THE WARSAW INSTITUTE REVIEW

Date: 6 July 2019    Author: Prof. Tomasz Grzegorz Grosse

The European Union in Relation to World Powers

Rivalry of the US with Russia and China has induced a new course of change in the post-Cold War international order. Thus far, while Europe has participated in this rivalry to a limited extent, it has ambitions, however, to reassume a predominant role in the new, multipolar geopolitical order. Europe also intends to maintain the globalization of institutions of trade, ensuring a favorable exchange of trade and investment on the global scale.

Introduction

The subjects of the analysis are the relations of the European Union (EU) with three world powers: the US, Russia and the People’s Republic of China (PRC). Among them, the United States still carries the largest importance, albeit, its geopolitical potential is systematically declining. Similarly, in the case of Russia – which in recent years has been trying to rebuild old influences and even expand them – has nonetheless categorically lost importance in comparison to the influence it commanded during the Cold War era. On the other hand, China is the power which is growing in both potential and geopolitical ambitions; increasingly dominating in relations with Russia, as well as rivalling with the US for primacy with increasing confidence.

The European Union is attempting to cooperate with all these powers, and yet at the same time, is also co-competing with an increasingly greater amplitude. This is a result of geopolitical changes which were induced by the crumbling of the Cold War order. First, the collapse of the Eastern Bloc took place along with the distinct weakening of Moscow. Then, as it turned out, progressively larger problems have also affected the US. In this way, the domination of the two most important states after World War II appears to be in passing, especially relative to states which are gaining influence and importance. In the first instance this pertains to the PRC, which is aiming to assume a leadership role, taking it from Washington in a new, Sino-centric global order in an accelerating manner.

Besides China, another state which has clearly benefited from the aftermath of the Cold War is a unified Germany. Integration processes in Europe have, to this day, supported the potential and international role of this country. Nonetheless, the EU faces many challenges, and so far, Germany is not a regional hegemony. To lead the EU, it requires the support from other EU member states, namely France. Therefore, Germany and the entire EU entered a period of dynamic change within the international order with considerable aspirations of capitalizing upon this potential. Notwithstanding these developments, the chances of realizing European ambitions are decreasing further and further.

Analyzing the issue of the EU’s position in relation to world powers ought to be approached from an angle of the geo-economics concept. Most often, it is defined as the exploitation of economic instruments by states for strategic purposes, in both the economic sphere and in geopolitics[1]. This is relevant to attaining asymmetrical advantages over rivals which would weaken them or make them dependent and at the same time surrender authority to the dominating power. In the case of the European Union, geo-economic efforts are undertaken foremost by select member states; in general, by the largest ones. At the level of the European Union, this type of activity is less visible, though representatives of EU institutions can also implement these activities, especially under the influence or pressure from national governments.  In foreign policy, France and Germany have the largest influence on EU institutions; wherein although this had also included Great Britain earlier, from the moment the referendum concerning Brexit had occurred, the role of London has decidedly decreased in this field. As in the case of shaping EU policy towards external powers, the first tunes are played by Berlin and Paris. As such, the objective of this analysis is to attain an answer to the question on what the specifics of European geo-economics are. Until now, the EU approach has been dominated foremost by economic interests, and geopolitical matters have been rather secondary. It is for this reason the EU is often described as an economic power, yet a geopolitical dwarf. With regards to this aspect, do the economic aims still dominate, or are they perhaps becoming gradually enhanced with geopolitics? Are the economic instruments, therefore, being utilized for the pursuit of geostrategic aims?

 United States of America

Academics and researchers generally consider that at the beginning of the 21st century, the EU relations with the US has been weakening, both in the areas of economics and geopolitics[2]. After the end of the Cold War, the role of NATO and the US in western Europe has undergone change. It has resulted from a diminished threat perception from the side of Russia, a perception that is especially true within France and Germany. On the same geopolitical basis, transatlantic cooperation has undergone erosion. Economic issues gained foreground importance for the mutual relationship, which are confirmed by earlier studies. For the EU institutions, the key matter in foreign policy is the promotion of European economic interests[3]. It results in a certain extent from the shaping of EU competences in this sphere. Foreign economic policy is a competency solely of the EU and it is overseen by the European Commission.

In turn, European foreign policy and security is conducted first and foremost in intergovernmental institutions, ergo by the EU member states. The role of the European Commission here is decidedly smaller compared to its role in economic policy; therefore, the Court of Justice of the EU is excluded from this field. Notwithstanding the division of competences in EU foreign policy, it is the member states that take the fundamental strategic role in the spheres of economics and geopolitics. The focusing of the EU on economic interests results, therefore, not so much from granted competences as from, predominantly, the interests of its largest states.

Simultaneously, economic relations with Washington were characterized by a growing number of discrepancies. An example was the assertiveness of both sides during negotiations on the topic of the Transatlantic Trade and Investment Partnership (TTIP), which was unable to have been negotiated in the period of the presidency of Barack Obama, and the discussions thereafter on this topic were suspended by Donald Trump[4]. These disputes concerned multiple economic sectors, commencing from the aviation industry; a several-year long legal dispute at the World Trade Organization (WTO) forum, imports of steel and automobiles into the US, blocking the imports of American food by the EU, decreasing the monopolistic position of American internet companies on the EU’s internal market, as well as limiting armament imports from the US[5]. Discrepancies in economic interests underwent an escalation in recent years, especially during the Trump administration. For this reason, researchers tend to acknowledge that there is even a disintegration of mutual relations taking place[6].

To a further extent, the worsening of these relations accordingly includes geopolitical issues. These were, from time to time, the function of economic interests, as it had taken place in the example of the differing approach on the issue of Iran. For the largest EU states – signatories of the nuclear agreement with Tehran[7]in 2015 – maintaining this agreement had an economic dimension, as many European firms participated in economic exchange with this country and dreaded the return of American sanctions. Accordingly, Germany, France and Great Britain established the company INSTEX, which was supposed to operate financial transactions with Iran, under the assumption it would allow European firms to avoid American sanctions. It turned out to be ineffective as the largest enterprises feared sanctions in the form of closing off access to the American market and to the financial sector of the said country. Faced with the decision between cooperation with the US or with Iran – they chose the larger partner. On the European side, it was an equally important factor of the geopolitical dispute surrounding Iran. It was associated with approaching the multipolar order, and simultaneously defending the multilateral agreement with Tehran with significant importance for the strategic situation in the Middle East.

Following the Cold War period, western Europe was counting on the possibility of overcoming Washington’s dominance and establishing a more balanced multipolar order,based on multilateral agreements, based on international law and organizations. It is acknowledged that in such an environment the European regulatory and diplomatic strength would be celebrating triumphs. Therefore, the EU intended to build its geopolitical potential relying heavily on economic and negotiation potential and less on military strength. Scholars purport that the European aspiration for multipolarity is most often initiated and carried out by member states, occasionally without the participation of EU institutions (as it was such in the case of the Normandy Format of 2014). This occurs relatively sporadically and is not really effective[8].

European ambitions for multipolarity to a large extent were based on the international order, which was constructed in the aftermath of World War II and was ensured and guaranteed by the US. Meanwhile, one of the most important manifestations of the European approach to multipolarity was the emphasis on strategic autonomy in defense policy, which largely was regarded as being independence from US influences and strategies. As such, it is the most profound paradox of European ambition: on one hand, it aims to untangle itself from the influence of Washington in international politics; and on the other hand, the effectiveness of its realization is to a very large extent reinforced by the institutions of the American order, or dependent on political support in Washington.

Nonetheless, the accentuation of independence from the European side caused that the EU did not follow Washington in several of its geopolitical initiatives. A manifestation of this phenomenon was evidenced in the policy towards Iran, Russia and NATO (an example being the reluctance of France and Germany to expand the alliance to Georgia and Ukraine, to provide military support to Ukraine, and to increase US presence in Central Europe[9]), as well as the US dispute with China pertaining to the South China Sea[10]. In all cases, the largest member states also worried about the economic repercussions stemming from their support of US policy. In the situation of economic projects which were tied with the market for security – the largest EU states put economic benefits above geopolitical issues. An example is the construction of the northern gas pipeline[11]or receiving the Chinese G5 technology[12]despite opposition from Washington and doing so even under the threat of sanctions from the side of the US[13].

Over time, since the end of the Cold War, Paris and Berlin – and, therefore, Brussels – with a decreasing extent were treating the US as a steadfast geopolitical ally, and increasingly frequently as an economic rival.The alliance with Washington has been not once perceived as a geopolitical encumbrance, potentially having adverse economic repercussions. Unsurprisingly, therefore, the European dreams regarding the multipolar order was supported equally in Moscow as in Beijing[14]. Both capitals had their own geopolitical ambitions of rivalling Washington, and weakening transatlantic ties had essential importance to their aspirations, as it decreased the possibilities of US influence.

Russia

According to researchers, after the end of the Cold War, Russia was not regarded in western Europe as a threat to security[15]. For example, after the war in South Ossetia in 2008, only the Baltic states and Poland increased their defense spending. In the remainder of the EU, defense spending underwent further reductions. Spending for this purpose increased again in Poland, Sweden and in the Baltic states after the aggression of Russia on eastern Ukraine and the annexation of Crimea in 2015, but underwent reductions in Germany, among other EU countries[16].  Even under unprecedented pressure of the Trump administration on Berlin to increase spending for this purpose, it again took the decision to reduce it to 1.2 percent of GDP by 2022 (NATO expects spending to be 2% of GDP)[17].

A certain change in the approach of the EU took place after the beginning of the conflict in eastern Ukraine and the annexation of Crimea by Russia. France and Germany undertook negotiating with Russia in the form known as the Normandy Format, which was interestingly without the participation of EU representatives or other member states. As a result of the shooting of the passenger plane over Ukraine with a considerable group of European citizens on board, all member states (i.e. EU) put sanctions on Russia. The deciding factor for taking this step was not so much the pressure from the side of the media as was the pressure from the American administration[18].

Despite that, Western Europe clearly concedes or acquiesces in disputes with Russiaas evidenced by the projects aimed at normalizing relations with the eastern neighbor proposed by scholars and considered by political decision makers[19]. They encourage stabilizing geopolitical relations with Moscow even at the expense of an informal acceptance of Crimea’s annexation and a commitment that Ukraine will never become a member of the EU or NATO.

Another factor is the traditional high support for the normalization of relations with Russia in select EU states, traditionally in France, Italy and Hungary. Eurosceptic movements cooperating with and in part financed by Russia additionally create political pressure for this type of change[20]. Moreover, efforts for strategic autonomy with regards to the US in European defense policy leads to academic opinions of the necessity of normalizing geopolitical relations with Russia[21].

In the foreseeable future, the EU alone and its armed strength are not able to replace NATO in the event of conflict with Russia. Therefore, decreasing the US presence in Europe must be preceded by the arrangement of geopolitical relations with the Kremlin, to a large extent on Russian conditions. In these changes, an improvement of mutual relations on the economic platform would be expected. A telling instance of such a policy was the construction of the northern gas pipeline “Nord Stream 2” at the same time when the EU was putting sanctions on Moscow[22]. A seemingly schizophrenic behavior, nevertheless, gave a clear signal to the Kremlin that sanctions are transitional, and economic cooperation is strategic in nature.

To summarize, Western Europe, and herein the EU institutions, in recent years, do not consider Russia to be a rival or a serious geopolitical threat; but rather a potential economic partner, and in the future, a likely political partner.

People’s Republic of China (PRC)

The PRC was for many years treated as an important economic partner, with whom cooperation brought benefits to the largest European exporters (mainly Germany). Therefore, European states favorably answered Chinese economic initiatives, even when it aroused the highest uneasiness from Washington. This was the case when the largest EU countries entered the Asian Infrastructure Investment Bank (AIIB) as “founding states.” Nonetheless, towards the end of the second decade of the 21^stcentury, the approach of the EU towards China began to undergo change. The European Commission described this state namely as an economic competitor and systematic rival, which promotes an alternative model for economic governance[23].

Berlin and Paris found themselves in the vanguard of the protectionist course towards Beijing. They sharpened oversight and supervision over Chinese investments in their countries, fearing largely the strategic technologies relevant to long-term competition of domestic economies[24].

Under the influence of both countries, the European Commission also undertook a more assertive stance. In 2019, it demanded from the PRC mutuality in economic relations, which includes the equal treatment of European investors on the Chinese market, receiving the same treatment as domestic enterprises.  This concerns opening the market for investments from the EU, impeding practices of forcing the transfer of technology to local cooperating parties and subsidization of Chinese exporters by the state. The Commission predicted tighter control over Chinese investments on the EU’s internal market as well as the closing off access to the European market for public orders from Chinese enterprises, to the similar extent that PRC will not contract tenders, on the basis of mutuality. The EU intends to change the WTO regulations to limit protectionism in the PRC. Although a few European states allowed the Chinese G5 technology on their markets, the Commission would like to, in the future, work out a common EU stance on this matter[25]. Paris, Berlin and Brussels were also concerned with the infrastructure investments undertaken on the territory of the EU in context of the new Silk Road (The Belt and Road Initiative) which includes Greece, Portugal, Italy, Central European states and the Balkans[26]. It appears that sharpening the course towards China resulted more from economic factors rather than geopolitical ones.

Scholars acknowledge that the largest states and the EU itself are passive towards the PRC on the geopolitical platform[27]. The aforementioned subjects did not treat Beijing as a political rival or a threat for security. Simultaneously, the largest countries feared the economic repercussions if they supported the US in geopolitical disputes. This was occurring even when Beijing was not abiding by international law, which was otherwise very important in official EU rhetoric. It is pertinent to remember that China refused to respect the rulings of the Arbitration Tribunal from 2016, in the breaching the United Nations Convention on the Law of the Sea[28]. The reaction of the EU regarding Beijing’s stance was almost non-existent.

National governments geopolitically caved before China, attempting to leave sensitive matters for EU institutions (which include, for example, PRC’s human rights record)[29]. At the same time, when the European Commission was criticizing China’s policy – which includes the growing investments in Italy and the Western Balkans[30]– the French government was signing economic contracts with Xi Jinping worth 40 bln Euros[31].

The only exception to Europe’s geopolitical passiveness towards the Middle Kingdom appears to be prompted by increasingly far-reaching Chinese investment and political penetration in Central Europe and in the Balkans. This concerned the largest EU states, namely Germany. The representatives of the European Commission had expressed their concerns with this expansion in the European “backyard”. In the documentation prepared at the summit of the European Council, officials demanded larger unity of member states with regard to the “16 +1” format, respecting European norms and values in the Western Balkans. This was pointed at Beijing’s ambitions of achieving technological supremacy in the armed forces by 2050, which would create major challenge for European security[32].

Despite this, it ought to be acknowledged that European states and the EU itself deem China first and foremost to be an economic rival, and less so a geopolitical rival.Member states in this matter are deeply divided. Portugal, Greece, Hungary and increasingly Italy have become the defenders of Chinese interests in the EU. These are the states that are in dispute with Brussels or those most affected by the Eurozone crisis. In this way, European crises and political fractures in the EU are avidly exploited by Beijing to promote Chinese geo-economic interests.

Conclusion

In contemplating the EU approach to the largest great powers, one ought to pay attention to the policies of France and Germany, and periodically to that of other member states that influence  the stance of EU institutions and external EU policy. Until recently, the EU was mainly interested in the promotion and defense of European economic interests in international relations. In the geopolitical field, the concept of multipolarity as well as strategic autonomy (from the US) maintained fundamental importance. Occasionally, it was a narrative which enabled the development of economic interests, the legitimization of economic protectionism, or financing from EU funds development of European armaments. Scholars point to the limited scope of the European geopolitical strategy and the weakness of its implementation[33]. Not uncommonly, economic interests were clear prioritized before the geopolitical interests. The fear of decision-makers was visible when it came to the endangerment of European business as a result of geopolitical actions. Even if the European entities (in this case, leading EU member states controlling EU policy) – had increasing geopolitical ambitions, they were intrinsically tied to their economic interests. It is possible to find only a few exceptions to this rule (for example, sanctions placed on Russia after the annexation of Crimea). European geo-economics has thus been concentrated on the economy, which means that instruments of foreign policy were used to support this aim, and from assumption, geopolitical matters should not collide with economic matters.

 

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