Troubles on the 'Sea of Atlas': The Transatlantic Partnership

The relationship between Europe and the U.S. has been strained, volatile, adaptive, reactive and yet robust. However, as the shared domestic consensus on democratic institutions, liberal values and global vision weakens, and alternatives emerge internationally, the longevity of the relationship as now constituted must be questioned.

The relationship between Europe and the U.S. has been strained, volatile, adaptive, reactive and yet robust. However, as the shared domestic consensus on democratic institutions, liberal values and global vision weakens, and alternatives emerge internationally, the longevity of the relationship as now constituted must be questioned.

The strategic aspect predominated until 1989. Russia’s interventions on Europe’s borders and extremist violence and immigration originating in the Middle East imbroglio and sub-Saharan Africa’s woes has brought security issues to the fore once more. However, the economic interdependence is still what anchors transatlantic relationship.

The U.S. and the EU were each other’s top destination for the export of goods and services in 2016, amounting to 18.7% of total U.S. exports and 20.8% of total EU exports. The American Chamber of Commerce noted, however, ‘Trade alone is a misleading benchmark of international commerce’ because ‘mutual investment dwarfs trade and is the real backbone of the transatlantic economy’.

Mutual investment has become essential for U.S. and European jobs and prosperity. The U.S. and Europe are each other’s primary source and destination for foreign direct investment (FDI). Only 21% of U.S. FDI went to the Asia–Pacific region in 2016, while 70% of the U.S. total went to Europe. In that same year, ‘Europe accounted for 72% of global FDI inflows into the U.S.’.

While China’s growing military capability draws U.S. attention towards the Asia–Pacific, the transatlantic relationship remains more important to the U.S. and the liberal international order. This is reflected in Donald Trump keeping options alive for the Transatlantic Trade and Investment Partnership while abandoning the Trans-Pacific Partnership. Around 22% of U.S. imports and exports were with Europe in 2016, while exports to China comprised only 8% of the total. U.S. affiliates based in the UK export more to the rest of Europe than U.S. affiliates based in China export to the rest of the world.

Revisionist China certainly poses a threat to the current global order; however, were the intricate strategic and economic strands that bind the U.S. and Europe to unravel the globalised world could rapidly descend into competing regional power blocks.

A report prepared prior the 2016 Munich Security Conference recognised that the transatlantic relationship already had become ‘weaker, and less relevant, than at any point in decades’ as ‘U.S. and European paths diverge’. In 2017 the equivalent report drew attention to ‘the uncertainty about the transatlantic security partnership and about the United States’ commitment to European security’. This year’s report observed, ‘The U.S. is no longer taking the lead in maintaining alliances, or in building regional and global institutions that set the rules for how international relations are conducted.’

It became increasingly clear at this year’s Munich conference that many European officials believe ‘that they need to prepare for a future security infrastructure without Washington’. The German Defence Minister condemned America’s ‘military-heavy approach to global affairs’. The German Foreign Minister said he could ‘no longer recognize’ America and was ‘perturbed’ by Trump’s policies.

In part the German ministers were speaking to their constituencies. In a recent poll, a staggering 88% of Germans said that in future defence policy, partnership with European countries should take precedence over partnership with the U.S.. The French Defence Minister told the conference that Europe must seek ‘strategic autonomy’.

Trump’s attitudes to multilateralism and globalisation have been described as an inversion in the logic of the transatlantic alliance, and that ‘it is Europe now that has the greater—and for it, existential—interest in preserving an international order that safeguards peace and globalisation’. Others argue, ‘Trump’s impact on European security is profound, strengthening already existing political forces working towards the EU’s strategic emancipation from U.S. tutelage.’

The security and economic pillars of the transatlantic partnership aren’t separable. The bellicose rhetoric of the Trump administration’s security and defence policies worry the Europeans greatly. Europeans are critical of Trump’s evisceration of the State Department. The U.S. approach to international relations is antagonistic to the general European preference for diplomacy, negotiation and arbitration.

As the Trump administration continues to emphasise military force and to take belligerent stances, the Europeans will further concentrate on strategic autonomy. The transatlantic economy accounts for ‘one-third of world GDP in terms of purchasing power’ and won’t be dismantled overnight. However, if Europe incrementally began to substitute the transatlantic dependency for a closer integration with the Chinese economy, the old international liberal order would come under perhaps fatal stress. It isn’t unimaginable that a new hybrid Eurasian international order might beckon. China is interested in a new international order with different rules and institutions.

East Asian tensions have the potential to provoke a conflict that would be calamitous for Australia. Avoidance of war rightly should be Australia’s highest foreign policy objective. But in the absence of a Pacific war, it will be on the shores of another ocean that the contours of the future global environment will be drawn.