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Transatlantic relations: cooperation and competition

A Note by the Director (2001/06)
 
A joint conference with the Institut Français des Relations Internationales
Over a sunny weekend and with the Institut Français des Relations Internationales as our partners, we met at the beautiful Chateau de Canisy in Normandy to consider at the present state of Transatlantic Relations and their possible future development.  We were fortunate to have two former Prime Ministers, Edouard Balladur and John Major, as our co-Chairmen, and to have Foreign Minister Vedrine as a speaker at dinner on 30 June.
The state of transatlantic relations has been subjected to regular critical assessment over the years.  It is an issue where it is hard to disentangle the subjective from the objective, and so it proved on this occasion as we examined both the overall political relationship, and its individual economic, security and foreign policy components.  In this note the terms “Europe” and the “EU” are used in the same interchangeable, but not strictly accurate way, as was the practice at the conference.
We began by asking ourselves whether there was such a thing as “normal” transatlantic relations.  We were inclined to think that we were now in a new phase where US post-war economic and military assistance had changed into a different relationship between a European entity which was evolving in a remarkable and unique way, and a USA which had itself developed economic and military capabilities which marked it out from the world community as a distinct and dominant actor.  Some claimed that the US was suffering from “super-power syndrome”.   Others expressed understanding for US irritation when Europe’s aspirations clearly outstripped its capabilities.  Europe, it was claimed, was in the process of pooling its individual nation states’ sovereignty in certain areas to achieve common goals.  The US was mistaken to treat it as just another international institution.  An American participant, referring to this complex process, said that the signals sent out by this new Europe were confused, and confusing.
This led us to discuss the often quoted aphorism by Henry Kissinger about “Europe’s telephone number”.  We were inclined to think if the question had ever been relevant it was not applicable either to the new Europe or indeed to the USA.  One telephone number would not establish the right connection on all questions either in Europe or the USA.  Both systems were complex and required sophisticated understanding.  In a discussion about the propensity of these two “organisations” to spend time trying to work out an internally acceptable policy, followed by a strong reluctance to change that policy, one European participant commented that US demands for greater clarity (a single telephone number) would inevitably lead to greater caucusing by the Europeans.
We examined the twin questions of cultural differences and whether anti-Americanism was on the increase in Europe.  While it was true that American cultural influence on Europe was strong, ranging from fast food to films and music, there was a disposition to question whether so-called American culture had not, in a sense, become an “international culture”, affected by a multiplicity of influences.  The propensity of the young globally to communicate in English, use the internet, enjoy the same music and travel widely might be producing a distinctive international culture whose political effect was not yet clear but which, when harnessed, could exert a strong influence on Governments over questions as diverse as land-mines and whales.  As far as anti-Americanism was concerned we were inclined to see this more as a by-product of the debate about globalisation and an international free market economy with which the USA was  so clearly identified.  The reverse phenomenon, anti-Europeanism in the USA, was denied.  Europe was still seen by many Americans as their place of origin.  Where irritation existed, it usually stemmed from the perception that the Europeans were inclined to boost their sense of identity by criticising or opposing US policies for no better reason that they were American.  This was a particular problem in the defence field.  But overall the USA was disposed to accept this as part of the normal political exchange and it should not be blown out of proportion.  We were after all, asserted, one participant, part of the same civilisation.  To which another added that it was this close identification of our basic values which made US customs like the death penalty so much more troubling for Europeans than its existence in other countries.  It was thought by some that religion still played a much bigger part in shaping attitudes in the US than it now did in Europe.  Another comment warned against assuming that it was possible to claim that a single European culture was interacting with a single American culture, both were in a state of rapid flux.  Mutual incomprehension and irritation would continue to affect our relations.  But since Europeans frequently found each other difficult to understand we should not be too concerned.
We moved from the subjective field of cultural and political perception to the field of economic relations to see in what respects the European model was different from, and perhaps behind, developments in the USA.  A good deal of time was spent assessing the extent to which share-holder culture was accepted in Europe.  The general view was that share-holder culture was now well established.  It was the norm in big European firms and was spreading to medium sized and smaller firms.  It was argued that share-holder culture would be more easily accepted, particularly in those countries where “Rheineland capitalism” had a firm hold, if the maximum number of stakeholders (employees, customers, management etc) could be involved.  One participant pointed out that those companies which followed enlightened stakeholder policies tended to receive a 15-18% premium on their share price.  The extent of convergence between the economic systems on either side of the Atlantic over the last 15-20 years was claimed to have been enormous.  US companies were still thought to have a lead in their understanding of risk management and equity capital.  But the Europeans were moving in the same direction.
We thought it likely that the WTO Ministerial meeting in Doha in November would succeed in launching a new round.  And while this would of course be only the beginning of a negotiating process in which many challenges would have to be faced, not least in meeting the desires of the developing countries, the current degree of cooperation across the Atlantic in preparing for a new round had dramatically improved over the last eighteen months.  There was broad welcome for the US proposal for non-binding political mediation in disputes.  This could be a useful alternative to judicial arbitration through the Dispute Settlement Body of the WTO which could set the legally binding powers of the WTO on a collision course with deeply entrenched political views in the US Congress and elsewhere.
The discussion of multilateral instruments like the WTO brought to the surface an issue which appeared frequently at other points in our discussions – the attitudes on either side of the Atlantic to multilateral as opposed to unilateral approaches to solving problems.  In this case it led us to a discussion of the implications of the globalisation of the economy, and the backlash against it, which was now a feature of most major international meetings concerned with economic questions.  Although “global” in its nature, protest was frequently driven by local factors, in the USA, trade (often agricultural), labour rights and the environment, and in Europe, the threat to culture and cultural diversity.  One participant put at the top of the list of challenges facing both Europe and the USA, the need to engage the anti-globalisation groups in a discussion of global governance on the basis of a comprehensive and comprehensible agreement on the system we were advocating.  A participant thought that the backlash against globalisation in Europe had been made worse by the failure of leaders to explain that liberal market economics was a means to the end of achieving a more prosperous society, and not an end in itself.
In case all this should appear to betoken harmony across the entire economic front, participants quickly drew up a list of potential problems ahead, while noting that the USA’s three biggest trading partners were Canada, Mexico and China.  The proposed GE/Honeywell merger was described variously as a Grade A or B political problem and as a normal dispute involving competition policy;  itself an inexact science, exacerbated on this occasion, claimed one participant, by the efforts of a Grade A actor on behalf of GE.  Other problems highlighted included a gap between Republicans and Democrats on labour rights (which would have to be resolved before a WTO round could be launched) and an accommodation between the EU and USA on agriculture, including a reform of the CAP and a resolution of Europe’s ban on US biotech exports, before it could be concluded.
Our discussions of economics were given a new focus by a powerful intervention at their conclusion which expressed doubts about the fundamentals of the system we had been discussing.  We needed to think again about how we measured wealth.  Our present system faced threats from population growth, land degradation, disposable waste, an alarming and increasing demand on water resources which would become a major source of conflict, elimination of animal and insect species which had maintained a stable balance, and climate change where the amount of CO2 in the atmosphere was now at its highest in the last 4000 years.  We were not assessing correctly the costs of our present practices.  If it was true that the economy was a wholly owned subsidiary of the environment, we were heading for bankruptcy.  Technology on its own would not produce a fix.  It was suggested that there was a need for those who understood the environmental risks we were running to be included among those who negotiated on the specific issues of trade policy so that the longer term implications of individual decisions could be better evaluated.
In a discussion of security and foreign policy we covered much familiar territory, but from the perspective of the enormous changes to the international landscape following the fall of the Berlin Wall in 1989.  The USA had become uniquely powerful – and uniquely vulnerable, someone commented.  The EU continued to develop its own ideas and institutions with the aim of playing an influential role on the world stage.
Against that background we looked at a number of important issues in the foreign and security fields.  What would be the future of NATO and what was its purpose now.  Did we have a common threat analysis?  Starting from the point made by one participant that if NATO did not exist we would not invent it now, a number of arguments were advanced as to why NATO would fail.  These were countered by those who continued to see a need for collective defence.  Headline goals and capabilities did matter.  This was of particular importance to countries like Poland and Norway, but also to others.  Would enlargement change the character of NATO fundamentally and slow the pace of decision making to such an extent that smaller groups of the willing would form on particular issues?  Another participant maintained that NATO should not become a loose security club.  NATO had more than one role.  In the first place it should be collective security.  NATO should also help with security outside its area.  The European Defence and Security Initiative was intended to contribute to that.  We should avoid a division of labour between the US and its European allies with the US concentrating on “hard” and the Europeans on “soft”, security.  As Lord Robertson continued to say – the best war-fighters were the best peace keepers.
This discussion raised two other questions.  The first was whether the “parochial” minded Europeans could be effective partners for the “global” minded Americans.  In one participant’s view this was linked to the second question about budgets, resources and capabilities.  Because the Europeans were not prepared to increase their defence budgets by enough to give themselves the necessary capabilities, their interests were necessarily more confined than the Americans.  Would the technological gap between the EU and the US widen to the point that interoperability was put at risk?  We thought that forthcoming decisions in the USA about battlefield IT systems on the one hand and transatlantic defence production cooperation, including Congress’ attitude to technology sharing with its European allies, would have important implications for the future.
Missile Defence and proliferation inevitably occupied a good deal of our time.  The Europeans were informed that while the decision in principle to proceed with MD had been taken, and was not reversible, all other aspects were open for consultation.  While some queried whether this was genuine consultation, others welcomed this approach, and acknowledged the US argument that they wanted a defence against nuclear blackmail and that proliferation of both missiles and weapons of mass destruction was inevitable in the coming years.  Those who had reservations asked against whom MD would be effective.  The most likely scenarios, exchanges between countries in the Middle East, for example, would be unaffected by MD.  Those who were in favour of MD asked why those who opposed it wished to perpetuate the ABM treaty which was so clearly a product of the cold-war period which had been characterised by suspicion and hostility between the superpowers.  Until the idea of Mutually Assured Destruction was put aside as the basis of US/Russian relations there could be no true reconciliation between the two countries.  European resistance to MD gave the Russians a pretext to maintain their opposition and it would be damaging to US/European relations if the political argument started to develop in the USA that the Europeans were attempting to stop the Americans from defending themselves.
China occupied an important place in this argument, and, interestingly, elsewhere in our discussions, as its emerging weight on the world scene is becoming more clearly recognised.  If the US intended MD to provide some sort of a shield against future Chinese strategic missile capabilities, then the implications needed to be carefully considered.  Those who had their doubts about the handling of the MD policy pressed for clarity about how soon the US testing programme might go beyond the limits set in the ABM treaty.  This would establish the amount of time available for negotiation and, hopefully, agreement with the Russians, before the US moved into a unilateral breach of the ABM provisions.  This would be undesirable, both in terms of US/Russian relations, and in reawakening concerns about American unilateralism.  One answer to the testing point was, possibly by the end of this year.  Another was that changes in the Senate and the hearings called for by Senator Biden would slow the programme down.  A suggestion was made that what we were really discussing was how finally to end the cold war.  Bringing NATO to an end would not be a useful contribution.  We should look instead at a package which would include three main elements – a US/Russian understanding including on the ABM Treaty and missile defence;  NATO enlargement;  and development of the NATO/Russia Founding Act.
Although our discussions focussed primarily on the security links across the Atlantic we had time to register the fact that we could easily face problems over differing attitudes and policies towards the Israeli/Palestinian crises, Iran and Iraq.  But, responded a European participant, we should not be dismayed by this.  There were bound to be differing views based, at times, on different interests.  A mature relationship should be capable of tolerating such divergences.  We also noted a much greater interest by the USA in its own hemisphere.
In our conclusions we looked back at the ground we had covered and reminded ourselves of the difficulty of not thinking about a new and developing situation in old terms such as decoupling, burden sharing, transatlantic drift etc.  While acknowledging that changes in our populations and societies were in train, we still shared a huge fund of common interests:  historical, cultural and economic.  As several participants had remarked, the process of homogenisation in business and banking was remarkable, transatlantic divorce was unthinkable, problems would have to be managed.  The point had also been made that neither the EU nor the US were likely to be able to achieve their most important goals without cooperation.  Unilateral policies were unlikely to be successful. 
On the security front no-body had advocated dissolving NATO.  There was a call for the USA to revert to its tradition of generosity and vision in relation to the process which was in train in the EU.  This was a revolutionary attempt at sharing sovereignty which was unlike any other multilateral institution.  For a super-power which valued its own sovereignty this was a difficult concept.  Further comments drew attention to the difference between operating on the basis of ad hoc coalitions and multilateral instruments in attempting to deal with crises.  The potential for future difficulty on the economic front as a result of the competitive drive by large US corporations and the need to close the productivity gap between the EU and the USA was underlined.  In looking at the difference between business and security one participant regretted that the main instrument for transatlantic cooperation was military.  This was a distortion of the relationship.  It would be nice if the Governments could learn a bit from the fast-moving world of business integration.
As is often the case with successful conferences, we ended with a number of recommendations for questions to be discussed at subsequent conferences.  We also ended with a reflection on the events which had taken place on the Normandy beaches not far from the Chateau de Canisy over half a century ago and which continued to serve as a reminder of some of the fundamentals of the relationship which we had been discussing.
I would like once again to express my thanks to our partners, the Institut Français des Relations Internationales and our hosts, the Comte and Comtesse de Kergorlay, for making this such a memorable conference.
This report reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.
 
 
PARTICIPANTS
Co-Chairmen:
M Edouard Balladur
Former Prime Minister
Mr John Major CH
Former Prime Minister;  Chairman, Council of Management, The Ditchley Foundation
 
CANADA
Ambassador Jeremy K B Kinsman

High Commissioner to the United Kingdom
FRANCE
M Jacques Andréani

Former Ambassador of France to the United States
M Marc Perrin de Brichambaut
Director for Strategic Affairs, Ministry of Defence
Mme Thérèse Delpech
Director for Strategic Affairs, Atomic Energy Commission of France
M Gérard Errera
Political Director, Ministry of Foreign Affairs
M François Gayet
Senior Vice President Defence France, Thales
M Hugues Hourdin
Association for Reform (APR), Conseil d’État
M Pierre Jacquet
Deputy Director, IFRI
M François Lagrange
Chairman, National Commission for Privatisation
Dr Dominique Moïsi
Deputy Director, IFRI
M Thierry de Montbrial
Founder and President, IFRI
M Guillaume Parmentier
Head, French Center on the United States, IFRI
M Hubert Védrine
Minister of Foreign Affairs
M Daniel Vernet
Director, International Relations, Le Monde
GERMANY
Herr Staatsekretär Dr Wolfgang Ischinger

Director General for Political Affairs, Ministry of Foreign Affairs
Professor Michael Stürmer
Chief Correspondent, Die Welt
Herr Kurt F Viermetz
Chairman of the Supervisory Board, Bayerische Hypo-und Vereinsbank AG
UNITED KINGDOM
Sir Nigel Broomfield KCMG

Director, The Ditchley Foundation
Mr Robert Cooper CMG MVO
Head, Defence and Overseas Secretariat, Cabinet Office
Mr Simon Fraser
Counsellor (Political), British Embassy, Paris
Sir Michael Jay KCMG
HM Ambassador, Paris
Sir Christopher Mallaby GCMG GCVO
Former Ambassador to France
Dr Shamit Saggar
Senior Lecturer, Department of Politics, Queen Mary and Westfield College, University of London
The Lord Simon of Highbury CBE
Former Managing Director BP Oil;  Adviser, Cabinet Office
Mr Philip Stephens
Editor, UK Edition Financial Times
Mr Kevin Tebbit CMG
Permanent Under-Secretary, Ministry of Defence
Sir Crispin Tickell GCMG KCVO
Chancellor, University of Kent at Canterbury
UNITED KINGDOM/CANADA
Professor Anthony King

Department of Government, University of Essex
UNITED STATES OF AMERICA
Mr Robert Conway

Senior Director, The Goldman Sachs Group Inc
The Hon Richard N Gardner
Professor of Law and International Organisation, Columbia University
Mr James F Hoge Jr
Editor, Foreign Affairs, Council on Foreign Relations
Mr Christopher J Makins
President, The Atlantic Council of the United States
The Honorable Bill Paxon
Senior Adviser, Akin, Gump, Strauss, Hauer & Field, LLP
The Hon Richard N Perle
Resident Fellow, American Enterprise Institute for Public Policy Research
Mr Charles P Ries
Principal Deputy Assistant Secretary, Bureau of European Affairs, US Department of State
Mr Alex Wolff
Chargé d’Affaires, US Embassy, Paris
Dr David Young
Founder and Managing Director, Oxford Analytica Ltd