A lecture on the 'EU-US Relations in a Changing World' was given by the EU Ambassador to the United States, David O’Sullivan to which Financial Times political commentator, Philip Stephens, responded at the Embassy of Ireland in London this week [June 22nd]. The event formed part of the Trinity College Dublin's Henry Grattan series and the third annual lecture hosted outside Ireland. The Ambassador of Ireland, Dan Mulhall opened proceedings and it was chaired by the Executive Director of the European Movement Ireland Ms Noelle O’Connell. Trinity’s Professor of Economics, John O’Hagan closed the event.
On the occasion of the lecture, the following is the speech by the EU Ambassador to the US:
Ladies and gentlemen, it’s an honour to have been invited here to give what I understand is the third in this most distinguished Henry Grattan lecture series, organised by Trinity College Dublin, to be hosted here in London.
Henry Grattan is reported to have said that the two people whom he most admired were William of Orange and George Washington, so I suppose he would somehow approve of a talk on Europe-US relations being given in his honour.
He also once said of an orator, that he ‘rose without a friend and sat down without an enemy’. I know I am among friends so I hope not to reverse the chemistry by turning this talk, on the day after the solstice, into the longest evening.
But there is much say on the subject of “EU-US Relations in a Changing World”. If ever there was a title that sounded deceptively simple, only to reveal itself later as the stuff of several dissertations, this is it, particularly in a week that sees both an emergency EU summit on the euro and a European Council where several weighty issues will be discussed.
The world is changing at an overwhelmingly rapid pace, and we live in rather more interesting times than some of us would like. The opening fifteen years of the 21st century have been nothing short of momentous: 9/11, the wars in Afghanistan and Iraq, the financial crisis and subsequent recession, the fall-out of the Arab Spring and Russia’s aggression in Ukraine are just some the highlights.
Deep changes are afoot. We are constantly confronted by new developments that challenge the status quo, some inspiring fresh hope, but many others leading to uncertainty and even despair. Among these, in no particular order, I would mention the shift in the balance of global power epitomised by the rise of China, a digital revolution that allows people to connect and communicate like never before, an acceleration of climate change disproportionately affecting the world's poor which was the subject of an unprecedented Papal encyclical last week, rising cyber-crime and cyber-terrorism which undermine systems we rely on for everyday basics (banking, power grids, water and food), the promotion of violent extremism by non-state actors, a crisis of migration in the Mediterranean and Asia, and ever-increasing numbers of displaced persons around the world (60 million, a record high according to the latest UN report).
The ability of the European Union and the United States to provide leadership and respond to these challenges is vital. But the relationship between the EU and the United States is not static either – we are both changing in ways subtle and striking. Within the timeframe I’ve just referenced, the European Union has expanded three times, become the largest market in the world ahead of the United States, introduced a single currency and strengthened its capacity to be a foreign policy actor, bringing a degree of unity to Europe that is unprecedented in history. That is not to say we don't have internal tensions, or that all of this expansion has been easy easily digested, but I will come back to that later.
From a US perspective, there have also been major changes economically, politically and demographically. A week doesn't go by in Washington DC, where I have been posted since November, when a major think tank isn't debating America's place in the world. One thing that has struck me in just a little over 6 months is that we don't hear so much about the pivot to Asia these days, not because Asia has become less exciting and new, but because the scale of the challenges popping up all over the world require something more familiar. Drawing on a huge reservoir of trust built up over 70 years of European integration, the United States and its European allies have come back from a rocky period at the start of this millennium, when tensions ran high over the war in Iraq and a number of high-profile trade disputes, to work side-by-side to right our hugely interdependent economies after the financial crisis, and to tackle jointly new threats to our shared values, beliefs and interests. Every US administration since the 1950s has backed EU integration at every turn, so regardless of which party wins the White House in 2016, we can be confident that the United States will remain deeply supportive of, and committed to, European integration.
I want to focus my remarks this evening on some current security and economic challenges that are preoccupying leaders on both sides of the Atlantic and where I feel the transatlantic relationship has benefited from having the EU as an actor.
Foreign Policy & Security
On the foreign policy and security front, the last few years have seen a transformation in threat perceptions. Only a few years ago, the European continent – post-Cold War and after the violence in the Western Balkans – was seen as being relatively safe, and on the road to being 'whole, free and at peace' (to use the U.S. formula). That has changed.
To the east, Russia's aggression in Ukraine is posing a major challenge to European security architecture, which was so painstakingly put in place over the last 30 years. The United States and the European Union have put faith in efforts to find a diplomatic solution, backed up by joint sanctions that are clearly inflicting some economic pain on Mr. Putin. Our hope is that the Minsk agreement, negotiated by Presidents Putin, Poroshenko, Hollande and Chancellor Merkel, will last and be successfully implemented. European leaders brokering ceasefire agreements does not mean EU foreign policy is not really relevant. To the contrary: the strength of the EU is that it draws on the deep diplomatic traditions and experience of its member states as well as on its own institutions. As HRVP Mogherini has pointed out on several occasions, national leaders undertake such missions not only in the national interest, but also in the common European one. Europe has to work through all its channels, in exhaustive and exhausting diplomacy, to secure the outcome we all want. After all, the EU is made up of its member states – without them, there would be no EU, but together, the EU institutions and member states can be mutually reinforcing and much more effective. In the case of Ukraine, diplomacy by the leaders of France and Germany was crucial in helping to prevent a further escalation of the crisis, and combined with the economic pressure from EU sanctions, is forcing Mr. Putin to pay a high price for his destabilizing actions.
We see the same kind of complementarity at work in the Iran negotiations where we hope, just days from now, to see some significant progress. It goes without saying that the EU and the US hope to see a good deal struck that will prevent Iran from acquiring military nuclear capability. If these talks are successful, it would be a major paradigm shift, and would be in no small part because of all the effort put in by the EU, represented first by Cathy Ashton and now Federica Mogherini, as Chair and coordinator of these negotiations, alongside member states participating in the talks.
More generally, we face serious common challenges to the south, whether from the crisis in Syria, the collapse of state authority in Libya or the rise of ISIS and the increasingly bloody conflicts across the Middle East from Iraq to Yemen, including the rise of terrorism, the complex issue of foreign fighters and the continuing search for an elusive solution to the Middle East peace process.
Working increasingly with what I call 'institutional Europe' has rendered the EU-US relationship much more effective. Without a program of joint EU-US wide sanctions, we would not have brought Iran back to the table and we would certainly have had a lot less leverage on Mr. Putin. So far, despite the drag of these sanctions on the European economy, we have managed to maintain unity, and as long as attempts to divide us fail, the EU will continue to work hand-in- glove with the United States on these complicated issues. Washington increasingly sees Europe as having an important role to play also in our southern neighbourhood and Federica Mogherini has been tireless in her attempts to contribute to solutions in Libya and Syria.
So, unfortunately, security is back on the agenda in Europe. I belong to a generation who thought our main purpose was to build an ever more peaceful Europe where war and conflict were things of the past. That should continue to be our goal but events to the East and South show that we still need the means to ensure our own security and that we cannot rely as much as we do on the United States.
The United States have said very clearly that Europe has to be ready to do more to be able to ensure its own security.
As former Commissioner Michel Barnier wrote in a paper published last week, the multiple challenges Europe faces in its immediate neighbourhood can no longer be seen as incidental but rather the new normal. Europe is at a defining moment and needs to decide how to take greater responsibility for its own defence and security, how to be a more effective security player and partner.
Ever since the Maastricht Treaty of 1993, there has been debate about how much the US really wanted the EU to get its act together in matters of foreign policy and defence. I would say that debate is largely over, and that the United States is sincerely hoping to see more EU defense integration as it re-positions its strategic assets to tackle new threats. But that is not the only reason Europe needs to confront the issue: acting in a fragmented fashion is giving us a very poor rate of return. It is startling to read that although we are collectively the second biggest military spender after the United States, we are far from being the second largest military power due to costly duplication, lack of interoperability, and lack of critical capabilities like air-to-air refuelling and strategic lift. To deploy a single European soldier costs 310,000 euro more than it does an American one, and for that achieve only 1/10th of the capacity. This is neither defensible nor smart in an era of shrinking budgets and multiple threats. Major savings could be made through more open military procurement (in 2013 84% took place at national level), more sharing of infantry vehicles, and so on. No doubt, making progress in this area will raise some national sensitivities, but what is also clear is that Europe may not have the luxury of waiting for a crisis to force the issue. NATO will remain the cornerstone of the security policy of the vast bulk of our member states but more joined-up defence cooperation at European level would provide a crucial contribution.
Another issue of most immediate concern for the European Union is the question of migration. With trademark prescience, Peter Sutherland, as UN Special Representative for International Migration, delivered this lecture twelve months ago was on this very topic. Since then, the situation in the Mediterranean has deteriorated as hundreds of thousands of desperate people seek to escape conflict and misery, parting with loved ones and everything they own in exchange for a dangerous passage aboard an overcrowded and unsafe vessel. They are risking, and in so many cases, losing their lives at the hands of unscrupulous traffickers who pay absolutely no regard to whether the boat reaches its destination, runs out of fuel or sinks on the way
There’s no single solution to this crisis, the root causes of which are many and linked to conflict and dysfunction in the region. What is clear is that no single member state can deal with this alone and that there is an important role for the European Union to play. President Juncker and President Tusk have shown courageous leadership on this issue – President Juncker by making Migration a dedicated portfolio and one of the top 10 priorities in his Commission, and President Tusk for convening the first-ever EU Summit on Migration in April where Heads of State agreed a European Agenda on Migration and took decisions to launch an EU military mission (EUNAVFOR Med) to disrupt smugglers’ operations and give more resources to the existing FRONTEX search-and-rescue missions in the Mediterranean. The European Commission is following up with detailed proposals to relocate some 40,000 Syrian and Eritreans from Italy and Greece, which have seen the biggest influxes, to other member states over 2 years, and to resettle, also over 2 years, a further 20,000 from outside the EU who meet UN international protection requirements. More will need to be done, and solidarity will be needed right across the Union which is not easy coming on top of economic crisis. But these are important first steps and show the value of working together as a Union. As Commissioner Avramopoulos, who holds this migration portfolio, has said: 'we have no other choice but to find a solution at European level’.
EU-US Economic Ties
No speech about transatlantic relations would be complete without some reference to our economic ties which have been the bedrock of our relations for many years as well as the driver of global growth and trade liberalization. As things stand, the transatlantic corridor remains the most important economic corridor in the world, accounting for about half of world GDP, and nearly a third of world trade flows. For all the allure of Asia, US investment in the EU is still 3 times greater than in all of Asia, and EU investment in the US is still 8 times that in India and China together. In a nutshell: no other commercial artery in the world is as integrated with $5.5 trillion in total commercial sales a year and employing some 15 million on both sides of the Atlantic.
Our combined global share in trade is, however, declining relative to the rest of the world, so with the multilateral track at the WTO not progressing for the moment, it is not surprising that the US and the EU have ambitious trade agendas of their own. The US should soon complete the Transpacific Partnership with twelve Asian and Pacific countries, and the EU has just concluded major FTAs with Canada and Singapore and is actively negotiating with Japan, Vietnam, Thailand, Malaysia, India and Mercosur. When Europe completes its trade agenda, it will be at the hub of the largest global free trade network ever seen.
You are all well aware that the EU and the US are seeking to take their own bilateral trade and investment relationship to the next level, too. After several attempts to move in this direction during the 1990s and early 2000s, it was only after the financial crisis, in July 2013, that we finally began negotiating the Transatlantic Trade & Investment Partnership agreement (TTIP) to give the EU and US economies a much needed boost and a stronger competitive edge in a changing global economy. The negotiations themselves are quite dry, as you might expect, focussed mainly on eliminating tariffs, cutting costly regulatory overlap, removing behind-the-border obstacles to trade and investment, and setting standards for products and services that haven't even made it to market yet, such as driverless cars. As export dependent economies, the United Kingdom and Ireland stand to gain hugely from TTIP which is why their representatives from government and business have been very active making the case for TTIP to their constituencies right across the United States.
We've made good progress on TTIP so far – I'd argue we're past the half-way point – but there will be some tough going when we get to the end-game stage when difficult concessions will be required from both sides. With Congress only reluctantly willing to grant President Obama Trade Promotion Authority, it is hard to say when TTIP is likely to be completed, but it is still in the realm of possibility that it could be done in the life of this US administration. Negotiators from the US Trade Representative's Office and from the European Commission will meet again early next month for a 10th round of talks in Brussels. I am not expecting any major breakthroughs but a lot of work is going on in the regulatory cooperation pillar, comparing our rules and systems to establish where they are equivalent and where there is scope to get rid of duplications.
We have a lot of work to do still, not least with our respective publics. Free trade has again become a divisive issue politically not just in Europe, even in countries that have benefited the most from trade, but also in the United States, within the President's own party and, as anticipated, among organized labour.
Notwithstanding the unprecedented transparency in these negotiations (at least on the European side), a lot of scare-mongering has been going on and I have frankly been surprised by the extent to which obscure elements have been seized upon , distorted, and linked to totally unrelated grievances that frequently make me want to quote Yeats ('the best lack all conviction…')! Some of this anger is legitimate and stems from mistrust toward governments and companies that were felt to have sleep-walked into the financial crisis but didn't personally take the fall. Some stems from the fallout of the Snowden revelations which threw us a curve ball as the talks began. Mostly, I believe it is angst about the disruptive effects of globalization which is felt in many regions to have created winners (business) and losers (workers).
The fact is that we cannot put the genie of globalization back in the bottle, but we must do a better job as policy makers and business leaders to ensure that we also think about flanking measures to make disruption to local economies less painful. On this aspect, I would like to commend British American Business for all it is doing in the United Kingdom to illustrate the benefits of TTIP and trade liberalization locally through profiles of small business owners who have been able to identify new market opportunities, create jobs and contribute in all kinds of ways to their communities. We need to give voice to these stories of local empowerment through trade.
But TTIP is more than a traditional trade agreement. It also has geostrategic importance. Failure to complete it would send a negative signal about global governance and globalisation in general. How can we encourage China and others to value and promote an open, rules-based trading system if the EU and the US cannot resolve their differences in TTIP? How can we expect to make progress in Geneva? If the EU and the US cannot tackle "behind the border" measures and make progress towards regulatory convergence, how could we expect to make progress on these issues in other fora?
At a conference in Sacramento recently, another speaker put what's at stake quite succinctly: 'Post-war institutions like GATT and the WTO helped create the architecture for our growth and prosperity in the last 50 years; agreements like TPP and TTIP will create the architecture for our prosperity for the next 50 years'. I agree, and hope that when we get TTIP done that we will be able to return to the WTO with a new gold standard in trade and investment rules that not just give us a better competitive footing but also move the whole way we manage trade forward to better cope with the needs and realities of the 21st Century.
Risks and Challenges to EU-US Relations
As I've said, I truly believe that this is a defining moment – for Europe in how we choose to proceed on so many fronts, but also for the EU and US as we find a new balance and work together to protect and promote our values and interests. We have economic risks, we have domestic political risks on each side of the Atlantic, and we have geopolitical risks which we face together.
Standing where I am, I have to say that one of those risks involves the path the United Kingdom might choose to take in the 2017 referendum on European Union. The United States has made it clear on many occasions that it hopes the UK will decide to stay in the European Union, but it is an issue for this country and its people to decide. We should not be afraid of that debate and those who believe in what the European Union has achieved should not be afraid to challenge its opponents to explain clearly how dismantling those achievements would somehow make the world a better place.
President Barroso used to say, ‘scale will count in the 21st century’ and he is right. Together the old nations of Europe can use their combined strength to be a force for good whether in terms of trade and business or in helping to resolve the many global challenges we face. The building of Europe is not about the diminishing of national sovereignty but rather about the pooling sovereignty in areas where its exercise by individual countries acting alone is much less effective. The United States gets that, for itself and for us. That is why America very much hopes that the UK will remain an active participant in the EU, as should we all.
Another risk to our relationship would be a Greek default leading to a Greek exit from the euro. While the euro is a political project and this kind of development would not be good in terms of the symbolism, I no longer believe it would be a body blow to the system because of all the reforms and protections we have put in place to strengthen EMU. First and foremost, it would be a terrible loss for Greece, and risk putting that country behind for decades, possibly at the mercy of other forces with different values and agendas to ours. I sincerely hope that a deal can be found that allows the Greek government and the Greek people to keep their dignity, obligations and place in the Eurozone.
More generally, the European project clearly faces a challenge of popular acceptance. As someone who has devoted a large part of his live to pursuing closer integration both for our internal benefit as well for making Europe a force for good in the world, my deepest regret is that we have never succeeded in communicating this to the bulk of our citizens who rarely see the connection between the countless advantages that the EU has brought and the arcane workings of the Brussels machine. I hope that coming UK debate can also be seen in that context which is a common challenge for all our countries.
I hope that I have managed to convey the unique partnership the United States and the European Union have developed over so many decades and why it is so needed today. We have huge and broad and full transatlantic agenda, with issues on which we mostly agree, sometimes disagree, occasionally find compromises to and quite rarely agree to disagree. There is room for all these variations because they are all around a common theme: our values.
Together the EU and the US defend a way of life which is based on democracy, on human rights, on free enterprise and on the rule of law. And this way of life is incessantly contested. It’s contested by Mr. Putin. It’s contested by China. It’s contested by other models. Let people put forward the other models. But we believe that our model offers the best reconciliation of economic progress, prosperity, human dignity and a meaning and a value of life better than any other.
That is really the big transatlantic challenge of this 21st century. It’s a great privilege to have been asked to give this lecture at this time with such a crowded agenda. And I look forward to working with many of you in helping to make sure that the EU and the United States go forward together. Thank you.