'The Entire Relationship With the EU and the US has Shifted' - Professor

© AP Photo / Virginia MayoGerman Chancellor Angela Merkel looks out of her car window as she arrives for an EU summit at the EU Council building in Brussels on Monday, March 7, 2016
German Chancellor Angela Merkel looks out of her car window as she arrives for an EU summit at the EU Council building in Brussels on Monday, March 7, 2016 - Sputnik International
German Chancellor Angela Merkel has called on the European Union to come together against nationalist forces. Speaking at the World Economic Forum in Davos earlier this week, Merkel said that her country stands behind multilateralism "not ending with the EU, but one that gives good answers to the challenges of tomorrow".

Sputnik talked about Angela Merkel's speech with Scheherazade Rehman, professor of international business and finance at George Washington University.

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Sputnik: Angela Merkel has a called for Europe to unite forces to stand up to China and the United States, citing these nations' dominance. In your view then, how justified is the threat describe by Angela Merkel and do you forsee such a stand off taking place in the near future?

Scheherazade Rehman: I think she's completely justified in this call, this is coming at an awkward moment, she's stepping down in two years, that means Europe's dominant political figure will be gone. When she talks about strengthening the European pull within NATO, it's absolutely right in the sense that the relationship with the United States and the rest of the world and the EU has changed. The problem with the EU and NATO has been that, number one, there are a lot of countries with different vantage points of history, to talk about a coherent defense policy, especially when it concerns Russia.

Europe has been internally distracted for many decades with the widening of its members after the fall of the Berlin Wall, the integration process of the eurozone and the decade-long financial crisis, the immigration onslaught, Brexit and now populism. They've been distracted and they have to now step up and shore up their own defense, because we are in a climate where I do believe that we're never going back to the old normal. One can't presume that whoever follows Donald Trump as a new president whether it's two years from now or six years from now, that we are going to go back to the pre-Trump era; I don't think that's ever going to happen again. The entire relationship between the EU and the US has shifted. We are in a new era, not only just with the EU but with the whole world.

U.S. Secretary of State Mike Pompeo is seen on a screen during his address via satellite at the World Economic Forum (WEF) annual meeting, on January 22, 2019 in Davos, eastern Switzerland. f State Mike Pompeo is seen on a screen during his address via satellite at the World Economic Forum (WEF) annual meeting, on January 22, 2019 in Davos, eastern Switzerland.  - Sputnik International
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Sputnik: Some very interesting points that you're making in terms of the current state of play geopolitically. What about your take on the IMF revising its economic forecast for this year? Does it indeed paint a gloomy picture for all of us?

Scheherazade Rehman: Well it definitely doesn't help the European Union. If you look over the last two decades, the European Union is at a crossroads. Economically, yes, they've grown but they're also weaker in the sense that there are a lot of countries that are still on the lifeline with the European Central Bank. Italy and Spain are two of those countries, and they're not small countries.

The immigration issue has not been battered down in any way, Brexit is still up in the air and is going to continue to be a mess probably for the remainder of the next couple of years, and we've got populism. So Europe is having a hard time managing itself because there are so many large problems and now to have the US essentially take one step backwards in terms of being very involved with the NATO process and the defense of Europe, they have got to have to find a way to get them selves riled up enough to come up with a more coherent defense policy. Because Donald Trump, at least for the next two years, prefers to have one-on-one discussions, which is one of the reasons why it hasn't gone unnoticed, that he has diminished the status of the EU diplomatically in Washington DC. He prefers the one-on-one style and it works for him.

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Sputnik: It's interesting that you're talking about the European Union, I was speaking to an ex-chief economist of the CBI a couple of weeks ago and he actually mentioned that the relevance of the European Union is going to change come what may over the next decade, please correct me if I'm wrong with these figures, he was saying the contribution to the global economies was about 50%; it will dropped by half of that to 25%. So in terms of the focus and the reality of what's happening in the European Union, there's going to be a change in architecture anyway, is there anything that you can add to that?

Scheherazade Rehman: So there are two things on that, he's absolutely right but that let's put that in context. The same is going to be true for the United States. Over 50% of the world's GDP is now created in emerging markets. This was 20% 20 years ago, and 20 years from now they'll command about 65-70% of the world's economy in terms of GDP growth and GDP itself. So the EU portion and the US portion are shrinking simply because China and other countries such as India are growing very fast. So that's just a reality that does not specifically mean that the EU is getting weaker.

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Look, the bottom line is this, especially with the UK out of the EU somewhat at this point, European countries' future solely relies on the EU. Without the EU, individually these countries are much more diminished today than they were before World War II and their future lies with the EU. So if they are going to survive as an economic powerhouse, and a political, and a defense powerhouse, they have to stay together under the umbrella of the European Union. So I would not say that the EU is going to be diminished, if anything, I think the EU per se is going to get stronger, because these countries do realize that without the EU they are a heck of a lot more vulnerable than if the EU did not exist.

Sputnik: Now do you think that Europe is becoming more vulnerable economically due to this malaise with Brexit and everything that's surrounding it in terms of trying to get some kind of negotiated settlement, whether it will obviously transact or ultimately be cancelled. I mean, the uncertainty that's surrounding it in fact is the core of Europe's economic uncertainty or a good proportion of it that's spreading to other parts of the world, is that an accurate statement?

Scheherazade Rehman: I would say for the better part yes. The Brexit drama was — A — unnecessary and — B — it's a complete fiasco and it's not helping the Great Britain or the European Union by any stretch of the imagination. However saying that, at some point, some negotiated settlement on a trade deal with happen and we will move forward from here.

Does the EU from the outside appear weaker without the UK? Yes, on all fronts, there's no question, but it's done now, for the better part, and the EU has to find the strength to get their house in order.

The views and opinions expressed by the speaker do not necessarily reflect those of Sputnik.

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