In defence of missile defences?

In defence of missile defences?

In defence of missile defences?

Written by Tomas Valasek, 14 March 2007

In defence of missile defences?
by Tomas Valasek

For those spoiling for another good transatlantic fight, the headlines from last week’s EU summit must have come as manna from heaven. “Chirac hits at US missile plans,” read the headline in the Financial Times after the soon-to-be-departing French leader addressed reporters in Brussels. “Cold War over missile defences,” wrote Le Monde, referring to US plans to place missile defence sites in Europe. Add to that the apparently critical words by Angela Merkel, the German chancellor, from earlier in the week and a new storm would appear to be brewing over the Atlantic.

Unfortunately for the hawks on either coast, closer reading of the actual statement shows a different, much calmer picture. Jacques Chirac did warn against needlessly ruffling Russia’s feathers, as did Angela Merkel. But little in the way of outright opposition to American plans is in evidence among European leaders.

There are two good reasons for that. As with the Iraq war, missile defences are likely to divide Europe itself. Warsaw, Prague and London have all expressed interest in hosting parts of the US system and would naturally oppose any attempt to build a common European position on the basis of opposition to missile defences. Most of the cost of a bruising argument would thus be borne internally, within Europe.

But just as importantly, many EU member-states are hedging their bets, not wanting to rule out the possibility of building a missile shield for Europe as well. The majority of EU member states – the 19 that are NATO members – already approved a 2006 study showing that such a programme is technologically feasible. That does not by itself mean that an allied missile shield will or even should be built: there are differences within NATO as to the gravity and urgency of the missile threat. But the fact that NATO countries commissioned the study at all shows their shared concern over Iranian and North Korean missile plans.

So while a tactical, politically-driven stance against US plans may seem tempting it would be difficult for any European capital to be simultaneously for and against missile defences, which is exactly the position in which those EU member-states that are also in NATO would find themselves. For that reason, chiefly, robust opposition to US missile defence plans is likely to be limited to a handful of European countries.

That is not to say that a debate on the system should not take place amongst European countries, quite the contrary. The discussions so far have already raised interesting questions about two key choices for the Europeans: How should they relate to Washington? And just how much solidarity can and will they show towards Moscow?

On the first point, German chancellor Merkel was absolutely right to say that Washington needs to use NATO more assertively in selling its plans for a missile shield. In saying so, Merkel is in effect echoing Gerhard Schröder, her predecessor, who - in one of his last speeches as chancellor in 2004 - urged allied leaders to involve NATO more in broader policy debates and to start using it to fashion common strategies and threat assumptions, not just military plans. This, Schröder and others argued, would be the most effective way to revitalize an alliance reeling from the aftershocks of Iraq. It could also give Europe a better foreknowledge of, and a bigger say in, US defence plans and strategy, thus reducing the chance of fratricidal arguments like those that shook NATO in 2003. The alliance is already moving toward broader policy debates. It plans to draft a new version of its key guiding document, the ‘Strategic Concept’, by 2009 and in fact, it has already debated US missile defence once, in February. Washington should continue to offer its future military plans up for a robust discussion at NATO, and it should do so early, to allow for a fruitful talks rather than a simple briefing. It may be rewarded with a greater sense of usefulness and solidarity among allies.

It is the European Union that comes out the worse for wear from this debate so far. When Moscow threatened Warsaw and Prague with military reprisals if they allow US missile defences on their territory, Paris and Berlin responded by, in effect, siding with Moscow against their fellow EU member states. While the French and German positions were nuanced – arguing for more consultations with Russia and not directly addressing Russian threats – the Czechs and Poles will no doubt feel that their EU brethren showed far too little solidarity given the gravity of Russian statements. This will do little to convince them to show more faith in the EU's security and defence policy, or to back Merkel's plans to revive talks on the EU's constitutional treaty and the creation of a European foreign minister.


Tomas Valasek in director of foreign policy and defence at the Centre for European reform.

Launch of German Marshall Fund's Transatlantic Trends Survey 2008

Launch of German Marshall Fund's Transatlantic Trends Survey 2008

Launch of German Marshall Fund's Transatlantic Trends Survey 2008

11 September 2008

With Ron Asmus, GMF.

Location info

London

Don't undermine free markets

Don't undermine free markets

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Written by Philip Whyte, Simon Tilford, 08 October 2008
From International Herald Tribune

Obama's missile defense change shows different targets

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with Tomas Valasek, 21 September 2009
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Time for the Export-Weltmeister to start consuming

Time for the Export-Weltmeister to start consuming

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Written by Simon Tilford, 13 February 2008

by Simon Tilford

Too many Europeans are blaming the US for the economic slowdown in Europe, as if everything would have been fine if only the Americans were not so irresponsible. This is complacent. The European economy would have faced a tricky rebalancing irrespective of the credit crisis. It is not sustainable for one group of EU economies to provide a disproportionate share of EU domestic demand while others run ever bigger current account surpluses.

Europeans are right to highlight the fact that the EU economy is a comparable size to the US one. However, European policy-makers and central bankers are on somewhat shakier ground when they queue up to claim that the EU economy is fundamentally more balanced that its US counterpart. Europeans should ask themselves the following question: would a US economy growing at the same pace as the EU economy did in 2007 be as easily rattled by a financial crisis in Europe and fall in the value of the euro as the European economy has been by the credit crisis in the US and the fall in the dollar? The answer is clearly no.

The European economy as a whole has become more flexible in recent years. Labour markets are now more efficient, employment rates (those employed as a percentage of the working age population) are up and many product markets are now much more competitive. These developments have helped accelerate the diffusion of new technologies. However, a look at the structure of EU economic growth demonstrates why the current recovery is so fragile, and why Europeans are wrong to focus so strongly on external shocks for explanations.

The UK and Spain, but also France and the new member-states have accounted for a very large share of the growth in EU domestic demand this decade. Consumption in these economies has grown more rapidly than output. The result has been a steady increase in their current account deficits. Spain’s hit an estimated 9 per cent of GDP in 2007, the UK’s 4 per cent, whereas deficits in Italy and France were around 2.5 per cent 1.5 per cent respectively. External deficits across the new member-states are big, in some cases startlingly so.

Over this period, another group of member-states led by Germany, but also including the Netherlands and Sweden, have seen their output expand much more rapidly than domestic consumption, with the result that their surpluses have ballooned. Germany’s and Sweden’s stood at 6 per cent of GDP in 2007, and that of the Netherlands was 7 per cent. Much of the rise in their combined surplus since 2000 has been with other members of the EU. In effect, these economies have been a huge drag on the European economy, and have not been, as they are sometimes erroneously portrayed, drivers of economic growth.

Economies cannot rely indefinitely on exports for economic stimulus, as other economies cannot run huge deficits indefinitely. A number of the countries that have generated strong growth in domestic demand must now rebalance their economies. The construction boom in Spain that has done so much to drive investment and private consumption in that country has ended and will depress Spanish consumption, perhaps for many years. For its part, the build-up of debt that contributed considerably to the strong performance of the UK economy in recent years has now run its course. France and Italy are in no position to take up the slack, not least because of their weak fiscal positions but also because they need to hold down wage settlements in order to prevent any further loss of competitiveness to the Germans. Neither are the new member-states, whose imbalances are starting to attract the attentions of the financial markets.

The countries that have relied on exports to the rest of the EU for a big chunk of their overall growth are going to have to rebalance and contribute to EU growth rather than being a drag on it. The prospects are not good. For example, for years German economists and politicians have been saying that Germany needed to regain competitiveness by ruthlessly holding down costs. This, they argued, would boost exports and feed through into investment and jobs. There has been a pick-up in investment and expansion of employment, but both remain vulnerable to a downturn in external demand because there has been no recovery in consumption. German private consumption actually fell in 2007 and domestic demand grew at half the pace of GDP. German real wages are likely to rise this year for the first time since 2003, but consumer confidence remains exceptionally low.

The EU needs to recognise that one of its core economic challenges is the excessive dependence of Germany and a number of other economies on exports to drive growth. The growth strategies of these countries should not be held up as examples for others to emulate. A huge current account surplus does not necessarily indicate an economy is ‘competitive’. It can also point to the weakness of domestic demand.

Simon Tilford is chief economist at the Centre for European Reform.

Comments

Added on 24 Apr 2008 at 16:53 by Leon avalos

i have to agree with asia with the good recipe against over population

Added on 17 Feb 2008 at 11:18 by Anonymous

Asia. I think it is important to not forget about that aspect.

But if asians got a substatial boost in their standards of living, that would level the playing field and benefit both EU and USA. The good news is that asians do not have anything against that, and it is a good and time tested recepie against overpopulation.

//steelneck

Missile strategy must not be seen as a retreat

Missile strategy must not be seen as a retreat

Missile strategy must not be seen as a retreat

with Tomas Valasek, 09 September 2009
From Financial Times

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