Many Europeans have long taken pride in the fact that the European Union has always used a different approach in international affairs to the United States. In their eyes, using soft, rather than hard, power is clearly morally superior. While Americans were hated in many parts of the world because of their government’s military interventions, many Europeans saw themselves as being welcomed because of their attempts to make the world a more rules-based place and help poorer countries to develop.
Moreover, EU leaders felt their approach was at least as equally effective as the US approach. The EU might be a military dwarf, but it is certainly an economic superpower, and this would suffice to protect and promote the European way of life and European values. Such was the dominant belief in Brussels and member state capitals.
The Europeans were sufficiently confident in their approach that they even failed to use the momentum of the introduction of the euro in the late 1990s to develop their own international payment networks and push for the euro as an international currency and a viable alternative to the US dollar. (To be fair, here the French had much bigger ambitions, but the Germans were sceptical.)
Unfortunately, this position is set for a very unpleasant disappointment. Europe these days is experiencing how easily it can be pushed around without proper military power of its own and without having made preparations to use at least its currency and market power as a foreign policy tool. Against the EU’s opposition, Donald Trump has cancelled the deal with Iran and re-imposed sanctions against the country. Worse, he is now using the threat of secondary sanctions against EU companies and citizens to force them out of the Iran deal as well. Everyone who is still doing business with Iran can be targeted by US sanctions, including even allies should they continue to buy Iranian oil.
At the same time, the trade war which Trump started by imposing tariffs on steel and aluminium is rapidly escalating. There is hardly a week in which the US or China does not announce new tariffs in retaliation to trade measures by the other side, and European car makers increasingly worry about a potential 20 percent tariff on car imports.
Europe these days is experiencing how easily it can be pushed around without proper military power of its own and without using its currency as a foreign policy tool.
Sooner or later, the trade war will cause real damage. US companies will see their competitiveness dwindle with rising prices for raw materials, parts, and components. EU companies will start relocating parts of their production to the (important) US market. This will lead to lower profits, higher prices, less economic growth, and less tax revenue.
At some point in this escalation, Trump could link security questions with trade. After all, he has long complained that the EU, especially Germany, his main adversary in the trade conflict, is not fulfilling its NATO commitment on defence spending. How long would the EU remain united in a trade conflict if the American government signalled to Estonia, Latvia, Lithuania, and Poland that US economic losses would mean reconsidering paying for the military protection of these allies along the eastern border of the EU? A quiet visit by the US ambassador to their foreign ministries or an unsubtle tweet by Trump could easily shatter the EU’s resolve to retaliate further in the trade conflict.
In the opium wars of the nineteenth century, it was the British threat to send in military force which kept markets open for British exports. In the twenty-first century, it could easily be the US threat to withdraw troops which will keep markets open for American goods even while the US closes its own markets.
One could now object that it is not in the US strategic interest to let Russia expand its sphere of influence by removing protection from eastern EU states. This might well be true. However, this overlooks the fact that removing protection is not a binary choice. Trump could create enough ambiguity to create fear and uncertainty in the eastern EU members while preventing Russia from actually acting aggressively. This fear and uncertainty alone could create significant economic and political damage in the countries concerned by spooking investors and driving voters into extreme camps.
So, unfortunately, the lesson for the Europeans from the first 18 months of Trump in the White House has to be that economic power will count for very little if it is not backed by a certain amount of military power. It might not be necessary to be able to run a medium-sized war anywhere on the planet (as the US military is), but the EU cannot remain dependent on the US for its own protection if it wants to stand firm in an economic conflict with it.
As absurd as it sounds, ultimately, Europe will have to spend more on its military if it wants to be able to use soft power to promote European values of a peace in a liberal and rules-based global order.
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