Recently, the ties between the United States and the European Union have been strained by a number of strategic and economic issues.
NATO and Trade Issues
The US President Donald Trump said that for very long, the US has been shouldering the financial burden of the North Atlantic Treaty Organization (NATO), and other member states — especially certain EU countries — have got away without doing much. In 2018, Trump wrote letters to NATO members states — including Germany, Spain and Netherlands, along with Canada, days before the NATO Summit (July 11-12, 2018), that they should contribute their “rightful share”. If not, the US would be compelled to think of withdrawing its military presence around the world.
The US President singled out Germany for failing to live up to its obligations vis-à-vis NATO, in spite of the economy performing reasonably. While reacting to Trump’s letter, the Belgian PM Charles Michel stated that he was not impressed by the letter from the US President.
The letter followed the G-7 Summit in June 2018, where Trump had major differences with leaders of EU countries, as well as Canadian PM Justin Trudeau over trade issues. The US President had even refused to support the communiqué issued by members, and had criticized the Canadian PM.
Days after the G-7 Summit, Trump did not miss out on an opportunity to lash out at the European Union. In a tweet, from Singapore where Trump had a summit with North Korean leader Kim Jong-un, the US President argued that the US financial contribution towards NATO is disproportionate, and ends up protecting countries which “rip off” the US on trade. Trump in his tweet said that the EU which had USD 151 billion surplus should contribute more.
Iran Nuclear Deal
Differences between the EU and US have been profound with regard to dealing with Iran. Europe has been in favor of engagement with Tehran, and opposed Washington’s decision to pull out from the Joint Comprehensive Plan of Action (JCPOA) signed in 2015.
French President Emmanuel Macron, while reacting to Trump’s decision to pull the US out of the Iran Nuclear Deal, tweeted: “France, Germany, and the UK regret the US decision to leave the JCPOA. The nuclear non-proliferation regime is at stake”. At a UN Security Council Meeting in September 2018, Macron criticized the US withdrawal from the Iran Nuclear Deal. He stated that the Iran issue could not be dealt with through “a policy of sanctions and containment”, and that engagement was essential.
Differences between the EU and US were also clearly visible at two major events in February 2019: the Warsaw Middle East Conference and the Munich Security Conference.
Washington had not taken kindly to EU countries (Germany, France) along with UK attempting to circumvent Iranian sanctions through a Special Purpose Vehicle (SPV). Top members of the Trump administration had attacked this decision. Commenting on this decision, US Vice President Mike Pence stated at the Warsaw Conference: “It is an ill-advised step that will only strengthen Iran, weaken the EU and create still more distance between Europe and the United States”. Pence urged France and Germany to pull out of the nuclear agreement at the earliest. While there were representatives from 60 countries at the Warsaw Conference, no senior officials from France or Germany attended the Warsaw Conference.
A number of EU leaders had been calling for a more nuanced method of dealing with Iran. Speaking at the Munich Conference, held days after the Warsaw Conference, German Chancellor Angela Merkel agreed with US concerns with regard to Iran’s nuclear program and also its role in the Middle East. She stated that the deal was not a sign of weakness, but a “small anchor” which could help in “exerting pressure on Iran in other areas”. While warning of the dangers of isolationism, she criticized US decision to withdraw from Afghanistan and Yemen.
The China factor could also lead to a further deterioration of ties between the EU and the US
During Chinese President Xi Jinping’s Europe visit in March 2019, Italy became the first G-7 country to become part of the Belt and Road Initiative (BRI). Italian Prime Minister Giuseppe Conte signed a “non-binding” agreement with Xi to be part of the BRI. Both sides also signed deals estimated at USD 2.8 billion. According to one of the agreements, the China Communications Construction Company (CCCC) will managed the Italian ports of Genoa and Trieste. CCCC will develop rail infrastructure of Trieste, which is close to Central and Eastern European cities, which the Chinese are seeking to tap.
One of the reasons why many European countries are strengthening economic ties with China is growing tensions with the US.
Italy’s decision to join the BRI project was criticized by the US. A tweet from the US National Security Council stated that Italy’s endorsement of BRI would not benefit the Italian people, and only provide “legitimacy to China's predatory approach to investment”.
within EU over BRI
It would be pertinent to point out that it is not just Washington, but many EU countries which are also skeptical of the BRI. Reacting to Italy’s decision, German Foreign Minister Heiko Maas made the point that if EU wanted to be taken seriously and emerge as a serious challenge to the US, China and Russia, it needed to have one stand over key issues. He also alluded that doing business with China wasn’t easy and a number of countries would find themselves dependent.
Skepticism with regard to BRI is the reason why the EU has come up with an alternative strategy to the BRI, dubbed as the EU-Asia Connectivity strategy. The strategy lays emphasis on the need for connectivity initiatives to be transparent, rule based and economically sustainable.
Macron, who signed MOUs with Xi, were also critical of BRI. Days before Xi landed in Europe, Macron visited East Africa and sought to offer an alternative to China. While there is no doubt that offering an economic alternative is not easy, African countries do not want to be solely dependent only upon China. The French President also made the point that French companies would help in creating jobs and benefit local economies and not lead to unsustainable debts.
During Xi’s visit to France, Macron invited Merkel and the European Commission President Jean-Claude Juncker for a “high level meeting on the challenges of multilateralism”. The aim was to present a “united European front”. Macron notably urged the Chinese President to “respect” EU unity and EU values.
Huawei and 5G Network
EU’s recent decision to give each member country the right to decide if they want to use Huawei equipment for their 5G network is likely to worsen tensions with the US. A recommendation by the European Union stated: “EU member states have the right to exclude companies from their markets for national security reasons, if they don't comply with the country's standards and legal framework”.
So far, many EU countries have been open to Huawei, while a few like Poland have taken a tougher stance vis-à-vis China’s telecommunication companies. US, on the other hand, has taken a much tougher stance with regard to usage of equipment provided by Huawei or ZTE. Senior members of the Trump Administration have been convincing other governments to impose similar bans, arguing that Chinese telecom companies are producing equipment which could help not just in spying, but getting access to the latest technologies.
The US’ National Defense Authorization Act (NDAA), passed in August 2018, bans government agencies from using Huawei products. One of the provisions of the NDAA clearly states that any organization receiving US government funding is banned from using telecommunications equipment and recording equipment made by Huawei or ZTE. The NDAA also states that it will stop assistance to educational institutions which take financial assistance or use Huawei equipment. Many US educational institutions have begun to decline funding from Huawei, which they received under the HIRP (Huawei Innovation Research Program), and have also stopped using Huawei equipment.
There certainly are strong disagreements between the EU and the US, but Trump’s transactionalism, which borders on being short sighted, is detrimental to EU-US ties. The biggest beneficiaries of growing strains between the EU and the US will be China. One of the reasons why many European countries are strengthening economic ties with China is growing tensions with the US. Beijing is successfully exploiting these divisions. The EU and the US should work seriously to develop alternatives to the BRI.
The Trans-Atlantic relationship is an important one, and in spite of dissonance between Brussels and Washington DC on key issues, EU leaders realize this as well. In this context, Merkel made a significant point at the joint meeting with Macron and Juncker that in the EU-US-China triangle, the US role is important especially in the context of “multilateralism”. It is important that the EU and the US work sincerely towards keeping this alliance intact.