Europe and the US

1. Get the expectations right

As the US transitions from the Bush to a new administration, we are likely to experience yet another transatlantic crisis – this time one of rising expectations unfulfilled. There seems to be great hope in Europe that a Democratic government (which almost everybody expects to replace the current Republican one) would turn the US into a more pliable, chastened and multilateral global actor solving common international problems on terms much more comfortable to Europeans. The US, on the other hand, will at least try to hold back from new engagements wherever possible, and expect a more helpful and self-assertive Europe that will take more responsibility and run risks to solve these problems. As a matter of fact, with economic and domestic problems being what most Americans seem to concern in this election, it is likely that especially an Obama administration, will hold back and ask Europeans for far more global commitment (Iraq and Afghanistan will be the most prominent examples to serve these expectations).

This should not lead us to think that the US will restrain from its global commitment and somehow turn isolationist. The main characteristic principles driving US foreign policy will prevail under any government. Both candidates agree on most foreign policy issues and the major problems of the day. Obama and McCain believe that homeland security is paramount; that WMD and terrorism are the greatest threats to the US; that more needs to be done in Afghanistan; that unilateralism and pre-emptive strikes are acceptable and may be necessary; that military force plays a great role in the fight against terrorisms and that therefore the US needs even more spending on defence; that it must reduce its dependence on foreign oil; and that its European allies, by and large, do not enough for global security. Their specific proposals vary slightly in emphasis, but are not dissimilar. Nor are they substantially different from Bush's policies. The subjects that most obviously divide the candidates are Iraq, trade, and - to a certain extent - regimes like Iran, Syria or North Korea. Though Obama and McCain appear poles apart on Iraq – one seeming to promise rapid withdrawal come what may, the other committed to stay for as long as necessary – the true difference is narrower, and getting more so. The same is also true for trade. Obama appears to have sold out to protectionist sentiment in the Democratic Party, whereas McCain is a staunch and consistent free-trader. However, for general election purposes, Obama will need to cool the anti-trade rhetoric a little. McCain is unlikely to bend on the matter but must know that in 2008 unwavering support for liberal trade is no election winner. Last not least, there is the case of Iran (and other unfriendly regimes). Obama says he would take any opportunity to engage Iran in direct talks that is without any preconditions; McCain on the other hand refuses to sit down with enemies. But does anybody believe Obama would meet anybody, friend or foe, without extensive talks among lower-level officials first. Conversely, McCain's refusal would be nothing more practice than a reluctance to do so publicly. Every government that takes this line pursues back-channel negotiations (the same, by the way, applies to Russia).

Taken all these issues together, trade and climate change, maybe Iran and missile defence, might make a difference in the context of transatlantic relations: A Democratic President would certainly be more open to any changes in the US climate change position in the European direction; in this case however, states and businesses have taken the initiative, not the federal government. Here, Congress is likely to prevent any significant future commitments. In the trade issue, a Republican government it seems would rather serve European and global interests. Irrespective of the outcome of the election, the US will be less active in negotiating and enacting trade deals. McCain would be badly hampered if Congress does not renew his authority to negotiate international trade agreements.

However one clear message for future transatlantic relations is that, regardless who will become the new president there will be not really a new US policy. Having said this, it is also important to understand that on the European side, not much will change either. The newly drafted Treaty of Lisbon will not make the EU a stronger global partner for the US. CFSP/ESDP will remain under control of the MS and the newly established top posts of EU president and EU High Representative for Foreign and Security Policy with their mostly coordinating functions might be able to slightly streamline decision-making. Thus, efforts at broad NATO and EU cooperation in creating effective military forces and power projection capabilities and the necessary political instruments so far have rather token value. Despite steady improvement in the sharing of intelligence on terrorism and in cooperation on anti-terrorism efforts and at military exercise, planning and technical level systematic and coherent force transformation planning will be constrained by cost, a lack of consistent national efforts, and the inability to achieve true standardization and interoperability. The UK will remain Europe's only power capable of serious power projection. Germany will continue its decline through sheer under-funding and lack of coherent direction. France is also spending more and will make some force improvements, but its modernization efforts have no clear mission (despite its latest initiatives in the Mediterranean), or mission capabilities, and it is slowly losing the expertise it built up previously in Africa. In this context a major focus will be on the possible and expected contribution by the New Member States in the EU to the development of NATO and ESDP.1

In other words, the EU for the foreseeable future will not turn into one of the three "empires" competing for relative dominance in the world as is assumed in a widely received recent analysis (Parag Khanna, The Second World, Empires and Influence in the New Global Order, New York 2008). It is also rather doubtful that Charles Kupchan' s analysis, who sees Europe's rising power and expanding global ambitions as the main reason for the current transatlantic crisis (which in turn is part of a long-term erosion and breakdown of the Western alliance), is getting it right. Nevertheless, the new US government will and should uphold pressure for more European global engagement by taking the EU president and the "foreign minister" seriously and testing their real capacities.

Anyway, what should be clear is that: yes, there is a long list of pressing current issues dominating the transatlantic agenda. However, we must also look beyond these issues to identify the underlying trends shaping politics across the Atlantic in these days. Though the "political storms that swirled so violently across the Atlantic over the Iraq crisis" (John Ikenberry) have since calmed, and new leaders will have taken office on both sides by 2009, questions remain about the longer-term significance and impact of this upheaval on transatlantic relations. The real questions in the contemporary debate are how serious the US-EU discord is and what are its sources?

Looking more deeply into the structure and foundation of the Western order and into how the recent conflict exposes the operating logic and trajectory of that order, there is only one realistic scenario for the future relationship and that is one that lies between the very optimistic vision that the transatlantic relationship will survive anyway because the West shares a history of freedom,2 and the pessimistic outlook telling the transatlantic world to drift apart. This scenario is closely interlinked with the "coalitions of the willing" concept and holds that future transatlantic relations will remain intact, but certainly also be less institutionalized (though the opposite would be necessary) and more ad hoc in character. Both sides start to accept that the relationship has definitely changed over the last one and a half decades and also realize their common vulnerability in today's world and renegotiate their political and strategic relationship (new bargain, strategic consensus, agree that we may disagree).


2. Structural shifts in transatlantic relations

As a matter of fact, there is a divergence of values across the Atlantic in these days. However, disputes on several issues are not only the result of the mismanagement of allied relations by the current US administration at a time when the Europeans were more committed to multilateral solutions. The structural shifts in the relationship as they have occurred and further developed ever since the end of the Cold War certainly contribute much more to the alleged transatlantic rift than Europe's alienation by the Bush administration. The spectacular change in America's international posture, the emergence of unchallenged US supremacy (militarily, economically and even culturally), the celebrated "unipolar moment" has caused latent discontent, even frustration among European allies/friends who had/have to deal with this dominance, yet did/do neither cope with the ideas of the neo-conservative revolution nor the rigid market conservatism in the US. It also contributed to the gradual shift of the EU from an economic power to an influential and instrumental actor far beyond the continent on the other hand. Though it took Europeans quite a while until they started realizing that the power they exercised in their neighbourhood (enlargement) was largely derived from the fact of the EU's very existence rather than from an active foreign policy, the EU today at least has accepted that there are areas of concern in it's vicinity that require a much more active policy (especially where it is no longer possible to wait for the Americans) and where it has to develop at least some kind of a strategic vision, either complementing or qualifying US power.3

In other words, the weakening of the bond has been inevitable as the end of the Cold War reduced Europe's reliance on the US for security, and there can be no doubt about the lasting impact of the evolving of this new kind of power on the transatlantic relationship, a power that cannot be measured in terms of military budgets but rather in terms of its long term transformative power. The Balkan wars further obscured the transformation of the transatlantic security alliance. It made the US think that the Europeans would continue to look to the US to make decisions, and in the end would follow the US world leadership.


3. Transatlantic differences

Following from these structural shifts, there are at least three strategic threats in the "hard security" realm which the US and the EU agree are important (proliferation, terrorism and militant Islam, failing states and their potential for armed conflicts), from which however, not least because of different socio-political, religious and cultural foundations, they have drawn different conclusions in the aftermath of 9/11. As the relevant Security Strategies reveal, Americans and Europeans have not so much different opinions on what they perceive as common threats (geo-strategic conflicts) but rather on how to answer to these threats. This has a great deal to do with their different histories and respective geographical outreach; while, historically, security threats and trade interests compelled Americans to think globally, Europeans so far have thought in regional terms. As a consequence, both sides have not only developed different policy preferences, but also different political-military (defence capabilities) and economic means to shape and manage international politics: "unilaterally" vs. "multilaterally"; using force ("hard power") vs. using diplomacy ("soft power"); "pre-emptive strikes" vs. "preventive diplomacy"; "using international organizations" vs. "coalitions of the willing"; "exit"- vs. "process-orientedness" etc. Last not least and again related to the other issues, Americans and Europeans often espouse different positions on many global issues for political-cultural reasons, partly also because of an additional critical question faced by Europe and that is the institutional finality of the EU (cultural-systemic conflicts). Many transatlantic conflicts still arise from ongoing leadership frictions within the EU as well as from serious questions of identity for Europeans - reflected in different levels of shared sovereignties, multi-level structures, and political steps that have moved the EU forward and backward – on the one hand, and a lack of understanding of and patience for these EU functional mechanisms.

Americans and Europeans certainly must find common ways to deal with these threats (especially outside Europe) including targeted development assistance, focused human rights initiatives, and plans to revitalize institutional mechanisms for dealing with global issues. For Washington existing international security mechanisms, including the UN and NATO, are ill equipped to deal with most of these security threats. Europeans, on the other hand, because of the progressive erosion of the nation state, insist that resorting to military force is legitimate only if sanctioned by the UN Security Council.4 The question is how well U.S and the EU can cooperate on them within and outside these institutions. In this context an analysis of the UN Charter's lasting relevance in light of the Bush doctrine of pre-emption is as necessary as a discussion on the need for US-EU cooperation on many "Greater Middle East" issues that have nothing to do with power projection (as they have been mentioned but so far not systematically addressed in the "Broader Middle East Initiative" of 2004).


4. A new Transatlantic Agenda

What could/should a future transatlantic agenda against this background look like? No doubt, the new geopolitical realities such as the inexorable rise of China and India, Russia's irritability, the ascension of fundamentalism, Iran's nuclear ambitions or globalization are almost automatically calling for joint responses and a common global strategic outlook by the Euro-Atlantic community. Even if Europeans do not tend to emphasize these threats and challenges in the same way as the US it does not change the fact that there is a shared vulnerability, which will keep the transatlantic relationship together. Even if Europeans are not interested in radical militant Islam, they have to face the fact that militant Islam is interested in Europe. And though Bush's so-called military "surge" may have somehow improved the overall security situation in Iraq, the US can not reclaim control of events in Iraq, even less so in the Middle East. The problem remains as it has been since the invasion: military force can work only as an adjunct to a political strategy. In other words, external pressure as a constant variable in shaping any foreign policy automatically forces the Euro-Atlantic community to react very much in the same direction - and if there is a dissent from time to time and Europeans have difficulties to reach accommodation the "coalitions of the willing" concept could serve as a complementary full-back option.

The interesting point in this context is that while in the US changes in foreign policy are very much driven by what one could call the power variable and a risk-taking propensity - thus making it very pro-active in nature, the EU's foreign policy approach is rather reactive and driven by "fear" and a constant evaluation of its options in terms of gains and losses. In the American case that means that there is a huge potential (in terms of capabilities) and also prevailing optimism to shape global politics on the one hand (exit-oriented), but also, on the other hand, an inherent danger of an overstretch which at one point can all too easily translate into an abrupt policy change when the former approach had failed repeatedly or catastrophically. In the European case there has been a tendency to suggest, that Europe can continue to profit from the status as the "soft" or "civilian" counterpart to the "hard" United States, but also the lack of an intrinsic justification for European integration in general and consideration of its international responsibilities and the means to master them in particular.

Anyway, faced with protracted conflicts in Iraq and Afghanistan, a crisis with Iran, a emerging rivals in Asia and tremendous tasks at home (budget deficit, reform of the pension system), Washington is looking for "partners" while Europeans, by contrast, seem to have given up their traditionally reluctant in favour of a more (self-) assertive role in global politics in many ways, seeking for co-equal leadership. By sharing tasks and decision-making responsibilities within a common NATO-EU frame, the US will certainly have to relinquish some decision-making authority, while the EU/European Member States must improve their capabilities. The ever increasing problems of failing states, proliferation, energy security, radical militant Islam can only be handled in a multilateral effort; there is no way, not even for the US, to face these challenges as an individual nation-state. That is why the US and the EU security strategies, despite all differences, as well as the new "Broader Middle East" initiative also bear some positive signals indicating that positions are merging into a new and hopefully more productive cooperation for the future.

Ever since the end of the Cold war, Americans and Europeans have engaged in projects of nation- and state-building (in Eastern and Central Europe, in the Balkans, and more recently in Afghanistan and Iraq as even tougher cases). Most of the efforts were successful when the West was able to provide an institutional framework through NATO and the EU, in which other countries could be integrated then. What the Alliance needs is a common understanding of state-building. This has become all too obvious by the different national strategies pursued by Provincial Reconstruction Teams in Afghanistan, the many uncoordinated approaches to reconstruction in Iraq or elsewhere in the Middle East (especially with regard to foreign economic aid) and lately also in Ukraine and Georgia. Clear framework criteria of the various forms of Civic-Military cooperation, donor coordination, economic stimulation packages and the strengthening of good governance (Jan Techau, Going beyond breaking news, DGAP, Berlin) could probably best be developed within NATO, accompanied by the EU, the UN and others to firmly embed state-building capacities and strategies into transatlantic policy making.

More productive cooperation is also taking place with regard to the economic side of the relationship: Europeans are gradually changing traditional economic patterns not only in light of the impressive achievements of America's model in recent years in terms of growth, employment and productivity (we all know that we are in a different situation in the US right now), but also because they (and Americans as well) cannot escape from the reality of a severe economic competition from parts of the world whose technical competencies now match those of the West, but whose labour and capital costs are much lower. At least in the shorter term this will cause disruptions of ongoing enterprises in the Euro-Atlantic community. Finally there is also a security aspect to these developments. If industry settles away from the transatlantic community, research and development which are expected to stir innovation at home to keep our societies competitive, may also display changing patterns. By and large however, though transatlantic trade disputes are getting more complicated if it comes to issues concerning biotechnology, service sector protection laws and financial services, regulating markets and standards (e.g. commerce; environment), liabilities (Enron) and corporate governance (since all these questions touch upon transatlantic value differences, the two great economic powers have begun to fashion a common strategy based on a shared interest in (relatively) open trade and respect for each others' strengths and constraints. Even when one of the partners stumbles, the other will pick up the banner of global leadership and challenge the counterpart to return to its generally open-trade commitment. This game follows the same pattern of domestic policy logic on both sides: free trade is praised rhetorically but is in fact constrained from time to time. With the newly established "Transatlantic Economic Council", founded after the EU-US summit in 2007, the transatlantic economic relationship has gained a new quality by providing high-level political support and the appropriate institutional and financial means necessary to ensure regulators acceptance of transatlantic cooperation and their willingness to engage in sustainable dialogue in parallel to their domestic obligations. At the end of last year this platform has been used for negotiations on the mutual recognition of US Generally Accepted Accounting Principles and the International Financial Reporting Standards used in Europe, making for the first time a persuasive case for treating the transatlantic market for financial services as a single space. The merger of the New York Stock Exchange with Euronext, Europe's trans-national exchange group, showed how the market was ahead of governments anyway in responding to the challenges of globalization through integration.

Anyway, pragmatism is the way forward in this field as well. Europe and the US cannot aspire to harmonised financial regulation. Equivalence, using mutual recognition where appropriate, is the more realistic goal, given different histories and traditions. The wider impact of such cooperation could be great. As joint agenda setters, the EU and the US could together influence the still immature financial markets of the world's new great economic powers in Asia and help shape financial markets around the globe.

What matters much more is that first both sides confront serious macroeconomic challenges and a looming demographic crunch, which will place a strain on pension, unemployment, and health insurance schemes, and secondly they are directly confronted with the rising importance of new international powers like China and India, and a re-assertive Russia – with tremendous implications for their domestic economies (in terms of a new competition, standards, values and institutions, and natural resources).


5. Prevent the anti-Western backlash

There is no doubt that the recent developments in world politics are opening the way for a more multipolar era and pose a tremendous challenge to the so far US-dominated global institutions.5

The inclusion of China, India, Russia and other emerging countries into the global economy has an enormous impact on the US and the EU in terms of the surpluses they create in labour, capital, and productive capacity; economists refer to it as positive supply-side shocks.6 The most obvious impact is related to the world's labour market. With the entry of these countries into the world market the global labour force has almost doubled, raising the return on capital and dampening wages and inflation. Lower wages and capital costs in these countries in turn almost guarantee that there will be continuing disruptions of ongoing enterprises in the industrialized world. The mere threat of shifting production to China has helped mute wage gains and income levels in the EU and the US as well over the last decade. At the same time, many Euro-Atlantic companies have lowered their operating costs, boosting their earnings in the process, by outsourcing. In addition, China's influence in global financial and credit markets has increased dramatically. Because of China's and other Asian economies' high-savings propensities, producing more savings than the world can absorb, global inflation could be lowered, which, in turn, has resulted in unusually low and stable interest rates in both the US and the EU. Meanwhile, China has emerged as a key global exporter of capital to the US. With foreign exchange reserves in excess of $ 1 trillion, the US has become the largest debtor nation in the world.

At the same time confidence in the overall superiority of the Western model in general and the US record in democratization throughout the Greater Middle East in particular is no longer so pronounced. America's oil quest and tactics in the region has been seen by many as provocative since US troops were stationed on the holy Saudi Arabian soil in 1990. This comes along with higher oil prices and tight supplies, driven by the economic rise of the new emerging powers, reminding both of their dependence upon producer states with dubious regimes. The Iraq issue meanwhile has moved beyond the problem of different views of international law to the consequences of an anti-Western campaign in many parts of the world undermining the West's hard and soft power as well. The US-led ideological struggle with Islamist militants is actually an inner-Islamic power struggle, however is influenced by the behaviour of the Western world. It has been putting Western policy under enormous pressure requiring domestic adjustments in order to provide security, retain economic competitiveness, cope with rising energy prices and handle the problem of disaffected Muslim communities. And it has raised the question on both sides of the Atlantic of how all this also affects and is related to the Western notion of values and democratic processes, of protecting liberties in the face of terrorist threats at home and abroad and of accommodating within the same social and political space different cultures and belief systems.

If the US and the EU want to withhold this pressure and somehow cope with the new international landscape, then, for two reasons, there is no better alternative for both than working together: First, rising (China, India) and returning (Russia) powers in the foreseeable future will not share the transatlantic value and belief system; rather they will be caught by the (in Western eyes) contradiction between a political system geared to state socialism and economic policy based on an aggressive capitalism. Nor will the extreme theocracies in the Moslem world follow a Western approach in looking after their people and establishing a constitutional democracy. In other words, liberal democracy is not appealing to the people in these countries, rather the strategic vision to take off economically and modernise their political and social systems. This notion has been strengthened over the years by Western cooperation with authoritarian regimes, sending the wrong (?) signal that diplomatic business can be conducted without regard for ideological differences. Anyway, the danger is that for all this these countries might try even harder to play Americans and Europeans off against each other in the future if they do not manage to project confidence in the values upon which their societies are based. Second, working together is vice versa the only chance to exert a certain pressure on these countries to comply with the rules of an effective multilateralism within the international institutions. It is true: many of the world's problems and crises cannot be solved without China and Russia - think of North Korea, Iran, the developments in the Greater Middle East (where Russia is again playing more pro-active role), energy security etc. But both, and the other emerging countries as well, also want to participate or become involved in the deliberations of various organizations, like the G-8, the OECD, the WTO, or the International Energy Agency - not least because they serve as the only platforms that somehow can legitimize their counter-visionary realpolitik. The US and the EU, for that reason, should use these bodies as some sort of political leverage towards these countries. This won't be easy for two reasons: For the US it means that it has to give up its unilateralism, which is viewed as having undercut many global governance structures in recent years, and instead rewrite the rules of the game to accommodate rising powers. For the EU this means giving up its overrepresentation in some multilateral institutions and its bilateralism with emerging countries. Such a combined effort would certainly help facilitate and coordinate global macroeconomic policies across the Euro-Atlantic Community and Asia.


6. Conclusion

To conclude, transatlantic relations have been in a transformation process since the end of the Cold War. Many policy conflicts today pertain to core interests of either side, cover a whole range of issues, and are no longer confined to security only. Though economic ties remain strong, and indeed have become even stronger over the crisis in recent years, they are no guarantee to keep the political relationship together. The West still shares a commitment to international law, even though notions such as sovereignty are understood differently. And though we still share values, our collective identity does not prevent confrontation.

Nevertheless there is no alternative to that relationship. The US' leadership is still needed in world affairs, but Washington "can't go it alone" (Joseph Nye). For Europe the same is true anyway. Under these circumstances, loosened ties and a deinstitutionalization of the Western Alliance would be disastrous for the world order and its tremendous challenges. Strong leadership in that sense will be imperative for the next President and his EU partners.