Colossus (43 page)

The EU as the new Byzantium? Kupchan’s views are less idiosyncratic than they seem at first sight. Classical analogies have also inspired the British diplomat Robert Cooper to call for “a new kind of imperialism, one acceptable to a world of human rights and cosmopolitan values … an imperialism which, like all imperialism, aims to bring order and organization but which rests today on the voluntary principle.” Significantly, Cooper sees not the United States but the European Union as the institution best able to become such a postmodern
imperium:

The postmodern E.U. offers a vision of cooperative empire, a common liberty and a common security without the ethnic domination and centralized absolutism to which past empires have been subject, but also without the ethnic exclusiveness that is the hallmark of the nation state…. A cooperative empire might be … a framework in which each has a share in the government, in which no single country dominates and in which the governing principles are not ethnic but legal. The lightest of touches will be required from the centre; the “imperial bureaucracy” must be under control, accountable, and the servant, not the master, of the commonwealth. Such an institution must be as dedicated to liberty and democracy as its constituent parts. Like Rome, this commonwealth would provide its citizens with some of its laws, some coins and the occasional road.
¹²

There is, however, no need to invoke the memory of either Rome or Byzantium to make the case that Europe is capable of spoiling America’s unipolar party. Joseph Nye too sees Europe as already America’s equal in the economic sphere, where “the United States is not a hegemon, and must often bargain as an equal with Europe.”
¹³
Though more perturbed by the rise of China, John Mearsheimer is also concerned by the two possible challenges to American power that he expects to emanate from Europe: “Either the U.S. will leave Europe … because it does not have to contain an emerging peer competitor, in which case the region becomes less stable, or the U.S. will stay engaged to contain a formidable rival in what is likely to be a dangerous situation.”
¹⁴
The historian Paul Kennedy has added his voice to the chorus, emphasizing the demographic significance of European consolidation and enlargement. “Even now,” he wrote on the first anniversary of the terrorist attacks of September 2001, “[Europe] has a substantially larger population than has the United States … and a roughly similar or perhaps slightly higher share of total world product. With plans to add more members, and with the use of the euro deepening, here is a trend that clearly knows of no September 11 watershed.”
¹⁵
The successful conclusion of accession agreements with ten new member countries—not to mention the sustained appreciation of the euro against the dollar since Kennedy’s article appeared—has seemingly vindicated this analysis. So too, in the eyes of some commentators, has the vociferous and not wholly ineffectual opposition of at least some EU member states to American policy in Iraq. If the United States has an imperial rival today, then the European Union appears to be it.

PRO

In what ways does the European Union genuinely represent a counter-weight—let us avoid the overubrown word
threat
—to the United States?

DEMOGRAPHY

As Kennedy rightly says, the population of the European Union is already more than a quarter larger than that of the United States. One effect of the enlargement of the union in 2004 has been to widen the demographic gap still further, increasing the EU’s population to just under 450 million, more than one and a half times that of the United States.

OUTPUT

In terms of total economic output, the European Union is indeed not far behind the United States, depending on which measure is used. According to the World Bank, the combined gross domestic product of the fifteen preenlargement EU member states in 2002 was $8.6 trillion, compared with a figure of $10.4 trillion for the United States. In other words, the European economy was about 82 percent the size of the American. Adjusting on the basis of purchasing power parity reduces the gap somewhat—on that basis EU output is still nearly 6 percent less—but it does not eliminate it. Only when output is measured in constant prices (expressed in 1995 dollars) can European GDP be said to be higher.
¹⁶
The ten countries who joined the EU in 2004 did not significantly add to its combined output.
¹⁷
The GDP of the EU-25 is also bigger than that of the “U.S.-50” on the basis of purchasing power parity, though it is still around 15 percent smaller in current dollar terms.

PRODUCTIVITY

The West European economies have spent most of the past half century rapidly catching up with the United States when performance is measured in terms of productivity. In 1950 gross domestic product per hour worked in the United States was three times what it was in Germany; today German productivity is just 23 percent lower, while French productivity is a trifling 2 percent less than American. Between 1973 and 1998 U.S. pro-
ductivity grew at an average annual rate of just 1.5 percent, compared with a French rate of growth of 2.4 percent.
¹⁸

TRADE

The United States has large deficits on its external accounts, whether one considers just “visible” trade or the current account in its entirety. The same cannot be said of the European Union. Not only does the EU account for a slightly larger share of total world exports (20 percent compared with 18 percent), it also runs a small trade surplus.
¹⁹
There is no question that in trade negotiations, the United States must treat the European Union as an equal. Nor is the EU as dependent on inflows of foreign capital as the United States (a point to be examined more closely in the next chapter). It is in fact a net exporter of capital.

THE SINGLE CURRENCY

To an extent that is not widely appreciated, the European Economic and Monetary Union has transformed the international capital market. The volume of government bonds denominated in European currencies was very large even before the single currency was introduced; in 1998 the outstanding volume of Eurozone government bonds was roughly half the outstanding volume of U.S. government bonds.
²⁰
However, as the rapid convergence of Eurozone bond yields shows, monetary union has greatly reduced what investors call country risk, so that all Eurozone members’ bonds are now regarded as being (almost) as good as the old German bunds. The EMU has significantly boosted the market for European securities. According to the Bank for International Settlements, around 47 percent of net international bond issuance has been denominated in euros since the first quarter of 1999, compared with 45 percent in dollars. For the equivalent period of time before the introduction of the euro the respective shares were just 29 percent for the currencies that merged to form the euro and 51 percent for the dollar.
²¹
Moreover, for all its crudeness, the Stability and Growth Pact imposed tight constraints on the fiscal policies of the Eurozone countries, though whether or not the rule restricting deficits to 3 percent of GDP will be reimposed remains to be seen. In theory, at least, the pact has merely been “suspended” since November 2003.

The possibility that investors may come to regard the euro as being as good as the dollar when it comes to denominating low-risk securities cannot therefore be excluded. Indeed, they may already be doing so. In the year after February 2002 the dollar declined against the euro by 45 percent. U.S. long-term bond yields have been between ten and seventy basis points higher than Eurozone yields since 1997, having been lower for all but two of the previous twenty years.
²²
According to one projection, foreign direct investment over the next five years will be substantially higher in the EU than in the United States.
²³
When he urged his country’s state oil company to price its gas and oil in euros rather than dollars, the Malaysian prime minister, Datuk Seri Mahathir Mohamad, was doubtless aiming to score a political point at the expense of the United States. But his proposal (made in June 2003) was far from absurd. It is not without significance that Arab cartoonists have seized on the appreciation of the euro as evidence of American weakness. A cartoon published in 2003 by
Al Jazeera
depicted a euro note being run up a flagpole in place of a depreciated dollar, to the chagrin of a weeping Uncle Sam.
²⁴

A FEDERAL CONSTITUTION

Ostensibly, the European Convention’s treaty establishing an EU constitution does
not
create a European federation. We know this because the phrase
United States of Europe
barely made it off the drawing board and because the word
federal
was deleted from an early version of Article I-1, clause 1. The original version read as follows: “Reflecting the will of the peoples and States of Europe to build a common future, this Constitution establishes a Union… within which the policies of the Member States shall be coordinated, and which shall administer certain common competences on a federal basis.” The final version was rather different: “Reflecting the will of the citizens and States of Europe to build a common future, this Constitution establishes the European Union, on which the Member States confer competences to attain objectives they have in common. The Union shall coordinate the policies by which the Member States aim to achieve those objectives, and shall exercise in the Community way [
sic
] the competences they confer on it.”
²⁵
The question is of course how far the constitution nevertheless remains in practice a federalist document. Some
people certainly intended it to be. When the 105-member convention was itself called into being at Laeken in December 2001, it was declared that its aim would be “the construction of a political union” to complement the Economic and Monetary Union created at Maastricht nine years before. In a joint statement before the Laeken meeting, the French president and the German chancellor expressed the wish that the convention should transform the EU into a “federation of nation-states.” The Greek premier went further, urging in January 2002 that “the enlarged European Union must evolve into a fully-fledged Political Union with strong governmental institutions and policies of a federal nature.”
²⁶

In some respects, it should be emphasized, the EU already has a quasi-federal character. This is most obvious in the legal sphere. EU legislation now accounts for around half of all new legislation in Europe.
²⁷
Article I-10 of the constitution simply reiterates—though it perhaps also reinforces—what has long been an established principle—namely, that EU law is superior to national law. Europe already has a Convention of Human Rights, which is upheld by the autonomous Court of Human Rights in Strasbourg. However, the constitution includes a new Charter of Fundamental Rights, which it would fall to the European Court of Justice to interpret, thus enhancing the standing of that court (which is based in Luxembourg) as Europe’s Supreme Court. The constitution also proposes the creation of a new category of cross-border crimes, which would become the purview of a European prosecutor, thus extending the EU’s competence into the field of criminal law.

If only on paper, the European Union also has many of the political institutions that one would expect a federation to have: not only a Supreme Court but also what the Germans would call a
Bundesrat
(the Council of Ministers, representing the governments of the member states), a Parliament, a central bank and a permanent bureaucracy. The principal institutional changes envisaged by the constitution treaty are partly designed to give this protofederation not just legal but actual personality. Thus the presidency of the quarterly European Council (of heads of state) will no longer be held successively by all the member states for six-month periods; it will be held by one individual, elected by the members of the council, for up to five years. The president of the European Commission, by contrast, will be nominated by the European Council but will require a majority in the European
Parliament to be confirmed in office. Which post will emerge as the dominant one? Almost certainly the latter, given the much more frequent meetings of the commission. There will also be a single commissioner to play the part of foreign minister, a role currently and confusingly performed by two separate people.

However, the most implicitly federal clauses of the constitution are those that spell out the respective competences of the EU, its member states and their regions and localities. Only a limited number of spheres of policy—thirty-four, to be exact—have up until now been subject to the weighted system known as qualified majority voting on the EU Council of Ministers. Decisions in other fields have required unanimity; in other words, they have been subject to veto by as few as one of the member states. The constitution does not eliminate the national veto, but it confines its use to decisions concerning foreign policy, defense and taxation. Qualified majority voting would now apply in seventy areas, including immigration and social policy. In perhaps its most sweeping articles, the constitution asserts EU competence not only over foreign and defense policy but over the “coordination of the economic and employment policies of the member states” (Articles 1–11 and 1–14) as well as over “common commercial policy” (Article I-12). It also authorizes the EU to raise whatever funds it regards as “necessary to attain its objectives and carry through its policies” (Article I-53). The sops to national sovereignty—the principle of conferral” and “the principle of subsidiarity”—seem rather nebulous by comparison with this bald assertion of fiscal power. Crucially, the right to propose EU legislation would remain the monopoly of the commission. According to one assessment, the extension and modification of qualified majority voting on the Council of Ministers would significantly increase the chances of draft bills’ becoming directives.
²⁸