Home > BRICS, Europe, India, Pax Americana, Politics, USA, World Economy > Straw in the wind and reading tea leaves

Straw in the wind and reading tea leaves

The current Great Recession is forcing Europe to rethink many of its assumptions and move out of its comfort zone.

After a Nobel .. a grateful Obama was the least that Europe expected ...

After a Nobel .. a grateful Obama was the least that Europe expected …

Coming to terms

After much hand-wringing, chest thumping, indignation, there is the ‘the truth dawns’ moment.

Long used to effortless Anglo-Saxon collaboration with the US, Britain is lost in trying to define and prepare itself for this change.

stepping into a Blockbuster video shop, I found myself walking past aisle after aisle of Hollywood movies. Then I came across a tiny section labelled “foreign”, which contained about a dozen European films. Either Hollywood’s hegemony was such that the US was no longer perceived as another country, or Blockbuster had adopted the US definition of foreign and imported it 4,000 miles into the UK. The same confusion governs this country’s defence policy. The other side of the Channel is forrin. The other side of the Atlantic isn’t. (via Only America can end Britain’s Trident folly).

The change in calculus

Instinctively, and habitually, Britain rejected the French offer to share costs, control, benefits of its nuclear patrol – turning down benefits of a US$ ‘x’ billions.

Last week the government slapped down a French offer to reduce the costs of our submarine patrols by taking turns to prowl the same seas rather than duplicating the effort and occasionally crashing into each other. This proposal, it said, would cause “outrage”, on the grounds that it’s an unacceptable erosion of sovereignty. Using a system leased from the United States, on the other hand, presents no such difficulty. When the government says our sovereignty is threatened, it means that another nation might disrupt the orders it receives from Washington.

At Copenhagen, the British and the Euro-zone were in for a rude shock. The US ploy of Obama+BASIC meeting, ensured that the “only breakthrough was the political coup for China and India in concluding the anodyne communiqué with the United States behind closed doors, with Brazil and South Africa allowed in the room and Europe left to languish in the cold outside.”

At Pittsburgh G-20 Summit, it was reported that Barack Obama refused a meeting with Gordon Brown, five times. The worst for the US-Britain ‘special relationship’ was the day when Paris Hilton made Gordon Ramsay the British Prime Minister. Long smarting under the label of US poodles, British MPs reacted. With so much happening, a report from a group of British MPs followed. It called for a review of ‘special relationship’ with the USA.

There is an excruciating ritual that dates back at least to Thatcher: lobby journalists accompanying her on a trip to Washington would ask the president of the day or his officials about the “special relationship”. Briefed in advance by the British embassy or US state department about this peculiar cultural tic, the Americans would happily confirm it was still in place. It did not cost them anything. To this day, any deviation is treated by the British media as a snub.

Fluid world, unprepared Europe

Fluid world, unprepared Europe

Europeans in general themselves seem to have a high regard for Barack Obama.

U.S. President Barack Obama is so beloved in Europe that he was nominated for a Nobel Peace Prize (which he later won) just 12 days after taking office for his “extraordinary efforts to strengthen international diplomacy and co-operation between peoples.” A Pew survey this summer found that 93 percent of Germans, 91 percent of French people, and 86 percent of Brits believed Obama “will do the right thing in world affairs,” a stunning turnaround from their views on the last administration. Yet, this perception belies the reality that Obama has done much less for Europe than his predecessor.

The Wall Street Journal had some interesting anecdotes about Obama’s approach to Europe and Britain.

It is alleged that his paternal grandfather, Hussein Onyango Obama, was tortured by the British during the Mau Mau rebellion in Kenya in the 1950s, when it was controlled by Britain.

Soon after his inauguration, he sent back to the U.K. a bust of Sir Winston Churchill that had been loaned to President George W. Bush after the 9/11 attacks. The sculpture had enjoyed pride of place in the Oval Office.

There is also an important ideological reason that Britain’s leading policy makers find themselves increasingly shunned by the U.S. Key foreign-policy advisers to Mr. Obama are keen advocates of a federal Europe, one in which the European Commission based in Brussels is the main center of power and influence, rather than the individual capitals, such as London, Paris and Berlin. In this context, Britain’s dogged attachment to a “special relationship” with America is regarded as an embarrassing relic of a previous era.

Before taking office Mr. Gordon wrote that America should “support the European project” and warned that Britain’s historic resistance to closer European integration could seriously damage London’s standing in Washington. “Fully in Europe, Britain has every chance to remain America’s preferred and privileged partner,” he said. “Marginalized from the EU [European Union], Britain could find itself less influential in Washington as well.”

Wobbling orbit

Across the world, there is yet another ripple. Was the Euro a bad idea? Paul Krugman, a weather-vane of US status-quo thinking says,

Long before the euro came into being, economists warned that Europe wasn’t ready for a single currency. But these warnings were ignored, and the crisis came.

Now what? A breakup of the euro is very nearly unthinkable, as a sheer matter of practicality. As Berkeley’s Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger “the mother of all financial crises.” So the only way out is forward: to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states.

But that’s not going to happen anytime soon. What we’ll probably see over the next few years is a painful process of muddling through: bailouts accompanied by demands for savage austerity, all against a background of very high unemployment, perpetuated by the grinding deflation I already mentioned.

It’s an ugly picture. But it’s important to understand the nature of Europe’s fatal flaw. Yes, some governments were irresponsible; but the fundamental problem was hubris, the arrogant belief that Europe could make a single currency work despite strong reasons to believe that it wasn’t ready.

Real politik

Reluctant Euro-media starts on anti-Obama campaign  |  2009 Cartoon by William Warren

Reluctant Euro-media starts on anti-Obama campaign | 2009 Cartoon by William Warren

For the next 2-3 decades, international equations are likely to be fluid. There is no room for congratulations, surrender or gloating. Symbiotic relationships will be the new model – and exploitative-confrontationist models may no longer be possible or feasible.

The US change in attitude towards Europe, can be said to be permanent, if the next US President were to continue the cold-shoulder.

Till then, play it by the year. Keeping your ears to the ground may also help.

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