Strategic Trends 2004 (Part 2)

Last month we began a review of the ten Strategic Trends that will impact our families, our careers and our country in the coming months and years. We covered Trend #1, Weapons of Mass Destruction, and Trend #2, The Rise of Islam, in last month's issue. This month we'll tackle Trend #3, The Rise of a European Superstate, and Trend #4, The Rise of China.

Trend # 3 - Rise of a European Superstate

The European Union has moved forward in its attempt to unite Europe politically and economically. It has succeeded in unifying and strengthening its economic market, creating a common currency, and establishing both a European legislative and judicial system. It has been suggested by some that the European Union may be the "revived Roman Empire." Thus it is interesting to note that the introduction of the Euro is the first time since the days of Caesar and the Roman Empire that Europe has had a common currency. Others have tried, most notably Napoleon Bonaparte, but none were successful.

Over the last few years we have watched closely as the European Union has emerged as a growing world power. The value of the Euro has surpassed that of the dollar, and this month the EU will welcome ten new members, increasing its influence in the UN and expanding its potential for growth. The bitter debate over Iraq between the United States, Germany, and France has been seen by many as a foreshadow of what is to come: a battle in which the EU, led by France and Germany, is positioning itself to surpass the United States as the dominant world power.

Unfortunately, the EU Constitutional Summit has yet to draft a document everyone can agree on. The biggest controversy has been over the appropriation of votes and, thus, the balance of power (we covered this in our March 2004 issue of Personal UPDATE).

The fight for power within the European Union, and the EU's battle for power on the international level, will continue to be a major factor in world politics. There are still many obstacles the European Union must face on the road to solidarity, but in the eyes of some they have already accomplished the impossible: the once impenetrable wall between east and west, communist and free, is now gone, and in its place is a growing economic and political force.

Turkey's Acceptance Is Still Uncertain

In December, European Union leaders will decide whether or not to consider Turkey an official candidate for membership in the EU. As a relatively poor country, as a Muslim country, and as one that oppresses minorities and abuses human rights, Turkey has met repeated obstacles in its long effort to gain acceptance by the EU.

While membership possibilities had been looking up for Turkey, on April 1st the European Parliament overwhelmingly voted in favor of a report that rejected starting membership negotiations with Turkey. The report stated that while Turkey has made some good progress at reforms, it still has quite a ways to go. The country still has a problem with human rights abuses, the MPs pointed out. The use of torture, discrimination against religious and ethnic minorities, and a lack of freedom of expression are still major issues. While the report is not legally binding, it sends a clear message to Ankara that its candidacy is not yet a done deal.

There are other concerns as well. The EU is not sure how well it can absorb such a large, fairly poor country. Many also fear that admitting Turkey into the EU could increase Islamic fanaticism in Europe.

However, Polish analyst Aleksander Smolar, head of the Stefan Batory Foundation in Warsaw, argues that it might be helpful to bring the Muslim nation into the EU. "Accepting Turkey in [the Union] would be the best manifestation to the Muslim world that Europe is not about the clash of civilizations, that Europe is not looking for confrontation with the Muslim world, and also, a factor which is very important is that giving this prize [of membership] to Turkey would be an award for democratic transformation and modernization on the largely Western pattern," Smolar said.

Still, France's new Foreign Minister Michel Barnier told Parliament recently that France was strongly in opposition to Turkey's EU entry. Turkey still needed to implement reforms to ensure an independent judiciary and full human rights for all of its citizens, he said. "Turkey does not respect the conditions, even if it is preparing to do so," Barnier said, adding that there was "no question" of Turkey's joining the EU "under current circumstances."

Alain Juppé, a close associate of French President Jacques Chirac, said that countries like Turkey, on the edge of Europe, "have no business joining (the EU), otherwise it will be diluted."

Turkey does have strong support from Germany and the U.K., but France's veto power could prevent Turkey from starting membership negotiations at the end of the year. The question of Turkey's EU candidacy promises to be a major dividing issue in Europe for the remainder of the year.

Trend # 4 - The Rise of China

Next on our list is Trend #4, The Rise of China. Once content with isolationism, China is now asserting itself as a global, fully communist, nuclear superpower. The "red dragon" no longer sleeps, and with its eye on reclaiming Taiwan and strategic alliances with Russia and North Korea, China can no longer be ignored.

In recent years, China has bought, borrowed, or stolen technology which has catapulted its military capabilities into the modern high-tech arena. No one can match China in sheer number of people, and now it can challenge most of the world in technological achievements. China has been accused of sharing weapons technology with North Korea, Pakistan, Libya, Iran, and other countries. Beijing is also expected to share its space technology with North Korea in preparation for a war with the U.S. that China believes is inevitable.

Appetite for Energy

For years China has been primarily self-sufficient in providing for its energy needs, but that's over now. After years of drilling, China's main oil fields are badly depleted and costs per barrel have crept up steadily. At the same time, China's economy is shifting into overdrive. Consumption, business investment, and government spending are running at full throttle.

China, an oil exporter only a decade ago, has acquired a voracious appetite for foreign oil. Last year China used more that 5.4 million barrels a day, eclipsing Japan as the world's second-largest oil consumer, although still far behind the U.S., which uses about 20 million barrels a day. China's hunger for oil and other forms of energy will create great obstacles for Beijing and the global economy.

Some experts are afraid the need for fuel will cause China to enter into oil-for-arms alliances, selling weapons technology to countries who support terrorism. Whether it is oil from the mid-East or oil piped into China from Siberia (which is also being sought by Japan), China must find an answer for its energy crisis. As many as two-thirds of China's provinces have already suffered severe power outages. China's energy crisis could cause severe damage to international stability.

Oil Supplies Limited

In 1956 geologist M. King Hubbert predicted that U.S. oil production would peak in the early 1970s. His projections were highly controversial, but he proved to be right (since 1985, the U.S. has produced slightly more than Hubbert's projection, largely due to successes in Alaska and in the far off Gulf Coast.) The peak year for global oil production is now estimated to be between 2004 and 2008 [see chart]. This is a trend worth watching in itself.

Next month we'll continue our update of the ten Strategic Trends with Trend #5, Biotech and Global Pestilence; Trend #6, The Struggle for Jerusalem; and Trend #7, The Magog Invasion. If you don't want to wait that long, get our featured briefing, Strategic Trends 2004, now available on video and DVD.