Behind the Euro

Is Western Europe Turning Anti-American?

By
Anti-Americanism
Behind the Euro : Is Western Europe Turning Anti-American? - Jeffrey Gedmin

Introduction

The year began with talk of dreams becoming reality. The finance ministers were "visibly moved," said press reports. The Italian was "proud" to be able to call himself "a European citizen." The Portuguese called it a page "that can never be turned back, while others beamed about the "new political start." There was a time when "empires were created through the sound of marching armies," but today, waxed French finance minister Dominique Strauss-Kahn, "tens and tens of millions give themselves a currency ... to unite their destinies." It was New Year's in Brussels and the Euro was being launched.

Meanwhile the American press prognosticated that European monetary union would simply be about economics: interest rates and global capital markets, trading volumes and transaction costs. "It's the most audacious gamble in the history of currency," said The New York Times. Everyone wonders whether the Euro can challenge the dollar as the world's leading reserve currency. Or how the Euro will make it easier - and cheaper - for tourists. But there's more to the story. And the implications for American foreign policy are far-reaching.

The economic rationale for the Euro, in fact, has always been weak. When 11 of the European Union's 15 members joined monetary union on January 1, they embarked on what probably constitutes the greatest voluntary transfer of sovereignty in history. But no one was particularly dissatisfied with the existence of national currencies. No one believed that Europe's single market required a common currency. And no one agrees today on precisely what the new single currency will accomplish economically. The divergence of views is striking. British Prime Minister Tony Blair says the Euro will make Europe "more efficient and less subsidized, more open and less heavily regulated." Across the Channel, though, Strauss-Kahn calls the Euro a "tool in the service of a better society, of a social model, that is to say the European model... based on greater solidarity" than in the US -code words for shielding inefficiencies and protecting against ''unfair" competition and what Mr. Strauss-Kahn calls "the free market illusion." There's little question why Ten Downing Street sticks to a wait-and-see approach on joining Euroland.

But from the outset, Europe's campaign for a single currency has been first and foremost about politics, both high and low. The French sought a price for acquiescing to German unification in 1990. The Germans would give up their beloved Deutschmark and the French would delude themselves into thinking they would run the new Europe. Not for the first time did French blackmail convene with German guilt.

But the notion of the single currency was born of high politics. Ideas for its creation predate Germany's unification and the Maastricht Treaty. The EU has pursued a monetary merger since 1969. The first architect of a detailed plan was Luxembourger Pierre Werner, who saw his vision undermined by the oil shocks of the early 1970s. But European integration, it was said, was like riding a bicycle. You keep pedaling or you fall off. Had not the European Community (EC) fostered such extraordinary multilateral cooperation after the Second World War? Was not, and against all odds, the historic Franco-German enmity being replaced with new amity? Even in the 1960s and 1970s, it was primarily political objectives, then, that drove considerations about a single currency. Monetary union, Germany's minister of economics Karl Schiller would say, was merely a "prelude" to political union.

The EC's own plans for unity had their antecedents. French foreign minister Aristide Briand had proposed a United States of Europe to the League of Nations in the 1920s. And Briand had his precursors. The idea of seeing the continent "pacified under one sovereign," writes Luigi Barzini, had always been "proposed as a cure-all by great princes, emperors, statesmen, thinkers, poets, and starry-eyed idealists." Victor Hugo, Novalis, Dante, Kant, Metternich, Briand - they all had their dreams.

It was German Chancellor Helmut Kohl, however, who would translate the dream into reality. Kohl's thesis was in sync with the historical ethos. After Germany's unification, the creation of a single currency would lead to a political unity that would once and for all lock in European cooperation and lock out the demons of malign nationalism, blood rivalry, and lethal fragmentation. "The courageous march toward political union," wrote Nobel Prize winner and MIT professor Franco Modigliani this winter, "may end forever the deleterious nationalism that has ravaged the continent for centuries."

Clearly, the idea was not new. What was new, though, were the conditions in Europe. Entirely new. And now the traditional argument driving the process seemed especially strange and contradictory. The EC, now the EU, was in no danger of coming apart. On the contrary, strong, liberal, democratic nation-states existed throughout Western Europe. And, without having ceded inordinate amounts of sovereignty and democratic control to supranational institutions, they were doing just fine. Multilateralism had become the altar at which all Europeans worshipped. Within the EU itself, the serious battles of the day were now over how to regulate the size of condoms or the curvatures of bananas. At the same time, the new democracies of central and eastern Europe needed a clear hand. But Europe's transitional economies were left outside the EU's door.

There was always "Europe" as the answer to the German Question. But who really thought that the German Question had not been solved? Heinrich Heine had once famously written: "Denk ich an Deutschland in der Nacht, dann bin ich um den Schlaf gebracht!" ("When I think of Germany in the night, I'm robbed of my sleep!") When Helmut Kohl gets up in the night, mused The Economist a couple of years ago, the only thing the then German Chancellor is likely to think about invading is the fridge. For Gerhard Schroeder, it's probably opinion polls and focus group summaries that the new German leader devours when nocturnal Wanderlust strikes. Germans themselves had argued convincingly at the time of unification that the roots of democracy were deep and secure. There was no serious argument to be had. Today's boring Germans, as Josef Joffe puts it, are interested in "exports, not expansion."

Still, if in Kohl's view an economically and politically united Europe was an antidote to Europe's darker inclinations, others had been developing a thoroughly different, modem perspective. There's been much talk of NATO needing a new mission ("out-of-area" or "out-of-business," as Senator Lugar first put it). Yet few have considered that the European Community, its original objectives having been similarly achieved, would be searching for its own modernized raison-d'etre. An economically and politically united Europe, the Clinton administration has casually and carelessly assumed, will be a stronger partner to advance our common goals within the transatlantic community and around the world. One wonders.

Historically, Europe had always sought unity as a means to stabilize itself internally. Now, western European officialdom is looking primarily abroad and views the Euro - and a politically unified EU - as the best vehicle to advance Europe's interests in the world. Fair enough. But what are those interests? And are they compatible with Western, transatlantic objectives?

Countering US Hegemony

For clues, start with the French, who lament America as the "hyperpower" and explicitly promote a united Europe as a global counterweight to US influence. Says Prime Minister Jospin: "The United States often behaves in a unilateral way and has difficulties in taking on the role to which it aspires, that of organizer of the international community." President Chirac speaks of a new "collective sovereignty" to check American power and sees the EU and the UN as playing crucial roles. If you can't beat them, outflank them, goes the logic. French Foreign Minister Vedrine advocates accommodationist policies toward Iraq, noting that "the French position is that '"of all Europeans...the Arab world, the position of the Russians, the Chinese'". Wherever one looks - be it Iraq, Kosovo, Iran, Russia or Cyprus - the French are happy to play spoiler. France's Interior Minister, Jean Pierre Cheuvenement, puts the matter succinctly: "We have our interests, and the Americans have theirs." French mischief -- and outright anti-Americanism -- are nothing new, to be sure. What is new, though, are the changed conditions of the post-Cold War world. Absent the Soviet threat, America's allies across western Europe are feeling less dependent on the United States. Generational change is underway. And western Europeans have been busy enthusiastically developing their European institutions - with minimal American participation or consultation. What's also new is that it's not only the French who are gnashing their teeth about American hegemony these days. Former German Chancellor. Helmut Schmidt has boasted that the arrival of the Euro means that the US "can no longer call all the shots" in the world. Leading German commentators cheer that Europe will no longer be "seconding US global policies." In fact, "unilateral [read: US] definitions of global behavior will not be acceptable anymore," declares Karsten Voigt, a senior foreign policy expert from Germany's Social Democratic Party. The left-of-center coloration of 13 of 15 current EU governments adds accent to the discourse. But the new opposition posture has a distinctly nonpartisan flavor. "When America calls for solidarity in the name of 'Western interests,"' says a former advisor to Helmut Kohl, "we increasingly ask whether these are simply US interests cloaked in Alliance rhetoric." German and French leaders alike these days insist that the United Nations assume greater power and influence and hold alone the "indisputable legal basis" for the use of force in international affairs. It may be legal nonsense, but support for the idea in western Europe grows and the intent is to check America's room for maneuver. Its effect, if the idea takes hold, will be to shatter what's left of the West.

It is understandable that, after decades of Cold War dependency, western Europeans of all political stripes have tired of always being the junior partner. It's also clear that the Clinton administration's mishandling of Alliance issues has not helped matters. Secretary of State Albright's schizophrenic dance between overly deferential multilateralism and unilateral bullying, without clarifying American priorities or intentions, destroys precious capital and credibility. But even when the Clinton team is gone, western Europeans will be telling America more often, and more directly, that they want to feel like grown ups. And apart from asserting their new feelings of independence, there's an agenda behind the posturing. What do the allies want?

European vs. Anglo-Saxon Economics

Within Europe, the agenda is to defend the culture of the. welfare state. That's why free market spirits like Margaret Thatcher and Vaclav Klaus are persona non grata on the continent. That's why in Germany Gerhard Schroeder, to the lament of industry and entrepreneurs, says "yes" to modernization, but "no" to an end of his country's consensual, minimalist and lowest-common-denominator approach to reform. It's important not to forget that Schroeder inherited the approach from Kohl's Christian Democrats, who count as the country's second Social Democratic party. Don't expect the departure of Germany's leftist Finance Minister Oskar Lafontaine to change things radically. Germany's Free Democrats, the country's only true pro-market party, poll in the single digits and have little influence. In fact, mainstream Germans from the time the Maastricht Treaty was negotiated have talked about monetary union as a defense against Anglo-Saxon economics. And so it is. Schroeder, Blair, and Clinton may congratulate themselves on their common Third Way. But partisan self-congratulation aside, the fact remains that a gulf still separates economic culture on the continent from the way Brits or Americans do business. The reality is, "Germans hate competition," says a senior German diplomat unsympathetic to the state of affairs.

It's curious that Tony Blair thinks that the Euro will be a key to liberalization. This, while EU officials push for "harmonization" of taxes as one more way to eliminate an important competitive advantage the UK has enjoyed in the past in attracting jobs and capital. The EU's direction is clear. "Most EU governments," as economist Irwin Stelzer correctly observes, "given a choice of America's labor market system (flexible labor costs and relatively full employment) or the alternative (relatively high labor costs and relatively high unemployment), quite consciously choose the latter." Like it or not, Mr. Blair's UK will be forced off the fence if it decides to adopt the Euro.

So be it. Europeans are entitled to their choices. But the choices will have implications for the US. First, the single currency will mean more, not less, protectionism against American goods and services if Western Europeans continue to resist painful reforms. Second, it will mean more, not less, discrimination toward the central and eastern Europeans who continue to languish outside the EU's door. Finally, the Euro will also lead to greater assertion of EU regulatory positions on the global stage. At the Davos World Economic Forum this year, America found itself isolated because its allies had so effectively orchestrated their calls for expanding regulations at the international level.

European vs. Atlantic Security

If the divergent views on economic policy are already becoming apparent, the foreign policy differences between the US and its allies are likely to be even more far reaching in their implication. Beyond the common currency, western Europeans want a Common Foreign and Security Policy. Americans laugh. But Americans laughed once about the Euro, too. And while the Euro is virtually certain to entail a great deal of muddling through, it is also certain to be pronounced a success by its champions. The campaign for political union will proceed. And western Europeans will look for additional ways to assert themselves.

At the summit between French and British leaders in the French port of St. Malo in December, there was talk of Europeans working "within or outside NATO" in the future. The tone and level of interest taken by America's British allies in the so-called European Defense and Security Identity was striking and unprecedented, with all the predictable footnotes about how greater European independence will not undermine the transatlantic link. But it's appropriate for Americans to ask whether the special relationship with Britain is to fade as the UK seeks amalgamation with a European federal state. And when the British and French issue a communique affirming that "the European Union needs to be in a position to play its full role on the international stage," it's also appropriate for Americans to ask what exactly Europeans envisage this role to be -and how it will relate to NATO. There have been those on the Left and the Right who cheer the direction and who argue for a neat division of labor in the alliance. The formula is simple according to Senator Kay Bailey Hutchinson: "Europe leads with the United States as backup on the European continent; the United States leads with European and other allies as back up in the rest of the world." The idea is deeply flawed, however, for a number of reasons.

It's important for Americans to understand, especially those who advocate European "leadership," that such leadership may become mired in intra-European petty rivalry; and that transatlantic cooperation may at times suffer, as common European positions are defined in opposition to US policies and preferences. Some of the results are clear in the drawn out phases of conflict resolution that have occupied the Atlantic Alliance in the Balkans already in this decade.

It's also important for Americans to understand that when it comes to the details on issues of broad strategic concern, it's wrong to assume that America's European partners automatically share our goals. Are the allies ready to play "back up" to the US in the world?

The US policy of containing Iran, for example, has faltered in large part because America's allies have been unwilling to go along. And now, despite mixed and contradictory signals from Teheran over the past year, Gerhard Schroeder calmly tells a German interviewer that "the time is ripe for an improvement in the traditionally good" relations between Germany and Iran. So much for consultation among allies. And so much for common Western analysis and response.

It was never easy during the Cold War. But the value of the transatlantic relationship endures. American isolationists, global unilateralists, and limp multilateralists will revel in the developments and the possibility for disengagement from Europe will become real. Still, the game is not over. There's a need to restore American credibility and articulate a vision for a common strategic culture. It's time to revitalize NATO in word and in deed. The Poles, Hungarians, and Czechs who join NATO this spring can contribute significantly. It's also time for a transatlantic free trade agreement and new Atlantic political institutions that complement NATO, strengthen ties to Western Europe, and reach out to a range of new and potential allies in Central and Eastern European. There are still those among our current allies who insist that the new ideology of Europe can be compatible with Atlanticism and common Western objectives. It's time to join forces with them and put the thesis to the test.

Jeffrey Gedmin, Ph.D., is resident scholar at the American Enterprise Institute and executive director of the New Atlantic Initiative. This article is reprinted with the permission of The Weekly Standard, where it first appeared in March 1999. For more information on The Weekly Standard, please call 1-800-283-2014 (in the US), or visit their website: http://www.weeklystandard.com.