Keynote Address to the Transatlantic Policy Consortium Plenary Meeting
“Transatlantic Perspectives on Liberalization and Democratic Governance”
Speyer, June 16–18, 2003
Unedited Draft

When I began preparing this address on the Old and New Europe in their transatlantic relations, I saw with a degree of relief that hundreds of wise men and women had already written or spoken about the subject in recent months. So my task looked like a pretty easy one, just to summarise what wiser people than myself have said. That was the good news. The bad news was that much of what the wise men and women have said was mutually contradictory. Hence any summary would be confusing or absurd and would have sounded like:

• New Europe is closer to America than Old Europe because America is called the New World, but in the end the two are the same. Or:
• Old Europe is closer to America because it is so much like America as regards annoying the fellows on the other side of the Atlantic. Or:
• Old Europe believed that Blix was supposed to find weapons of mass destruction in Iraq while New Europe new better because of closer ties to the Pentagon. Now that everybody knows that the weapons of mass destruction were only put on the agenda for “bureaucratic reasons”, we need no longer distinguish between Old and New Europe.

So I feel a bit confused about New and Old and you should too. Let me suggest a contest between you and me. My job is to speak about the confusion, and yours is to listen. If you finish first, please let me know. Then I declare you the winner.

“Of Paradise and Power“

One of the prominent writers on the subject is Robert Kagan. In Of Paradise and Power, he sees a deep and structural divide between us Europeans and the US: To make his point, he needs no distinction of old from new Europe but regarding America, he doesn’t see much of a distance between Republicans and Democrats either. He says that even moderates in the US think like the hawks in terms of making use of America’s insuperable military power while even hawks in Europe are inclined to think in terms of paradise and international law to solve international conflicts.

At a lecture in Berlin ten days ago, Kagan insisted that most of today’s US policy that is annoying Europeans has actually been cooked by the Clinton administration. But that is grossly inaccurate, according to Frank Loy, the chief climate negotiator of the US under Clinton who listened to Kagan’s Berlin lecture and was much angrier about him than I am. Loy told me three days later, still full of anger, that arrogant unilateralism was an invention of the Bush people; and whatever came close to it during the Clinton years originated from the Republican dominated Congress after November 1984, not least from Newt Gingrich then House majority leader, and from the notorious Jesse Helms.

Other Americans tell me that after 9/11 the internal security system has turned absolutely frightening for liberals. Public institutions and private companies are encouraged to spy on staff and report to the Secret Service, reminding badly of the McCarthy times if not of the worst times we had in Europe. Kagan doesn’t touch that dimension and shouldn’t be surprised that Democrats and liberals feel he is not talking about their America.

Even inside the Republican government there is a rift. Newt Gingrich, now an advisor to Rumsfeld, said in April 2003: “The last seven months have been six months of frustrating and unsuccessful diplomacy and one month of successful military campaign”. His intention is clear to de-moralise Powell.

We learn from all this that Kagan is grossly over-simplifying American realities. Nevertheless, I find his observation absolutely convincing that Americans and Europeans are actually not that different by their human nature but by military realities. He also notes that historically this reality is a new phenomenon resulting from the collapse of the Soviet empire. Before 1990, America was simply not the only superpower and therefore had strong reasons to fear an all-out war. Hence, oddly, the Cold War served as a stabilising factor.

After 1990, all that was gone, and now America is the only military superpower left and hence is behaving, guess how? Just as Britain did during the 19th century and Germany tried to behave somewhat later and France and Spain somewhat earlier. At such times of the European nations’ military dominance, says Kagan, it was the USA to insist on diplomatic rather than military solutions. And let me add that civil freedoms at these times were well protected in the USA, not in militarised European states.

When explaining the propensity of nations to tailor their strategies to what they realistically can expect to achieve, Kagan quotes an old English proverb saying that if you are a hammer, the world around you looks like full of nails. The message being that in our times there is only one hammer left, the USA.

To add an element of scare, let me at this juncture tell you what observers say in Washington about the Bush team’s operational principle: “Ready – Fire – Aim”, in this sequence. And I am learning that this is a strategic idea originating from Harvard Business School, chiefly for start-up entrepreneurs: If you wait until you exactly know where to aim at, it will be too late to shoot. Now I don’t mind that first shoot then aim mentality for start-up businesses but I must say I find it scaring if it has infested the Pentagon. And so much is certain: this attitude was not in place in the Clinton years.

Returning to Kagan’s views on power-dependent mentalities, I should like to add that mentalities are not only dependent on military power but also on the physical experience of war. My wife brought that home to me when she observed during early 1980s that there was a fundamental difference in war fiction novels and films between the US on one hand and Europe on the other. German, Soviet, French, Italian, Polish or Scandinavian novels and films were very similar in that they all depicted the war as the ultimate tragedy and disaster. In US novels and films, with the exception of some Vietnam war sagas, war consists of battles between the heroes and the villains, — and as the heroes are the winners, war isn’t a bad thing per se.

I tell this to substantiate my view that the transatlantic divide that we are feeling in our days is not Schröder vs. Bush but rather roots much deeper in history.

The “old European” experience is clearly shared by nations that Donald Rumsfeld counts as New Europe. The Polish President, Aleksander Kvasnievsky, recently said in an interview with Der Spiegel that the description of new and old Europe was wrong and that Poland was, of course, “old Europe”. And ninety percent of the Spaniards rejected Aznar’s support to Bush and clearly wanted to be seen as Old Europe.

Living with US dominance

This brief historic introduction was perhaps necessary to better understand the state of affairs of transatlantic relations. Europe must learn from Kagan and others that we are in no way better animals than our American friends. Nevertheless, our historical experience may qualify us for a different role. That experience includes horrible wars and dictatorial governments as well as the deliberate and successful submission to the European Union of earlier national sovereignty.

Our American friends, on the other hand, would do good realising that other people may have good reasons not to follow the present American model. As a matter of fact, people around the world do feel troubled by the fact that America is touching their own daily lives more than their own government does. This disturbing observation has induced Thomas Friedman, author of the brilliant book The Lexus and the Olive Tree to write an enlightened article in the New York Times (June 2, 2003) entitled Why the rest of the world hates America. He too refers to the unparalleled ascent of US military power after 1990 and adds the dominance of US cultural and economic ideas about how society should be organised. If Washington judgments and decisions touch peoples lives more than their own parliament’s and government’s decisions, the very notion of democracy is at stake: What’s the use of going to the ballots if whom you vote for matters less than how some fellows on the Potomac behave?

That is something to reflect on. The US is claiming to crusade to bring democracy to the world but by its unforgiving unilateralism makes people feel that democracy is not about influencing the forces that lie behing their real lives. What is the credibility of such crusade on democracy?

Gerard Baker and others in the Financial Times (30 May, 2003) show less sympathy than Friedman with the powerless and put it more matter-of-factly: “the future of transatlantic relations will ultimately be decided far more in Washington, by the sole superpower, than in Brussels”.

Does that mean, perhaps, that New Europe is the part of Europe, which has given up questioning the supremacy of the US while Old Europe is still struggling with it? Kagan says, we should not give up but should leave our “paradise” and build up military powers matching those of the US. It is an expensive advice: The US spends three percent of its GDP on defence, Germany only 1.1 percent. Although both figures are small compared to the six percent Britain spent during the glorious “Rule Britannia” times of the late 19th century, I don’t see any realistic strategy for tripling European defence budgets. Anyway I see no reason how such dramatic militarisation would solve any of the transatlantic problems and would rather create new ones.

Moreover, I see no need to bolster European self-confidence by running after the hammer. Instead I do see fascinating new roles for good old Europe which I shall outline momentarily.

European preference for the rule of law

The role of good old Europe as I see it is that of a mature global player who has learned the hard way that all fare better if internationally there is a rule of law, applying, of course, to everybody. Wars should be considered for defensive purposes only or under the explicit mandate from the United Nations, i.e. with explicit consent of the US, China and Russia.

The European Union was founded first as the European Economic Community after the war with a view to end all European wars forever. For this, it was simply necessary to subordinate international relations under the rule of law. Kagan himself quotes Steven Everts from Britain explaining and justifying the European project this way. By surrendering to the Union many traditional powers of the nation state, the European nations created the most successful, most prosperous and most peaceful period of history on the Old Continent.

We have no reason to leave this road of success. Rather we should attempt to geographically extend it, as we are presently doing with the accession to the Union of ten more countries all of which have suffered from the war and from authoritarian regimes. Europe’s global role should be one of strengthening the UN and of working on the establishment of a rules based world order.

This is also the view of US philosopher Richard Rorty, of the German Jürgen Habermas and the French Jacques Derrida, of the Swiss Adolf Muschg, of Umberto Eco from Italy and Fernando Savater from Spain. They all feel Europe should further develop and maintain that attitude of a proud and peaceful alternative to the present US policy of unilateralist dominance.

Coming from this perspective I would not put the blame on Europe for the present transatlantic tensions. They are unavoidable as long as the US government keeps de-legitimating the UN and international law and tries to divide Europe into old and new.

Sure enough, we have made mistakes in Old Europe. Chancellor Schröder was inconsistent with the said allegiance to the UN when declaring that Germany would under no circumstances participate in a war against Iraq. He surely assumed that there was no “case of defence” conceivable and that therefore the NATO Treaty’s Article 5 (used in the case of Afghanistan) would under no circumstances apply. It would have been easier for the US to accept this, had he said so explicitly. (Schröder and Chirac were right, on the other hand, not accepting the US language of constantly mixing up Al Quaeda, Saddam Hussein and Islamic fundamentalism.)

However, another major mistake was made by Old Europe in February and March. At that time we should have admitted publicly that without the US military build-up around Iraq, Saddam Hussein would not have moved on any of the Western demands. Had we said so, it would have been much easier for President Bush to eventually withdraw his troops without a war and yet without loosing his face.

Is the tide turning against G.W. Bush?

Admitting smaller mistakes will not suffice to re-establish transatlantic friendship. Robert Kagan and most Americans would probably reply to Rorty and his European colleagues that all that soft rhetoric of a rules based world would never impress Al Quaeda, Hamas or Kim Yong Il. And here the Americans are right.

For a while I hoped that the Iraq war might have a positive effect on the Israel-Palestine conflict. Palestinians have realised that the US is not bluffing and some leaders feel that it may be better for their people in the end to accept the “roadmap for peace” designed by foreign powers (including Europe!). At the Aqaba meeting, the US seemed to make progress also in taming Sharon. But only a week later Bush’s strategy suffered a massive setback. Anyway, the Palestine question is a bit outside today’s focus and is outside my own competence.

It is not out of our focus to look at some of the more contentious new catchwords used by the Bush Administration. Is it right for one country to call other countries “rogues” or “failed states”? Is it right for one country to declare “regime change” in another country an aim of its foreign policy? Can one country classify others as an “axis of evil”?

Clearly, in the present European political language, such are all impossible notions. What I nevertheless would be willing to accept is the use of these terms if they express what the US government, parliament or public choose to believe – as long as they don’t become instrumental for unilateral military action.

Rejecting unilateral military action has nothing to do with cowardice or Anti-Americanism but is indeed rooted in the said European experience of WWII and after. And let us remember that European NATO partners did not hesitate to support the “war on terrorism”, when the USA was attacked on 9/11.

After 9/11, nearly all people of this world including many Islamic people felt shocked and were on the side of the USA. A year and a half later, public opinion has massively turned against the US. To quote an American source: “There is little doubt that stereotypes of the United States as arrogant, self-indulgent, hypocritical, inattentive and unwilling or unable to engage in cross-cultural dialogue are pervasive and deeply-rooted.” So says The Independent Task Force on Public Diplomacy of the Council of Foreign Relations of the USA in a Report published a few weeks ago.

It is fair to assume that this massive change of tide has not been engineered by Schröder and Chirac. Most of my own American friends rather put the blame mostly on George W. Bush, on Donald Rumsfeld or on Fox media. Some of my friends believe that the tide is simply turning against G.W. Bush and are confident that his government will just be a transitory if embarrassing period after which reason will again assume the upper hand. They tell me that since a very long time, America has never been so deeply divided internally than in our days, and that despite all the patriotic feelings after 9/11, and despite near-unanimous backing of the American soldiers fighting in Iraq.

Of course, if you are on the side of Bush, as Kagan no doubt is, you are inclined to deny the existence of a divide. But then, there is a fundamental asymmetry of logic: If of two people in a room one is saying we agree and the other says we don’t , the latter is right and the former is not. In any case, we Europeans should never say “America” if we mean the Bush administration.

I still agree with Kagan that the transatlantic rift goes beyond President Bush’s current policies. So I try to go deeper into the rift challenge, in two steps. One step, following Rorty, Habermas and the others, is an outline of a proud European vision from which an extent of world-wide European influence could follow, which the US simply cannot ignore. The second step addresses what Continental Europeans see as an Anglo-Saxon preoccupation, namely the idea that it is good for all if we have as much economic competition as possible and that the survival of the fittest among the competitors is also good for all.

The European vision and the European Union

Let me begin with the European vision.

An essential part of the European vision will always be our fundamental friendship with the United States. The US have been so immensely helpful after WWII in establishing and defending freedom, democracy and the rule of law. And the US at the time of George Washington and Thomas Jefferson were the first in the world to adopt a democratic constitution based on European ideas.

The business communities in particular on both sides of the Atlantic are very eager to return to business as usual in the mutual relations and do not support such silly jokes as renaming French fries into Freedom fries.

But the European vision has to be far more ambitious than returning to business as usual in transatlantic relations. Much of the European vision is already in place and has to do with what is now called the European Union.

At the beginning there was the determination never to allow wars again among European countries. Nearly sixty years later, wars have become virtually inconceivable between France and Germany and the rest of the EU, and everybody in the world is appreciative of that achievement.

The beginning was modest by today’s standards: the Community of Coal and Steel, then considered core industries. From 1957 on, based on the Treaty of Rome, six countries became the European Economic Community, – a free trade zone pretty much like NAFTA. As more cultural, fiscal, environmental and legal matters were added, it became the European Community. A European Parliament was created, which over the years was given ever more powers. It will in the future be entrusted with electing the EU President.

The Community developed strong mechanisms of harmonising its policies. The Commission has the privilege to propose new directives, although the Councils of ministers can reject them and negotiate about details. In the field of the environment it is said that EU Directives and Regulations determine some 80% of the legislation of member countries. In agriculture it is more.

The European Court of Justice oversees the implementation of Community law and has often forced member countries to change their policies accordingly.

The Single European Act of 1987 was the first amendment to the Treaty of Rome and with its “Four Freedoms” (of movement of people, goods, services and capital) kicked off a new phase of integration leading through the Maastricht and Amsterdam Treaties to the new name of the European Union.

Meanwhile the number of member countries, all of them voluntarily joining, grew from six to fifteen, and another ten are joining in a year from now.

The Maastricht stability criteria were also the basis for the introduction of a European currency with presently 12 countries participating.

And since this weekend we are confident that we shall have a European Constitution overriding national constitutions.

From this formal description of the EU it is already clear that the NAFTA zone is light-years apart from that degree of integration. What Americans in particular tend to find revolting is the idea a supranational authority has powers to convict citizens and firms from one member country.

Differences go still further. The EU has a tradition originating from its earliest years of embedding the market economy into a web of social policies. In Germany we call it Soziale Marktwirtschaft, a term introduced some fifty years ago by Ludwig Erhard, then minister of economic affairs. The inclusive kind of market economy was extremely successful in demonstrating that the market economy was not only good for the high achievers but also for the less fortunate. The socially inclusive capitalism has also become official policy of the EU. Notably the Cohesion Funds of hundreds of billions of Euros serve to shift money from the rich to the poorer regions of the Union. In NAFTA countries the poor regions can only dream of such mechanisms in the absence of which rich regions as a rule get ever richer and poorer ones ever poorer.

Of course, the European vision would be a lot more attractive still if we were enjoying steady economic growth, which, alas, is not the case. I cannot offer you any miracle solutions to that problem. But I give to consider that growth in economically mature countries is correlated with population growth. The USA (and Canada and Australia) still benefit from immigration. Notably the US acts as a huge “vacuum cleaner” sucking in talented people from around the world, not least from overpopulated Asian countries but also from Europe and Latin America. These immigrants typically are in their best years and immediately begin to work and to increase economic output. Europe and Japan, by contrast, have hardly any internal population growth and apply fairly strict anti-immigration policies. Germany has taken in some two million immigrants from the former Soviet Union, — mostly as pensioners! All this may explain much of the transatlantic (and trans-pacific) differences in growth rates.

To respond to this challenge, Europe should adopt more liberal immigration policies and develop many more English language university courses. We should actively compete with America on attracting the elites of the world and on attractive conditions for modern industries. Moreover we should further liberalise labour markets, rebalance our social security system and otherwise improve conditions for investors without, however, giving up on the inclusive model of capitalism and on the maintenance of a first-class infrastructure.

This also means we should not compete for business by constantly cutting taxes. Functioning states need money. But then, what the OECD calls harmful tax competition originates mostly from the USA, and President Bush keeps pushing this agenda, to the detriment both of US public services and of transatlantic relations.

Economic Darwinism and Globalisation

Let me come to what I impolitely called an Anglo-Saxon preoccupation of ever enhancing economic competition. The quasi-moral value of competition is something that you don’t find in ancient Asian, African, Latin American or continental European cultures.

Having served as a professor of biology, I know, of course, Charles Darwin’s Origin of Species through Natural Selection, published in 1859 and know about the evolutionary power of competition. But let me submit that Charles Darwin, after his visit to the Galapagos Islands, made it clear that the evolution of diversity was dependent on barriers. The evolution of diversity presupposes millions of cases of survival of the less fit, while natural selection mainly works to reduce diversity. Diversity, on the other hand, is the precondition for resilience of the system against unexpected shocks and therefore enjoys artful conservation! This is a fact known to biologists but often ignored by economists using biological selection as a natural law to support their economic “Darwinism”.

Nearly a century before Darwin, Adam Smith discovered the productive sides of competition on the markets, laid down in his pivotal book on The Wealth of Nations. This groundbreaking work is seen as the origin of modern economic thinking and has shaped the Anglo-Saxon civilisation more than others. It reached all cultures over the last 200 years and has become dominant throughout the world after the collapse of communism. But why is it then that so many people feel threatened by markets and openly fight against further liberalisation? I see two reasons for this:

• The losers and the scary simply feel threatened and think (often rightly) that they would be better off with less competition;
• The benign function of markets requires strict rules, which at Adam Smith’s times were guaranteed by a strong nation state. The state is supposed not only to set and monitor the rules but also to take care of whatever may be necessary for a healthy development but is not profitable as a private economic activity (for this, Smith gives the example the construction and maintenance of lighthouses).

The first reason for fighting market competition must be refuted, but not the second. It is indeed essential to have rules (and to have an authority paying for infrastructure) reaching as far as the market forces do.

Now I am coming to an interesting observation concerning economic globalisation. Global capital has been around, of course, for a long time. But so long as we had the Cold War, capital was massively interested in keeping countries in the Western camp of market economies. For the high achievers and for capital owners, the social welfare state was no doubt a nuisance, but still preferable to communism. So they grudgingly accepted in each nation state measures such as affirmative action, extended workers rights and a whole host of redistributional taxes. When the Soviet Union collapsed, all of a sudden, the field was free for attacking everything that since a long time had been seen as a nuisance.

This is the new situation emerging after 1990, which was given the name of “globalisation”. It has been proven that the term globalisation entered the media not before 1992. Globalisation is clearly benefiting the high achievers and the capital owners. In the absence of a communist threat, they can now force nation states (and sub-national bodies) into ever fiercer competition against each other for optimum conditions of profit making, regardless of the costs to democracy, to the public, to the environment and to future generations. This what some consider global economic Darwinism falling back far behind Adam Smith!

Globalisation coincided with the new US American superiority. After all, both had the same origin, namely the collapse of the Soviet Union. But the synergies go further. The US has by far the largest institutional investors and by far the strongest universities, patent holding companies, acquisition and mergers banks, accountant firms, entertainment industry and computer firms, in addition to its superior military. The US is by far the biggest beneficiary of the new and global economies of scale. The “winner takes all” phenomenon works chiefly to the favour of the US and by the same token to the disbenefit of other countries.

This may explain some of the anti-American undertones found in the “anti-globalisation” movement. This too is part of the transatlantic relations problem. America would do good to understand this nexus and could co-operate with Europeans, in establishing global rules.

Let me just indicate a line of thinking that I adopted when dealing with globalisation. In the situation of states coming under more and more pressure from the international financial markets, public goods too come under dangerous pressures. If we want to re-balance public with private goods, what we have to do is a systematic strengthening of civil society to create the necessary public pressure in defence of public issues. This can unite millions of people, mostly of the civil society on both sides of the Atlantic and may constitute an essential pillar of friendly transatlantic co-operation in the future.

This is not meant as yet another idealistic longing for the paradise. We do have to sort out our real problems and we Europeans and Germans have to do our homework including in the war on terrorism.

But at least I hope to have shown to our American friends that European visions, inclusive capitalism and the evolution of globally respected rules are not meant as anything like Anti-Americanism.