The EU Must Stand Ready to Confront US Leadership

By Emmanuel Murlon-Druol, Lord Kelvin Adam Smith Fellow in the Adam Smith Business School, University of Glasgow. Originally published at VoxEU.

The new US administration’s recent policy measures and criticisms against Europe have so far provoked little reaction from EU leaders. US president Donald Trump was in The Times and Bild on 16 January, and wheeled out a number of clichés against Europe. French and German leaders reacted by merely re-affirming Europe’s readiness to protect its own values and interests.

German chancellor Angela Merkel said that ‘we Europeans have our fate in our own hands.’ French president François Hollande said that ‘Europe will be ready to pursue transatlantic cooperation, but it will be based on its interests and values (…). It does not need outside advice to tell it what to do.’ But so far EU leaders’ reactions have remained at the level of general declarations. Indeed, there still seems to be a widespread perception that the EU is too weak an organisation to stand firm vis-à-vis the United States’ policy choices.

Part of this perception comes from the fact that the United States famously encouraged and protected early efforts to unite Europe. The Marshall Plan and the subsequent creation of the Organisation for European Economic Cooperation (OEEC) are often taken as the start of post 1945 European integration. They are prime examples of positive US involvement in Europe. By providing economic aid and supporting Europeans to organise themselves, the United States played an important role in the origins of European integration. In addition to this economic support, the United States also provided a military umbrella over Western Europe after World War II. Therefore, economically and militarily, the European Union developed in a transatlantic cocoon.

Should we be surprised, then, by the recent negativity on the part of our transatlantic ally? This is certainly not the first time that US foreign policies have been directed against European interests. It is important to realise that on several past occasions, the EU did prove able to react forcefully, protect its interests, and modify the course of US foreign policy in Europe.

In foreign policy, the overcoming of the cold war order in Europe is an excellent example of the success of European diplomacy in the face of the alleged hegemony of the US, and indeed also the Soviet Union. For instance, in the late 1960s/early 1970s, US strategy mostly consisted in perpetuating the bipolar order, and thereby the division of the European continent. By contrast, Western European governments and the then European Economic Community (EEC), the EU’s predecessor, aimed to slowly transform European relations in order to overcome the cold war partition of Europe between East and West.

The policy of the EEC and Western European governments contributed to showcase a European voice, distinctive from its transatlantic ally. The Helsinki Final Act – which the EEC signed – crowned these diplomatic efforts. The most recent historical literature points to the fact that EEC member states acted together within the EEC framework to promote the process of European détente. The EEC/EU showed that it did not need the advice of the United States to decide on its fate.

In trade, a united EU reaction to US policy has also proved very efficient. In the early 1980s, the Soviet Union started building a natural gas pipeline to supply Western Europe. In order to do this, the Soviet Union needed financing, equipment, and technology from the West. Many Western European countries welcomed the construction of this pipeline, as it would contribute to diversify their imports of natural gas. The US administration, by contrast, severely criticised the initiative.

The United States targeted four EEC member states in particular – France, Italy, West Germany, and the United Kingdom – for having concluded contracts related to the construction of the new transcontinental gas pipeline. Through this trade, the US administration argued, European countries were effectively supporting the Soviet Union. In 1982, US president Ronald Reagan decided to impose an embargo on all equipment manufactured by Western firms – including British, French, Italian, and West German – under license from US companies involved in such a trade with the Soviet Union.

These EEC members reacted with outcry. But instead of reacting separately, these four countries coordinated their response through the EEC and its then embryonic foreign policy, called European Political Cooperation (that was also the mechanism involved in Helsinki). Faced with this strong opposition, Reagan backed down, and lifted the embargo. A coordinated EEC response proved again that it could make a difference.

In the monetary realm, the EU has also been capable of prompt and effective reactions. The whole story of European monetary integration showcases the affirmation of Europe on an international stage dominated by the dollar and its harmful fluctuations for European economies. In monetary affairs, US actions have been more often than not directed against Europe’s own efforts. For instance, when US president Richard Nixon decided on 15 August 1971 to put a brutal and unilateral end to the gold-dollar link and introduce an import tax, the US administration clearly aimed to disrupt European efforts at monetary unification. And it momentarily succeeded in doing so.

In the late 1970s, the US administration pursued an economic policy that led to the collapse of the dollar on international currency markets. This endangered European economies, in particular West Germany. The then West German chancellor Helmut Schmidt, upset by what he perceived as a US ‘malign neglect,’ called for a proper European reaction. This reaction took the form of the European Monetary System (EMS), created in 1978. In presenting the EMS to the Bundesbank, Schmidt explained that Europeans could not remain passive in front of US unilateral actions that had consequences on the world economy. Schmidt declared that ‘it was urgently necessary that the Europeans say to the Americans: that’s not going to carry on.’

Such past examples should remind European policymakers of the EU27’s potential strength on the international stage vis à vis the US. The EU27 can do little to change the predetermined policy inclinations of the new US administration. But what the EU27 can do is to gain full confidence in its capacity to influence the course of international events by being coherent, consistent, and united. There is no reason for the EU to shy away from its duty to protect its citizens’ interests and uphold their values internationally. The EU27 must be ready to say to its transatlantic ally, whenever the US administration puts at risk European interests and values: this is not going to carry on.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

51 comments

  1. Clive

    The EU (by which I refer to the Franco-German alliance which is what the EU has allowed itself to become) has, up until now, been able to successfully pursue mercantilist economic policy going back a decade or more combined with protectionism. The Common Agricultural Policy is one of the biggest protectionism scams going and the main cause of material error in the EU’s budget allocations.

    It was nice for the EU while it lasted, but it was naivety — arrogant — of the EU to think it could go on forever. The US has, finally, started to call the EU out on some of the worst stunts they pull. Rather than responding to criticism by looking seriously at the points raised, cleaning house where needed and coming up with counterarguments where the EU is innocent, we get the Adam Smith Business School espousing uncritically the EU’s antics and calling for defence against the US where it (the US) “puts at risk European interests and values”.

    Better chutzpah please. Trump may be a fool, but he’s not the EU’s. He signaled loud and clear that he’s not buying Merkel’s defending liberal democracy pieties and sees them for the self-interest in a worn, increasingly threadbare and feeble disguise hogwash they are.

    1. PlutoniumKun

      Too true. I think its more correct to say that US policy towards Europe has been for Europe to be united – but not too united, in case it can compete geopolitically with the US. It has always suited the US that it can peel off some Europeans (the UK usually) to provide multinational and European support for whatever it wants to do. And more recently, the generally very pro-US governments in Eastern Europe have provided valuable cover.

      But a key issue is Germany – for much of the life of the EU, Germany played quite a positive role, in that it realised it could not be seen as too dominant, but open borders would always favour German industry. But its role has become increasingly malign. Not, I think, through geopolitical cynicism, but more through it transferring its own neurosis about trade imbalances and borrowing across Europe. I sometimes think the Germans actually think they are doing the right thing by Greece and Italy, etc., its like when you punish a naughty child for its own good.

      Trump will be clarifying for Europe. It will force Europe to stop the hypocrisy over its economic and geopolitical policies and force individual members to recognise that while the EU can be a force for good, it can only be so if it works for the interests of all EU Citizens. And it will finally I think stop the refusal to recognise that the roots of the refugee problems are caused primarily by US policies in north Africa and the Middle East, exacerbated in particular by the roles of the French and British.

      I have no illusions that it will all end well, but at least the underlying power relations will become visible to everyone.

      I would just quibble with one thing you say – I don’t think its true to say that the EU is now a Franco-German alliance. I think the weakness and incompetence of Sarkozy and Hollande has seriously weakened French influence. I think the core strength in the EU now likes with a cluster of northern (and some eastern) europeans around Germany. France now occupies a sort of awkward point between the north and south – this should have been a source of strength, but is now a weakness. In many ways, countries such as Finland, Denmark, the Netherlands and the Czech Republic are now even more ‘hard line’ in some respects than the Germans. Surprisingly enough, the Baltic States too.

      1. Clive

        I’m probably biased by a too-small sample size of friends who live in France but are fully paid up members of the French liberal elite (by which I mean they think they are of the left but would probably die of fright if a real, live, member of the rural pesantary moved in next door to them) who tell it like France has equal influence to Germany when it comes to defining the European Union direction of travel. Perhaps, like the British as a whole have a bad case of, they substantially overestimate their true degree of influence and room to maneuver.

        We’re really up the you-know-what creek if German flavoured Ordonomics is going to be allowed a complete free hand without any French corporate state variety socialism to (however slightly) offer a counterbalance.

    1. Uahsenaa

      Exactly. It seems whenever southern European countries are on the chopping block, suddenly pan-European solidarity gets thrown out the window. Pay no mind to the fact that all that southern European debt helped keep northern European industry afloat.

    2. susan the other

      I was going to say “one word – China”. Because EU solidarity is going to have to accept either individual sovereignty or a political union and the political union is not something they understand yet. So, enter China, the New Silk Road, desperate to expand its own economy, friend of Russia and courting all of the European countries like only the Chinese can do – they’ll out mercantilize Schaeuble in no time. And we? We are going to get control of ME oil even if it causes WW3 and then go bilateral, if not bipolar. Which means the EU is on it’s own. So it happened. Just as predicted. The Heartland is coming together. I think we’ll be OK because in the end we always come together just enough to be practical.

  2. PlutoniumKun

    I would add a point, btw, about the power axis within the EU at present, that the greatest obstacle to a negotiated ‘softish’ Brexit will not be Germany or France, but some eastern European countries. I’ve heard from reliable sources that there is real fury in those countries (at government level) at what they see as a betrayal by the UK. I suspect they would veto any agreement which is seen as anything less than the punishment of the UK. Perhaps that will change (nothing like an EU Banking crisis to change minds), but for now, they have a surprising amount of power over what happens.

  3. Bugs Bunny

    The EU needs to fix the Euro and the democratic deficit before it can again have a coherent voice strong enough to speak louder than the US or even China on the international stage.

    If an entity founded as an “economic community” can’t even get its act together to enact an internal economic policy that provides relatively equal benefits and obligations to its Member States, why should anyone else take it seriously?

  4. Praedor

    Greece (and Ireland, etc). The EU is a neoliberal looting operation that primarily serves Germany’s interests, allowing France a weak second place. It is broken at the core (ideologically) and hamstrung by private banks ruling the money.

    The Europe of the 80’s no longer exists. It is not the peacey lovey combine that sought coexistence with the USSR. It is now a full blown war dog, blowing up Libya, seeking to blow up Ukraine, and shooting spit balls at Russia, expanding NATO without limit.

    1. makedoanmend

      If one accepts your points, and I tend to agree with them, these points do nothing to address the antagonism that the US, also a neoliberal looting operation with a penchant for even more war-mongering which primarily serves the interests of the rulling elite and their middlestat enablers (right and liberals both), might show to the EU project. The US elite can hardly be expected to be the saviours of the ordinary European citizen. How many poodles (i.e. special relationships) will the US support in Europe if the EU fragments?

      As always, it’s the ordinary citizens who are left without influence upon events and a choice between equivalent “evils”. hmmm….

      All one can say, as a European, is that we could have influence through the ballot box and other means on European politicos.

      Obviously, we’ll have none on US politicos. US politicos have made this starkly clear from all shades of the political spectrum.

    2. OIFVet

      A war dog? More like a yapping lapdod, bravely growling toward the East and South from the safety of the US’ military lap. But it is quick to roll over and play dead when a wannabe Sultan issues even the mildest of threats to open the migrant spigot, and then hurries to write him a big check to buy a little protection. Watch it write the US a big check too, should the Orange Satan manage to consolidate power and remake the bureaucratic and policy apparatus in DC in his own image.

      1. sid_finster

        Good point, as anyone who has ever gone shooting with a European knows.

        Europeans are the biggest metrosexuals on the planet.

        1. makedoanmend

          You know all 750 million+ people in Europe?

          Impressive.

          Does shooting guns give one this stamina to meet so many people?

        2. Gaelle

          It might be a side issue to you …
          But to the 51,7% of us – EU citizens – who are women, the implicit assumption that the standard imagined European is a man, is a great deal more annoying than whatever stereotype you may derive from an anecdotal experience over a fringe sport for older men.

  5. Disturbed Voter

    Real politik has always tended toward German and Russia getting together, as they were during the Napoleonic Wars. The industry of Germany and the natural resources of Russia demand it. The Communism and the Cold War prevented this. The US and Germany have been a generation late in accepting this particular Manifest Destiny. Germany wasn’t supposed to become Middle East Nord as it has under Merkel.

    1. Carolinian

      I’ve just been reading that Merkel has fallen behind in the polls and, even though the election is months away, may in fact be on the way out.

      And for those who care for The Saker, one of his big points is that Germany and Russia are natural partners, something the neocons of course view as nightmarish.

      When I toured Europe back in the post Vietnam period there seemed to be a fair bit of hostility toward Americans. This was annoying at the time but now seems natural and entirely welcome. Who wants every other country to be just like us (US)? It makes for a more boring world.

      1. sid_finster

        Ain’t just the Saker. The natural alliance between Germany and Russia was a stratfor talking point as well.

      2. Dr. Roberts

        No idea what polls you’re looking at, but every poll I’m seeing suggests a continuation of the current coalition. There has been a recent surge in SPD support that brings thrm close to the margin of error, but it won’t be possible for a government to be formed without both the CDU and the SPD, even if the SPD manages to knock off Merkel as chancellor. There’s a little chance that a Schulz-led SPD will coalition with the left-wing die Linke, and that’s really the only other possibility.

        The best to be hoped for is that the SPD edge out the CDU and Merkel and Schäuble get sidelined. Of course we probably wouldn’t be so lucky and Schäuble will probably end up back in charge of the Innenministerium or something.

    2. susan the other

      I think this is correct. China adds an extra layer of unification. Which makes me wonder what our actual China policy is or should be. We have taken three obvious steps that look like we want to push China into the Euro-Russian sphere: We forced Russia to turn to China as a trading partner for natural gas; we harangue China constantly about the South China Sea – pushing China away from us politically and economically; we haven’t sabotaged the New Silk Road and Belt (that I know of). And of course, our position globally is clear – we want to control oil and the ME. By controlling oil we control China’s expansion and India and prolly Africa and So America. Which leads me to suspect that the Ruskies are in on the whole plan. Crazy?

      1. FluffytheObeseCat

        We should “harangue” China about their land and resource grab in the South China Sea. There are other populous, industrializing nations around that region who stand to lose as China obtains regional dominance. We have interests in the Philippines, Indochina, Indonesia and all of the southern Pacific region. Those interests are not served by allowing China to make them each it’s bitch.

      2. ChrisB

        Putting trade sanctions on Russia and military sanctions on India, sabre rattling at China, and threatening the global trade routes of all three, is creating an environment where these three enormous powers are being forced together into trade and military alliance.

        This is the exact opposite of the extremely successful divide and conquer approach taken in the region in late 60’s and early 70’s.

  6. Eustache de Saint Pierre

    The author cites examples of European co-operation which it seems to me are from the days when the EU could work together effectively.

    Perhaps they still can, but nowadays if it were likened to a badly designed ship which is overladen with debt & is obviously heading further into financial reefs of various sorts, has many interchangeable captains, who are prone to squabbling among themselves while a significant proportion of the below decks are planning open mutiny – would it actually take much of a squall from any direction to sink it ?

  7. Chriss Street

    The author lives in the Acela Bubble and has absiolutely no empathy for the rest of America in flyover country.

    Germany has the largest current account as a percentage of GDP surplus for any nation on the planet at around 8.7 percent. Over a quarter of Germany’s rapidly growing surplus is with America. Germany exported $124.9 billion of mostly automotive vehicles and parts to the U.S., but only imported $49.9 billion of mostly automobiles, aircraft and pharmaceuticals from the U.S.

  8. cocomaan

    Not a bad article and lays out the stakes, but I would be cautious about that characterization of the Marshall Plan as being the US somehow enabling and encouraging Euro cooperation.

    http://www.telegraph.co.uk/business/2016/04/27/the-european-union-always-was-a-cia-project-as-brexiteers-discov/

    There were instances where EU politicians balked at what was being encouraged, only to be pounded into submission by the American presidency:

    Truman’s motive was obvious. The Yalta settlement with the Soviet Union was breaking down. He wanted a united front to deter the Kremlin from further aggrandizement after Stalin gobbled up Czechoslovakia, doubly so after Communist North Korea crossed the 38th Parallel and invaded the South.

    For British eurosceptics, Jean Monnet looms large in the federalist pantheon, the emminence grise of supranational villainy. Few are aware that he spent much of his life in America, and served as war-time eyes and ears of Franklin Roosevelt.

    General Charles de Gaulle thought him an American agent, as indeed he was in a loose sense. Eric Roussel’s biography of Monnet reveals how he worked hand in glove with successive administrations.

    And it goes on and on.

    1. Paul Greenwood

      Marshall Plan was because of a Dollar Shortage in Europe. Companies like Ford and GM needed to re-equip factories and would need an export surplus with the USA to get Dollars. Marshall Plan allowed European companies to buy US machine tools and equipment thus saving the US from postwar Depression or speculative excess as in 1920s.

      Marshall Aid was not charity. Germany repaid Marshall Aid. Germany also lost its patents, designs, research, and trademarks taken by the USA and in 1946, 3.8 Million pages of German scientific research material from industrial laboratories and universities were filmed and provided to domestic takers for a modest fee. In the United States, 186,000 dossiers of the Reich’s patent office were available.

      Allies confiscated 346,000 German patents including 200,000 German foreign patents. There were 20,870 German trademarks as well as 50,000 new color formulas that had been developed in the research facilities of IG Farben.

      http://www.wintersonnenwende.com/scriptorium/english/archives/articles/patents.html

      1. oh

        Very true. We destroyed Europe and lent money for rebuiding them ‘hmmm.. can you say financial lobby…. i came to the same conclusion as you a few years ago when I wondered why the USA spent blood and treasure in WWII.

  9. oho

    >Such past examples should remind European policymakers of the EU27’s potential strength on the international stage vis à vis the US

    So long as EU26 kow-towed to the wishes of Germany.

    Germany’s a mess internally trying to deal w/the consequences of Merkel’s migration policy.

    Color revolution anti-Eurocrat genies are out of the bottle in France, Netherlands, Italy, Catalonia, Hungary.

    Clocks are ticking.

  10. Jus'Thinkin

    Nice article, but as Praedor points out from the 1980s. Things have changed since the Cold War.
    Why not highlight some great examples of Europe standing up to the US, let’s say, in the last 20 years? Could it be they are few and far between?
    Europe certainly supported sanctions against anybody the US wanted to sanction.
    I don’t recall any great opposition to any of the wars the US has become involved in lately which certainly have hurt Europe with the refugee crisis. Isn’t Europe still the US’s “pooch?”

    1. TheCatSaid

      Quite right. There are a few places (diminishing?) where EU polices are contrary:
      –There is still some EU ability to keep out GMOs,
      –Individual countries still have some say regarding their national healthcare approaches (e.g. homeopathy fully recognized in many EU countries; various national approaches to healthcare/insurance structures though here, too there is constant pressure from US-based insurance model players)
      –More union support in some EU countries and sectors
      –More social safety net in most EU countries

      As some other commenters have observed, EU also has its own flavors of democratic deficits with lack of transparency and accountability.

  11. Gilford

    I don’t see how we Americans truly benefit from hastening the disintegration of the EU (which will likely implode on it’s own). Their internal financial agreement is a disaster for the South, but surely it’s better to let them hash that out by themselves. If you fracture the alliance, you’re running the risk, if Germany veers right with the AfD, of them thinking about a cozy alliance with the Russians. From a historical perspective pretty scary.

    Better to have the Germans in the current alliance and balanced by other members.

    1. Paul Greenwood

      EU is currently constraining economic growth and destabilising the global economy causing US trade deficits to be the main economic stimulus

    2. witters

      Can I have some links for the ‘historical dangers’ (and for whom?) of ‘a cozy alliance’ between Russia and Germany?

  12. Paul Greenwood

    Trite and simplistic article unworthy of serious consideration. It omits the SIS/CIA funding of the European Movement, the role of Josef Retzinger, the Bilderberg connection, and the US push for German Rearmament to counter Soviet offers of a United Neutral Germany. France had to be bought off just as when the D-Mark was introduced and the Treaty of Rome was the price, followed by Adenauer’s anger at JFK for failing to block Ulbricht building the Berlin Wall…..within months Adenauer had signed the Elysee Treaty with Paris to snub Washington, and JFK came post-haste to Berlin to announce he was a doughnut; 5 months later he was dead.

    There is no “European”. Metternich stated it was “nur ein geographischer Begriff” and so it is. There is nothing that binds a Pole to an Englishman other than transfers of money; and the ability of 5% Poland’s population moving to UK, or 40% Eu immigrants to UK coming from Romania and Bulgaria.

    The EU was built on the League of Nations model with a Commission (Permanent Secretariat); a Council (European Council); and an Assembly (Euro Parliament which cannot initiate legislation nor remove the Secretariat). It was designed to be Non-Democratic rather like the Congress of Vienna.

    France had bought votes from farming constituencies under de Gaulle because Code Napoleon made farms small and uneconomic. the need to harness German funds to keep the system viable in return for access for German manufactures created the essential structure.

    UK as major food importer would always pay high contributions into EU budget funded from common external tariff and VAT, and it had no advantage in funding French farmers voting patterns and certainly no access to the German market protected by non-tariff barriers.

  13. TheCatSaid

    Another factor omitted from this discussion is the USA’s Project Paperclip under which it imported the most important German minds and technologies, including some still classified and compartmentalized in the black projects / secret space program areas.

    Others have said the Germans managed to preserve their technical preeminence through a highly organized German secret society formed well before the end of WWII, and which is ongoing. (Michael Shrimpton claims to have documented this extensively but I’ve not read his material.) It may function outside the official German government budget and structures, similar to some USA activities.

    1. Synoia

      Compared to Japanesec Cars, German ones are unreliable. Other than cars, what Technolgy does Germany have?

      1. Paul Greenwood

        Cars are not “technology”. US acquired magnetic tape recording, rocket technology, optics technology, IG Farben patents. Pre-WWII the IG Farben “Berichte” were the basis of Chemistry and helped Dow and DuPont enormously. The patent swaps with Exxon and IG Farben before and during WW2.

        You simply have no idea how much of US industry 1945-1980 was built on German technology taken in 1946. The fact that Japan and Germany now run exports surpluses with the USA shows how far that dowry has been expended

  14. Sally

    After the second world war the US was in the dominant position. Apart from Pearl Harbour, America had avoided any real bombing damage of the home land. They had little debt, their currency was backed by gold, and they had 50% of global trade. In contrast Europe lay in ruins. The British Empire was bust, Germany and Japan was flattened. All those factories that had been churning out tanks and guns back in the U.S. we’re ready to be converted back to making cars, fridges and food mixers.

    Problem was, who was going to buy all this new stuff outside of the U.S.? The Marshall plan was not just the Americans being nice. They wanted Europe to get back on its feet as quickly as possible so as to start buying all those gleaming products. So they encouraged Germany to re-industrialise. This was hugely problematic for the French who un surprisingly having been invaded twice by the Germans in 30 years were against any such move. The deal was that The Germans and the French would be brought closer to together. Germany doing the industrialising and banking, and the French doing the administration and agriculture. And so the EU was born.

    In 1971 Nixon took the US off the $ partly because the Vietnam war had cost so much that people began to be suspicious of the $ s real woth. The French president decided to put it to the test and kept demanding $ be exchanged for US gold. Up until then the US had always boasted that the $ was worth its weight in gold. Not surprisingly the gold store went down and The US decided to abandon a policy that would have seen all their gold go out the door. Treasury Secretary John Connally was sent to Europe to tell the politicians that the the new policy on the $ “it’s our currency, but it’s your problem …” And so it was……

    I find it bizzare that the author of this piece is from the Adam Smith business school. I am not sure what Smith would have made of ever closer European intergration or indeed a single currency. I doubt he would have approved of the European project as it has emerged. Smith was concerned about the merchant class leaving England and Scotland, but convinced himself that they would stay in the UK becuae of their love of their home country. It’s were his famous invisible hand comes from.

  15. The Trumpening

    “Unity is out Strength” seems to be the theme of this article. Which I’m sure makes a hell of a lot more sense than the asinine slogan Diversity is our Strength. For surely Trump’s strategy will be to divide and rule Europe. And so that means European diversity is Trump’s strength when he’s attacking Europe.

    One obstacle to European unity is the fact Merkel’s insane refugee policy is tearing Europe apart and leaving it easy pickings for Trump and his crew. In fact I am convinced that if it wasn’t for Merkel’s Boner, then neither Brexit nor The Trumpening would have taken place. Just think of the reaction of everyday Americans to Hillary Clinton and Barrack Obama back when they were speaking glowingly about what Merkel did to Germany and promising to do similar things to America.

    Here’s what Europe has to do to rise to the challenge of Trump.

    –dump Merkel and agree to let Viktor Orban lead Europe.
    –reinforce Europe’s external borders so that the internal borders can remain open.
    –help implement the “safe zone” policy in Syria, the Middle East, and Africa.
    –move towards the Australian “you have to go back” refugee policy.
    –deport most recent refugees to safe zones similar to the way Yugoslavs were deported from Germany in the 90’s.
    –pursue enough protectionism to ensure plenty of job opportunities for low skill labor.
    –stop meddling in Muslim nation’s affairs
    –actively pursue peace and stronger relations with Russia.

    If Europe and Russia combine then Emmanuel Todd’s prediction of the decline of the American Empire will finally come true. The US will slip down to regional power status and Eurasia will return to being the center of global society as it has been for most of the history of mankind.

    And the current policy of killing Muslims in their nations and then kindly compensating by accepting a similar number of living Muslims as refugees / immigrant in Europe or the US has to stop.

  16. Sally

    Trump is actully right about the Euro currency. The Germans are able to use the weakness of the other European nations to have a weaker currency to export their stuff. The German economy would have a much higher value currency if it was just their own currency. And the Greeks and the Italians need to devalue their currency for their own economies.

  17. Roland

    There has been a long but intermittent historical trend for Germany and Russia to economically associate.

    e.g. Russian emperors such as Peter and Catherine invited Germans to settle in Russia, in order to foster economic development. Many Germans ended up as army officers, government officials, and so on.

    e.g. in late 19th cent. Russia’s modernization featured grain export to Germany, while German banks invested in nascent Russian industries. Reactionary elements in the German upper classes tended to be Russophile and Anglophobe, while reactionary elements in the Russian upper classes tended to be Teutonophile and Francophobe.

    Despite this historical legacy, however, one should understand that there are core contradictions underlying the notion of a Russo-German entente: the economic complementarity is predicated upon Germany always being the metropolis, while Russia always remains the periphery.

    The more successful a Russo-German entente becomes, the more acute the contradiction. Why? Because if the entente prospers and advances, the peripheral partner will either develop its own metropolitan capacities, or it will be thwarted in developing such capacities. Rupture, either way.

    Moreover, since Russia is larger than Germany in terms of both human and natural resources, a Russia which achieves a metropolitan level of development would reverse the roles in the relationship. If the trend goes to maturity, eventually Russia becomes the senior partner, Germany the junior.

    From these contradictions arise the predominant 20th century trend of Russo-German relations: the German efforts to violently pre-empt the full economic and political modernization of Russia.

    The need to prevent Russia from becoming as modern as Germany was a critical factor in German grand strategy before the Great War. The thinking ran thus, “If we don’t break them soon, they’re going to dominate us the same way we have come to dominate the French.” The same sort of thinking underlay the German effort to subjugate Russia in 1941.

    The Germans, corollory to those efforts, fostered client states in Eastern Europe. Curiously, since the end of the Cold War, this sort of activity has been mostly taken over by the USA (what Cheney liked to call “New Europe”). However, German investors play a major role in Slovakia, Poland, Romania, etc. Moreover, the as yet abortive efforts to get Ukraine into the EU seem to indicate that the Eurocrats prefer their resource-bearing peripheries to be in an obvious state of political and economic dependency.

    Metropolis/periphery relations are problematic even within a single state whose people share a cultural heritage; between separate peoples the strain often leads to breakdown of the relationship.

  18. mrtmbrnmn

    I am often the last (or almost the last) commenter in these chains as I usually don’t have a chance to read this most excellent site until the middle of the night. Reading the above contribution and comments, it occurred to me that I came across a piece on the “internets” about Brexit and the EU back in June that is appropriate to this discussion. Very little has changed for the better since then, unfortunately. But sooner or later, like the Soviet Union, this European Union Frankenstein will collapse of its own dead weight…

    http://news.jornal.us/article-681256.Brexit-Britain-Breaks-Free.html

  19. nobody

    Whatever else may be the case, this post and the discussion that has followed has prompted me to go digging through the personal stacks for my half-read copy of David Calleo’s Rethinking Europe (Princeton University Press, 2001):

    Rethinking Europe’s Future is a major reevaluation of Europe’s prospects as it enters the twenty-first century. Summoning the insights of history, political economy, and philosophy, Calleo explains why Europe was for a long time the world’s greatest problem and how the Cold War’s bipolar partition brought stable resolution of a sort. Without the Cold War, Europe risks revisiting its more traditional history. With such volatile surroundings – in particular Russia and Europe’s Muslim neighbors – no one, Calleo argues, can pretend to predict the future with assurance. Calleo’s book ponders how to think about this future.

    It begins by considering rival “lessons” and trends that emerge from Europe’s “living past.” It goes on to discuss the theories for managing Europe’s traditional state system, how that system was affected by the transition from autocratic states to communitarian nation states, reasons for the enduring strength of nation states, and their uneasy relationship with capitalism. Calleo next focuses on the Cold War’s dynamic legacies for Europe – an Atlantic Alliance, a European Union, and a global economy. These three legacies form systems that now compete to define the future.

    The book’s third and major section examines how Europe has tried to meet the present challenges of Russian weakness and German reunification. Succeeding chapters focus on Maastricht and the Euro, on how globalization appears to affect Europeanization, and on the EU’s unfinished business – expanding into ”Pan Europe,” adapting its hybrid constitution to the expansion, and creating a new security system for this widened Europe. Calleo presents three models for the new Europe – each proposing a different relationship with the U.S. and Russia. A final chapter considers how a strong European Union might affect the world and the prospects for American hegemony. A beautifully written book offering insight into a critical moment of history, whose outcomes are likely to shape the world long after our time.

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