Tuesday, March 31, 2009

Agree to disagree

By Carl

Say what you want about Obama's policies so far in his term,
he's put European leaders in a quandry:

Washington - The new American president's debut on the world stage, beginning Tuesday in London in advance of the Group of 20 meeting, is sure to have its share of "Hello!" magazine moments and glamour. He will, after all, meet with Queen Elizabeth II, an established member of the thin upper crust of global personalities and an international rock star in her own right.

But President Obama may be speaking sotto voce and out of the spotlight while in the company of presidents and prime ministers. That's because he is expected to articulate positions and prescriptions that are out of step with leaders from Western Europe, China, Russia, India, and beyond – on issues ranging from the global economic crisis to the war in Afghanistan.

Indeed, Mr. Obama may well find himself in the inverse position from where George W. Bush stood by the end of his White House run. Whereas Mr. Bush enjoyed greater cooperation and like-mindedness with many key foreign leaders, though he remained unpopular with the international public, Obama is expected to encounter an adoring public but a deep skepticism – even resistance – among heads of state.

England has already made conciliatory and supportive comments for Obama ahead of the summit, but the current leader of the European Union, the Czech Mirek Topolanek, has all but said Obama will drag Europe to damnation.

Pretty strong words from a diplomat, to be sure.

The pressing issue for this summit is the economic crisis. Obama has made some curious statements with respect to "more stimulus" from the European Union. Here's why this sounds sort of flat.

The European Union as a whole has the largest economy in the world, on a par with the US (currency fluctuations can have one or the other as the larger, so it's just easier to call them the same size). The difference is, the European Union has already invested the spending in the areas that Obama wants to port to America: healthcare, infrastructure, advanced energy technologies, green technologies, and so on.

The trade-off Europe makes in its GDP and its economic growth is this: its labor force is about 50% bigger than the United States, yet generates "only" as much revenue as we do. This means that much of its growth potential is tied up in taking care of its citizenry.

This is a good thing, but the downside to this equation is that this hurts them in terms of having a cushion from which to increase spending. Europe has a group commitment to see that deficits for individual states do not exceed 3% of the individual GDP, so deficit spending is not an option. So what little surplus the states may have is going to have to involve cuts to either its population or to its business models (read that as higher taxes), neither of which is an attractive option in a faltering economy.

So you can understand why European leaders are hesitant to jump on the US bandwagon here.

On the other hand, the general populations of the European nations look to Obama in many of the same ways they looked to Bill Clinton. He is a rock star, accorded rock star status by some truly legitimate rock stars like Bono, and as such will have powerful sway over public opinion.

Worse than that for European leaders, lets assume the average European is about as informed as the average American, e.g. they watch the TV news and then extrapolate to their lives. They're going to see Obama browbeating the EU for more spending and they're going to look around and realize that their friends are out of work, their mortgage payments are harder and harder to make, and the roads need repair.

As we've seen in America, if a politician promises to put more money in your pocket, he stands a very good chance of persuading you to his side. Couple this with the general attitude in Europe that governments ought to fear the people, rather than the other way around (this holds truer in "Old Europe," like France), and you have pretty enormous pressure for EU leaders to capitulate and throw money at problems.

I haven't looked at Obama's specific European recommendations but I suspect he'd call for more green technology spending, particularly in former Soviet republics like the Czech Republic... which is why Topolanek is crying "Uncle." After all, these are the economies with the most potential to grow quickly if cheap energy sources can be made available, manufacturing and industry were already solid performers there.

I would imagine Obama has asked for a stronger commitment to fighting global warming, although his footing here is unsteady, given the recent American stance on this issue and the Kyoto protocols, as well as the upcoming Copenhagen summit on this very topic.

Finally, the contention that NATO needs to strengthen its commitment to Afghanistan is tied into helping America out of it economic crisis. After all, every additional euro President Obama can wrest out of the EU is one and a half dollar less he has to spend there.

(Cross-posted to
Simply Left Behind.)

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