Craig Kennedy is a senior fellow at the Hudson Institute. Prior to joining Hudson, Kennedy served as president of the German Marshall Fund of the United States for 18 years. After the recent Munich Security Conference placed the spotlight on the relationship between the US and Europe, the DOC asked for his take on the status of the historic alliance, what we can expect from the remainder of the Trump presidency, and what action Europe should take to maintain positive relations.
Dialogue of Civilizations Research Institute: We would like to hear your perspective on transatlantic relations. This past weekend, reporting from the MSC has suggested a sense of disaster and that the relationship is in tatters. When you spoke to the ECFR a few months ago you suggested that “Europeans could be pleased that they are not top of Washington’s foreign policy agenda” but you also acknowledged that Trump’s unpredictability made it difficult to gauge how things might progress.
Where do you see transatlantic relations now? Does the fact Europe and the US are both concerned with the rise of China provide cause for potential cooperation?
Craig Kennedy: Let me start by saying that transatlantic relations have been ‘tattering’ for a long time. You can probably take the period around the launch of the Iraq war as the initial point of real fraying and it has been continuing ever since then.
The Obama years were not great years for transatlantic relations. The key people in the Obama administration might have been nicer and more pleasant to work with in terms of European issues, but there were certainly a lot of problems there. I happened to be in Warsaw the two times that President Obama visited and believe me, the reception was certainly negative, if not critical, towards US policy.
Part of the issue is that the asymmetric nature of the relationship has become even more skewed over the last twenty years. A pacifist, largely non-interventionist Europe has a hard time sustaining credibility in a world in which big power politics have really come back. And on top of that, there is a whole set of arrangements that were really crucial during the Cold War that have now come to be questioned.
A really good example is the differential vehicle tariffs between the US and Europe. Historically, these have been viewed as a way of bolstering the French, Italian, and German economies.
I think we can see two or three things going on currently:
A pacifist, largely non-interventionist Europe has a hard time sustaining credibility in a world in which big power politics have really come back
One is the asymmetry in military power relations; secondly, there is a questioning of older arrangements including NATO and trade relations; and finally, which the question alludes to, Americans are focused on China right now, so Europe is not forgotten but it’s probably not considered at the top of the list.
I found the coverage coming out of Munich very interesting. In some ways, the Munich Security Conference represents a last gasp of the existing world, a world that is changing very quickly. I don’t think we are going to see a revival of a transatlantic relationship of the kind that was present in the 1960s or 1970s, or even for that matter in the early 1990s, when the US devoted so much time and energy to making sure Europe was integrated, enlarged, and strong.
Regarding China, there should be potential for cooperation but I think this points back the asymmetries that have developed globally. Europe, and especially Germany, is frankly much more dependent on China and access to Chinese markets than the United States is. Something like 50% of all the Volkswagens in the world now get sold in China. That’s a very high percentage of VW’s total output.
You can look at the heavy dependence of the European auto industry on China, and at other relationships like those of Siemens or Bosch, and you can’t think that Europe will be as bold as the Americans can be. I’m not saying the US isn’t also vulnerable, but the US also has a different kind of leverage over China, which is that China needs access to US markets even more than the US needs access to Chinese markets. So the trade imbalance that drives President Trump up the wall is in fact something he uses regularly as leverage.
I don’t think we are going to see a revival of a transatlantic relationship of the kind that was present in the 1960s or 1970s, or even for that matter in the early 1990s
China can put tariffs on everything the US exports and there will still be $300 billion in excess above that the US can still put tariffs on in response. That is a big deal and Europe’s position does not match that.
DOC: Just as you contextualise Trump’s impact within a longer-term wane in transatlantic relations – whereas other coverage has perhaps over-emphasised Trump’s impact – something you have touched on elsewhere is the extent to which the Trump presidency can be said to follow ‘normal’ patterns, for example, in the way that many presidents play to their base domestically for the first two years of their term. Others have suggested it is normal for US presidents to looks for ‘easy wins’ in foreign policy in the two years preceding an election. To what extent do you think ‘normal’ is a word we can use of Trump and what should we expect in terms of foreign policy for the rest of his presidential term?
CK: Firstly, ‘normal’ is probably not the first word one would use when thinking of this administration. It is very complicated, very different to anything we have ever seen in the United States, and probably to anything seen in Europe too.
That said, there is only so much room for a president to manoeuvre within the institutional boundaries and the political cycles of the United States. When you don’t control both houses of Congress, getting through a partisan legislative package becomes almost impossible so we will not see any big legislative initiatives over the next two years. That leaves the administration to either work on things it can do using executive power, which is very much what Barack Obama did – he just didn’t do it in quite as provocative a way as President Trump does – or, to focus on things like foreign policy and trade policy.
The one area where we may see Trump try to build a real bipartisan coalition is on trade issues. Many of the most outspoken Democrats in the Senate and the House are people that don’t disagree with Trump completely on taking a hard line on trade. At various points Sherrod Brown, the Senator from Ohio, or the senior Senator from West Virginia Joe Manchin, and several others, have all basically supported Trump in his trade initiatives, so that could be one key area.
To return to something we touched on earlier, the liberal international order has been fraying for a long time, and especially here in the United States it has been many years since there was a big consensus that the UN, for example, is a positive force in the world. It’s not that everyone thinks we should get rid of it, but it’s no longer seen as an effective, powerful institution. This is true in the US but also further afield, where many find it hard to cite the big wins of the UN system over the last few years.
The one area where we may see Trump try to build a real bipartisan coalition is on trade issues
The WTO is another institution for which we can see a gradual diminishing of power and authority, which really accelerated during the Obama years when his administration refused to approve new people for the WTO’s appellate bodies. You can look at these institutions and see a longer term– to put it provocatively – ‘decay’, or at least a fraying and a loss of influence.
Trump has certainly brought this into focus, but he is not the one that began this process.
DOC: A few months ago you mentioned the lobbying efforts of European carmakers in Washington. Angela Merkel was quite stark in her comments about potential tariff increases when she spoke in Munich. Does that tone confirm the industry’s fears about what is to come from the Trump Administration?
CK: Yes, that’s is probably correct. In the next few days we could even see the president announce a change in American policy, which is his right, by the way. Just because a policy or an agreement has been in place for thirty years, that doesn’t mean it has become permanent or an absolute part of life. One of the things that Germany in particular has got to face up to is that there is going to be more scrutiny of these kinds of economic relationship.
Just to put this in context, we should keep in mind what the EU Commission and the EU Parliament has tried to do with the equivalent American companies to Daimler and BMW, which would be Google and Microsoft and Amazon. The atmosphere hasn’t exactly been friendly on the European side either so we are going to see more and more of these kinds of tensions.
One of the problems right now is that Europe, and especially Germany – with the exception of the car industry – doesn’t have any new technological champions. Europe has nothing on the scale of Amazon, Microsoft, Google, or Facebook. That is going to be a real source of tension in the future and I’m quite sure how a way through that can be found.
DOC: You wrote last year with pointers on how the transatlantic relationship could be improved. Whilst some in Europe readily acknowledge the continent does need to do more in providing for its own security, they admit that this isn’t going to happen overnight. What can Europe do besides this?
Until Germany is willing to take on some of the risks and criticisms which leadership implies, then I think Europe will be stalled
CK: Firstly, Europe needs to address its own internal contradictions and divisions. Within Europe, there are four or five asymmetric relationships, including military power, political power, economic power, and exposure to export markets. These cause real divisions within the EU, and this might be strange to hear from an American, but these divisions are not as easily managed as they would be in the US. The EU system is in some ways a very clumsy one when it comes to dealing with these internal contradictions.
The second thing Europe needs to do is encourage stronger leadership from some of its key countries. Perhaps Chancellor Merkel’s speech in Munich could be seen as the beginning of a stronger German presence as a true leader for Europe. I hope so. We desperately need Germany to step up and take charge in Europe-wide leadership, something the country has been very hesitant about. When Joschka Fischer was foreign minister, he described the German style of leadership as “leading from the second row”. Until Germany is willing to be in the first row, and take on some of the risks and criticisms which that kind of leadership implies, then I think Europe will be stalled.
Thirdly, Europe needs to take the process of rethinking the transatlantic relationship very seriously. Yes, this means more security provision from European countries. It is very difficult for American politicians to explain to their constituents why a place as economically sophisticated as Europe, where people have five or six weeks of holiday a year, deserves a huge American subsidy.
The final thing would be to address both emerging and pre-existing economic and trade tensions. This is something where real progress could be made if European leaders are willing to step forward and take some risks. President Trump has suggested a tariff-free trade zone between the US and Europe. Of course there is no French politician – or German, for that matter – who is going to endorse that, because that would probably be to the US advantage. But trade is certainly an area where things can get started.