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Wednesday, November 15, 2006

EU politics: Relations with the new US


The unexpectedly sweeping victory by the Democratic Party in the US Congressional elections on November 7th has generated discussion about how this might affect US-EU relations in terms of foreign policy, trade, and the environment. However, little change in their relationship can be expected in three key areas, the environment, trade and foreign policy. The president will continue to direct foreign policy and the differences with the Democrats are not huge. At the same time, Mr Bush's scope for action will be limited at home by potential investigations into the War on Terror and the invasion of Iraq, and abroad by the lack of serious foreign policy alternatives.

Relations between the US and EU have improved enormously in the last couple of years from their nadir in 2003 over the invasion of Iraq. Angela Merkel, the new German Chancellor, is markedly more Atlantacist than her predecessor; French President Jacques Chirac has seen his influence wane in his last few months in power; and US President George Bush has made significant headway following trust-building trips to Europe in 2004-06. Most recently, the departure of US Defence Secretary, Donald Rumsfeld, who famously dismissed much of the EU15 as "old Europe", will probably help smooth relations. His replacement, Robert Gates is seen as more multilaterist.

No trade off

One key area of difference has been over environmental pollution, which has become an increasingly important issue in the US, particularly among Democrat supporters. The EU, which has taken a lead in developing a carbon emissions trading system, recognises the importance of US involvement, not only because it is currently the biggest carbon polluter, but because US leadership will be essential to win support for emissions reductions from China, India and other large emerging markets. The UK in particular has pledged to lobby for more US involvement, following the publication of the Stern Report on the economic effects of climate change. So far, progress in the US has been at the state level, with California and other states agreeing to introduce emissions trading. In addition, several corporations, including GE, have suggested a willingness to make serious investments into environmentally-friendly technologies in power stations and carbon capture systems. However, scaling up private sector support still depends on federal government resolve to set the ground rules for investors, something that is doubtful in Mr Bush's last two years.

Moreover, the US administration might validly criticise the failings of the EU's own emissions trading model "cap and trade", which has set pollution limits too high to have a serious impact on emissions.

On trade, the emergence of a Democratic controlled Congress has effectively put paid to the slim hopes that the Doha round of trade talks might be revived, after being derailed in July. The elections have weakened support in Congress for trade liberalisation, and Mr Bush is unlikely to have his fast-track negotiating power renewed when it runs out in July 2007. The more troubling question is whether in the absence of pressure to get a WTO deal, the US might slip further towards protectionism. The US farm bill is up for renewal in 2007 which will test Congress's commitment to free trade; legislators are already adding riders to bilateral trade agreements with Colombia and Peru.

Although some important reforms to the EU Common Agricultural Policy have been made, such as reform of the sugar regime, it is questionable whether there is political will within the EU to take on the interests of its own agriculture sector, which also proved to be an obstacle to a Doha-round agreement. The EU is now pursuing bilateral arrangements and a major new trade round is unlikely to emerge until after the US presidential election in 2008.

In foreign policy, difference may emerge over Turkey, and the implications of its EU accession bid. The US supports the accession of a strong, pro-Western Turkey to the EU. Turkey is seen as a stabilising force in the Middle East, whose ultimate EU destination might help lessen the divide between a Muslim Middle East and a Christian West in the fight against Islamist terror. Many in the EU agree with such an assessment, while opinion in Turkey is decidedly ambivalent to US foreign policy. But opposition to Turkish accession is strong within the EU--mainly in France, Austria and most obviously Cyprus--and US influence will be minimal.

Middle Eastparalysis

The changing power balance in the Middle East is by far the most important foreign policy issue with which both the US and the EU are grappling. Despite wide EU-US divisions in the past over Iraq, their current differences are no longer unbridgeable.

Much of the debate about policy towards Iraq will take place within Washington, irrespective of EU interests. And any policy formulation is likely to be defined by the very limited options on offer, namely gradual withdrawal; staying in Iraq to support Iraq's own security forces; and countenancing the division of Iraq. The EU and US positions on an Iraq exit strategy are unlikely to differ greatly.

Similarly, attitudes towards Iran and Syria are converging. The US has allowed the EU to make the running in negotiations with Tehran over its nuclear programme, though this has produced few results. A military solution is almost inconceivable (unless Israel were to launch a unilateral strike). Any progress is therefore likely to come through a broader Middle Eastern engagement that recognises a regional role for Iran which might involve official contacts with the US. Yet it is difficult to see what either the EU or the US might realistically offer Iran that would be of interest in Tehran: its influence is increasing in the region regardless of talks, and its nuclear ambitions are deemed far too important to toss away.

The US may be more amenable to UK approaches to Syria. But as with Iran, it is doubtful that the EU and US can offer anything meaningful to Syria that does not involve pressure on Israel over the Golan Heights, concessions to the Palestinians, and allowing for greater control in Lebanon. None of this is remotely palatable to the US or EU.

Policy towards Israel and the Palestinians has been a major divide between the EU and US outlooks, and little progress towards a settlement can be expected on that front either. The US Democratic party is in general no less supportive of Israel than the current Bush administration; and the EU is unlikely to expend political capital in attempting to shift either US, Israel or Arab positions. Meanwhile, Israel and Palestinian leaders themselves are too far removed from the proposed Middle East road map that once provided a basis for negotiations. In effect, both the EU and US may prefer containment of the numerous simmering conflicts zones rather than seek their resolution.

EU-US relations may well appear more cordial in coming months and years--helped no doubt by an increasingly multilateralist manner from the US. However, none of this is likely to yield any major policy changes or achievements in Mr Bush's final years in office.

The Economist Intelligence Unit
Source: ViewsWire

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