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Pivot to Europe: options for a new Atlantic century

    • Venice
    • 4 October 2013

          At this latest edition of the Aspen Transatlantic Dialogue, the participants pointed to recent developments in the United States – with the at-least partial “shutdown” of federal government operations – as highlighting the multiple dysfunction of political systems on both sides of the Atlantic. It was noted that, in the midst of an economic recovery that is uncertain, in some respects fragile, and unquestionably asymmetric (both as between different sectors and between different countries), the efficiency of government decision-making becomes crucial. At the same time, however, it was acknowledged that the real deciding factor is the capacity of transatlantic economies to grow, thus making it at the very least essential that government actions do nothing to curb any positive trend towards greater market confidence and a revival in demand and production.

          Several key areas of transatlantic consensus emerged from the discussion. The first of these concerned the need to reduce public spending, particularly in certain countries, in order to ensure a sustainable debt trajectory, while the second related to the importance of renewed investment, upon which employment also depends. While it was conceded that these priorities will undoubtedly be framed in different ways by each country, they were nevertheless considered unavoidable by the majority of the Dialogue participants.

          It was seen as evident that economic policy options and the choices of private firms and individuals are also heavily shaped by prevailing international conditions, and that recent years have witnessed several episodes which seem to confirm the more pessimistic prognoses of the decline of Western influence in various regional theaters of crisis and instability. The signs were considered mixed, however, as regards the ability of the United States and its European allies to contain risks and threats in the broader Middle East, in part because the types of risk are changing, becoming increasingly transnational and non-state contingent. The Obama administration is inclined towards delegating more responsibility than in the past to allies and regional partners (even in Asia to some extent, where the challenges are for now more traditional in nature), but on several fronts Washington continues to be the single most influential actor capable of tipping the balance. This was deemed as probably the case with Iran, where, in contrast with Syria, American national interests are directly at stake, and, hence, the US is more predisposed to take a stronger leadership position both on the diplomatic front (by far Obama’s preferred option) and in the event of military intervention.

          The participants then observed that given the severe pressure on government budgets and widespread social discontent on both sides of the Atlantic, it is unsurprising that domestic concerns have tended to predominate, even more so at a time when major global trade and capital flows directly affect even private individuals, resulting in the adoption of protective measures and an inward-looking focus. In light of these considerations, it was felt that the talks already underway for a Transatlantic Trade and Investment Partnership (TTIP) present a great opportunity to strengthen and renew Euro-American ties, but require a firm concerted effort of persuasion on the part of political and business leaders. In essence, the further liberalization of transatlantic trade entails full recognition of states (and the agreements entered into by them) as playing a role in setting and enforcing advanced market rules, but not as economic actors in their own right. The goal should therefore be to increase the efficiency of markets, and not the influence of political authorities in economic mechanisms. The problem – it was suggested – is that this general principle may be interpreted and applied in various ways and with differing nuances, which is why “the devil is in the details” when it comes to agreeing partly new rules for trade and investment.

          It was stressed that the volume of transatlantic trade is such that any agreement between the US and EU will have a major global impact and hence strategic, diplomatic and security ramifications. Despite the emphasis placed by the Obama administration on the growing influence particularly of Asia, US interests remain closely bound up with the future of Europe as well as that of the Middle East, as has been confirmed yet again by recent events in Syria and Iran, which among other things have seen Russia make a comeback on the international scene in a role that in some respects goes beyond its actual overall potential.

          A further observation in this regard was that the TTIP negotiation process may also have the indirect consequence of counteracting tendencies towards introversion on both sides of the Atlantic, prompting a renewed awareness by leaders and the wider public of the long-term benefits of interdependence. The new economic partnership was felt unlikely to have the same strategic importance that NATO had during the Cold War (and partly in the years that followed), but to a certain extent it will reshape global balances of power, enabling the West to regain some of the bargaining leverage it has lost in recent years. In particular, setting common standards and rules will push other major players in the global economy to reappraise their rules on trade, thus triggering a virtuous cycle. Although it was acknowledged that there are understandable and legitimate concerns over who will be excluded from the agreements as such (with China but also Japan and Turkey – all of whom have close relations with Western economies – springing to mind), the overall effects of the TTIP were viewed as positive, encouraging a convergence towards improved standards. In any event, while the general framework of the TTIP will be sketched out within a relatively short period of time, various specific and important issues will require ad-hoc negotiations within that framework. Although not an easy path, this will potentially be a virtuous process.

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