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Will Europe Rise to Biden’s Challenge?

In seeking to renew the image of liberal democracy in an age of rising authoritarianism, US President Joe Biden recognizes that the first step is for the West to get its own house in order. For Europe, that means finally overcoming longstanding political hurdles to deeper economic integration.

BERLIN – US President Joe Biden has found his mission: to secure the West by strengthening its liberal democracies against authoritarian temptations, both foreign and domestic. Having witnessed both an attempted coup and steeply rising socioeconomic inequalities in his own country, Biden knows that democracies will not find support abroad until they have fulfilled their promises of fairness, justice, and security at home.

If Europe wants to be a partner in this democratic revival, it can start by recognizing the realism behind the US administration’s rhetoric. Biden is not pining for some mythical lost era of American greatness, as his predecessor did. He is focusing on the future, and he is concerned with questions that animate democratic liberals and conservatives alike.

For example, how do we create opportunities for those left behind by global capitalism, so that they will not fall prey to populists’ false promises? How do we restore other developed democratic countries’ commitment to democratic values? How do we rein in overpowered financial and tech industries, or forge a more dynamic global order?

The idea of “the West” was always meant to be universal, offering a normative framework for peaceful, prosperous coexistence among all people. Human rights, freedom of expression, democratic self-determination, and the rule of law are not exclusive to any region or group of countries.

But if you are a Chinese leader, you will ask why your country should follow the “West,” especially now that most Chinese regard the Western-designed international order as hostile to their own aspirations. From this perspective, the European-American era is over. Signs of Western decadence are ubiquitous – from the Iraq War debacle and the Trump presidency to the United Kingdom’s exit from the European Union.

While Americans and Europeans argue for the importance of individual human rights, the self-confident Chinese rebuttal is that there are also social human rights: to education, nutrition, adequate housing, and so forth. Here, China has undeniably achieved great things, lifting more than 800 million people out of abject poverty over the past four decades.

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The lines, then, have been drawn. For Europe to make a meaningful contribution to Biden’s mission, it must become stronger. And because its common foreign and security policy tends to evolve only very slowly, Europe must also continue to press ahead with the expansion of the single market, which will remain Europe’s main attraction and source of strength.

But the single market can retain its attractiveness only if it allows for greater dynamism. To become a technological leader with less dependence on China and the United States, Europe must invest more in research and development (R&D), digitalization, and artificial intelligence. It should be pursuing a joint climate policy with the US. And while the G7 recently agreed on a Build Back Better World Partnership to compete with China’s Belt and Road Initiative in Central Asia, Africa, and Latin America, the EU must do more to support this program, while also bolstering NATO’s deterrent power.

With federal elections coming in September, Germany, the EU’s biggest economy, should be debating how it intends to strengthen the bloc in the coming years. Yet all the main German parties and politicians have been silent on this issue, presumably because they are still waiting to see how the pandemic will evolve. Many fear that richer northern member states will regain their economic strength quickly while others – namely, Italy and France – fall further behind.

The EU’s €750 billion recovery fund will not be enough to achieve anything close to a convergence between southern and northern member states; indeed, it will not even be enough to prevent them from drifting further apart. Since the EU’s poorer member states are already over-indebted, they cannot borrow much more, particularly if interest rates rise. Whenever inflation begins to increase again, the European Central Bank’s implicit policy of monetizing member-state debt (through the unlimited purchase of government bonds from poorer countries) will have to end.

Under these conditions, the only remaining way out would be a “transfer union,” with richer countries like Germany increasing their own financial investments in poorer member states. Greater investments in infrastructure, digitalization, and R&D are needed not only to boost efficiency and productivity in the economically weaker member states, but also to hold the eurozone and the EU together. The road is long, however, and longer still because Europe currently lacks the instruments needed to see the journey through.

From the perspective of German fiscal policy, investing in a more economically and socially stable Europe would offer enormous returns. Yes, the prevailing view in Germany is that the country already puts more into Europe than it “gets out.” But that is nonsense. As an export champion with a massive, persistent trade surplus, Germany, by definition, receives more than it pays out.

Instead of creating the impression that Germany is dependent on the Chinese export market, German leaders should make clear that the country’s real dependence is on the European market. Germany’s exports to other EU member states account for over 50% of its total exports, whereas China and the US each account for only about 10%.

In the long run, Germany will do only as well as its European neighbors. The sooner we recognize that, the better off we will be. Biden’s credo about fixing things at home applies to us, too. We must show that our own democratically constituted societies are better than the autocratic alternatives. Otherwise, the normative idea of the West will continue to lose its luster.

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