Tuesday, 2 September 2003

The Euro Menace: The USE Vs The USA

Of all the remarkable consequences of the war against Saddam Hussein, one stands out for its sheer unlikeliness: The subject of Europe has become interesting to Americans again. In the run-up to the war, France and Germany revealed an unprecedented hostility toward the Bush administration’s foreign policy. Americans noticed. France, in particular, orchestrated a global campaign to prevent the United States from deposing its former client, Saddam. And, since the war, France has continued to frustrate U.S. foreign policy–most recently when Foreign Minister Dominique de Villepin visited Yasir Arafat, whom the United States has tried to isolate. Worse, with the unveiling of a new federalist constitution for a “United States of Europe” in June, the anti-American trend will be subtly but profoundly institutionalized. It’s past time that Americans wake up and see this new threat for what it is.

For the longest time, of course, America’s approach to European unity was one of supportive neglect. In the wake of World War II, there was no reason whatsoever for the United States to object to increased Western European integration, the expansion of intra-European trade, and the pacification of ancient conflicts, especially between France and Germany. In fact, there were many good reasons to endorse and encourage increased European integration.

But this analysis always obscured something at the heart of the European project. From the beginning, European unity was understood, especially in French eyes, as a counterweight to the global hegemony of the United States. The calculation was simple: No single European power could ever hope to approximate U.S. wealth, population, or power. Even the most formidable European nation–Germany–had a population only one-third as large as that of the United States. A nation such as France, with an ancient history of global influence and a recent history of military humiliation, looked to the European project as a way to regain what it had once lost. Beneath the patina of shared sovereignty, there was the dream of a new sovereignty–more powerful than any in the past. Britain’s accession to the European Economic Community (EEC), long prevented by the Anglophobic Charles de Gaulle, was only embraced because it appeared at the time to represent Britain’s retreat from its commonwealth and U.S. allegiances, and toward a new commitment to forging a federal European entity.

This single entity was the goal from the start, from the 1950 pooling of French and German management of their coal and steel industries and the 1957 Treaty of Rome’s commitment to an “ever closer union” between the nations of Europe. Since then, a relentless series of treaties, laws, and institutions has accelerated the trend. From the early days to the expansion of the EEC in the 1970s to the single-market reforms of the 1980s and the Maastricht Treaty of 1991, member states slowly gave up salami slices of national sovereignty. Not only did tariffs disappear, so did national laws that did not comport with European-wide guidelines. The European Court of Justice became the last resort for many judicial cases, overriding national judges. And then, of course, came the surrender of monetary and large amounts of fiscal policy to the European Central Bank in the late ’90s, capped by the formal introduction of the euro in 2002. Not only is it now impossible for major European countries to run government deficits outside proscribed EU limits, they can’t control interest rates or use devaluation of their currencies for economic flexibility, either.

It’s hard for Americans to grasp this. But imagine if U.S. interest rates were set by a Canadian central banker stationed in Rio. Imagine if Supreme Court judgments could be appealed to a trans-American court in Brasilia that represented the entire Western hemisphere. Imagine if the dollar was abolished to make way for the “americano,” a new common currency that included Mexico, Canada, Brazil, Argentina, and Chile. Changes on this scale are epic. They are transformative of settled domestic politics. And it is only natural that they should lead to drastic changes in foreign policy as well.

This is exactly what has happened in Europe in a blisteringly short period of time. In fact, the more integrated the European economies have become, the more eager European elites have been to fuse the polities as well. Currently, critical decisions–such as taxation and foreign policy–are still largely determined by national governments, although their freedom to maneuver has been sharply curtailed. The president of the European Commission still doesn’t have the clout of, say, the British prime minister or the German chancellor. The European parliament, an elected body that does amazingly little, is just as anemic. The solution? A new European “constitution,” the final leap from a series of treaties (from which member countries could theoretically still withdraw) to an actual federal European state. The work has now been underway for some time, coordinated by former French President Valery Giscard d’Estaing. At the looming June 20 European summit, this Euro version of the Federalist Papers will be finalized.

So far, the proposals suggest a huge shift toward what the architects wanted to call the “United States of Europe” (USE). The first draft, released in February, asserted that “the Constitution, and law adopted by the Union Institutions in exercising competences conferred on it by the Constitution, shall have primacy over the law of the Member States.” In many cases of national legislation, that is already true. But the current useful fiction is that this is merely a practical matter–the member states routinely assent to EU diktats but aren’t constitutionally subordinate. Now the USE would become a separate legal body, and member governments would be formally subordinate to it. The areas of competence for the new superstate range from public health to farming and fishing, from economics to social policy and civil rights. National governments would have no power to regulate these matters unless sanctioned by Brussels. There would be a full-time European president, elected by the European heads of state, and a USE foreign minister–the man whom Henry Kissinger once lamented he could not easily call. In some respects, the European nation-states would end up with less power than the states in the U.S. Constitution.

It’s by no means clear that this new constitution will survive the next few months. The European Union will shortly admit ten new members from Eastern Europe (in addition to the current 15) whose views on the matter are mixed. Britain, as usual, will head up the group of nations that is relatively happy with the current setup and will likely veto some of the proposals. But France and Germany, the two central powers in EU politics, will press on regardless. Defenders of the new constitution argue that it is merely “tidying up” the current miasma of treaties and obligations before the European Union expands to 25 countries. But, even if you accept this minimalist interpretation of what’s going on, the changes still represent a big, integrating shift. Currently, for example, the presidency of the European Union rotates every six months, with each country having a turn at representing the full 15. Under the new proposed constitution, that will change–with a single EU president, almost certainly from one of the major countries, i.e. France, Italy, or Germany, who will serve a term of two and a half years. There will also be a single EU foreign minister, assigned to coordinate the 25 countries’ foreign policy. The notion that these powerful new positions won’t serve to unify the continent around a single foreign and economic policy is clearly naive. That’s why many of the smaller countries are currently fretting about the EU’s consolidation under the influence of the big nations.

If history is any indicator, the integrationists will eventually win out. The new EU entrants from the east may be skeptical, but they are supplicants right now and have nothing like the clout of founding members of the project. Indeed, every latecomer has been sidelined and forced to acquiesce to the federal dream of a single European state. Even Margaret Thatcher, that most dogged of all Euroskeptics, presided over the signing of the Single European Act of 1986, which greatly increased the powers of federal Europe over individual nations; and her Tory successor, John Major, signed the Maastricht Treaty, with a handful of opt-out clauses for the British economy. Maastricht led to the creation of the euro, a currency that was subsequently adopted even by Germany, forsaking its beloved Deutschmark. The euro was not initially popular. Germany adopted it without risking a popular vote. Even the French backed the new currency by the slenderest of margins. But it is now a reality in twelve countries, it will shortly be the currency in ten more countries, and even the British government is formally keen to join. Prime Minister Tony Blair has promised a referendum on the matter, though he still hasn’t decided on the timing. The point is, the European idea has won every major battle it has fought. And it would be foolish to bet against it now.

The architects of the new constitution couldn’t be clearer about what it means to them. Giscard d’Estaing sees the new USE as an entity that “will be respected and listened to as a political power that will speak as an equal with the largest powers on the planet.” Hmm. I wonder which powers he could be thinking about? Or take today’s president of the European Commission, Romano Prodi. He wants “a single government for all countries who share the money.” That, by the way, will include Poland, which the Bush White House is still treating as if it were a separate sovereign country. The questions for the United States are therefore simple: Is this development welcome or unwelcome? And what should U.S. policy be toward its growing momentum and power?

In the past, the default U.S. position was pro-integration. The slow but relentless unification of Europe seemed–and, for the most part, was–an obviously good thing for U.S. interests. In the postwar period, the reconciliation of France and Germany, once thought impossible, became a reality because of the early, essentially economic deal between the two countries. From then, the free-trade area expanded to include the core of Western Europe, fostering prosperity and democratic stability. During the cold war, the cooperation and integration of the Western European democracies also made crucial sense as an anti-Soviet bloc. And, with the inclusion of Britain in 1973, the United States gained an Atlanticist ally within the new entity to offset Gaullist mischief. The EU’s predecessor, the European Community, subsequently played a critical role in midwifing Spanish democracy after the Franco dictatorship; in providing massive boosts to small, outlying European countries, such as Ireland; and fostering faster economic growth and freer trade across the continent as a whole. What wasn’t to like, apart from French-imposed agricultural subsidies, which both held back the European economy and hurt U.S. agricultural exports? When the Berlin Wall fell, the European Union further helped provide a European structure within which to reunify Germany and a critical incentive for the post-communist states farther east to adopt Western political and economic norms. Even now, the lure of entry into the European Union has helped an Islamic country, Turkey, gravitate toward the West. These were huge achievements. They still are.

But the end of the cold war, the liberation of all of Europe, and the emergence of a U.S. unipolar world all change the equation. So long as the Soviet Union existed, Europe–and specifically its most powerful country, Germany–needed the U.S. security umbrella more than it needed an independent role on the world stage. But, since the collapse of Soviet power and the emergence of a largely peaceful Russia, Germany needs no more such reassurances and has largely acquiesced in France’s ambitions to create a European rival to U.S. power. Germany’s final capitulation came with the abolition of the Deutschmark. The new euro helps fulfill French ambition by becoming a fledgling counterweight to the dollar in international markets, helping erode the critical U.S. economic advantage of having the uncontested global currency. As it reaches record heights against the dollar, we will soon see whether it can at some point rival the greenback as a global currency, thereby severely limiting America’s flexibility in economic policy.

The USE is the obvious next step for this essentially French project. And it couldn’t come at a less propitious time for U.S.-European relations. The United States saw the full consequences of the EU’s “soft power” in the buildup to the second Iraq war. Although France and Germany had no military capacity to rival Washington’s, they had considerable diplomatic clout. By using the United Nations and, to a lesser extent, the European Union, the French and German governments helped unify world opinion against the war. They severely increased the diplomatic costs of U.S. intervention. And, by and large, they won the debate at the United Nations. No second resolution was passed because of European opposition and outreach to other countries around the globe. Yes, Britain, Spain, Portugal, Italy, Poland, and other Eastern European states supported the United States. But, in retrospect, that may turn out to have been the high watermark of European pro-Americanism. President Jacques Chirac warned the new states of the east that their accession to the European Union might be compromised by such a pro-U.S. stance. Under a future USE, the British government would nominally still control its foreign policy. But London’s ability to go it alone against the weight of the other USE member states could be severely compromised. If the EU foreign minister declares European opposition to a future war by America, the political costs of siding with the United States could be huge for a British prime minister. Even during the buildup to the Iraq war, Blair came close to losing his job by balking at the European consensus. Such foreign policy intransigence could possibly lead to marginalization within the European Union, with all the costs that could entail.

Look at the example of Poland. The Poles’ decision not only to support the United States but to send troops and now peacekeepers to Iraq has clearly rankled the French and German governments. The Polish invitation to the Germans to join them in Iraq under the auspices of NATO was brusquely rejected. Prodi lectured Poland in April that “one cannot entrust his purse to Europe and his security to America.” A German diplomat described the Poles to The Wall Street Journal as “mercenaries.” There have been hints that the EU major powers may try to make sure that Poland bears a cost for being a “bad” European. How likely is it that, within the next decade, if a USE actually emerges and Poland is subsumed within its economic, social, and political fabric, the United States will be able to appeal to Warsaw over the heads of Paris and Berlin? Or that Warsaw will be in any position to respond? The mere threat of reducing agricultural or industrial subsidies could bring an independent Polish government to its knees.

The same can be said even for Britain, Spain, and Italy. Could these European states outvote the Franco-German axis in a new, enlarged Europe? It’s possible, but unlikely. The center of gravity in the European Union will always be the Paris-Berlin axis, together with the Benelux countries (Belgium, the Netherlands, and Luxembourg). The only way the central dynamic could be changed is if another major European power allied with Germany and cut France off. That isn’t likely to happen. A test case occurred in the last few years when Blair tried to bring off an AngloGerman entente. Behind his back, Chancellor Gerhard Schroeder and President Chirac simply made a deal on agricultural subsidies that wounded Blair immensely.

Moreover, the future USE in some ways is designed specifically to avoid the larger entity dissolving into a loose federation of nation-states, some Atlanticist, some anti-American. By strengthening the core, expanding majority voting (so no member state can veto major initiatives), and installing a new and more powerful presidency, the French are attempting to corral the new and more diverse Europe into the old Franco-German formula. Yes, there is resentment of France and Germany among the smaller European countries, especially in the east. But they will need Franco-German economic aid more than they will need U.S. military support in the coming years; and their capacity to resist Brussels will be highly limited. The new constitution will marginalize them further still. There is only one rationale for such a proposal at this time: to check U.S. power. In the next global conflict, the French hope the American president will not be able to call up the British or Spanish prime ministers or the Polish president and make a deal. He will have to phone the president of the USE in Brussels. And the conversation won’t be pretty.

What can the United States do about this new threat? The sad answer is not much. Attempts to intervene and prevent the new USE from taking shape could backfire. One thing that could unify Europe is a clumsy U.S. intervention to prevent it. But the United States can and should strengthen its military ties to the new Europe, especially Poland and Hungary, and keep an independent relationship with all the Eastern European states. In trade negotiations, the United States could also try harder and harder to unravel European agricultural subsidies. It’s this system that keeps some countries dependent on Brussels and could enhance France’s leverage over a highly rural country such as Poland. Above all, the United States can let its most reliable European ally, Britain, know that it prizes the relationship, that it does not necessarily believe British adoption of the euro is a good or necessary thing, and that it values Britain’s independent military capacity immensely. Keeping Britain both in the USE and outside of it militarily, diplomatically, and monetarily should become a prime U.S. objective in foreign policy. Without it, the United States could lose its most valuable military and diplomatic ally. If you think that’s unimportant, imagine the Iraq war–diplomatically and militarily–without the fig leaf of British support.

At the same time, Americans need to wake up and understand the significance of this new rival to U.S. global power. No, it will not be a military threat. But it can be an enormous deadweight on U.S. power, as we saw earlier this year. And its anti-American timbre is unmistakable. Hence the strange paradox of the European Union. It has fostered a culture of post-nationalism. It pretends to oppose the exercise of raw international power. But its rationale–now and for a long time–has been precisely to regain global power for Europe, lost in two world wars and the American century. If the European Union can achieve this, if it can slowly absorb its member states into a uniform and vast new entity, then it will represent a real challenge to U.S. influence in Africa, the Middle East, and every major international institution. The major power that will benefit from this will be France, and France’s intentions, as we now know from bitter experience, are essentially hostile to the United States, culturally, economically, diplomatically. That’s the current challenge to U.S. foreign policy: how to prevent the new European constitution from becoming a reality, how to woo and keep the loyalty of pro-American European governments and states, how to save new Europe from the stultifying and malign embrace of the old. It may, alas, be too late to prevent the worst. But better late than never.

Andrew Sullivan