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Transatlantic Relations in the 21st Century and the UK’s Policy toward Europe and NATO

Ladies and gentlemen

It is a great pleasure to be here at the Atlantic Council on my first visit to the USA as Minister for Europe.  The Atlantic Council has served as an indispensable forum for transatlantic discussion dating back to the creation of the Atlantic Treaty Association in 1954, shortly after the birth of NATO. And, this year marks the 50^th anniversary of the Council’s formal establishment.  I wish the institution many happy returns upon reaching this milestone and sincerely hope that it continues to prosper for the next 50 years and beyond.

Europeans and Americans should be profoundly grateful for your service. The positive influence you have on those making policy on both sides of the Atlantic is significant and rightly well-known. So it is a great honour to be invited to speak to you this afternoon, particularly when I consider the quality of speakers that your institution regularly hosts here or through your Annual Awards. As a lover of classical music and opera, I must confess to wishing I was here in a few weeks time to see the great tenor Placido Domingo receive one of your coveted awards. Although I have sympathy for the person that takes the stage after him- no easy task to follow such a performer!

As I thought about the work of the Council in preparation for this speech, it occurred to me that within your roster of former Council Presidents there is a fine example of the nature of the relationship between Britain and America that I wish to discuss today. I am, of course, talking about the late Christopher Makins.  Christopher, like one of his most illustrious predecessors, Winston Churchill, was a genuine transatlantic product, a dual UK/US national whose career transferred seamlessly from respected UK diplomat to eminent US opinion former.  His life epitomises the fluid movement of people and ideas, often taken for granted, that provides such a solid basis for the relationship between our countries. 

The strength of that relationship is maintained at all levels and across many sections of British and American society. For us in government it is still the most important one we have – what my government calls an ‘unbreakable’ or ‘indispensable’ alliance.  And I know that within ten minutes of arriving in 10 Downing Street last May the Prime Minister received a call from President Obama underlining his strong commitment to it. But it is not solely at the level of government to government. Parliament and Congress maintain a close dialogue through structures such as the British-American Parliamentary Group and the continual shuttling of delegations of legislators across the Atlantic in both directions.

In the private sector, we are one another’s single biggest investor. At nearly half a trillion dollars, the stock of foreign investment here in the United States from UK firms is 570 times the amount invested by China, supporting in the region of one million American jobs.  And the bond is further forged through the less tangible, but no less important, exchange of information and innovation between our universities, and through the shared enjoyment of one’s another culture, from film, theatre, music, literature and art. Indeed, it’s probably only over national sports that there’s still mutual incomprehension – despite the best efforts of one of our top ambassadors… David Beckham.

Of course our close bilateral relationship is made stronger by the wider transatlantic alliance within which it is set. That alliance has maintained the security and prosperity of both the US and Europe for the past 100 years, but we cannot ignore the fact that its continued relevance is being questioned.

There are two stereotyped arguments that you can find in some parts of the press to support such a thesis of decline :

• in Europe, the argument goes that the USA is becoming more isolationist, that it is less interested in “abroad”, that it is turning away from Europe to focus on Asia and the Pacific;
• in America, there are those who see Europe with a sclerotic, declining economy, and a European Union that is riven with internal arguments and that won’t accept responsibility for its own security;

I contend that these arguments are false. They oversimplify a more complicated picture. But what is certainly true is that power, in terms of economic weight and political power, is becoming more diffuse, and shifting to the countries of East and South. 

Why? Because an ever-growing share of the world’s population lives in the East and South of the globe. In thirty years, it is likely that three quarters of the world’s people will be Asian and African [1]. And it is not just about number of people. Within those populations it is projected that by 2040 Africa will have over a billion people at working age[2]. That is likely to be more than the entire population of the US and Europe combined.

This translates into economic strength. It is thought  that by 2050 only two European countries will be among the world’s top ten economies[3], in a landscape dominated not only by the BRICs but by emerging economies such as Mexico, Indonesia and Turkey.

We cannot resist this shift, nor should we seek to. It is bringing a better life to literally billions of people. The question is how best we manage it. The challenge for us is to work out how we can best serve our national interests against this changing backdrop.  And there lies the kernel of truth in those stereotyped arguments about the transatlantic alliance’s decline:

• it is true that the US is looking to Asia and Pacific and taking close interest in engagement with those rising powers- the same of course can be said of Europe;
• it is also true that Europe needs to rediscover quickly its traditions of enterprise and innovation as a route to economic growth and job creation. In Britain we recognise the urgency of this task, and last week the Prime Minister issued a pamphlet called “Let’s Choose Growth”. It sets out a series of measures that we believe are necessary to secure sustainable long-term growth in Europe. We need to upgrade the single market, cut away barriers to investment and innovation, and do all that we can to free up trade, in particular by concluding Doha.

ATLANTIC ALLIANCE STILL COUNTS

But notwithstanding the need for renewal in both Europe and the United States, there is no doubt that the Atlantic Alliance and the wider transatlantic relationship will remain hugely important.  

First, on matters of international security, the alliances and partnerships that served the transatlantic community so well in the 20th century are still the best way of serving the interests of the US and the UK in the 21st. This is not based on some sentimental appreciation of the past, but on the frankly hard-headed and pragmatic calculation that in periods of change you need partners you can depend on. That is why 25 European countries belong to the world’s most powerful and successful military alliance, NATO.

In 2001, it was primarily European allies and Canada, initially through NATO, that stood shoulder to shoulder with the US over Afghanistan and continue to do so.

Most recently in Libya, the US, UK and France have been at the forefront militarily, backed up by NATO allies, in defending civilians from Qadhafi’s murderous regime.  

Of course there has been a healthy debate among the Atlantic community about taking such action. This is a serious endeavour, and that is how it should be. But if you had asked any of us here a year ago, in the light of Afghanistan and Iraq and increasing war fatigue in our populations, whether we would have been able to gain agreement at the UN and unity in NATO for a humanitarian intervention in Libya in such a short time, I think most of us would have privately said this would not be possible. Yet we made it possible. 

Of course, not everything is perfect. We still have a great deal to do to reform the international architecture to make it better able to deal with the challenges of the 21st century. We can already see new structures such as the G20 emerging in response to the need for better representation for emerging powers. But we also need to reform the existing institutions, too.

On the security side, NATO took the lead in setting out its vision for the future at Lisbon last November. Libya was an important affirmation that we meant what we said when we rejected the false choices of collective defence versus out-of-area. But there is more to do. NATO still needs to deliver on the agreement to reform its structures to deliver that vision, and I hope Defence Ministers will be able to do just that this June. 

NATO’s relationships are adapting to the changing circumstances as well. In particular the improvement in atmospherics in the NATO Russia Council is very welcome, and I hope that will help us deliver on one of the key Lisbon agreements; the establishment of a Missile Defence system in partnership with Russia. 

So NATO is adapting. Yes, Europeans need to do more to take responsibility for their collective defence.  And against a backdrop of declining defence budgets on both sides of the Atlantic, this will be hard. But it’s not impossible. Britain’s partnership with France formalised in the Defence Co-operation Treaty last year shows a step in the right direction and that we are serious about maintaining our capabilities in tough economic circumstances. We think it provides a model for others to follow, both institutionally and nationally. 

Second, the significance of the transatlantic trade and investment relationship must not be underestimated.

Our economies are more deeply integrated than anywhere else in the world. The US trades more than twice as much with Europe as it does with China.  In 2009, transatlantic trade was worth $817bn, compared to $319bn between the US and China. The difference is even more pronounced when you consider who invests in the US. European investment in the US totals $1.47 trillion compared with only $791m from China. In other words, European investment in the US is close to 2,000 times greater than that of China. 

These economic facts are reflected across the spectrum of international co-operation. Europe has 2 of the 5 permanent seats on the UN Security Council, and 5 seats in the G20, a subject of some debate here, I know. We also attach the same importance to development spending. In 2009 the EU spent a total of $66 billion on development aid and the US spent $29 billion. That is not just altruism or a sense of moral responsibility for the world’s poorest;  it is also central to our efforts to spread stability.

We could debate whether we maximise this European potential- and, in fact, as the British Government’s Minister for Europe I frequently make the case in Brussels that could and should do more- but we should not undersell European weight in the world, nor Europe’s centrality to the economic health and security of the USA.

So, these are the areas where the Atlantic Alliance has been and remains supremely important for both our countries. But, the world is shifting beneath our feet; we must adapt our alliances and institutions to meet the challenges ahead.  That each of us needs to adapt is almost trite, that we need to do so together, is just as important to remember, lest we lose the unity of purpose and approach in this century that served us so well in the last. 

Take security – I have already touched on some of the more conventional aspects, but looking ahead, it is the new domain of cyberspace, the threat of international terrorism, and the challenges of failing states and those in transition that we need to give particularly urgent and collective consideration.

NATO has made progress on cyber-security since the attacks on Estonia in 2007. The Lisbon Summit recognised that the protection of our information and communication systems are integral to our defence, and not just those of the Alliance itself, but of individual Allies too. Together, we have worked to shore up our defences individually and collectively, and in doing so we are coming to common understandings of these threats, and appropriate responses.   And at the EU-US Summit last November we committed together to ‘tackle new threats to the global networks upon which the security and prosperity of our free societies increasingly depend’.  

Likewise, in combating international terrorism, we stand stronger and safer together than we do apart. This is about more than political solidarity in the face of violent extremism, it is about the very mechanics of our defence. Take much of the information on which our counter-terrorism strategies rely. The more we know and the more we share – who is on our planes or using our financial systems – the safer we are. There is an important debate about the balance between information sharing and data protection. Here as elsewhere, we are striving for a balance between our rights to safety and security and the other rights we value in democratic societies. We would not all draw the line in exactly the same place – but we have to come to close to it if we are to make the most of the information that we hold collectively.

Lastly on security, we must match the complexity of the challenges we face in transitional states like Afghanistan with the sophistication of our response. The integration of what Secretary Clinton called the “three Ds” of defence, diplomacy and development is as crucial in our international institutions as it is in our capitals and on the ground. Europe needs to ensure that we are contributing across the three lines of operation. The EU could do more to provide technical assistance and capacity building.

Of course, as the Prime Minister has said, “Our national security depends on our economic security, and vice versa.” And both sides of the Atlantic face a tremendous economic challenge, both in the wake of the financial crisis, and structurally. Surging public and private debt, rising commodity prices, ageing populations, and new competitors have created a sense of crisis. We are facing the sobering prospect of seeing the next generation grow up poorer than our own. We believe that the worst response to these challenges is for the developed world to turn in on itself. The EU must not measure its success by the height of its barriers to rest of the world; nor should the US be tempted to turn in on itself.

Quite the contrary, we must remind ourselves of the sources of our prosperity: trade, innovation, innovation and education. To this end, we must redouble our efforts to expand trade with one another and the rest of the world. We must capitalise on recent efforts to improve the Transatlantic Economic Council as a mechanism for addressing obstacles to transatlantic trade. And, together, we must show leadership on the Doha Development Agenda and through our own Free Trade Agreements. Our populations are right to demand that we respond to the financial crisis by charting a way forward to prosperity. That we should do so through opening ourselves to more trade and more investment are the hallmarks of confident nations.

Of course, the financial crisis knocked our confidence almost as much as it hit our pocketbooks. Confronted by continued double digit growth in China and other emerging economies, many commentators questioned whether the Western model had had its day. We need to remind ourselves that the United States still spends more on defence than every other nation combined, and its economy will remain larger than China’s for at least another decade. So, I think the narrative of relative decline is overstated, both on the figures, but also on the values that underpin our societies. 

The Arab Spring is a timely reminder of the appeal our values and their institutions have beyond our borders. There are no placards on the streets of Benghazi or Damascus demanding “State Capitalism” or “Managed Democracy”, nor are they burning British or American flags. Instead, these people, many of them young, are demanding what we have, and want them to have too: jobs, security, political choice.

So, this is the third area on which the transatlantic alliance must rapidly agree a basis for common action: the spread of capitalist democracy. I was fortunate enough to be working in the British Foreign Office for then Foreign Secretary Douglas Hurd when the Berlin Wall came down and change swept Europe. Now, as then, we must match the moment with a generous and farsighted offer to the people of the Middle East. I have spent a lot of time talking about NATO, and would like to come on to the EU, including the role it can play in responding to the Arab Spring.

First, we should be honest about the fact that the foreign policy of the European Union remains a matter for inter-governmental debate and agreement. Henry Kissinger will still need more than one number for Europe, as we sometimes do for the United States. The EU is not the USA, it is not a state, and has no prospects of becoming one. There is no European demos or polis. 

Nonetheless, things are changing, institutionally – through the High Representative and the External Action Service – and culturally – through more instinctive co-ordination amongst foreign ministers. The Coalition Government wants the institutions of the Lisbon Treaty to be a success, and we have urged them to focus on those areas where collective action can most add value.

I would like to finish by discussing two areas in which the EU can make a particular difference: enlargement, and its neighbourhood.

Enlargement has been a success story for the EU. It has entrenched the rule of law, democracy, human rights and the free market in parts of Europe where these traditions were crushed for much of the 20^th Century. The key difference between 1919 and 1989 was the institutional framework that the EU could provide emerging democracies. 

We should not forget those parts of Europe that remain beyond the full realisation of a Europe “whole and free”. It is the prospect of membership that drives reform in these countries, and we disagree fundamentally with any suggestion of a “pause” after the accession of Croatia. If a country is European and can meet the criteria, they should be able to join the EU, and we remain resolute in our support of the aspiring countries.

Turkey is no exception. It’s membership holds out tremendous economic and political benefits for the existing membership. For the EU to turns its back on Turkey would be a catastrophic strategic error.

The EU’s impact on its neighbourhood, those countries on the periphery of Europe, but without any immediate prospects of beginning accession negotiations, has been less marked, and needs to improve. The EU and the US have a shared agenda in the Middle East. The prospects of violent instability, energy shortages and mass migration are particularly acute to those on the Mediterranean. None of these risks will be mitigated without jobs, security and political choice. The youth of these countries – often a disproportionate part of their populations – no longer believe that they are isolated from the aspirations and achievements of others.

The EU must rise to the challenge. We have spent millions of Euros over the years to very little political or economic effect. In the short to medium term, we must ensure that future assistance is tied more clearly to progress. In the longer term, we must agree a more strategic offer to the Arab world based on investment and market access as a means to encourage and facilitate some of the painful reforms that will be necessary in many of these countries.

Ladies and gentlemen,

Britain believes the transatlantic alliance needs to recognise its strengths and be active in projecting them, shaping the changes we want to see in the global landscape. Today I have spoken about how we can do this across three fronts: providing security, building prosperity, promoting our values.

If we can deliver progress across these critically important areas we will have gone a long way to ensuring that the transatlantic relationship endures as the starting point for both our nations’ international cooperation . And that is the central theme of my remarks; that as much as new friends are exciting and interesting, old and dependable friendships that have proved their value over time should continue to prove their worth in the future. As Churchill once said ‘There is at least one thing worse than fighting with Allies – and that is to fight without them’.

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