Readjustment of EU’s Policy towards US: Causes and Tendencies
Research Fellow and Director of Institute of European Studies, China Institutes of Contemporary International Relations
The transatlantic alliance is the pillar of the EU’s foreign and security policy. However, as major readjustment happens to US foreign policy, EU-US relations undergo significant changes, and there are also tendencies of readjustment of EU’s foreign policy.
A “Different” America
Since the World War II, Europe has been in close alliance with the US, by which America provides Europe with security protection, and Europe willingly follows the US leadership and sits at its feet on all major global diplomatic and security issues. However, since taking office, the Trump administration has pushed forward the “America First” foreign policy, and made America no longer the same country as Europe used to be familiar with and trust, but conversely the biggest saboteur and violator of European interests.
First, it ignores major security concerns of Europe. Among others, a most protruding case is US withdrawal from the Joint Comprehensive Plan of Action on Iranian Nuclear Issue. When running for US president in 2016, Mr. Trump promised to withdraw from the Iran nuclear deal if elected. On several occasions, European leaders (including French President Macron and German Chancellor Merkel) had lobbied the Trump administration against such a move, however a stonewalling America had insisted on the withdrawal, resumed original sanctions at the same time, and further implemented a policy of extreme pressure, which increases the possibility of war in the Middle East. Upon making decisions on the IntermediateRange Nuclear Forces Treaty, Syria and Afghanistan, the US has all put its own interests first without considering European security concerns, that is to say, so far as the US is concerned, the security interests of its European allies are irrelevant.
Second, it strikes out at European manufacturing in the name of national security. Since taking office, the Trump administration has openly questioned the equitability of the World Trade Organization, threatened to withdraw from it, and abused its measures on safeguarding national security in putting 25% tariffs on all imports of EuDOI:
ropean steel products and 10% on that of European aluminum products. The Trump administration also threatens to place a maximum of 25% tariffs on the imports of cars. Car manufacturing industries are European, and especially German competitive industries, also an important source of job creation and profit. Therefore, should the US government impsose high tariffs on car imports, it would cause serious damage to European economy, which attributes to the present misgivings and irritations in Europe, especially in Germany.
Third, it is openly hostile to the EU and European integration. Though there is a view among the American elite that through European integration, the EU is on the road to independence and will challenge US global leadership sooner or later, none of the US presidents preceding Trump had ever taken an open hostile attitude toward the EU and European integration. However, the Trump administration believes that the EU is in unequal competition with the US. For example, it believes that sitting behind devaluation of the Euro, Germany exports a lot of cars to America to the detriment of American car industries. Without the umbrella of the Euro, it would have been impossible for Germany to have gained such an extra advantage from America. As such, President Trump has be filled with animosity against the EU and European integration, and made an open statement that he would like to see the collapse of the EU, and supported everything to the detriment of the EU such as the Brexit and upsurge of farright populism in Europe. For a period of time, President Trump even demoted the diplomatic status of EU mission to the US.
Difficulties Facing the EU
While America is being extremely unfriendly and even hostile to the EU, the EU itself is bogged down in severe difficulties.
First, the Brexit has impacts. For the EU, it is unprecedented for a member state to withdraw from it, which indicates that European integration is a two-way traffic that it can go backward as well as go forward. Since June 2016 when British referendum decided to exit from the EU, UK-EU relations have continued to trouble the EU. For three times running, consecutive Brexit agreements struck between the May Ministry and the EU had been defeated by the British Parliament, which forced Prime Minister May to resign on June 7, 2019. Boris Johnson was elected as the successor of May to lead the Consevative Party and UK on July 24th. Mr. Johnson pledged to take Britain out of the EU, with or without an agreement. Should Britain leave the EU without an agreement, UK-EU relations would be severely damaged, and so also would be the British and European economies.
Second, internal contradictions of the EU intensify. First of all, the contradictions between the North and South. During the sovereign debt crisis, Southern European countries such as Italy and Greece were severely damaged, being forced to take austerity measures and cut social benefits, which seriously hurt the interest of the people, resulting in a major shift in popular will and the upsurge of populist forces. After taking office in June 2018, the populist government of Italy has contemplated to expand public spending, raise wages, and stimulate economic growth, but Northern countries like Germany and the Netherland request the EU to take hardline measures against Italy. It is worth noting that as the differences between the North and South increase on Eurozone reform, eight Northern countries including the Netherland and the Nordic-Baltic countries have formed the so-called Bad Weather Coalition (dubbed the New Hanseatic League), calling on all EU states to observe fiscal discipline, control fiscal deficit and public debt, and lobbying against all reforms involving transfer payment, which is in essence to openly oppose French President Macron’s plan on Eurozone reform that includes preparing Eurozone budget and having a Eurozone finance minister. Secondly, the contradictions between the East and West. Since taking office in 2015, the Law and Justice Government of Poland has conduct judicial reforms, including provisions for Parliament to ap- point members of national justice commission and for the minister of justice to appoint presidents of local courts, a reform that is regarded by the EU as “running contrary to European values and standards”. The contradictions between both sides have continued to worsen, and countries like Germany and France have also continued to criticize and accuse Poland. On September 24th, 2018, the EU sued Poland in the European Court for its reform on the Supreme Court. In regard to Hungary refusing to accept refugees and cracking down on illegal immigrants, the European Parliament voted on September 12th, 2018 and determined that Hungary “threatens the core values of the EU”, and decided for launching the process of placing sanctions on the country, which is the first time in EU history. Moreover, the plan of apportioning refugees initiated by Germany has been constantly opposed by the Czech Republic, Hungary and Poland, whereas German attempts to sign repatriation agreements with other member states in order to accelerate repatriation of its illegal immigrants have also been strongly resisted by several Central and Eastern European countries.
Third, the populist forces hold sway. At present, populist political parties rise fast in Europe, turning from fringe parties in the past to serious parties being able to replace mainstream parties, such as the Italian populist party the Five Star Movement and the German far-right party Alternative for Germany. Not only can such parties enter into the parliament, they can also form government or join coalition government. In most of the EU countries, be it affluent Western European countries or relatively backward Southern European ones, and be it big countries or small ones, there are populist political parties or political organizations, which in a profound way impact the EU and the process of European integration. The populist parties emphasize on that their national interests come first, and are opposed to European integration, giving rise to proliferation of Euroscepticism and antiEuropeanism, and rocking the popular support for European integration. Tied up by populism, it is difficult for European countries to compromise on EU policy, resulting in that there are a lot of discussions on major EU reforms but hardly any decision. The causes of the rise of populism are multiple, for example the sequel to the debt crisis that is polarization, the sequel to the refugee crisis that is the development of identity politics, radicalization and extremization of society and the list goes on. Such issues are developing and will continue to do so in a deep-going way, that is to say, populism will exist for a long time to come and will have
While America is being extremely unfriendly and even hostile to the EU, the EU itself is bogged down in severe difficulties.
even greater impact on the development of the EU. European integration is where the power of the EU lies, however as internal problems rise and cohesion declines, the process of European integration can only struggle on if it goes on at all.
The EU’s Dilemma of Choice
When in predicament in the past, the EU used to have the US to help it. However, at present, not only will the Trump administration be reluctant to help the EU find solutions to its problems, it is also an important part of EU problems. How to respond to America is a key issue facing the EU, to which it cannot find a solution for the moment. As aforesaid, the EU is in a vulnerable positon in its relations with the US. Not only is it unable to part from the US, but it has to depend on the US even more.
First, the US remains the guarantor for European security. The NATO and the transatlantic alliance are the basis for post-war European economic prosperity, however since the Cold War ended, the importance of the NATO has somehow decreased. It is a prevalent view of the European countries that their traditional military enemy has disappeared, as it is hardly likely for Russia to make military invasion into Europe. Therefore, European countries have generally cut armament, their defense spending being on the decrease over the years. Since the outbreak of the “Ukrainian Crisis” of 2014, the military threat from Russia has come back to the agenda of the EU, and some of the European countries have attached more attention to the NATO and become more dependent on it. At present, European countries have generally begun to increase their military spending, however owing to the upsurge of populism and economic difficulties facing them, it is almost impossible for various European countries to integrate their militaries into an effective military power. Hence, the dependence of European countries on the US and the NATO will conversely increase in the future.
Second, in large measure, Europe depends on the US for its economic development. America is the world’s largest consumer market, and also the largest export market for Europe, taking up 20% of total European exports in 2017. In the past few years, EU exports, and especially Eurozone exports to the US have fast increased and so also has their trade surplus. In 2008, the EU had a trade surplus of $65 billion with the US, and the figure reached a record high of $122 billion in 2015. In particular, German exports account for approaching half of its GDP, its trade surplus at its peak accounting for 8% of its GDP and approaching half of the total European trade surplus to the US. By 2018, EU exports decreased but its exports and trade surplus with the US saw a rather large increase. This further indicates that the EU has a high dependence on the American market.
Third, the EU wishes to contain China by availing itself of American strength. The EU also feels that China’s development impacts its interests and global influence. On December 20th, 2017, the EU published its Market Distortion Report, singling out China for special attention, believing that with allegedly unfair practices in competition, China had yet to meet the criteria for a market economy, introducing the concept of so-called “significant distortions of market”, and promoting a trade protectionist policy. Against the backdrop of a large amount of Chinese investment entering into Europe in recent years, the EU has begun to practice investment protectionism. On March 5th, 2019, it officially completed lawmaking on its investment screening. Furthermore, the EU is increasingly worried about China’s development model, believing that China’s success in economic development is in systematic competition with the European development model, which needs to be strictly prevented against. The EU believes that it cannot change China in its own right, and it is necessary to join hands with the US in order to keep China’s development down and force China to change its development model.
Though the Trump administration has hurt European interests time and again, it will not do for Europe to part from America, and absolutely not to abandon America, as its dependency on America is so deep and so extensive, and it is in predicaments and lack of strength. But at the same time, European countries have also come to see in a profound way that America has changed, and it is impossible for the transatlantic alliance to return to the past.
First, the Trump administration enjoys quite solid popular support. More and more Europeans have begun to realize that the “America First” foreign policy of the Trump administration is not a temporary phenomenon but very likely will become a long-term trend, and probably all upcoming US presidents will pursue this policy more or less. It is worth noting that US-EU relations is less than equal and balanced, America being the principal side of the contradiction and in complete dominance, and therefore it is inevitable for changes in America to lead to changes in US-EU relations, even though the EU countries might not like to see such changes.
At present, not only will the Trump administration be reluctant to help the EU find solutions to its problems, it is also an important part of EU problems.
Second, Europe’s position in US global strategy will continue to decline. Since the period of the Obama administration, the center of gravity of US strategy has shifted to the Asia-Pacific. The Trump administration’s National Security Strategy of 2017 clearly defined China as an adversary, but it is very unlikely for Europe to become a willing, able and effective “hatchet man” for America there. In terms of willingness, Europe does not entertain the ambition for hegemony. With China, it has no strategic interest conflict but normal development and economic competition. Europe may make the US look more vigorous and impressive, but cannot fundamentally take China for an adversary. In terms of ability, the military help Europe can give to the US is inevitably on the decline. European countries are increasingly aging, which will lead to declining economic vitality, reduced fiscal revenue, and limited defense spending. It is less than likely for European countries to increase military spending to a large extent as willed by the US.
Third, Europe will have to take on more diplomatic and security responsibilities. As the “America First” foreign policy progresses, except continued expansion in the Asian-Pacific region, the US has begun a global contraction, which includes announcing to pull out its troops from Syria and Afghanistan and withdrawing from the Iran nuclear deal. But the EU has significant security interests in the above areas, including solution of refugee issue and cracking down on terrorism. As such, Europe has paid particular attention to the issues of development and stability in places of the Middle East and Africa, as only when these areas undergo development and the people there live and work in peace, can the issues of illegal immigrants and refugees be eventually solved at the source.
In general, Europe is faced with the most difficult dilemma of choice: either to continue to embrace America or to seek independence, both being difficult for Europe to make decisive decisions.
Tendencies of EU Policy Readjustment
As aforesaid, the EU’s policy toward the US is in face of readjustment, whose direction and strength are not yet clear. Owing to the special features of the EU that it consists of 28 member states, that foreign and security policy is largely their business, and that on EU plane it is hardly possible to have a policy toward the US, such a readjustment cannot be completed with one stroke. Nevertheless, there are tendencies of changes in the EU’s policy toward the US, among which the most important change is a newfound emphasis on the building of “strategic autonomy”. First, the EU intends to build European defense, to implement the “Permanent Structural cooperation” (PESCO), and to increase defense autonomy. Second, it intends to escape from the “long arm of the dollar”, and to increase financial autonomy. In September 2018, Ms. Mogherini, High Representative of the (European) Union for Foreign Affairs and Security Policy made a joint proposal with the foreign ministers of Germany, France and Britain to establish a Special Purpose Vehicle (SPV) in order to help European companies trading with Iran to circumvent the international settlement system of Society for Worldwide Interbank Financial Telecommunication (SWIFT). After gestation, the foreign ministers of Germany, France and Britain announced on January 31th, 2019 the creation of INSTEX SAS (Instrument for Supporting Trade Exchanges) as a policy instrument to implement the SPV to facilitate legitimate trade between Europe and Iran. The vehicle’s original focus is to cover key areas of people’s livelihood in Iran such as medicine, medical equipment, and agro-products, and its long-term objective is to open to third-party economies willing to trade with Iran. The EU also intends to expand the use of the Euro, for instance, requesting that EU imports of energy and other commodities and EU transactions on airplanes be settled in the Euro rather than the dollar.
While enhancing the building of strategic autonomy, the EU becomes more flexible and pragmatic with global diplomacy. First, it has strengthened cooperation with the so-called “likeminded” countries such as Canada, Japan and South Korea, seeking common ground and setting up coalition with them on WTO reform, global trade order and multilateralism, which is also aimed to influence the US and pull it back to the Western World. Besides, the EU has signed free trade agreements with Japan and the Southern Common Market, seeking to supplement the multilateral trading framework with bilateral trading frameworks and to increase its leverage over the sanctions the US threatens to impose. Second, it has continued to strengthen pragmatic cooperation with China and Russia on international issues such as the climate change and Iran nuclear deal in order to check US unilateralism.
However, the dilemma of the EU determines the fact that the readjustment of its policy toward the US is limited, and that at least in the foreseeable future, the EU will not move itself entirely away from the track of US foreign and security policy. The original aspiration of the EU to build its “strategic autonomy” is not to contend with America but to do what it can to prepare itself in terms of capacity building against the eventuality of being totally abandoned by America. Hence, at the same time as it builds “strategic autonomy”, it still intends to do its best to hold America.
In the long run, the EU building “strategic autonomy” will necessarily accelerate mutual alienation between the EU and the US. For instance, the integration of EU defense, and especially that of its defense industries will continue to weaken the military ties between the US and the EU and give rise to a greater competitive relationship between the two, and the fact that the EU accelerates the internalization of the Euro will also weaken dollar hegemony. The progress of EU strategic autonomy is still in small steps, and it is quite likely that even the EU itself is not aware that such small steps will gradually lead to major shifts in EU-US relations.