The threats to Europe come not from countries with cheap unskilled labour, These, after all, need to buy capital goods that they mostly do not produce. The real threat is from newly industrialized nations, such as South Korea, getting out of cheap labour products into sophisticated goods that undercut the exports of self-indulgent Europeans in third markets. In the years ahead, the really tough competitors in this field may be countries of the former Soviet empire if they can harness their combination of high technical skills and low wages once the transition from communism to the free market is complete.