Tuesday, 2 September 2003

America, Britain and the European Union

The European Union means different things to different people. To some Europeans it signifies an opportunity for economic expansion and increased trade with neighboring countries. The European Union is seen by some as an economic mechanism for breaking the dominance of the U.S. dollar. To others it signifies a threat to local control and sovereignty.

It has been said that Britain is the bridge that connects America to Europe. The attitude of Britain to the euro and to the European Union is therefore of great importance. If the European Union contains the seeds of a future anti-American economic policy, then British politicians might prove allergic. In any future conflict between Europe and America, it is Britain that is torn asunder. For Britain is part of Europe, but Britain is also the mother country of America. The ties that bind Britain to America are old and deep. The U.S. and U.K. were allies during two world wars and the Cold War. They have enjoyed decades of partnership, a common language and a common heritage. But the lure of joining a common market with a single currency may be difficult to resist. At the same time, an act that initializes a barrier between America and Britain may be impossible to perform. As hostility toward America grows in the main continental countries, Britain is surely aware of the economic weapon they would be handing over to the French and Germans by handing over their currency and their economic policy. For all anyone knows, joining Europe might signify an unintended break with America.

In the age of economic rationalism, we supposedly know which way the wind blows. The notably pro-American British Prime Minister Tony Blair recently promised to put an end to Britain’s ambivalent approach Europe. He wants to prepare Britain for membership in the European Union. He wants to rid his colleagues of doubt and hesitation on this issue. But Blair is not a miracle-worker.

The recent discussion in Britain’s House of Commons on the adoption of the European Union’s single currency revealed both hesitancy and ambivalence toward the EU on the part of Blair’s government. Chancellor of the Exchequer Gordon Brown delivered an address to the House calling for British economic flexibility and major economic reforms (see http://politics.guardian.co.uk/euro/story/0,9061,973995,00.html ). He spoke of the need for “sustainable convergence” with Europe as if sustainability were not yet possible. He spoke of “the test of employment” and the “test of investment,” noting that current adoption of the single currency failed these tests. As if to confuse his listeners, the Chancellor noted that important American and Asian investors were in favor of British economic integration with Europe. It is inevitable that Britain join the European Union, he seemed to say. But when would this happen? Maybe next year.

The opposition shadow chancellor, MP Michael Howard, mocked Brown’s equivocal support for the euro. The case against the euro was clear, said Howard. The majority of Britons don’t like it. Howard also noted that London was not a European economic center, but a global economic center. Britain’s trade with non-European countries, especially America, might be jeopardized in the quest for a greater market share in the so-called “eurozone.” He also noted that the Labour government was hardly united in its zeal for the euro. Howard alleged that Brown’s equivocal position was the “result of frantic efforts by the Chancellor and the Prime Minister to cover up their differences.” He further stated: “The studies produced by the Treasury showed [that] joining the euro would damage Britain’s prosperity, cost jobs and mean irreversible loss of control over economic policy.”

Those who favor joining the single currency disagree. They alleged that British trade with Europe would increase by up to 50 percent. Economist Philippe Legrain claims that per capital income in Britain would increase by 10 percent in the long term and make “the average Briton 1,700 pounds richer.” (It is curious that Legrain calculates would-be gains in terms of pounds.)

David Frost, the director general of the British Chamber of Commerce said: “We welcome the basic conclusion that the U.K. is not yet ready to join the euro.” It seems that even British business is uncertain and hesitant. What is the real reason, deep down, for resistance to the euro and the European Union? Given the negative impact of uncertainty on political and business interests, what is Britain waiting for? Is the real reason for hesitancy fully conscious?

A conflict is growing between America and the European Union. The Bush administration has officially warned European countries against opposing immunity for U.S. citizens at the International Criminal Court. Washington will not accept the possibility of Americans being arrested on frivolous or politically inspired charges during visits to Europe. On its side, EU officials say the Americans are bullying poor and backward countries into signing pacts that give immunity to so-called “American war criminals.” It is a curious dispute. It signals that the European Union may be hostile to America, conceiving itself as a morally superior rival. Last week the United States sent a diplomatic message to all 15 members of the European Union, accusing them of lobbying prospective EU members not to sign immunity pacts with the United States. What this reveals is a growing break between those who hold sway over the European Union and the Bush administration. It suggests that all efforts to preserve and repair America’s alliance with Europe are doomed to failure. Those European officials who actively seek to undermine U.S. military efforts in the Middle East ? as France and Germany have done ? are not America’s friends. When officials from these same countries, acting on behalf of Europe, seek the right to arrest U.S. citizens for war crimes, a definite animosity is in evidence. When this same crowd of European bureaucrats get control of British trade policy what will do with it? Would Britain’s membership in the EU put a crimp in British-U.S. trade?

While Britain concentrates on the economic problem of integration with Europe, there is yet the problem of Europe’s growing anti-American tendency. Does the U.K. want to join a political formation that opposes U.S. interests in case after case? Will Blair allow the lure of economic gains in Europe to sucker him into joining with an emerging anti-American bloc?

Nobody yet knows the answer.

© 2003 Jeffrey R. Nyquist

June 11, 2003