October 2003
Relaunching the Transatlantic Partnership: Common Goals and Shared Values

On October 2-4, 2003, the New Atlantic Initiative of the American Enterprise Institute and the Aspen Institute Italia organized a conference in Rome that focused on ensuring American understanding of why the United States needs to cultivate its European allies, on drawing the European attention to the importance of the democratization of the greater Middle East, and on relaunching the transatlantic relationship.

What Divides and What Unites the United States and Europe

* Ambassador Jim Nicholson, U.S. Embassy to the Holy See (chairman)
* Michael Novak, AEI
* Josef Joffe, Die Zeit
* Richard N. Perle, AEI
* Enrico Letta, Italian Parliament

A deep and usually unspoken force that unites North America and Europe is ethnicity and religion. The North Atlantic civilization has drawn four thought categories from its Jewish and Christian roots: the rights endowed in all human beings by their Creator, the liberty of conscience, a regulative idea of truth, and historical consciousness. These are the distinguishing marks of the civilization of Europe and North America, which set it apart from every other civilization, whether religious or secular. They are horizon-shaping concepts that frame the way we perceive reality.

Despite common values, numerous factors divide both sides of the Atlantic. The United States and Europe have different views of national sovereignty and freedom of action and of the readiness to provide for robust military forces, as well as of the responsibility for the protection and extension of democracy in the world. Americans are also skeptical as to whether international law and the United Nations, which was not built to deal with terrorists, can protect their fundamental security interests. The United States perceives its high vulnerability to external threats as a justification for sacrifice and for preemptive action.

In the run-up to the war in Iraq, two allies and one old adversary of the United States, namely France, Germany, and Russia, came together in an ad hoc coalition against America, anxious to stop the looming war. Their opposition signaled a profound change in the nature of power and dependence across the Atlantic, but the coalition could not stop the war. Rather than returning to balance-of-power politics, the solution is to return to cooperation, since the most important national interests of both the United States and of Europe can only be pursued together.

Europe and the United States do not only differ on strict foreign policy issues but also on matters related to the economy and trade. While the United States focuses on growth, Europe focuses on distribution-on spending money that is more and more difficult to obtain. The United States is walking. Europe is standing. After the Seattle and Cancún failures, the trade world balance changed in a significant and irreversible way, and it became obvious that we both need a strong World Trade Organization. Being open and united is crucial to achieving this goal. 

The Challenge of Democratization in the Middle East

* John Bruton, European People's Party, Dublin (chairman)
* Javier Solana Madariaga, European Union-Council of Ministers, Brussels
* Danielle Pletka, AEI
* Emma Bonino, European Parliament
* Michael A. Ledeen, AEI

The Muslim Middle East seems to be a democracy-free area. In fact, there are elections and parliaments, but at the same time, there are autocrats. This makes the Middle East unique. Democracy has slowly but surely spread in Eastern Europe, Asia, and Latin America, but the Middle East seems stuck in what may be called "outmoded" forms of government. Democracy is not easy to establish, and it does not occur naturally. Indeed, it is not just about elections and government, because elections can bring dictators; it is mainly about the society. Democracy must be wanted in order to be successful. The Middle East can be democratized, but it will take time and effort on the part of both the United States and the European Union.

The most urgent challenge is to put human rights and market economics on the agenda and to make sure that through education and learning those very necessary changes toward democratic principles can be achieved. Elections are by far not the end of the game: they are the culmination of a democratic progress. Broadening political space in the Middle East is vital. Statistics show drastic declines in income, health, life span, and productivity, and if those problems are not addressed, a continued rise in alternative ideologies and extremism will take place. However, there is a constituency among Muslims of the Arab and Iranian Middle East for freedom and a willingness to fight the battle-this prepares the ground for the process of democratization.

The United Nations needs reforms to become more effective at bringing about sustainable change for millions of Arabs/Iranians who face problems such as demographic explosion, economic stagnation, and lack of political freedom. This change must happen despite the deep disagreement between Europe and the United Sates on the UN role in international relations. Hardly any means of communication and information exist in the Arab world--there are no outlets for most Arabs' voices and opinions in public life, even if they are literate and well-educated. These voices require breathing space, and we need to start listening to them.

Since the countries that sponsor terror are all tyrannies, the question of whether the process of democratization of the Middle East will succeed or not has become a serious concern rather than an interesting study case. Waging war against international terrorism equals waging war against tyrannies: that war can only be won if democracy finally gains the upper hand. Some who live under despotic regimes are ready for freedom and democracy. Iranians, for example, study law, constitutions and democratic principles, and compare their way of living to others. They have access to information through satellite television, radio, and the Internet. Over the past century, education and technology have accelerated democratization; in many countries the process is already underway and might even proceed faster than one can foresee. Can Iran, together with Iraq, provide the seeds for genuine democratic revolution in the Muslim world?

International Legitimacy, Between the UN and Coalitions of the Willing

* Ana Palacio Vallelersundi, Ministry of Foreign Affairs, Madrid (chairwoman)
* John O' Sullivan, National Interest, Washington, D.C.
* Carl Bildt, United Nations, Geneva
* Karsten D. Voigt, Ministry of Foreign Affairs, Berlin
* John R. Bolton, U.S. Department of State, Washington, D.C.

The authority of the UN Security Council and its role as a legitimizing entity for the use of force causes different reactions. Some European states desire to restrain American power, and they attempt to utilize international law and the United Nations for that purpose. This attitude has negative effects on the UN's efficiency. When the United Nations proves incapable of taking action, ad hoc coalitions of countries will naturally arise to deal with international threats.

However, in the view of some Europeans, coalitions of the willing should not intervene in other states' affairs on the basis of long-term prevention. According to this view, the United States set a dangerous precedent with intervention in Iraq. India, for example, could gather a group of neighboring countries to address what it believed to be a terrorism threat. In order to avoid this chain reaction, we need to strengthen the transatlantic community and reform international law to accommodate new security needs.

Many in Europe and in the United States believe that institutions such as the International Monetary Fund, the United Nations, and the World Bank are necessary to strengthen globalization and take on the challenges that the world has been facing since the fall of Communism. The "good world" that we all want to build must be founded on rules and cooperation amongst the actors involved. The more we can build structures that we can rely on and trust, the more effectively we can achieve shared goals. One suggestion was that in case of Iraq, the United States should work together with the United Nations to rebuild the country.

The question of legitimacy is a contentious one. While Germany's constitution explicitly states that international law supercedes German law, American law regards the American constitution as the highest authority-international law does not have the legitimacy to determine a sovereign government's decision. A good example of this conflicting view is UN Resolution 678, which authorized the expulsion of Iraq from Kuwait in 1990. Indeed, while this resolution was in accordance with the U.S. administration policy and enjoyed political support, it was not deemed necessary to legitimize the American government's actions.

Social Market versus Cowboy Capitalism: How We Can Learn from Each Other?

* Lucio Stanca, Ministry for Innovation and Technology, Rome (chairman)
* Lord Dahrendorf, House of Lords, London
* Kevin A. Hassett, AEI
* Daniel Gros, Centre for European Policy Studies, Brussels
* Bruce Kovner, Caxton Associates, New York
* Lorenzo Bini Smaghi, Ministry of Economy and Finance, Rome

Different models of capitalism reign not just on the two sides of the Atlantic but also within Europe: we have Italy's "family capitalism," Britain's "shareholder capitalism," and Germany's "corporate capitalism." Generally speaking, innovation and entrepreneurial initiative are more effective in the United States than in Europe. A solution to this problem calls for changes in cultural attitudes-the main reason for transatlantic divergences.

Both continents face increasing government spending for welfare programs and continued decreasing corporation tax rates. America grows much faster than Europe because Europe has very large governments that represent a big share of GDP, which mechanically constrain productivity growth. If Europe could drop 10 percent of GDP from government, the long-run effects on growth would be tremendous. To improve growth prospects in Europe and in America, economic policies should tackle the looming generational imbalances in the pension systems and welfare benefits. Real change in European economies can only occur if "peer pressure" is exerted on policymakers in both big and small countries. Indeed, pursuing a policy of forcing large countries to meet the rules of the stability pact is key to creating a more dynamic European common market.

Europe and the United States need to develop better instruments of policy consultation, especially as regards foreign exchange policies. Exchange rates are expressions of the price of two currencies, and no country can influence its exchange rate without influencing the rate of another currency. Europe can learn from the United States how to exert pressure through the use of exchange rates, where the Federal Reserve has been very effective. While the United States tries to pressure China and Japan to allow their currencies to adjust to market forces, Europe lacks a single voice on these matters and is not able to represent its complex interests.

Europe also needs to address its slow population growth: between 2002 and 2003 America's population growth hovered at about 1 percent while Europe's population grew only by about 0.3 percent. Indeed, although U.S. and European per capita GDP are almost the same, Europe's GDP is still 40 percent lower than the America's GDP. The reason for this disparity originates from a higher percentage of the American employment and longer working hours than the European population. To become more economically competitive, Europe needs to liberalize its labor markets.

NATO's Role in Facing Current Threats

* Alessandro Minuto Rizzo, NATO, Brussels (chairman)
* Gary Schmitt, Project for the New American Century, Washington
* James F. Dobbins, Center for International Security, Washington
* Roberto Testore, Finmeccanica, Rome
* Simon Webb, Ministry of Defense, London

The NATO debate today is about its relevance: many critics think that NATO has become obsolete with the end of the Cold War. They are wrong. In the last decade, not only has NATO expanded, but it has also undertaken missions in Macedonia, Kosovo, Bosnia, Afghanistan, and on the margin, in Iraq. However, impediments to NATO's effectiveness remain, including an inflexible decision-making structure, European reluctance to use military force, American unwillingness to utilize NATO's full potential after the terrorist attacks of September 11, 2001, and possible overlaps with the upcoming European security and defense policy.

NATO's success will hinge upon how it deals with Iraq-an issue that has been the greatest source of division across the Atlantic and within NATO. In the Middle East, the United States has taken on different tasks and it needs help. The American government should consider an increase of NATO's commitment during Iraq's transition to a democratic order. On the other hand, Europe must create a rapid reaction force, which would be used to fight terrorism and the proliferation of weapons of mass destruction.

The United States and Europe need to put on the table the areas of agreement and disagreement and to move forward together. After September 11, the two sides of the Atlantic cooperated to go after al Qaeda and international terrorists. Iraq has led to the sharpest transatlantic division since the end of the Cold War. In the face of new threats and challenges, the values upon which the transatlantic alliance was founded-democracy, liberty, and the rule of law-still have to be our strongest magnets.