February 8th, 2011

Why Europe Is, and Will Remain, Powerful

Joseph Nye; EU PowerBy Joseph Nye.

Predictions of European decline rely on an outmoded understanding of power. On all issues that require power with - rather than over - others, Europe has impressive capacity.

A defense of Europe’s relevance.

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The closest thing to an equal that the United States faces at the beginning of the 21st century is the European Union. Although the American economy is four times larger than Germany’s, the total economy of the European Union is slightly larger than that of the U.S. in purchasing power parity, and Europe’s  population of nearly 500 million is considerably larger than America’s 300 million. American per capita income is higher than that of the EU, because a number of the new entrants into the European Union were poorer than the original West European core countries, but in terms of human capital, technology, and exports, Europe is very much a peer competitor for the United States. Until the Spring crisis of 2010 when fiscal problems in Greece and elsewhere created anxiety in financial markets, many economists speculated that the Euro might some day replace the dollar as the world’s primary reserve  currency. Instead, European governments (and the IMF) had to organize a $925 million rescue program to try to restore market confidence, and German Chancellor Angela Merkel warned that if the Euro fails, “then not only the currency fails…Europe will fail, and with it the idea of European unity.”[i]

In military terms, Europe spends less than half of what the United States does on defense, but has more men under arms, and includes two countries that possess nuclear arsenals. In soft power, European cultures have long had a wide appeal in the rest of the world, and the sense of a Europe uniting around Brussels has had a strong attraction for its neighbors. Europeans have also been important pioneers and played central roles in international institutions. The key question in assessing Europe’s resources is whether Europe will develop enough political and social-cultural cohesion to act as one on a wide range of international issues, or whether it will remain a limited grouping of countries with strongly different nationalisms and foreign policies. In other words, what is Europe’s power conversion capability?

The answer varies with different issues. On questions of trade and influence within the World Trade Organization, Europe is the equal of the United States and able to balance American power. The creation of the European Monetary Union and the launching of the Euro at the beginning of 1999 made Europe’s role in monetary affairs and the International Monetary Fund nearly equal to that of the U.S. (though the 2010 crisis over Greek debt dented confidence in the Euro.) On anti-trust issues, the size and attraction of the European market has meant that American firms seeking to merge have had to seek approval from the European Commission as well as the U.S. Justice Department. In the cyber world, the EU is setting the global standards for privacy protection.

At the same time, Europe faces significant limits on its degree of unity. National identities remain stronger than a common European identity, despite six decades of integration, and national interests, while subdued in comparison to the past, still matter.[ii] The enlargement of the European Union to include 27 states (with more to come) means that European institutions are likely to remain sui generis, and unlikely to produce a strong federal Europe or a single state. None of this is to belittle European institutions and what they have accomplished.  Legal integration is increasing, and European Court verdicts have compelled member countries to change policies. On the other hand, legislative and executive branch integration has lagged, and while Europe has created a president and a central figure for foreign relations, the integration of foreign and defense policy is still limited. In the words of Lord Patten, a former member of the European Commission, “unlike the US we do not matter everywhere.”[iii]

Over the decades Europe has seen alternations between excessive optimism and bouts of “Euro-pessimism” such as the current period. As one journalist reported in 2010, “this year, the 27 nation European Union was supposed to come of age as an actor on the world stage, bolstered by the Lisbon Treaty, which streamlines the EU’s cumbersome institutions. Instead, Europe is starting to look like the loser in a new geopolitical order dominated by the U.S. and emerging powers led by China….No Europeans were invited when U.S. President Barack Obama and Chinese Premier Wen Jiabao held the make-or-break meeting on Dec. 18 that brokered the modest Copenhagen accord. The Chinese invited the leaders of India, Brazil and South Africa. That meeting and Europe’s absence was the ‘seminal image’ of 2009.”[iv]  Moreover, after the 2008 financial crisis, the fiscal problems of several EU members, particularly Greece, exposed the limits of fiscal integration in the Eurozone and  raised questions about  role of the Euro.

The National Intelligence Council report foresees a Europe in 2050 that will be “a hobbled giant distracted by internal bickering and competing national agendas”. As The Economist noted, “talk of Europe’s relative decline seems to be everywhere just now….You may hear glum figures about Europe’s future weight and with some reason. In 1900, Europe accounted for a quarter of the world’s population. By 2060, it may account for just 6% — and almost a third of these will be more than 65 years old.”[v]  Europe does face severe demographic problems, but size of population is not highly correlated with power, and “predictions of Europe’s downfall have a long history of failing to materialize.” In the 1980s, analysts spoke of  Euro-sclerosis and a crippling malaise, but in the ensuing decades Europe showed impressive growth and institutional development. “The EU’s modus operandi – sharing power, hammering out agreements, resolving conflict by endless committee – can be boring and even frustrating to watch. But in an increasingly networked and interdependent world, it has become the global standard.”  [vi]  As the director of the European Council on Foreign Relations put it, “the conventional wisdom is that Europe’s hour has come and gone. Its lack of vision, divisions, obsession with legal frameworks, unwillingness to project military power, and sclerotic economy are contrasted with a United States more dominant even than Rome…But the problem is not Europe – it is our outdated understanding of power.”[vii]

The political scientist Andrew Moravcsik makes a similar argument that European nations, singly and collectively, are the only states other than the U.S. able to “exert global influence across the full spectrum from ‘hard’ to ‘soft’ power. Insofar as the term retains any meaning, the world is bipolar , and is likely to remain so over the foreseeable future.” The pessimistic prognosis  is based on a 19th century realist view in which “power is linked to the relative share of aggregate global resources and countries are engaged in constant zero-sum rivalry. [viii]  Moreover, as he points out, Europe is the world’s second military power with 21 per cent of the world’s military spending compared to 5 per cent for China, three per cent for Russia,  two percent for India, and 1.5 percent for Brazil. Tens of thousands of troops have been deployed outside of home countries in Sierra Leone, Congo, Ivory Coast, Chad, Lebanon, and Afghanistan.  In terms of economic power, Europe has the world’s largest market, and represents 17 per cent of world trade compared to 12 per cent for the U.S., and Europe dispenses half of the world’s foreign assistance compared to 20 per cent for the U.S.

In terms of relative power, if the EU endeavored to become a global challenger to the United States in a traditional realist balance of power, these assets might counter American power. But if Europe and America remain loosely allied or even neutral, these resources could reinforce each other . As The Economist speculated a decade ago, in terms of military security, it is possible that “by about 2030, both Europe and America will be having the same trouble with some other part of the world” such as Russia, China and Muslim southwest Asia.[ix] 

Nor is economic divorce likely. New technology, flexibility in labor markets, strong venture capital and an entrepreneurial culture make the American market attractive to European investors. The United States spends 2.7 per cent —twice as much as Europe – on universities and R&D.  Direct investment in both directions is higher than with Asia and helps knit the economies together. More than a third of trade occurs within transnational corporations. Moreover, while trade inevitably produces some degree of friction in the domestic politics of democracies, it is a game from which both sides can profit if there is a will to cooperate, and U.S.-European trade is more balanced than U.S. trade with Asia.

At the cultural level, Americans and Europeans have sniped at and admired each other for more than two centuries. For all the complaints about Hollywood films or McDonald’s, no one forces Europeans to eat there, though millions do each year. And despite the frictions between parts of Europe and the George W. Bush administration, Barack Obama became almost a cult figure in his popularity in much of Europe.  In some ways, the inevitable frictions between the two continents show a closeness rather than a distance.  It is also true that American consumers can benefit from European efforts to raise standards in anti-trust actions or internet privacy. And in a larger sense, Americans and Europeans share the values of democracy and human rights more with each other than with other regions of the world. Even in a traditional realist assessment of balance of power resources, neither the US nor Europe are likely to threaten the vital or important interests of the other side.[x] Power struggles over conflicting interests are likely to remain at a more mundane level. And on issues that require power with rather than over others, the Europeans have impressive capacity.


 This is an exclusive excerpt from Joseph Nye’s forthcoming book, The Future of Power.

Joseph Nye is a Harvard University Distinguished Services Professor, and a former chair of the US National Intelligence Council.



[i] Ralph Atkins, “State of the union,” Financial Times, June 1, 2010.

[ii] Pippa Norris, “Global Governance and Cosmopolitan Citizens,” in Nye and Donahue, eds., Governance in a Globalizing World (Washington, D.C.:  Brookings Institution, 2000), p. 157.

[iii]  Chris Patten, “What Is Europe to Do?” New York Review of Books, March 11, 2010, p. 12.

[iv]  Marcus Walker, “EU Sees Dreams of Power Wane as ‘G-2’ Rises,” Wall Street Journal, January 27, 2010.

[v]  Charlemagne, “Lessons from ‘The Leopard’”, The Economist, December 12, 2009, p. 61.

[vi]  Stefan Theil, “The Modest Superpower,” Newsweek, November 16, 2009, p. 41.

[vii]  Mark Leonard, Why Europe Will Run the 21st Century (London:  Fourth Estate, 2005), p. 2.

[viii]  Andrew Moravcsik, “Europe:  The Quiet Superpower,” French Politics 7, 3 (Sep/Dec 2009), pp. 406-7.

[ix] “Weathering the Storm,” The Economist, September 9, 2000, p. 23.

[x]  Robert D. Blackwill, The Future of Transatlantic Relations (New York:  Council on Foreign Relations, 1999).


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