The Obama Moment. European and American Perspectives

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2. The Obama administration and Europe
still finds its footing and is preoccupied with an ambitious domestic reform agenda
while beset by serious economic woes.
In short, while tone and style have changed for the better, differences in national
interest and outlook, both across the Atlantic and within Europe, could mark the
limits of charisma. And as the geopolitical framework for transatlantic partnership
shifts, the relationship is challenged to adjust accordingly. Seven benchmark issues
offer a guide to prospects for more effective US-EU relations.
Seven challenges
The economic crisis
The first task for the US-EU partnership is to tackle immediate economic challenges
while positioning the transatlantic economy for the future. Few issues are
likely to shape European-American relations over the next few years as the global
economic crisis. The Great Recession should have erased any doubt about how
interconnected the transatlantic economy has become. The deeper and more prolonged
the downturn, the greater the risks of inward, insular policies on both
sides of the Atlantic. The Obama administration and its European partners face a
common challenge: to show their citizens and billions around the world that it is
possible to reap globalisation’s benefits while making its costs bearable to those
most directly affected, without succumbing to protectionist temptations.
To date, the Obama administration and its European partners have struggled in
their efforts to confront the economic crisis. The US has spent about 6 percent of
GDP on its ‘American Recovery and Reinvestment Plan.’ European plans have varied
widely, with Spain spending 2.3 percent, Germany 1.5 percent, France 0.7 percent,
and Italy only 0.2 percent of GDP – despite the Obama administration’s call
for greater stimulus efforts. Many of the key differences, however, are to be found
among Europeans, rather than between Europeans and Americans. France and Germany,
for instance, have teamed up to urge stricter financial regulation, but the
British – keen to protect the City of London’s global financial position – have resisted.
Britain and France, in turn, have tried to borrow their way out of recession,
while German politicians have retained their historical opposition to public debt.
French President Nicolas Sarkozy has attacked the monetary policy of the European
Central Bank for being deflationary while German Chancellor Angela Merkel has
criticised it for being inflationary.