EU Got That Thing

The United States of Europe: The New Superpower and the End of American Supremacy by T.R. Reid (Penguin Books, 305 pages, $25.95)

It is easy to scoff at the trappings of the European Union. Its flag of 12 gold stars on blue is bland. Its national holiday -- Europe Day, commemorating the Schuman Declaration of May 9, 1950 -- is ignored. Its national anthem is wordless because Euro diplomats could never agree on a language in which to sing Beethoven's “Ode to Joy.” Its rapid-reaction force, should it ever form, will be no match for the U.S. Army.

Nonetheless, the EU is the most ambitious and successful exercise in international cooperation in world history -- and now even Americans are noticing. Over the past half-century it has emerged as the dominant forum for economic policy making in Europe. Tariffs, quotas, and most customs barriers have been eliminated. The euro has displaced national currencies. Environmental, antitrust, agricultural, trade, and industrial-standardization policies are largely centralized. The European Parliament, directly elected, steadily increases its power. Whether or not its new constitution is ratified, the EU has had, as lawyers know, a de facto constitution for decades under the Treaty of Rome. The European Court of Justice has established the supremacy of EU law, the right of individuals to invoke that law, and its own authority to exercise constitutional review -- so recognized by every domestic court in Europe.

European nations cannot match U.S. military might, but in trade, foreign aid, votes in international organizations, legitimacy, and global appeal of their social and political model, they surpass the United States. The EU has become the “quiet superpower,” quietly challenging the neoconservative boast of U.S. “unipolarity.” Since the end of the Cold War, the single most effective Western instrument to promote peace and security has not been the U.S. military but the EU's enlargement -- and Turkey is next. As the primary trading partner of every country in the Middle East, including Israel, Europe remains indispensable to any regional settlement. European countries provide 70 percent of the world's foreign aid, which helps explain why the United Nations Security Council tends to vote their way. They also field 10 times more peacekeepers than the United States -- the Pentagon being averse to such tasks -- and have sustained more casualties than the United States, not just in the Balkans but also in Afghanistan.

Perhaps most important in the long term, many around the world are coming to view Europe as a superior social and political model to the United States. The essence of its appeal lies in Europe's social-democratic character. Europeans espouse a broad conception of human rights, which subsumes universal social welfare, medical care, child care, quality education, and unemployment assistance. They willingly pay higher taxes for public transit, media, and housing. Across the globe, this is far more attractive than the 19th-century laissez-faire and libertarian tendencies so prominent in the American constitutional tradition. Abroad, many share Europeans' disdain for political appeals to religion or nationalism, foreign policy based on military might, expansive protections for private property, and populist exploitation of the death penalty -- all staples of American political life. Small wonder that no country has copied the U.S. Constitution for a half-century.

As the 50th anniversary of the EU's founding Treaty of Rome nears, Republican policies in the United States have helped bolster a sense of a contrasting European identity. That notion of Europe as an alternative to the United States is reflected in a spate of new books on both sides of the Atlantic hailing Europe's achievements, including Will Hutton's A Declaration of Interdependence and Jeremy Rifkin's The European Dream. Now comes The United States of Europe by T.R. Reid of The Washington Post.

Reid details how Americans -- particularly American conservatives -- have repeatedly underestimated Europe. Consider the euro. Henry Kissinger predicted that European governments would never accept a single currency. George Will pithily pronounced, “It will not work.” Martin Feldstein foresaw a collapse into chaos and war. Arthur Laffer prophesized in The Wall Street Journal that the euro would sink to a value of 60 U.S. cents. In fact, the euro was smoothly introduced on January 1, 2002, and, less than three years later, stands at $1.30 and rising. It is now poised to overtake the dollar in global reserves -- a status that might penalize Americans greatly should deficits trigger a run on the dollar.

Reid is at his best when showing how the EU wields its market power to establish and enforce regulatory standards to the advantage of its consumers and producers. Airbus, a consortium founded by European governments, has toppled Boeing as the world's leading passenger-jet manufacturer. Pan-European agreement on standards for mobile phones propelled Nokia, Ericsson, and Siemens ahead of Motorola in that dynamic market. Dependence on exports to Europe means midwestern farmers are forced to comply with European, not American, regulations -- including strict limits on the use of genetically modified organisms. For multinational firms, universal public health insurance is a competitive advantage because the costs to employers are actually lower than for private coverage in the United States. Ford Motor earns more profits from its Volvo subsidiary in Sweden than from its American plants. No wonder Scandinavian countries topped The Economist's list of the world's most competitive economies.

American politicians and executives are feeling political, as well as commercial, heat. When the EU targeted Washington's World Trade Organization–illegal system of export subsidies -- the multibillion-dollar Foreign Sales Corporation tax write-off -- House Speaker Dennis Hastert blustered, “We fought a revolution 230 years ago to stop Europeans from telling us how we have to tax in this country.” But Congress complied with Europe's demand. As CEO of General Electric, corporate legend Jack Welch bet the firm's future on a mega-merger with Honeywell, never imagining that EU competition authorities might disapprove. When Brussels quashed the deal, even over President Bush's complaints, Welch's career was all but finished.

Reid believes not only that Europe is powerful economically but that it is on its way to political and cultural unity. Pan-European business begets pan-European culture. Having reported from London for five years, Reid is captivated by the sort of multinational Euro-yuppie lifestyle in and around the multinational banks and businesses of the City in London (and other EU capitals). Members of “Generation E,” as he terms them, speak English as a second language, drink Red Bull, follow global soccer stars such as David Beckham, and watch the Eurovision song contest. Reid foresees the realization of Jean Monnet's half-century-old prophesy that economic integration will transform Europeans into a single, geographically mobile, and culturally unified people, much like Americans today.

Yet here Reid misses perhaps the most important aspect of Europe today -- namely, the remarkable persistence of its many national policies, institutions, and cultures. Contrary to Reid's thesis, Europeans have no intention of moving all the way to a United States of Europe. Instead, they are satisfied with an emerging “constitutional compromise” embedded in current EU institutions. According to this compromise, trade policy, microeconomic regulation, monetary policy, and human rights are delegated to Brussels. But taxation, social policy, health care, pensions, education, defense, and infrastructure -- and nearly every other policy that involves fiscal transfers -- remain basically national or local. The latter policies reflect distinctive social compromises, and Europeans show no willingness to surrender national democratic control over them. Similarly, national languages, customs, and communities remain stubbornly resistant to homogenization. English may become the second language of Europeans, but it will remain a first language only in the British Isles.

Contrary to Reid's claim, the genius of the EU institutional design is not captured in Monnet's 1950s slogan of continuous technocratic centralization: “ever closer union.” Instead, it is found in a phrase that emerged as Europe's motto during its recent constitution-drafting process: “unity in diversity.” Despite its technocratic patina, the EU cannot erase the diversity of its members. Ironically, given the vehemence of conservative opposition to the European Union in the United States and the United Kingdom, the EU is classical limited government par excellence -- with a slow, incremental style of governance, unanimous assent for constitutional change, strict separation of powers, and narrow substantive limitations on policy. National institutions and cultures are thus protected.

European unification is an epochal idea not because it will create a new nation but because the EU succeeds in balancing the demands of family, community, and nation against those of markets, modernity, and multilateralism. This represents a unique and desirable equilibrium for modern democracies. Precisely because it has achieved this goal so well, the EU is the only distinctively new form of political organization to emerge and prosper since the modern democratic social-welfare state a century ago.

Andrew Moravcsik, author of The Choice for Europe, is professor of politics and director of the European Union Program at Princeton University.