Growth, Trade and the Transatlantic Partnership

In the U.S., sequestration threatens a shaky recovery. In the eurozone, unemployment rose to record levels this week. In response, both sides of the Transatlantic partnership are recasting what was traditionally a strategic partnership as an economic one, aimed at enhancing global security by facilitating economic growth. For the past several years, economic anxiety has been pervasive in both the U.S. and the EU (where it has reached existential proportions). However, the recent words of prominent opinion leaders point to a resurgence in the relationship, and confidence that pronouncements of the Euro’s death were premature.

Writing about Vice President Biden’s appearance at the Munich Security Conference last month, Washington Post columnist David Ignatius reported that “The relief that the euro-zone crisis has largely passed was palpable here.” Ignatius continued: “Given how widely it was predicted that the euro zone couldn’t hold together, its resilience counts as one of the interesting contrarian facts of the new year.” The administration’s initial distance from Europe may have stemmed from doubts that it would muster that resilience, but now that it has, Biden spoke of the importance of the Transatlantic Partnership in traditionally strong terms. At a conference aimed traditionally at security issues, Biden promoted the “almost boundless” benefits of a U.S.-EU Free Trade Agreement (the Washington Post followed suit in an editorial the following week.)

Earlier this week, at the Atlantic Council’s annual Geremek Lecture, former National Security Advisor Gen. James Jones continued the theme. Following assurances that “the European Union will survive” from the former Polish President Aleksander Kwasniewski, who took that country into both NATO and the EU, Gen. Jones argued that to meet present and future security threats, the U.S. and EU “must be economically strong and politically cohesive” and using economic growth as “the most powerful weapon in our arsenal”, through means of a free trade agreement, was the best way possible to pursue mutual security. Jones, a former Supreme Allied Commander-Europe (SACEUR) spoke of a growing awareness within NATO of the need for economic strength as a foundation of any successful post-Cold War collective security missions. (Jones’ theme is the subject of a recently-published Atlantic Council report, “An Economic NATO.”)

Analysts such as the Peterson Institute’s Nicholas Veron continue to report in detail on the incremental challenges involved in designing and implementing a unified regulatory regime for Europe’s banks. The prospect of a common European fiscal regime poses a further challenge. At the moment, however, leading policymakers have delivered a verdict on Europe’s existential trial. The EU and eurozone will move forward. A related verdict holds that the U.S. and EU should move forward together in renewed partnership. But when Generals are giving speeches on economic growth, it seems clear that the partnership will require new terms for a new era. And when American legislators are reduced to arbitrary budget cuts, Gen. Jones’ call for a “politically cohesive” U.S. rings all the more true.