent was the lowest for the month on satellite record, even surpassing the 2007 melt.

While the relentless fall in sea ice extent over the past three decades is remarkable enough, what’s stunning is the 55% decline in summer sea ice volume. Once the thick, multi-year ice is gone, then it’s really gone – the low albedo of the ocean water will raise local temperatures, preventing all but a thin film of sea ice from reforming during the cold winters. It is thus a near certainty that Arctic sea ice is already deep in its death spiral.

Inland, earlier snowmelts enable the ground to absorb more heat, while dark-hued shrubs and boreal forests encroach on the tundra.

Many of the effects will be negative. The polar bears will probably go extinct, either drowning for lack of sea ice, or starving, or migrating south and merging with their grizzly cousins. Invasive species from the south will drive out Arctic flora and fauna off the top of the world. Global ocean and air currents will be interrupted as the temperature differential between the Arctic and the tropics shrinks.

But the new Arctic merchants will be making a killing.

Shipping routes during ice-free Arctic summer . Image credit – Laurence C. Smith.

In 2010, the Baltica became the first high-tonnage tanker to sail with petroleum products by the Northern Sea Route, steaming from Murmansk to China. This was followed by the voyage of the MV Nordic Barents, the the first vessel to sail from one non-Russian port to another through the Arctic, cutting 5,000km off the traditional Suez route. It carried 41,000 tons of iron ore from Kirkenes, Norway to feed the steel mills of China. One upping them all, the year ended with the first round-trip voyage without icebreaker assistance via the Northern Sea Route. The Norilsk Nickel-owned ship Monchegorsk carried the metal from the north Siberian port of Dudinka to Shanghai, taking just 41 days of steaming (the Suez route would have lasted as long as four months).

The opening of the Northern Sea Route and rising demand for metals and petroleum products from China and other emerging markets is set to continue spurring the development of Arctic shipping. In January 2011, a Sovcomflot executive said the Russian shipping company has already received 15 requests for icebreaker assistance in the Arctic for this year, compared to just four in 2010*. The governor of Murmansk, Dmitry Dmitriyenko, predicts that cargo transport through the Northern Sea Route will increase tenfold by 2020. This expansion will be sustained with private investment funding: both Sovcomflot and the Port of Murmansk are to be partially privatized in the coming years.

Similar trends are in play with the opening of the Northwest Passage across Canada. It has been conquered by cruise ship in 2006 and the commercial ship MV Camilla Desgagnés in 2008. Exploitation of the Northwest Passage will likely go slower than of its north Eurasian counterpart, because of lower demand and the (relative) underdevelopment of Canada’s icebreaker fleet. But there is still a wealth of opportunities there.

Black Gold or Fool’s Gold at the Top of the World?

Use it or lose it is the first principle of Arctic sovereignty.

- Speech by Canadian Prime Minister Stephen Harper, 2007.

Our first and main task is to turn the Arctic into a resource base for Russia in the 21st century.

- Speech by Russian President Medvedev in September 2008.

Global oil production has now either peaked or is close to peaking, and will now either continue on its present “undulating plateau” – or begin to decline at an accelerating pace. The specifics are intensely argued over and the debate is far too extensive to detail here. But suffice to say, the “cornucopian” position that technological ingenuity and market forces will always conjure more and more resources out of a finite planet is untenable.

Any number of factors – global production exceeding new discoveries since the mid-1980′s; the world’s inability to significantly ramp up oil production despite soaring prices for the commodity; the rising costs of oil production due to the falling EROEI of the remaining oil sources; massively inflated reserves numbers from OPEC members; growing resource nationalism – militate against a business-as-usual future of increasing production in the oil industry.

These mounting challenges are the reason the big oil majors are pushing into the deepwater drilling that produced the Horizon blowout in the Gulf of Mexico, and partnering with Russian state oil companies to develop offshore gas deposits in the Kara Sea, and sinking millions of US dollars on prospecting off Greenland despite no returns to date. They need to maintain their reserves numbers to prevent their stocks from tanking – but to do so, the oil majors are forced into taking escalating financial, environmental and political risks.

The Arctic’s natural resources. Image credit – Global Research.

In 2008, the US Geological Survey estimated that the Arctic may hold as much as 13% of the world’s undiscovered oil (90 billion barrels) and 30% of its undiscovered natural gas. Unsurprisingly, the Arctic is rapidly becoming central to oil exploration. That said, capitalizing on these resources – even assuming they are as big as estimated above – will be exceptionally difficult. For a start, some 84% of these sources are likely to be offshore. Second, according to more recent USGS calculations, developing them will be prohibitively expensive: “Assuming production costs of up to $100 per barrel, only 2.5 billion barrels of oil could be lifted… and only with a 50% probability.” For perspective, an average oil price of $92 per barrel broke the world economy in 2008.

Talk of the Arctic becoming the next Saudi Arabia is unrealistic. Its oil reserves are smaller, more dispersed, more remote, of worse quality, and far more challenging to exploit. But this isn’t to say that its black gold is fool’s gold. Technological progress on Arctic drilling, as well as a lack of better options elsewhere, will draw Western oil majors and National Oil Companies north.

The Arctic isn’t only of interest to shippers and oilmen. Confronted with inexorable rises in demand from China, the global mining industry is rushing to add metals and minerals production capacity wherever they can. Just to take a few Arctic examples, there are plans to start or expand iron ore production on Canada’s Baffin Island, Norway’s Kirkenes and the Kola Peninsula. Coal production is resuming at Svalbard. Just in case the whole oil thing doesn’t work out, Greenland is looking to exploit its potentially vast mineral resources. The Coeur d`Alene Mines Corporation recently opened a gold mine near Juneau, Alaska ahead of schedule. Though volumes remain small, this will change as depletion becomes as evident for minerals as it is now for oil.

Towards an Arctic Civilization?

… Before this century is over billions of us will die and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable.

- James Lovelock, inventor of the Gaia hypothesis.

Beginning with the shipping and energy industries, the influence of the Arctic will eventually come to encompass the entire world. Assuming that efforts to quickly cut greenhouse gas emissions are unsuccessful, and that geoengineering is either not attempted or doesn’t work, then many of the middle regions will become too hot and dry for sustained agriculture (and maybe human survival), and masses of climate refugees will try to migrate north. The center of global economic growth, politics, and perhaps – in the far future – population, will come to rest within the Arctic Circle.

The North Pole may become the spatial center of the world. Image source – Trausti Valsson.

This process will likely be accompanied by mass upheavals, societal collapses, famines, border conflicts, maybe even bigger wars. But as usual misery contains the seeds of opportunity. It is not impossible that the farsighted individuals who are now buying up Hudson Bay territories or Siberian riverside lands are positioning themselves or their heirs for lordships and kingdoms in 2200.

But let’s focus on just the next three decades. The opening of the Arctic by various “push” factors (overpopulation, global warming) and “pull” factors (shipping routes, resources) will create demand for infrastructure, housing, associated services, etc. Buying up strategic lands, routes and infrastructure in the Arctic region offers one of the best, and most overlooked, rates of return in the world today. Take inspiration from OmniTRAX, a Colorado-based company that bought the derelict Port of Churchill and its railway from the Manitoba government for a bargain basement price of $10 in 1998. Now that Hudson Bay has become clear of sea ice during the summer, these assets are receiving tens of millions of dollars of investment from the Canadian government.

How can you benefit from the coming Arctic boom? In the coming years, Russia is going to partially privatize lucrative state assets, such as shipping company Sovcomflot and the Port of Murmansk (which handles 60% of shipping across the Northern Sea Route). New ports, roads, railways, pipelines, mines, dams, oil and gas fields, aluminium smelters, LNG plants, etc. are springing up over the entire region.

Enter the ARCS of Progress: Why Alaska, Russia, Canada, and Scandinavia are Positioned to Dominate the Polar-Centric World

Идут на Север срока огромные,
Кого ни спросишь – у всех указ…
Взгляни, взгляни
В глаза мои суровые,
Взгляни, быть может, в последний раз.

- Soviet GULAG song, 1947.

O Canada!

Our home and native land!
True patriot love in all thy sons command.
With glowing hearts we see thee rise,
The True North strong and free!

- National Anthem of Canada.

Watching the economic news these days is a sure path route to depression. Anywhere you seem to look in the developed world there are awning budget deficits, soaring debts, depressed output, and stagnation. We’ve established that putting your money into the PIGS (Portugal, Italy, Greece, Spain) isn’t such a good idea. But the US is the “safe haven,” right? Unfortunately, its fiscal sustainability indicators are actually worse than the PIGS average. In 2009, the US got $0.6 in tax revenue for every $1 of outlays, or a receipt-to-outlay ratio of 0.6; the equivalent ratio for the PIGS was 0.78. Maybe Japan? With a 0.52 receipt-to-outlay ratio, it makes the US look like a paragon of fiscal discipline.

But within all that mess there’s a few, sparkling gems. Not only are they at the heart of the opening Arctic, but they are all excellent investment destinations on their own merits. They are the ARCS countries: Alaska, Russia, Canada, and Scandinavia.

Alaska

In contrast to the rest of the US, Alaska was barely dented by the economic crisis, its GDP declining by just 0.3% in 2009 and recovering 0.6% in 2010. Employment is lower than the US average. While states like California and Illinois flirt with state bankruptcy, Alaska has accumulated $40 billion in its Permanent Fund. Finally, it is – along with Greenland – the most demographically vigorous of the Arctic states, with a total fertility rate of 2.32 children per woman in 2006. It won’t be afflicted by the First World’s looming aging crises any time soon. Alaska is well set to fulfill its motto: “North to the Future!”

Russia

Though the poorest of the ARCS, Russia is also its fastest growing one, with 5% annual GDP growth during 2001-2010. Its high level of human capital (around 70% of Russians continue to higher education, a First World rate), vast resource wealth and decent macroeconomic management set it on a promising path to convergence with developed countries.

Additionally, Russia has a predominant population, economic and military presence in the Arctic. The Murmansk region by itself has more people than all of Alaska, while the Russian Northern Fleet is by far the strongest Arctic force. State policy is to transform the Arctic into Russia’s “strategic resource base” within the next decade.

Criticisms of Russia’s prospects typically center on allusions to its “Zaire with permafrost”-like corruption levels, plummeting population, crumbling infrastructure, “legal nihilism” and Putinist authoritarianism. While each of these has a grain of truth, taking them as gospel fundamentally misrepresents the country. For a start, if Russia really was more corrupt than Nigeria or Zimbabwe – as implied by Transparency International’s Corruption Perceptions Index – then it would still be deep in debt as in the late 1990′s, and its $480 billion foreign currency reserves would be in Cayman Islands accounts instead of the Central Bank’s vaults.

What about Russia’s demographic “death spiral”? A quick glance at Rosstat will show that its population grew in 2009, and that its total fertility rate, at 1.6 children per woman, is now higher than the European average.

One can spend pages upon pages unraveling the double standards, misrepresentations and outright lies which the Western media and political class use to attack Russia. But if you’re unconvinced, and refuse to buy into Russia’s undervalued market on principle, it’s your loss.

As t he professional Russia investor Eric Kraus wrote in Business Week in July 2010, “Russian markets are fashion victims, and are currently both unfashionable and cheap. You can own them now, or wait and buy the next time they surge back into vogue. And I will be selling out just about then.” I’d trust him – that’s exactly what he did in 2008!

Canada

Canada combines the American spirit of free enterprise, with a greater safety net and social mobility. It is also on far better fiscal footing. In 2010, its cyclically adjusted primary budget deficit was -2.7% of GDP (US: -7.0%), and its net debt was 32.7% of GDP (US: 65.2%; Japan: 104.6%). Possessing huge energy, mineral and freshwater reserves, as well as a well-educated and growing population, it is surely one of the better investment bets in the developed world.

Scandinavia (and Nordic)

The Nordic region is one of the richest, most educated and socially cohesive on Earth, frequently coming at or near the top in any global index of freedom, social mobility, environmental sustainability, and technological modernity.

In 2010, Sweden’s GDP grew the fastest in Europe at a blistering 5.2%, while maintaining a balanced budget throughout the crisis. Norway’s fortunes are far more directly tied to its oil industry, but peak oil, excellent state management of reserves and a low population make for bright prospects. Norway is the second richest European country after the banking center of Luxembourg.

Even apparent basketcases like Iceland may be a good investment to buy up on the cheap. While its international banking career might be over, it still has massive freshwater and geothermal energy reserves, that make it an attractive center for energy-intensive industries such as aluminium smelters.

Finally, contrary to right-wing depictions of social democracies as retirement homes full of effete, aging liberals, all the Nordic states have fertility rates that preclude major aging crises (they range from 1.8 children per woman in Finland to 2.2 in Greenland).

The Arctic when all the ice melts.

From an Ultimate Dim Thule…

By a route obscure and lonely,
Haunted by ill angels only,
Where an Eidolon, named Night,
On a black throne reigns upright,
I have reached these lands but newly
From an ultimate dim Thule —
From a wild weird clime, that lieth, sublime,
Out of Space — out of Time.

- Dreamland by Edgar Allen Poe.

Even in our day, science suspects beyond the Polar seas, at the very circle of the Arctic Pole, the existence of a sea which never freezes and a continent which is ever green.

- The mystic H. P. Blavatsky.

Before the rise of the world economy, spatial perspectives were local, at most extending to the boundaries of their cultural sphere or world-empire: The Ecumene for the Ancient Greeks and Romans; Dar al-Islam for the Muslims; Christendom for the Franks; the Great Wall for the Chinese. Medieval European geographers referred to any lands beyond the borders of the known world as Ultima Thule.

Globalization from the 19th century bound the entire world together, for the first time in history, but its flows and links of labor, capital and commodities passed the Arctic by. Unattractive to sustained private investment, the region’s development was always fitful and unbalanced, from the Yukon Gold Rush that petered out almost as suddenly as it flared up; to the penal camps, subsidized settlements and military bases of the Soviet Arctic, now decaying away except where hydrocarbons extraction has thrown them a lifeline.

But now the world is changing. No longer will opening the Arctic have to be a hubristic project, as with the chiliastic visions of Soviet planners; or a costly and unprofitable strategic necessity, as with the Cold War submarine patrols beneath the Arctic sea ice or the bomber flights over it. Today, it is global macro-trends such as global warming, resource depletion and overpopulation that will ensure the rapid but organic development of the Arctic.

With the growing human presence, the Arctic will inevitably begin to lose its luster of mysticism, foreboding and darkness. As the years turn into decades, and 2050 approaches, the polar-centric view of the world will become increasingly central to human spatial consciousness. The world’s trade, energy and capital flows will have been largely rerouted north.

The ARCS of Progress, their numbers swelled by climate refugees, and their economies bolstered by a flood of capital investment, will be amongst the leading Powers in the world. This assumes they retain their present political configurations. For instance, could an independent Greenland, with just 56,000 people today, retain its own national identity? Facing resource shortages and droughts in the south, would China encroach on the Russian Far East? Would the US try to assimilate Canada?

Whatever the answers to these questions, one thing is near certain. The vision of a northern Ultima Thule is dissipating, and will soon dissolve altogether (thought teh concept may be resurrected to describe a desolate, uninhabitable South many hundreds of years into an extreme AGW future). In its place there will emerge a polar world-economy of open seas, farms and growing cities by 2050.

There will arise an Arctic ecumene.

* According to more recent data, there were 34 transits of the Northern Sea Route in 2011, up from just 4 in 2010; with 820,000 tons of goods transported relative to 111,000 tons in 2010. Volumes are predicted to double again this year. This goes in tandem with record breaking sea ice melt in 2012.

Edit Jan 28, 2013: There were a record-breaking 46 vessels making the transit through the NSR this year.

(Republished from AKarlin.com by permission of author or representative)
 
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One notices a remarkable correlation between this, and the perceived attitudes of local women and their obesity rates.

(The map above was made by RVF commentator “durangotang” based on the geographic data here).

(Republished from AKarlin.com by permission of author or representative)
 
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The Economist lies about Russia, it has beef with France, and in general it is far more useful as a barometer of Anglo-Saxon elite opinion than as a good source of objective information on the real world. Nonetheless, it does have the occasional gold nugget, and even one gold vein – its Daily Charts blog.

After all, one can rarely argue with cold, raw statistics, and opinion polls.

Above is a chart from early April about the importance Europeans attach to being rich. It’s funny the extent to which it confirms almost every relevant stereotype in the book (in general, the act of stereotyping is very much maligned, but that’s for another post). Russians and Ukrainian gold-diggers, oligarchs, mafia. Israel – Jews LOL. Greeks have a reputation for being a very mercantile people. Czechs are individualists, so it makes sense that they’re high up there too.

At the other end of the scale, you have the Scandinavian countries that operate under the self-effacing principles of Jante Law, and the French with their rich anti-capitalist intellectual traditions and love for existentialist philosophy. In the middle we have quintessentially bourgeois nations such as the UK, and Germany – they love themselves some money, but Protestantism has long encouraged them to be low-key about it.

(Republished from AKarlin.com by permission of author or representative)
 
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I am going to start off by looking at Europe, defined as the region under the influence of Western Christianity and/or the European Union (not Russia or Turkey, which will be covered in a later Eurasia Report).

The Big Questions

  1. Demographic problems: aging, low fertility and Eurabia?
  2. The unsustainability of the modern welfare state?
  3. Cultural decline & reaction against liberal rationalism?
  4. The return of Great Power politics? (e.g. Mearsheimer 1990), & the decline of the EU and growing centrality of Franco-German relations, – or will the EU survive, and if so in what form?
  5. National trends: a secure, “flourishing” France; a troubled but powerful Germany; Poland beset on two fronts; marginalized Britain, Spain & Italy, all in decline; Sweden as preeminent Baltic power; on the outskirts, both Russia and Turkey increase their power – realistic?
  6. The retreat into authoritarianism and militarism? Europe as a Black Continent?

European Trends

Without much exaggeration, demography is Europe’s central issue for the foreseeable future. Just to keep the labor force constant, the EU needs 1.6mn immigrants annually (current population: 500mn); to maintain a 3:1 ratio of labor force to retirees, it will need 3.1mn immigrants yearly to offset the aging of the population. These kinds of numbers are probably unrealistic due to (justified?) European xenophobia, especially in the east and center.

The root explanation is Europe’s post-1970 fertility collapse, especially pronounced in Germania, the Mediterranean (Spain, Italy, etc), and the Visegrad region (East-Central Europe). It is most severe in Germany and Austria (both TFR = 1.3), where the total fertility rate (TFR) fell below the replacement-level rate of 2.1 children per woman in the early 1970′s; since the Germans have not been reproducing themselves for a full generation now (and have no desire to start doing so, as even the desired TFR is at a low 1.8), they will inevitably fall into a death spiral.

The situation is similar in the Mediterranean nations and Visegrad (TFR around 1.3), with the exception that their fertility falls came a decade and two decades after Germany’s, respectively. However, much like Russia, Visegrad still has chances of effecting a demographic recovery, assuming their fertility collapse was primarily a result of “transition shock” instead of “social modernization”. Much better off are France (TFR = 2.0), the UK (TFR = 1.9), and the Nordic countries like Sweden (TFR = 1.7), whose fertility rates are all within a manageable distance of the replacement level rate.

However, conservatives who fear the coming of a Muslim Europe – “Eurabia” – are going to be happy. That theory rests on the assumptions that a) the size of the Muslim minority in Europe is severely underreported, b) the Muslim minority retains its extreme religiosity, c) “reversion” to Islam will increase, and that d) the high fertility rates of first-generation Muslims and e) high levels of Muslim immigration will continue indefinitely in the face of rising European xenophobia. All of these assumptions are very much open to question. The far likelier possibility is that the trans-European Muslim community will be scapegoated by a declining continent rediscovering its old geopolitical faultlines.

Napoleonic France introduced pensions for civil servants, Bismarck’s Germany invented the social security system, and Sweden developed the modern welfare state in the 1930’s – a system that reached its apogee on the European continent on the back of the post-war economic miracle and demographic expansion. Both have come to an end, and so too may the modern welfare state as we know it.

Due to their fertility crises, Europeans will find it increasingly difficult to maintain their generous welfare states. Sweden will likely soldier on with its “social-democratic welfare state”, given that it lies at the heart of its identity (social mobility, egalitarianism, progressivism); a (relatively) youthful France will also find it manageable to retain the extensive perks, privileges, and niceties of its dirigiste system. Though demographically healthy, Britain has an array of other critical problems that will force it to strip down the bloat and return to its traditionally minimal “liberal welfare state”. In low-fertility Europe, raising the retirement age and cutting down the “corporatist welfare state” to the spartan standards of the earlier 20th century is now the only realistic solution, the alternatives being one or two more decades of decay followed by fiscal and social collapse. The rightist wave sweeping the European elections of 2009 may be a subconscious realization that it’s time for taking responsibility.

The wealth, social solidarity, and geography of European nations means that overpopulation, pollution and climate change will not have quite the same critical impact as in other regions like the Middle East or China – though an inundating Holland, desertifying Spain and burning Greece may beg to differ. (This applies to the period until 2030; after that, all bets are off everywhere).

European Regions

Germany has a robust industrial ecosystem manned by a well-educated population, powered by a triad of coal, natural gas and renewable sources of energy, and underpinned by advanced technologies and a potent machine-building sector. It constitutes Europe’s economic and commercial powerhouse. However, it is artificially reliant on exports to provide the savings needed for its rapidly aging population – short of a mortality crisis, an irreversible problem compounded by the most intractable demographic crisis of any major European nation. This reliance is dangerous, given the imminent waning of globalization. Facing a sub-par energy future, the loss of global export markets, and the rediscovery of a conservative nationalism bizarrely married to environmentalism, Berlin will again turn its baleful gaze to East-Central Europe.

In addition to the manifold soft power tools at its disposal, Germany is already beginning to unshackle itself from its post-WW2 military constraints. Though the Bundeswehr is of Cold War vintage with minimal power projection capabilities, Germany has the technologies and industrial potential to once again become a leading European land power. Its status as a “virtual nuclear weapons state” means it has the capability to develop and field a small arsenal of deliverable nuclear weapons within months of commencing a crash program. Thus, Germany has both the dormant potential and the incentives to return to the Reich, expanding into Visegrad to acquire captive markets and to guarantee Russian hydrocarbons supplies – and reigniting its old, paranoia-fueled duel with France for European hegemony.

Unlike in the first half of the 20th century, it is France that will be the more potent competitor this time around. Its fertility rates are the healthiest on the European continent – though its population of 62mn is smaller than Germany’s 82mn, it already has a higher number of annual births. Though they have a restive 10% Muslim minority in the deprived banlieues, French Muslims are culturally more integrated than their co-religionists in Germany or Britain. The French economy is versatile, productive, and robust, suffering little during the 2008 economic crash – though scolded for dirigisme and S&M business regulations that stymie employment, its dirigisme is arguably superior to Germany’s export dependency, the Mediterranean’s fiscal holes, and Britain’s bubble economy.

On the strategic level, France is a powerful independent actor. With 80% of its electricity generation coming from nuclear power, its industrial and residential infrastructure is invulnerable to gas disruptions – be it Russian “energy blackmail” or Ukrainian intransigence. The country is underpopulated relative to the rest of Western Europe. France possesses Europe’s sole fully-autonomous military-industrial complex, producing the whole panoply of weapon classes from helicopter carriers to fighter jets; it has substantial power projection capabilities; and its extensive nuclear infrastructure supports the world’s third largest strategic nuclear stockpile, the bulk of its 300 warheads mounted on MIRVed SLBM’s held on four ballistic missile submarines.

All these factors put it in good stead for a symbiosis with its former North African colonies. Algeria is a major oil and gas producer, while Morocco has 2/3 of the world’s rock phosphate reserves – “a critical component in global fertilizer supply”. Facing a demographic “youth bulge” and shrinking agricultural yields under the stress of global warming and an advancing Saharan desert, the Maghreb nations may feel compelled to offer energy & phosphate supply guarantees to France in exchange for its commitment to a high immigration quota and protection of Muslim rights. Further afield, it has a strong military and neo-colonial presence in energy-rich West Africa. Occupying an enviable geostrategic location from a position of immense strength – demographic, economic, and strategic – there can be little doubt that France will be the predominant European power of the next decades.

On the surface, Britain appears to be a strong contender for European preeminence in the coming decades. It has respectable demographic indicators and, at least so far, a relatively low level of sovereign debt. The island nation occupies the most strategically secure location on the European continent – it has never been successfully invaded since 1066, largely thanks to its efforts to maintain a continental balance of power, spoiling attacks on potential European hegemons, and as a last resort, the English Channel. The island nation hosts significant power projection capabilities and a robust SSBN-based nuclear deterrent (much like France); furthermore, it also maintains a “special relationship” with a United States that shares its fundamental goal of stymieing the rise of a European hegemon. At the same time, London is not averse to profiting from European markets and the pursuit of its neo-colonial interests further abroad, as befits the descendant of an empire on which the sun never set. As the sun sets on Pax Americana, could its British satrapy continue its legacy on the old continent?

The answer is almost certainly not. Despite its ostensible strength and vigor, the United Kingdom faces a set of imminent, interlinked challenges – economic, fiscal, energy, and nationalities – that could not only preclude its rise to preeminence, but put at peril its very existence as a federated state.

Britain has seen accelerating deindustrialization since the neoliberal revolution of 1980′s Thatcherism, culminating in the false boom of the 2000′s driven by construction and finance. At the same time, government spending increased as Britain moved to implement a social-democratic welfare state – partly because of the need to satiate the emerging victims of market fundamentalism, and partly because of a general expansion of state power relative to the citizenry (surveillance, databases, etc). However, it should be noted that unlike in Scandinavia, this development did not lead to higher socio-economic mobility, which remains the lowest in Europe.

Even before the current crisis, government spending (purchases and transfers) was approaching 50% of GDP, with the figure rising to 56% in Scotland, 72% in Wales and 78% in Northern Ireland. With the discrediting of the neoliberal model, soaring budget deficits (12%+ of GDP), plummeting foreign investor confidence, and widespread indebtedness stymying a consumer-led recovery, Britain finds itself locked into a predicament, between the Scylla of inflationary fire and the Charybdis of a painful fiscal retrenchment and deflationary “debt trap”. Though on current trends the former seems to be the more prevalent, the likely triumph of the Conservatives in the 2010 elections may herald a sea change in favor of the fiscal restraint championed by their middle-England electoral base.

This fiscal predicament is compounded by its energy woes, in which the absence of a long-term energy policy, mindless liberalization, and above all the rapid depletion of the North Sea gas and oil fields, may see it enter a period of Third World-style blackouts by the mid-2010′s. Britain’s growing need for gas imports will necessitate costly investments in LNG terminals, put its current account further into the red, and even develop a German-style dependence on Russia. This could be the straw that breaks the camel’s back – forced into buying expensive energy supplies and suffering from power disruptions, the British economy will go into stagnation or outright decline. This cannot be squared with the level of requisitions needed to support the metastasizing British welfare state, and it will have to give.

Finally, Britain’s latent separatist pressures will come to the forefront – no one wants to remain on a sinking ship. Scotland is a viable nation with a substantial industrial base and still significant North Sea hydrocarbons deposits – given independence, it will resurrect its Auld Alliance with France. Similarly, there will be less enthusiasm for maintaining Northern Ireland on the English dole; once ditched, it will inevitably drift to the hearty embrace of the Republic of Eire. Only Wales is likely to remain within the new Republic of England & Wales (the Queen will have moved to Scotland). Though England will retain the vast bulk of the UK’s population, economic, and military assets, their general degradation during this time period will have relegated it to the status of a secondary European Great Power like Italy or Spain. However, its longer-term prospects are slightly brighter due to its relatively healthy (current) demography and preparedness for global warming.

Not even that can be said about the Mediterranean nations, however, which suffer from all the challenges facing Germany, France and the UK – collapsed fertility rates (TFR = 1.3), social immobility, sclerotic economies, unsustainable welfare states, debt traps, and imminent fiscal collapse thanks to the ECB depriving them of the ability to engineer a currency depreciation (their traditional solution to fiscal crises).

Italy is sinking back into political cronyism, the level of corruption is astounding for a First World nation, and its artisanal manufacturing is being destroyed by Chinese competition. There remain huge gaps between the advanced Nord and the Mafia-riddled, poverty-stricken Mezzogiorno – thus, opportunities for domestic tensions abound. As for Spain, it is facing an excruciating bust as the foreign credit flows pumping up its construction-fueled economy subside; furthermore, it faces an uncertain energy future (despite its impressive expansion into renewables, the scale is still far too small), exponentially-rising damage from global warming, and separatist tensions from the Basque region.

The performance of their education systems (both basic and tertiary), spending on R&D, and levels of corruption, are all far behind their north European neighbors. Too preoccupied with their manifold domestic challenges and isolated by the Alps and the Pyrenees from the North European Plain, these two nations have neither the incentive nor the capability to play a major role in future European power politics. They are likely to succumb to an accelerating, self-reinforcing decay, eventually culminating in the emigration of millions of young Spaniards and southern Italians to France and the US (being whites, xenophobia will not play a big role).

Finally, there are two European nations that are currently marginal, but may assume a much more prominent role in future decades – Poland and Sweden. Let us start with the former. Poland has a balanced, protected, and fast-growing economy that was little affected by the 2008 crisis (relatively speaking); a strong sense of national unity; and although it suffered from a sharp fall in fertility from the early 1990′s along with the rest of the socialist bloc, it may have a chance of recovery for the same reasons as Russia, i.e. because there is evidence to suggest its demographic decline was a result of the “transition shock”, i.e. not permanent. However, the likelihood of that occuring is smaller because a) its desired fertility (around 2.1) correlates with those of the low-fertility Med nations, whereas Russia’s is higher (around 2.5), and b) its transition shock was much less pronounced than Russia’s, but unlike Russia from 2006 it has yet to see any firm signs of demographic recovery. And although it does not have Russia’s mortality crisis, the main impact of that will be to put more pressure on the Polish pensions system, on which it already spends more than 10% of GDP (i.e. a figure similar to the rest of “old Europe”).

As such, it is hard to give credence to credence to George Friedman’s (Stratfor) prediction that Poland will become a Great Power any time soon. That said, as the strongest barrier between Germany and Russia – and hence a bulwark against the emergence of a European hegemon – much of the rest of the continent, especially France, England, and Sweden, as well as the US, will find it in their interests to extend technical and military aid. And should the resurgent Russia Empire collapse and wither back into its Muscovite heartlands, the recreation of a modern Polish-Lithuanian Commonwealth, encompassing much of Visegrad and western Ukraine, beckons.

With its cold climate and poor internal communication lines, the Scandinavian Peninsula’s population was always concentrated along the southern coasts. This is where Sweden first emerged as a maritime Power based on riverine trade within the Hanseatic / Baltic region – and that is where its modern interests lie. It naturally dominates energy-rich Norway and its maritime traditions enable a flexible military posture in Europe, while Finland serves as an excellent buffer against Russian expansionism. Sweden exerts financial domination over the Baltic nations, maintains friendly relations with NATO, and hosts an advanced military-industrial complex. As such, Swedish power is incommensurate with its small population, though overall it remains, and will remain, a minor player. Global warming will open up more of its lands to sustainable settlement, which coupled with its respectable demography and immigration from climatically-stricken zones from Europe and farther abroad will ensure the continued growth of its relative power. Finding a natural ally in Poland to contain German ambitions and Russian revanchism, the two could prove to be a potent combination.

Demo. Econ. Energy Mil. Clim. Power
England 55+ 4- 3– 4- 4-
France 65++ 4 3+ 4 4+
Germany 80– 5- 2 3+ 4
Italy 55– 3– 2 2- - 3–
Poland 40 2+ 2 2+ + 2+
Russia 140 4+ 5+ 5 ++ 5++
Sweden 10+ 2+ 2+ 2 ++ 2+
Spain 45- 3– 2 2- - 2–
Turkey 80++ 3+ 2 3+ - 3++

Above is a rough table summarizing my view of the current relative strengths (mostly 1-5) and future prospects (+ and -) of the current European Powers in population / demographic structure; economic-technological strength; energy reserves, sustainability and/or security of supply; climate effects; and overall hard power. For obvious reasons these are very rough estimates and subject to a wide degree of error.

Europe’s Geopolitics

Having outlined the general trends and regional idiosyncrasies of the European continent, I am now going to try to bring it all together and paint a picture of how European geopolitics and metapolitics are going to develop in the decades ahead.

First, a word about the European Union. It is the quintessential “end of history” project – as Fukuyama himself noted, its “attempt to transcend sovereignty and traditional power politics by establishing a transnational rule of law is much more in line with a “post-historical” world than the Americans’ continuing belief in God, national sovereignty, and their military”. This utopian pursuit is, however, dependent on social stability, which is what underpins Europe’s historically recent embrace of liberal democracy and rules-based mechanism for resolving disputes.

But considering the interlinked and growing economic, energetic, demographic, and climatic challenges to this social stability covered above – and bearing in mind that for all its pomp and splendor, the EU remains weak and peripheral relative to the twenty-seven European nation-states that will collectively decide its destiny – the EU’s disintegration, “withering away”, or “expansion into irrelevancy”, is almost inevitable. Powerful Eurosceptic elements in Britain, Poland and the small European states do not want to give away their national sovereignty and are suspicious of European federalism, which they perceive to be nothing more than a new, covert hegemonic project. Nor is it likely that it will be replaced by a “Europe of two speeds” based on accelerated Franco-German integration; the interests of these nation-states are simply too divergent for that to happen.

As for NATO, if it can be undermines by an issue as small as Afghanistan now – it has no chance of surviving the coming earthquakes in any meaningful form. Britain, France, and Poland will likely remain closely allied with the US, but beyond that the dominant paradigm will be a return to 19th century-like Great Power politics. Facing a subpar energy future, the loss of export markets in a more protectionist world, a rapid demographic decline, and an unprecedented fiscal crisis, Berlin will again look east, as it usually does in times of national stress. It is in its strategic interests to draw closer to Moscow, given the mutual desirability of setting up a bilateral relationship based on trading Russian commodities (natural gas) for German machine tools and technology, as occurred so often in the past. (For instance, in the Treaty of Rappallo (1922), the two international pariahs signed a peace agreement, forgave each other’s debts and signed a free trade accord. Russia also helped Germany circumvent the Treaty of Versailles by allowing Germany to use its territory to continue military-related R&D and weapons testing, far from the prying eyes of Western observers). Furthermore, Russia could make use of a neutral-to-friendly Germany as a shield to consolidate its power over the post-Soviet space.

Once again, Poland will stand in the way of this Russo-German relationship. Russia is interested in pushing American influence out of East-Central Europe, converting the region into a neutral buffer for its empire. Germany will be interested in 1) furthering its economic penetration of the region, given the losses of many of its other export markets, and 2) in preventively blocking Russia’s further expansion into Europe proper, which in the end would seriously endanger German national security. In addition, there’s also its traditional craving for Lebensraum.

The region of Visegrad will therefore become a vortex of geopolitical competition between Germania, Eurasia, Scandinavia, and the Atlanticists. Poland will be supported directly by France, which has a direct interest in guaranteeing Polish sovereignty in order to prevent the rise of a German-dominated Europe (or of a contiguous Russo-German bloc, which would amount to the same thing). Despite its likely retreat from active Eurasian power politics in the face of mounting domestic crises, the US too will likely contribute to Polish security, since preventing the rise of a Eurasian hegemon will still figure amongst Washington’s priorities. Interestingly, a weakened Britain (or England) will probably try to maintain neutrality and good relations with all sides: its desire to support France and Poland in order to preempt the rise of a united European hegemon will be partially counterbalanced by its growing energy dependence on Russia.

However, the alliance between Germany and Russia will be far from rock-solid, considering that it is based exclusively on shared interests. Germany does not want a Russia that is too strong, and as such will try to maintain a modicum of good relations with the Atlantic powers as a hedge, as well as making geopolitical inroads and alliances beyond Europe proper. Boxed in by seas to the north, a powerful France to the west, the Alps to the south, and an Atlanticist-supported Poland to the east, Germany will push its influence into the Balkans in conjunction with Turkey, a country with which it will resurrect its traditional alliance, and more importantly, a country that will be able to keep Russia’s attention diverted to its unstable south (the Caucasus, Central Asia, and the Balkans – areas where Turkey already has substantial cultural and economic influence). Furthermore, Turkey would provide Germany with an additional supply of gas independent of Russian control sourced from Azerbaijan, Central Asia (if they remain outside Russia’s overt control) and possibly even Iran (if it reconciles with the West), and assuming that the necessary pipelines get built. In exchange, Germany will transfer the technologies Turkey needs to build a self-sufficient military-industrial complex that will complement its already formidable military power.

France will seek a close alliance with the Visegrad nations and Sweden to keep Germany and Russia occupied, while focusing most of its energies on securing its regional dominance. Flooded with younger immigrants from Spain and Italy – and perhaps the Maghreb, should it agree on the energy-for-immigration deal mooted above – its population will grow even more rapidly than projected, perhaps reaching 80-90mn souls by the 2030′s. This will result in the division of its electorate into three major groupings – the French conservatives and nationalists; the internationalist moderates; and the hard left, which will include the Islamist groups.

These internal divisions will be the cracks through which its weaker neighbors, especially Germany, will try to undermine it; however, ironically, those same divisions may lead to the long-term survival of multiculturalism and liberal democracy on French soil, even as Germany returns to the Reich, Italy reverts to its regionalistic capo governing traditions, Turkey revives its Ottoman imperial legacy, and Russia reacquires its Eurasian empire. Along with the British isles and various enclaves (Sweden, Switzerland, Czechia, Ireland, Poland?, etc), France will remain a light in a continent rapidly turning black with fascism, militarism, collapse – and perhaps war. War? Yes, I’m serious. Once effective ABM shields are developed and proliferate – and that’s not especially far off – the deterrence power of nuclear weapons will fall dramatically.

As mentioned above, both of the major Mediterranean powers will be too absorbed by domestic affairs to give serious heed to geopolitical jockeying. Though they might try to revive their colonial-era relations with North Africa – Spain in Morocco, Italy in Libya – they do no have the carrots to enjoy sustained success, and will be outmanoeuvred by France. Though Poland holds some promise, it is locked into a geopolitical vice and will remain too weak to play a truly independent role in Europe. And though Sweden is a formidable and growing Baltic power, its population and industrial base is simply too small to play a true Great Power role.

[A possible future European alliance / categorization system. Black - the expansionist Germans, Turks and Russians. Dark gray - France and its allies, Poland and Sweden. Gray - the relatively weak "balancing powers": Britain will lean more towards France, Italy more towards Germany, but none want to see a European hegemon. Light gray - too weak to really matter].

Conclusions

As a result of the epochal shifts in the global balance of power brought on by peak oil and the waning of Pax Americana, within the next decade the geopolitical structure of Europe will experience a profound transformation. The post-historical EU project will die when history returns to Europe. As Britain weakens and splinters into its constituent parts, and as the Mediterranean powers retreat under the weight of their manifold demographic, fiscal, and economic problems, the old struggle between France, Germany and Russia for European hegemony will resume.

This will entail a complex balance of power system. A powerful France will seek to encircle an ailing but still formidable Germany by allying itself with Visegrad and Sweden, while maximizing its own power by asserting itself in its Mediterranean backyard. Germany will make a wary alliance with Russia, and try to break free of its encirclement by threatening Poland, undermining France, and hedging with a Turkish alliance. Meanwhile, Russia and Turkey may come into intense geopolitical competition over the fate of the Balkans, Caucasus and Central Asia; however, should Turkey focus its expansion into the Middle East, their relations will likely be quiescent. (But this issue is for the Eurasia SSR). As the world energy and climate crisis worsens with every passing decade, Europe will return to its future – the Black Continent.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.