The wellfare state, well, Europeans, among them the Germans realized how expensive they are and are scrapping them or transforming them because they think there should be none who decides to live on welfare instead of looking for a job.
Social mobility will likely decrease because wealth guarantees superior education and access to universities, but naturally there are also countermeasures that are accepted as long as the current elite doesn't feel they threaten their offspring's chances.

Sorry, but this analysis is botched up PERIOD.
The author seems not to be very intimate with what is going on in Europe, so let's set some things straight. There's a European Union and there are countries with more and countries with less opportunities. So people of the poor countries with less opportunities go to the rich countries to work and send money home where it finances the economy (Situation would be similar if the US would allow Mexicans to cross the border freely). These people from the poorer European nations do include a highly qualified work force. So despite declining birth rates it doesn't lead to an economic problem in the economic core. The fringe gets depopulated, but receives financial infusions in return. Current problem in Europe isn't a lack of skilled labour, but a lack of chances of employment. However, Europe, unlike the US has a favourable trade balance with China and so the Europeans do and will profit from the Chinese rise. There are a few voices that speak in favour of also selling them even weapons, but so far most Europeans are expecting to be entangled in some kind of war with China and selling them weapons is generally a no-no.
The European xenophobia is a very dificult issue, essentially the population and the countries are split on this issue. At least in Germany the dispute will be solved biologically, it's the famous 4-3-2 society, 1/4 of the population has a migratory background (lots of them aren't foreigners, but have German blood ties), 1/3 of all marriages have at least one partner with a migratory background and 1/2 of the children have at least one parent with migratory background.
You talk about environmentalists married to nationalists in Germany, well, that's counterfactual. The Green party are not only the anti-nuclear, anti-chemistry, pro-environmental faction, they're also the migrants faction and they are becoming the strongest party and push the agendas of all the others. Just look at Cem Özdemir (Joschka Fischer has also a migratory background). It's not the same growing up with a German or a Muslim name and looking for a job or finding a partner, there are prejudices like in every society, but the environmentalists are one of the glues that bring this society together the other is football or soccer, as an American would call it. Mehsut Özil decided to play for Germany. A further kit is that there are more partnerships between Christians and Muslims than one realizes at first glance.
The final thing about great power play and the military. Europe is not the USA, it has witnessed lots of unpleasant wars on its soil and is therefore anti-militaristic. The United Kingdom, France, Turkey and Russia are exceptions of the rule. The development of nations has come to a close and the people may be bickering about being under a gouvernment they consider foreign, but they all agree that being a member of the European Union is the big deal. So powerplay is within the European Union and there Germany uses its economic power, that is the greatest on the continent, however, it doesn't always get what it wants. France has much more soft power because of its superior connections (read up the Latin Monetary Union). Military confrontations within the European Union are totally out of question and there's no one posing a military threat for the European Union. However, there are common economic interests and essentially the combined economic power is what makes Europe great and attractive because borders inhibit exchange by creating regions with different rules.
The Lithunians are part of the Balto-Scandinavian alliance and have no wish to join the Poles since their Commonwealth was dissolved because the Poles wreaked the constitution (reminds people of the USA today).
Basically, you are too much stuck in Europes old history with your analysis. That's before the creation of the EU that was influenced by the US and will continue to face the rising BRINC states. However, you are right that there will be no EU superpower, but the nation state bickering about influence and power will continue, but military forces will play no role in that powerplay.

Hi Anatoly

Just a quick response as short of time. I was myself going to use ‘neo-liberal welfare state’, and see nothing ironic or ridiculous about the term. Neo-liberalism is a strange creed because it holds that unregulated markets will create full employment, which I doubt will ever be the case and can think of no examples where it has been. This can only happen in centrally controlled economies. Unemployment increased greatly under Thatcher (and despite what you say about the invisible hand, it is worth noting that many striking miners were ineligible for benefits) Indeed, discussing the British economy is difficult because it does not fit into any ideology: most state assets were privatised yet we still seem to have a strong state role in the economy. At times I think that the privatisations were like leaving garlic cloves out: more of a symbolical gesture than a real spur for capitalism and inovation. When I was in heavily-nationalised Greece by contrast there were lots of booths, markets where you could buy fresh fish, vegetables and fruit, etc and many coffee shops, restaurants, stationers. It seems that whether from our national character, neo-liberalism, or socialism, Britain doesn’t have a ‘petit-bourgeois’ which it seems to me can be seen as both conservative or social democratic.

Maybe my views are due to the conflict between our media parotting the Hayekian line about liberalism as the path to freedom and how our overpriced, chaotic, overcrowded trains symbolise liberty contrasted with the strange feeling that I'm living in a semi Soviet totalitarian surveillance state (http://www.privacyinternational.org/article.shtml?cmd347=x-347-559597).

Manufacturing is a difficult one; Britain once led the world in this regard and I can see nostalgia propelling a break with neo-liberalism if a demagogue replaces our current crop of politicians, though I don't think it is as likely as you say: our 'democracy' has to be the most closed system in Europe. Whilst our education system is overall poor, we paradoxically have some of the leading universities; this could conceivably contribute to competitiveness.

As for Poland, this is another complex one. Britain’s current baby boom is said to be largely due to East Europeans (the largest group of whom are Poles) yet these are not British citizens.

As for your projections, all too true, I am innumerate and didn’t tally the timescale 

Time pressures force me to respond to this in bits. The first 'bit' shall be your projections for Germany's future.

Your projection's for Germany's future strike me as remarkably inconsistent with larger forecasts you have made in the past. Allow me to summarize a few of these of forecasts:

Please inform me if I have misrepresented any of these points.

I will accept all four of these points as true for the sake of this response. (The third point deserves its own bit analysis though. Or perhaps its own forum topic...), but before I continue, I would like to make a few note about Germany's current role in the world system.

Germany is, in many ways, a toothless giant. The German military is professional, and German weaponry is of the highest quality. However, Germany lacks, in your own words, "a fully autonomous military industrial complex", and is unlikely to gain one by means of a "crash-course" military build-up. Absent "near-peer" military power, Germany's leverage in international affairs is dependent on two things: its exports and its role as a power broker in international institutions. Your coverage of the exports in your piece is adequate; your portrayal of Germany's attitude towards international institutions is remarkable less so.

Germany does not see these institutions as "restraints" on the excerpt of its power, but as tools that amplify it. Indeed, most of Germany's "soft power" comes from its prominent place in these institutions. Your realist bent may make you hesitant to recognize this. Yet even if we accept realist claims in their entirety, this does not mean the Germans will. If international institutions such as NATO and EU are to fall apart, it will be with Germany's bitter protestations.

So what is a Germany of the future to look like? It will lose all of its soft power and influence with the collapse of globalization and institutions like the EU. The withdrawal of American security guaranties will force the German state to pay for its own military, something increasingly untenable in a world of economic decline. And while the Germans may try to protect themselves by building a nuclear deterrent, the ballistic missile interception systems whose invention you project will soon make their deterrent obsolete. Making matters worse, Germany's demographic decline makes the manning of a large army an impossibility.

Germany also has a host of issues that make a resurgence of the Reich unlikely. Every single problem Great Britain has is shared by Germany -- Germany has its own separatists, its economic system is built upon the failing <i>pax Americana</i>, and it faces severe energy shortages. Germany then gets to add two unique problems : its demographic implosion and the afore mentioned difficulty in kick-starting the German military machine.

On top of all this is the spectre of the rising Russian empire. Unlike the British, the Germans have a way out of their energy dilemma ... that way is named 'Gazprom'. The Russians will be all to eager to become the guardians of Germany. And heck, Germany will be overwhelmed by domestic problems during this period. The Russians won't face much resistance.

Today Germany plays the role of middle man between Russia and the United States. If your core predictions do come to pass, this Germany will be forced to play the middle man for not just the U.S., but the rest of Europe. What we see will not be the return of the Reich, but the Finlandization of Berlin.

I sure will, Greer.

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Update
I've cross-posted my blog post @ PeakOil.com - Geopolitics of Europe in the Post-Peak Oil World, where there is an active discussion on it (and generating publicity for the Sublime Oblivion community). Hopefully we can gradually draw more people into commenting and participating on this forum.

I have a lot to say about this report... but not enough time to do so right now. Send me an e-mail remainder in a few days if I have not gotten around to it yet.

Thanks for the comments, Gregor - they are always appreciated.

2. Re-welfare states. I've recently done a paper specifically on the welfare state for my political science class, and one thing I've learned is that it can be a) quite precisely defined, and b) there are several "types" of welfare state. I'll quote the relevant bits from it.

First, welfare states are explicitly market-based (ranging the gamut from America’s relative laissez-faire to Belarus’ “market socialism”) – according to Marshall, it “did not reject the capitalist market economy, but held that there were some elements in a civilized life which ranked above it and must be achieved by curbing or suppressing the market” . Second, it does not (necessarily) aim for radical economic or social transformations; its goals are more modest – “the characteristically welfare statist approach is to opt for readjusting final distributions [primarily to relieve those in the most distress through direct provision of basic needs like food, shelter, etc], rather than altering the pattern of property rights in productive resources that gave rise to undesirable distributions in the first place” . Third, welfare is enshrined in law and viewed as a universal civil right for those deserving of it, in contrast to private charities and the “public charity” embodied in the English Poor Laws (their aid being viewed as gifts and humiliating to have to accept).
...
First, there is the “liberal welfare state” (the US, Australia), which regard markets as the primary guarantors of welfare with government only stepping in to restrict un-competitive practices, streamline market distortions and assume only minimal relief obligations from private charitable and religious groups. This setup, based on the “freedom to choose” (or “freedom to lose” according to left-wing critics)... Second, there is the “corporatist welfare state” prevalent in continental Europe (France, Germany), a socially conservative philosophy in which the provision of welfare is tied to the imperative of maintaining social stability. According to Mahmud, Goodin and Parpo , “corporatists see freedom in more Hegelian terms, in which people are freed to realize their true nature as fundamentally social beings living in organic groups (first and foremost, the family)”. Third, and the most radical one, is the “social democratic welfare state” (Sweden), which completely eschews the negative liberties of non-intervention embodied in classical liberalism, and instead aggressively pushes (self-defined) social progress and egalitarianism through state institutions and regulations – they define economic freedom not as “to choose” (liberals) or “to lose” (leftists), but as “freedom from [want]” rather than “freedom to [do almost whatever you want]”.

My thoughts on this are that formally speaking, in terms of definitions, Britain has over the decades (starting from Attlee) gone from being a "liberal" welfare state, to a "social democratic" welfare state. Because obviously a state that spends 50%+ of the GDP cannot be considered considered "liberal", nor can Britain be considered "corporatist" in the continental European tradition, as I'm sure you'll agree. So unless it's some kind of strange new creature like a "neoliberal welfare state" <img src="http://www.sublimeoblivion.com/forum/my-plugins/bb-smilies/default/icon_wink.gif" title=":wink:" class="bb_smilies" /> , the only option remaining is the "social democratic" welfare state - the philosophy has gone from people being "free to" [choose], to being "free from" [fear, want, etc], all thanks to the state - and with all its connotations of psychological dependence on said state.

And to be fair to Britain, its state is indeed a "last resort for those unable/ incapable of finding work, but place a strong emphasis on the state as provider of work, education and training". If you want to pick up a cheque from the job centers in Britain, you have to furnish proof you are actively looking for a job; after about 6 months, you are *assigned* work training or "make-work". (I knew some people on the dole, not making this up). Sounds pretty social democratic to me.

What *can* be argued is that Britain is doing a piss poor job of running a SD welfare state compared with the Scandinavian nations. IMO, the root cause of this is 1) the poor primary & secondary education system and 2) the continuation of a rigid class system, which produces an unnatural clash with the post-WW2 SD elements. It is a damning indictment that despite the huge government spending, indicators like social mobility and child poverty rates in Britain are some of the lowest in developed Europe.

Re-manufacturing. The problem is that only a few very disciplined nations have the right psychology and institutions to make their manufacturing internationally competitive. Japan is one. Germany and Sweden are others. The Asian dragons. Britain obviously doesn't fit into that group. So it'll have to turn protectionist to be competitive, but problem is a) it goes against today's reigning ideology - though probably not for much longer, and b) there will be retaliatory measures. That said, I fully expect all this to happen within the next decade.

Re-demography. Unemployable and uneducated are relative concepts. Slash welfare and remove the minimum wage - as I argue in this article, quite possibly things Britain will be *forced* to do soon - and the invisible hand will find them jobs.

3. Medieval patterns resurrecting themselves. Scotland wants a powerful guarantor against English revanchism. France finds an outpost north of its traditional English rivals useful for containing them.

4. Increased religiosity does not necessarily correlate with increased fertility, at least in non-immigrant communities. Poland is far more religious than Sweden, but the latter has much healthier demography. Poland is both more comfortable / prosperous *and* much more religious than Russia, but Russia's TFR has already risen about 1.5 since 2006, whereas Poland's remains on a plateau below 1.3. Plenty more examples. As such I wouldn't put much stock in religious trends to forecast fertility, at least not in Europe.

The only place where Russia in influential in the Balkans is Serbia and Montenegro, which are Orthodox and Slavic, and some pipelines, and a friend in Greece. Turkey has the allegiance of Bosnia, Kosovo and Albania; more friends in the West; and much wider economic penetration. I'd say Turkey has the upper hand now due to closer proximity, though should Russia reabsorb Ukraine the competition may equalize - and become more intense.

5. I don't think so.

First, I am only forecasting to 2030-2040 or so at most, because there is very little point going beyond those points. In particular, by then the effects of climate change and high-EROEI energy depletion will probably be occupying a very central position.

Second, this is an important point because the folks who will be entering the labor force in 2025 have already been born; we can be reasonable sure that by that date, no matter what happens in the interval, there will be more 20-year old French to support the welfare state, old people, fight in the army, etc, than there will be 20-year old Germans. This will be the case even if next year Germany's and France's fertility indicators switch places, which is not, of course, going to happen. <img src="http://www.sublimeoblivion.com/forum/my-plugins/bb-smilies/default/icon_wink.gif" title=":wink:" class="bb_smilies" />

Good work Anatoly

A Few points

1) Very true about balance of power. Throughout history that has been the emphasis in Western Europe (despite what both extreme Catholics and Protestants in England thought, the French and Spaniards were always primarily worried that if they attacked England, they would leave themselves vulnerable to their Catholic ‘brothers’).

Interestingly enough, Germany seems to be the exception to the rule. Maybe that’s why they get owned all the time?

2) I disagree with your term ‘social democratic welfare state’ to refer to Britain, for the same reason I slightly quibble with calling Berezovsky an ‘oligarch’ rather than ‘former oligarch’: just as there cannot be an oligarch without an oligarchy, so I don’t think that there can be a ‘social democratic welfare state’ without social democracy. We Social Democrats do believe in welfare as a last resort for those unable/ incapable of finding work, but place a strong emphasis on the state as provider of work, education and training.

However, the strange paradox of modern conservatism is that subsidised unemployment is seen as preferable to subsidised employment. Only by kick-starting manufacturing and industry (albeit on more refined lines) could Britain reduce welfare dependency. As I see it, if the Japanese can be wealthy with a large manufacturing sector, why can’t Britain?

Incidentally, this is tied to why I quibble that Britain is demographically ‘strong’ in a logistical sense. The underclass have a vastly disproportionate number of children, many of whom will be unemployable and uneducated.

3) If Scotland does get its independence, I think England could further fracture between North and South. A Conservative MP recently stated that the post-industrial cities of the North should be pulled down and the people resettled in the South East. He wasn’t joking. I like the Auld Alliance idea, though we'll see if it is popular.

4) I’m afraid, sadly for us Byzantines, things look especially grim in the Balkans, with some Greeks thinking that Greek Albanians will soon be biting chunks out of the country. Any thoughts? Will the areas ‘too weak to matter’ become Magna Albania?

5) I think the demographic indicators may hide some interesting facts in these countries. Young Romanians in Britain seem very devout and often have large families. According to a friend who lives there, Greece is becoming more devout as well. Statistics may show decline in belief and births as the elderly die and the ‘lost generation’ swells proportionally, but this could mask a growing trend in young people. Do you think a resurgent Orthodoxy may give Russia a foothold in the South East, as Turkey gets more Islamist? (okay, maybe that’s a bit out of the bounds of your definition of Europe as influenced by Western Christianity)

6) Lastly, I think you are falling into Steyn-ism <img src="http://www.sublimeoblivion.com/forum/my-plugins/bb-smilies/default/icon_smile.gif" title=":-)" class="bb_smilies" /> , by projecting current demographics into the future. In the case of France, the healthy demographics are a very modern trend which shows that a couple of decades can see a recovery/ slump.

The article SSR #10: Europe, The Black Continent forms a basis of discussion for the Europa forum. Just to get things going. Please visit the above link for the full article.

This is the first of fifteen Sublime Strategic Reports (SSRs) covering global trends, regions, and geopolitics, a list of which you can see on the sidebar to the right on the main forum page. I 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).

[Warning: it's quite pessimistic, unconventional, and even "doomerish", and probably too obsessed with the realist interpretation of international relations. <img src="http://www.sublimeoblivion.com/forum/my-plugins/bb-smilies/default/icon_wink.gif" title=":wink:" class="bb_smilies" /> ]

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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?

[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.