The Diplomat is running a series of interviews with Washington D.C.-based ambassadors on defense, diplomacy and trade in the Asia-Pacific region. In the ninth interview in the series, Pacific Forum CSIS non-resident fellow Eddie Walsh talks with Danish Ambassador H.E. Peter Taksøe-Jensen, whose country currently holds the presidency of the Council of the European Union. Their conversation centers on the opportunities and challenges Europe faces as a result of the rise of Asia.
The last few years have seen enormous changes sweep the world. Of all trends, one of the most notable is the rise of Asia. From your perspective, should Europeans fear the increasing wealth and power of Asian countries?
From a Danish perspective, as we look at the enormous changes in the world, you can choose to be scared and nervous, or you can choose to see opportunities. There’s no doubt that we are seeing this as a great opportunity.
We have to remember that there is a bit of catching up still to do in the rest of the world. If you look at Asia twenty years ago, half the population was living in a situation of poverty. That has been decreased over the last couple of decades. The way that economic growth has been used as a tool in fighting poverty should be acknowledged.
We aren’t going to have a Europe that grows at the speed of Asian countries – we just need to get back to a situation where we lower our unemployment and have normal growth rates. We aren’t trying to achieve 8 percent to 9 percent growth, so there’s a lot of room for Asian countries to grow since they are starting from such very low levels compared to our welfare and prosperity.
In January, former Australian Foreign Minister Kevin Rudd delivered a powerful address to the Royal Institute of International Affairs entitled Asia Rising, Europe Declining, and the Future of the West. He warned that Europe would need to “embrace far-reaching financial and economic reform to provide the platform for renewed growth, rather than economic decline.” However, the world has now seen voters in France and Greece appear to reject their leaders’ vision for reform. How must the Council now respond? And, do you agree that Europe’s role as a “global player” is at stake if real economic growth doesn’t soon return to the continent?
The Western welfare system is under pressure in both Europe and the United States because we have financed it through loans, which of course isn’t sustainable. This is why Europe is working to find solutions to this problem – a challenge of high unemployment, low growth, and a lack of structural reforms. The rising powers of Asia are in the meantime.
If you look back six months and you see how the crisis looked, we were falling into the abyss. But, in the last six months, I would say that European leaders have shown resolve in fashioning solutions to these challenges. We’ve put in place the necessary measures and tools to handle a monetary union that wasn’t fully equipped to handle national financial markets with no control from Brussels. We have negotiated a fiscal compact that says that you can’t finance your welfare with loans, but that you must have a balanced budget and have a system in place to control national financial markets. In order to manage the long-term challenge, we also have put in place a firewall to ensure that the crisis in Greece is addressed and doesn’t spread to other parts of Europe.
We agree that there still needs to be reforms put in place in Europe. The same is the case for other parts of southern Europe and Ireland where what we are doing is buying time for the national governments to put in place the necessary reforms to regain competitiveness for their national economies. We want to make sure that when we come out on the other side, it’s as a stronger Europe than we were before the crisis.
Of course, when you are going through measures with such a direct impact on people’s lives, you need to do it at a speed where politicians in a democratic system get the voters behind them. We have to nurture the basis of the whole thing – our values. One of the key ones is that we are democracies. Unfortunately, when politicians aren’t leading up to their role of leading people and getting voters behind them, there will be problems along the way
But we also have to recognize how much we are asking of the people affected. In some countries, they already have lowered their wages by more than 10 percent, and they may need to do it even more in order to be competitive. They are moving in the right direction and we just need to be patient in order to make the reforms work.
I always say that Europe was a construction that started 50 to 60 years ago. In times of crisis, the answer has always been for more Europe not less. That’s the case again this time around. We are responding by saying that we want more solidarity.
These are hard times. We have high unemployment across Europe, although my own country is doing relatively well because we had healthier financial policies coming into the crisis. So, it will take some time. But these structural reforms will actually increase productivity in Europe and competitiveness of European countries. Once these have been fully implemented, I think that we will come out as a stronger Europe.
You spoke earlier about values. Another point that Rudd made at Chatham House was that the concept of the West lies not in its geography, but in its core values, for which Europe has “stood for centuries.” He argued that Europe “should not talk itself into an early grave politically, economically, strategically or in terms of the core values.” Do you see any risk that Europe’s core values are under threat as a result in the shifting balance of power and global economic crisis? And do you harbor fears that rising European nationalism and racism represent a real threat to Europe’s leadership in the world, particularly on human rights?
I fully agree with that statement. In difficult times, you always see nationalist movements. You see it here in the United States, in Europe, and in other places. You have these populist movements that try to gain support. But I maintain that Europe is built on these values and it would undermine our own basis to move away from those values. So, I don’t see Europe moving away from our core values.
Our challenge will be to regain our strength and continue to promote our core values like democracy and human rights. We believe deep down in our hearts that these are for all mankind to enjoy. When you are struggling with yourself, it becomes more difficult to promote these values. But, we will continue to do so, and sometimes will have discussions with our Asian colleagues who challenge these values.
The way Asia is developing is changing Asia as well. We think that the European system is a very good and unique example of how you can create a very large space for stability and security. We therefore think that we have a lot to offer Asia in terms of our experience in building multilateral systems where all of the different issues between states can be managed.
If you think of Europe 100 years ago compared to today, and think about what impact institutions like NATO and European enlargement have had on stability and prosperity in Europe, then you can see how these things can be exported as an inspiration to Asian cooperation frameworks like ASEAN and other frameworks. It’s my perception that the roots of Asian institutions aren’t as deep as in Europe. But we can help to promote these multilateral institutions in Asia and help to manage all of the issues that will pop up as different countries in Asia develop, like Burma.
A final point Rudd made was that the West should “engage China and other emerging economies within the existing and emerging framework of the global and regional rules based order, so that future Chinese leaders embrace the need for such an order to continue, although with political and economic power appropriately shared within it.” In Europe's view, what level of accommodation is appropriate? And do you believe that emerging economies like China will find the political and economic power that Europe will be willing to concede sufficient to sustain the status quo in the international system?
I very much agree with (Rudd’s remarks). I was working for the United Nations before coming here and one of the challenges for the U.N. is to continue to be relevant as a global organization. What’s needed is to adapt to the new reality and reform our international institutions so that they can be a framework to handle international and regional issues.
We are therefore pushing to reform these international institutions to accommodate the needs and new power of rising powers like Brazil, India, and China. If we don’t do it, global issues will be handled outside of the existing international frameworks, which isn’t in our interest. They will be handled in new frameworks where we won’t have the opportunity to promote our solutions.
Of course, the multilateral system of the 20th century, which was built on Western values, will have to be reviewed. When you have new, powerful players coming onto the world scene, there will be a challenge to those structures. You have to look to develop new structures to enable those new players as they become economic and political powers. We want to find ways to work with Asia to find common solutions to the great global challenges that we will face moving forward.
Look at the International Monetary Fund. We are working to rebalance the board. We have agreed there might be too many Europeans there and we – Europe – are willing to give away a bit of power and increase the power of emerging powers.
But, if you look at the U.N. or Rio+20, those powers who claim to still be developing countries must also realize that they have a different role now. They can’t just push the Group of 77 in front of them. We need to have a realization that with these new changes come responsibilities from those who deserve a better place at the table.
One area where Denmark and Europe has sought a leadership role is on climate change. However, earlier this year, the BASIC (Brazil, South Africa, India, and China) group of countries vehemently opposed the European Union’s decision to charge airlines for carbon emissions, saying such charges “violate international laws and jeopardize global efforts to fight climate change.” Although some compromise may be reached, it appears Europe will be unable to advance its climate change agenda on the international stage, especially in the face of strong opposition from emerging economies. From Europe’s perspective, what can be accomplished in the next five years with respect to climate change on the world stage? And can Europe still emerge as a leader on climate change if it lacks the political and economic leverage to induce emerging economies to follow its path?
We tried (unsuccessfully) for many, many years to find a solution within a multilateral framework. And so we put into place (our own) system. It’s not discriminatory. It doesn’t differentiate between European and third country airlines. It’s not extra-territorial. We think this is the right way forward, even though we see grave opposition toward it.
What is possible in the next five years? On climate change, we’ve already come a long way. Are we moving too fast ? Maybe so. But we don’t have a lot of time. The clock is running out. If we continue the way we do, the temperature will rise, according to the scientists, by six degrees Centigrade – four more than the goal established in Copenhagen.
Europe is moving forward. We are trying to set the example for the rest of the world that you can continue to have economic growth and be energy efficient. In the last 30 years in my country, we have grown about 76 percent and kept energy consumption totally flat by measures to become more energy efficient. We actually have even lowered our carbon dioxide emissions. So this can be done. Of course, we need to go into green financing so that it isn’t going to be hampering the development in the rest of the world. We also need to find the right way to transfer technologies to those countries.
A lot can be achieved leading by example. I continue to believe that a multilateral deal like what we attempted in Copenhagen is going to be difficult. The goal in Durban was to develop a legally binding instrument by 2050. I think the E.U. will be ready to sign on to that. But I’m not sure that the United States will be able to move forward on climate or energy legislation in the political quarters of this country. (In fact), there needs to be movement by both the United States and China. China also needs to accept that what they are doing nationally is something that you need to reflect internationally.
So I’m not ruling out the possibility that something can be accomplished. I’m just saying that it’s not a slam dunk, or something easy to accomplish by 2050.
As a member of the Arctic Council, Denmark will play a critical role in managing an open Arctic. There are concerns that non-Arctic countries, particularly China, could take a revisionist stance on the rules and norms advanced by Arctic countries. Do you think these concerns are at all warranted? Do you harbor any fears that the Arctic could become a region of instability as a result of the shifting global balance of power?
The Arctic is really opening up. Our approach in Denmark has been that we need governance in place before the whole thing explodes. If you have such governance in place, there will be no unstable developments.
So, the five Arctic coastal states – Russia, Norway, Denmark/Greenland, Canada, and the United States – took the initiative to have the Ilulissat meeting, (where) we said that we have the legal framework in place to handle the various legal issues which will come up. We agreed that the U.N. Convention on the Law of the Sea (UNCLOS) and on-the-line customary international law (represent) the legal framework that we are going to use to handle judicial issues. We also said that the Arctic Council is the institution that will manage the opportunities and challenges that (arise) when the Arctic opens up. In the 2011 Arctic Council foreign ministers’ meeting, we renewed this commitment to governance and put political emphasis on the Arctic Council.
To your point though, we have long been proponents of including all who have a stake in the Arctic. For example, where you have a new sea lane going through the Arctic, we know very well that you must have the necessary rules in place to avoid another Exxon Valdez. We need to have standards in place to ensure that ships going through aren’t unsafe to the environment.
We know that these ships aren’t going to be just Danish, Russian, and American but also Chinese, South Korean, and others. So, we want them to be inside the tent, not outside. We therefore have been pushing for the Arctic Council to allow for observers to participate and be part of the debate. This is China, Japan, South Korea, and the European Community.
We are still pushing for this because we believe this is the solution for the challenge. Sweden and Norway (support us). The U.S. also believes in allowing observers in the meeting. But there’s still some hesitancy before some Arctic states move forward with this.
Andrew Erickson and Gabe Collins have pointed out that “Danish diplomatic assistance is opening the gate for China to establish a strategic foothold in the Arctic.” In their view, “Danish diplomacy is literally following the money as some of the country’s policy elites turn away from the U.S.” Do you agree with their characterization of Danish bilateral relations with China and the U.S.?
We’ve had a very close cooperation with the U.S. on the Arctic. These quotations presuppose that the U.S. wants to keep China out of the Arctic. I don’t see that in any way in my conversations. We want to work with the U.S. to establish the necessary framework to manage the Arctic – our last new frontier – as best we can. Our leaders believe the best way to do that is through bilateral and multilateral cooperation and building governance. The fact that China is interested in the natural resources of Greenland or Canada or the northern part of Russia doesn’t really change that.
We have home rule in Greenland so Danish Greenlanders decide a lot of what goes on there. But I do know that they would welcome closer U.S. interest in developing some of the resources in Greenland, such as oil and gas, rare earth metals, and other minerals. Our wish in Denmark is that (Arctic development in Greenland) is done in a way that promotes the Greenlandic population so that they benefit and prosper from the new opportunities that open up from the exploitation of natural resources.
Its been reported that Denmark intends to boost its exports to emerging economies by 50 percent over the next five years. What new policies will Denmark put in place to accomplish this goal? Which BRICS (Brazil, Russia, India, China, and South Africa) countries will be of particular emphasis?
There is a new discussion underway in Denmark. In the past, we saw a need to invest in the workforce. But we realize workforce innovation isn’t enough. We also need production – it provides the basis for innovation. We are therefore now moving aggressively to keep hi-tech production in Denmark.
In terms of emerging markets exports, there are four sectors where we particularly aim to grow: 1) Cleantech; 2) Pharmaceutical and Biotech; 3) Healthcare; 4) Food Technology. We are focusing on exports to all of these. But we are also focused on second tier countries as well.
The next economic boost in the world will be in Asia, and maybe a little later in Africa. If you establish yourself in these countries now, you’ll have competitive companies there when it takes off instead of trying to access these markets when other competitors already have the lion’s share.
Although we didn’t talk about it here, we think that what has happened in Asia could and should happen in Africa. The focus is so much on Asia. If African can get some of the same development, it could have a major impact not only on fighting poverty there, but also ending some of the armed conflicts on the world’s most war torn continent. Hopefully, it will come soon. We must remember that Asia came much faster than we envisioned.
Eddie Walsh is a freelance journalist who covers Africa and the Asia-Pacific. He also serves as a non-resident fellow at Pacific Forum CSIS and a full member of the International Network of Emerging Nuclear Specialists. Follow him on Twitter: @aseanreporting