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October 01, 2020

A New Bargain

The rapid rise of China is inevitably forcing a major shift in the US-European relationship. It is time for both sides to root the transatlantic bond in shared interests, rather than often ill-defined values. Fortunately, such a basis exists.

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The world has entered a period of great power competition. Above all, this is because of the rise of China. For the first time since the Cold War, there will be two superpowers in the world. And for the first time since the 19th century, the United States will not clearly be the globe’s largest economy (at least as measured in purchasing power parity, or PPP, terms).

This reality simply compels change in US foreign policy, and indeed in its domestic policy as well. For the generation following the collapse of the Soviet Union, the United States was by far the most powerful state in the international system. Needless to say, it could not always get its way on everything, but it was so powerful that its fundamental interests could not be seriously challenged.

This is no longer the case. China will be so powerful that it will be able to challenge the United States not only for global preeminence in some abstract sense, but in the ability to shape the world in which we live—the terms of trade, the distribution of economic power and wealth, the political systems that are lauded and disfavored, and so forth. The US will still need to address other problems, such as transnational terrorism and the threat of future pandemics, but its top focus must be dealing with the consequences of China’s rise. No other state or entity will be able to agglomerate so much power, and power remains the critical prerequisite for addressing all other problems.

This means that the US will need to prioritize. It will not be able to meet the challenge that China poses to its interests by marginal changes, let alone more of the same. To the contrary: Essentially everything it does will have to be shaped by this overriding priority of dealing with China.

China’s Threatening Hegemony

Most of all, this will mean ensuring that China does not establish hegemony over Asia. According to the US government, this appears to be Beijing’s goal; indeed, if anything, debate seems to be focused on whether the Chinese government’s true goals are not more ambitious, especially in light of the aggressive leadership of President Xi Jinping. Denying China hegemony over Asia must be the primary US objective for two straightforward reasons: Asia is the world’s most important region, given the size and trajectory of its economy—approaching half of global GDP—and China is the most plausible candidate to secure such hegemony over one of the world’s key regions. China constitutes roughly half of the GDP of Asia; it therefore stands in prime position to dominate the region unless effectively checked. If China came to dominate Asia, it would be able to drive the policies, rules, and terms of trade there. Such a dominating position would ultimately allow it to exercise a domineering influence over the US itself, not to mention Europe.

From this vantage point, Europe is the world’s second most important region. It constitutes approximately one-quarter of global GDP, though its share is declining. Moreover, there is no state that could plausibly pretend to hegemony over Europe for the foreseeable future. While Russia may have untoward ambitions, it simply lacks the power to pretend to any such goal. It may have the second largest economy in Europe (by PPP), but it is tremendously outweighed by the power of NATO, including even merely European NATO. The strongest state in Europe is, of course, Germany, but Germany is not more powerful than other European states by a substantial fraction; needless to say, Germany also has a fraught history that inhibits any aspirations to hegemony over the continent.

The fate of the rest of the world’s regions are not as important. No region has even 10 percent of global GDP, limiting their importance, and growth trajectories indicate that is unlikely to change. Moreover, none of them has a major state that could pretend to regional dominance.

A Lasting Shift to Asia

Based on this, the US effort must be concentrated on Asia. Here Washington must lead in forming an anti-hegemonial coalition of states that together—whether formally or informally—seek to deny Chinese dominance of the region. This prospect has become clearer and its implications more daunting recently, as witnessed by China’s aggressive moves against India, its subjugation of Hong Kong, and its intensifying use of its growing wealth and power to seek to coerce its neighbors.

Denying China hegemony in Asia will, however, be very difficult, primarily because China will be so tremendously strong. Beijing will be able to use this power to shape both threats and inducements toward individual countries, not only in the region but also in Europe and elsewhere, seeking to short-circuit or pry apart this coalition. Only the US will be individually strong enough to match China. It will therefore need to play a special, leading role in this coalition in order to ensure it successfully forms, coheres, and sustains itself. This demanding effort will have to occupy America’s attention and exercise first claim on its resources.

As a consequence, the US posture toward Europe will have to change. Of course, Washington has already signaled this, first politely and almost furtively under President Barack Obama and now much more pointedly and bluntly under President Donald Trump. But there remains a sense among many in both the US and Europe, especially in transatlantic circles, that this trend is an aberration, that Washington will go back to policies of “Europe whole and free,” a blank check for resourcing NATO, unquestioning support for the European Union, and a tolerant, don’t-rock-the-boat-too-much approach on trade and economic issues.

No Turning Back

Such a return almost certainly will not happen. US policy toward Europe during the Cold War was, of course, driven primarily by the Soviet threat and the primacy of Europe in the international economy. For the two decades after the Cold War, Washington’s approach was a reflection of the almost unprecedented preeminence of the US in the international system. In this latter context, American leaders could speak as if transatlantic relations were almost an extension of domestic politics—that our bond was unshakable, that our relationship was based most of all on values, and that in any case these values would never meaningfully trade off against our interests, and that our interest was always in a more unified, stronger Europe.

The rise of China has complicated these bromides, to put it mildly. From a geopolitical point of view, the necessity of adequately resourcing the demanding military, economic, and broader strategic competition in Asia means that there is a ceiling on how much the US can and should do for European security. Asia is the primary theater, and the US must ensure it can effectively defend its allies there if any anti-hegemonial coalition is going to succeed. The more demanding this standard is in light of China’s rise and the contributions of allies and partners to collective defense in Asia, the greater the downward pressure will be on US military efforts in other theaters, including Europe.

Fierce Economic Competition

Economically, the US is unlikely to simply return to its old policies. Twenty years ago, many Americans imagined that China would remain lower down the economic scale for a very long time; 10 years ago, many thought that China would be unable to challenge America for the heights of global economic activity. Today, however, it is clear that economic competition with China will be fierce and take place on these heights; indeed, China may already be ahead of the US in key fields such as artificial intelligence. In the meantime, deindustrialization— partially as a result of China’s economic rise and American policies that welcomed it—has resulted in significant dislocation and alienation in US society. Finally, the US debt burden is growing heavier, with daunting implications for Americans’ entitlements; at some point, there is likely to be a reckoning about Social Security and Medicare, given the growing mismatch between what has been pledged and what is likely to be affordable. The economic stimulus undertaken as a result of the COVID-19 crisis only exacerbates this tension.

As a result, the US doesn’t have the margins to give away that it could in the 1990s and 2000s, let alone the 1940s. Magnanimity is easier for a country when it is unchallenged in its global preeminence, its economy is clearly far and away the world beater, and its social conditions are uniformly bright. Those exceptional, unusual conditions no longer exist. This is not a partisan issue; Democrats as much as Republicans are calling for more attention to the fate of the American worker, a reassessment of post-Cold War trade deals, and the need for more focused attention to the country’s industrial base.

This isn’t to say that the US is in decline or that it will return to its insular posture of a century ago. Far from it; the country probably has the best underlying factors for sustained growth and power among the world’s larger states. Nor can it afford to return to isolationism. Rather, it means the US will need to compete in a world in which it is not the only great power, and thus in which it must strive to build, sustain, and apply the strength needed to ensure its interests are respected. And this will require change and adaptation, including toward Europe.

Europe Needs to Shoulder More

In the security realm, the United States should remain committed to the NATO alliance and is likely to do so. But it will need to bring down the requirements of attending to it, especially as US defense budgets appear likely to plateau, if not decline in real terms, in light of the fiscal pressures mentioned earlier. A dollar spent or soldier stationed in Europe will be one not spent or stationed in Asia. This means Europeans will need to pick up a considerably greater share of the burden.

This is both feasible and right. The primary threat to NATO’s security is a Russian seizure of territory in the Baltics and Poland. While part of any Russian theory of victory would involve nuclear weapons, its critical prerequisite is local conventional advantage; if Russian conventional forces cannot seize NATO territory, nuclear weapons are unlikely to be very helpful for Moscow. Fortunately, European NATO—in addition to partners like Sweden and Finland—can readily bear a greater portion of the conventional defense effort. Collectively, European economies dwarf Russia’s; it is simply a matter of putting a modest additional fraction of that wealth to use in developing, readying, and deploying conventional forces able to blunt and ideally deny a Russian assault against NATO’s east. Such a focused, limited effort would reduce the chances of war with Russia by taking away Moscow’s only truly plausible theory of victory against NATO without threatening Russia’s territorial integrity.

In reality, this is primarily a question of Germany stepping up to play a larger role. Germany is certainly capable of that. In 1988, a West Germany two-thirds the size of the current Federal Republic had 15 active and ready reserve divisions; today Germany can barely muster a single one. With a more robust German effort within NATO, other European nations like the United Kingdom, Poland, and the Scandinavian and Benelux countries could integrate to create a formidable European defense effort. US forces would still play a critical role, especially in the event of conflict, to the extent that doing so would not hollow out American defenses for Asia. The lion’s share of the forces required to deter or defeat a Russian attack on NATO would, however, be provided by European nations.

A Market of Scale

Economically, the US will likely move toward working to form a trading area large enough to outcompete the Chinese market. That is, as the United States moves toward a partial decoupling from China, particularly in order to diminish Beijing’s ability to use its economic power as leverage, it will need to replace those supply chains and ensure access to adequately large and diversified markets for American companies and products. This will require scale; the Chinese market includes over a billion people on its own, and it continues to grow and rise in levels of development. If American companies are going to be able to compete with Chinese ones, they will need comparable scale. Needless to say, this will need to include not only the markets of North America and parts of Asia like Japan, India, Australia, and Southeast Asia, but also Europe. Indeed, the Trump administration’s own signals about an Economic Prosperity Network indicate this may already be aborning. At the same time, this impulse will be balanced by the higher US scrutiny for equity and fairness in trade deals in light of the painful experience of deindustrialization.

Because of this, the US has an interest in a deeper trade relationship with Europe, albeit one that addresses longstanding American concerns about unfair treatment of US companies. Europe too, it seems, also has an interest in such a deeper relationship that addresses its own concerns; European companies will also be outclassed by Chinese firms if the former do not have sufficient access to the US market. Moreover, Europe very much shares US interests in ensuring China cannot dominate the Asian and global markets; given the fissures in the EU, European states are far more susceptible to Beijing’s selective, coercive influence than the United States. If China dominates Asia, Europe will feel the pinch much more acutely than the US. Both sides, therefore, have a most potent interest in assembling together a market that can provide the scale to ensure their respective companies can compete with China’s and that is strong enough to resist an increasingly powerful China’s ability to coerce them. Given this fundamental shared interest, it will therefore be critical for the two sides of the Atlantic to find ways to consummate this shared interest in politically sustainable ways.

US policy toward the EU will likely be determined by Brussels’ degree of cooperation with Washington in this respect. If the EU works to align the European market with the US as well as other states that oppose Chinese hegemony like Japan, India, and Australia, the US is likely to be supportive of the EU as an institution, since such cohesion will enable Europe to cooperate more effectively with the US in this more competitive world. If, on the other hand, Brussels seeks to create a third pole in the international system in contrast to Washington, the US is likely to have a much more skeptical if not oppositional approach toward the EU.

Arguments that “America has always supported European unification” notwithstanding, it will not make much sense for the US to have a favorable policy toward an entity that is important to US interests but is seeking to equilibrate between Washington and Beijing. This is especially because a European “third way” approach is essentially in China’s interests; the US and Europe need to work together to create the market scale that China can approach on its own, while Beijing may only need Europe to distance itself from America for China to gain first regional and then global preeminence. Thus, if Europe pursues such a non-aligned policy, the US will be better off working with individual European states, to the detriment of prospects for further European cohesion.

No Third Pole

In part because of this, such a third pole approach seems unlikely to be advisable for the EU even from an avowedly Eurocentric perspective. Doing so will not succeed in developing the strength to match a much more powerful China even as it alienates the United States; meanwhile, both states will have abundant capacity to drive wedges within the EU. Consequently, Europe’s most plausible route to greater unity is likely to be in entente with the US. Facing a very powerful and increasingly dangerous China, Washington will have a strong interest in a more cohesive Europe that can work with the United States to stand up to Beijing, illustrating—if indirectly—Charles de Gaulle’s observation that Europe will not be united by Europeans, but by the Chinese.

This, moreover, provides the basis for Washington to support a stronger and more unified European role in the world. Given America’s need to focus more on Asia, Washington benefits from its allies and partners taking a larger role in their regions, if that approach is essentially collaborative with Washington and compatible with US interests. (A similar logic should apply to Washington’s perspective toward India in South Asia, for instance.) French President Emmanuel Macron’s proposals for greater European vigor, “strategic autonomy,” and impact on the global stage can thus be welcomed in Washington if they are about a form of autonomy compatible with US interests, but not if they are intended to chart a third way equidistant between the US and China. If, on the other hand, European vigor and impact are aligned with American interests—in broad terms, even if not in every particular—then there is every reason for Washington to encourage it. Indeed, in such circumstances Washington could take a more secondary role on a range of issues more relevant for Europe than the United States, including in Africa and the Mediterranean.

A New Foundation

This approach forms the basis for a new transatlantic bargain: Washington’s support for a greater, leading European role in its own region and adjacent areas in the context of consistent European alignment with Washington in seeking to check China’s untoward ambitions. Such a new bargain would re-plant the transatlantic relationship in more solid, durable ground— interests—than the shifting grounds of “values.”

Broadly shared values like democracy and human dignity are of course an important part of the transatlantic bond. But the basis for collective action has to be something more tactile and concrete. Just because the US and Europe share commitments to the goods of elections and treating people with dignity does not mean that their policies in the real world will necessarily align, especially when people’s livelihoods or indeed lives are on the line.

The transatlantic relationship is a partnership among nations, not a family or advocacy group. This is especially important because, while American and European values are often cognate, they are not always the same. This is not a bad thing—after all, Americans and Europeans disagree vehemently and sometimes fundamentally among themselves. Why should we presume a degree of consensus in the transatlantic relationship that we cannot—and need not—attain at home? Striving for it is unnecessary and will only, by inevitably failing, exacerbate discord.

Better, then, to root the transatlantic bond in shared interests. Fortunately, such a basis exists. On these grounds, we can look forward to a healthy transatlantic relationship for many years to come.

Elbridge Colby is a principal at The Marathon Initiative.

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