Monday, February 21, 2005

Transatlantic Tensions

In today's Guardian, Niall Ferguson points out that despite the gushing rhetoric from Washington and Brussels, differing priorities and interests will keep the Europe and the US from a real rapprochement. Ferguson correctly notes that the fall of the USSR removed the essential glue that bound the two sides together - fear of Soviet invasion. At present, Europeans see no immanent physical threat from abroad. Thus they can afford to indulge in empty-headed pacifism and look nervously on American military supremacy, idiotically hoping for a counterweight to America, even if that balancing power turns out of the China, a nation ruled by brutality and force. Without a common menace to united America and Europe, internal factors spur both sides to move apart. Immigrantion, Ferguson argues provides one force propelling the separation:
Perhaps more importantly, large Muslim populations (especially in France and Germany) have subtly shifted European attitudes towards the Middle East, the world's geopolitical hub. Traditional Arabophile tendencies on the part of European diplomatic elites have been reinforced by politicians fearful of alienating Muslim constituents if they adhere too closely to the US. In some quarters, European hostility to Israel has become more strident, sometimes (at least to American ears) even anti-semitic.
More corrosive to the long-term future of Euro-American relations is the China question. Ferguson correctly notes that the US has willingly allowed China and other Asian nations to bankroll its heavy borrowing. If the Asians who have so generously underwritten America's massive deficits decide to look elsewhere for a better return on their investments (say, Europe), the US economy will feel the pinch.
It is not widely recognised that the US is currently being subsidised by foreign monetary authorities, mostly Asian. Central banks, led by the People's Bank of China, are financing about 75%-85% of the US current account deficit. In essence, the Chinese are buying dollars and US bonds to prevent their own currency appreciating against the dollar, which would in turn hurt exports.
Europeans looking to hobble the US have spotted this opportunity and will likely make the most of it.

The irony is that just a few months before Bush's visit to Brussels, a European statesman went on a little-reported trip to Beijing. President Jacques Chirac was there ostensibly to promote trade and cultural exchanges with France. But Chirac surely had a rather grander design in mind. He knows that talk of transatlantic rapprochement amounts to little more than empty rhetoric. He also knows that Europe has an opportunity to woo China from the American embrace.

Today, as in 1972, the international system has a triangular shape. Then it was the US that outwitted the Soviet Union by making overtures to China. Perhaps it is now Europe's turn to outwit the US by doing the same. Or has George Bush already booked his flight to Beijing?

This explains why the EU plans to drop its arms embargo against China, despite US fury. Europe pays lip service to human rights and the spread of democracy whilst practicising realpolitik in favor of its perceived interest. Washington did the same, very successfully during the Cold War. The Bush administration, however, prefers Wilsonian idealism, which may alientate many states that the US could otherwise bring into an alliance against China. Many in Europe have decided that China is a better long term bet than the US. Given the economic, scientific, educational and foreign policies now in vogue in Washington, one can see why the Europeans are wooing the Middle Kingdom. It also belies the any claim of morality in foreign policy.


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