Choices Facing the European Union and Their Implications for the United States

The Choices Facing the European Union and Their Implications for the United States
Woodrow Wilson International Center for Scholars
West European Studies Program
Washington DC,
September 8, 2005.

Panel 1: Choices Facing the European Union.
Panel 2: Prospects for the U.S.-EU Cooperation

On September the Eighth, the West European Studies program of the Woodrow Wilson International Center for Scholars hosted a conference about the choices the European Union faces after the rejection of the Constitutional Treaty by the French and the Dutch and the implications of their choices for the future of the EU-U.S. relationship.

The first panel, concentrating on the issues facing Europe and its options for tackling them, brought together Julian Braithwaite, Counselor at the British Embassy to the U.S. and head of its Global Issues Group, Stanley Crossick, director and founding chairman of the European Policy Center, and Krzysztof Bobinski, the current publisher of Unia i Polska. The second panel, which focused on the prospects for the EU-U.S. relationship, was comprised of Stuart Eizenstat, a former U.S. Ambassador to the EU, Simon Serfaty, holder of the Zbigniew Brzezinski Chair in Global Security and Geostrategy at the Center for Strategic and International Studies, and Helle Dale, Deputy Director of the Davis Institute for International Policy Studies and Director of the Allison Center for Foreign Policy Studies at the Heritage Foundation. Samuel Wells, Director of the West European Studies Program and Associate Director of the Woodrow Wilson Center, moderated.

Panel 1: Choices Facing the European Union

Julian Braithwaite, Counselor at the British Embassy, outlined the agenda of the United Kingdom, utilizing the admittedly "weak vehicle" of the EU Presidency for the second half of this "key year" of 2005, to the challenges facing Europe.

The United Kingdom feels that Europe needs to respond to change, as its population worries about globalization, job security, pensions, and living standards. According to Braithwaite, the British Presidency's priorities (outlined also in Prime Minister Blair's June 23 speech at the European Parliament) centered on building a more flexible Europe that also looked outward, promoting security, stability, and prosperity both at home and abroad. He noted that exactly how to accomplish this was the subject of the great debates during this post-referenda European "time-out."

Braithwaite advocated improving the business climate, reforming the labor market, and crafting a better regulation agenda, but stressed that even with liberalization the EU would remain committed to social justice. He noted that the transatlantic economic relationship, already supporting 12 million generally high-waged jobs (including 7 million U.S. jobs with EU-owned companies), provided a great opportunity for growth. According to the OECD, increased transatlantic liberalization could lead to gains in per capita GDP of 3-3.5%, reinforcing the recent U.S. and EU joint statement that further transatlantic economic integration was the key to realizing the competitive potential of both economies.

Concerning security and stability, especially terrorism, organized crime, and illegal immigration, the British diplomat insisted that not only are the EU states stronger when working with each other, but that they needed also to look beyond Europe to the U.S. and the UN for global solutions. Europe must not just build on the existing Justice and Home Affairs policies and the EU framework to track and obstruct terrorist planning and funding, but also must address the factors leading to radicalization and recruitment. Placing enlargement in a security context, Braithwaite said Europe must implement its existing commitments, such as opening negotiations with Turkey on October 3, beginning accession talks with Croatia when their conditions are met, and preparing for the entry of Bulgaria and Romania in 2007.

Finally, Braithwaite argued, the reinforcement of the European defense policy and capabilities is essential for the European Union to tackle issues such as poverty in Africa, the reform of the Middle East, and the reconstruction and stabilization of the Balkans. The Union should be capable of matching its economic weight with political power to be a "force for good" in the world. However, the EU moves not in straight lines, but with "crablike" progress, and Braithwaite warned its successes would often be "obscure." But as the UK works toward those goals during its leadership of the G8 and the EU Presidency, he assured the audience it would do so seeking even closer partnership with the United States.

The second speaker, Stanley Crossick, Director and Founding Chairman of the European Policy Centre in Brussels, Chairman of the Belmont Firms, and Senior Administrative Partner and international consultant for London-based Franks Charlesly & Company, questioned the long- and short-term choices of the EU. Crossick noted that the recent unanticipated events do not bode well for the EU, but advised that one should not give up on Europe. He reminded the audience of the extraordinary European tendency to follow setbacks with leaps forward – such as Wim Duisenberg, who claimed in the mid-1980s that he would not live to see the Monetary Union implemented, but instead, as head of the European Central Bank, guided its launch. Crossick pronounced the constitution dead ("a sad story"), leaving only the question of what kind of Europe the Europeans do want. He suggested the answer was a Europe that provides jobs, political security (against terrorism), and external security (European Security and Defense Policy), and painted a broad picture of current problems facing Europe. The responsibilities for those problems and for finding their solutions lay both with the EU and its member states individually. The exact division vexes European citizens, whose national leaders have not properly explained to them what exactly the EU is and how it operates, who take credit for its successes, and who blame the EU for failures in areas, such as economic and foreign policy, where the power still lies with the member states.

European growth is stalling, slowed down by its largest and most lethargic economies: Germany, France, and Italy. However, Crossick saw the European Commission as neither the cancer nor the cure, noting that long term remedies must hail from the individual member states, requiring difficult sacrifices from today's leaders for future growth. Unfortunately, democratically elected politicians are unlikely to endorse the "Pay now, gain later" scheme. In Germany, Crossick hoped for the likely governing grand coalition to push through tough reforms, serving as a "motor" for European recovery. France, unfortunately faced an "identity crisis," and his hope for Italy was that President Silvio Berlusconi would be replaced, perhaps by former European Commission President Romano Prodi.

Unlike Braithwaite, the Brussels lawyer saw counterterrorism as mostly another "competence of the member states," but noted (hard-to-measure) progress in interstate cooperation. Concerning the balance, when fighting terrorists, between personal security and human rights, Crossick argued that Europe until now favored human rights, tolerating more risks for citizens, whereas the U.S. embraces the reverse. However, after the terrorist attacks in Madrid and London Europe might change its mind. And on a common foreign policy, Crossick emphasized that Iraq should not be the "tree that hides the forest." On ninety percent of UN initiatives, European countries have a common position. There is much less consensus over the 2007-2013 budget, as disagreements over its size, allocation of the funds, the UK rebate, and the Common Agriculture Policy (CAP) remain.

Crossick suggested there would be delays on enlargement as a post-modern, introspective Europe "reflected on how to reflect": Romania's accession is postponed for one year, Croatia enters in 2010, and Turkey, realistically, is eventually offered a privileged partnership, and other Eastern states would have to wait even longer.

The main European paradox is that people want a strong Europe, independent from the U.S., but do not vote for the solutions that could bring Europe closer to achieving that goal. To many, Europe is still seen as a tool of globalization, not the means for Europeans to manage it. But an un-EU-educated populace is not the only impediment to further integration. Crossick concluded that there could be no progress in Europe until economic stability and good economic growth reappear, for Europe in the past has lurched forward politically when propelled by economic growth. To him, the EU is a "boat on the sea": sometimes the sea is calm, and sometimes rough, but the EU still floats. And Crossick wants to believe that the undercurrent always pushes Europe in the right direction.

Krzysztof Bobinski, of Unia i Polska in Warsaw, presented the perspective of the new member states. For Bobinski, the European Union was not a boat but a safe harbor—a berth which served as an inspiration to democratize and reform the political systems and economies of the former Soviet ships of state. However, "breaches have begun to appear in the harbor walls." Poland, Bobinski noted, finds itself not only obligated to participate in the current EU soul-searching, but also blamed for the problems provoking it. He protested the unfairness in fingering enlargement, observing that "enlargement at the end of the Cold War was what the EU was supposed to have been about." However, Poland and the other new member states, increasingly led by a younger generation educated in post-Communist freedom, are ready not only to participate in the current debates within the EU, but also to help lead them.

On the constitutional treaty, the first of these quarrels (each a loose thread in the "woolen jumper" of the EU), Poland (with Spain) stood against Germany and France on the issue of voting weights. In the end, however, the French people rejected the treaty, a blow from which Bobinski doubts the document will recover, regardless of how much Germany, Belgium, Poland, and other new member states (which overwhelmingly ratified the constitutional treaty immediately) press for the continuation of its ratification. However, even though a CSIS summit deemed the ratification process a major test of "the legitimacy of the union," a sentiment with which Bobinski agrees, he notes that it is now barely a topic of conversation and the EU has gone back to "business as usual."

Bobinski considered another dispute over the 2007-2013 budget, pitting France and the UK against each other over the British rebate and the Common Agricultural Policy "as intractable as ever in the EU." He also argued that the current proposals for budget reform seem impractical to the new member states, which need mostly and simply funds for structural improvements. Also, unlike many of the EU15, the new member states are overwhelmingly pro-enlargement, largely supporting the extension of the EU borders to the far sides of Ukraine, Croatia, and Turkey.

Bobinski further contrasted the perspectives of East and West, recounting how a leader of the Dutch "Yes" constitutional treaty campaign could not think of one good slogan to convince voters they needed the EU. The former Warsaw Pact states, according to Bobinski, "don't have many doubts," seeing EU membership as a guarantor of their security.

Other "loose threads" included the stability and growth pact, adhered to by the smaller states but flouted by the largest, and the euro, the partial adoption of which could threaten the consensual balance within the EU—already dividing into various camps, some of which follow the ghostly outline of the Austro-Hungarian Empire. Bobinski also feared the shadow of another eastern empire, Russia, which he suggested the EU needed to make and keep "happy, prosperous, democratic, and stable."

Yet if Bobinski's EU sweater were to unravel, he seemed confident in the ability of the new member states (especially the former Communist nations, during whose interwar experience germinated many of Europe's federalist ideas, the fruits of which they were denied by their postwar experience) to pick up the "ball of wool and to start stitching... again; simply because our country's and our neighbor's basic security requires it."

During the question and answer period, in response to questions on the European Central Bank and the eurozone, Braithwate and Crossick agreed that the eurozone is often a scapegoat for problems stemming from the lack of structural reform in national government. Concerning the WTO Doha Development Round, Braithwaite reiterated British support for EU reform supporting less developed countries, but noted that since many interpret the failed referenda as a rejection of liberalization, amending the CAP and other issues are now much more difficult; and extending what Crossick deemed the West's "hypocrisy against the Third World." The Brussels lawyer found a model for a blend of social justice and economic liberalization in the Nordic countries, which enjoy high levels of competitiveness and Europe's highest social standards.

When faced with questions on the lack of a sense of urgency among Europeans to fix the EU, Crossick also reiterated his point that Europeans do not understand why they need the EU, and blamed the current elite for failing to make that argument. He lamented that Europe did not have an American-style civil society to host that debate outside of traditional politics and government, but, that instead, Europe will "muddle through."

Panel 2: Prospects for the U.S.-EU Cooperation

Stuart Eizenstat, partner and head of international practice in the law firm Covington and Burling and a former U.S. Ambassador to the European Union, argued that the relations between the EU and the U.S. have improved since the Iraq war. Europe faces a double challenge: the first in its relations with its principal ally, the United States, and the second one of its own doing. While he was optimistic about the former, he saw the second worsening. The U.S.-EU relationship, grown out of a postwar American realization of the necessity of helping to shape Europe's future and manifested in a shared goal of European integration, depends not only on U.S. policy, but on the development of the EU as a more reliable partner, able to react to events quickly and in a unified matter. To Eizenstat, European integration remains no less important to American security than it did during the Cold War, as the EU and the U.S. command sixty-five percent of the world total GNP and together forty percent of global trade, which itself is dwarfed by the transatlantic investment relationship. Even with the rise of the East, U.S. companies invest thrice the dollars in Ireland as in China. Moreover, as Bobinski had earlier noted, EU membership has always acted as a "magnet for democracy building in Europe": in Spain, Portugal, Greece, and then Eastern Europe. One should not then underestimate the importance of the EU-U.S. relationship in the future, and the role Europe can play in promoting its interests common to those of the U.S.

However, the war in Iraq was a fundamental rift, bringing to the surface deep-rooted military, political, and cultural differences between the two powers. The Iraq war came not only on the heels of U.S. unilateral rejection of issues important to the EU ranging from the Kyoto Protocol to the landmine ban, but exacerbated tensions grown out of two seminal events: the fall of the Berlin Wall on 11/9/1989, which prompted Europe to turn away from the U.S. after the elimination of the Soviet threat, and 9/11/2001, which saw the U.S. turn away from NATO, invading Afghanistan and Iraq without the alliance. Without a common enemy, there two partners now have great difficulty in presenting a unified front on major international questions. Europe and the U.S. are treading down different economic, political, and societal paths. The U.S. is becoming evermore religious, while the EU is increasingly secular. The U.S. enjoys relatively strong and steady growth with an emphasis on private action, while Europe stalls and embraces collectivist social policies. And on defense the increase in the U.S. defense budget between 2005 and 2006 dwarfs the entire defense budget of any single European state (threatening a significant imbalance in NATO), while Europe sees international law and institutions as the best avenue for tackling international events, a view rejected by the incumbent U.S. administration.

Fortunately, the former ambassador argued, despite the events of his first term, the beginning of Bush's second inaugurated the first steps towards a renewed partnership. The U.S. has found itself overstretched and not able to simultaneously handle Afghanistan, Iraq, North Korea, Iran, and Hurricane Katrina. The U.S. can no longer handle crises unilaterally and recognizes the need for European "financial and diplomatic clout." And the Europeans have realized they still need the U.S. This new partnership is evidenced by the backing the U.S. gave to the EU3 in their negotiations with Iran over its nuclear program, and the outstanding cooperation between Europe (France) and the U.S. in forcing Syria out of Lebanon. However, Eizenstat warned that this does not preclude another rupture appearing in the future. The lifting of the arms embargo on China by the EU could lead to another sharp chill in transatlantic relations. But, generally speaking, things seem to be improving.

In order to avoid new ruptures in the future and advance the relationship, while taking into account very real differences between the two and the EU's newfound political maturity, Ambassador Eizenstat advanced the idea of a "New Atlantic Charter." This new charter would consist of forming in ten years a new, barrier-free market across the Atlantic on capital, services, professionals and businessmen, through such measures as increasing mutual recognition, equivalency in regulation, and common accounting and auditing standards (which are close to being implemented). It pledges to make the Doha Development Round a reality, because without an agreement on key issues between Europe and the U.S. true success is impossible. It endorses a recommitment to transatlantic exchanges in the non-governmental (civil society, academic, labor, etc.) sectors, especially to change the minds of the fifty-five percent of Europeans who currently believe the U.S. to be the greatest threat to world peace. The Charter, presented through the Transatlantic Business Dialogue to the European Commission and U.S. government in April and discussed at a Washington summit in June, also advocates increasing cooperation on terrorism and non-proliferation and developing the European Reaction Force (which would be able to borrow NATO assets) in order to take advantage of the U.S. and EU respective strengths in the military fields, with U.S. ability to project force worldwide and EU expertise in peacekeeping and nation building.

Simon Serfaty, the Zbigniew Brzezinski Chair in Global Security and Geostrategy at the Center for Strategic and International Studies and an Eminent Scholar at Old Dominion University, endorsed Eizenstat's "double challenge" facing the European Union and insisted that concerning potential allies, Europe remained "the premier choice" for the United States. The transatlantic relationship has taken on even more importance as it comprises security, economic, democratic, political, and societal ties to an extent that cannot be duplicated with anyone else.

Nevertheless, to be able to be involved in a great partnership, it is first necessary to define what is meant by Europe. To Serfaty there is a sense that the "overwhelming transformation" of Europe during the last sixty years may be at risk. Europe is going through a deep crisis that is neither simply personal nor political. It is a general crisis illustrated by today's lack of the prosperity Europeans were used to in the past. Europe needs to regain its confidence and its prosperity to give to people a real sense of safety.

The current crisis is larger than the constitutional treaty, and larger than any single national leader. One single state cannot build Europe alone. States must work together to make Europe advance. But today, Europe is in the middle of a "structural crisis of perceived relevance." No collectivity of states can be found to lead. The institutions are not equipped to deal with the expanded EU membership and the enormous mandate with which they have been entrusted. As Serfaty put it, Europe "failed to deliver on what it pledged." In fact, Europe is seen as a consumer of prosperity and safety—especially by the young, who voted overwhelmingly against the constitutional treaty in France. Also lacking is the sense of regional security and safety necessary for European transformation.

At the beginning of his second term in office, President George W. Bush decided to reach out to Europe not one national capital at a time, but as a whole, through Brussels in February 2005, since, as Serfaty put it, "one state at a time, Europe ... does not have the bulk" to deliver on its share of the transatlantic partnership in today's world. Yet, even as it takes on responsibilities in Afghanistan (where commitments are still unfulfilled), the Balkans, Iran, Ukraine, and the Middle East, Europe still must pass a "test of efficacy." The CSIS expert was surprised to hear the general idea shared among speakers that Europe needed time for reflection. To him, on the contrary, there is a deep sense of urgency. Europe must prove itself a credible partner to the U.S. now, not later. Because if the test of efficacy is not met by the EU, then the U.S.'s willingness to reengage Europe as a union will fade, and the U.S. will return to its coalitions of the willing and the cherry-picking, bilateral approach.

That approach could prove disastrous, as it could destroy the idea of Europe that has developed over the past fifty years. In the next several months, Europe, led by Blair, must find solutions on the budget and seek further consensus on the accession of Turkey and on enlargement in general. Serfaty concluded, noting that "in a paradoxical way," the great choices affecting the transatlantic relationship are not America's, but Europe's, as it continues its great evolution from a land of city-states, to nation-states, to member states, and in doing so finds its place in the world and in relation to the United States.

Helle Dale, Deputy Director of the Davis Institute for the International Policy Studies and Director of the Allison Center for Foreign Policy Studies at the Heritage Foundation, was certain that the nations of Europe will remain America's "most solid allies." However, she considered Europe to be bigger than the EU, and stressed that the U.S. cannot ignore its unique, bilateral relationships with individual European states. She preferred to think of Europe as a free-trade federation, and hoped its populations would not be bound together "before they are ready." Instead, discussion of national or bilateral interests "should not be politically incorrect."

She echoed other presenters, noting that the current EU crisis might be an opportunity to press through economic reforms (inspired by British and Irish economic success). Nevertheless, one must allow for cultural and economic differences when implementing these or any reforms. Here, she argued, is where political scriptures get in the way. She also agreed with Eizenstat about the need for a New Atlantic Charter, but noted that global issues, such as China, Iraq, Afghanistan, and Africa cannot be ignored.

During the second panel's question and answer session, Eizenstat agreed with Serfaty that Europe must prove itself a partner before the U.S. will integrate Europe into its foreign policy thinking, and echoed Crossick, noting that political progress will be hard to achieve during Europe's current economic doldrums. On the issue of the British rebate and the CAP, he argued that the Doha Round was the venue for reforming agriculture, not the budget. He then faulted the UK for lack of leadership, retaining its rebate without compromise as it held the presidency, making it difficult for France to make any concessions on the CAP. Serfaty suggested a compromise solution "on the cheap" that could be prompted by the UK declining future increases in its rebate.

Regarding one audience member's question on what kind of Europe Americans want, Eizenstat reiterated his sentiment that a "dysfunctional Europe is in no one's interest whatsoever." The U.S. expects a Europe that will disagree with it from time to time, but needs a prosperous Europe (as the two economies are already so interdependent, and a sluggish Europe hurts the U.S. dollar) who can contribute "its weight and particular expertise, tremendous aid budget, and capacity for peacekeeping and nation-building" when necessary. For Serfaty, the answer was simply "bigger is better," nodding to the long-held American principle that an enlarged Europe carries benefits in terms of "prosperity, organization, and capability." But to mend this relationship, Crossick noted that one cannot paper over the "gulf of misunderstanding," but must deal with those difficult issues (such as the structure of the EU's burgeoning strategic partnership with China) and truly bridge it. He bemoaned the difficulties of communication in a media-driven society (where news is entertainment and bad news all the more so) and short-sighted governments. Eizenstat saw room for improvement in transatlantic interagency dialogue and the U.S. Congress-European Parliament relationship, which involves only a few House members and no Senators or committee structure.

Bobinski, noting that although the U.S. was instrumental in bringing the EU into being, it had help, in a perverse way, from Stalin and Hitler. Fighting their legacy, the Cold War, held the transatlantic alliance and Europe together, but with their passing, Europe and alliance now need "something to be for." He suggested that the promotion of democracy no longer sells itself these days. As new nations like Kazakhstan shop for systems of government, they will eye Russia, which has failed to produce prosperity, the EU, which provides legitimacy but little new growth, and China, which enjoys extreme growth and stability, with no democracy at all.

Eizenstat responded to Dale's argument on the importance of bilateral relationships, arguing that they would diminish as the EU itself develops its diplomatic capacity, gaining eventually a true foreign minister and diplomatic core. It is already proving much more efficient to turn to a Brussels commanding the support of every state than having to mobilize all twenty-five capitals separately on certain issues. Serfaty agreed, calling the EU itself the twenty-sixth member state of the Union. Although the constitution would have hurried the creation of these institutions, there already exists and will continue to evolve a "pattern of cooperation and sufficient institutional capacity" to work to the advantage of the U.S. Eizenstat hoped that this European "period of reflection" would end ("Americans never reflect") and Europe would act to legally implement further reforms found in the defunct constitutional treaty, including, as much as possible, abolishing the rotating presidency, with its frustrating lack of continuity and excess of unfinished initiatives.

Dale disagreed with Eizenstat, arguing that it is too early and would be wrong to push portions of the unratified constitutional treaty through the "backdoor," as that would generate further distrust among European populations for their leaders. Instead, Europe needs to concentrate on economic reforms, realizing that compromises might have to be made on "luxuries of the past," including labor costs and job security.

Moderator Samuel Wells, Director of the West European Studies Program and Associate Director of the Woodrow Wilson Center, ended the conference, noting that all agreed a sense of "urgency" is lacking in Europe, and without proper reforms and movement on its part, the U.S. cannot strengthen and renew a transatlantic relationship critical to both continents, and indeed the world. This in itself should inspire Europe to action, since, this historian reminded us, without the United States, there is no European Union.