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Saturday, August 30, 2003

The Future of US-EU Relations

Originally published on April 26th, this article --- along with about 30 others --- was lopped off the buggy site when a hacker broke into a downstream ISP and forced us offline on July 1st. It's reprinted here in a markedly expanded and updated version. It begins with a set of observations sent by a visitor that ends with a query.

Professor Gordon,

I always appreciate your thoughtful comments.

I think a major concern of many Americans is the level of trust in France and Germany for what was previously thought to be truly shared values. Perhaps this was naive, or wishful thinking. Those values of freedom and security are not so shared. In the next pinch, will they be there for us? They weren't there for Turkey. While trade will and should go on, the deeper matter of trust is shaken, at least if not permanently lost. I would value your comments.

Regards, Chris Fallon Long Valley, NJ


Thank you for the kind words. Also for the very thoughtful observations and questions.

Most likely, the degree to which Germans, Frenchmen, and Americans share certain values in common --- democracy, a rule of law (applied with different success), respect for individuals and minority rights --- is still strong, and stronger still among Americans, Britons, Dutchmen, Danes, and Italians, and certainly it seems with the new East European democracies. But how these abstract commitments --- which after all are taken for granted in peoples' daily lives --- are then translated into shared national interests and priorities among them as governments pursue them regionally or globally is another matter.

In particular, it's worth keeping in mind that hard core alliances like NATO have usually thrived only with a common enemy, and since the end of the cold war, that bond has been less visible
From NATO-I to NATO-III Since the end of the cold war, NATO has undergone two transformations in the brief thirteen year period that has followed. It still exists, but with different rationales and different degrees of unity. In some ways, these transformations reflect an adaptation to changing realities. Seen from a different angle, they also underscore the declining centrality of NATO for the EU on one side and for the US, a global power with new security concerns of a vastly differently, wide-flung sort, on the other.



For a while, after 1990, NATO's European members and more specifically the German and French governments would back US initiatives, as in the first Gulf War in 1991 or in seeking to stabilize the Balkans. Actually, on second thought, that statement needs qualifying.

For one thing, NATO itself never developed an unified policy toward the Iraqi invasion of Kuwait and the subsequent war to punish Iraqi aggression. Instead, a handful of European members of NATO went ahead on their own --- especially the British and French --- to side with the US and Arab members of the anti-Saddam coalition and send troops to the Gulf area. For another thing, in Bosnia where some West European countries sent peacekeeping troops on their own --- even as war was raging and hence there was no peace to keep --- the EU itself managed its the intervention; in paticular, a EU summit at the start of 1992 decided, under German prodding, to recognize the new state of Croatia, just as fighting was breaking out there and in Bosnia next door, another breakaway state from Yugoslavia, and then to send West European peacekeeping forces. No effort was undertaken, either then or later, to develop a common NATO policy over Bosnia. Worse still, the EU heads specifically went out of their way to stress that Bosnia was a European problem, to be settled by Europeans without US involvement. At the time, to be more specific, the foreign minister of Luxembourg --- whose country had recently been the presiding country in the EU Council when Yugoslavia's breakup was being considered by the EU --- told the US to butt out of the Yugoslavian imbroglio; the Balkans, he said, were in the EU's "backyard," and the EU by itself was perfectly capable of handling the problems there and would show that it was capable of independent military action in the new post-cold war era. A few hundred thousand Yugoslav corpses later, the EU, as Mark Steyn observed in 2001, was only too happy to have the US "butt back in." That was in the fall of 1995, as the entire EU and UN peacekeeping mission was jeopardized with fiasco, and President Clinton --- with London's and Paris's backing finally --- resolved to use US air power to bring the war to a close and shepherd a US-mediated peace between the warring factions in Bosnia at a summit in Dayton, Ohio, with their leaders in late October.

The upshot of all this for the alliance?

Bluntly put, by mid-1995, NATO I --- the original cold-war alliance --- looked therefore like falling apart, with no clear military rationale after the disappearance of the Soviet threat. Then, thanks to a new US initiative --- President Clinton's decision to expand NATO eastward right up to the Russian borders, which was denounced widely in the EU as naive and dangerous, a threat to relations with Russia --- NATO gained a new rationale: it would encourage democracy and a market economy, pre-conditions of joining NATO, in the 15 or so post-Communist countries throughout East Europe, along with guarantees of their independence and security. For five or six years, as long as it was focused on this strictly European mission, NATO II worked well. Above all, in 1999, the alliance held firm when it went to war with Milosevic's Yugoslavia --- without any UN Security Council approval --- over Kosovo. That was and remains the high-point of NATO unity in the post-cold war period. Note, though: the pre-condition here was a mission of NATO limited to Europe. All the West European countries, France and Germany included, had and still have a direct interest in stability and economic development in the Balkans and more generally throughout East Europe --- an interest now being solidified by a commitment to bring in several new member-countries in that region next year, with more to follow in the next decade.

Two important consequences ensue. Both need to be clarified.


The First Consequence: NATO II's Rationale Confined to Europe

We all ought to welcome that new rationale. Viewed from any angle, the restructured alliance has been useful in helping to stabilize East Europe and ending the violent wars in the former Yugoslavia, while encouraging democratic developments in over a dozen countries there. (The EU too, it's important to note, is doing this in its own way as well now.)

That said, NATO-II isn't the same alliance in which, say, West Germans contributed a military force of several hundred thousand to protect itself and West Europe for decades in the cold war era, and all the other European members made noticeable commitments too. It's functions in that guise are strictly limited to Europe. The efforts to move the alliance to a common front in the war on terrorism since 9/11 have failed, generally, to elicit an effective common policy other than over the initial war with Taliban Afghanistan. Not that the divisions here pit the US against an united European opposition.

Britain, as always, has sided with the US throughout the war on terrorism, including the decision to go ahead in March of this year to destroy Saddamite Iraq. For the most part too --- despite lacking popular support --- the conservative governments of Italy, Spain, Denmark, and Holland sided with the British and US governments over Iraq, though without sending troops to participate in the war (some have sent small peacekeeping or security forces to Iraq since its end); and for that matter, the three existing East European members of NATO who joined in 1999 --- Hungary, the Czech Republic, and Poland --- actively supported the British and US position too, to the point that the Czechs and Poles actually sent troops into battle during the Iraqi war and have since then increased their military presence on the ground. Nor was that unique in East Europe. The 8 prospective member-countries in East Europe, slated to join NATO next year, all diplomatically sided with the US and UK in opposition to the German-French-Russian blocking coalition in the wrangles over UN Security Council support for war or not. Note that the motives of the Continental European members of NATO, including the East Europeans, in siding with the US and Britain weren't and aren't confined to shared security concerns about Saddamite Iraq or in the wider war on terrorism. They also encompass more narrow worries of a specific EU sort: in paticular, their governments and most of their elites seem to be worried as well about Franco-German efforts to dominate the EU and, it appeared in the Schroeder-Chirac tete-a-tetes and public statements since last fall (2002), to shape the EU in ways that not only would lead to a Franco-German dual hegemony but create a EU increasingly independent of the US . . . something the German government, it needs to be added, has explicitly denied, without however fully reassuring the rest of the EU.


A Key Qualification

But wait! To play down the journalistic cliches that find a Transatlantic gulf emerging --- black-and-white world of assertive and militarily dominant America on one side and an united EU devoted to multilateral diplomacy come what may and opposition to US hegemony on the other side --- is one thing, and essentially accurate. To ignore that there is such a gulf of sorts --- if only on the level of elite and intellectual opinion, which is increasingly anti-American in the EU, and with growing echoes in popular public opinion (which does fluctuate in its views of the US in response to specific headline news) --- is another, very different thing. That thing needs to be acknowledged and its implications teased out.

In the long run, after all, an alliance of strictly democratic countries can't be sustained meaningfully without strong public support, especially if there are major differences among the governments over security priorities and the ways to pursue them.

Increasingly, there have been backlashes to US initiatives not just in that war, but elsewhere --- as initially over anti- missile defenses and then over the new US preemptive strategy, never mind the recent war with Iraq. The Bush administration, of course, carries some blame here. Most of it, though, lies in the shifting nature of the threats the alliance members confront --- and far different interpretations in Germany and France and some other EU countries (not all) compared with those that prevail in the US, with large American public support. (Even now, about 60% of Americans approve of the Bush policies in Iraq.) Simultaneously, the growing gap in power between the two sides of the Atlantic have reinforced the growing gulf in American and European priorities. Put tersely, for the US, the only global super-power --- diplomatically, militarily, and even in economics --- West Europe is far less important in our global strategy than it was a decade ago, never mind the long cold war period between 1945 and 1990.

[Sidebar comments: We mentioned Germany during the cold war. The French, remember, exploiting NATO's protection of West Germany and all the other countries in West Europe, began "free riding" in the Gaullist era of the mid-1960s: the French government withdrew from NATO's integrated military structures, ordered US troops off French soil, and declared its nuclear force wasn't targeted at anyone in particular. The French also essentially withdrew their forces from their tiny sector in West Germany. Ever since, French governments have stressed that they pursue an independent policy, a member of the NATO alliance still, but with a military that never reintegrated into the alliance's common command-and-control system . . . and with a diplomacy that will sometimes back US policies in Europe and elsewhere, and sometimes not.

[More recently, the efforts of Paris to lead a blocking coalition with Germany and Russia against the US and the UK over Iraq ended up --- predictably --- first badly dividing NATO, then no less predictably leaving France isolated in it and even with most of its fellow EU countries. Since then, Chirac has been keener to mend relations with the US than vice versa, and as recent as August 30th, in an important public address, the French president went out of his way to avoid any criticisms of the US. Read this largely as an effort of the French to avoid diplomatic isolation in NATO, especially at a time when the Germans have repeatedly underscored their own desire to improve relations with the US after the end of the war with Saddamite Iraq. That, of course, may not exhaust French motives here. Chirac and his advisers probably recognize that the future of Europe requires, for the time being, a continued US presence on the Continent . . . even as they, and almost any subsequent French government, can be counted on to find ways to reduce US influence on the Continent and globally.]


The Second Consequence? From NATO II to NATO III.

  In the diplomatic tussles over Iraq that began last fall in the UN Security Council, remember, the new East European members of NATO (3 in it since 1999, 8 to join this year) all vocally expressed strong support for the UK-US position . . . as did the governments of Italy, Holland, Denmark, and Spain.

That didn't prevent France and Germany than essentially bringing in Putin's Russia as a third member of the coalition of the unwilling, all this, remember, on an issue that the US government regarded as a matter of existential security concerns, with Tony Blair risking his political career to stand pat on the same concerns; and yet Chirac and Schroeder actively continued to try thwarting US and UK policies everywhere they could . . . including (something unique in NATO's 54 year history) blocking military aid to Turkey, an ally threatened by Iraqi retaliation if war began.

Since then, NATO has been transformed into what we can now call NATO-III, a divided alliance in which three members, France, Belgium, and Germany joined the former enemy Russia in a common blocking coalition aimed at the US and Britain over Iraq --with London and Washington then countering by gaining the active support of all the new members of NATO (11 by the end of next year), plus Italy's, Spain's, Holland's, and Denmark.


NATO III Clarified: What Kind of Alliance Is It Now?

NATO's role as a stabilizing force in East Europe remains intact, but its value and rationale as a military alliance seem to have faded without disappearing entirely. . . this despite Berlin's recent insistence that a strong US presence in Europe is the linchpin of German policies on that continent. And though there's no reason to doubt the Schroeder government's sincerity here, it has simultaneously committed itself --- no doubt as a gesture to the French --- to create a new entirely independent EU military . . . not that this will amount to much. Meanwhile, despite noticeable efforts in Germany and even France to improve relations with Washington --- and the strong desire of the European members of NATO to maintain a strong US presence in Europe --- the alliance still finds it hard to agree on military priorities outside Europe in the war on terrorism. Over time, this may change --- particularly, as we'll note in a moment or two, if Islamo-fascist terrorism breaks out in West Europe, where daily, it seems, one Muslim terrorist network is uncovered in this EU country or that. Simultaneously, there is more talk of a NATO Rapid Reaction Force with a larger European contribution; and the reality of it is more promising by far than the EU equivalent, a pure verbal commitment; nothing else.

Whether the NATO RRF will ever be used anywhere outside the European arena, though, remains uncertain. For that to happen, there would have to be more diplomatic unity than now exists; and while it can't be ruled out, it can't be solidly counted on either . . . not in the sense NATO I was fully committed to a common military strategy and action in the event of a Soviet invasion during the cold war.

[Sidebar comment on the EU Rapid Reaction Force, which the EU committed itself formally to creating at the end of 2000. Nothing ever came of it. The force remained a paper-tiger in the literal sense, never moving beyond a treaty commitment. Not long afterward, the German government notified its European partners that the 20,000 troops it was supposed to provide to the 60,000 member-RRF wouldn't be available until 2015. The reason? Though the British take defense seriously, military spending as a percentage of GDP has been falling steadily since 1990. France, whose spending fell even faster for a while, has been increasing its military spending lately --- not least as part of its effort to overhaul the former conscript military into a professional one like the British; but it still spends only 2.6% of its GDP on defense (the British 2.2% in 2002, the US close to 4.0% this year). As for the German military, it's so pitifully starved of financial support that the International Herald Tribunerecently called it a "basket-case."

To summarize, then, the NATO alliance survives in its new third version. No longer a hard-core military alliance with a common enemy and a major military contributions from all the West European members in the struggle with the Soviet empire in Europe, it functions now as an alliance that continues to help stabilize East Europe and promote democracy there and that shares intelligence and police-work and even some peacekeeping functions in the war on terrorism (Afghanistan). None of this is negligible. The alliance's continuation is something we should all welcome. As a general thing, though, NATO remains a divided alliance on the all-important problems of the war on terrorism . . . with redoubled efforts these days to patch over differences that emerged sharply during the run-up to the war over Iraq, even as it reflects the two-way tug in some EU capitals over American power and global influence that the EU itself is far from even beginning to balance in a friendly manner.


The US Interest

None of this means the US should write off NATO, on the contary. It has, as we just noted, its decided value even in its new and internally divided form. The active role, say, of Germany in leading the peacekeeping forces in post-Taliban Afghanistan --- a policy Berlin agreed to after the end of the Iraq, not least as a clear signal to the US of the important its government places on good relations with the US --- is something to be welcomed. Possibly, too --- if the Bush administration is willing to compromise and elicit a similar response from Berlin, Paris, and Moscow --- a more robust NATO presence in peacekeeping in Iraq might be forthcoming, especially from France and the new East European countries. Beyond that, on a strictly security level, the various militaries in NATO continue to work closely in Brussels, and the various intelligence agencies, the French included, work cooperatively and actively with Washington in the wider war on terrorism.

Remember, too, Paris and Berlin --- especially the latter --- have gone out of their way to try mending relations with the US in the aftermath of the diplomatic wrangles over Saddamite Iraq. Their efforts here underscore that the Europeans, even Paris --- which fears isolation in NATO if its anti-American impulses break out again --- themselves value an active and continued US presence in Europe and a working alliance . . . whatever its rationales might be, and however much it has receded in significance for all its members, not least the US itself.


The Long-Term Future: The Growing Transatlantic Gap on the Societal Level

The wider issue that gets us back to values and public opinion in most of West Europe and the US is that the towering American lead across the board in all categories of power --- military, wealth, per capita income, technology, economic dynamism, population, cultural impact (for good or bad) --- wasn't supposed to happen after 1990, the year the cold war ended.

The Power Gulf: Great As It Is Now, It Will Likely Increase In The Future

Almost all European observers expected the US to go into some sort of economic decline, while their own more "humane" capitalism --- which supported long-term unemployment about three times higher than in the US, and hurts young people especially --- would forge ahead, even as the EU developed a coherent foreign and security policymaking apparatus with teeth. The exact opposite occurred. Actually, not hard to predict given that the US has had the highest per capita income for 125 years now, ever since the early 1880s . . . more than half the time since the industrial revolution began. Not hard to predict unless, as with the French and the Germans, they were convinced that somehow they're brighter or cleverer while being all the more humane. Both countries, keep in mind here, have been undergoing major identity crises for a long time . . . Germany since WWII and the Nazi period, intensified by economic stagnation since 1990 (it's the slowest grower in the EU, and doesn't look like emerging any time soon from such stagnation), and France for almost 200 years, with recurrent bouts of self-doubt and anxiety a common phenomenon. Chirac himself drew that conclusion last June when he was reelected. Since then, his offensive against the US is part of the Gaullist-Napoleonic thrust in French life to restore confidence and unity with the pursuit of glory (glory or death, no? Napoleon's view this . . . endorsed by his biographer, de Villepin the Foreign Minister, who --- as he informed us recently --- daily strives against all gibes and ridicule to enhance French prestige.) And even if, as we noted earlier, the French government --- faced with isolation in NATO once its German partner energetically moved after the destruction of Saddamite Iraq to improve US-German relations --- has sought to mend some fences with the US too, the thrust of long-term French policy is almost certain to remain the same: find ways to reduce US influence in Europe and elsewhere, while seeking to leverage French influence and prestige within and outside Europe.

Whether, that predictable quest of the French --- built into the political system there, from one end of the ideological spectrum to the other; and echoed daily by the media and most of the intellectual class --- can elicit the support of other European countries remains doubtful . . . a big question mark anyway. French high-handedness is well known in the EU, a point of reference for most countries that worry about French schemes, not least when a German government seems to endorse them.

That said, what will happen on this count will depend in no small part on the ability of the US government, whether in the Bush era or later, too. Above all, it will turn on our ability to reassure most of the European members of NATO that the US government will take into account their legitimate national concerns, especially on contentious issues . . . even as it shows, we hope, a related ability to pursue policies abroad that reflect robust degrees of wisdom, determination, and effective means to bring about desired results for the US and its allies and other friendly countries around the world.


The Problem of Matching the US

On an even more abstract level, countries with the power and influence like the US --- unmatched since the days of the Roman Empire (but with no desire to acquire territory or rule others) --- will inspire envy and resentment almost everywhere.

That said, the envy and resentment vary in Europe (or elsewhere). Last October 2002, a British pollster found that 81% of Britons admired the US --- the highest percentage ever recorded there. In the months that followed, 35% of Britons found the US to be the greatest threat to world peace --- the US at the top of the list in that country --- but that reflected the assertive US diplomatic stance over Iraq in the Security Council, and the favorable opinion is likely to return again. It's high too in East Europe, where the publics know full well that the US is largely responsible for their independence from Soviet Communist dominance, and appreciate the new NATO role. But elsewhere on the Continent of West Europe, it would be foolish to expect the US to enjoy high status in public opinion as long as the power gap is so great, the economic performance of most of the EU is laggard, and worries about Europe's future --- the EU, the rapidly mounting percentage of radicalized and often violent Muslim populations (with terrorist cells uncovered daily in one country or another) --- persist into the future.

Demographically, economically, and militarily, then, the EU in all probability will be undergoing hefty strains from all sides as its governments and publics seek to come to terms with the multiple challenges they face, now and in the future, that will require major wrenching changes as their populations age and their ethnic composition alters; as violent crime continues to mount (even as the US is now reported this year to have reached a 30 year low in crime); as Muslim fundamentalism likely continues to pick up vigor around the continent; and as the comfortable but cramped certainties of state welfare-capitalism find themselves crumbling under the rise of new Asian dynamos and the very likely sustained dynamism of the US for decades into the future. By mid-century, 2050 --- even if many reforms are carried out, according to a recent study of the EU's prospects over the next few decades put out by a prestigious French research institute not known for alarmist rhetoric --- the EU's share of global GDP will decline quite likely from 22% at present to around 12% by mid-century . . . a technological laggard, a slow grower, and an older and uncertain region lacking confidence in its culture and future and fearful of change. (For an excellent summary of the study, see the International Herald Tribune.)


Will It Happen?

If this grim scenario begins to materialize --- and it's not inevitable, only a likely scenario (one of three), and hardly one Americans should welcome --- it's not hard to foresee how envy and resentments toward a far more dynamic, globally active US with its own population less attached to its European heritage will likely multiply and intensify. No, not inevitable. But note two things.

First, as the IHT summary below notes, a less grim future requires "rather profound changes" for which there is no enthusiasm in the EU, and from any quarter there. At most governments these days are reluctantly trying to reduce tax burdens, lower social security taxes, and extend the age of retirement; but nowhere is there any enthusiasm for the necessary changes to offset decline. So far, three or four of the smaller, more cohesive EU countries --- Finland and Ireland and Denmark (4 million each), Sweden (9 million), and maybe Holland (15 million, less and less cohesive) --- have done better in restructuring their economies. Even they, however, despite good school systems and populations used to living as trade-countries, lack entrepreneurial energies and inclinations, and they are all, save Ireland, beginning to absorb the complex social problems caused by rapidly expanding, increasingly alienated Muslim immigrant populations and ever higher crime.

Second, even if the EU countries manage to succeed in instituting far-reaching changes in their economies and welfare-systems, they are bound to experience a series of shocks and dislocations as the changes work their way in multiple directions through the lives of their peoples. Lots of established businesses will fail; unemployment will increase in certain regions without laid-off workers showing much willingness to move to other, more dyanmic regions, even within their own countries --- never mind elsewhere in the EU; welfare systems are bound to become more selective; violent crime will likely continue to rise, not least in proportion to the growth of increasingly young, increasingly alienated Muslim communities where fundamentalist appeals have been on the upsurge for a decade; a sense of social cohesion, even in the small countries --- witness Holland, a country of impressive human rights and cohesion for generations, the last year politically with the assassination of Prim Fortuny and the rise and fall of his populist party --- will likely decline; and populist movements, mainly from the right, but also possibly from the left --- especially in the Latin countries --- will likely continue to gather political support. The consequences for US-EU relations, amid all these fairly predictable social tensions in the EU? Even if the talented EU peoples and their leaders manage to deal with them successfully, the turbulence and social conflict that can't be finessed or eluded --- whatever governments try to do, including not altering vigorously the status quo over a sustained period --- are bound to cause various kinds of spillovers onto US-EU relations.


What Kinds of Spillovers Specifically?

At a minimum, we can likely expect that globalization and US capitalism --- the two increasingly identical in the EU media and intellectual ane even political circles, including both left-wing and right-wing political parties --- will be increasingly blamed for the inevitable problems and tensions that will likely grow and ripple in West Europe during the next decade or two. Then too there's the growing impact of American culture, for good or bad. We can also expect that it, too, will engender more and more backlashes, intellectual and political.

Some of the resentments, of course, might fade for a while if President Bush isn't re-elected next year --- or in case he is, if the administration would strive harder to reconcile with Paris and Berlin and to adjust its policies for a larger consultation with the European members of NATO. The latter would be desirable. Obviously. Still, the problems that bedevil US-EU unity in the wider war on terrorism aren't transient matters, caused by the Bush administration's continued jolt, one after another, of policy initiatives that have upset our European allies: anti-missile defenses, a pre-emptive military strategy (itself tepidly now endorsed by NATO), the growing role of the US in the Middle East, the effort of Washington to restructure the despotic countries there, and of course certain economic tussles whose responsbilities fall on both sides of the Atlantic.

The roots of those problems lie elsewhere: in a growing power gulf, a shift in global priorities and threats interpreted far differently in most of Europe than in the US, the tension-ridden struggles of West Europeans to come to terms with their economic troubles and their lack of effective diplomatic influence even as the EU doubles almost in the number of its member-countries in the decade ahead ---a less and less coherent regional grouping --- not to forget the likely rippling fallout of all this in public opinion, political discourse, and strenuously voiced resentments of the US that the EU media and talky intellectuals can be predictably counted on to vent with vigor.

The overall outcome? In the decades to come, it would be foolish to expect that US-EU relations on the social-cultural-and-economic levels will not be ruffled and undergo a variety of tensions . . . including more surges of right-wing and left-wing populism in the EU countries and growing Muslim fundamentalism on the European continent. Whether and in what forms NATO-III can survive such society-generated conflict and strains isn't clear now. It won't be, possibly, for another decade or two. Conceivably, an intensified form of Islamo-fascist terrorism in the EU might even draw the two sides of the Atlantic closer on the diplomatic and military levels; if so, that might maintain the alliance as a valued organization in both Europe and here. That kind of diplomatic cooperation in the war on terrorism can't be ruled out anyway.

Then again, neither can it be solidly counted on to occur.


The IHT Summary of the French Research Institute's Report May 14, 2003.

"French research group paints a gloomy economic picture"

PARIS: For a doomsday scenario, this one paints Europe heading for the dungeons of history as an economic force.

"The enlargement of the European Union won't suffice to guarantee parity with the United States," it says. "The EU will weigh less heavily on the process of globalization and a slow but inexorable movement onto 'history's exit ramp' is foreseeable."

By 2050, under this scenario, Europe's share of the world economy is only 12 percent, against 22 percent today, while the euro is a second-class currency. North America maintains its "technological hegemony," Greater China, which includes Taiwan, grows to represent almost a quarter of the world's economy, and the Japan-Korea region's share of trade, along with the yen, declines sharply in importance. Roughly a half century from now, goes the scenario, an EU of 30 member states will have a growth rate of 1.1 percent, the North American free trade grouping, 2.3 percent, and Greater China, 2.6 percent.

This vision of Europe's misery-to-come is projected in a new report called "World Trade in the 21st Century" by the Institut Francais des Relations Internationales (Ifri).

It is interesting because the research organization is not usually in the business of drawing grim perspectives for either France or the EU. Its tone also fits the register of a thesis advanced in the newspaper Le Monde that the current decline in the dollar does not reflect American weakness but a situation in which "the power of a country, in circumstances of low inflation and low growth, is reflected in its ability to depreciate rather than increase the value of its currency."

The Ifri report, of course, contains scenarios in which Europe does better. But they depend on exceptional changes in current political, social and economic trends. Rather, the report's basic projection, called the "reference or trend scenario," is calculated on a continuation of the current curve of world trade and economics.

For Ifri, Europe has two basic problems. The first is its dwindling population. From 2000 to 2050, the institute projects a decline in the EU's active population from 331 million to 243 million. Over the same period, the active populations of Greater China and South Asia move ahead, while the North American grouping rises from 269 million to 355 million.

The second involves technological progress and capital accumulation. In these areas, according to the reference scenario, North America "continues to suck in a good part of the world's savings," while Europe depends on "savings and domestic investment" for capital. North America remains "the locus of innovative activity," the projection says, even though Europe will make gains in productivity, cutting the size of its lag behind the leaders.

What can Europe do? If things go along as at present, according to the reference scenario, "the decline of Europe is confirmed and the EU with 30 members becomes a second-rank economic power."


But in a more favorable second scenario, Ifri projects the creation of an area of "integrated development" that includes Europe, Russia and the south shore (the Arab countries) of the Mediterranean.

This involves launching in the target areas outside the EU "a vast program of technical cooperation reinforcing the creation of local scientific and technical elites and fixing them in their country of origin" - in other words, making sure they do not migrate to other competitive parts of the world.

At the same time, and in a somewhat contradictory manner, immigration to Europe is encouraged at the rate of at least 30 million persons by 2020. Then, in what might be called a burst of optimism, the report talks of improved economic conditions in the Mediterranean Arab partner countries, and - although they remain under "firm" governments - their introduction of "real" freedom of expression and greater emancipation of women.

Parallel to this, Ifri's scenario most favorable to Europe projects an improvement in Europe's own demographic situation, and "Russia's coming closer to the EU and vice versa."


At its most hopeful and ambitious for Europe, the report projects creation of "co-prosperity space" with the countries in the Russian orbit and along the Mediterranean that would involve macroeconomic coordination at the government and central bank level. Ifri also provides a rather less miraculous but more politically realistic second scenario for co-prosperity if nothing is undertaken to increase Europe's levels of its own population growth and immigration into the EU.

The co-prosperity space - with its perhaps unfortunate World War II echo of imperial Japan's Greater East Asia Co-Prosperity Sphere - is itself based on some extraordinary assumptions: that Russia and the Arab countries of the Mediterranean could meld smoothly with the EU, or, given an acceleration of their development, that the United States, China and the rest of Asia would not be formidable rivals to Europe in steering or sponsoring Russian and Mediterranean growth.

Yet in both of Ifri's favorable projections, Europe's share of world trade declines.

In conclusion, the report said, the essential element in the EU's response to its prospect of decline is action involving a political project that would create a sense of involvement and responsibility in each of its citizens.

"Without this tie, which supposes rather profound changes in politics and society," Ifri asserted, "the necessary elements for overcoming the European crisis of confidence will be lacking."