Short-term Crisis between the European Union and United States

Press Release 20 January 2004 Relations between the EU and US are undergoing serious difficulties. The main problem is that economically the two powers are closer than ever but politically the distance between the two is increasing. Particularly worrying is the fact that these differences of opinion seem to be evolving overnight into a dispute over prestige. Prestige seems to matter more than a set of common values. In his book “Transatlanttinen suhde – Yhdysvallat Europan unionin peilinä” (The Transatlantic Relationship – the US a Reflection of the European Union), published on Wednesday, Peter Ekholm discusses the present situation between the EU and US, the reasons for the difficulties and their consequences. That the two continents should think differently is not in itself surprising. Even though it was the Europeans who originally subdued America, it is only natural that such distant geographical neighbours should have large differences. However, a foreign European country such as France, for example, is much closer to the US than Japan. Ekholm charts the cultural, political and eco­nomic similarities and differences. The differ­ences are such that it is easy for both sides to sink to arrogance – but there is sufficiently common ground for a dignified compromise. Increasing tension Ekholm considers the prime cause of the increased tension to be Europe’s newfound inde­pendence from the United States. Europe’s increasing wealth gave it first economic inde­pendence and has now made it a rival to the US. Since the end of the Cold War Europe has rapidly progressed towards political independence. The two transatlantic partners are today more equal than at any time since the Second World War. Europe has grown up, so to speak, but the arguments it uses are less grown-up. The US has given indispensable aid and support to the idea of European integration. It has also understood that it is chauvinistic bravado that has driven Europe into a crisis situation. Integration has succeeded. Paradoxically, on the other hand, the US is still a nation state and behaves in a way that it has hoped that Europe would eschew. The much discussed Asian Crisis has not succeeded in alienating Europe from America nor America from Europe. In politics the two fight and defy each other but in 2001 the French were the fifth largest investor in the US, putting considerably more money into the American economy than the Canadians, for example. On the Americans’ list of foreign investments France figured in ninth place, way ahead of China. American investment in Mexico was only just over a half of what it was in the Netherlands. Ekholm emphasises that traditional exports and imports of goods and services do not give a correct picture of the two countries’ economic relations. Most is accounted for by subsidiaries on both sides of the Atlantic. Looked at as a whole, economic relations between the two countries have become increasingly close. Boundaries between economics and politics unclear Ekholm draws attention to the fact that the boundary between politics and economics has become extremely fuzzy. It is now more difficult to distinguish what is politics and what is economics. This is the EU’s Achilles heel when it comes to drawing up the rules for inter­national trade. In negotiating with the United States, the EU follows a common trade policy but if political considerations are taken into account, then there are fifteen different European views to be reconciled. The more politics and economics become intertwined, the more re­strict­ed becomes the EU’s freedom to act. On the one hand, the EU needs to concentrate its resources and, on the other, the leaders of the two continental partners should commit them­selves to closer cooperation. The combined populations of the EU and US today account for a decreasing proportion of the world’s inhabitants. It is becoming increasingly difficult to justify the overtly dominant role played by the two power groups in such international organisations as the World Trade Organisation and the United Nations. If democratic representation is to continue to charac­terise such organisations, the Americans and Europeans must soon join forces rather than indulge in petty squabbling. Questions surrounding European enlargement and NATO From a transatlantic viewpoint Ekholm sees European enlargement as a very real stumbling block. The present member states of the EU have good reason to be grateful to the US but can the US find real friends in Central and Eastern Europe? How important is US membership of NATO as a guarantee of security compared with membership of the European Union when the new members are faced with making choices? Will they opt for an American-type market economy as opposed to the European kind of social market economy? Does the US hope to put pressure on the EU’s choices through the new member states? As far as security is concerned Ekholm expects the significance of NATO to decline in the medium term. The key question is what the US feels that it needs NATO for. Finland has eco­nomic interests in the United States but only such where the EU is a more important player than Finland would be alone. When it comes to matters of security the most important con­sideration according to Ekholm is that the principle of not abandoning one’s friends applies to traditional friends and allies, not just those who have good and unproblematic relations with America. A look in the mirror… Ekholm is of the opinion that the EU has in many respects only reacted following develop­ments in the US. Internal markets grew up since Europe was unable to respond to American competi­tive­ness. The Lisbon process is a similar reaction. Peace-keeping troops finally came about when Europe needed the Americans in Yugoslavia, etc. The US is a mirror not only in decision-making ability but also in competitiveness. Overall Ekholm wonders how often Europe uses America as a mirror. Many think that America is needed less whereas, in fact, we need Europe more, he concludes. Peter Ekholm’s book is part of Sitra’s Europe 2020 project. The purpose of this project is to chart future prospects for Finland and the European Union. Sitra’s aim is to identify important factors determining Finnish success. Peter Ekholm is head of the Sitra project. His book, “Transatlanttinen suhde – Yhdysvallat Europan unionin peilinä” (The Trans­atlantic ­Re­lation­ship – the US a Reflection of the European Union), is a result of the Sitra Europe 2020 project. Further information: Peter Ekholm, Europe 2020 project, Sitra, tel. +358-50-520 8995.Publication in Finnish: “Transatlanttinen suhde – Yhdysvallat Europan unionin peilinä” (The Trans­atlantic ­Relationship – the US a Reflection of the European Union). Peter Ekholm, Sitra 261. ISBN 951-37-4115-X, ISSN 0785-8388 (Sitra), 110 pages, RRP €24. Edita Prima Oy. Helsinki 2004.