Americans are writing Europe off–and apparently for good reason. The last several months have seen the European Union stagger from one crisis to another. After barely passing the Lisbon Treaty–which amended the EU’s fundamental texts in order to streamline its institutional structures–the EU soon found itself in the throes of its current crisis over the economic governance of the euro, while simultaneously confronting the failure of its ten-year effort to modernize the European economy.
American pundits seem almost to take pleasure in Europe’s problems. Richard Haass, the president of the Council on Foreign Relations, claims that the European project is “foundering” and that Europe’s days as a world power are over. Officials in the Obama Administration are less consumed by schadenfreude, but are nonetheless irritated with Europe’s navel gazing. They find the EU’s decision-making structures confusing and indecisive–no one knows whether the president of the European Council, the high representative on foreign affairs, or the country holding the Council presidency is supposed to be in charge of foreign policy. While U.S. officials publicly claim that the relationship with Europe is “the cornerstone for U.S. engagement with the world,” they privately do everything that they can to avoid entanglement with Europe’s byzantine policy apparatus. When the United States wanted to make sure that some decision would emerge from the Copenhagen talks on climate change, it deliberately cut the Europeans out of the final stages of the negotiations in favor of one-on-one discussions with China. As European Commissioner for Energy Günther Oettinger acknowledges, “If the Copenhagen summit showed us one thing, it is that even the European Union isn’t big enough for world authority when it comes to countries like China.”
That the European Union is going through a rough patch is indisputable. The Greek debt crisis and the reluctant bailout by members of the union have underscored the unsustainability of Europe’s economic arrangements. Even so, the United States cannot afford to lose patience with Europe. The U.S.-EU economic relationship is the largest and most important in the world. The EU and the United States together dominate international financial markets, accounting for 80 percent of the debt securities market and 65 percent of issued equity before the Great Recession. If, as Haass predicts, the EU falls into complete disarray, it will hurt the United States nearly as much as it hurts Europe. The collapse of the EU would cause massive turmoil in international financial markets, and very likely a new Great Recession, which would be far worse than anything recently experienced.