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Nº111
november 2011
working paper
European foreign
policy and the
economic crisis:
what impact and
how to respond?
Richard Youngs
About FRIDE
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Working Papers
FRIDE’s working papers seek to stimulate wider debate on these issues and present policy-relevant considerations.
European foreign
policy and the
economic crisis:
what impact and
how to respond?
Richard Youngs
Director of FRIDE and Associate Professor
at the University of Warwick, United Kingdom
© Fundación para las Relaciones Internacionales y el Diálogo Exterior (FRIDE) 2011.
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ISSN: 2172-5837 (Online)
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Contents
A fork in the road?
2
Forms of mercantilism
5
Strategic retrenchment
11
From Europeanisation to pragmatic cosmopolitanism
13
Post-hegemonic transatlanticism 17
Conclusion 19
EUROPEAN FOREIGN POLICY AND THE ECONOMIC CRISIS:
WHAT IMPACT AND HOW TO RESPOND?
RICHARD YOUNGS
1
The euro crisis increasingly threatens not just the European Union’s (EU)
internal economic unity but also the cogency of its international projection.
Relatively little attention has been paid to how the euro crisis might affect EU foreign
policy. But it is widely felt that the ever-more consuming nature of the economic
crisis can only diminish European foreign policy effectiveness. It is pertinent to begin
mapping out what the impact might be and what EU geo-strategy should do in
response to the crisis. The EU needs to reflect not only on its immediate management
of the euro crisis but also on how this will feed into the changing relationship
between Europe and the wider world. This enjoins European governments to redirect
their longer-term international policies. If a two-speed Europe is indeed upon us, a
common set of geo-strategic principles may help prevent a core-only economic union
fundamentally fracturing foreign policy unity.
What makes such an exercise doubly difficult is that the euro crisis interacts in
complex ways with the longer-term, underlying trend of Europe’s relative decline.
In a sense, the EU faces the double whammy of a short-term crisis superimposed
on a more structurally-rooted, incremental loss of power. It is this conjoining of
immediate and long-term crises that renders the current juncture of such existential
weight. The geo-economics and geo-politics of these two levels of crisis interact in
myriad and varied ways. The challenge is to manage this uniquely probing scenario
of what might be termed ‘crisis-upon-decline’.
It is widely acknowledged that the EU has so far failed to delineate an overarching
strategic philosophy for tempering the effects of its crisis-upon-decline. Traces of
geo-strategy such as there are remain inscrutable and extempore. The most obvious
trend is towards a sentiment that the post-Western world order behoves the EU to
be more of a zero-sum predator, more ‘like China’. While a degree of hard-headed
realpolitik is certainly required, the EU is in danger of being overly seduced by this
untenable siren. It is now ritually stated that geo-economics will more tightly set
the terms of geo-politics; but European governments err in conflating geo-economic
strategy with quick-gain mercantilism.
Europe’s crisis-upon-decline does not need to end up being apocalyptically negative
for European foreign policies. But the EU does need a more coherent and proactive
geopolitical vision to navigate the choppier waters of a crisis-reshuffled world order.
Working to ensure that incipient variable-speed fiscal and monetary integration does
not augment foreign policy divergence, the EU must build this vision around four
principles. The EU should:
• avoid too heavy a dose of geo-economic mercantilism;
• not allow more modest ambition to elide into self-defeating strategic introspection;
• replace instrumental Europeanisation with pragmatic cosmopolitanism; and
• offer firmer support to entice the United States towards a less hegemonic
multilateralism.
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To note Europe’s impending decline is not defeatist. The EU retains enormous
strengths and potential. But many trends invite sobriety. The EU will still count for
a great deal in global affairs; but its shares of trade, investment, military capacity,
energy resources, research funding, diplomatic prerogatives and demographics are
all on downward trajectories that are unlikely to be dramatically reversed in the
foreseeable future. Many diplomats and analysts minimise these trends as they are
concerned not to ‘talk down’ the Union; this is self-destructively otiose.
The scenario of crisis-upon-decline is preoccupying enough to warrant serious and
more comprehensive strategic reflection. The EU requires a much more holistic and
balanced mix of co-operative realism, internationalism, polycentrism and regionalism.
Treading a thin line between over- and under-reaction, the EU can chisel positive
opportunity from the still-forming contours of the remoulded international system.
But its current approach to exiting recession and recouping presence in rising powers
is too utilitarian to constitute good geo-strategy.
A fork in the road?
As of this writing, in late 2011, some kind of two-speed Europe looks highly
probable. While the financial crisis is still unfolding and could take a less dramatic turn, prevailing opinion in Berlin, Paris and Brussels is that deeper integration
is required amongst a core of euro members. Positions are beginning to be staked out
on what this core will look like. The crisis has, of course, confirmed the precariousness of monetary without some kind of economic union. But well-known differences
persist between Germany (and to some extent The Netherlands) and other states
on fiscal questions and the role of the European Central Bank. And it is not clear
whether we are heading towards a two-speed Europe or in fact the marginalisation of
only a very small number of member states. One model would involve weaker euro
members and current ‘outs’ being left by the way-side by a reduced core, another
would see the self-exclusion of only the UK and Denmark, as the two member states
with permanent opt-outs from the euro.
Against this background, the impact on EU external relations remains difficult to
predict. In fact it is striking how little attention has been given to the possible spillover to foreign policy questions. At present, many suggest that the precariousness
of the whole EU integration project means that external policies have little priority
– on the grounds that if the euro fails, all bets on a common foreign policy are off.
However, these internal struggles should also oblige the EU to think harder about
foreign policy in its own right instead of assuming external influence follows easily
from successes of internal integration.
And yet the external dimensions of attempts to stabilise the euro zone are hardly
detectable. MEP Jacek Saryusz-Wolski, a former chair of the parliament’s foreign affairs
committee, has lambasted the formal Brussels response to the euro crisis for presuming
EUROPEAN FOREIGN POLICY AND THE ECONOMIC CRISIS:
WHAT IMPACT AND HOW TO RESPOND?
RICHARD YOUNGS
3
‘that the EU is an island in the ocean, with nothing around it.’1 The downward spiral
of the euro crisis has made it patently clear that the focus on deficit reduction is not
working and has placed monetary union under renewed strain. The policy recipe has
been fiscal stringency off-set by bail outs, rather than using funds to boost the flagship
EU2020 strategy and link a competitiveness drive more systematically to external
policies.2 Moreover, with more publicly funded bail outs on the cards three years on
from the outbreak of the financial crisis, external EU messages purporting a positive
linkage between liberalisation and good governance must be seriously compromised.
Richard Gowan has aptly noted that the EU’s strictures to the world on effective
multilateralism now lack credibility when inter-state cooperation within Europe has
been so rocky during the euro crisis.3
One pessimistic reading is that variable-speed integration on fiscal questions will
further and even definitively undermine the prospects for EU unity on foreign policy.
Opinion pieces are aplenty that internal fracturing will kill off any pretension of a
united Europe in global affairs. Many experts predict an existential parting of the ways.
The Economist foresees a ‘two belief ’ Europe, with an inward-looking and protectionist
core fundamentally at odds with an outward-looking, liberal periphery.4 On this
reading, the liberal ‘outs’ are expected to be quite happy to take the opportunity of a
treaty revision to plough their own furrow in international affairs. Many insiders and
observers fear that a core ‘economic government’ is likely to lean in a more indirectlyprotectionist direction to such an extent that in the long term the tenability of
Communitarised external policies may be menaced. Potentially deal-breaking Dutch
misgivings are not entirely unconnected from such a prognosis.
Commission president José Manuel Barroso fears that formal division between euro
members and the ten non-euro EU member states will ‘harm the European Union as a
whole, put in question the single market, [and] be an invitation for renationalisation
of Community policies.’5 Jean Pisani-Ferry observes that international markets are
already beginning to treat the different parts of the European Union economy as
separate blocks, portending a broader policy fragmentation.6 The likely axis of tension
is that ‘core’ member states will push for renegotiated terms and new policy directions
on a range of external questions, while ‘peripheral’ states defend the baseline aquis of
the treaties ‘at 27’. Members of the core are likely gradually to begin caucusing on a
broader range of external policy issues. This is likely to apply in particular to issues
of global financial governance that touch upon fiscal and other financial questions.
An eventual single eurozone representative in the IMF or G20 may begin to carve
out a broad mandate on global governance issues that cuts uncomfortably across
positions of the ‘outs’. With an approaching debate over formal institutional treaty
change, guarantees are needed against undue external segmentation between eurozone
members and non-members.
This paper is an extended version of a presentation made to the Dahrendorf Symposium in Berlin, 10 November 2011
1. Reported in Global Europe, 21 October 2011.
2. J. Emmanoulidis and J. Janning, ‘Stronger after the crisis: strategic choices for Europe-s way ahead’, European Policy Centre, June 2011, p. 24
3. R. Gowan, ‘Is the G20 bad for the EU?’, Politica Exterior, 44 (2011).
4. The Economist, 17 September 2011, p. 34.
5. J. M. Barroso, ‘A Roadmap to Stability and Growth’, speech, Brussels, 12 October 2011.
6. J. Pisani-Ferry, ‘How to Stop Fragmentation of the Eurozone’, Brussels, Brugel, 10 October 2011.
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Tension may grow not only between ‘ins’ and ‘outs’, but also between members of
the core. Some experts feel that the crisis has left such a bitter taste of recrimination,
in particular between Germany and southern member states, that a general loss of
cooperative spirit may be witnessed. If the euro crisis generates so much tension, it
may simply sap the good will needed to work together on external challenges. This
would in effect be a softer version of Martin Feldstien’s seminal 1997 prediction that
the euro would usher the spectre of conflict back onto the European continent.7 It has
been provocatively argued that, given this unpropitious context, it is by ditching –
rather than more strongly embracing - weaker member states that the core EU is likely
eventually to boost its international presence.8
Ivan Krastev argues that German-led pressure for fiscal retrenchment could even override local political choices to such an extent that democracy will be hollowed of all
meaning in peripheral states – leading to a cleavage not just in economic terms but
also between a core where democracy still ‘means something’ and an outer ring where
it is reduced to a precarious façade. Formal commitments to fiscal integration, in the
name of protecting the euro, may do little to recover this kind of fragmentation at an
underlying political level. It is difficult to see how this could not have deleterious effects
on many normative aspects of EU foreign policy.9 Some international relations scholars
see the euro crisis as the manifestation of broader underlying global political dynamics:
a realist-oriented segment of the academic community argues that in the multipolar
word there is no single, overwhelmingly threatening power against which the EU needs
to ‘balance’, removing the main driving force for integration and gradually weakening
the glue binding member states together in the most general strategic sense.10
Other routes may suggest less of a dramatic read-over to foreign affairs. First, among
the core members themselves a leap forward in external unity may be seen as a
necessary corollary to fiscal union. José Manuel Barroso has argued that the move
from a ‘stability union’ to a ‘solidarity union’ should be understood in its fullest sense
of requiring not just fiscal transfers but also a deepening of unity in foreign affairs.11
Prominent academics detect a broad resuscitation of neo-functionalist dynamics, with
the crisis pushing forward the ‘integration frontier’ across a whole range of issues.12
In addition, the breach between ‘ins’ and ‘outs’ may not be as wide as pessimists
fear. In formal institutional terms, a deal may be envisaged where ‘outs’ refrain from
placing obstacles in the way of a core economic union in return for guarantees that
external competences ‘at 27’ will be ring-fenced. Moreover, it is not clear that a
measure of fiscal integration will immediately give the core a fundamentally different
set of foreign policy interests to the ‘outs’. The effect may be long-term and subtle;
caucusing among the core may lead to tensions with the ‘outs’ that are difficult to
manage but would not necessarily weigh against the external, structural reasons that
should encourage all member states to cohere on foreign policy.
7. M. Feldstein, ‘EMU and International Conflict’, Foreign Affairs, November-December, 1997.
8. H. Dixon, ‘Can Europe’s divided house stand?’, Foreign Affairs, November-December 2011.
9. I. Krastev, ‘Europe’s Distintegration Moment’, Dahrendorf Symposium, Berlin, 8-10 November 2011.
10.S. Rosato, ‘Europe’s Troubles: Power Politics and the State of the European Project’, International Security, 35/4 (2011), pp. 45-86.
11.J. M. Barroso, ‘The State of the Union’, speech, Berlin, 9 November 2011.
12.L. Tsoukalis, ‘The JCMS Annual Lecture: The Shattering of Illusions – And What Next?’, Journal of Common Market Studies Annual Review 2011,
volume 49, pp. 19-44.
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The notion that there is a ‘two belief Europe’ straining to free itself from the shackles
of the current Union is an overly stark caricature; it both overstates the liberalism
of the northern and eastern periphery and underplays the stake that core eurozone
members have in international markets. Experts express serious doubts that there
is coherent or sustainable economic logic in Europe splitting between eurozone
members and the current ‘outs’.13 The euro-plus pact may succeed in providing a
bridge between core and periphery sufficient to instil more unity on issues of broader
international competitiveness. A highly positive prognosis would be that the UK and
others will see more of a need to deepen cooperation on foreign policy in order to
compensate partially for their marginalisation from the core economic union. Some
voices in both Germany and France do express sympathy with the view that European
security policy without the UK would be untenable. A slightly different point is that
a more loosely integrated ‘outer ring’ of EU membership may help dissipate tensions
over enlargement. While some elaborate institutional engineering would be required,
aspirant candidates for membership may more readily be welcomed into a formalised
outer grouping made up of states that are more favourable to enlargement than France
or Germany (although it is not clear how attractive an option this would be for them).
In sum, while ubiquitous warnings now flow that internal fracture will fatally undermine
EU foreign policy unity, the centrifugal effect of the economic crisis on external policy
still needs to be investigated rather than assumed a priori in what may yet prove to
be exaggerated fashion. The crucial implication of this more subtle reading is that
focusing on a new configuration of formal EU institutional rules is not enough. Far
more important is to assess whether member states are able to develop clear substantive
geo-strategic principles for dealing with crisis-upon-decline.
Forms of mercantilism
To debate these principles, the starting point must be that geo-economics is
returning as the leading edge of Europe’s global presence. The financial crisis has
helped give greater prominence to geo-economics as a factor that will strongly condition
further power-realignment. Finance and markets have once again become high politics.
State and private sector ally in pursuit of relative commercial gain as the West frets more
about economic security relative to other types of threat, seeking negotiated access to
resources and contracts.14 Geo-economics will increasingly be a handmaiden of geo-politics.
The rise of geo-economics demonstrates how Europe’s age of austerity is a profound
foreign policy and not merely domestic economic challenge. The impecunious
inevitably require more diplomatic ingenuity to retain power. Historians regularly
13.Chatham House Debate: ‘Is a two-speed Europe sustainable in the long-term?’, Transcript, 19 October 2011.
14.M. Thirwell, ‘The return of geo-economics: globalisation and national security’, Lowy Institute for International Policy, September 2010.
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point out that financial crisis has often presaged broader and disturbingly precipitous
political collapse. Think of some of the strategic symbolism of recent developments:
Brazil offering to buy Portuguese debt; the UK courting Indian investment to cover its
gaping financial hole; Spanish prime-minister José Luis Rodríguez Zapatero trundling
to China to plead for more debt purchase.
An assertive focus on immediate material interests and commercial deals is understandable
and indeed desirable. But the EU’s geo-economics are drifting in two directions that give rise
to concern. First, inward-looking market-protection is on the rise. Second, the EU is failing
to ensure that its highly mercantile form of commercial diplomacy is pursued in parallel
with the more political dimensions of global presence. Both these trends are understandable
and hardly surprising in the context of such vicious economic contraction. But taken too far
both are unduly expedient and short-termist to pass the test of good geo-strategy.
In terms of the first trend, the change of direction in trade policies is subtle, but
nonetheless meaningful. To some degree the EU has retained a commitment to outwardlooking commercial policies. At a technical level, EU trade officials are still working
to restart the Doha development round and the EU is by no means the guiltiest party
in the stalling of multilateral trade liberalisation. External trade has recovered to precrisis levels and a raft of new commercial agreements is being negotiated.
However, the finer grained detail reveals some reversal of the spirit of economic openness.
Many new regulations introduced in the aftermath of the financial crisis discriminate
against non-EU states and companies. Export subsidies have increased significantly.
Covert forms of protectionism now abound. Patrick Messerlin calculates that EU states
have introduced far more measures of behind-the-border protectionism since 2008 than
have non-Western rising powers.15 Fredrik Erixon and Razeen Sally detect an inevitable
spill-over from market-control and state-companies collusion internally to less liberal
external policies. While traditional tariff- and quota-based protectionist measures
introduced since the crisis cover only 1 per cent of trade, financial and regulatory
mercantilism has become increasingly prevalent. Official figures confirm that the EU has
resorted to such covert, non-border measures more than any other region since 2008.16
The Business Europe president laments that new crisis-related EU financial regulations are
choking off lending for external trade and investment.17 The EU is set to reduce from 176
to 80 the countries that benefit from its Generalised System of Preferences; this will involve
excluding rising powers that currently take nearly half the scheme’s preferences. Many
third countries express concerns over the incompatibilities between the myriad bilateral
trade deals that the EU is negotiating, alleging that these complicate access to European
markets. By now it is clear that the G20 is serving primarily as a site of geopolitical
bargaining between big powers; in terms of the organisation’s role in the financial crisis,
the EU members seem to have no desire to harness the G20 as a contributor to the vitality
of multilateral liberalisation. Anti-globalisation sentiment has grown not just on the left
but within a right more focused on preserving local communities and values.
15.P. Messerlin, ‘How the rich OECD nations should handle the emerging giants’, Europe’s World, Spring 2010, p. 15.
16.F. Erixson and R. Sally, ‘Trade, globalisation and emerging protectionism since the crisis’, ECI PE working paper 2, 2010, p. 8 and p. 12.
17.European Business Summit, Brussels, May 2011.
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For now, the EU figures strongly in economic rankings. It still accounts for 50 per
cent of global FDI outflows and 40 per cent of inflows. In 2010, the Global Economic
Forum placed six European countries in its top ten competitive economies.18 But
interdependence with the BRICs is low, measured by both trade and investment. Exports
to Asia are relatively modest. In 2010 Germany did five times more trade with other
EU states than with all the BRICs. The EU’s competitive edge in international markets
has been eaten away by US firms. Despite the EU being set to lose 60 million workers
over the next decade, immigration is still far more low skill than in the US. Member
states still exclude four fifths of services output from the internal market, let alone
broader global competition.19 In short, there is little margin for de-internationalisation.
The temptation of Euro-autarchy is likely to prove a dead-end. The original post-war
rationale driving European integration may be subsiding. But if Euro-distinctiveness
is lost because the gap closes between intra-European integration and broader global
interdependence, this should be celebrated. What jars more negatively is an inward
looking chauvinism that seeks confusedly to recreate such a supposedly distinctive
European economic identity-cum-model.
A second, related trend is that the crisis is pushing the EU towards a far narrower
and highly utilitarian vision of its external geo-economics. In the 1990s and early
2000s the EU did have at least a vision and ambition to work with Asia on deepening
multilateral strategic norms. Now it appears to be concerned with pure commerce.
Germany in particular is drifting very much into an economics-based international
profile. Jonas Parello-Plessner laments ‘Germany’s inept strategic culture…drifting
away in extra-European flirtations with BRIC-identities’.20 In the midst of a harsh
budget crisis, Spain’s beleaguered Socialist government freed up resources for the state
body providing credit financing for Spanish exports – not a bad measure in itself but
one that reflected a virtual reduction of foreign policy to such commercial support.
The British government is quite explicitly prioritising a commercial diplomacy. The
UK kept its 2010 Strategic Review so general and unspecific because it did not want
to name rising commercial partners as strategic challenges. This stands in contrast to
the US, that is able to pursue commercial diplomacy but still hone in on the strategic
risks emanating from those same markets.
Diplomats agree in private that the EU simply has not engaged with Asia as a strategic
issue in the same way that the US has. The EU has no strategic perspective in Asia
beyond a race for commercial contracts and reversal of its weakening economic
presence. As the EU offers bilateral trade deals with some Asian states, this engenders
an avalanche of requests for similar deals from other countries – Japan and Taiwan
are now pressing hard for generous accords. It is clear that the geo-strategic tensions
caused by the included-excluded dichotomy of commercial bilateralism have not been
addressed. The example of the EU abandoning its regional deal with the Association of
Southeast Asian Nations (ASEAN) to seek instead to negotiate commercial deals with
the grouping’s individual members is emblematic of this trend.21
18.Global Competitiveness Report 2009-2010, https://members.weforum.org/pdf/GCR09/GCR20092010CountryHighlights.pdf
19.Figures from D. Hamilton, Europe 2020: competitive or complacent? (Washington: Johns Hopkins, 2011).
20.J. Parello-Plessner, ‘Germany and China’s new entente commerciale’, E!Sharp, 29 June 2011.
21.G. Khandekar, ‘The EU’s mistaken approach to ASEAN’, FRIDE Policy Brief, July 2011.
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One Asian ambassador complains: the EU is ‘just trying to get things out of Asia, not thinking
how we can really cooperate’. After thirty-five years of dialogue with ASEAN, the EU shows
no real urgency in talking in broader political terms with the region. To the amazement of
ASEAN officials, the EU has not approached Asians to ask what can be learnt from the way
they coped with the 1997 crisis. Shada Islam warns that EU is still predominantly ad hoc in its
approach to the region and lacks a regional assessment or approach to Asia, for example through
supporting softer forms of security policy in the region.22 The US and Russia now participate in
the East Asia Summit, the main regional security forum; the EU does not. Perplexingly, in both
2010 and 2011 Catherine Ashton turned down invitations to attend the ASEAN Regional
Forum. The EU’s security contribution amounts to little more than a small amount of border
management with Japan. Without something more tangible to offer, any European musclingin to Asian gatherings is hardly likely to be viewed as a serious endeavour anyway.
An EU-India security dialogue inaugurated in 2006 is recognised by both sides to have
produced little, with most focus on long-stalled FTA negotiations. External Action Service
diplomats shun the suggestion that the EU should press to work with India on issues of
broader international and political values. Indian officials in New Delhi puzzle over the EU’s
reluctance to cooperate on ‘dealing with’ China. They warn that European governments’
use of bilateral commercial diplomacy merely reinforces India’s tendency to see the EU as
a fractured entity in political-strategic terms too.
The EU’s 65 sectoral dialogues with China lack any strategic focus. And while the current
Kuomintang government in Taiwan has reduced cross-Straits tensions since 2008,
Taiwanese diplomats complain they have received little reward from European governments
– indeed they stand penalised by the EU-South Korea free trade deal – and that the EU is
still overly sanguine about the future strategic risk of mainland-Chinese preponderance.
Of course, the EU cannot realistically aspire to be a leading security power in Asia,
but it at least needs a position on key strategic issues, and especially on how its actions
can back up the US’s role in the region. For example, it remains strikingly unclear
what the EU would do in the event of a conflagration in the Taiwan Strait. European
security will depend increasingly on how the US acts in Asia; and yet attempts to
influence this role have not been apparent in European policies.
Crucially, such direct and narrow mercantilism flows from an assumption that multipolarity will be the global order’s pre-eminent organising principle. While it is logical
and desirable that the EU focuses increasingly on enhancing its relations with the
larger rising powers, it should not predicate its geo-strategy too heavily on the premise
of competitive multi-polarity. State-centred multi-polarity will be one feature of the
post-Western world order. But it would be unduly reductive to paint it as the sole or
overwhelmingly defining dynamic. Basing strategy on such an assumption leads to the
view that power is about tit-for-tat commercial bargaining and that this should return as
the dominant logic guiding EU geo-strategy. In fact, the EU has already been gradually
heading this way over the last decade; the euro crisis has hastened and intensified the
trend. This is the miasma of pale-imitation crypto-realism: a foreign policy of too much
guile and too little guiding principle. A geo-strategy based on the constant search for
22.S. Islam, ‘Europe and the Asian century’, Friends of Europe policy briefing, June 2011, p. 3.
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reciprocal commercial bargains is inherently unstable and unpredictable. The incipient
reliance on more protean deal-making with rising powers is a seductive but false elixir.
Too exclusive a focus on multi-polarity begets a view that power is exercised through
gaining commercial reciprocity. Indeed, reciprocity is now a more prominent (although,
of course, not new) leitmotif of much external policy. And to some extent there is
understandable logic in the push to bargain hard and win more benefits from rising
powers in return for the incentives offered by the Union. But if pursued too hard, this
approach risks being self-defeating. Interviews suggest that this drift in policy actually
reinforces the perception that the EU may be a reasonably important trading partner
but has little political intent to uphold international rules. Responding to the notion of
such reciprocity, one former Brazilian foreign minister replies that in pursing this line
the EU fundamentally misunderstands the aspirations of rising powers: ‘Brazil cannot
be bought’, he warns, it wants a stake in the system not a series of negotiated benefits.
As a basis of geo-strategy, hard-bargaining reciprocity harbours a contradiction: it
presumes that the best way to correct the EU’s loss of material power is by exerting
material bargaining pressure – the very thing it is losing. This is why the EU needs to
compete and find leverage on a different plane. To the extent that reciprocity serves
geo-strategy it must be of a more diffuse variety, tailored to long-term give-and-take
over global reordering. While the EU clearly has a great deal to learn from China, one
wonders if the ‘We must be more like China’ line is not bending a little too far with
the wind of fashion. In practice, reciprocity has also served as a comfortable pretext
for the EU’s own protectionists.
The main virtue of such a reciprocity-based strategy is its supposed workability: that
it gets things done, without governments waiting endlessly for nebulous rules to be
agreed at the multilateral level. But the evidence suggests that it often falls short on this
most pragmatic of yardsticks. The payback in relations with China is not yet apparent.
The EU has pressed increasingly hard on intellectual property rights, stepped up antidumping duties against China and taken the latter to the WTO over market access in
natural resources. But the 2010 EU-China summit ended in acrimony because the EU
refused to grant China market economy status, and China refused to open procurement
markets in order to persuade European states to budge on this. China’s assertiveness and
nationalism have increased not diminished as European governments have raced to build
up commercial portfolios. China is changing its favoured European partners from year
to year, and beginning to play them off against each other in Putinesque fashion.
Katinka Barysch charts how the EU’s more pragmatic alliance-building approach towards
Russia has also produced few results: a cooperation agreement is still not agreed; Russia
has moved towards WTO accession but trade liberalisation is blocked by Russia’s customs
union with Belarus and Kazakhstan; Russia still rejects multilateral energy rules, wanting
a new energy treaty based on more geopolitical principles; the EU-Russia Modernisation
Partnership is still essentially empty of content; Germany and France offered Russia
participation in a new security committee, but Moscow has modified few of its positions
on South Caucasian frozen conflicts.23 The improvement in Polish relations with Russia
23.K. Barysch, ‘The EU and Russia: all smiles and no action?’, CER Policy Brief, April 2011.
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has unblocked a more unified EU strategy of cooperative engagement. But this was
largely the product of domestic political shifts and the symbolism of Poland finally
transcending the Cold War, not of any fundamental rethink on a coherent geo-strategic
approach vis-à-vis Russia.
Perhaps most worryingly, these approaches to geo-economics risk undermining multilateralism. Basing policy on defending the EU as one amongst several ‘poles’ is emerging
as the default strategy, without any tenets to ensure that core principles of multilateralism
are not thereby compromised. Bilateral trade deals are indeed positive, in so far as they are
WTO-approved. But firmer evidence is required that they are actually fashioned so as to
be stepping-stones towards multilateral progress, as the EU claims. Asked in more political
terms precisely how the EU’s bilateral strategic partnerships have been used to further
multilateralism, diplomats are imprecise and acknowledge that such confluence remains a
fairly airy aspiration. Some senior diplomats worry that the EU’s tough reciprocal economic
bargaining is undermining fundamental multilateral principles. As said, companies say
they are struggling to deal with the spaghetti bowl of trade deals as these overlap with
each other in ways that confuse multilateral rules. Some policy-makers are beginning to
mutter in private that the EU has become too fearful of the strength of rising powers in
recent years. Enhancing strategic presence will quite properly involve seeking short-term
bilaterally-negotiated benefits; but these must be conceived as staging-posts towards deeper
multilateralism rather than as final destinations in themselves.
There are many features of the emerging world order that mitigate the purity of
multipolarity – and which must be reflected in the way that EU geo-economic strategies
respond to crisis-upon-decline. Polarity implies a degree of separateness between blocs
that simply does not attain today. Parag Khanna powerfully articulates the picture of a
world order whose essential feature is not its multipolarity but its multi-actorness.24 The
most influential features of the new world order are speed, unpredictability, deepening
problem-intersections at all levels and non-linear change, all quite antithetical to the
staid frameworks of traditional, inter-pole diplomacy.25 In consequence, Joloyn Howarth
stresses that today’s ‘grand strategy’ cannot be based on traditional, Westphalian alliances,
as influence derives more from multi-faceted cooperation and connectedness.26 According
too much weight to multipolarity can smack of structural determinism. To argue that
non-Western powers’ more assertive foreign policies amount per se to multilpolarity
hollows the concept of its analytical rigour. Many countries may ‘rise’ without being of
remotely similar structurating potential in international relations.
The EU was slow in reacting to the shift in power away from the West; arguably, it
now rather overstates the weight of polarity in its external strategies. One of the strong
points of EU foreign policy was its early recognition that geo-economics and geopolitics cannot be separated; to countenance such a separation now would represent
an unfortunate regression. All this means that while assertive geo-economics is entirely
proper, the EU errs in casting its commercial policies in such narrowly mercantilistic
terms as are unlikely to serve its own long-term interests.
24.P. Khanna, How to rule the world (New York: Random House, 2011).
25.J. Cooper Ramo, The Age of the Unthinkable (London: Little Brown, 2009).
26.J. Howorth, ‘The EU as a global actor: grand strategy for a global grand bargain?’, Journal of Common Market Studies, 48/3, 2010, pp. 455-474.
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Strategic retrenchment
Similar considerations pertain in the realm of geo-politics. The EU must work a
lot harder in the wake of the economic crisis to consolidate itself as a measured
strategic internationalist. Its scale of foreign policy ambition must be pitched neither too
high nor too low. Thankfully, the insouciance with which too many held the Union to be
a qualitatively superior form of superpower-in-the-making is now less prevalent. But an
equal concern lies in the Union shifting too far in the opposite direction of disengaged
introspection. The euro crisis has appreciably compounded this trend. The right balance
is for the EU to set its sights on being a committed and efficient medium power.
Many will protest that if the EU were to act with the full sum of its parts it should aspire
to retain great power status. While centrifugal forces persist, it is better and simply more
realistic for the EU to aim to be a medium but resolute power rather than an indecisive big
power pretender. Some have suggested that the EU can, on a global scale, now be likened to
a traditionally benign ‘small power’.27 But the reach of European governments’ hard security
interests and presence limits the utility of this comparison. The EU can aspire to lead a cluster
of medium powers, able to attenuate the largest rising powers. As a medium power the EU
must aspire to shaping future agendas, especially on issues like the geostrategic impact of
climate change. This is where the EU can still count, as a ‘shaping power’.
In light of the euro crisis, international over-reach must be guarded against, and undoubtedly
persists in some areas of European policy. But on balance, the more striking and preoccupying
trend is more towards an unhealthy degree of Euro-retrenchment. Pascal Venneson defines
this as a ‘Euro-neutralism’ that is increasingly wary of entanglement in foreign affairs;
unconvinced that spending significant resources abroad accrues strong benefit to European
security; and eschews values in the name of ‘keeping instability out’ through counter-terrorism
and migration control.28 A crepuscular pathos is proving stultifying to good geo-strategy,
settling like a wet blanket that suffocates proactive EU vision.
Retrenchment can be witnessed in the strategic sphere as a response to crisis-upondecline. While a dearth of military power is not in itself the EU’s principal weakness,
its regress in power projection does matter. Military power is needed not to pursue
aggressive policies of realpolitik counter-balancing, but rather as the backbone to
shore up civilian power. Declining defence spending is a concern; but the most serious
shortcoming is the configuration of European military capabilities and the limited
extent to which these are harnessed to coherent political strategies and visions.
Overall EU defence spending has been flat for a decade. This hides variation: increases
from the UK and France, decreases from Germany, Italy and others. The story of European
defence has been increasingly one of the UK and France investing, with others free riding.
27.A. Toje, The European Union as a Small Power (Basingstoke: Palgrave Macmillan, 2010).
28.P. Vennesson, ‘Competing visions for the European Union grant strategy’, European Foreign Affairs Review, 15/1, 2010, p. 65.
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This compares to the more than doubling of defence spending from most rising powers,
and a 60 per cent increase from the US. In 2010 the EU was the only region where defence
spending declined. Five emerging powers (the BRICS plus Saudi Arabia) are now in the
top ten defence spenders globally; India and Brazil will soon overtake Germany.
In the wake of cuts to defence budgets, the UK and France have become ultra-pragmatic
in their military planning, including through their November 2010 accord on defence
cooperation. The UK-French accord quite consciously starts from the basis of pragmatic
capability-sharing not a common high-end military or strategic doctrine. The increasing
focus in defence policy on equipment pooling is not the same thing as common geostrategy – indeed some planners fear it may be displacing the latter. Reviewing the 2008
French Livre Blanc and 2010 British Strategic Defence and Security Review, Julian
Lindley-French concludes that in both cases ‘offensive armed forces are being sacrificed
to fund the new but indefinable mantra of homeland security ... [which] ... implies the
retreat of Europe into itself, with any pretence ended to an autonomous stabilisation role
in or beyond its borders, be it civilian or military’.29
Most EU member states are simply free-riding. Of particular note, Ulrich Speck laments
an ‘unbound Pacificism’ distorting German views of geopolitics.30 The Netherlands is,
to use the phrase now used in its internal debates, retreating behind the dykes. Several
other states say this retreat, of a state hitherto emblematic of European internationalism,
is apocryphal. The Dutch sent only one boat to the Mediterranean to help police the
arms embargo against the Qadafi regime, but political and public opinion was firmly
against significant involvement in Libya. A smattering of Dutch police trainers remains
in Afghanistan after the country’s withdrawal from Uruzgan in 2010.
The limits to Common Security and Defence Policy (CSDP) missions have been well
chronicled. Javier Solana’s aim was quite openly to get the EU ‘on the map’ by getting
CSDP mediating and involved in as many, often small conflicts as possible – even though
it was realised that these engagements were bereft of a geo-strategic vision. The rhythm
of CSDP is slowing: only one new mission has been agreed in the last 15 months, and
several existing missions are winding down. Insiders concur that Catherine Ashton has
shown little interest in CSDP, leaving the latter without a champion at the highest level.
The EU has no civilian-military doctrine as such, rather just a loose commitment to
‘doing a bit of both’ in different conflict situations, which is far from being the same
thing as integrated strategy. NATO’s Strategic Concept has done nothing to improve
EU-NATO cooperation on the ground; in fact tensions have deepened between the
two organisations. Insiders say this is because both EU and NATO officials remain
unconvinced of the advantages of cooperation.
The reshaped world order is an uncertain place but has not yet produced major, tangible
or direct military threats, meaning that cash-strapped governments are struggling to
make the case for hefty defence budgets to their populations and parliaments. The
argument increasingly has to be made to convince many EU policy-makers to remain
strongly committed to outward looking, internationalist strategic engagement. The
29.J. Lindley-French, ‘Strategic pretence or strategic defence?’, GCSP Policy paper 14, April 2011, p . 4.
30.U. Speck, ‘Pacificism unbound: why Germany limits EU hard power’, FRIDE Policy Brief, May 2011.
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EU claims it should be good at managing an increasingly widened concept of security,
but in reality a failure to dovetail geo-economics and geo-politics is its Achilles Heel.
At present, policy trends are going in the wrong direction. From a large number of
senior policy-makers, this author has heard the same refrain over and over again: we
have no vision of where we want the EU to be globally in the medium term, beyond
desperately defending what we have within Europe as the euro crisis tightens its grip.
Perversely, the Lisbon treaty has actually produced a shift in the centre of gravity of
foreign policy-making back to national capitals and hence more defensive reneging on
proactive internationalism. The gap between formal, unity-enticing rules and practice is
widening. While the 2003 European Security Strategy has had little bearing on concrete
policies, there is little willingness to contemplate a new, more operational strategy: the
fear is that member states would not agree on enough. The External Action Service still
has no clear mission statement. It may help coordination, but is still focused on classic
diplomacy more than inter-issue linkages. US strategy documents are now much better
on dovetailing soft and civilian power to geostrategic ends, stealing the EU’s clothes.
While the need for deeper unity and engagement seems clear in a post-Western world,
in practice member states seem further apart on the big geostrategic questions than a
decade ago. Europe’s crisis-upon-decline is pushing strategic primacy back to national
capitals in a way that may provide for beneficial short-term flexibility but augurs badly
for the longer-term if not kept within manageable parameters. While the financial crisis
is undoubtedly a serious constraint and future core-periphery institutional change now
uncertain, it is vital that member states still work together to temper strategic shrinkage.
The global uncertainties that the crisis intensifies require a greater not a diminished
security engagement.
From Europeanisation to pragmatic
cosmopolitanism
A further effect of crisis-upon-decline is that it will become harder for the EU
to retain a focus on normative political values within its foreign policies. Many
would say it is largely futile and misplaced for the EU even to try to do so. Yet the EU
should keep faith in the liberal notion that cosmopolitan values are in its own long-term
interest. It will however need to approach and support such values in a different way. In
the wake of the crisis, the EU will need to think less in terms of Europeanisation and
more in terms of universalism.
The EU is widely seen as synonymous with qualitatively new forms of governance, based
on the shared management of technical rules and regulations. And the EU has extended
such forms beyond the Union’s formal frontiers. This is geo-strategy by post-modern
governance in preference to the gunboat. The EU’s reach has spread through its own
rules seeping beyond its borders: a kind of geopolitics of regulatory osmosis.
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This will remain a pivotal dimension of European power. But after the crisis it needs
also to be recast: the EU should think less in terms of European governance and
more in terms of cosmopolitan governance. This is how the EU can retain influence
and protect important strands of the liberal world order. The EU must move
from ‘replicating itself ’ to using its own achievements to influence jointly-forged
universalism. This is a subtle but important change for the rest of the world – and
one that crisis-ravaged Europe errs in resisting.
Europeanisation has been a totem of power-as-benign-envelopment. It has been seen
as co-extensive with normative power. Of course, the EU’s rules retain appeal. But
the assumption must be more qualified and selective in a post-crisis and reshaped
world order. The externalisation of EU rules should indeed be used to pursue
core tenets of internationalism but eschewed as a means of corralling other states
speciously into a sphere of administrative tutelage. Think of current policies in the
Middle East and North Africa. The EU still sees multilateralism as synonymous with
Euro-Mediterraneanism. It needs to change its mental chip. Multilateralism needs
to arise from local forums of interdependence within North Africa and the Middle
East, to which the EU, as one actor among many, then lends its support. The EU
awaits its Copernican revolution, to break the mental map of layers of surrounding
neighbourhoods revolving around the unmoving pivot of the Union.
At present, there are few signs of a shift towards a less Euro-institutionalist approach.
Indeed, pinned back against the ropes of financial crisis the EU clings more firmly
to its own familiar institutional templates, while resiling from apparently expendable
universalist agendas. No European policy-maker will say that the EU has abandoned
cosmopolitan values; but they will almost without exception muse that to push
internationalist values today goes against the grain. The sentiment is that the EU
cannot do much to nudge global politics in this direction and that this therefore
makes a bad basis for geo-strategy.
Indeed, a general weakening of the EU’s cosmopolitan spirit is evident. Policy-makers
of course still lay claim to its core values. But, many assume the future will be one of
little more than a residual liberalism, hanging on stubbornly through merely formal
commitments as the world heads on a fundamentally different direction. The EU has
come to favour a rather state-centric, managerial form of multilateralism.31 It tilts more
towards containment-based approaches to conflict mitigation, dramatically downscaling
the funding and ambition of institution-strengthening programmes in places like
Pakistan, Afghanistan and Iraq. The EU says it believes in holistic security as opposed to
hard power but has never been able to specify how much it spends through the entirety
of its instruments for security-relevant ends. Understandings of European identities
are contracting and being defined in more exclusivist terms against the outside world.
Before the Arab spring flourished, the EU’s commitment to supporting democracy was
weakening; and after it, remains circumspect. Alliances with single powerful states now
trump efforts to encourage inclusive regionalism.32
31.A. Cooper and P. Subacchi (eds) ‘Global economic governance in transition’, International Affairs, 86/3, 2010; World Economic Forum, ‘Everybody’s
Business: strengthening international cooperation in an interdependent world’, WEF, Geneva, 2010; H. Altinay, ‘The case for a global civics’, Working
paper 38, Brookings Institution, 2010.
32.For more details on these trends, see R. Youngs, Europe’s decline and fall (London: Profile Books, 2010).
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Philip Stephens may overstate his case in arguing that relations between EU member
states themselves have ‘returned to Westphalia’.33 But at least something of the spirit of
1648 certainly has seeped back into European policies outside the continent. It may be
that decades hence historians will be able to look back and conclude that the terrains
we are currently traversing are indeed the foothills of illiberalism’s ascent. But with so
much of the emerging order in indeterminate flux, it must for now be overly defeatist
so dramatically to reduce the effort invested in supporting cosmopolitan universalism.
Support for cosmopolitan liberalism does not necessarily clash frontally with the nature
of the emerging global order. It would be wrong to base policy on the assumption
that the new world order is the antithesis of liberal internationalism. The best known
exponent of this positive view is John Ikenberry, who has long insisted that rising
powers do not threaten the liberal world order so much as they want more of a say
in running it. With no all-encompassing alternatives in sight, he argues, debates are
about updating, not replacing the liberal world order. This view has, of course, been
widely challenged. It certainly underplays the more political dimensions where at
least some rising powers espouse deeply illiberal challenges to the prevailing world
order. Yet Ikenberry’s thesis does contain traces of useful antidote to the prevalence
of ‘zero sum world’ prognostics. Even if the argument may be over-cooked, this does
not entirely invalidate his concern that the West’s hurried steps away from the liberal
world order reflect a ‘panicked narrative’.34
In similar vein, Naill Ferguson insists that current trends embody not just a quantitative
catching-up of the developing world but something more historically profound,
namely that ‘the rest’ no longer reject the factors that gave the West its advantage
for the half millennium after the 1500s: technological advance, competition and the
Lockean concept of property rights. Diversity remains mainly in the field of political
institutions. He argues that the ‘others’ now have greater faith in what were assumed
to be Western values than many in the West itself.35
They key policy implication is that we confuse the loss of Western hegemony with the
demise of liberalism, because these two things have historically gone hand in hand.
Ikenberry goes too far in the degree of immutability he sees in the liberal word order;
there must be give and take. But it is the case that what are widely dismissed as ‘Western
liberal values’ have more resonance as universal aspiration than is commonly assumed.
The irony is that to argue against such values with the now common argument that ‘we
must be less Euro-centric’ is itself breathtakingly Euro-centric – because it arrogantly
holds so many core values to be ‘the European way of doing things’. In a way, the West
got what it wanted: for others to buy (at least partially) into the liberal world order.
The cost has to be a loss of political control over that order.
Tackling crisis-upon-decline requires the EU to reflect on how the liberal order should
be recast in a way that retains its essential features. This also means that the EU needs
33.P. Stephens, ‘Europe’s return to Westphalia’, Financial Times, 23 June 2011.
34.G. John Ikenberry, ‘The future of the liberal world order: internationalism after America’, Foreign Affairs, May/June 2011, p. 57. For one exampleof
the other extreme of this debate, positing a Chinese power turning the whole global order fundamentally illiberal, see M. Jacques, When China
rules the world: the end of the Western world and the birth of a new global order (London: Penguin, 2009).
35.N. Ferguson, Civilization: The West and the Rest (London: Penguin, 2011).
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to change the soft power narrative; we assume this is a more acceptable narrative
than that of the liberal order, but it may be the opposite: rising powers want at least
some aspects of the liberalism but with hard power. Differences between China and
other rising powers may prove significant. Rising democracies resist many elements of
Western democracy promotion, but it is not true that they are entirely realist in their
thinking; indeed, some elements of their external policies do now seek genuinely to
support liberal political reform in other states.36 Brazil, Turkey and others can make
‘soft persuasion’ work only because the US and EU stand behind them assertively
anchoring core liberal values of multilateralism, normative rules and openness. The
EU would err if it implicitly saw second order Asian powers simply as useful counterbalances to China rather than potential partners in internationalist values.
European post-crisis geo-strategy could do worse than weaving in David Held’s notion
of ‘layered cosmopolitanism’, which seeks to capture the notion of principle-withpluralism and rights attaching to global citizens rather than nations.37 His argument
that states are not to be ontologically privileged should also be applied to the EU
– and thus serve as a corrective to the Brussels tendency to see geo-strategy through
the lens of outward-expanding Euro-governance. Joseph Nye has recently argued that
‘smart power’ is today a form of ‘liberal realism’ that links together harder and softer
elements of power better to quell changing geostrategic challenges.38 And the most
brilliant of social democrats, Tony Judt, agreed that, however much remoulding of
market-dominance is required, ‘freedom is freedom’ and must be better defended by
Western governments against the claims of the efficient authoritarian state.39
A crucial result of the financial crisis is that the critique of economic liberalism
increasingly spills-over into a doubting of the creed’s political dimensions. Basic core
liberalism gets a bad press today, and is routinely painted as regressive and unsustainably
hegemonic. But in a multi-nodal, polycentric world order it can be spun in a more
favourable light, regaining resonance as a focus on the irreducible core of liberal values
while leaving scope for institutional variations across other regions and cultures. It is still
worth recouping Locke’s original point of political philosophy, that tacit consent must
lie behind the compact the citizen makes with political authorities to cede his natural
rights and freedoms – this being pertinent to the extent that the ‘European project’ has
gone too far to the other (Hegelian) extreme of attributing institutions value as endsin-themselves. Tzvetan Todorov argues that the true spirit of the enlightenment that
is in need of rescue is that of freeing up society to find its own consensus and not to
prescribe the content of either religious or secular-ideological beliefs – which is where
the enlightenment project has gradually run into the ground.40
In their broad sweeps of how the world is being remodelled, and from their contrasting
positions on a left-right spectrum, all these prominent thinkers issue an implicit plea to
the European Union: for the EU to be avatar of a decentred liberalism could be made
36.T. Carothers and R. Youngs, ‘Looking for help: will emerging democracies becomes supporters of international democracy?’, Carnegie Endowment
for International Peace working paper, July 2011.
37.D. Held Cosmopolitanism: Ideals and Realities (Polity 2010).
38.J. Nye, ‘The future of power’, Public Affairs, 2011.
39.T. Judt, Ill fares the land (London: Penguin, 2010).
40.T. Todorov, In defence of the Enlightenment (London: Atlantic Books, 2010).
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to run with and not against the grain of the emerging world order. It would be a geostrategy far more attuned to the times than the tired rhetorical trope of soft power. An irony
of the emerging world order is that some states fearful of falling under Chinese tutelage
may become more susceptible to Western influence; the very modest loosening of political
conditions witnessed in Burma in late 2011 have been widely interpreted in this light. The
new liberalism might be more subtle and implicit, more accepting of variation, more about
setting broad parameters for economic and political comportment, not quite so pugnaciously
Promethean – and probably be better for this. While some post-crisis trends may indeed run
with the tincture of redux-Westphalianism, at least some parts of the supposedly zero-sum,
illiberal world are now conjured up to justify pre-determined policy preferences, not as an
accurate description of reality. Too much idealism may look out of touch; but too much
value-neutral realpolitik is overly reductive in its understanding of global trends.
Post-hegemonic transatlanticism
A final, important consideration for EU geo-strategy is that the financial
crisis has made it even more definitively clear that the US can no longer bear
the same share of the cost of maintaining a liberal world order, through security
guarantees and other international public goods. The liberal word order has in effect
been overseen by US hegemony; but it is now beyond any doubt that this cannot
endure in its current form. This will raise the question of indirect European geostrategy: how will the EU influence how a declining US influences the post-Western
world order? The issue is not purely about aligning with the US in a classical form of
transatlantic cooperation, but using Atlanticism productively to push the US in the
direction of a less hegemonic multilateralism.
If the EU wants to assist a less hegemonic liberal world order then it has to help the
US bear the costs of that order, well beyond the imprecise discourse of shared values
that suffuses the transatlantic agenda per se. The EU cannot simply depend on the
US to fulfil many hard power capabilities in the future. The irony is that, while
Europe struggles with its own crisis, broader Western decline requires the EU to do
more to temper US decline. The sheer scale of its debt will militate against the US
maintaining such an extensive military presence across the globe; this will have huge
implications for how the EU sees the world.
Both the EU and US now talk of a more selective transatlantic partnership, more
pragmatic and varied between policy issues. Paradoxically the more pragmatic and
apparently depoliticised approach to transatlantic relations is actually encouraging
member states to align with the US bilaterally on select issues, undermining any
overarching unity in terms of a broad narrative in relations with the US. What the
EU needs is not mere pragmatism, but a guiding narrative: that of helping to deepen
the US’s commitment to a non-hegemonic liberal word order. The primary challenge
is for the US and EU not so much to focus on ironing out bumps in their bilateral
relation, but to work together to safeguard global public goods.
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This narrative should be given preference over the worrying tendency now to conceive
of the EU, China and US as superpowers in their respective regions, colliding with each
other on the global stage. The EU should not hitch itself to a G2 world with passive
resignation. In this world the US and China act to each others’ benefit – the US gaining
access to Chinese liquidity to cover its deficits, China a means of using savings to enhance
its international leverage. Other powers risk being left aside in determining the conditions
under which interdependence is managed. Only multilateral rules can protect the EU from
a G2, not a focus on narrow commercial reciprocity. David Miliband argues: as the EU
begins to feel squeezed out by US-China deal-making, the solution is not to try to get in
on the same act but rather fill the vacuum this is leaving in multilateral governance.41
Unfortunately, at present, EU policy stops short of following such a narrative. In some ways,
transatlantic tensions are now greater over what the basic priorities should be in dealing with
shared decline. The US political elite has moved away from Wilsonianism: on the left, to a
Jeffersonian focus on American internal democracy as a model; on the right, to a Jacksonian
selective international engagement, moulded to concrete interests and off-shore balancing.42
Secretary of State, Hillary Clinton’s recent advocacy of more robust economic statecraft
suggests that the US is drifting in the same mercantile direction as the European Union.43
In response to the crisis, the EU and US are if anything competing against each other more
ferociously in China rather than working together to pull the latter into multilateralism’s
orbit. They have been talking for years about having consultation meetings before big
international fora such as the G20 or their respective key bilateral summits with the likes
of China. Notwithstanding some new EU-US cooperation on China-related issues, such
consultation is still far from being systematic or comprehensive. European diplomats admit
in private that the EU is still not able to talk strategically to the US about the rising powers,
as the US does not see what it will get from the EU on this issue, while the economic crisis
is pushing member states to look for their own gains in transatlantic relations.
Constanze Stelzenmüller perceptively rails: ‘We appear not to have understood that America
is impatient for Europe to take responsibility for our own neighbourhood – and may soon
be willing to withdraw if that is what it takes get the message across’.44 Libya could be the
first instance of such a trend. Some member states did show willingness to assume a lead
role from the US. Indeed, the Libya mission was reminiscent of the early-1990s Balkans,
with the US once again expecting European leadership. But few EU member states stepped
up to contribute assets to the Libyan operation, despite it being unequivocally pursuant to
a multilateral policy. The US had to be called in to provide things like air-to-air refuelling
and satellite technology. Notwithstanding the success of the intervention, the degree of
European commitment to post-Qadafi Libya remains to be determined.
In light of the crisis-upon-decline scenario, the EU needs to position itself as a more steadfast
and responsible partner to the US. It must put to rest the perceptions that exist amongst some
US policy-makers that European governments are keener on detaching themselves from the
US as the latter’s hegemony wanes. It is from the basis of stronger solidarity and cooperation
41.D. Miliband, ‘Europe, between America and China’, Transcript of speech to the 4th Polish-British Roundtable, Krakow, 12 May 2011, available at
www.chathamhouse.org.uk
42.D. Hamilton, Transatlantic Trends 2011 (Johns Hopkins: Washington, 2011), chapter 1.
43.H. Clinton, ‘On Economic Statecraft’, speech to Economic Club of New York, 14 October 2011.
44.C. Stelzenmüller, ‘Gates was far too nice about NATO’s failings’, Financial Times, 15 June 2011.
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that the EU will be best placed to convince the US of a shared narrative of returning to core
liberal values as the world becomes a less comfortable place for the transatlantic community.
US defence expenditure is to be cut by $450 billion over the next few years. The EU must
work to help the US retain influence not through hard power but through its management
of the very networks and multiplicity of connections to which emerging powers so keenly
desire access.45 One example of concern: President Obama has changed little on counterterrorism policy, but simply presented policy in a way that makes it more palatable than the
Bush administration did; this is an area where the EU still needs to pull the US into a more
rules-based approach, consonant with the reshaped world order. The EU needs to convince
the US that it is a serious security partner in order to have that influence.
In response to the crisis, the US may be overly fearful of a loss in security; the EU may be
too narrowly focused on commercial gain. They need to find a middle ground vision of the
world order, that neither sees it is as zero-sum game-over for the West nor sweeps political
problems under the carpet. A broadly liberal world order will in fact be truer to its own
terms and thus embedded in stronger legitimacy if it endures because it delivers globally
than because it is upheld by American hegemony.
Conclusion
Lear-like, the EU must unavoidably obey the weight of its age. The immediate
challenge is to guard against institutional fracturing. Delineating a common set
of geo-strategic principles may help provide some of the glue necessary to stopping a
two-speed Europe rupturing foreign policy cooperation. As there is at present no agreed
paradigm for the emergent post-Western order, positioning the EU geo-strategically is
difficult. It will not be a great power; but in what context and against what measure
of influence? The fluid, multi-faceted and eclectic nature of the reshaped world order
requires geo-strategic flexibility. But, in dealing with both its immediate financial crisis
and long-term relative decline, at least some clear guiding principles must anchor such
pragmatism. Good geo-strategy must eschew both too much of the one-idea hedgehog
and too much of the flitting fox.
Medium power that is internationalist in its engagement, cosmopolitan in its values,
able to cast utilitarian bilateralism within a framework of mutually beneficial multilateral
cooperation, and balances the big rising powers with challenges in its own neighbourhood:
this mix does not constitute a single principle of geo-strategy but a series of meso-level
guidelines for ensuring that EU policies exhibit adaptability without mere short-term
instrumentalism. A promising guide for knitting together these crisis-compounded
economic and political challenges would be that of ‘reform liberalism’. This doctrine
charts a course between laissez-faire and dirigiste-collectivist varieties of the creed and
45. G. Herd, ‘The Global Puzzle: Order in an age of primacy, power-shifts and interdependence’, Geneva Center for Security Policy, Geneva Papers 1, 2011.
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WORKING PAPER 111
suggests that solutions lie not in less liberalism or a turning-inwards but in a more complete
conjoining of economic with effectively-empowering social and political freedoms.46
Many EU diplomats would have no problem in subscribing to such a vision. And yet
many elements of real-world policy in response to the EU’s crisis-upon-decline now
drift in a contrary direction. Of course, it is vital to strike alliances with rising powers;
but the EU has begun to strike its bargains on extremely expedient terms. There is a
huge difference between seeking reciprocity of rules and reciprocity of merely material
benefits. The tricky thing to grasp is that the EU is at the same time insufficiently
geo-strategic in the identification and follow-through of a clear set of priorities and
drifting too far towards highly realpolitik behaviour in an ad hoc fashion with limited
unity between member states. The EU’s credibility cannot withstand too many more
‘Great Deceits’: Turkey’s accession promise, democracy support in the Middle East,
spreading the inclusive benefits of liberal world order.
For all its supposed post-modern sophistication, the EU still needs to recast its notions
of power. Degrees of power cannot be measured in mechanistically relative terms as
in the 19th century; the whole basis of power has changed. In the future world order,
influence will not equate with structural weight. It is something to celebrate not fear
if solutions to global problems come from non-Western sources, as long as the EU
has worked to ensure that other powers approach problem-solving in a positive-sum
fashion. Geo-strategically this is far, far more important than short term commercial
bargaining gains. Rising powers may reject homilies on liberal internationalism, but
will need to deal with the same challenges of cooperative security-building as their
political responsibilities and interests accumulate.
Some of the perennial descriptors of EU geo-strategic identity need to be, if not entirely
abandoned, at least interrogated more critically – and ultimately pursued with more
rationalised precision, rather than blandly assumed as articles of blind faith. What the EU
presents as its uniquely branded soft power is often just plain inert or insipid power. In the
post-2008 crisis scenario, the EU has to get beyond a situation where its influence derives
from other states being supine supplicants of its aid and trade access. It is unsustainable
for the EU to think it can bask in post-modernism within Europe while guarding such a
supposed Kantian paradise through realist bargaining outside its borders. This distinction
must look increasingly untenable when the barriers between inside and outside are today
so porous, and when at present internal crisis is the EU’s external image.
This linkage between the internal and external is key in fashioning a response to crisisupon-decline. And it relates to a point made by Lord Dahrendorf as far back as 2003:
he observed that, with the original rationale of peace in Europe achieved, the EU
needed a new narrative to ‘fire the imagination’.47 If in the 1950s, European states
needed to be protected from each other, today they need unity to prosper in a redrawn
world order. Devising an outward-looking, forward-thinking geo-strategy can help
both prepare the EU for a post-Western world and return fixity of purpose to the
European integration project itself.
46.C. Waligorski, Liberal Economics and Democracy, University Press of Kansas, 1997, especially chapter 7.
47.R. Dahrendorf, ‘Anti-Americanism and Europe’s Identity’, February 2003, Project Syndicate.
EUROPEAN FOREIGN POLICY AND THE ECONOMIC CRISIS:
WHAT IMPACT AND HOW TO RESPOND?
RICHARD YOUNGS
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