German sailors prepare to embark on foreign mission

GIS Dossier: Europe as a global player – the basics

  • With the U.S. retrenching and other powers rising, Europe must act like a world power
  • The EU’s multinational structure and military weakness make it unsuited to this role
  • Economic muscle and ad hoc arrangements may help, but carry their own risks

GIS Dossiers aim to give our subscribers a quick overview of key topics, regions or conflicts based on a selection of our experts’ reports since 2011. This survey, the first of a three-part series, considers whether Europe (primarily, the European Union) can stand on its own as a global power. Part One examines the basis and instruments of European power. Parts Two and Three look at where and how this power could be applied.

Europe’s post-Cold War idyll is over. One of GIS’s consistent themes is that the world’s richest continent cannot hide from history, even protected by the leading superpower. There have been plenty of warning signs. The 2008-2009 financial crisis showed the vulnerabilities of the euro area’s stagnant economy – overregulated, overtaxed and overburdened by bloated welfare states. The inadequacy of the European Union’s foreign and security policies was exposed by the twin shocks of Russia’s intervention in Ukraine in 2014, followed by the great migrant influx of 2015.

“The polite pretense that the EU is only a benign, inward-looking … construct seeking the integration and well-being of its members should have been put to rest with the events in Ukraine,” GIS expert Bernard Siman wrote in a July 2017 report. “It ignores the simple truth that once created, a geographically coherent bloc with 500 million inhabitants, located at a geopolitical crossroads, must have a profound impact on others.”

In today’s less stable geopolitics, marked by the rise of China and Russia’s attempt to “claw its way back to the rank of a major Eurasian power,” the long-term risk of war is rising, GIS founder Prince Michael of Liechtenstein noted in a March 2018 report. In this context, Prince Michael wrote, “Europe has developed an identity problem: it haplessly bounces back and forth between … its traditional vector toward the North Atlantic and the U.S. in the west, and toward Eurasia in the east.”

One reason for this vacillation is that the EU has not built up diplomatic and military strength commensurate with its economic power. The essential absurdity of this situation was described by Prince Michael in a December 2016 essay: “Some 500 million Europeans now need 350 million Americans to defend them against 140 million Russians.”

Looking for Uncle Sam

Europe’s dependency on the American security umbrella has become problematic as the U.S. reorients its global priorities. This process began long before the Trump administration or President Barack Obama’s “pivot” to Asia, as the waning of the Cold War (1947-1991) started a continuous scaling down of U.S. forces.

Even so, as GIS expert Luke Coffey pointed out in an August 2015 report, “what has not changed is Europe’s geopolitical significance. From the Arctic to the Maghreb, from the Caucasus to the Levant, the continent borders on some of the most important conflict areas in the world.” Russia’s move into Ukraine sparked a partial reversal of this retrograde movement, as the U.S. redeployed light forces to the Baltic states with its NATO allies and prepositioned gear for an armored brigade.

President Trump wondered aloud about NATO's cost-effectiveness if U.S. allies do not pull their weight

But the advent of a new administration had President Donald Trump wondering aloud about the cost-effectiveness of the U.S. commitment to European defense, especially if NATO allies do not pull their weight. He also pulled out of the landmark project to create a transatlantic free trade agreement (TTIP), provoking German Chancellor Angela Merkel’s uncharacteristically harsh remarks that “the times in which we can fully count on others are somewhat over,” and “we Europeans must really take our destiny into our own hands.”

In fact, there is considerable evidence the Trump administration will not depart from traditional policies toward Europe, even if its approach is more abrasive. As GIS expert Dr. James Jay Carafano pointed out in a June 2018 report, the U.S. remains committed to NATO and is not out to deconstruct the EU, even though it is taking more of a bilateral approach and “using much more combative economic policies.”

As GIS expert Dr. Michael Wohlgemuth wrote in an overview of the transatlantic relationship in January 2018, the tensions could even yield a better, more balanced relationship, provided Europe grows up and “Uncle Sam does not succumb to senile dementia.”

Russia’s intervention in Ukraine convinced the EU that it needed to rearm
Jan. 22, 2015: Pro-Russian separatists ride a tank into Donetsk, Ukraine. The Kremlin’s decision to intervene militarily helped convince Europe to refurbish its conventional deterrent (source: dpa)

Soft power’s limits

While Europe is seeking to become a world leader through the exercise of soft power, its “defense policy and its striking absence of military power is failing to frighten anyone,” noted GIS expert Charles Millon in a June 2014 report. While the defense spending of EU countries is about 40 percent of the U.S. level, it achieves only 10 percent of the operational capacity. This condemns Europe “to bow to U.S. policy, which does not necessarily line up with its interests.”

This EU approach ran into its hard limits in Ukraine in 2014, according to Mr. Millon:

After offering a treaty to a peripheral country, you cannot reasonably shy away at a rival power’s first grumblings … or ask your American big brother to help resolve the situation.

Another sobering “experience of the narrow confines of European defense” was the Libyan revolution of 2011, as GIS expert Dr. Uwe Nerlich noted in a January 2013 report. After the decision by France and Italy to intervene, the whole air campaign quickly showed its utter dependence on U.S. logistical and command support – and failed to achieve its objective of stabilizing the country.

A forgotten aspect of military strength is that it spurs economic development, by protecting commerce and encouraging technological innovation, Prince Michael noted in a January 2018 opinion that explored the hazards of Europe’s position. “To be rich and militarily weak is a very risky proposition,” he concluded.

Chaos or flexibility?

The obvious reason the 28-member EU cannot behave like a conventional great power is its complex, multinational structure. As a result, “neither its individual member states nor the bloc as a whole possess the capacity and authority to react effectively to global threats,” as Dr. Nerlich wrote in a December 2016 analysis of the emerging European Global Strategy (EGS). Even its largest states lack resources to act as a great power, while the Union has been deliberately deprived of wide authority on defense and foreign affairs.

The alternative, as Dr. Nerlich explored in a follow-up report in March 2017, is cooperation of larger European powers and regions in ad hoc groups below the Union level. The most spectacular examples are the euro area and the European Defense Union, to which could be added “format” diplomacy, regional coalitions, and bilateral “enhanced cooperation” on military matters.

European leaders stroll down Versailles Hall of Mirrors
March 6, 2017: Government leaders of “core” EU countries France, Germany, Italy and Spain meet at an informal summit in Versailles to discuss the future of the bloc (source:dpa)

While the proliferation of special-purpose groups is often seen as a threat to EU cohesion, Dr. Nerlich argued that it could strengthen the bloc while empowering its member states – many of whom fear the centralized power of Union institutions and the popular backlash it provokes. “Flexibility is a powerful tool in building competitiveness, and it could well become Europe’s essential organizing principle” in responding to global rivals.

Not surprisingly, this view is endorsed by some of Europe’s traditional powers, especially France. GIS’s Charles Millon – a former defense minister under French President Jacques Chirac – argued in 2014 that Europe can only hope to project power abroad if it creates “several circles of integration,” which would allow an “inner circle of France, Germany, Italy, the Benelux countries and Spain” to pursue “common foreign objectives” independent of NATO. Europe’s initial goal would be to “pacify its close neighbors,” especially in Africa and the Middle East. This requires not technology or even military capabilities in the first place, “but rather the political will to intervene in the wider world. … The means to achieve this will follow.”

The painful evolution of the EU’s security doctrine was charted by GIS expert General Stanislaw Koziej in a March 2018 report. The EGS approved in 2016 stressed “principled pragmatism” that attempted to “steer clear of isolationism and primitive interventionism alike.” General Koziej tends to be an optimist, noting that the EU had “made a long, slow journey toward becoming a real player in security strategy.” Yet even he admits that if no consensus is achieved on defense, a multi-speed Union could precipitate a “European security collapse.”

Brexit will remove Europe’s biggest military and half of its nuclear deterrent from the EU

For now, the risks seem more apparent than the opportunities. Brexit will remove Europe’s biggest military and half of its nuclear deterrent from the EU, though some believe it could encourage a more active British role in NATO. Yet both sides have bungled a chance to soften the economic blow of the UK’s withdrawal in exit talks, as GIS expert Dr. Michael Leigh noted in February 2018. Within the EU, there is an ever-deepening north-south divide over finances, now combined with an east-west split over migration and the rule of law.

Even so, disagreement and divergence have been the norm in Europe and even in transatlantic relations, as Dr. Wohlgemuth pointed out in January 2018. Europe’s strength is its ability “to pool resources, coordinate efforts and agree on common objectives,” even if the process is slow and cumbersome. That is a useful skill on the world stage, especially if Europe sees its role as a defender of the multilateral structures undergirding the post-Cold War order.

Military menu

In November 2013, Dr. Nerlich laid out Europe’s defense options: “D-1: More of the same; D-2: Regional capacity for intervention; D-3: Oceanic outreach; D-4: Global strategic power.” He argued that in the long run, the third or even fourth options were called for. But four months before Russia’s annexation of Crimea, Dr. Nerlich wondered whether this sort of pivot was even possible.

Over the next five years, Europe reoriented itself away from an expeditionary-based concept used in Iraq and Afghanistan and more toward self-defense, both against terrorism and territorial aggression. This was primarily in response to Russia’s strategic challenge to NATO and EU expansion, which began in Georgia in 2008 and deepened in Ukraine in 2014. These changes are explored in a May 2018 GIS Dossier on NATOs strategic dilemmas.

Graph of European military spending compared to other nations
Long-term forecasts show European militaries dropping into the global third tier (source: macpixxel for GIS)

It also ramped up military spending, mostly on home security and badly neglected conventional forces. But even this limited push to improve existing capabilities did “not overcome the fundamental problem, which is that Europe’s armed forces are designed to operate in an American framework that relies on U.S. headquarters, long-range strike capabilities and logistical support,” GIS expert Professor Mikkel Vedby Rasmussen noted in a February 2018 report.

For the first time, the European Commission’s plan for Permanent Structured Cooperation (PESCO) is investing serious money collaborative defense projects, while Germany is beefing up research and development efforts through bilateral procurement projects, as Professor Rasmussen noted in an October 2016 report.

Yet all this must be kept in perspective. Four years after the 2014 NATO summit in Wales, seen as the turning point in strengthening Europe’s defenses, only five European members of the alliance – Estonia, Poland, Greece, France and the UK – met the defense spending target of 2 percent of gross domestic product, as GIS expert Professor Stefan Hedlund noted in a March 2017 report. Germany – the butt of President Trump’s complaints about free riders – spends just over 1 percent.

Europe is uniquely vulnerable to a shift in Russian doctrine on the use of tactical nuclear weapons

Europe is also uniquely vulnerable to a shift in Russian military doctrine, which adjusts for NATO’s superiority in purely conventional forces with a willingness to make first use of low-yield nuclear weapons on the battlefield, Professor Hedlund wrote in April 2017. This strategy of “escalate to de-escalate” can only be countered by comparable Western capabilities, which even the U.S. has neglected. The nuclear forces maintained by France and the UK are purely strategic deterrents, without low-yield tactical weapons, as General Koziej noted in a May 2016 report. Unless these capabilities are modernized, European military planners are left with the unpalatable choice of backing down after Russian first use or triggering a huge nuclear exchange.

Economic power: trade

Economically, the EU is a colossus, second only to China and larger than the U.S. as measured by purchasing power parity. Its internal market of 500 million consumers is for many the world’s most attractive, giving the bloc tremendous business leverage. This has become a go-to option for European policy makers.

In some ways, the bloc’s accomplishments have been impressive. Europe has made more progress in negotiating Free Trade Agreements (FTAs) than the U.S., and could well take the lead in shaping future world standards now that Washington is slipping into protectionism, noted in GIS’s Michael Wohlgemuth in a January 2018 report. But the bloc has shown no hesitation to use bare-knuckle methods of its own, aggressively going after U.S.-based multinationals on a variety of consumer protection issues, most recently the security of personal data.

Map of EU trade agreements with the rest of the world
Europe has fallen short of its ambition to reach free trade agreements with the rest of the world, but has still done much better than the U.S., giving it potential influence and leverage (source: macpixxel for GIS)

But this can be a double-edged sword, as many of these actions by regulators can be seen as “a European measure against American firms’ dominance in digital commerce, especially companies like Apple, Google, Facebook and Amazon,” as Prince Michael noted in a June 2018 comment. Like straight-up protectionism such as the threatened retaliatory measures against U.S. aluminum and steel tariffs, it does not improve competitiveness and ends up hurting Europe’s already sluggish growth, damaging economies and costing jobs. In this sense, the EU’s trade leverage has gained it little.

A potentially more compelling example of using economic power has been the EU’s efforts to diversify away from dependence on Russian gas. This has primarily been through a combination of regulatory pressure (third-party access laws) and infrastructure projects to bring new supplies to Europe, as through the EU’s Southern Gas Corridor from the Caspian Sea to Italy. But Europe has been inconsistent in applying pressure, and market forces have been proved more decisive. Falling energy prices, sluggish European demand for gas, and surging exports of LNG from U.S. shale producers have done more than investments to loosen Russia’s grip.

Economic power: infrastructure

The EU’s cohesion funds and ability to tap the European Investment Bank (EIB) and other multilateral lenders gives it an enormous ability to upgrade infrastructure. This has spurred economic growth in the bloc’s new eastern members, and could potentially allow the EU to “project force” through development initiatives in Eastern Europe and North Africa.

Yet even when this financial leverage is deployed successfully, as in the EU’s gas diversification in response to Russia’s use of the gas weapon against Ukraine, politics has gotten in the way. To preserve its market position and undercut competitors, Russia built costly new pipelines and adopted mercantilist pricing. Ultimately, this distorts competition on the European gas market and undermines efforts to diversify, as GIS expert Dr. Frank Umbach noted in a September 2017 report. Yet Berlin has cooperated with Moscow on Nord Stream 2, showing “a stunning contradiction between Germany’s long-term narrative that it favors multilateralism and its unilateral energy policy.” Dr. Umbach noted in May 2017.

Map of the Belt Road Initiative (BRI)
Europe sits at the end of Eurasia’s largest infrastructure project (source: macpixxel for GIS)

To a surprising extent, Europe’s investment power has been unfocused and passive. A more force-projecting variety of infrastructure spending is shown by China’s Belt and Road Initiative (BRI), which will deploy at least $240 billion in financing to knit together 60 Eurasian countries, with about 65 percent of the world’s population and one-third of its GDP. This is a project explicitly dedicated to furthering China’s economic interests and establishing its political hegemony, as GIS expert Henrique Schneider pointed out in a September 2017 report.

Given its potential to hand China an “unacceptable level of control over a large trading area,” European policy makers must decide how to respond, GIS expert Professor Enrico Colombatto noted in a January 2018 report. BRI’s completion will put European companies at a severe competitive disadvantage, according to Polish business executives at a November 2017 panel discussion organized by GIS with the daily Rzeczpospolita. Yet not taking part could be even worse, as then “Chinese bureaucrats will be the ones coming up with the ideas,” according to Radosław Pyffel, Poland’s representative at the Asian Infrastructure Investment Bank.

Professor Colombatto predicted that Europe would likely end up accepting Chinese leadership rather than presenting an alternative – free trade and deregulation, which would attract more investment to Europe. Prince Michael saw the dilemma posed in even starker terms in a July 2017 Opinion, drawing a parallel with China’s abdication of world leadership in the early modern period.

Astonishingly, Europe’s role in these developments – so important economically, politically and strategically for the entire world – has been virtually zero. At stake are Europe’s links to what will soon be the largest markets on the planet. Yet Europe is as passive today as China was in the 18th and 19th centuries, when Europe occupied most of Asia.

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