I started off this past summer hoping to write an essay on the global financial crisis and how it was affecting Europe’s evolving federal system. I was not surprised to learn that European leaders were handling things with rather more political skill than we were giving them credit for. What did surprise me, however, was, first of all, the large number and vehemence of Europeans apparently opposed to the Euro, and, by extension, opposed to the European Union itself. But, secondly, I grew impressed with the determination of most European states and the apparatus of the EU to defend the Euro. What I eventually came to realize was that the financial crisis was pointing toward basic geopolitical issues between the European and American federal systems, and among the European states themselves.
The economic and constitutional problems within the two federal systems are in some senses similar. For several decades, government in neither federal system has been able to adjust spending to income. In the US, the Federal Government has run large fiscal deficits at home since the 1970s, together with large current-account deficits with the rest of the world since the 1980s. Deficits have been covered by creating dollars and dollar instruments, a practice made possible by the dollar’s role as the global reserve currency. As a result the world economy is awash with financial assets in dollars. In the EU regular fiscal deficits in many member countries, have accumulated to form substantial loads of official debt. By now both federal systems are caught in a long simmering global financial crisis, intimately related to their own high indebtedness. In the European Union, several member states find themselves menaced by a “sovereign debt crisis,” where they actually have difficulty raising the cash needed to cover their current obligations.
Paradoxically, while many EU members are among the world’s richest and most powerful states, their own European Monetary Union deprives them of the power to set national monetary and exchange rate policies. At the same time, it fails to substitute a central authority able to act effectively for the Union as a whole. Thus the huge collective potential of the EU’s economies is impaired by its mixed constitution. Sovereign power is scarce in the EU. It lies in whatever flicker of general will proceeds from the bargaining of the member states. In principle every state has a voice. Reaching decisions requires lengthy deliberations and imaginative compromises.
The challenge has been to find institutions capable of formulating and enforcing rules acceptable to all. Progress has certainly been made, but there is still only a shaky consensus. In effect, today’s financial crisis in Europe raises the fundamental issue that any federal or confederal union of states must confront: to what extent and in what ways should richer member-states subsidize poorer member-states?
In America’s own long experience as a federation, the central government has regularly channeled money from rich states to poor states. From the start, the EU members also agreed that a high degree of equality was an essential condition for sustaining a European Union. Accordingly, the EU has regularly channeled regional and structural funds into the poorer member-states and the more vulnerable parts of the shared economy, agriculture especially. These subsidies have sometimes been abused but have often also achieved impressive results, most recently in the transformation and absorption of several new member states from Eastern Europe.
Ideally, every EU member should be well enough endowed to compete with reasonable success. Where the necessary resources are lacking, they should be transferred. But adjusting market outcomes to pursue redistributive goals easily generates resentments highly dangerous for a federation. Just as a successful nation state requires a strong sense of common identity and interest throughout its population, a successful federal union requires a strong sense of solidarity and mutual respect among its member states. Quarrels over burden sharing erode those unifying sentiments.
Fortunately for Europe’s future as a federation, the ties that hold together federal Europe are not merely or even primarily economic. The EU endows Europe’s states with political advantages that are beyond price. For several generations Europe’s Union has removed from European life the old fear of internecine (nay-scene) war. It has given European states a framework of shared institutions, habits and perspectives needed to understand each other’s needs and reconcile differences peacefully. The more prosperous states have at least as much to lose from an end to this confederal experiment as the poorer. Germans, in particular, have every reason to support a project that cements their alliance with France. Otherwise Germans risk falling back into the disastrous patterns of Bismarckian Europe, where everyone else feared united Germany. While the Germans no doubt did much to bring down ruin on themselves, no one can deny that others relentlessly plotted against them, or that they ultimately came to share Europe’s suffering to the full. Bismarck’s “nightmare of coalitions” proved all too prophetic.
To assess the geopolitical bonds that now are expected to hold Europe’s federal experiment together we need to start by recalling the broad history of the last century. The second half of that century featured the Cold War—as the two superpowers competed for global hegemony. The US had substantially greater resources, plus a grand alliance encompassing Western Europe, including much of Germany, as well as Japan. Given such an overwhelming preponderance of economic and military resources, the final result should not have been surprising. From this perspective, we can almost say that America’s achievement in the Cold War was more diplomatic than military. America’s alliance—its leadership over the “West”—its “hegemony”—was not so much imposed as invited by the Europeans themselves. The Soviets, of course, had a great potential ally in China, but were unable to build a serious alliance. Indeed, the two were often fighting limited wars between themselves.
America’s achievement in building such an overwhelming alliance, was all the greater given our long history of truculent isolationism toward Europe. From the American Revolution, where our alliance with France was critical, followed by the War of 1812, from then until the world wars of the 20th century, the United States and the European great powers had never been allies. Isolationism made sense for a country with a population of immigrants from Europe, who tended to identify themselves according to their European national roots. Along with the “British” of several varieties there soon followed an almost equal number of Germans, then Irish. Scandinavians, Italians and Slavs. Jews first came from Brazil in the 17th century. The late 20th century saw a mass influx from Asia and Latin America. The new century promises to diversify the population further, to make it much less “European.” This is causing considerable anxiety. In America, the diverse nationalities have often lived in adjacent or common neighborhoods. New immigrants many times arrived with their old antagonisms intact. Cohabitation was not always peaceful. Absorbing this rich diversity peacefully was a Herculean task for the Republic.
Playing an active role in Europe was hazardous for America’s own multinational consensus. It made better sense for American political ambition to focus on its own West, where the military threat was seldom formidable, and where internal antagonism among America’s national families could more easily be avoided.
Once it began, however, America’s transformation from isolated giant to global leader was remarkably rapid.
America’s transformation from isolated giant to global leader was remarkably rapid.
A few months after the US entered World War I, President Woodrow Wilson was ready with a plan for the League of Nations. Wilson’s grand initiative failed—abandoned by his own countrymen, who instead reaffirmed their isolationist tradition. But a quarter of a century later, Franklin Delano Roosevelt, who had been in Wilson’s war cabinet, succeeded where Wilson had failed. As Japan plunged the US into World War II, Roosevelt was imagining a full set of new postwar institutions for global security, finance and trade—institutions in which the United States would play the leading role. FDR’s assertive new diplomacy proved contagious among America’s elites. By 1943, the Republican presidential candidate of 1940, Wendell Willkie, was touring the country at Roosevelt’s behest, attacking the isolationists in his own party and touting the virtues of One World. Henry Luce, owner and editor of Time Magazine, was proclaiming the “American Century.”
These Wilsonian ambitions of the 1940s were greatly reinforced from another American vision—a patrician geopolitical school gathered in the early 20th century around Franklin Roosevelt’s cousin Theodore, President from 1901 to 1909. The group included the Adams brothers – Henry and Brooks, Henry Cabot Lodge and John Hay. It was strongly influenced by America’s own naval strategist with a geopolitical vision – Alfred Thayer Mahan. This “realist” school of American imperialists had quite different assumptions from Wilson’s liberals, and in the end perhaps has had greater influence over American foreign policy. The principal teaching of this school was that the global state system required a hegemonic leader – preferably a naval power with an imposing manufacturing and financial base. Britain was the nineteenth-century model. According to Mahan, Britain would be surpassed as America fulfilled its own continental destiny, and thereby grew able to deploy much greater naval power worldwide. Mahan died in 1914. He and his friends had been in no hurry to displace the British. Indeed, World War I precipitated the British breakdown before the US was ready. But American imperialists could not be indifferent, any more than the British, to the prospect of a fresh European continental hegemon, uniting Europe’s resources for projecting power into the world. Nevertheless, at the war’s end, Mahan’s principal political disciple, Senator Henry Cabot Lodge, led the fight in the Senate to prevent the United States from joining the League of Nations. Part of Lodge’s disaffection was philosophical and aesthetic. Mahan’s was a realist vision – rooted in Machiavelli and Hamilton. Wilson’s, on the other hand, was an “Idealist” project, rooted in Locke and Jefferson.
The “isolationist” backlash against Wilson’s League was, however, less a reflection of Lodge’s intellectual ascendency among the elites, than it was a populist reaction from German America springing from the Midwest. Wilson’s failure demonstrated the essential fragility of any domestic popular base for American leadership abroad, above all in Europe. This hostility to involvement in European affairs persisted throughout the 1920s and 1930s. It took the Japanese attack on Pearl Harbor to break its spell. Even then, Roosevelt was worried that he would not be able to use the Japanese attack to take his country into the war in Europe. He was greatly relieved when Hitler himself declared war on America, shortly after Pearl Harbor. Roosevelt, of course, proved to be a superb war leader, who successfully fused Mahan’s realists with Wilson’s idealists. Thanks to him, Americans were finally ready for, as he put it, their “rendezvous with destiny.”
America’s victory in World War II, followed by the Cold War, radically changed the domestic framework for American foreign policy. Fear of the Soviet Union proved in many ways a perfect catalyst for overcoming the domestic divisions that still inhibited America’s pursuit of European hegemony. This proved true despite the populist threat to America’s foreign policy elites from Senator McCarthy’s anti-communist witch-hunting. Isolationism faded as the Cold War transformed West Germany from America’s principal enemy into America’s closest ally. Thanks to the brutal, irreligious and generally odious character of the Soviet regime, popular support for a hegemonic alliance to contain communism was relatively easy to sustain. NATO came to be prized as protector, or potential liberator, for the homelands of America’s European populations. Hence NATO’s lingering popularity in the US and postwar America’s European-centered foreign policy.
This brings us finally to the post-Cold War era – and to our own century. With no Soviet Union and, as yet, no reliable substitute, stable popular support for America’s post-Cold War global ambitions can now less and less be taken for granted. To restore the taste for global leadership, Americans need a narrative that explains the post-Soviet world and indicates the appropriate American and European roles in it. Three grand narratives have been on offer. We might call them: the triumphalist narrative, the declinist narrative, and the pluralist narrative. Each suggests a different role for the US and Europe, and a different relationship between the two.
According to the triumphalist narrative, the Soviet collapse has left the US, as the only remaining superpower, free to pursue global hegemony, so long as America’s own domestic base will support it. Of course, hegemony always has opponents, at home and abroad, and its exercise needs to be managed skillfully. The first Bush Administration, for example, was prompt to intervene internationally but careful to cultivate the support of its European allies and, at the same time, wary of encouraging too much European military autonomy. The second Bush Administration, by contrast, often thought the US might be stronger without its European allies.
The declinist narrative carries a quite different message. According to declinist theory, America’s hegemonic role is unlikely to last. This is because a hegemon, carrying the principal burdens for sustaining the order and security enjoyed by everyone else, inevitably exhausts itself. While the free riders grow stronger from the benefits, the hegemon grows weaker providing them. As hegemony fades, the world grows increasingly chaotic. Out of the chaos, a new hegemon eventually arises. It is not hard these days to find signs of America’s financial and psychological exhaustion or of the world’s disorder. Nor is there any lack of speculation that China will be America’s eventual successor.
The third or pluralist narrative sees a global future dominated not by a hegemon, old or new, but by several rising regional powers—perhaps, too, by a variety of nonstate actors and interest groups capable of coordinating on a global scale. The classic recipe for peace in such a system is a stable balance of power, upgraded into a concert of major states, collaborating to maintain an orderly and prosperous world.
These three narratives, in all their variations, have faded in and out over the years. The middle years of the Reagan Administration, with their giant “Twin Deficits”, were the golden age of declinism. The Soviet collapse then brought forward the triumphalist narrative. Its influence remained strong in the first Bush Administration, through the Clinton Administration and into the second term of the George W. Bush Administration. By then the signs of America’s decline had grown increasingly compelling. The American public was weary of indecisive wars, frightened by the widespread perception that living standards had been slipping for the average American as America’s preeminent economic position was being challenged by the rising great powers of Asia, China especially. Meanwhile, America’s weakness was leading to global disorder and financial chaos, as declinist theory had promised.
In recent years, the shrinking credibility of the triumphalist narrative, along with the resurgence of the declinist perspective, have fed a revival of American interest in the Western alliance. Instead of pursuing the isolated omnipotence of the triumphalist view, the Obama Administration has adopted a policy of “constant engagement” with its European allies, hoping thereby to rejuvenate the grand alliance that won the Cold War. Closer cooperation with a Europe growing stronger will compensate, it is hoped, for America’s own declining strength. The US and the EU states together still possess an overwhelming superiority in world military and economic power. If that power were sufficiently united and focused, the threatened end of American predominance and Western superiority might be postponed indefinitely. The argument clearly has a certain plausibility, but there are some fundamental objections.
To begin with, the European Union itself is far from effectively united for playing a coherent world role. It remains to be seen whether the EU’s “confederal” institutions—that is to say, institutions designed to preserve the sovereign interests and personalities—of numerous and long established nation states, can evolve effective shared goals, within some reasonable time frame.
It can be argued, of course, that weak European states divided among themselves are ideal partners for the US. A strong-willed US can appropriate European resources without having to make too many concessions to European interests, as might be said to be the case with NATO in Afghanistan. But a weak and factious European confederacy is not a satisfactory ally for the US. When it is too easy for American diplomacy to pit competing European states against one another, the alliance itself is greatly devalued. Europeans, of course, remain content to have a formal Atlantic alliance continue indefinitely—as a way of maintaining a basic framework of balanced order in the face of big and hostile neighbors. So long as Russia or Iran has a government unfriendly to the West, Europeans are unlikely to throw away their American protection. Neither, however, are they willing to pay too high a price for it—as the history of transatlantic relations during the George W. Bush presidency makes clear.
As many neo-conservatives continue to argue, Europeans bring the Alliance little additional strength, but impose caveats that effectively weaken America’s own power and determination. This was a view popular among supporters of the George W. Bush Administration, at least in its first term. Europeans reacted with dismay and disdain. By its end, the Administration had little support from allied governments and was shockingly unpopular with European publics.
The Obama Administration’s policies have certainly improved the atmosphere for transatlantic relations. But it remains to be seen whether they will forge and sustain common interests strong enough to keep a close global alliance together. The US and the EU states have competing as well as common geopolitical interests—in relations with Russia and the Islamic world, or in any new world order generally. Relations with China are certainly vital to both Americans and Europeans, but their policies toward China may not be easily compatible. Each is, after all, competing to fill the role of China’s principal Western partner.
Even if the Europeans are pleased with Obama’s approach, it is not clear that it has much support among Americans. Some analysts perceive a growing alienation of publics across the Atlantic. Current studies point to a wide “American-Western European values gap” (Pew I). Much of this gap has to do with different views about the welfare state, religion or social issues. Even in the economic sphere, where an immense number of particular interests regularly span the Atlantic, inevitably, some of these are severely competitive.
In the end, how Europe and America fit together in the new century depends greatly on how the two continental federations themselves evolve
In the end, how Europe and America fit together in the new century depends greatly on how the two continental federations themselves evolve. Since Europe, while commanding large resources, is still defining how effectively it wishes to combine them, its decisions have the potential to impose significant changes on the world in general. If Europe’s sovereign states, while remaining in a confederal union, can somehow find the formulas needed to manage their own interdependence successfully, Europe will assuredly remain a major force in the world – both for its strength but also by its example. The EU would remain one of the world’s largest economic “systems.” As a confederacy it would be unlikely to define itself primarily as a military power. Instead, it would present a model that favors bargaining and conciliation. Its constitutional character would accord well with its geographical position, occupying, as it does, the “Cape” of the Eurasian continent. Europe’s natural instinct would be to reach out to Russia and the Muslim world to entice them into its own orbit of stable peace and prosperity. If Europe evolves in this fashion, it may prove ideally suited to act as a mediating power between the US and China. Indeed, confederal Europe might prove to be the key to a world system that permitted the mutual accommodation of rising Asia and a still vigorous West. In this reborn bipolar system, juxtaposing China and America, Europe could have the balancing role for which its own confederal character would have prepared it.
All this assumes that Europe’s still mostly confederal constitution will persist. But many people now believe that to survive the EU will need to turn away from that traditional confederal constitution toward a more centralized American-style federal model. If the EU does follow this path it might come to play a different role in the world. Given the resources and imperial traditions of its major states, moving seriously to a centralized federation might, over time, put Europe on a path that leads toward becoming a superpower. Having such a Europe would probably reduce the chances for a renewed bipolar system, with Europe in a mediating role. More likely it would point toward our third narrative — a multipolar world of several great powers. In such a world, Europe’s conciliatory manners and taste for compatible diversity might still provide a model for others. Of course, Europe’s own long history easily suggests an unhappy outcome for a plural world without a hegemon. Instead of a golden age of confederal peace, with or without a stronger Europe, the world may find itself re-entering the early 20th century, caught in a new age of unmanageable great power competition. Still, whatever the odds for a rational and peaceful global order in our 21st century, the prospects seem more promising if Europe remains a major player. Europe’s reassertion, combined with America’s sustainable consolidation and Asia’s more measured rise, together suggest a rational and hopeful future for the world. Much will, of course, depend on whether Europe collectively can continue to develop its own model successfully — in other words find the right domestic balance between conciliation and effectiveness.
Perhaps to help things along, Americans should try harder not to see the European Union as a primitive, incomplete version of ourselves – a continental nation state in the making. Instead we should see the EU as a different federal formula, one that builds on the achievements of nation states and links them in a fashion that brings a stable peace to their relationships. Perhaps that will make us more willing to learn from what the Europeans have actually achieved, less worried that they will eventually threaten us, and more patient with the halting progress of their institution-building. Europe’s importance for shaping the world’s future suggests a heavy responsibility for Western leaders and opinion-makers – a challenge perhaps not well enough understood in Europe or America.