Euro 2008: A Glimpse at the Future of Europe

It's often said that "art imitates life." Sometimes, so, too, does sport. In watching the 2008 European football championships, Macro Man has been struck how each of the four semifinalists in some way represent the future of Europe in a way that, for example, the host nations (Austria and Switzerland) never could. Consider the impact of the following four countries:

1) Germany. It's fitting that Germany's made the semifinals, as they have been, are, and will continue to be the most important country in the European Union. For the past several years, ECB monetary policy has been made for the primary benefit of the German economy; it's almost been like having the Bundesbank back again. Waiting for an ECB rate cut? When the German economy shows definitive signs of rolling over, you'll finally get one.

2) Russia. If Germany is the most important nation in the European Union, Russia may well be the most important country in the European continent. In a resource-hungry world, Russia's been blessed with an abundance of fuels and minerals that give it significant economic leverage. And Czar Vladimir I of the Chekist Empire is, by all accounts, not afraid to use this leverage. Much like their erstwhile Communist colleagues in China, the Russians have burst upon the global economy in the past half-decade in a less than subtle fashion. And while they've been happy to participate in organized multilateral events such as these Championships, in the economic sphere they've been mostly unilateral. How they choose to deploy their energy resources and manage their currency piss-taking could be vital to the European economy (and, potentially, security) in the coming years.

3. Turkey. Turkey represents a choice facing the European Union. Do they embrace multiculturalism and engage the world's most Western-facing large Muslim country? Or do they drive yet another barrier between the Islamic world and the West by denying the Turks membership to the EU? Certainly the latter option is favoured by certain xenophobic segments of the European population and the politicians who cater to them. Fortunately, by the time that Turkey has negotiated all the acquis chapters for EU membership, the time of the xenophobes may have passed. And while Turkey's importance may currently be more geopolitical than economic, in the fullness of time its large, youngish population may be just the thing to energize the European economy and support its ageing workforce.

4. Spain. Spain represents all those Eurozone economies harmed by the ECB's "one size fits all, as long as it's Germany" monetary policy regime. For years, ECB policy was too easy for the likes of Spain and Ireland, leading to substantial property bubbles. Now that those bubbles have popped, policy in those countries is arguably too tight (though perhaps not, given the rate of inflation.) What does seem clear is that as it approaches age 10, the single currency experiment is facing what may be one its largest challenge: a real disconnect amongst the constituent economies that cannot be solved with a single monetary policy. While the Spanish weren't allowed to vote on the Lisbon Treaty, Ireland (facing similar problems to Spain) rejected it, perhaps in part because of the suboptimal monetary policy that they've received. How Europe deals with dissonance between core and periphery will be vital in determining the future of the single currency.

Still, things could be worse. There was one team in the competition which represented the cynical pragmatism and, ahem, willingness to push the boundaries of both sportsmanship and the rules that has made the EU bureaucracy such a morass of corruption and waste. Macro Man refers, of course, to Italy, with their defensive catenaccio "eleven men behind the ball" tactics and their eagerness to dive at every opportunity. For those watching last night's quarterfinal against Spain, there was poetic justice in the fact that Antonio di Natale ("let me roll back onto the pitch with my 'injury' so the ref will be sure to stop play") missed the decisive penalty in the shoot-out which brought Spain victory.

Hey, perhaps there's hope for Europe yet.

A note to Italian readers: when your teams play football, they can be a pleasure to watch. Sadly, diving appears to have become an epidemic in the Italian game in recent years. Sort it out!