FLASHBACK: In 2005, U.S. intelligence warned of Euro econ crisis and EU's demise unless welfare states downsized

By: Mark Hemingway
Commentary Staff Writer
05/14/10 12:52 PM EDT

In 2005, the National Intelligence Council prepared a prescient report warning that overextended welfare states could lead to economic crisis and possibly the collapse of the European Union sometime in the next 15 years:

The experts felt that the current welfare state is unsustainable and the lack of any economic revitalization could lead to the splintering or, at worst, disintegration of the European Union, undermining its ambitions to play a heavyweight international role.

The National Intelligence Council was created to develop long-term strategic thinking for the U.S. intelligence community. The report cited above is entitled "Mapping the Global Future: Report of the National Intelligence Council's 2020 project." [PDF link] The 2020 project was an attempt to predict geostrategic conditions fifteen years into the future. Also in the report:

Experts are dubious that the present political leadership [in the EU] is prepared to make even this partial break, believing a looming budgetary crisis in the next five years would be the more likely trigger for reform.

It's five years later now, and a major economic crisis is has already engulfed Greece, is spreading to Spain and could potentially drag down the whole EU. Mervyn King, the head of England's central bank, now says that the EU must undergo dramatic changes in order to survive in its present form.

"[King] also believes that European Union must become a federalised fiscal union (in other words with central power to tax and spend) if it is to survive," reports the Telegraph. Getting Europe to adopt the same currency required considerable strong-arming, so it's really hard to imagine centralizing power to tax and spend. Regardless, the EU may not look much like it does now once it gets out of the current crisis.

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