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Thursday, February 6, 2003




First off --- at least for now, tomorrow when I'm fresher, something else will start the analysis here --- consider the following table sets out the relevant differences between the US and all other major countries in the world, including the European Union of 15 member-states . . . itself a long way from being a unified politcal entity with its own distinctive and coherent foreign and security policies.

Major Countries Compared

On the contrary, as the analysis in Part One showed, the EU countries are themselves heavily divided on lining up for or against the US policy toward Iraq . . . a pro or con position that extends way beyond the Iraqi controversy to underscore different underlying attitudes in and mass elite circles ---in France right across the political spectrum with widespread popular support: in Germany, with more noticeable divisions between Christian Democrats and Social Democrats and Greens, but with German opinion increasingly anti-American and lurching toward utopian and tiresome self-righteousness ("the German way") and neutrality within NATO--- and Britain, Italy, and Spain far more attached to the US alliance and close relations with this country. As for the East European members of NATO --- not yet in the EU, but likely to be there in 3-5 years --- Poland, the Czech Republic, and Hungary line up closely with the US on almost all issues; and that's the case of almost all the other new members in the NATO alliance in East Europe that will be joining the alliance this year, including Bulgaria and Rumania and the Baltic States.
Technical Note.

The figures in the table have been rounded off for easier comparisons. Note that GDP and per capita income are expressed in PPP terms: purchasing power parity terms. The purpose of PPP transformations is to get around the problem of gauging real standards of living in an era of fluctuating exchange rates. For instance, the euro --- launched 4 years ago --- started out at 1 euro = $1.18. Within a few months, it had plunged below 1 euro = $1.00, and by 2002's start, it had fallen about a total of 25% to around $.85. And yet the standard of living of the European Union peoples on an average had hardly changed. Likewise, since last summer, the euro has suddenly climbed rapidly to around $1.06, an increase in the exchange rate of about 25% from its low point without any increase in the standard of living in the EU either

How is PPP calculated?

Worked out essentially by a team of economists at the Univ. of Pennsylvania in the 1970s -- when the floating exchange rate system among major countries began --- it takes a basket of goods and services in the US, maybe 10,000 key items or 100,000 if you want, and calculates in dollar terms what that adds up to. Say it's $10 trillion. Say, too, that the same basket of goods and services in the EU adds up to 20 trillion euros --- at a time when the official exchange rate of the euro is 1 euro = $1.00. That means that the euro is OVER-VALUED by 50%. The exchange exchange rate --- if it reflected real standards of living --- should be not $1.00 but $.50. Oppositely, if the same basket of good and services in the EU cost 5 trillion euros, the euro at a 1:1 exchange rate with the dollar is UNDER-valued, and should be raised to $2.00.

By means of adjusting fluctuating exchange rates in PPP terms this way, you are able to compare the per capita income of countries and their GDP at similar prices. That gives a much more accurate view of their actual living standards and total output of good and service (GDP). Note only that PPP comparisons are generally accurate for fully market countries --- mainly industrial and rapidly industrializing, where almost all economic transactions have market prices. By contrast, in poor developing countries, lots of economic activity is outside the market: for instance, small farmers build their own shelter, raise their own food and produce their own drink and maybe clothes . . . all of which aren't reflected in GDP. The result? The real standard of living of poor countries and even most middle-level developing countries is higher, often considerably higher, than any comparisons at existing exchange rates.

The magnitude of the underground economy is also a distortion here: the larger that underground economic activity --- estimated to be over 50% in Mexico, Brazil, and many other Latin American countries (calculated in a variety of ways that cross-check each other) --- the more real per capita income and real GDP diverge from official national income statistics. Keep in mind, finally, that per capita income says little about the distribution of income in a country, though as a general rule, the more developed industrial countries ALL have more equal income distribution through the market than developing countries. Among the more developed countries, income distribution than varies lagely because of taxes and transfer payments like social security. Again, the underground economy can distort this though.

Good studies show that the US has the smallest underground economy of the rich industrial countries, about 7% of official GDP. In Scandinavia, high taxes lead to a lot of efforts to evade paying them through barter and non-cash deals --- eg., a dentist fixes the teeth of a child of a Mercedes mechanic in return for the mechanic fixing his Mercedes, with no cash exchange --- and the underground economy is about double that of the US. In Southern Europe, it's about three times as high. And note too in this connection that there is a clear correlation between high taxes and high welfare payments on the one hand in rich countries and unemployment levels and job creation. The US has created about 60 million new jobs, most of them good ones since the mid 1970s. The EU, with a third larger population, has created only about 15 million in the private sector, and has been shrinking its public sector jobs.

The Pro-Bush Camp in Europe: The Governments

Recall that there were 8 European NATO countries that signed last week's declaration supporting the Bush policy toward Iraq . . . compared to the German-French position, with essentially Belgium, Greece, and Luxembourg aligned with them, five in all. Holland, whose government has just changed in a leftward direction, is wavering right now, but last fall its right-of-center government and parliament voted formerly to support the Bush policy.

Note that all 5 of the anti-Bush governments are in the EU, and total 160 million (80 million in Germany, 60 million in France, Greece and Beligum 10 million each, Luxembourg smaller than Santa Barbara county). The four small EU neutrals don't count one way or another, though the Swedes will no doubt huff and puff morally as is their wont. By contrast, 5 of the 8 EU NATO allies in the pro-Bush camp --- Britain and Italy (60 million each), Spain (40 million), Portugal (10 million), and Denmark (4 million) --- are slightly larger in population. The pro-Bush group also includes the existing three NATO allies in East Europe, totaling 55 million --- Poland (40 million), Hungary (10 million), the Czech Republic (5-6 million), and the new NATO allies in Eastern Europe joining this year--- the Baltic countries and Bulgaria, plus Rumania (large, 40 million) --- are heavily pro-Bush and pro-American too

The conclusion?

It has always been a journalistic misconception --- widely shared by the French and German governments and the state-controlled French tv and radio (I watch the deuxieme chaine's daily news at night, and it shamelessly acts as a PR-agent for the government, doing exactly what the powerful civil servants in charge are told to do by Chirac's personal aides) --- that Bush's America is pitted against the EU, not just over Iraq, but in the war on terrorism and on almost anything else . . . save the Kyoto Treaty and the ICC, international war-crimes court, where the EU position was solidly arrayed against the US. Watching the censored deuxieme chaine the last two weeks, you'd never know that Hans Blix's report last week to the Security Council was heavily critical of the Iraqis, nor that the 8 European coutnries signing the declaration in favor of Bush represented something serious --- the announcer said in passing that the Foreign Minstry "minimise sa signification", nothing else here. You would have known, however, as the announcer went on, that the 8 signatories opposing the French-German position --- for that was what it amounted to --- was a result of a "complot" instigated by Washington to isolate the poor French and Germans, as though the 8 Europeans were marionettes being manipulated by Bush and his team with only brave Paris willing to stand up, bolstering the Germans and others.

You would also have learned how brutal the UN inspectors were last week. How so? Well, on a tip, they entered a mosque --- not during worship --- in order to search for weapons; and though there were no interviews on French tv with the inspection team, the imam and government officials were shown in a lather of disbelieving indignation at the "brutalitie sacrilege" of the inspectors, brazen and determined, evidently, to push around poor Saddam and his people who, as it happens, owe the French several billions of dollars . . . no doubt lots of top civil servants and industrtialists and some politicians to boot, since corruption in these matters is widespread in France. You would also have been treated to the brief interview of Saddam by Tony Benn, a has-been British left-wing Labour MP (or ex-MP), aka Lord Wedgewood-Benn who renounced his title for the duration of his own life (but not to worry, to resume when he kicks off and his first-in-line son takes over the tile), in order to leverage advancement to the top of the Labour Party back in the 1960s. This was a propaganda stunt pure and simple. French tv -- the deuxieme chaine anyway (the only one you can get in the US by satellite) --- treated it as a solemn declaration by Saddam that he knows no more about weapons of mass destruction than he does about terrorism or who Bruce Willis's next flame will be as featured on tabloid covers at the Safeway nearest you next month. On and on it goes, this shameless do-what-your-told media coverage in France . . . a degree of state censorship without parallel in the democratic world.


So much for the line-up and a lot of background material that helps you understand where various NATO European countries stand and the individual reasons for their pro or anti-Bush positions. Two questions rear up here that are more explanatory in nature. What accounts for the shared and different influences in each camp that produces the European gap? And what are the implications for US foreign policy, not just in the war on terrorism or against Saddamite Iraq, but globally and in our relations with NATO.

    First recall that there are 18 members of NATO, soon to be expanded by six or seven new East European members this year. Eleven of the 15 EU countries are in NATO, though France is not and hasn't been a full-fledged ally since 1966, the year that President de Gaulle ordered US and NATO forces off his soil and withdrew from the integrated military structure. Add in the US and Canada, the three existing East Europeans (Poland, Hungary, and the Czech Republic), and Turkey --- 65 million secular Muslims, a NATO and pro-western ally since NATO's founding in 1949, and keen on entering the EU, whose member governments are anything but keen in the main on this score. That leaves two other NATO countries in Europe: Norway (4 million), whose conservative government hasn't said anything explicit about the Bush policy toward Iraq that the Buggy Prof has heard about, and tiny Iceland (300,000 or so).

      Turkey, which is lining up with the US and the British and ready for a war with Iraq --- which is almost inevtiable now, unless Saddam is killed in a coup or forced into exile --- adds 65 million to the NATO group supporting the Bush policy. Then, too, the new NATO East Europeans are not only likely to be closely aligned with Bush when they join this year, probably after the war with Iraq is over, but are heavily pro-American in ways that markedly contrast with the populations of France and Germany

      The upshot? . Quite simply this: the Franco-German condominium -- whose clumsy scheme for politically managing the EU was an effort to reconcile their contrasting positions regarding federalism and which was denounced anyway by the other EU members as a naked power grab --- is a minority position in NATO and will become even more isolated in the course of the year

      michael gordon gordonm40@cox.net

Replies: 3 comments

I hate to hog space on your site with my posts, so I'll try to be brief...

I can only say that, after seven years of higher education at four prestigious institutions here and abroad, you're still my best professor and greatest intellectual influence.

Having worked for the Bundestag and as a regular visitor to and observer of Germany, I laughed out loud at your humorous and accurate description of the worst of Germans: the appalling self-righteousness of the Besserwissender Deutscher, who knows better than the rest even when his position defies such logic as to be preposterous. I think that you also accurately describe the origins of anti-Americanism among German elites. But my sense is that the anti-Americanism among the Jedermann that Schroeder tapped into in the recent election has different, more recent, origins. I think that many Germans believe, more on the left than the right but really in both parties, that the slow-motion collapse of the German welfare state model, and all the anxious uncertainty and wresting away of expected entitlements that entails, has been accelerated if not caused by the seemingly inexorable imposition of a heartless, American style of capitalism borne of a global forces "Made in America." It's no wonder then, that Schroeder, who was unwilling (politically incapable?) during his first term to impose any really substantive or lasting reforms, sought to channel frustrations about sky-high German unemployment and economic stagnation into America-bashing and away from his political failure. He was just fighting and-- poor him-- losing the battle to preserve the status quo against the onslaught of forces beyond any German's control. I think there are Germans on the left who place great hope in Europe as a means to insulate and preserve the welfare state status quo, ignoring the fact that advanced economies must evolve in order to remain on top in a world of relatively free trade where rapidly industrializing nations can effectively compete with them on numerous levels.

To be fair to Germany, and to my former employers, the Christian Democrats (CDU), Edmund Stoiber, the uncharismatic CSU (CDU equivalent in Bavaria) chancellor candidate who lost to Schroeder, wrote an Op Ed in the Wall Street Journal during the 2002 election pledging his support to President Bush in the war on terror and in Iraq. I know the high value the CDU has historically put on Germany's relationship with the US because several important people within the party told me emphatically that was the most important thing they hoped I would take away from my experience there. In fact, I just recently read in the Frankfurter Allgemeine Zeitung (a serious paper, unlike that rag Der Spiegel, in which I've never read a positive word about the US) that the opposition Christian Democrats are apparently already making preparations for German reconciliation with the US, perhaps under a new government. And that seeking to assure the US of her party's loyalty, CDU party whip Angela Merkel plans to fly to Washington to pledge the CDU's unwavering support of our Iraq plans. With Schroeder's free-fall in popularity, and recent CDU political gains, I have to believe there's still hope for Germany.

Finally, in the last paragraph of my previous post (written during a bout of insomnia), I was thinking mostly about US critique on US intervention in Iraq. The media reports poll after poll in which we're led to the conclusion the country seems to want to defer the decision to international consensus, and has the Bush administration done enough to convince our allies? But I do think it's equally applicable to Europe-- and of course across the political spectrum-- although the European right is quite often to the left of mainstream Democrats in the US (something I had to come to terms with working for the CDU).

Posted by John @ 02/11/2003 04:07 AM PST

John Neu, who sent us this stimulating set of comments, is a former honors' student at UCSB who wrote one of the best honors' theses I've seen in more than two decades here --- a study of Austrian politics. John spent a year in the UC Education Abroad Program at the university in Vienna, then did two paid internships with the German government in Bonn in the mid-1990s before returning to this country and going to NYU's law school. He now is practicing law in San Fancisco.


Many thanks for this unusually thoughtful commentary. It strikes me as altogether sound, if not complete --- among other thing, not just the left in the EU, but also Gaullist France, dominated by the Gaullist right-wing coalition that is always seeking to enhance French prestige and influence, seem more concerned with containing the US and limiting its influence and freedom of action than with dealing with Saddam Hussein. I also think you're right about the moral relativism of too many of the elites, especially in universities, media, the churches, and schools in the EU --- with a little concession now and then that yes, Saddam Hussein is a "scoundrel" --- ein Sschurke (had to look this up in the dictionary, which says it's outdated, yet I saw it in a German paper last week) --- or maybe even a terrible tyrant. The latter phrase used by the Foreign Minister Fischer at Munich this weekend.

Anyway, the commentary isn't finished yet ---the transfer of the site the main reason ---and I'll try to do it tonight or tomorrow.

Please be sure to comment again, on this or any other commentary. In many ways, your first-hand inspired insights in European politics and culture are more up-to-date than my scholarly views.

Posted by The Buggy Prof @ 02/10/2003 08:27 PM PST

I'm listening to Christopher Hitchens speak on NPR at a Commonwealth Club debate on the appropriate use of US power, with focus on Iraq. In his summation, Hitchens exhorts the audience to consider the available facts and answer for themselves the question of appropriate action in Iraq, rather than mindlessly deferring that decision to international consensus. Your posts underscore Hitchens' point by exposing the less-than-benevolent motivations of our detractors on Iraq and, accordingly, the danger of deferring an Iraq decision to international consensus. Following Hitchens' point, however, should it matter which European nation supports the US or doesn't? Isn't that just a rebuttal to anti-war advocates based on their own flawed deferral to international consensus? The facts, which you've brilliantly presented in earlier posts, should alone inform any decision on Iraq. I recognize that as a general matter, allied support has important political dimensions. Of course, we need international support to facilitate US military action (e.g., Turkey, Kuwait) and to pursue any agenda that requires coordinated action (e.g., on free trade, ecological protection, embargoes). But how much weight should those considerations have in our calculations regarding Iraq, especially when our detractors are motivated in large part by a desire to circumscribe US power and service to their own economic and political interests? Arguably, moreover, international cooperation on other matters relies on participating countries continuing to find it in their interests to do so, which seems unlikely to dramatically change on the basis of US action in Iraq.

My own view is that hand-wringing about the US acting without an international consensus is motivated in two things. First, it's an attempt by the left to raise questions about the Bush administration's credibility and trustworthiness by pointing to the brazen opposition of Germany and France, among others, to support that view. This also is informative as to why the support you describe in Europe and elsewhere is underreported in the media. Second, it's borne of the moral relativism prevalent among elites, who refuse to stake out any position as to right or wrong, fact or equally valid alternative worldview. The Iraq question requires the kind of stark decision of consequence that puts the moral relativists in a quandry. Long having avoided any challenge to their equally valid alternative worldview, they now demand shelter in consensus if any decision is to be made.

Posted by John @ 02/08/2003 08:35 AM PST