Tag: EU financial crisis


The “Republic of India” in Europe

December 30th, 2015 — 9:20am

Amit’s note: After a four year absence, I am back writing. As a Professor of Leadership and Strategy at IMD, I will off and on produce articles for publication that IMD calls “Tomorrow’s Challenge.” Often, these articles are shortened for publication by the media outlets that publish them. I will, on a case-by-case basis, post either the original version or the published version. For example, a shorter version of the following post appeared in 10 media outlets (that I know of) from Finland to Hong Kong during October and November 2015. I will, of course also occasionally post opinions that don’t fit the criteria for Tomorrow’s Challenge. Let me know what you think.

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The EU is wrestling with seemingly insoluble human and financial crises. Pundits routinely draw (unfavorable) parallels to the US to illustrate needed changes. A mechanism to move resources to areas where needed. A central bank with powers to set monetary policy and regulate all major financial institutions. Greater political integration. They note that with a debt of $72 billion that it cannot pay because of a decimated economy, Puerto Rico faces a crisis similar to Greece’s. Yet, financial markets have not panicked, assuming America’s fiscal, monetary, political and judicial mechanisms will enable a soft landing for this US Territory.

This technocratic prescription, though valid, doesn’t address the EU’s real problem: The EU is similar not to today’s US, but to the US of 1776 – 1789. After winning independence, the US states functioned as “these United States” only in name. Each focused only on its own needs and foreswore responsibility for the immense war debt. After 13 years of chaos, the Second Continental Congress adopted the US constitution and installed George Washington as the first President. The EU is in its “thirteen years” now, in need of its own reform. However, despite the present crises, the situation still isn’t bad enough to force fundamental change.

Progress before the situation gets “bad enough” will require learning from India. This will be challenging; no European I know thinks an emerging economy where corruption is rife can teach the EU much. They are wrong. The EU’s challenge isn’t creating a “US of Europe,” but a “Republic of India” in Europe:

• The EU must unify very diverse peoples. In 1947, India integrated over 600 independent and semi-independent kingdoms and the erstwhile British India, and over a few years, consolidated them into language-based states. (There are 29 today.)
• The EU has 24 official languages, and so does India (including English). Westerners are dismissive when I claim to speak two Indian languages. But the people who speak these languages – as different as English and Polish –live as far apart as London and Warsaw. Half of India can’t even recognize the other half’s alphabets. So, educated people use English to communicate.
• Like Europeans, Indians swear by the cultures and food of their states. Only a tiny minority eats regularly what Westerners call “Indian cuisine.”
• Europe is less religiously diverse than India. India has more Christians than all but five EU countries, and more Muslims than all but two countries worldwide. The Hindus are also diverse; for example, the rituals of the two areas whose languages I speak differ considerably.
• As in the EU, people in India (still) harbor false beliefs that people in some states are industrious while those in others are not.

The EU’s efforts at managing diversity have been a near complete failure. Its politicians haven’t made a clear and consistent case why diverse peoples should come together. The absence of an emotion-laden “I am loyal to the EU because …” rationale for unity has produced today’s “What’s in it for me?” ruptures along national and linguistic lines, and the alienation of European Muslims.

EU politicians don’t understand a basic truth we teach in Leadership and Change Management courses: when people rally around a shared vision, driving change becomes easier. Why does the EU exist? Surely not to prevent a German initiated World War III? That rationale became irrelevant decades ago. Politicians – like Jean-Claude Juncker – who ardently champion the EU, offer technocratic rationales, not ones that ordinary people can feel in their guts.

In contrast, India’s efforts at forging a common identity – the concept of “India” had not existed in the prior 4,500 years – have been a substantial success. Indian politicians got a lot wrong, but this they got right. They adopted a national anthem that lauded, by name, every part of the country. They adopted a flag with colors associated with the three major religions. They made political decisions that made no logical or economic sense, but helped manage diversity. They drummed the message of “Unity in Diversity” into every child’s head.

And despite India’s periodic, ugly, politics-driven religious killings, they championed religious diversity. Four of India’s 12 presidents were Muslims, as were 4 of India’s 42 Chief Justices, many senior bureaucrats and ministers, and the senior-most leaders of its armed forces. Forbes lists Indian Muslim billionaires, and India worships the many Muslims in its movies, cricket team, and the arts. EU leaders should ponder why so many British Muslims have joined ISIS while few (if any) Indian Muslims have, even though Britain’s Muslim population is 1.6% of India’s.

I first made my case for “The Republic of India in Europe” in 1989 at a dinner with the executives of a Flemish-Belgian multinational. Europeans must learn, I said, that sometimes a major investment must be made in a particular region not because it makes sense, but because “it’s their turn.” An executive whom I respected retorted, “I don’t care, as long as it isn’t in any French area!” The others laughed.

In the early 1990s, as a professor at INSEAD, the “European Institute of Business Administration,” I observed French companies recruiting only French students, German companies only Germans, British companies only British and so on. On a visit in 2005, I heard former colleagues ruefully note that the situation hadn’t improved very much. Hopefully, for Europe’s sake, it is a lot better now.

I had hoped that the EU policy that required teaching children two non-native languages would help Europeans appreciate their diversity. On the plus side, a 2012 European Commission report noted that 73% of young students were learning English, while German and French were common as second languages. However, the time individual countries devote to languages varies sharply. The UK lacks a specific time commitment and unsurprisingly, while living recently in a well-off London neighborhood, I only heard children speak English. Spain devotes only 5% time at primary levels and 10% in secondary levels. Again unsurprisingly, during my recent visit to five Spanish cities, I met very few young people who admitted to speaking English. A waiter who spoke good English bemoaned the quality of his daughter’s English education.

People can drive change themselves, but they must want to – and it takes much longer. In India of the 1970s, my fellow students and I ridiculed the efforts of a language institute, modeled on the Académie Française, that coined long-winded Hindi equivalents of simple English: “railway signal” became “lahu-puth-gameni-awat-jawat-soochak-danda.” Though today’s BJP government is trying to reintroduce similar silly ideas, DJs and program hosts on Indian TV and radio tend to speak smooth amalgamations of the local language with English (e.g., “Hinglish” combines Hindi and English). So, even illiterate people learn – and use! – English words, facilitating interactions. Unity in diversity, writ small.

Virtually every European leader is running away from the richness of European culture. Instead of unifying people, they are perversely pushing them apart. Wolfgang Schäuble mused that Greece should temporarily leave the Euro zone. David Cameron promised a referendum on EU membership unless the EU acceded to British demands. Greece is flirting with Russia. Viktor Orban wants the EU refugee/migrant policy to ensure that Europe remains Christian. This depressing list is unending. Disunity in diversity, writ large.

(It’s worth noting that today’s EU refugees are a fraction of the roughly 10 million Muslim refugees that India hosted during the 1971 bloodbath that birthed Bangladesh. That India, unlike the EU, was dirt-poor.)

The EU will stop lurching from crisis to crisis only if its leaders ensure it stands for something that makes people proud. They must set an extraordinary, but human, vision for the EU no European country can fulfill on its own. They must learn to give something up first, in order to get something in return. They have to champion policies and ideas that might have limited value for their own countrymen – and indeed, may be to their detriment in the short run – but are essential for the EU’s longer term success.

David Cameron, Angela Merkel, and Francoise Holland have not shown they are up to the challenge. What are they willing to give up? What policies will they promote that aren’t in their own countries’ best interests? However, I know in my gut that some other Europeans are. After all, ordinary Europeans created Médecins Sans Frontières, and instead of staying in the comfort of their rich homelands, at great risk to themselves, they regularly take light and hope to the darkest corners of the world. Surely others can see the value in ensuring the EU embraces European diversity?

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