Europe's digital vulnerability adds to financial woes
Point 1: the European Union wields strategic "soft power" and is capable _ it hosts the largest consumer market worldwide _ of influencing globalisation through the promotion of norms and regulations.
Point 2: the EU, now composed of 28 European countries with the accession of Croatia on Monday, retains great confidence in its capacity to restore the credibility of its financial institutions, more than three years after the start of its sovereign debt crisis, inflamed by Greece's abysmal deficit, first revealed in May 2010.
These two points are the main themes behind the Asia-Europe Meeting process (Asem) and the EU campaign to promote its business interests in Asia through free trade or partnership agreements with Japan and several Asean countries.
In part, these assumptions are true. According to observers, the decisions approved on Friday by European leaders is evidence that things are finally changing on the continent. After lengthy negotiations _ largely hampered by each government's desire to safeguard its own banks, taxpayers and reputation _ the EU has finally decided to require financial institutions to contribute to community-coordinated national resolution funds, to place ultimate supervising authority for the single currency area in the hands of the European Central Bank (ECB), and to warn bank shareholders and creditors that they will not be systematically bailed out if a new crisis erupts.
The official message behind this action is that the EU intends to become a stronger financial policeman, and will not let its taxpayers become victims of a new round of financial follies.
Risk-prone investors, pensions funds, national funds _ among them wealthy Asian individuals or institutions _ shall bear the brunt if things turn sour again. And they shall contribute to a reliable bank-insurance system based on those national resolution funds expected for the end of 2014, to avoid being trapped in a future systemic shock.
Convinced? Well, not quite. Because once again with the EU, the devil is in the details and in the implementation of these complex financial regulations.
The pivotal European set of treaties may even have to be re-negotiated. But more than this, true European independence and capability will be needed if the EU intends to set its own rules in an increasingly complex and collaborative globalised financial game.
And there arises the big bug. Can Europe be taken seriously when ongoing revelations on the extensive US digital spying network aimed at European institutions and embassies prove that most of its secrets are immediately known to Washington?
The truth of the matter is that Europe's digital vulnerability _ from its inability to protect its Brussels premises from being bugged, to the fact that most of Europe's data (private and public, personal and financial) is stored in US-based or controlled "clouds" _ undermines its entire effort to enforce its future regulations, to control its financial sector, and to wield international influence.
Financial markets are the blood system of the global economy, and putting in place blood pressure control instruments is certainly useful. But without an equivalent control of the internet and data confidentiality, which acts as its nervous system, those European initiatives are bound to fail.
Already hampered since its inception by the competition between national governments defending competing interests, the EU now faces a gigantic obstacle _ find a way out of the US digital net, and confront Washington on this essential issue of surveillance whilst negotiating a future transatlantic trade agreement, crucial for both economies.
Let us take another example. A lot has been written in recent months about the EU-China trade war on solar panels, focusing on the need for the European Commission competition arm to tackle under-priced Asian competitors.
But here again, digital security is at the heart of the matter. Can the EU protects its licences, research, laboratories or industrial secrets from competitors? This is today's question.
This issue, moreover, is nothing new. Already in 2010, the European Parliament voted down the EU-US "Swift" agreement on bank data transfer, based on concerns over America's capacity to screen all European financial transactions, although a modified version of the deal was later approved.
But now, as Europe is trying to sort out its financial woes, the "digital" question is rearing its head again, as it impacts what matters most nowadays _ big money.
How can the EU truly protect its financial institutions from a systemic crisis if all of its decision-making processes are bugged, especially when it intends to force Wall Street-based investors to pay the price of their own excesses and follies?
How can the EU hope to deliver strong, independent community supervision of its financial sector when it is unable to protect, in Brussels, the Juste Lipse building where finance ministers are meeting monthly, often until late at night?
Like it or not, Europe's digital vulnerability is adding to its financial woes. This issue must be addressed urgently.
Richard Werly is Brussels correspondent for the Swiss daily Le Temps, and associate fellow at the EU Centre Singapore and Diplofoundation Geneva.