Master of Arts Thesis

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Master of Arts Thesis

Euroculture

University of Göttingen (Home)

University of Groningen (Host)

August 2017

Separate Ways?

Revisiting the Relationship between the United States and European Union

in Light of Brexit and the 2016 US Election

Submitted by: Ryan Minett 21553459 S3069702 rminett@wustl.edu Supervised by:

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MA Programme Euroculture Declaration

I, Ryan Minett, hereby declare that this thesis, entitled “Separate Ways? Revisiting the Relationship between the United States and European Union in Light of Brexit and the 2016 US Election”, submitted as partial requirement for the Ma Programme Euroculture, is my own original work and expressed in my own words. Any use made within this text of works of other authors in any form (e.g. ideas, figures, texts, tables, etc.) are properly acknowledged in the text as well as in the bibliography.

I declare that the written (printed and bound) and the electronic cope of my submitted MA thesis are identical.

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Historical Background………..…05

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Theoretical Background………..…..09

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_{Methodology……….….…12} Economic………..……….…14

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International Economic institutions……….….14

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Airbus vs. Boeing Case Study……….….16

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Standards.………..………21

Military.………..……….25

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Post-Cold War NATO.………..25

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ESS vs NSS.……….31

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Deeper European Military Integration..………..….33

Norms.………..38

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Identification and Comparison of EU and US Norms.……….38

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Replacing the Global Norm.……….45

Moving Forward.……….60

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Tipping Point.………63

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Conclusion……….…65

Biblography……….….66 List of Abbreviations

ECSC: European Coal and Steel Community WTO: World Trade Organisation

TEC: Transatlantic Economic Council

TTIP: Transatlantic Trade and Investment Partnership DSB: Dispute Settlement Body

TLCA: Trade in Large Civil Aircraft

ESDP: European Security and Defence Policy ESS: European Security Strategy

USNSS: United States National Security Strategy NPE: Normative Power Europe

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Introduction

The United States and Europe have a long shared history. Both have been greatly influenced by each other and invested in each other’s past, present, and future. The relationship has never been more precarious. On one side of the Atlantic, the United States is in an unprecedented situation with its new president. Never before has there been someone so divisive and so despised in the Oval Office, and it has only been six months since he took office. In Europe the outlook is a bit more optimistic even though the Greek Crisis is still present in the south of Europe, the Refugee Crisis is far from being solved, and on of the strongest members recently voted to leave the European Union. For most people, especially Europeans and Americans, this is the first time in living memory that the global leadership of the US was seriously questioned. During the Cold War, the US was the leader of NATO against the Communist Other; after the fall of the Soviet Union, the US expanded its influence to fill the vacuum left behind, and; through the debacle in the Middle East the idea of US leadership was taken for granted. US leadership has been a mainstay of European politics since World War II, but for how much longer can this last? The purpose of this thesis is twofold; first, to show that the fundamental norms of global society are in the process of shifting, and second, that the European Union is integral to facilitating this shift in norms and will benefit from it. Henry Luce’s American Century seems to be drawing to a close after almost eighty years and this creates an opening for a new direction for global society. The European Union may have suffered setbacks 1

recently, but compared to much of the rest of the world, it is the best position to shape the global future in its own image. Stepping out from underneath the US umbrella is the biggest test that European integration was always meant to face. If the European Union intends to keep expanding and integrating, it is going to have to leave the nest and become masters of its own fate.

Now is an opportunity for the European Union and Europe to get out from under the United States. Since the end of World War II and the subsequent beginning of the Cold War, the United States has taken the lead in the Western World and Europe has followed it. In the immediate aftermath of the war, there was little choice for many European countries, either take the Marshall Plan funding and follow the lead of the US, or fall into the Soviet bloc. Which war-torn, rubble-covered, Western European leader, who’s nation was liberated and occupied largely thanks to the US military would say no, especially with the Soviets looming to the East. The world just went

Luce, Henry. The American Century. Life. 17 February, 1941.

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through the bloodiest war in history and Europe was a, if not the, major theatre of this war. The nations of Europe swallowed their pride, fell in line behind the United States, and set towards rebuilding.

Historical Background

At the beginning of post war integration, the United States emerged from World War II as a superpower, Europe was destroyed, and the influence of the Soviet Union was spreading in the East. The early European integration process starting with the European Coal and Steel Community (ECSC) was extremely successful in part due to US foreign policy in the form of the Marshall Plan. Considered one of the most successful foreign policy initiatives by the US, the Marshall Plan set the stage for Western Europe to recover from World War II. According to a 1991 working paper from the National Bureau of Economics, “the Marshall Plan did play a major role setting the stage for post-World War II Western Europe’s rapid growth.” While they affirm that the Marshall Plan was 2

too small by itself to receive all the credit, they point out just how important it was for the beginning of the recovery effort. The report explains exactly what the Marshall Plan did for these countries saying, “Without such aid, they would have soon faced a harsh choice between contraction to balance their international payments and severe controls on admissible imports.” 3

The Marshall Plan also highly encouraged peaceful integration, especially economic, with conditions being included by the Plan administration to remove quotas and other trade controls. An 4

open market and peaceful integration were not ideas put forth solely by the US. Once the Marshall Plan became an option for rebuilding European governments, the scales tipped in favour of European integration. So the US did not finance the entire rebuilding of Western Europe, but the aid from the Marshall Plan allowed European governments to overcome many of the initial obstacles that would have delayed or disrupted the rebuilding process.

It is unnecessary to flesh out the entire history of US economic relations with Europe over the last several decades. Rather it would be best to examine what this relationship looks like presently in light of more recent history. The economic presence of the United States at the

! De Long, J. Bradford, Barry J Eichengreen, and Centre for Economic Policy Research. 1992. The Marshall Plan : 2

History's Most Successful Structural Adjustment Program. Discussion Paper Series, No. 635. Centre for Economic Policy Research. 1.

Ibid., 6.

3

Ibid., 50.

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beginning of the post WWII European integration process has given the United States a fantastic advantage, as they lined themselves up as the prime trade partners for Western Europe. Winning the Cold War sealed their economic victory, eliminated the other superpower, and affirmed that the United States would remain unopposed economically. “Together the EU and the US account for almost half of the world GDP and one third of total world trade.” The United States is the closest 5

trading partner of the European Union and the European Union is the second largest trading partner of the United States behind China. Due to their efforts during the Cold War, the United States has managed to have the largest GDP, with the European Union following at a close second. 6

A working paper from the European Central Bank broke down the role of the US in the world economy. The working paper clarifies why the EU has and should continue their close economic ties with the US. It also explains why the EU must work with the US to avoid future financial crises. According to the paper, the US economy greatly influences the rest of the world and is seen as “the engine of the world economy.” So as “the engine” of the world economy, 7

shocks to the US economy have ripple effects around the world. The paper continues to explain that while global economic integration has lessened the negative effects of these shocks, the shocks are becoming more persistent. While there was evidence around of the world of ‘decoupling’ from the 8

US economy, the financial crisis in the US and its subsequent spread worldwide in 2008 reaffirmed the interconnectedness of the US economy with the rest of the world. Keeping the US economy prospering is of great benefit to the European Union. The US is the EU’s closest trading partner and as a result goes through the same ups and downs as the US economy. The benefits of continuing close economic ties with the United States are undeniable and the costs of severing them would be too high. Because of these close, well-established economic ties, the idea of the US and EU economies going their separate ways is presently untenable.

As for the common military background between Europe and the US, throughout integration there is relatively little to speak of, especially compared to their economic relationship. In the aftermath of World War II and the Holocaust, peace and human rights became priorities in Europe.

Impact Assessment Report on the Future of EU-US Trade Relations. March 2013. European Commission. 10.

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"GDP (current US$)." GDP (current US$) | Data. Accessed July 30, 2017. http://data.worldbank.org/indicator/

6

NY.GDP.MKTP.CD?year_high_desc=true.

Dées, Stéphane, Saint-Guilhem, Arther. 2009. “The Role of the United States in the Global Economy and its Evolution

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Over Time.” Working Paper Series. European Central Bank. 5. Ibid., 6.

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The countries of Europe realised they could on longer keep destroying each other and the rest of the world, to which European wars would inevitably spread, agreed. But that did not mean that war, militaries, and weapons, would simply evaporate in Europe. Quite the opposite happened.. Simply stated, but Europe was to be spilt into the Warsaw Pact in the Eastern Europe under the Soviet Union and NATO in Western Europe under the US. Behind both sides of the Iron Curtain, military buildup and nuclear arms races served as representation of the building tension between the US and USSR. Through all this, the states of Western Europe integrated themselves under the US military umbrella. When Günter Schabowski accidentally opened the Berlin Wall, this served as a tipping point for the Warsaw Pact countries and eventually lead to fall of the Soviet Union. For NATO, 9

which had not conducted one operation for the entirety of the Cold War, this was a clear victory. 10

For European integration, this was a chance to expand East.

Throughout the entire Cold War period, the US and European Communities were reliant upon each other. For Europe, the US served as much the need protector and economic partner throughout their early integration phases. For the US, Europe was not only strategically placed, but also an invaluable economic partner. For all the posturing, proxy wars, and military buildup, in the end it was economic reasons that lead to the fall of the Soviet Union. Despite their best efforts the USSR simply could not keep up with the US spending, leading to economic downturn and a need for reform. The US was able to outspend the USSR, thanks in large part to the economic success of Western Europe, and it became a global hegemony. With their initial investment, the US bought 11

itself into the market of a half of a continent. Its victory over the Soviets and communism seemingly proved to the world that the capitalist system of the United States was the way forward. As it turned out “‘the inevitable march of history’ was […] not away from capitalism, but towards it.” The US 12

and capitalism had won the Cold War, and if one wished to participate in the world economy, they would have to conform.

With the fall of the USSR, the US had achieved global leadership and the Europeans were instrumental in helping the US get there. Their economic strength helped the US economy outlast

Moulson, Geir. "Günter Schabowski: Political spokesman whose 1989 press conference hastened the fall of the Berlin

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Wall." The Independent. November 02, 2015.

Nato. ”Operations and missions: past and present." NATO. December 21, 2016.

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Fitzpatrick, Sheila. 2007. “The Soviet Union in the Twenty-First Century.” Journal of European Studies 37 (1): 52.

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that of the Soviets. The US reliance on Europe would permit Europe to influence the US, provided it was organised and motivated enough to exercise its influence. To this point, whichever incarnation of European integration existed up to the present time has had neither the motivation nor unity necessary to challenge the US, until recently. With the departure of British influence from the European Union decision making table and the emergence of far-right populism in the US there arises the opportunity for both. First, the British were the bridge between the US and the EU, and had the most favourable opinion of the US. Second, the US has elected a president that is almost 13

universally opposed, as are his policies, and nothing unites people quite as well as a common enemy. Now this does not mean that EU and US will become enemies, rather this current 14

administration and its policies may be inflammatory enough to encourage EU member states to step up and oppose them together. With the departure of the United Kingdom and its quasi-American representative in the European Union, and the uniting potential that a Trump presidency presents, the European Union may be able to finally muster enough economic and political influence to rewrite the nature of the transatlantic relationship.

The year 2016 was the year that far right populism once again reared its head. Due to the fact that Europe for the most part has resisted it, in stark contrast to the US where it has now infected the entire federal government, this could be the a turning point in US-EU relations as well as another step forward for European integration. One of the assumptions of this thesis is that the far right populism of Trump’s administration and that of the Leave campaign in the United Kingdom are only temporary. The decision makers of Europe are committing themselves to opposing Trump in many areas, especially when it comes to human rights and climate change. It must be understood just how detrimental Trump is, but also that politics in the US is almost cyclical. Power moves back and forth between the progressives and conservatives. 15

But there are constants, such as the fact that the US stays in its pole position internationally, and that Europe is constantly more liberal than the US, no matter if the Republicans or Democrats are in power. It seems that the US hegemony is coming to an end, but their influence is still

Editorial. "Following Brexit, the UK is no longer the bridge between Washington and Moscow." The Independent.

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December 24, 2016.

Wike, Richard, Stokes, Bruce, Poushter, Jacob. "2. Worldwide, few confident in Trump or his policies." Pew Research

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Center's Global Attitudes Project. June 26, 2017.

Smith, S. A, Amelia Hadfield, and Timothy Dunne, eds. 2012. Foreign Policy : Theories, Actors, Cases. 2nd ed.

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widespread and the decisions and polices of the US continue to affect the entire world. Europe’s commitment to economic prosperity and compliance with US leadership has brought Europe from the rubble of World War II to where it is today, but the framework of US leadership and European compliance is inherently incompatible. Eventually Europe would grow too strong and begin to content US leadership. The Marshall Plan may have been one of the greatest foreign policies of the United States, but in the end it worked too well. At this point in integration, European politicians must start asking some hard questions. If the US hegemony is to end, where would that leave Europe? Do the governments of Europe dare risk souring relations with the US and the economic prosperity that they enjoy, especially given that the last economic crisis is still present in parts of Europe? Is the EU committed to the norms of collective prosperity, peace, and human rights? Will Trump’s presidency weaken the conservatives and empower the liberals in the US enough to the point where the US and Europe finally see eye to eye and work as partners as opposed to leader and follower? Those in Europe who are bold enough to take on the United States’ global leadership will hope that the answer to these questions is a “yes”. For if Europe intend to shape the global society after the end of the US hegemony, the must act.

Theoretical Background

The theoretical background of this theses cannot be narrowed down to one international relations theory. Mention of norms and global society already indicates that the main theory used during the analysis is social constructivism. That being said, the foreign policy of the US dictates that neorealism be accounted for as well in parts of the analysis. But, as this thesis focuses primarily on the European Union and their future, the theoretical background will be primarily social constructivism. The analysis of the research focuses on norm diffusion, contestation, and decoupling. One of the conclusions of this thesis is that due to the recent actions of the United States, as well as other contributory events since the end of the Cold War, the global society is undergoing a fundamental shift in norms.

Critical to social constructivist theory is the idea of norms. According to social constructivists, “It is a truism that social reality does not fall from heaven, but that human agents construct and reproduce it though their daily practices” Norms dictate how actors will behave in 16

Risse, Thomas. “Social Constructivism and European Integration.” In European Integration Theory. 2Nd ed. Oxford:

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the social constructs and their identity in the social community. A norm would dictate that one will 17

most likely wear clothes when they go out in public. While a norm is not a blanket statements as there are those who contest the norm and do not wear clothes in public, in general, most people abide by norms. Norms are also used to define the ‘rules of the game’. These are not official rules 18

for an official game, but rather a guideline of the rules tacitly followed by those who accept the norms of the constructed society they live in.

As mentioned before, while norms are the ‘rules of the game’ and typically dictate the actions of actors in a society, norms are constantly contested. While not every contestation leads to 19

a change in norms, it is not unheard of. Remember when the norm in Europe was that academics constantly spoke, wrote, and studied in Latin? That is because of a change in norms. Martin Luther translated the Bible into German, used Johannes Gutenberg’s printing press to spread his work, and the rest is history. The change in norm completely changed the course of history in ways too many to quantify and serves as an example of a fundamental norm shift in European history.

For a norm to take hold, there are three stages of evolution it must go through; emergence, norm ‘cascade’, and internalisation. The first stage, emergence is when the “norm entrepreneur” 20

tries to convince other actors to follow the norm. The emergence of a new norm shows discontent over the existing norms. According to Finnemore and Sikkink, who theorised the three stages of norm evolution, “new norms never enter a normative vacuum but instead emerge in a highly contested normative space where they may compete with other norms and perceptions of power.” 21

Once enough actors in the society have accepted the new norm, it reaches a ‘tipping point’ that leads to the second stage, norm ‘cascade’. During the norm ‘cascade’, the norm has become accepted by a critical number of actors in a society leading to the rest of the members of society to

Ibid., 149

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Ibid., 149

18

Wiener, Antje. 2009. “Enacting Meaning-In-Use: Qualitative Research on Norms and International Relations.”

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Review of International Studies 35 (01): 176.

Finnemore, Martha, Sikkink, Kathryn. “International Norm Dynamics and Political Change.” in International

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Organisation, Vol. 52, No. 4, International Organization at Fifty: Exploration and Contestation in the Study of World Politics (Autumn, 1998), 895.

Acharya, Amitav. "Ideas, norms, and regional orders." In International Relations Theory and Regional

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begin accepting this norm. In stage three, the norm is internalised. It becomes “taken-for-granted” and is no longer subject to public debate. 22

Once a norm goes through the stages of norm evolution and is accepted by society, this does not mean it is invincible. Norms are constantly contested, especially in “beyond-the-state contexts where ‘no categorical imperatives’ are in practice”. When norms are contested, there are three 23

stages, each reliant upon the earlier stage. These stages are contingency, social practices, and 24

crisis. Each stage must be present before the next stage can proceed. For example, climate change has been a crisis for the last few decades, but only in more recent years ecological friendliness started to emerge as a possible norm . Norms gain visibility as they are disputed. As they are 25

disputed they receive political visibility, which trickles down to society in what Karl Deutsch calls the “layer-cake assumption”. In order to recognise a divergence from the old norm, there are 26

multiple identifiers. For this thesis and this divergence, the important identifiers are the elites, issue areas, and political arena. As this thesis posits a shift in fundamental norms, the explanation of the previous fundamental norm would serve as an indicator as well. Elites make for good indicators as norms are spread and accepted by the elites in the society, such as world leaders, and then diffused through their respective populations. With that, the norm has to be in an issue area, which is “a topic which is widely accessible”. If the topic is not widely accessible to the public, then it will not 27

trickle down from the elites. But both of these indicators would be incomplete without taking into account the political arena and fundamental norm at the time.

With these indicators and given these stages, it is possible to identify a shift in norms, such as the shift posited in this thesis; the shift from US global leadership to transnational cooperation as a fundamental global norm. Central to this posited shift in global norms is the relationship between

Finnemore, Martha, Sikkink, Kathryn. “International Norm Dynamics and Political Change.” in International

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Organisation, Vol. 52, No. 4, International Organization at Fifty: Exploration and Contestation in the Study of World Politics (Autumn, 1998), 895

WIENER, ANTJE. 2009. “Enacting Meaning-In-Use: Qualitative Research on Norms and International Relations.”

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Review of International Studies 35 (01): 179. Ibid., 183

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Rudiak-Gould P. 2013. “‘We Have Seen It with Our Own Eyes’: Why We Disagree About Climate Change Visibility.”

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Weather, Climate, and Society 5 (2): 121.

WIENER, ANTJE. 2009. “Enacting Meaning-In-Use: Qualitative Research on Norms and International Relations.”

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Review of International Studies 35 (01): 190. Ibid., 191.

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the United States and the European Union. Their relationship embodies the shift in norms and this thesis uses examples from their relationship to prove the fundamental shift in global norms. The stages of norm evolution and norm contestation can be seen when examining case studies and examples of foreign policy of the EU and the US and point to a global change in fundamental norms. Of course this could all turn out to be wrong. Since "nothing in this normative sphere is absolute”, this shift in fundamental norms is far from a guarantee. 28

Methodology

In this thesis there will be three chapters used to summarise US-EU relations; military, economic, and norms. The first two sections will contain three parts; a summary of their relations in said category, a case study of an event related to the category where the US and EU were at odds with each other, and the area that the EU should focus on immediately in order to continue working closely with the US. The third chapter will not have a specific case study, but will use the conclusions from the prior chapters as well as other examples. The final chapter builds on the first three chapters for the conclusion of the thesis.

The chosen themes for the chapters are directly related to the European norm and potential new global fundamental norm. As explained later in the thesis, this norm originates from the original goals of the European Communities; human rights, which is achieved through peace, which is achieved through collective prosperity. To do this, case studies that highlight specific examples will be used to infer a larger conclusion. The suggestions at the end of each chapter are specific areas that the European Union should focus on immediately if it is to facilitate a change in global fundamental norms while also keeping a close relationship with the US. Achieving this and bringing the US into global governance would be the ‘tipping point’ that would bring about the norm ‘cascade’ leading to a shift in norms.

For the military chapter the summary will focus on post-Cold War NATO as currently 22 members of the European Union as well as the US are members. The case study examines what lead up to the security strategies of the United States (USNSS) and the European Union (ESS) and compares the two. Given the first two sections of the chapter, the conclusion reached was that the EU should focus on military integration in Europe. The military chapter is the first chapter as it is

Ibid., 185.

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the clearest example of the difference between the norms of the European Union and the US. The comparison of the ESS and the USNSS comes from both the splintering of NATO over the Iraq Invasion in 2003 and the beginnings of Normative Power Europe. The comparison of the Security 29

Strategies also shows the clearest gap in values in this thesis. Finally, the suggestion at the end of the chapter will be the most difficult for the European Union to reach consensus on due to a lack of precedence in the area among other reasons.

For the economic chapter the summary will focus on the economic institutions that connect EU and the US, and what these institutions mean for each side. The case study examines the Airbus/ Boeing conflict and how it was handled by both governments. Section three analyses standards, their importance for the European Union, and why they are one of the most useful tools available to excel economically. The economic portion of European integration is the cornerstone of the entire project, the strongest area of the European Union, and the one area where the EU can best compete with the US. The Airbus/Boeing study shows the US reaction when one overtakes the US in a certain area or market. This case study is especially relevant due to the nature of wide body aircraft manufacturing industry and its relationship with governments, subsidies, and regulations. In the end, the suggestion to control standards would greatly benefit the EU especially as a supranational government and would help move the US to adhere to translational governance.

These examples and suggestions will lead to the final chapter where their respective norms as well as the posited shift in norms is discussed and analysed.

Manner, Ian. 2002. “Normative Power Europe: a Contradiction in Terms?” Journal of Common Market Studies 40,

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Economic

United States and European Union relations have been primarily economic. They are the two largest economies in the world and the area of deepest integration for the Europe Union. As explained earlier, they are reliant on each other for their own well-being and prosperity, and separation from each other would be catastrophic. “U.S. investment in Europe is more than three times more than in all of Asia combined.” So, as these two economies are the largest in the world 30

and as they are so integrated and reliant upon each other, trade relations should be friendly and mutually beneficial. For the most part, this is the case, but there are problems with the US-EU economic relationship. With the increasing power and wealth of the European Communities, especially since the end of the Cold War and the beginning of the EU, the US has began to see Europe as economic competition. The European Union presents the US with a combined front of European economies working together as opposed to many weaker member states each with different bilateral agreements.

International Economic Institutions

How do the European Union and United States interact economically? To start, they are both long-standing members of the World Trade Organisation, as well as all the member-states of the European Union, and are therefore beholden to the rules and rulings of the WTO. The Airbus/31

Boeing case study is one of fifty-two WTO cases between the US and EU, which is by far the most disputes between any two WTO members. The WTO is clearly an important organisation for the 32

two wealthiest members and largest economies in the world. As a third party who can rule on disputes between the two members, the WTO provides a necessary service when disagreements arise, but only if both members respect the results of the decisions. This is not the case when it comes to the US. Disputes between the US and EU at the WTO lead to repercussions and obligations, which the EU respects, but the US ignores and avoids. This lack of respect for international governance is typical of the US, a major theme throughout this thesis, and potentially incompatible with a more powerful European Union, which relies on these institutions when exerting its influence.

"EU-US Relations: Trade and Investment." Delegation of the European Union to the United States.

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"Members and Observers." WTO.

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"Dispute Settlement - Map of disputes between WTO Members." WTO.

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Therefore, if the US and EU cannot settle their differences using international governance like the WTO, there must be close economic relations between the governments in Brussels and Washington, D.C. In 2007, the US and EU set up the Transatlantic Economic Council (TEC), which is “the primary plenary forum for economic dialogue between the United States and the European Union” according to the US Department of State. This council eventually lead to starting of the 33

negotiations regarding the Transatlantic Trade and Investment Partnership (TTIP). Such an agreement could be monumental and create the largest free trade area in the world. The agreement was expected to be completed by 2014, but has been delayed. This delay was to an inability to reach concessions in certain areas by those negotiating the agreement and public outcry on both sides of the Atlantic. With one of the main criticisms of TTIP being the lack of transparency, the negotiations and deals are not subject to public criticism. But, according to both leaks obtained by Greenpeace and other high-ranking European politicians, this deal seems to be far from complete. Though the US officials have been pressuring European officials to accept their conditions, some differences are considered “irreconcilable” according to the leak from Greenpeace. The comment 34

from Sigmar Gabriel, Germany’s economic minister and Vice Chancellor that “we mustn’t submit to the American proposals” is indicative of future US-EU economic relations. It appears as if the US has gone into this negotiation unwilling to compromise on key areas that have roots in European norms and has nevertheless attempted to pressure the EU into appeasement. Only this time, the Europeans have decided not to roll over to US demands, and the negotiations have stalled as a result. Although leaks in general are not the most reliable source of information and should be approached with scepticism, this leak appears to be credulous given the typical US approach to foreign relations and the fact that the free trade agreement due in 2014 seems to be leading to failure, such a scenario does not seem too far-fetched. The TTIP negotiations are an indication the 35

future of US-EU trade relations grows correspondingly more fragile with the increasing power of the EU and the increased competition it poses to the US.

"About the Transatlantic Economic Council." U.S. Department of State.

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Neslen, Arthur. "Leaked TTIP documents cast doubt on EU-US trade deal." The Guardian. May 01, 2016.

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Jordans, Frank. "German economy minister says EU-US free trade talks have failed." Business Insider.

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Airbus vs. Boeing

This case study portrays exactly how the US uses international governance as an instrument and their lack of respect for these institutions. Trade disputes between the United States and Europe are rare given the volume of trade between each other, but when half of global trade is across the Atlantic, they will happen from time to time. One of the most important trade disputes involves the US-based company, Boeing and their European counterpart, Airbus.-These two aircraft manufacturers have both risen to the top of their respective markets domestically after buying out, absorbing, or simply out muscling their competition. As the two leaders in the airplane 36

manufacturing market, each on their respective sides of the Atlantic, it was only a matter of time before they started competing with each other. But European and American companies compete all the time, so what makes the dispute between Airbus and Boeing worthy of mention?

Airbus and Boeing both manufacture large civilian aircraft, the type of civilian aircraft that brings travellers around the world as opposed to the smaller aircrafts that do not make such long-distance flights. The manufacturers that they are selling to are international airlines making international flights therefore leading to direct competition between the two manufacturers. They are the largest manufacturers of large civilian aircraft and therefore the most likely to produce these wide body aircraft. The problem with wide body aircraft is how economically risky it is to develop, build, and fly them. Some of the risks included in developing new large aircraft include, the research and development costs, the manufacturing costs, the costs of flying including fuel costs, and competition, especially with other plane models of your own. On top of that, the market for large aircraft is relatively small. Although it has been estimated that air travel will triple by 2028 (written in 2010) leading to a demand for 17.000 new large airplanes valued at about $1.3 trillion, there are many competing figures and risks notwithstanding. With two massive multinational 37

companies competing for an estimated 17.000 orders over almost 20 years, there will be risks and competition.

Irwin, Douglas A, and Nina Pavcnik. 2003. Airbus Versus Boeing Revisited: International Competition in the Aircraft

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Market. Cepr Discussion Paper, No. 3876. London: Centre for Economic Policy Research. 236.

Maennig, Wolfgang, and Stephan Wittig. 2010. “Wto Dispute Settlement Proceedings: European Support for Airbus

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As governments need air travel, especially international travel, they subsidise these industries, especially wide-body passenger jets such as the Boeing 747 and the Airbus 380. 38

International travel is not only very profitable, but it is also a main conduit for trade, making the development of a competitive airplane manufacturer even more important to governments in Europe and the US. It is also important to the companies to work with the governments as this industry relies heavily on international trade, export markets, and low production costs, all influenced heavily by government. Aircraft manufacturing is unusual as it is “an economy of scale enormous 39

relative to market demand” according to Irwin and Pavcnik. They posit that, “The aircraft sector 40

provides a textbook example of an industry in which trade policy could affect the strategic integration between a domestic and an international rival and shift profits in favour of the domestic firm.” So due to the fact that these large civilian aircrafts are international in many respects, often sold abroad, and that subsidies can give some manufacturers in certain countries an advantage over others who may not receive the same amount of subsidies, trade disputes occur and must be settled. In such circumstances, a case could be taken to the World Trade Organisation Dispute Settlement Body (DSB).

Such cases have gone to the DSB. Airbus and Boeing have a complex history competing against each other. In 1992, at the behest of the United States and the European Commission, the negotiations were started by a subcommittee to discuss the subsidies of wide-body aircraft. This 41

agreement put a cap on direct subsidies at 33% of total development costs to be repaid within 17 years and for indirect subsidies the cap was set at 3% and must not be repaid. Of course as with 42

many WTO settlements involving subsidies, it becomes very difficult to track exactly how much money is being given to these companies for these projects due to a plethora of methods companies and governments can use to hide the true intent of the subsidies. For example, military contracts are not regulated as a form of subsidy. This is just one of the many creative ways governments and manufacturers have used to get around WTO agreements such as its agreement on Subsidies and Countervailing Measures. These measures were also what the US accused governments in Europe

Ibid., 225

38

Pavcnik, Nina. 2002. “Trade Disputes in the Commercial Aircraft Industry.” The World Economy 25 (5): 735.

39

Irwin, Douglas A, and Nina Pavcnik. 2003. “Airbus Versus Boeing Revisited: International Competition in the

40

Aircraft Market.” Cepr Discussion Paper, No. 3876. London: Centre for Economic Policy Research. 224. "WTO Analytical Index: Agreement on Trade in Civil Aircraft." WTO.

41

"EU – US Agreement on Large Civil Aircraft 1992: key facts and figures." European Commission.

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of violating as well as the GATT of 1994. So the governments of Europe and Airbus went right 43

back at the US and Boeing, with the same accusation that the US government was illegally subsidising Boeing.

This dispute started in 2004 with the development of the Airbus A380. The A380 was Airbus’ answer to the Boeing 747 and would compete directly for a share in the wide-body aircraft market. With Airbus projected to take the lead over Boeing for the first time in the airline 44

manufacturing market, the US withdrew from the WTO agreement on Trade in Large Civil Aircraft (TLCA) and subsequently brought its case against the European Communities, France, Germany, the United Kingdom, and Spain to the WTO. Its argument was that these governments in Europe 45

had given Airbus Launch Aid for the Airbus A380 development, which was expected to cost €11.9 billions. This aid came as direct aid from the different governments accused by the US as well as from indirect aid, such as British subsidies to Rolls-Royce , one of the main suppliers of aircraft engines. The US and Boeing were correct to be worried as Airbus received more orders in seven 46

of the ten years from 2000-2009. But Europe and Airbus were not going to just allow the US to 47

hinder its aircraft manufacturing industry so they retaliated with its own accusations.

According to Airbus and the European governments WTO investigation, Boeing was receiving plenty of direct or indirect subsidies from the US government at the federal and state level as well. On top of this, the Europeans defended their subsidies as being within the letter of the original TLCA agreement of 1992, a fact which the US does not dispute. This is because “Interest 48

and principal is repaid on deliveries, even before the programs break-even and irrespective of the sale price.” On the other hand, the Europeans have a long list of accusations against the US government and Boeing regarding subsidies. They insist that the US aerospace industry has been able to lead for half a century because of these subsidies, which do not have to be repaid, claiming that since 1992 when the agreement was signed, Boeing has receive €23 billion in subsidies from

"WTO | dispute settlement - the disputes - DS347." WTO.

43

Irwin, Douglas A, and Nina Pavcnik. 2003. Airbus Versus Boeing Revisited: International Competition in the Aircraft

44

Market. Cepr Discussion Paper, No. 3876. London: Centre for Economic Policy Research. 239 "WTO | dispute settlement - the disputes - DS347." WTO.

45

46

in the Spotlight.” Intereconomics : Review of European Economic Policy 45 (3): 185. Ibid., 187

47

EU – US Agreement on Large Civil Aircraft 1992: key facts and figures." European Commission.

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the US government. These subsidies include indirect subsidies which were at €2.74 billon or 11.9% of the 2003 fiscal year for the Large Civilian Aircraft (1992 agreement capped this at 3%), foreign subsidies from outsourcing to production to countries like Japan, military contracts, which are not regulated by the WTO, and additional subsidies from different US states which amount to €6 billion on top of what it receives from the federal government. On top of that, “since 1990 Boeing has avoided paying around more than $1.2 billion in federal taxes through the use of off-shore Foreign Sales Corporations (FSC). This is a direct (and illegal) government subsidy prohibited by international rules.” The amount of subsidies that Boeing receives from the US government is 49

staggering and the governments of Europe continued their accusations. “The real issue is one of competitiveness: From 2001 to 2003, Boeing has invested only $2.8 billion of its own funds in commercial aircraft R&D and capital expenditure compared to $9.4 billion by Airbus.” This dispute has continued for over a decade with developments coming every few years only for decisions to be appealed and obligations avoided.

This dispute between the EU and the US is important for this thesis as it illustrates a few key points in a few key areas. Primary among them is how the US uses international governance for its own benefit, but has difficulty accepting any ruling against them. The US was clearly in the wrong in this situation. Even so, the WTO Panel was very lenient on its estimations of the amount of subsidies going to Boeing between 1989-2006, saying they added up to €5.3 billion as opposed to the argued €19.1 billion. Yet they continued to avoid the punishment to the point where the EU 50

had to bring more disputes about the issue to the WTO. The EU’s adherence to international authorities and superstate rules is not a trait that the US shares and this is one of just many examples of this phenomena. Another important revelation from this case is the US reaction to losing its leadership position even in just one market. The US immediately withdrew from the TLCA and accused Europe and Airbus of violations it commits chronically. When the WTO failed them, it did not respect the ruling. Boeing had not brought out a new project since 1990, had little domestic competition after taking over the US market, and only spent one-third of its own funding on R&D. 51

When Airbus on the other hand only began to compete with Boeing in the late 80s, and had 8 projects being developed since 1990, 3 of which received government subsidies, it should be little surprise that Airbus has been doing so well of late competing against Boeing.

Ibid.

49

"Dispute Settlement - The Disputes - DS353." WTO.

50

EU – US Agreement on Large Civil Aircraft 1992: key facts and figures." European Commission.

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Large aircraft manufacturing and the disputes it has caused between the US and European Communities/EU is an excellent case for illustrating the priorities of the both sides as well as how they handle such affairs. On the one side is Europe, who has complied with the letter of the agreements, which has not been disputed by the US, despite the fact it brought this case to the WTO. On top of that, these subsidies were important to the development of European interests; “The European Commission approves these loans with reference to Article 87.3 of the EC Treaty, which recognises state aid as being compatible with the common market if and when it helps support important projects of common European interest.” The new Airbus A380 would compete 52

directly with Boeing’s 747 and, given Airbus’ recent success over Boeing, this could not stand for the US. Boeing’s position as leader in this market was threatened so they tried to hurt the competition. When their plan backfired, they looked for a way out of the exact kind of punishments they tried to inflict on Europe and Airbus all while leaving the relevant WTO agreement. This shows exactly how the US reacts when it loses, in this case to Europe. If the European Union is to attempt to get out from under the US umbrella and compete for leadership positions that the US has typically occupied, such as in the aerospace industry, this is the type of response it can expect. Both sides should be wary that while these two companies are fighting each other over subsidy disputes, new competition rises to the north and east as Canada, China, and Russia have plans to compete with the Airbus/Boeing duopoly for their share of the aircraft manufacturing market. 53

In terms of the result of the Airbus/Boeing dispute, despite panels, WTO decision, and overwhelming evidence, a series of US appeals have kept this dispute going. Both sides have been found guilty for violations at certain points of the appeals process, but after both claimed victory in 2010, the European Union once again appealed claiming that Boeing was not fulfilling its obligations, leading to a similar suit against Airbus from the United States. This lead to another 54

WTO ruling in March of 2012, which was a decisive victory for Airbus. Airbus was confirmed to have legally fulfilled its obligation as opposed to Boeing, who had not. Four years later, a panel of third-party members decided how to move forward. As if more evidence was needed for how brazenly the US uses international organisations as a tool instead of respecting its authority, it

52

in the Spotlight.” Intereconomics : Review of European Economic Policy 45 (3): 184.

Wall, Robert. "New Jets Threaten Airbus and Boeing Duopoly." The Wall Street Journal. July 16, 2017.

53

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appealed the results of a panel of the EU, Brazil, China, India, Japan, Korea, the Russian Federation, Australia, and Canada. For reference, these members represent the top ten economies 55

around the world other than the US and account for about three-quarters of the rest of the world’s Gross Domestic Product. As of March 2017, the latest appeals filed in December 2016 by the US 56

and January 2017 by the EU are still being processed by the WTO. This dispute started in 2004 57

under President Bush, proceeded and was appealed under President Obama, and now continues under Trump. This truly shows not only that the US plays by its own rules and only sees international organisations such as the WTO as a tool to be used instead of as an authority to be respected, but also that this attitude persists whether the Democrats or Republicans are in control of US politics. 58

Standards

As the world grows more globalised, the governments ability to regulate the market diminishes. In response to this, governments set standards for what is allowed to be sold in its markets. By setting minimum standards, governments force all potential manufacturers that would like access to their market to conform to standards that their own manufacturers already adhere to. Standards are one of the procedural factors in norm diffusion. They are especially useful for supranational governments like the EU and governments that are heavily invested in the rest of the world like the US. These standards grant them a level of influence over commerce beyond their 59

own domestic markets. Standards act very much like norms. As following a norm allows one access into a society, so too would adhering to a standard allow one access into a market. This is true of standards whether they become standardised by market influences or government regulations. 60

55

"World Economic Outlook Database April 2016." International Monetary Fund.

56

57

Smith, S. A, Amelia Hadfield, and Timothy Dunne, eds. 2012. Foreign Policy : Theories, Actors, Cases. 2nd ed.

58

Oxford: Oxford University Press. TAC 310

Steen Håkon Ursin. 2011. “Limits to the Regulatory State in the Rule-Making of Digital Convergence: A Case Study

59

of Mobile Tv Standards Governance in the European Union and China.” Technology Analysis & Strategic Management 23 (7): 760.

van de Kaa, G, and M. J Greeven. 2017. “Mobile Telecommunication Standardization in Japan, China, the United

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When it comes to the economic relationship between the United States and the European Union, it is important to account for the importance of common standards when it comes to producing a product. The standards set around the world dictate how corporations will design their products and where these products may be bought and sold. Standards are a procedural factor in norm diffusion as the setting of standards creates binding norms, so long as the agreements are followed. If standards were the same between the two markets, manufacturers around the world would have to conform with these standards in order to compete in the world’s wealthiest standardised market. By creating binding norms in the form of standards between the US and EU, they would be able to control the market and the development of the product as seen in the following case study.

To further examine standard setting and its importance for the European Union and its relationship with the US, there is a case study by Green and van de Kaa. This case study is of the standardisation process for model telecommunication in Japan, Europe, the US, and China. By analysing the standardisation process of mobile networks, one is given insight into how standards are set in a quickly evolving market. This market is also extremely globalised as mobile devices must be compatible with other devices and networks if they are to function internationally. Governments, therefore, must play a role in this process. This makes standard setting of mobile networks an appropriate example when examining how different markets in different economies develop in order to compete internationally.

In the case study, the authors summarise the evolution of mobile networks starting with 1G or the first generation. They conclude “On the line between de facto and de jure standardisation, the process has moved to a point where the basis for new standards is developed in an official way and that industry then takes over.” As mobile networks advanced from 1G to 4G and the much 61

anticipated 5G, there have been differing strategies by differing governments through each generation. For 1G, mobile telecommunications was loosely regulated as it was typically already controlled by the governments. 2G was similar for Japan and the US, but in the EU and China, standards were set leading to the most successful standardisation period so far. This was important for Europe as it resulted in a single standard across all its member states. 3G saw the clearest embodiment of the authors conclusion with standards being set by governments then further

Ibid., 190

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developed by the global organisations. Concerns did arise when the Japanese/EU development of a single standard were halted as it was not mandated because of international trade law. This was 62

due to worries that the two dominant firms in the industry would control the new market with undisclosed patents and abuse their power. The development of 4G standards there was similar to 63

what Europe did during 2G, except on a global level. With the further globalisation of the telecommunication industry, more voices from more countries influence the final product. This development has happened over decades and was lead by the US and Europe for the first three generations. It was not until 4G that other technologies from around the world such as China and South Korea became more integrated into the global standards. This is a trend that will almost definitely continue, especially given China’s dedication to 5G and ultra wide-band technology development. This development shows the importance of staying on top when it comes to 64

standardisation if one wishes to control the market. When a phone such as the Nokia N95 can be “Made in China”, sold in the US, but still have EU countries account for over 50% of the added value by themselves, staying ahead in such markets using standardisations becomes even self-evident. 65

The second important conclusion from this case study is the difference between the US and the EU in their approach to standardisation of a product. In this process, there are many similarities, but the differences accentuate the differences in American and European mindset and approach. The first difference is the between the standard setters. In the US, there is the TIA, which is a US trade association consisting primarily of US companies. In Europe there is the ETSI, which is made of mainly of European member states. In the US, the decision process if made primarily by the 66

corporations whereas in Europe, the governments have the most sway. This difference is particularly poignant when considering the extra step that is taken in Europe, but left out in the US. While their standardisation processes are similar, the ETSI has the added step of public enquire. 67

Ibid., 187

62

Kameoka, Etsuko. 2014. Competition Law and Policy in Japan and the Eu. Cheltenham, UK: Edward Elgar. 167

63

van de Kaa, G, and M. J Greeven. 190

64

Ali-Yrkkö Jyrki, Petri Rouvinen, Seppälä Timo, and Ylä-Anttila Pekka. 2011. “Who Captures Value in Global Supply

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Chains? Case Nokia N95 Smartphone.” Journal of Industry, Competition and Trade : From Theory to Policy 11 (3): 272.

Ibid., 183

66

Ibid., 184

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Public comments are taken into account in this stage and any significant changes made at this point will lead to another round of voting. Not only do democratically elected governments take the lead on standard setting, but also the EU allows citizens to have direct input. In the US, corporations in trade associations choose standards with little input from the consumers.

The takeaway from this case study is twofold. First is that standards are the way forward for a government that wants influence markets at home and abroad, especially for a government like the EU. Standards can be used to control markets on a global scale if the market of the standard setters is big enough. With the increase competition coming from countries like China, Japan, and South Korea, the EU and the US must continue to act together if they wish to keep their leadership position in evolving markets and the economic prosperity this provides. In the Nokia N95 case study referenced to demonstrate the value Europe adds to products, the authors confirm that, though the N95 is a single case study, this is “a typical case in the electronics industry”. If Europe and the 68

US fall behind now in markets such as mobile networks, they will lose large parts of the market shares to other economies. If they work together to form common standards, they will create the strongest market in the world that simply must be accounted for if one wants to trade internationally. The second conclusion from this case study is the deep-seeded difference in approach, which could be a potential stumbling block for common EU/US standards. It is also an opportunity to impress upon the US government the importance of common standards for its ongoing prosperity and the necessity of input from the citizens in the setting of these standards. Just as in the EU where member states working together gives them strength, so too will happen when the US and EU agree on common standards.

Ali-Yrkkö Jyrki, Petri Rouvinen, Seppälä Timo, and Ylä-Anttila Pekka. 2011. “Who Captures Value in Global Supply

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Military

Compared to the economic relationship between the US and EU, the military relationship is less expansive. As summarised earlier, European integration grew under the protection of the US military umbrella. Since the end of the Cold War, NATO has expanded, as has the EU. With the expansion and political integration after the Cold War, military integration would inevitably be a topic of debate in Brussels. To this point, military integration attempts have been met with resistance. The general attitude of the modern day Europeans is not conducive to military integration, a fact lamented by some in the US. “In early 2010 US Defense Secretary Gates captured the position thus: ‘The demilitarization of Europe – where large swaths of the general public and political class are averse to military force and the risks that go with it – has gone from a blessing in the 20th century to an impediment to achieving real security and lasting peace in the 21st’”. Of all 69

the forms of integration, this is the most controversial and divisive, especially as it begs the question of who is in charge if there ever was a situation. This lack of one undisputed leader is just one of many obstacles that lie ahead. If the global norm of US leadership is about to shift and European integration is to emerge from the shadow of the US, then it must integrate militarily eventually.

Post-Cold War NATO

To analyse the military relationship between the EU and the US, one must examine NATO. Currently 22 members of the European Union are in NATO along with the United States. The EU 70

has had troubles integrating itself militarily leaving NATO as the dominant military alliance of the region. There has been some military integration at the European level and this integration was fostered and encouraged by NATO until it no longer suited them. While the EU is closely linked 71

with NATO and works together with them on common challenges, NATO is the more effective military alliance in the region. This is due to the presence of the US in NATO and its Cold War history. After the fall of the Berlin Wall and subsequently the Soviet Union, NATO evolved from a

Marsh, Steve and, Alan P. Dobson. “Fine Words, Few Answers: NATO’s ‘Not So New’ New Strategic Concept.” In

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Nato Beyond 9/11 : The Transformation of the Atlantic Alliance, edited by Ellen Hallams. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. 157.

Nato. "Member countries." NATO.

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Hallams, Ellen, ed. 2013. Nato Beyond 9/11 : The Transformation of the Atlantic Alliance. New Security Challenges.

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Cold War defensive alliance against Communism “into a wider collective security institution predicated on crisis management.” NATO was in the process of turning its focus to ‘out of area’ 72

operations. Since the Cold War saw no fighting in Europe, NATO, the Cold War alliance, did not conduct any operations until after the enemy they united to defeat was already defeated. But now 73

that the fear-inducing shadow of the Soviet Empire had receded, there was only one superpower left in the world and the US intended to make sure it stayed that way.

After the Cold War and the emergence of the US as the only superpower, there was a transition period for NATO. Before the 9/11 attacks and subsequent debacle in the Middle East that has ensued, NATO was to transition into a tool that the US could use to spread its influence into the vacuum left behind after the fall of the Soviet Union. This was achieved in three ways, intervention in the Balkans, enlargement in the East, and establishment of the European Security and Defence Policy (ESDP). Intervention in the Balkans was the real test for Europe and NATO as it was 74

before operations ‘out of area’ were established and accepted by those in NATO or outside of it. The situation in the Balkans during the 1990s allowed the US a humanitarian justification to get involved and act as the world police. The problem was, Europe was not completely committed to ‘out of area’ operations and was also against the US decisions to lift a weapons embargo on Yugoslavia. But for President Clinton and the US, this was a chance to prove themselves. Clinton 75

said failure in Yugoslavia would mean “to give up American leadership”. Since it took the entire 76

Cold War to win this leadership, failure was not an option. By the end of the decade, European hesitance paired with US aggression lead to the US taking the lead militarily in Europe. So did the US use a humanitarian crisis, which it enabled by lifting the weapons embargo and choosing sides, to claim military leadership for postwar NATO and de facto the US? Perhaps, perhaps not, but this conflict lead to the beginning of fissures in the NATO alliance.

Ibid., 3

72

Rühle, Michael. “Reflections on 9/11: A View from NATO.” In Nato Beyond 9/11 : The Transformation of the

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Atlantic Alliance, edited by Ellen Hallams. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. 57.

74

Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. 5. Ibid., 6

75

Gibbs, David N. 2009. First Do No Harm : Humanitarian Intervention and the Destruction of Yugoslavia. Nashville:

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The Balkans were one of the key areas for the US in gaining power in post Cold War Europe With NATO growing more legitimate with each passing operation, it needed to grow stronger as well. This was achieved twofold; by expanding its membership to include former Soviet bloc member states and by emboldening the Europeans to integration militarily. Enlargement was an clear way forward for NATO as it not only strengthened the alliance, but also weakened Russia if it were to recover. By strengthening the alliance with enlargement to the east and closer cooperation with in the Middle East and Gulf region, “the alliance has become a precondition for being recognised as a modern, democratic subject.” By accepting the newly democratised members from 77

the East, NATO spread the influence of US democracy far and wide, in order to never face competition from Russian Communism again. NATO became the international instrument for enforcing the fundamental global norm of US global leadership. NATO and EU enlargement after the Cold War are considered convincing empirical evidence of relationship building “for the sake of friendship and cooperation rather than rivalry of enmity, and that identities and interests have been fundamentally changed in the process.” The EU and especially NATO were used to spread the 78

fundamental norm of US global leadership and bring people into the “Western club”. 79

But that too was not enough. NATO was an alliance of primarily European nations with the US pulling the strings, but European political and economic integration was advancing alongside the rise of post Cold War NATO. The new direction of NATO was causing friction with the new direction of Europe. The EU began to integrate militarily with the ESDP, but in this, intentions started to become clear and cracks in the alliance widened. The ESDP attempted to allow the EU the chance to use autonomous military action without the alliance and “fuelled US concerns that a separate European defence capability would undermine the centrality of the alliance”. The US 80

feared competition from an increasingly unified Europe.

On January 1, 1999, the US faced its biggest threat, coming from its closest allies. This new threat was the introduction of the euro and direct challenge it presented to the dominance of the US

77

Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. 15.

Smith, S. A, Amelia Hadfield, and Timothy Dunne, eds. 2016. Foreign Policy : Theories, Actors, Cases. 35d ed.

78

Oxford: Oxford University Press. 82 Ibid. 86

79

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dollar. “The advent of the euro coincided with a gradual upsurge of contention between the United States and Europe regarding trade in aircraft, genetically modified foods, telecommunications, and fruit products.” Helmut Kohl believed that this could lead to the end of US dominance and at the 81

time the Financial Times called it “a seismic challenge to the dollar”. For NATO, this meant many of its members were integrating, which could only lead to more global power and legitimacy. For the US, this new currency threatened the US dollar’s dominance, a dominance won through decades of neoconservative campaigns under the constant threat of global nuclear war. The euro was a 82

currency backed by a peaceful and supranational government that used soft power instruments as opposed to interventionist tactics of the US. It was also the currency of a group of strong economic partners who would now work more closely.

The US had expanded the power and legitimacy of NATO throughout the 1990s and with the turn of the century around the corner, NATO had to address concerns about the future of the alliance. With the increased integration of the European nations and the introduction of the euro, the US needed to realign US and European interests. For this, it came full circle and intervened in Kosovo. This also allowed for the introduction of the “New Strategic Concept”, an idea that stated that NATO should intervene anywhere in the world to protect Western interests. “A strengthened NATO represented an institutional alternative to the unreliable European Union, thus undercutting European efforts aimed at foreign policy and financial independence.” On top of that, US General 83

Wesley Clark admitted to the US strategy saying “As a result of those [economic] interests, we have continued to maintain a strong military presence in Europe”. With one swift move and a change in strategy and mission of NATO, the US stalled European military integration at the European level just when it had serious momentum. This is just one of many times the US has fended of contestation of the global fundamental norm from the EU. These moves to empower NATO have also highlighted the lack of unity in the alliance and “the structural impediments to NATO’s effort to adapt”. The 1990s were a strong decade for the US; it consolidated power after winning the 84

Cold War, effectively set itself up as world police, and curtailed efforts around the world to

81

Vanderbilt University Press. 172.

Herman, Edward S, and Noam Chomsky. 2002. Manufacturing Consent : The Political Economy of the Mass Media.

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New York: Pantheon Books.

83

Vanderbilt University Press. 173.

Rühle, Michael. “Reflections on 9/11: A View from NATO.” In Nato Beyond 9/11 : The Transformation of the

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Master of Arts Thesis