COMMENTARY

Summer 2010

by Ngaire Woods

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Pedro Solbes and Richard Youngs are clearly disappointed that the EU is not shaping a new more effective multilateralism and global economic governance. They argue that the EU should have eschewed trade protectionism and taken practical steps to re-start the Doha Round, and should have pushed harder for governance reforms in both the G20 and IMF. The EU should also have sought a new international monetary agreement to ensure Chinese revaluation, whereas "EU influence over Chinese revaluation has been zero". Europe, it would seem, has neither forged a vision of global order, nor engaged in implementing it. The perplexing case of Europe's economic power but lack of influence has a precedent; perhaps Europe is the new Japan? Back in the 1980s Japan became the world's largest provider of foreign aid, an economic superpower with rapidly growing foreign direct investment, commercial bank loans, and global economic goals (often secured using aid). Japan's military spending rose to super-power levels by the end of the 1980s even though its capacity to use military force was constitutionally constrained. But curiously, Japan's global influence never materialised.

Japan did not change international institutions or debates, although it made a couple of forays in the IMF and World Bank. In fact Japan's foreign policy focused on consolidating its economic relations with neighbours, securing access to oil and raw materials globally, keeping foreign markets open for Japanese goods and investments, and staying within alliances which met Japan's security needs. After the East Asian financial crisis Japan stepped in with ideas (such as an Asian Monetary Fund) and assistance (about $30bn in short-term loans and assistance) to its regional neighbours before retreating on both fronts to more modest engagements. Much of this could be said about Europe's policies.

Japan opted out of global governance. In 2003, Japan expert Edward Lincoln suggested we imagine "a Japan prepared to offer Iraq several tens of billions of dollars in foreign aid and inducements for Japanese firms to locate factories there. Had such a Japan demanded a say in decisionmaking prior to the recent war against Iraq, the U.S. government likely would have listened because the potential financial flows from Japan to a post-war Iraq are much larger than what the Germans or French might have offered." Lincoln's point is that Japan did not offer nor demand inclusion. Its government and people do not think it is their business to take up issues of human rights in other countries nor the convoluted politics of the Middle East.

The EU is different. Europeans think human rights the world over are their business. Human rights are upheld across the wider European region by the European Court of Human Rights. Within the EU, human rights are part of the standards set for accession. The EU also differs from Japan in its attitude to conflicts. With large immigrant populations in every major European country (unlike Japan), Europeans cannot afford to ignore conflicts in the Middle East and elsewhere. They know that instability and conflict in other parts of the world will reverberate loudly at home. This explains why some aspire to greater global EU influence. But does this mean that Europe needs to act like a super-power? The Cold War super-powers failed dismally to promote human rights and resolve conflicts. So did the global strategies of European countries as great powers in the colonial period. By contrast, the European Union was created to avert conflict among its members, and has succeeded. It has also been a powerful incentive for countries to democratise – think Spain, Portugal and Greece, and the new accession countries. The EU's success has been its doing, but its aspirations to super-powerdom may be its undoing. The EU is most effective when its members need and wish to act collectively. But on global strategy they do not. The largest of the EU member states have their own leadership aspirations, and the fact they will not cede their seats in the Security Council, the G20, the IMF or the World Bank reflects their belief that they neither need nor want a collective EU voice on the issues addressed by these bodies. European countries accepted one EU voice in the WTO, but not because they collectively intended to dismantle their own protectionism and press for global development through trade policies – pace Solbes and Youngs. The EU voice in the WTO reflects the simple logic that the larger the market you represent, the more power you have in trade negotiations. In some ways, Europe may well be the new Japan; an economic power without the global influence many would expect. Some European hand-wringing may well be the bruised amour propre of officials outraged that they have been relegated to corridor handshakes by global (not EU) leaders. The deeper question is whether the EU's approach to date is meeting Europe's core interests. As with Japan, it may be easy to overlook narrower achievements of Europe's approach – its focus on its own neighbourhood and immediate economic interests. Japan successfully met its mercantilist goals, without aspiring to shape global governance. The EU's case for global influence will only be persuasive when it is linked more closely to the core goals of its members.