As Asia Rises, Europe Must Revitalize

President Bill Clinton tried yet again last week to convince President Boris N. Yeltsin to sign off on NATO enlargement, the U.S. plan for stabilizing Europe and revitalizing the transatlantic link. The trip was well worth the effort. Clinton and Yeltsin projected an aura of partnership even as the Russian leader voiced his objections to the enlargement of the North American Treaty Organization. And they made progress on fashioning arms-control agreements and a NATO-Russia charter that will help assuage Moscow’s concerns about its exclusion from an expanded Atlantic Alliance.

But even if Clinton ultimately succeeds in wearing down Russia’s opposition to NATO enlargement, his energies are misdirected. The Helsinki summit and America’s continuing preoccupation with expanding NATO simply miss the point. The Atlantic Alliance is in a steady decline that will not be reversed by its enlargement. Europe is in the midst of prolonged economic and political stagnation. The United States is, meanwhile, turning its attention from the Atlantic to the Pacific, drawn by the inexorable rise of Asia. The Atlantic Alliance needs a far-reaching renovation that goes well beyond the addition of a few new members.

Reviving the Atlantic community must begin with Europe’s own economic and political renewal. Europe has to take a series of painful steps to restore its competitiveness. Deregulating its economy and scaling back its welfare system top the list. The European Union must also become a more coherent political actor, sharing more fully with the United States the burdens of global leadership. Finally, the Atlantic Alliance needs to open its doors to Russia. Clinton must stop compensating Moscow for its exclusion from the West, and instead ensure that the Atlantic community embraces Russia as it moves down the path of democratic reform.

The erosion of the Atlantic link began when the Soviet Union disintegrated, ending the urgent need for the Western democracies to band together against communism. But it speeded up with the arrival of the Clinton administration and its decision to elevate economics to the top of America’s foreign-policy agenda. Without a pervasive external threat, economic considerations loom larger in setting U.S. priorities. Indeed, Clinton has expended far more political capital on trade liberalization and export promotion than on traditional security issues.

America’s new focus on economics does not augur well for the Atlantic link. Asia’s near-term growth rates are projected to be twice those of Europe. Trade across the Pacific is already outpacing commerce across the Atlantic, and investment flows are heading in the same direction. These stark economic realities, combined with Clinton’s focus on exports, necessarily mean a U.S. tilt toward Asia.

To the extent that strategic challenges still inform U.S. priorities, Asia again trumps Europe. Deep political and ideological fault lines divide Asia’s major powers. A strong U.S. military presence is needed to prevent these fissures from provoking conflict. And integrating a rising China into the international system is a premier challenge of coming decades. In contrast, Europe’s major powers are at peace. Their level of political and economic integration is historically unprecedented. U.S. forces stationed in Europe continue to provide reassurance, but their task is far less onerous than in Asia.

The U.S. gravitation toward the Pacific is understandable, therefore, but global stability would be undermined if the Atlantic link withers as a result. As its futile attempt to bring peace to Bosnia made clear, the European Union is not ready to manage continental security on its own. A U.S.-European partnership was also behind the main successes of the decade: countering Iraq, bringing peace to the Balkans and liberalizing international trade. For the foreseeable future, no Asian coalition will replace America’s European allies in constructing an international order based on liberal multilateralism. If the Atlantic Alliance fades, the United States will find the world a far more lonely and difficult place.

Breathing new life into the Atlantic community will take much more than enlarging NATO. If Europe is to avoid being eclipsed by an ascendant Asia, it must make itself a more potent global player. Economic revival is the top priority. The EU is stuck with lagging growth rates, unemployment levels at postwar highs and towering budget deficits. Its labor costs in manufacturing are nearly double those in the United States, forcing even Europe’s most competitive industries to move production abroad.

This stagnation stems from compacts between labor, management, sources of finance and the state that constrain economic competition and dynamism. An overextended welfare system only makes matters worse. The result is rigid labor and capital markets that stymie innovation and growth. In short, Europe practices an outmoded brand of capitalism that cannot compete with America’s laissez-faire capitalism or Asia’s investment-driven brand.

Revitalizing the European economy requires scaling back loss-ridden state enterprises and accelerating privatization, as Britain has done. It means tearing down remaining protectionist barriers to promote restructuring and enhance competitiveness, and deregulating the securities and banking industries to foster deeper capital markets. It also means revamping the welfare state to ensure that Europe remains solvent as its population ages.

Arresting Europe’s marginalization also requires its political renewal and a greater willingness to shoulder the burdens of being America’s global partner. Whether in Asia, Africa or the Middle East, the European Union shares America’s broader objectives, but often leaves it to Washington to expend the effort and resources needed to bring these objectives to fruition.

The solution is to fortify the Franco-German coalition, providing the EU with the leadership needed to make it a reliable partner of the United States. Europeans do not like to admit it, but key decisions about their future are already made in Paris and Bonn, not Brussels. If the coalition is to guide the EU to a new level of global engagement, Germany must move beyond fear of its own past and participate fully in European and transatlantic military operations. And France will have to give up the illusion that pursuing its own course constitutes leadership, instead guiding Europe to share defense burdens more equitably with America.

The final piece of the transatlantic puzzle is Russia. Russia is falling into a geopolitical no-man’s-land. To its east is a rising China and a Pacific Rim economy that grows increasingly dynamic. To its west is an Atlantic community that is expanding to Russia’s borders. The rhetoric of a united Europe notwithstanding, current plans for EU and NATO enlargement promise to leave Russia alone in the heart of Eurasia. To so isolate Moscow is to risk a redivided and weakened Europe.

Clinton’s task in the aftermath of Helsinki must be not just to placate Yeltsin about NATO enlargement, but to pave Russia’s way into a broader Europe--as long as its transition to stable democracy continues apace. Including Russia in Atlantic institutions will help reform by strengthening pro-Western politicians and exposing Russians to the habits and attitudes that underpin democratic governance. It will stabilize Europe by preventing Russia’s estrangement and decreasing the likelihood that Moscow reasserts control over its neighbors in response to NATO’s growing might. And including Russia in a broader Europe will raise Europe’s strategic and economic importance to the United States, strengthening the Atlantic link even as America tilts toward the Pacific.

The character of both the EU and NATO would change were Russia to join down the road. But recasting Western institutions is precisely what’s needed to adapt to a new era.

Putting the EU’s economic and political house in order is largely up to the Europeans themselves, but Russia’s inclusion in a new Europe is America’s job. Only Washington has both the political will and the geopolitical influence to ensure that Russia is embraced by the Atlantic community.

The future of the Atlantic Alliance rests on Europe’s capacity to bring about its own renewal and the West’s willingness to open fully its doors to the east. The alternative is the erosion of the partnerships and principles that Americans and Europeans worked so hard to make the anchor of a more peaceful global order.