International Affairs Forum:
What are the most recent conclusions that have been drawn by the European Institute over transatlantic relations, between the United States and Europe?
Transatlantic relations are a very broad topic. We are currently working on different issues: economic issues, especially problems concerning trade and finance, but also on diplomacy and security. On the economic side, we work a lot on the impact that the current economic and financial crisis had and has, for instance, on trade negotiations. But also, we can work on topics such as emerging issues of energy security or cyber security. We work on the evolution of NATO; on the evolving cooperation between Europe and the United States concerning homeland security…So, this is a very large range of issues.
Generally speaking, we can say that the change of the U.S. administration has been a good thing for transatlantic relations. If the Europeans had to vote, we have seen that they would have voted massively for Barack Obama. So this change is globally seen as a very positive thing, among the European people. The approach of the new president seems more consistent now, and closer to the kind of approaches Europeans can have in terms of international relations. I can say that the transatlantic relationship between the United States and Europe is today in much better shape than it was, for instance, one or two years ago.
What is interesting is that, while the relations seem to have improved, the challenges faced today by both Europe and the United States are enormous. The situation that the previous Bush administration has left to President Obama is not good: not good in the economic and finance area, and not so good in the security area. Generally speaking, it should be easier for the new administration to find compromises with the Europeans. However, the U.S. Congress still seems more conservative, unilateral and concerned with sovereignty and not sharing decisions. This can be a significant difficulty.
But globally, the relationship seems much better today.
However, if approaches President Obama defends seem closer to those which Europeans defend, his first priority remains the defense of the interests of American people. At the same time, European governments tend to defend their own interests as well. So we face cases where cooperation is necessary, but interests can be different.
What do you see as the major points of disagreement between Europe, especially France, and the United States? In particular concerning the financial crisis?
Firstly, I think that there is more agreement than disagreement. Both Presidents Nicolas Sarkozy and Barack Obama are trying to work together as well as possible. The time of antagonism between France and the United States is really gone. France is notably going to rejoin the integrated military organization of the transatlantic alliance, NATO. This is politically an important step. It is really a major move that brings France closer to the United States. We might not forget that France provides the most military resources to international operations out of Europe.
On the economic front, France and the United States are both trying to do the same, which is first of all trying to resolve this crisis and improve the situation. But what we have seen is that the press and media in general have more focused on points of divergence, rather than the real common effort made between France and the United States to solve the crisis. The press has focused on how President Obama and his new administration were asking for more stimuli on the part of everyone; and on the other side, it presented Europe as more focusing on the regulation of the financial system. But, in fact, the U.S. administration does know that it is necessary to regulate more, and Europe knows as well that it might be necessary, at some point, to stimulate a little bit in order to get out of this crisis.
If there are, I think that the divergences come first from the fact that the United States and Europe are both facing different situations. Firstly, people are saving more money in Europe than they are in the United States. People consume much more in the United States. And so, in Europe, you can’t restart consumption artificially when people usually don’t consume so much naturally. In Europe, some countries are already heavily indebted; they don’t want to take too many risks. They are also limited by the constraints implemented with the euro as a common currency. They can’t go too far into their debts if they want to stay in the Euro-group.
On the other side, the United States is an exception. The dollar, first of all, is an international currency. And the U.S. is the only entity in control of this money. Indeed, it is easy for them to print as much money as they want.
But on a more global aspect, what is more important, beyond the oppositions between leaders, is to look at the differences between the structures of the economies. And so, I think that, countries we really need to take into account today, in terms of differences between economic structures, are China and other Asian countries. Asian economies such as China are mostly based on exports and cheap currencies. To restart the global economy, two things are needed. These economies must firstly enforce local consumption, as opposed to exports. The second thing, then, is to make sure that toxic assets have been eliminated from the banking system. And this is far from being done. These are the priorities that the IMF has claimed for during the G20 meeting. Asian economies need to do something as well to improve the situation.
So, at the end, I don’t think there are many differences between Europe, especially France, and the United States. They have to find compromises, and to do everything they can to restore the system. In that sense, they also have to focus on China and exporting economies, in this attempt to regulate the crisis.
Is there a real move toward protectionism currently in the United States? If so, is this a significant threat for Europe and the rest of the world?
This is a very serious concern. On the one hand, American leaders hold speeches in favor of free trade, claiming protectionism as a “big danger”. But on the other hand, there are specific measures, decided and voted in the Congress, that are protectionist in nature. There is actually a “Buy American Act” in the United States. And not only is there one, but a new reaction of it has been included in the stimulus plan. It is surprising that this abundance of “Buy American” acts in the United States is actually not triggering a willingness, on the part of Europeans, to have a “European preference”. If that happens in Europe, the United States will have to blame itself for having provoked it. What the United States and Europe should be working on right now is the dismantling of any kind of protectionist measures. The reality is that those who want to protect try to do it in such a way that it can’t be seen, so it gets even more complicated.
Is there, also, a rising protectionism in Europe, especially in France and Germany?
In Europe, the situation is really different. First of all because all trade negotiations are made by the European Union as a common entity, not by individual countries. By nature, European members and the EU institutions have always worked on dismantling trade barriers, because it is on the liberalization of trade that the common market has been based. European countries were brought together on this mission, on this ideal of free market and trade. However, it does not mean that countries, on a more individual level, don’t try to take specific protection measures for specific fields. But of course, forms of protection in Europe are not as consistent as they can be in the United States.
What about Eastern European countries, and the implications for them in the current economic crisis?
Eastern European countries, now that they have integrated the European Union, can’t keep the protectionism they had before, and indeed are not able to implement protectionist measures. The whole European continent has been in fact working on dismantling protectionism, something we have not seen in the United States. I am not saying that the European system is perfect and that there are no barriers. There are still some, but they tend to be marginal.
Concerning international trade, do you think European countries such as France, Britain, and the United States should resolve the crisis by more financing of global trade?
At this moment, many companies involved in international trade say that they have difficulties finding the resources they need to conduct their operations. This proves firstly that the banking system is in bad shape. I don’t think that there is a need for more stimulus, but the priority is the need for fixing the banking system, in such a way that it doesn’t prevent or harm international trade.
Can we expect a real consensus between Europe and the United States, over measures to take to solve this current crisis?
It would be new, but nothing is impossible! Good things come out of a crisis, but I honestly think that it might be difficult. However, it is good to have a G20 meeting happen, in such circumstances that it is now indispensable for the representatives of the main economic powers to cooperate and agree to do something in common. It is excellent. Now, the extent to what will be implemented in common is still to be determined.
On the European level, is there an efficient consensus between members of the European Union?
First, on the European continent, you have the European Union. The European Union is itself divided between the Euro-group, who share the Euro as a common currency, and other members who keep their national currency. On a third part, we have countries that are neither in the European Union nor in the Euro-group. There are different situations among Europe.
The European Central Bank has been really instrumental in taking a number of decisions at the right time, to limit the effects of the crisis, which could have been disastrous. And they have done a fairly good job. Also, the leaders of the countries have tried to work together, and they have taken a range of significant decisions, such as the stimulus plan at the European level, or national stimulus actions decided together by groups of countries. They coordinated their efforts and positions on a whole range of issues. This trend is positive.
However, what has been lacking is a leadership role on the part of the European Union common institutions, in particular on the part of the European commission. The Commission has been late in intervening, and weak in proposing common measures. Better work could have been done if there had been more coordination implemented by European institutions.
How do you perceive the current Czech presidency of the European Union? To what extent does it differ to the previous French presidency?
It is not nice to compare both presidencies. The French presidency was very efficient and rather spectacular. The Czech leaders are doing a good job, but in difficult circumstances. Therefore, it is not a presidency that people will remember for its efficiency and its leadership. It is always difficult to hold the presidency of the European Union when your government is unstable, even more for the Czechs, since their president is Euro skeptic. Skepticism has never led anywhere.
How are transatlantic relations evolving within NATO?
The fact that France is rejoining NATO is very positive. France was still a member of the transatlantic alliance, but not of the integrated military organization. However, the French military was working very closely with members of the military alliance. But the problem was that France could not by fact participate in the decision process. It is always difficult to implement something when you have not participated in the decision. The decision to rejoin NATO has been a long-term thinking, a difficult decision to take for Nicolas Sarkozy. But this is contributing as reinforcing NATO as a strong military organization.
A more global problem is that NATO is at a crossroads. The Cold War period has ended, and NATO has entered a whole range of new projects. But there is no general consensus on what NATO is actually doing, on what are the specificities of its missions. As a result, the resources necessary for NATO to conduct its operations and missions are not here, in comparison to its stated ambitions. It is always very dangerous to have great plans, but without many resources.
However, the 60th anniversary of NATO should be an opportunity to review the strategies. In the next few months, there is a probability that participating countries of the transatlantic alliance will come up with a common plan. At least, we can hope.
And what about decisions on Afghanistan among members of the NATO?
There is more consensus on Afghanistan than there was on Iraq. And there is more consistence in the European position, and in the United States position now, than there was under the previous administration. Mostly because Europeans and Americans now agree on the fact that the solutions to the Afghan problem can’t be only on a military basis, they have to be civilian. The need that was claimed by Europe, to recalibrate the goals of the operations in Afghanistan, is now shared by the U.S. as well.
Jacqueline Grapin is Founder and Co-Chair of the Board of The European Institute, and Publisher of European Affairs, a publication of The European Institute.
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