Turning the Tables

European Union vs United States

Europe March 3, 2018

President Trump may enjoy his Twitter-powered banter and bluster; he is not quite getting his way either at home or abroad.

As US relations with the European Union and others sour, President Trump pours out one problem after the other, blaming all and sundry – and particularly the much-maligned EU – for his country’s perceived ills. One day German car manufacturers bear the brunt of his anger, the next day it is the turn of French cheesemakers or Spanish solar panel producers. He also blasts European attempts at introducing a levy on digital revenues, criticises the continent’s renewed push to meet the emission targets of the Paris Accords, and – of course – continues to moan about relaxed attitudes towards defence spending.

Unlike prior transatlantic frictions such as those over the war in Iraq, today’s issues tend to unify Europe around the need to manage any damage Washington is able to inflict. The continent is no longer split over US demands. President Trump is almost unanimously considered an unknown quantity – one made of a substance yet undetermined. The demands and complaints of previous US presidents were much easier to understand and address. Trump is not just attacking Europe; he also dislikes multilateral trade and would – if he could – do away with the World Trade Organisation (WTO) altogether. As such, President Trump seems determined to disassemble the postwar world order, built by his country, and replace it with with something he hasn’t quite yet figured out yet.

Transatlantic trade spats and political misunderstanding are, of course, nothing new. A US president with a devil-may-care attitude, however, is. Even hardcore Atlanticists such as German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte are now openly calling for a united Europe and a concerted effort to push back. Chancellor Merkel said that the EU must do more to increase the continent’s self-reliance – a statement unthinkable but twelve months ago.

Closing the Ranks

After closing its ranks – a remarkable feat in and of itself – to deal with the fallout from Brexit, and noting its resounding success in the negotiations that followed, the EU feels much emboldened to take on the US without too much willingness to compromise or accommodate. Though Poland – not currently in Brussel’s good books – and the three Baltic states would prefer a soft diplomatic response, the overriding sentiment in most EU capitals is to hit back with retaliatory duties without any further ado.

Should the White House even so insist on imposing surcharges on European steel and aluminium, the EU is expected to break with its ineffective policy of flattering and distracting the US president in the hope that he suffers another, possibly less damaging, epiphany. An added difficulty in dealing with Washington is the absence of sensible and even-keeled top officials such as Colin Powell or Condoleezza Rice who grasped the bigger picture and understood America’s role, and responsibilities, in the world.

It now transpires that President Trump’s anger, and his staff’s rather monumental ignorance of world affairs, has vindicated Europe’s approach by showing that countries can better solve real-world problems when acting in concert. Thus, Trump’s America First brought EU member states closer together under their own banner – Europe First. That idea was first formulated during the 2015 climate change discussions in Paris, when the nations of Europe pushed ahead and endorsed the agreement, leaving the US the odd one out.

Instead of buckling under the double whammy of Brexit in the UK and the election of Donald Trump in the US, the European Union emerged stronger than before, with member states successfully resisting attempts at sowing division. Even notoriously recalcitrant member countries such as Poland and Hungary dare not stray too far from Brussels.

The already upbeat mood received an added boost as Euro-sceptic parties suffered a string of defeats at the polls. Voters in Austria, Italy, The Netherlands, Germany, and France rejected the narrow-nationalist arguments of populist candidates and elected pro-EU politicians instead, delivering a debilitating blow to all those who had prophesied the imminent collapse of the union. The political defeat of the nationalists was so thorough a trashing that many have since changed their tune.

In France, Marine Le Pen no longer advocates leaving the union or reintroducing the franc. In Italy, the irreverent Five Star Movement of comedian Beppe Grillo performed a similar U-turn. In The Netherlands, now home to Europe’s fastest-growing economy, Geert Wilders lost both the election and his lustre. His slightly more stylish spin-off Thierry Baudet is riding high in the opinion polls but so far has only attracted former Wilders voters who are tired of their man’s ineffective and repetitive rants. Germany welcomed backed its GroKo (Grand Coalition) government with Angela Merkel at the helm. The bloc of disgruntled voters blaming the EU for their countries’ ills – imaginary or otherwise – remains stable, hovering around the 15% mark of the electorate.

Panache

Even the impending departure of the United Kingdom from the EU hasn’t caused more than a ripple on the continent. Top of the bill at UK news outlets for months on end, Brexit barely deserves mention in continental media. The admirable panache shown by EU top negotiator Michel Barnier, who doggedly kept to his brief and proved unmovable in the face of often flippant or fanciful British demands, was widely praised – and that was pretty much it. The highly-anticipated falling out over the future funding of the EU budget – still less than 1% of the union’s GDP – once the UK stops its contributions, failed to materialise with member states wisely agreeing to kick this particular can down the road where – for now – it belongs.

Slowly, the realisation dawned that what had been built in Europe over seventy years was just too precious to sacrifice on whatever altar proffered by cynical populists of the Nigel Farage variety – here today (to wreck it) and gone tomorrow (fishing). The World Economic Forum deposited its tuppence by pointing out that Germany, France, Luxembourg, and The Netherlands – four of the six founding members of the EU – have all significantly outperformed both the UK and the US economically over the past sixty years. The two others – Belgium and Italy – are not far behind.

For all its deficit spending and borrowing, the US economy has trailed the EU for three years running and is expected to keep lagging for the foreseeable future. As the US Administration gets ready to double the country’s already humongous national debt of $21 trillion – in good times (!) – concerned investors increasingly see Europe, and particularly the Eurozone, as a safe haven ruled by old-fashioned values of thrift, prudence, and carefully balanced budgets.

After a difficult start, and suffering from flaws in its design, the euro has been put on a solid footing with the European Central Bank flexing its considerable muscle mass, signalling its ability, willingness, and readiness to defend the common currency against all comers. A poll by Eurobarometer taken in May 2017 shows that at 73%, support for the euro now stands at an all-time high whilst only one in every five citizens of Eurozone countries would prefer to revert to national currencies.

EU monetary authorities are now polishing up the euro edifice with plans to erect a European Monetary Fund to assist troubled member states and create a limited fiscal facility to help absorb asymmetric shocks that affect only one, or at most a few, member states such as Ireland which stands to suffer considerably with Brexit.

A year or two ago, few would have thought the European Union capable of reinventing itself and turning the tables on a set of circumstances that conspired against it. In many quarters, the EU was dismissed as yesterday’s news, a toothless tiger, if not a pitiful anachronism. It now appears the union has a considerable reserve of spunk left which it means to dole it out to whomever doubts its resolve.