Our Interests in Europe

Yet this approach completely misreads the nature of America's post--Cold War interests in Europe, and has resulted in a deepening transatlantic rift on both the security and the economic front. More important, America's scrambled European priorities threaten to destroy our chances of transforming the transatlantic relationship into a partnership that could truly serve many of the most pressing interests of both Europe and America today.

Washington's major mistake is precisely its security focus in Europe. Although vested bureaucratic and intellectual interests deny it, the demise of the Soviet Union has shattered any rational basis for extensive U.S. involvement in European-security affairs and has undermined shared interests that made possible U.S.-European security cooperation outside the North Atlantic region during the Cold War.

America's post-Second World War decision to become Europe's guardian was not beyond criticism, but it was grounded in the rational calculation that Europe's domination by a hostile global power could gravely threaten American security and prosperity. Today and for the foreseeable future, peace and stability in Europe face several important threats, but an ambitious would-be military hegemon is not one of them. Indeed, as shown by the evolution of America's Yugoslavia-Bosnia policy, despite the self-congratulatory boilerplate still issuing from NATO summits, even many American leaders and strategists no longer see Europe mainly as a security-policy asset. Instead Europe looms primarily as a series of traps and dangers that could bog down American forces in hot spots having no bearing on U.S. security. As the German journalist Josef Joffe, a strong supporter of preserving the NATO security alliance, has put it, "While Europe used to be the most stable area in the world, it has begun to compete with the Middle East for first place in instability."

Moreover, threats to European peace and stability that could endanger important U.S. interests (such as Europe's role as a market for American goods) cannot be addressed militarily. The presence of U.S. troops can do nothing to prevent further ethnic turmoil (just as our still sizable NATO forces did not prevent conflict in the former Yugoslavia), speed the development of capitalism and democracy in Eastern Europe, or improve Western Europe's faltering economic competitiveness. Meanwhile, U.S. and European positions on many security issues outside Europe (for example, dealings with outlaw states such as Libya, Iraq, and Iran) grow further apart by the week.

The reasons for this last, especially troubling development should be obvious. The United States and the countries of Europe are of different sizes, have different historical experiences, are located in different places, and have different needs in various parts of the world. With the common threat posed by the Soviets gone, how could they fail to have different interests in many areas outside the North Atlantic region?

On the economic front, headlines recently have been dominated by transatlantic quarrels (over the Uruguay Round of world trade talks, over America's decision to handle its latest trade quarrel with Japan outside the new world-trade regime, over interest rates, over the Airbus and other sector-specific trade issues). American leaders continue to talk openly of tilting toward the more dynamic Pacific Basin. And European leaders increasingly contemplate an economic future without strong ties to whatever trade bloc America joins or creates.

Yet despite some important continuing differences, never since the early post-Second World War decades have the United States and Europe had more in common economically. Bill Clinton's election put into office an American President unusually close to mainstream European social-market views on the state's proper economic role, although the 1994 Republican triumph revealed that anti-government emotions still run high. At the same time, Europe's Single Market program has promoted the liberalization and opening of European economies. Consequently, it is now realistic to talk of the United States and Europe working together to open markets around the world and to secure global economic rules compatible with Western interests and values. Europe and the United States also face a wide range of common economic problems--from competing with low-wage, high-tech Third World work forces to providing affordable health care and pensions to rapidly aging populations. Shared or at least similar solutions should be high on their agendas.

Most important, despite all the headline-making quarrels, the United States does more business more profitably with Europe than it does with any other major region. Transatlantic economic flows taken together, including investment and technology transfers as well as trade, still dwarf U.S.-Asian flows. In contrast to the deep, chronic deficits that the United States faces with East Asia in almost every type of economic activity--and especially in trade involving core manufacturing industries, from autos to computers--U.S.-European trade and commerce are either healthily balanced or significantly in America's favor. In fact, American manufacturers have run trade surpluses with Europe nearly every year since 1980, even in telecommunications equipment and in civilian aircraft and aviation parts --two sectors in which European subsidies have sparked major trade conflicts. Finally, European companies create many more high-quality jobs in America, use more local content, and pay, proportionately, much more in U.S. taxes than do Asian companies.

Yet because of a continuing obsession with outdated security concerns and because of an unreciprocated romance with Asia, American leaders today are permitting a small number of narrow, comparatively trivial trade disputes with Europe to obscure our common interests, and even to worsen U.S.-European estrangement across the board.

The timing of this deterioration could not be worse. American prosperity has never been more dependent on the world economy, but America can no longer dictate the nature of that economy. In fact, the accelerating globalization of business and finance means that the process of writing new rules for the world economy will intensify. Yet because several different kinds of capitalism exist today, and because national economic interests can differ for the same reasons that national-security interests can, America may not like many of the rules that emerge. Thus, if it wants good rules, the United States will need allies. And since European capitalism and European economic interests are closer to America's than are any other region's, Europe is America's best bet for an ally.

As the focus of America's interests in Europe shifts from security to economic matters, it will be imperative to infuse these new realities into both its policies and its institutional relationships.

In policy terms, the new approach should aim first at systematically broadening and deepening relations among countries that, like the members of NATO, are fully committed to market-based economic systems. The North Atlantic region must be the core, for it contains the main cluster of countries that agree on free-market norms. But this effort--which deserves at least the attention devoted by President Clinton to free trade with Mexico--should not be limited by geography. Several non-Atlantic countries would be promising early candidates for admission--notably Chile and Singapore. The World Trade Organization should remain in place. But participation in the new group--which would provide the benefits of freer trade, technology, and investment flows--should be limited to countries willing to conform to its main principles and practices. These benefits would of course also create incentives for outsiders to move their economies in directions that Americans and Europeans would applaud. This "SuperGATT" approach contrasts sharply with indiscriminate calls for a free-trade agreement with any country willing to sign one, regardless of that country's policies and practices.

The integration discussions should also aim at helping the world's most market-oriented countries to resolve their remaining differences on domestic practices that greatly affect international commerce, such as labor policy, competition policy, and regulation in noneconomic fields such as the environment. Unlike the current U.S. approach to international economics, this effort would not try to force prematurely, or blithely assume the existence of, consensus where none exists. It would focus on areas where substantial agreement already exists, and would frankly acknowledge and accept many areas of disagreement. Thus it would deal with the world as it is, not as we wish it to be.

In institutional terms, the United States and Europe urgently need to develop a NATO-like forum for handling economic issues. Responsibility for the various aspects of transatlantic relations is currently scattered throughout national and multilateral bureaucracies in both the United States and Europe. As a result, strategic direction and even tactical coherence are utterly lacking. And owing to inertia, the old security-centered priorities have remained largely intact. The creation of a new forum would ensure that these questions receive sustained, top-level political attention, and that Washington and the European governments begin to develop those habits of cooperation that so effectively maintained solidarity and aided problem-solving in the security field when their interests converged.

At the same time, nothing in this strategy should excuse the United States from the imperative of amassing and nurturing its own economic power. Creating this new institution would not ipso facto solve America's problems with either Europe or the rest of the world. In order to ensure that interdependence and cooperation with Europe occurred on the most favorable terms, Washington would have to take these objectives more seriously than it has at any point since the end of the Second World War.

Tough bargaining--even with allies--would lie ahead. National power and wealth would remain essential for national success in these negotiations. Those who brought the most to the table--in the forms of capital, technology, manufacturing prowess, and vibrant markets composed of prosperous companies and workers--would have the biggest effect on the results. But a foundation of genuinely shared interests would keep European and American eyes fixed firmly on their larger common challenges. And those challenges have become more crucial than ever before.