This is all part of a bigger international story. In a new study of the future, Global Turning Points by academics Mauro Guillen and Emilio Ontiveros (Cambridge University Press 2012), the authors state that the world is now witnessing a fundamental transition of economic energy and power to emerging countries, and that in the future one single country will never again be dominant but that economic power will be stretched across multiple centers—almost all of them in Asia, Latin America, and, in the longer-term future, in Africa. "Emerging economies," they state, "are providing the financing for the large current account and government deficits in high-income countries." Emerging economies account for two thirds of the world's foreign exchange reserves, accumulating an extra $2 billion of these reserves every day—half of which are accrued by China alone.

The imbalance between developed, highly indebted countries and developing, high savings countries is very stark. It is hard to see how the larger economies within the EU will find enough sources of growth to move away from austerity economics and get out of their debt problems and current account deficits. The brutal political reality is that public services will continue to be cut and taxes will rise in order for governments to fund their debt levels. Even in the UK, which has made the fiercest attempts to cut back on the public deficit, it has only fallen by a quarter, with the real possibility of a triple-dip recession.

Gloomy prospects

Economists asked by the Financial Times to make predictions about the coming year's prospects offered answers that were almost uniformly gloomy. A year before, they had argued in some cases for significant growth driven by the United States, China, India and other important economies. But in 2013, the best that most were willing to say was that there would continue to be stagnation in the EU, though again crisis would be avoided and the euro zone would survive.

For the most severely affected economies such as Greece and Ireland, the worst is likely over. Ireland managed to implement its obligations after being bailed out and has returned to modest growth over the last two years, despite a fearsome collapse in its property market, construction sector and employment levels. For Greece, resentment at the conditions imposed for its loans continues, with the real possibility of further unrest in 2013 repeating that of last year. For Italy, the election of a new government in the spring may well see the return of former Prime Minister Silvio Berlusconi, at the age of 76, for mostly negative reasons—the rise in unemployment and the fall of living standards in order to implement austerity policies have created negative public sentiment, despite avoiding economic collapse and the need to go to the EU for a Greek-style bailout.

2013 could be a year of continuing flat growth for the EU, but it is also a year in which decisions will have to be made. The EU budget, postponed from last year, will need to be addressed again, with some kind of agreement as to how the whole multilateral entity will be funded. Politicians in countries like the UK will need to decide what to do about the increasing numbers of people who want to either have a referendum on the EU membership or simply withdraw. EU politicians will have to explain, as never before, the benefits of their organization.

When the leaders of the EU went to collect their Nobel Prize for Peace last December, it was a rare moment of celebration. The prize had been awarded for the ways in which the EU has evolved and grown over the last six decades in managing to create a peaceful environment for countries that had experienced two of the bloodiest wars in history in the first decades of the 20th century. In that sense, while the award was controversial, it was probably fair.

EU leaders and member states that support the union need to defend the ideals on which the organization was originally built at a time when there is increasing doubt and skepticism. It would be a tragedy to see the union falter or even break up at a time when the process of globalization and integration elsewhere is accelerating and deepening. For that reason, whatever else 2013 might be, people throughout the world have to hope that it is a year of decisiveness and resolve in Europe to finally solve its economic issues and start on the path to growth again. This matters to all of us.

The author is an op-ed contributor to Beijing Review and executive director of the China Studies Center at the University of Sydney

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