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A transatlantic divorce?

By Alain Minc.

Alain Minc is one of France's leading thinkers; he is an historian, economist, social commentator and business guru. In December 2003 he delivered a lecture on the state of transatlantic relations, chaired by Peter Mandelson.

He has written several groundbreaking bestsellers on themes ranging from the new economy and globalisation to nationhood and the dark side of political correctness. In 1978 he predicted a world of global communication through networked computers and was the author of France's first strategy for facing up to the digital revolution. His best known titles include 'The New Middle Ages', 'www.capitalisme.fr' and 'A selfish history of Economics'.

As well as writing, Alain Minc has been an advisor to various French governments. He formerly served as an Inspecteur de Finances and also runs an influential consultancy firm, AM Conseil. He is the chairman of Le Monde's supervisory board and director of a number of leading companies, from brands such as Gucci to firms such as the automotive giant Valéo and the construction group Vinci.

What follows is a transcript of his most recent lecture delivered to a packed house at The Institut Français, London. The event was chaired by Peter Mandelson and attended by some of the UK's leading foreign policy experts including Sir Michael Butler, Phillip Stephens, Roger Liddle and Mark Leonard

The Foreign Policy Centre would like to thank Accenture for supporting the lecture and The Institut Français for hosting the event.

Transcript

For a French man to talk about transatlantic relations under the present circumstances would be like a murderer to develop a theory of crime. You may, obviously, be suspicious: is he savagely Chiracian? Or Villepinesque? Or is he by any chance one of the last remaining French Atlanticists? I hope I will escape this quite limited category. To be frank, and to put my cards on the table, I was against the war and against the veto, which may be compatible. My deep feeling is that transatlantic relations are at a crossroads for much more essential reasons than Iraq. In fact the Iraq affair is more a symptom of the transatlantic rift than a key cause, and I think there are six questions that deserve an answer:

  • First, are our two worlds, the old one and the new one, becoming more and more alien from each other?
  • Second, do we Europeans think that we are facing a new American Empire?
  • Third, is our common space no longer strategic but economic?
  • Fourth, in this context, what are the potential scenarios?
  • Fifth, what about the British?
  • Sixth, what about all Europeans, you and us?

So are our two worlds the old one and the new one becoming more and more alien from each other? I think that no one can ignore the new ethical melting pot that has emerged in the US. More than 50% of Phds in the US are going to Asians. There are more and more Asians in the academic world and the research centres. To give you an example, in the main Motorola lab 99% of the employees are Indians. The Hispanic phenomenon is also transforming the US. The US is becoming a kind of synthesis and whilst yesterday it was a western country, today it is a world country.

What will the US look like in some years from now? The Indians will be as powerful as presently the Jews, the Chinese as influential as presently the WASPs, the Hispanics as politically important as the Irish Catholics. Do you think it will be the same United States? Will the melting pot work like it works today? I will quote you some remarks from Harold Macmillan's diaries from September 27th 1952:

We are threatened by the Americans with a mixture of patronising pity and contempt. They treat us worse than they do any other country in Europe. They undermine our political influence all over the world. They really are a strange people. Perhaps the mistake we made is to continue to regard them as an Anglo-Saxon people. That blood is very much watered down. Now they are a Latin-Slav mixture with a fair amount of German and Irish. They are impatient, mercurial and panicky

Tomorrow's America will be an Asiatic, Hispanic mixture with a black flavour. Will it be the same? What will be their values? I think that we will continue to share the market and democracy because these values are less and less Western and more and more global. But apart from that, will we have the same vision of God? Of the place of religion within our society? Of human rights? Abortion, death penalty, of habeas corpus, freedom and balance of power? Europe will be the freezer of old Western values and the US the laboratory of the new world wide values. And in a world where public opinion is the key we must understand how deep these differences may be. We are the freezer of the old values which we may enjoy, but they are clearly creating new values.

So behind the transatlantic relations there will remain our common customs of our common histories, but our common values which have rarely clashed, will become under strain because the new American ethnicity will change America as much as it has changed the new immigrants. This transformation will also have implications for our increasingly differing roles in the world. As a world country the US will have worldwide concerns. China is in the long run its main competitor, the industrial world's factory and the first creditor of the US will be its first priority. And it will not be so easy for the US. The Chinese will not be as kind to them as the Japanese. China has not lost a war, China does not need any nuclear umbrella, China can use its financial power to influence the US. Next will be India, which is presently becoming the services factory of the world. I have asked myself why China is becoming an industrial factory and India a services factory and I have found that the only answer is "English", because you can't become a service factory without knowledge of English. You can become an industrial factory without knowing any foreign language. The British have helped India become the world's service factory. The third concern for the US will be Russia which is less and less a nuclear power and more and more an oil power.

Vis à vis the terrorist threat; there is a transatlantic relationship and all countries, not only the wealthy ones, are involved. Egypt and Turkey are more threatened than Spain, France or Britain. So even from that perspective the US's solidarity is global and transatlantic.

We must keep in mind that in the US there is no such thing as an immigration threat. Immigration is their life and is their chance. In Europe there is strong concern about immigration even though we need more and more immigration. The Americans will look to us as we presently look to Switzerland. So it is clear that the old Europe means the old and the new one, to use Mr Rumsfeld's concepts is to a certain extent an oxymoron.

Immigration will be our first concern which will be more and more difficult for Italy, Spain and Portugal which were emigration countries and now have to become immigration countries. Demography will be a key concern because of the pressures on pension systems. We also have concerns about the precision of our own borders. We don't know where our eastern border is and where our southern border is and we will become obsessed with incidents and difficulties on these borders. We don't see ourselves as a world power. The most important determinant of the transatlantic relationship is common enemies. The godfather of Europe is not Jean Manet but Joseph Stalin because we built Europe over the threat of the Soviet Union. Terrorism is a common scapegoat. But it is not enough to sustain a long term axis. I think that in the long run the United States is becoming another world.

Following on from that, do we Europeans think we are facing a New American Empire? You know obviously Robert Kagan's theory about Venus and Mars which from a certain point of view Kagan is right: the US is Mars and we are Venus. But his theory is partly wrong because although we are Venus, they are not Mars. They are not Mars because this would dramatically overestimate American power and its ability to be a worldwide policeman. Is the present US posture an accident that will vanish with a new administration, or is it the expression of the new US, a country which considers that it has to rule the world? Is the Bush Administration, even though it was badly elected, the expression of a new political spectrum which will dominate the US in the same way that Roosevelt was the expression of an old political spectrum? I think that in the long term the US will be internationalist and unilateralist and this will not be contradictory.

This America with its new ethnicity, the new melting pot with new values does not fit the Wilsonian approach. If you are a world country the world is supposed to be your province. Although that is the vision, the US doesn't have the means to manage such a policy. Its ambitions are contradictory with its financial means. A ruling empire can not rely on creditors to pay for its soldiers. Such large budgetary and external deficits mean an imperialist strategy is not possible in the long term. To be an empire you need to be able to pay for the colonies. You can't beg when you want to dominate.

The present value of the dollar is a miracle and would have fallen much more if the US was not the kind of strategic country that creates a premium for the dollar. Furthermore, the US can't be the new policemen of the world because they have no colonial experience, no colonial office. This could not be more obvious than it is in Iraq. I think that the British are doing much better in Basra than the Americans in the north of the country and the French are doing their job better in Cote d'Ivoire because they have the know how. In fact the US should have sub-contracted the management of Iraq to the British. You could have got money and it would have been much more efficient if it was managed by British generals who have read Lord Curzon's memoirs. If the country was ruled by former British colonial officers, the situation would have been less dramatic. But I think that the US is not so conscious of that. Even on the military side the US has reached its limits. All of us know that the army is overstretched and cannot afford to face a second military crisis. They have the means to win technological wars but they don't have the means to rule huge colonies. That means that in the long term the US will not be a worldwide empire because they can't dominate and can't take for granted that the world will obey them. They will be forced to have another strategy to save money, troops and world influence. You can't be the policeman of the world and have the Chinese as your first creditor. The key point is that when you are an empire you do not have an exchange deficit but you have an exchange surplus and that really is a key point.

A third question: is our common space no longer strategic but economic? Strategically, I think that the links will grow weaker and weaker. NATO is an organisation without mission, philosophy or a goal. NATO is a tool for the US to prevent Europe from having a common defence and it is clear that, in Europe, there are different perceptions about the strategic relation with the US. The British distrust the Americans much more than we do but they think they are able to influence them. The Germans are becoming like the Swiss: peaceful public opinion, no strategic will and a kind of quietness, which is not presently compatible with worldwide policy. They presently pay lip service to the link with the US but it's no more the core of their strategy. The French are reinventing the Bandung movements, it is clear that Jacques Chirac wants to be the leader of Bandung, a new unaligned movement. On a good day Chirac is Nehru and on a bad day he is Nasser, but he going from Nasser to Nehru. The Spanish consider themselves to be the leader of a new commonwealth that is Hispanic. That commonwealth creates a special link with the US and that is a link with the US and not with Europe. When you see how the French are able to make noise in the Francophone world consider the huge power Hispania will give to Spain. 350 million people speak Spanish worldwide and by 2015 it is predicted that there will be more Spanish speakers in the US than native English speakers. The Spanish are perfectly aware of this and that is the main reason behind Spain's opposition to the Convention. When you are the leader of Hispania how can you accept to be treated as two-thirds of Italy? Italy is not a worldwide country. Spain is a worldwide power and that is one of Giscard's failures that he had a problem with Spain. At the King's coronation 30 years ago Giscard, at that time President, sent him some books, including de Tocqueville and that created the tension with the King. Giscard has never understood Spain. This was a mistake, we should understand in the long term that Spain will have the only special link with the US.

Strategically, Europe's relationship with the US will remain important but will not remain the key relationship. We will retain strong ties and they will become stronger and stronger. First, our market economies will continue to work in the same environment and Europe has committed itself to the Anglo-Saxon style of capitalism. The commercial conflicts between us are outstripped by our common interests. As more solidarity develops between developing countries, the US and Europe will feel closer and closer whatever their disagreements are over agriculture, culture, steel and bananas. Cancun reflected this: the developed world, the US and Europe, were on the same side of the table and we will be so more and more. In ten years from now, our agricultural policies will be much closer and they will be contested by the developing countries and I think we will continue to be on the same side of the table. Our monetary competition between Dollar and Euro will be not transform itself into a conflict because we have the same interests in a stable and solid monetary system. It's clear that our growing competition with China, India and all the new players will make us economically speaking closer and closer because our interests are the same and our markets are the same targets for the newcomers. Obviously, some economic differences will remain: the US will have a higher growth because of its demographics and also because we made a conscious choice in our social model. If you consider the balance between competition and protection or the balance between efficiency and solidarity there are two models: the American one and the continental European one, even though Britain is somewhere in the middle. The only area where you are the bridge is between the American economic model and the continental European model. So although there is a difference between the US and Europe this does not mean that our interests are contradictory. We in the capitalist system need balance between competition and protection, there are several ways of finding a balance between employment and wealth. You may have Swedish equality with a Swedish tax income, you can have US inequalities with the US tax system. The French are a special problem because we have American inequalities, with a Swedish tax system. That will force us to reform our welfare state.

Forth question. In this context what are the potential scenarios? I think there are four scenarios in the long term. The first is a kind of kind of minimum Atlanticism. A new administration would return to Clintonian multilateralism and that Europe will unify, creating a steady alliance between a multilateralist USA and a decently unified Europe. That's a scenario that I don't believe is possible. The second scenario is violent divorce and European unification itself and it's clear that for this to happen, there must be no world wide threats so we are not unified by a common anxiety. The third scenario: imperialist domination. The new US exists but Europe manages to unify itself under overwhelming US domination. The fourth scenario: strong Atlanticism. This would suppose a very dramatic crisis such as China wanting to use all its strategic, nuclear, economic powers to gain a world wide position, or it may be nuclear terrorism. It is clear this new Atlanticism will only emerge from the existence of a very violent threat. My own forecast is a fifth scenario: soft divorce.

A fifth question, what about the British? Can you be the bridge between the US and Europe? If I may I will refer to old and new. However, this is not the old or new Europe in Rumsfeld's world. In fact I think a more useful distinction would be between new and old America. I think that Britain can act as a bridge between Europe and 'old' America but cannot do so with 'new' America. I think from that point of view the Bush administration is a blessing because it can only push Britain closer to Europe. What did you get from the US after the Iraqi crisis? Did they understand that they could have relied much more on your experience and your knowledge of the country? Would the US have been able to be a little more modest and use you? British officials normally claim they had a discrete and very powerful influence. Let me say that if this had been the case then I am sure that things could have been much better. In the long term Britain will need to face new US political habits when you will have an Asiatic President with a Hispanic Secretary of State with an Indian Defence Secretary. What would Britain mean for them? The US political elite of the future will see Britain as average Europeans no more no less because they will not share your history, they will not share memories with you and their feeling of history will be elsewhere. They will share the English language but as far as it becomes the worldwide Esperanto, the linguistic link will become weaker. It is clear that they will consider that you are more sympathetic to them than the French. But that isn't difficult. However, I think that with the changes taking place in US demographics and the growth of the Spanish speaking community, Britain is likely to be less important than Spain.

For Europe to be able to face up to the 'new' America it needs to have a hard core and this will only exist only if Britain is the core of the core by joining the Euro system and exerting its influence in the EU. I think the changes taking place in the US will push the UK to the heart of Europe.

Peter Mandelson The Prime Minister has invested a great deal in Anglo-Spanish relations. I realise now that it is because we look to Spain to provide the bridge between Britain and America. I would also like to add to that, if you describe George Bush as a blessing, as the chief factor which drives Britain to look to Europe, in my experience of British public opinion while it is true at one level that President Bush has caused more people in this country to look towards Europe, the moment they do so they tend to look back again.

Questions

Q1: To assume that population gives political power in the US in the short- term is a mistake. If you look at Black or Hispanic representation in the US political establishment now, you will see that it is extremely limited. So I think it will be quite a long time before we have an Indian Defence Secretary, a Chinese Secretary of State along with a Hispanic President and an African American Treasury Secretary. But I also want to get your thoughts on the model of the world Blair talks about, of a multi-polar system which includes the US, Europe and also China and after a time India. Is that something that fits with Chirac's ambitions to sometimes be Nehru and sometimes be Nasser, and can that fit in your model of 20, 30, 50 years?

AM: Let me start with Chirac. You must understand that Chirac considers all civilisations to be equal, he does not believe in the superiority of Western values. Democracy is a western value and while he believes we should live by democracy he feels that the Chinese and the Indians and others may have other values and that these values are equal and acceptable. That is behind the fact that he has no sense of a transatlantic link because for the transatlantic link you have to believe that Western values have to be the values of the whole world. That was Mitterrand's but no Chirac's way of thinking.

To come back to your point, as you may have noticed I have not quoted African Americans in my list. The US was a country managed by WASPS and Jews with Black servants. Blacks belonged to the Western world. When I say this to other friends they say, "but look the Secretary of State is African American and so the melting pot will also work for blacks". It is not at all the same. The blacks do not have the identity that Chinese, Indians and Hispanics have. Ethnicity is an important factor. To come back to Blair's vision of multilateralism, it is not contradictory to what I said in my lecture. I think this vision is clearly very long

term but it is contradictory with there being a long term American link but your Prime Minister cannot say it.

Q2: I think that fundamentally the UK will cycle back and forth between the US and Europe. The US is fundamentally a optimistic culture which believes in growth and that everybody will have their chance, whilst I believe Europe is a "divide the cake culture". So when we are in good times we lean towards the US and when we are in bad times we go towards a more liberal democratic view and we will oscillate somewhere around mid-Atlantis and never fall into the arms of the US or the arms of Europe. Do you see those characteristics pertaining?

AM: I agree that as a "world country" the US will remain optimistic. However, in response to your question let me quote you some statistics, presently there are

300 million Chinese belonging to the middle class, 90 million Indians and 60 million Brazilians. In three years the size of the Chinese middle class will equal two-thirds of the European population. In Europe we don't appreciate the genuine scale of this phenomenon like they do in the US. In many ways they are forced to understand for economic reasons. Presently the Chinese are buying $120 billion Dollars worth of US Treasury bonds per year, the present trade deficit between China and the US is $120 billion. These statistics show that there is a major economic shift taking place which is underestimated in Europe. From that point of view I think that Europeans also need to consider their relations with India. It is easier for Europe, in the long term, to have a relationship with India than with China. We have an asset there that we are underestimating.

Q3: I think that the whole idea of American pre-eminence is built on sand. The Fed boosted the boom till it nearly busted then stopped it from busting by flooding the markets of the world with money so that the imbalances that were created in the mid- 90s were still there. The stock exchange for tech stocks are bound to burst and the dollar could at any minute start to fall especially if the Americans really irritate the Chinese and the Japanese who are slowing the fall and so I think in some years time America will look a good deal less powerful so all the scenarios you put before us will have to be revised.

AM: I agree, the US is booming because it has followed the most Keynesian policy for decades, with a budget deficit of 5% and interest rates of 1%. That's a temporary relief. The dollar should have fallen much more, I agree with that. While we have too many savings they have an economy that is built on debt. In Europe, the saving rate is nearly 15% of national income, in the US it is 5% of debt which is a dramatic problem in the long-term because you have to get rid of debt. There are many ways to do this: war, classical inflation, but this is not possible because of the high degree of competition in the globalisation process. The third way to get rid of debt is to have asset inflation and again we are seeing the first signs of an asset bubble. So I agree we may have an economic situation for the US which is mush less impressive that it is now but nevertheless the US will remain the laboratory of the world, even if factories are in China. Their entrepreneurship will mean that they remain the technological engine of the world. They have one strong advantage which is demography and this will be a strong growth engine. From that point view they have a much more favourable situation than we do.

Q4: There are a couple of reasons why I think you underestimate the reasons why Europe and the US need a closer relationship. Firstly, there is the issue of nuclear proliferation and the terrorist threat which I think is very real. Europe is more vulnerable than the US because it is nearer to the Arab world and it has Islamic fundamentalism in its own societies. The problems which lead to terrorism and nuclear weapons are as much of a threat to Europe as they are in America and that is one reason why we must stick closer together.

Secondly, as I go around the capitals of the new Europe, and this is a longer term thing, I do notice that there is a lot of residual fear of Russia. There is a lot of scepticism over Blair and Schroeder's coupling up to Putin and about the threats that Russia will pose to the new democracies of Europe and in parts of the Europe there is, therefore, still a strong feeling that we should remain close to the United States because it is still the ultimate guarantor of our security.

AM: I agree with you that we should stick as close as possible to the United States. My point is that will the United States may not want to stick so close to us. With regard to European anxiety about Russia, do you consider that the US will jeopardise their relationship with the first worldwide oil producer for the sake of Ukrainia. Russia is not a nuclear threat anymore. It has power because it is an oil producer. From that point of view, before jeopardising their relationship with Russia, Russia needs to have created great disorder in the world. Why else do they tolerate the Chechnya affair? Because they need Russian oil. They produce more than Saudi Arabia and it will be easier to control them in the long run because they will belong to the capitalist world. I understand the Polish worry but I think that they are once again romantic. They are romantic vis-à-vis US solidarity with the new world.

Q5: On the India versus China question, I am not sure I share your views on the huge commonalities between Europe and India. I think that India is much more like the US and the things we feel uncomfortable about with the US (the development of an Imperial Republic, ambivalent about multilateralism and globalisation) are also true of India. However, whilst China seems to be going through more of shift towards global governance, you still have residues of Marxism, popular nationalism and traditional realism but alongside that there is a quite profound shift to a sort of liberal internationalism, a shift especially in terms of global institutions as something that is in China's interests not just to protect it from US hegemony but also due to real recognition of the true benefits that China can draw from globalisation. This could turn China into a more post-modern country than India.

Your framework of thinking about great powers was fascinating. September 11th has been about the clashing of two global systems and the great power America reasserting itself among the rise of non-state actors. I was wondering how you see these two worlds fitting together. When you were talking about the economic dilemmas that the US is facing and the change in the exchange rate between military and economic power which is to do with the "New Middle Ages", I was wondering what you thought this meant for the two worlds coexisting.

AM: I agree with you, but I also think it is easier for us to deal with India than China because China thinks only in terms of the US. The fact that India is protectionist makes them easier to be understood by the French. The Indian economic system is much easier to be understood by European countries than the Chinese one. American businessmen think they have an easier life in China than in India, India is not easy but neither is China. The idea of the "New Middle Ages" was that there was no homogeneity; that you may be a military superpower but that doesn't mean that you will be an economic superpower and that in this world there are a lot of grey areas. There will be many regions and countries without any state and that is clear. As for terrorism, it is strange, almost astonishing, that no one has used nuclear weapons tactically. It is easier to steal a tactical nuclear weapon than to coordinate an attack like September 11th. That is probably a much greater threat than we think. To think only in terms of Islamic terrorism is to think only in terms of one kind of terrorism. One day the mafia will use these weapons to blackmail and this will force great powers to act together. We will have to work with the US just as they work with other countries. What I want to emphasise is that if terrorism was only directed at the wealthiest it would create a solidarity between the US and us. But this is not the case because terrorist targets today include Egypt and Turkey. The terrorist question is a worldwide question, not a western question.

Q6: In your presentation you discussed how the US has been transformed by migration. However, do current trends in Europe not reflect the fact that far from remaining a white continent, Europe is also becoming a 'global' nation like America?

AM: Vis à vis immigration we need a strong immigration movement. Half of Europe does not know how to achieve that. However, I think Europe's inability to grasp the importance of immigration will be counteracted by immigration within Europe from the eastern side of Europe to the western side of Europe. It will only be a partial answer to our problem and it will happen partly because it's easier to integrate Slovakians than Malians. Enlargement will have a similar impact on immigration and it will be much more important than we think. It will be an answer and we will be obliged to learn from the US.