It is easy for leaders on both sides of the pond to continue fretting about rising trans-Atlantic resentments, carping about this or that ally's failings, and thumb-sucking about "the future of the West." But doing something concrete to improve trans-Atlantic ties is much harder.
Part of the problem is context. Europe and America are in two very different places at the moment. Europe is preoccupied with itself, trying to take the next step in integration and enlargement and figuring out how to make this "greater Europe" work. America, meanwhile, is focused on a threat both foreign and domestic: terrorism. So the challenge for political leaders is to do something that addresses the growing tensions in the U.S.-European relationship, that reflects the reality of trans-Atlantic economic and military imbalances, that accepts profound philosophical differences-and that is practical. It's a conundrum.
For the past half-century, haunted by the horrors of World War II and living in the shadow of the Soviet threat, Europeans and Americans generally agreed on a common purpose for their alliance: mutual security bolstered by joint economic well-being. This shared vision helped contain periodic differences over foreign policy and trade. But now that the alliance's original goals have been achieved, the relationship lacks a compelling raison d' tre, one that would inspire voters, taxpayers, and policy makers on both sides of the Atlantic to make new sacrifices to preserve and expand U.S.-European ties. Some analysts ay there should be a new and ambitious "big idea" that could revive U.S.-European relations. Others say that if the two sides just keep after the smaller problems, over time the overall relationship will get better. But that approach does little to address the underlying malaise in the alliance.
In the big-idea camp are House Minority Leader Richard A. Gephardt, D-Mo., former House Speaker Newt Gingrich, former Sen. Bob Dole, former National Security Adviser Brent Scowcroft, former European Union President Jacques Santer, and former EU Trade Minister Sir Leon Brittan, among others. Over the past five years or more, they have all proposed some form of trans-Atlantic free-trade agreement as the new big idea. Most recently, Gordon Brown, chancellor of the Exchequer in the United Kingdom, has championed a similar initiative.
But the concept has never really caught on. No one in the Bush administration openly supports it, and current EU Trade Minister Pascal Lamy actively opposes it, fearing it would undermine the current Doha Round of trade negotiations among all the world's countries.
One reason for such opposition is that the economic benefits of trans-Atlantic free trade are comparatively small. A free-trade area would add no more than 1 percent to the U.S. economy and 2 percent to the EU economy, according to various preliminary estimates. Economists argue that a successful global trade liberalization under Doha offers a greater payoff from the investment of trade negotiators' time and political capital than a bilateral agreement between Washington and Brussels. A second roadblock is political. The French have always feared that America would dominate any Atlantic free-trade arrangement.
In lieu of a free-trade area, Michael Ancram, the British Conservative Party's shadow foreign secretary, has advocated negotiation of an Atlantic charter, which would include a statement of common trans-Atlantic values, an early-warning system to identify policy differences before they get out of hand, and a reaffirmation and rethinking of NATO as a pre-emptive security organization. Similarly, EU Ambassador to the United States Guenter Burghardt has proposed the signing of a trans-Atlantic "declaration of interdependence," drawing on an idea first advocated by President Kennedy 40 years ago.
But one more hortatory reaffirmation of the importance of U.S.-European ties would lack the substance that gives an alliance meaning. To provide some of that meat, a hundred CEOs from both sides of the Atlantic created the Trans-Atlantic Business Dialogue in 1995, to suggest practical means of boosting regional trade and investment. In 1998, the Clinton administration and the European Commission created the Trans-Atlantic Economic Partnership to spur joint problem-solving on a range of issues. Such "building block" efforts to reconstruct the trans-Atlantic relationship have produced remarkably little.
Nevertheless, Washington and Brussels recently agreed to a new and not terribly exciting bilateral agenda, including the development of guidelines for regulatory cooperation, mutual recognition of organic farming standards, and new dialogues on insurance and financial markets.
In the short term, to help defuse the growing number of explosive bilateral trade disputes, Gary Hufbauer, of the Institute for International Economics, and Stuart Eizenstat, the former U.S. ambassador to the European Union, have proposed that Brussels and Washington forswear new trade actions against each other for at least a year, or possibly longer-until the end of the Doha negotiations. If such a truce proves to be politically impossible because of domestic pressures, the United States and the EU might agree to submit their disputes to arbitration by the World Trade Organization, an option permitted under international trade rules, but as yet never tried. Or they might agree that if either side wins a WTO case, it will accept compensation rather than exercising its rights to retaliation.
These steps may help manage day-to-day problems, but they are not sufficient to make the trans-Atlantic relationship more relevant in today's world. That requires closer U.S.-European cooperation in solving the high-visibility problems that now preoccupy publics and policy makers on both sides of the Atlantic.
The war on terrorism comes first. Rapidly sorting out the role of NATO's European members in that war, openly acknowledging their substantial contributions, and never repeating the Bush administration's humiliating initial dismissal of European help after 9/11 would go a long way toward making the trans-Atlantic security relationship relevant for the 21st century, European officials said.
The Enron, Arthur Andersen, and WorldCom fiascoes also pose new challenges to, and opportunities for, the Atlantic relationship. "The U.S. economic model has absorbed enormous body blows in the last few weeks," said Peter Sutherland, chairman of the board of BP (formerly British Petroleum). These black eyes and bruises could ultimately prove quite costly. The United States economy must borrow nearly $4 billion a day from foreign investors-through the sale of stocks, bonds, and other kinds of investments-to balance its books. Doubts about the future safety of money lent to America will make it all the more expensive to raise those funds.
But if Europe and the United States could work in tandem to restore worldwide investor confidence, that could help the alliance, too. Patricia Hewitt, the British secretary of State for trade and industry, has proposed such "action on the global stage to restore confidence." Jim Shinn and Peter Gourevitch, in their recent Council on Foreign Relations book, How Shareholder Reforms Can Pay Foreign Policy Dividends, propose a global "gold standard" of shareholder protections, enhanced standards of corporate governance, and new shareholder voting procedures. They also suggest a convergence of the Generally Accepted Accounting Principles used in the United States with Europe's International Accounting Standards, so that corporate financial statements from both sides of the ocean can be compared directly.
Rather than pursue such a cooperative approach, the U.S. Senate's accounting reform bill seeks to subject foreign auditing firms to new U.S. regulations that would supersede their own countries' regulatory regimes. In a protest letter to Congress, the European Union said, "A future trans-Atlantic capital market would be better served by a continuation of the ongoing deepening U.S.-EU dialogue and agreement to work towards standards of equivalent effect, rather than by a unilateral determination by one of the partners." Meanwhile, Europe has its own set of issues that might benefit from American attention. European citizens and their leaders are preoccupied with the EU's current constitutional convention, which is drawing up new rules to govern a united Europe, and with enlargement of the union, which could add as many as 10 new members next year.
If Europe is to be a full partner with America in the future, the EU needs to be able to speak and act as one on foreign and security policy, to pursue trade polices that are not held back by its weakest members, and to earn greater support from Europe's citizens. The only way to do this is through streamlining internal EU decision-making.
European Union officials say there are two things Washington could do to help that process. First, stop playing favorites. As long as London and Berlin feel they have special access in Washington, then the United Kingdom and Germany have no reason to further pool their sovereignty in Europe. Second, President Bush should publicly endorse the European constitutional convention as consistent with America's long-running support for European integration. These initiatives, however, would require some expenditure of White House political capital because they would be opposed by conservatives, both inside and outside the Bush administration, who believe that America's interests are best served by a fragmented Europe in which Washington can pick and choose its partners and play one capital off against the other.
EU enlargement is similarly fraught with potential trans-Atlantic tensions. In the 1980s, Spain's accession to the union triggered a trade war over citrus products. In this next round of enlargement, American businesses fear that Poland's or Hungary's terms for EU membership may cause U.S. firms to lose market share to European firms. The two economies involved are small, so the potential problems are manageable if both sides stay on top of the issue.
In the end, despite differences in economic performance, geopolitical concerns, and philosophical worldview, Europe is second only to the United States in global power and influence. Washington and Brussels have a broad self-interest in working together. "We have no other option," said one senior EU official. "We should acknowledge our differences, bridge them where we can, and commonly pursue our interests." But finding that common purpose is tough right now. Unfortunately, said one British government official, "I don't think we know what that 'it' is." And that uncertainty, he admitted, is likely to leave the alliance, for now, running on what he called "opportunistic adhockery"-a series of clashes and cooperative ventures that are unlikely to garner broad political support or produce meaningful results.