European Affairs

altBy contrast, The Next Superpower?, Rockwell A. Schnabel’s review of the Transatlantic relationship after his stint as U.S. ambassador to the European Union, is unlikely to excite the tabloid press. As far as revealing tidbits go, this is about as racy as it gets: “At a meeting in February 2003 with Nick Burns, then our ambassador to NATO and myself, [Javier] Solana stressed his hope that we could insulate U.S.-EU relations from any fallout from Iraq.” Schnabel notes “the strange truth” that the European Union took no position on the most pressing issue of the day.

Schnabel’s book, subtitled The Rise of Europe and its Challenge to the United States, is not intended to entertain as much as to instruct. It is a sober analysis of Europe’s strengths and weaknesses, a sensitive critique of Brussels and a broad assessment of how best Washington should handle the European Union. In short, it reads like a pragmatist’s guidebook to the Old World.

This is both admirable and disappointing. Admirable, because it reinforces Schnabel’s reputation as a diplomat of the old school, a man who sticks to the official script and respects the confidentiality of the ambassador’s office. Disappointing, because Schnabel is a self-styled realist who worked inside a U.S. administration riven by profound ideological differences over Europe. A little less discretion and we might have learned a lot more about the very important argument within Republican ranks over Europe.

The Bush administration has been caricatured as split between those who favor a Europe that is “divided and weak” versus those who prefer it “united and strong.” After President George Bush’s symbolic, rhetorically pleasing, but ultimately insubstantial visit to the institutions of the European Union in February 2005, the wiseacres in Brussels concluded that the president had made a Solomonic determination: America, Mr. Bush seemed to say, was happy to see a Europe united and weak.

Schnabel would, no doubt, dispute that interpretation. But, sadly, his book does little to help illuminate either the argument within the administration or the president’s policy. There is simply a passing reference to the “neoconservatives, who argued that the United States could ‘cherry-pick’ European allies by forming coalitions of the willing…thus rendering the European Union irrelevant” and “the realists [who] insisted on the contrary that European integration was here to stay…and that the United States should aim instead at confirming our partnership with a united Europe.”

Still, Schnabel makes a strong case against the dirigiste tendencies at the European Commission, particularly in the area of regulation. He makes America’s case simply and clearly against an over-reliance on the precautionary principle. Later, he takes an interesting detour into Europe’s relationship with Islam, both criticizing opponents of Turkish EU membership and also offering up Europe, with its growing Muslim population, as a “cradle for Islamic democracy.”

The book seeks to introduce American readers to Europe, presumably to make up for what Schnabel sees as a woeful lack of coverage in the U.S. media. (Only the Wall Street Journal maintains a permanent presence in Brussels, he notes; Francis X. Rocca, his co-author on the book, is an American journalist, but based in Rome.) The result is a gallop through Europe’s modern history, with nods along the way to Churchill, Monnet and Delors, but, infuriatingly, stopping just short of the French No to the European constitution in May 2005.

The most vexing issue, for Europeans and Americans alike, is the European Union’s role in setting foreign and security policy. Here, Schnabel cautions Europeans against overemphasizing military integration, against embracing an unrealistic faith in diplomacy to avoid war, against a strictly reactive and defensive military doctrine and against a “vision of the European Union as a geopolitical counterweight to the power of the United States.”

And, if that sounds a difficult course for the Europeans to navigate, consider his prescription for the United States. America must still wait for an answer to the old question often doubtfully attributed to Henry Kissinger: “If I want to talk to Europe, what telephone number do I call?” Schnabel says that there is no single number, but, at least, “there is a switchboard.”

He continues: “In our dealings with the European Union, America will have to show enormous patience and flexibility, as well as humility and respect, if we hope to see this new global power emerge as a new and great ally of the United States.” A worthy piece of advice, but bound to raise a laugh in European corridors, where the words “patience,” “flexibility,” “humility” and “respect” are not immediately associated with the Bush administration.

Olaf Gersemann’s book, Cowboy Capitalism: European Myths, American Reality, is not nearly so diplomatic. And it is all the better for it. Gersemann takes on the German elite’s disdain for so-called “American conditions,” debunking the stereotypes, prejudices and assumptions so many Europeans make so confidently about life in the United States. And, then, he throws it back in European faces: Cowboy Capitalism is a point-by-point rebuttal of Europe’s so-called “comfy capitalism.” It is a call to the leaders of Germany, France and Italy, in particular, to embrace American-style liberalism or punish Europeans with years more of sub-optimal growth and lackluster job creation.

His starting point is Gerhard Schroeder, the former German chancellor, and a slew of others, who repeat the same rejection of the U.S. economic model on uncannily similar grounds: “I do not want American conditions in the labor market. Social democrats are convinced that it has to be possible for people to live in decency and dignity without having to do three jobs a day and without any protection against dismissal.” Gersemann then takes on the “three job” jibe, laying out the numbers to explode the myths.

This is a fine piece of economic argument. It is readable, thoughtful, compelling and, if not exactly amusing, it is, on occasion, wry – no small feat for a book which is, among other things, an analytical compendium of economic growth and labor market statistics from the 1970s to the present day. (A disclosure: I don’t know Gersemann, but he works for FT Deutschland, the German cousin of the Financial Times, which is my newspaper.)

The book is peppered with figures: a working-age German works about 2 hours and 35 minutes per day, if averaged out over a 365-day year; 15 of the 20 largest listed companies in Germany in 1967 were still in the top 20 in 2002, whereas the make-up of the U.S. top 20 publicly traded companies had almost completely changed; in fact, only 0.34 percent of employed Americans in 2003 were working three jobs.

Gersemann is offering a paean to U.S. productivity growth and the record of American job creation. (Here are the numbers: between 1970 and 2003, the total number of people employed in the United States rose by 58.9 million or 75 percent; in Germany, France and Italy, employment increased by 17.6 million or 26 percent.)

But he also tackles a number of Europe’s cherished self-justifications. He teases European skeptics for their apparent preference of no jobs to “McJobs”, then points out that in the United States there has been faster job creation at the upper end of the income scale than at the bottom; he rejects the claim that U.S. growth is credit card-financed, noting that household debt in America is sustainable; he examines U.S. poverty statistics and concludes America has a poverty problem, but one that is greatly exaggerated by Europeans.

Gersemann skips perhaps a little too briskly over the issue of the U.S. current account deficit. He does not address the politics of fundamental economic reform in Germany, France and Italy. He explains why millions of Americans are uninsured, but the reasons are unlikely to placate Europeans who view the U.S. healthcare system as a colossus of daily injustice.

Given the imbalances in American society on display in the wake of Hurricane Katrina, his most contentious line of argument is his embrace of income inequality. Gersemann’s case is, among other things, that a) equality of opportunity, not income, is a social right; b) income inequality is a spur to growth; c) inequality of income in the United States is not terribly unfair, as it is based heavily on experience and education; d) economic inequality and injustice in Europe are more profound than Europeans like to admit.

All this may be true, but the U.S. income gap is a worsening social problem that is prejudicing equality of opportunity and social mobility in the Land of the Free. The problem is belittled by Gersemann’s statistical approach. But, then, Gersemann’s book is an assault on soft-headed economics. He makes, for example, a deft case against the use of German state aid to prop up Philipp Holzmann, the German construction group.

Cowboy Capitalism is an argument for boldness. Angela Merkel, Germany’s new Christian Democratic chancellor, may well agree with much of Gersemann’s analysis. Unfortunately, her position at the helm of a coalition government with the Socialists that Mr. Schroeder used to lead is not exactly an ideal starting point for flouting conventional wisdom.


This article was published in European Affairs: Volume number 6, Issue number 4 in the Fall of 2005.