US-European partnership How can it be revitalised?

Dietrich von Kyaw

Europe is excited about Obama, but worried about bearing United States’ burdens.

The United States remains the indispensable leader of the West — and the US-European alliance remains the indispensable partnership. The deep financial crisis and the sharp drop in Western global influence require the natural partners of the United States and the European Union (EU) to come closer again. The presidency of Barack Obama now offers us the opportunity to do so. President-elect Obama has caught the imagination of the world, including the Europeans. They welcome his promise of a better mix of American military might with soft power and diplomacy. They appreciate his readiness to consult with transatlantic allies and not just scold them. They see in his charismatic figure the person and the land that once again represents the hopes of mankind.

At the same time, in spite of exaggerated expectations, our increasingly interdependent, multi-polar, complex world means there’s only so much an American president can — or should — do. Given the magnitude of the challenges facing the new administration, Obama’s honeymoon period will be short, so he must seize it quickly. Already, some Europeans wonder to what extent the appointment of old hands such as Hillary Clinton (for secretary of State), Robert Gates (for secretary of Defence), and Jim Jones (for National Security Adviser) might signal not merely continuity but also business as usual.

They expect differently perceived national interests to continue to give rise to transatlantic disputes from time to time. They contend that if the West is to become more effective, such differences must be resolved by careful negotiation instead of unilateral fiat.

In fact, the gravity of the current financial crisis and its negative influence on economic growth, employment, and the fight against global warming, as well as the many foreign-policy challenges — from Russia to the Near East, Iraq, Iran, Afghanistan, Pakistan, China, and North Korea — are pushing the two sides of the Atlantic even closer together. We have overarching common interests and values to defend. In a world in which power is shifting from West to East, in particular to Asia, we can no longer afford unnecessary divisions. We must develop common strategies to broker a more lasting armistice between Israel and the Palestinians that allows for further negotiations on a peace settlement. We need to find a better balance between diplomacy and sanctions on Iran and make more progress toward enabling the Afghans to put their own house in order.

Together, we must think through ways to positively engage Russia as a provider of energy supplies and necessary partner for the solution of international conflicts, while at the same time ensuring the independence of countries such as Ukraine by putting a greater emphasis on their close association with the European Union. In the years to come, of course, the United States’ leadership role will depend largely on how Washington deals with the deep financial and economic crisis. The need for more stringent regulation of financial markets, increased public spending, and other measures to stimulate consumption and bail out troubled industries, while still promoting meaningful investment in the future, are already on the agenda. Expenditures will lead to an even higher public debt.

Thus the United States is likely to continue living beyond its means, spending more than it earns and not saving enough. And the Federal Reserve will face intensifying political pressures from Congress and the White House over monetary policy. Consequently, European leaders worry that the United States will shift much of the burden onto the shoulders of its partners, not least by a further competitive devaluation of the dollar and by protectionist legislation. That could create friction not only with China and Japan, but also with the European Central Bank and the European Union.

Stability-oriented Germany, the European Union’s economically most important member state, with its high savings rate, its quite successful efforts at balancing the budget, and a high dependence on free trade, would be particularly affected. No government enjoys being “invited” to help bail out those primarily responsible for a crisis, especially when it faces a crucial election year, as the German government does in 2009. All this does not mean, however, that Berlin will refuse to contribute its share. In addition to the 200 billion package adopted by the European Union and its member states as recently as last December, Germany

will soon enact a second national stimulus package.

Because of power shifts in our globalised world and because of policy mistakes in recent years, the United States role as a global leader has been put into serious question. The entire Western world today suffers the consequences. It is now up to Obama and European Union leaders to revitalise the indispensable partnership with the indispensable leader.