Why Europe Will Run
the 21st Century
Mark Leonard

For Dick, Irène, Miriam and Gabrielle

Table of Contents

Cover Page

Title Page

INTRODUCTION The Power of Weakness and the Weakness of Power: Why Europe Will Run the Twenty-First Century

CHAPTER 1 Europe’s Invisible Hand

CHAPTER 2 ‘Divided We Stand, United We Fall’

CHAPTER 3 Europe’s Weapon is the Law

CHAPTER 4 The Revolutionary Power of Passive Aggression

CHAPTER 5 The European Way of War

CHAPTER 6 The Stockholm Consensus

CHAPTER 7 The European Rescue of National Democracy

CHAPTER 8 Europe at 50

CHAPTER 9 Brussels and the Beijing Consensus

CHAPTER 10 The End of the American World Order

CHAPTER 11 The Regional Domino Effect

APPENDIX The 109 Countries of the Eurosphere

NOTES

Acknowledgements

About the Author

Copyright

About the Publisher

INTRODUCTION The Power of Weakness and the Weakness of Power: Why Europe Will Run the Twenty-First Century

In the middle of Pennsylvania Avenue in Washington a middle-aged woman with a weather-beaten face and a brown wig sits on a milk crate. Surrounded by hand-painted placards calling for nuclear disarmament, Concepcion Picciotto hands out her cheaply produced leaflets to any passer-by who will stop to listen. This remarkable woman has been holding a vigil outside the White House day and night for twenty-one years – sleeping, in a sitting position, for just three hours a night, so as to avoid breaking the stringent DC vagrancy laws. It is impossible not to be moved by her conviction and moral rectitude; it is equally impossible not to be depressed by the futility of a cause that has robbed her of the best years of her life.

It does not take long for most Americans to figure out that Concepcion is European. Like Concepcion’s faith in world peace, they see Europe’s belief in international institutions and the rule of international law as weak and unworldly – a luxurious delusion which post-9/11 America can no longer afford. In fact for many, Concepcion represents the distilled essence of the European position: lazy, free-riding, idealistic, and weak. She lives on American handouts of money and food, and enjoys the protection of the Washington Police Department without contributing a cent to pay for its upkeep. And yet she has the temerity to sit at the gates of the White House and complain about the manner in which her providers and protectors choose to conduct themselves.

What is more, many Europeans would agree. 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 at the height of the imperial republic, and not afraid to use force to get its way. We are told that if the American Empire is set to dominate the next fifty years, it is the Chinese and Indians who will take over the baton and dominate the second half of the century.

But the problem is not Europe – it is our outdated understanding of power.

The Weakness of Power

For all the talk of American Empire, the last two years have been above all else a demonstration of the limits of American power. America’s economic lead over the rest of the world has disappeared (in 1950 its GDP was twice the size of Western Europe’s and five times Japan’s; today its GDP is the same size as the EU’s and less than double that of Japan’s¹); and its political power is waning (its failure to secure support from Europeans, and even from countries as economically dependent on the USA as Mexico and Chile, showed that the price for saying no to the United States has been going down). In fact American dominance is only clear-cut on two levels: the ability to fight and win intensive conventional wars, and the ubiquity of American popular culture.² Joseph Nye has characterized these two kinds of power as ‘hard’ and ‘soft’: the ability to get your way by coercion and attraction.³ Both are declining currencies.

Terrorism and weapons of mass destruction allow the desperate and weak to neutralize the superpower’s military machine.⁴ And by constantly talking of countries as rogue states and threatening them with military attack, the Bush Administration actually encourages them to adopt these tactics. What is more, as the administration becomes obsessed with ‘Hard Power’, it further erodes American ‘Soft Power’ by replacing memories of America as saviour with fear of the instability its war on terror is causing. As David Calleo says: ‘Where promiscuous Europe sees a world where everybody is a potential friend, martial America lives in a world where every independent power is a potential enemy.’⁵ The paradox is that the more this Janus-faced empire flouts its strength, the less it is able to achieve its goals on the world stage.

To understand the shape of the twenty-first century, we need a revolution in the way we think about power. The overblown rhetoric directed at the ‘American Empire’ misses the fact that the US reach – militarily and diplomatically – is shallow and narrow. The lonely superpower can bribe, bully, or impose its will almost anywhere in the world, but when its back is turned, its potency wanes. The strength of the EU, conversely, is broad and deep: once sucked into its sphere of influence, countries are changed forever. For fifty years, under the cover of an American security blanket, Europe has been creating a ‘community of democracy’ and using its market size and the promise of engagement to reshape societies from the inside. As India, Brazil, South Africa, and even China develop economically and express themselves politically, the European model will represent an irresistibly attractive way of enhancing their prosperity whilst protecting their security. They will join with the EU in building ‘a New European Century’.

The Power of Weakness

If you put the words ‘Europe’ and ‘crisis’ into the internet search engine Google, over four million entries come up. Newspapers have used them together so often that they are almost interchangeable: on any day over the last fifty years there have been stories of divisions, failure to meet targets, diplomatic wrangles, a perpetual sense of failure. But historians tell a different story from journalists. They describe a continent with one of the most successful foreign policies in history. They tell us that, in just fifty years, war between European powers has become unthinkable; that European economies have caught up with America; and that Europe has brought successive waves of countries out of dictatorship and into democracy.

When they look at a map of the world, they will describe a zone of peace spreading like a blue oil slick – from the west coast of Ireland to the east of the Mediterranean; from the Arctic Circle to the Straits of Gibraltar – sucking in new members in its wake. And around this blue map of the European Union (covering over 450 million citizens) they will describe another zone of 385 million people who share land and sea borders with the EU. Surrounding them another 900 million people are umbilically linked to a European Union that is their biggest trade partner and their biggest source of credit, foreign investment, and aid. These 2 billion people (one third of the world’s population) live in the ‘Eurosphere’: Europe’s zone of influence, which is gradually being transformed by the European project and adopting European ways of doing things.⁶

Because news is told by journalists rather than historians, European power is often confused with weakness. But when a country like Russia signs the Kyoto Protocol on green-house gas emissions in order to smooth relations with the European Union; when Poland reverses decades of practice to introduce constitutional protection for ethnic minorities to be allowed to join the EU; when an Islamist government in Turkey abandons its own party’s proposals for a penal code that makes adultery a crime punishable by law so as not to attract the ire of Brussels; or a right-wing Republican administration swallows hard and asks the UN for help over Iraq – then we need to question our definitions of power and weakness.

We can see that a new kind of power has evolved that cannot be measured in terms of military budgets or smart missile technology. It works in the long term, and is about reshaping the world rather than winning short-term tussles. Europe’s power is a ‘transformative power’.⁷ And when we stop looking at the world through American eyes, we can see that each element of European ‘weakness’ is in fact a facet of its extraordinary ‘transformative power’.

Europe doesn’t flaunt its strength or talk about a ‘single sustainable model of progress’. Instead, like an ‘invisible hand’, it operates through the shell of traditional political structures. The British House of Commons, British law courts, and British civil servants are still there, but they have all become agents of the European Union. This is no accident. By creating common standards that are implemented through national institutions, Europe can spread its influence without becoming a target for hostility. While every US company, embassy, and military base is a terrorist target, Europe’s relative invisibility allows it to extend its global reach without the same provocation. The fact that Europe does not have one leader, but rather a network of centres of power united by common policies and goals, means that it can expand to accommodate ever-greater numbers of countries without collapsing, and continue to provide its members with the benefits of being the largest market in the world.

Europeans are not interested in classic geo-politics when they talk to other countries. They start from the other end of the spectrum: What values underpin the State? What are its constitutional and regulatory frameworks? Europe’s obsession with legal frameworks means that it can completely transform the countries it comes into contact with, instead of just skimming the surface. The USA may have changed the regime in Afghanistan, but Europe is changing all of Polish society, from its economic policies and property laws to its treatment of minorities and what gets served on the nation’s tables.

Europe doesn’t change countries by threatening to invade them: its biggest threat is having nothing to do with them at all. While the EU is deeply involved in Serbia’s reconstruction and supports its desire to be ‘rehabilitated’ as a European state, the USA offers Colombia no such hope of integration through multilateral institutions or structural funds, only the temporary ‘assistance’ of American military training missions and aid, and the raw freedom of the US market.

By creating the largest single internal market in the world, Europe has become an economic giant that, according to some calculations, is already the biggest in the world.⁸ But it is the quality of Europe’s economy that makes it a model: its low levels of inequality allow countries to save on crime and prisons; its energy-efficient economies will protect them from the hike in oil prices; its social model gives people leisure and time with their families. Europe represents a synthesis of the energy and freedom that come from liberalism with the stability and welfare that come from social democracy. As the world becomes richer and moves beyond satisfying basic needs such as hunger and health, the European way of life will become irresistible.

In every corner of the world countries are drawing inspiration from the European model and nurturing their own neighbourhood clubs. This ‘regional domino effect’ will change our ideas of politics, economics and redefine what power means for the twenty-first century.

The Project for a New European Century

Imagine a world of peace, prosperity, and democracy. A world where small countries are as sovereign as large ones. A world where what matters is that you obey the law – rather than whether you are with us or against us; where your democratic values are more important than what you have done in the war on terror this week; where you can have a population of just 400,000 and be part of the biggest economy in the world. What I am asking you to imagine is the ‘New European Century’.

This book is not an attempt to excuse all of Europe’s faults. It has plenty: from the absurdity of its common agricultural policy to the meanness of its immigration policies; from its lack of assertiveness on the world stage to its over-assertiveness in devising standards. However, it is an attempt to defend the European Union from its enemies: both those who seek to hide its extraordinary achievements by blaming it – often unfairly – for all manner of evils, and those who, in the name of the European cause, want to turn it into something else: a federal state on the American model. Both these groups have succeeded in filling Europeans with gloom. My aim is to help cast off the oppressive yoke of pessimism that has enveloped our continent before it becomes a self-fulfilling prophecy.

CHAPTER 1 Europe’s Invisible Hand

In the beginning there was no future, only the recent past. Blood-drenched, genocidal, and everywhere. The bodies had piled up with each new vision of European unity: 184,000 in the Franco-Prussian War, 8 million in the First World War, 40 million in the Second World War.¹ Grand plans and charisma had almost extinguished a continent. It needed a miracle to recover, but Europe could not bring itself to believe in romantic leadership again. With six words the French poet Paul Valéry captured the European condition in 1945: ‘We hope vaguely, we dread precisely.’²

That is why Europe’s epic escape from history was guided not by the larger-than-life heroes of the war – people like Churchill or De Gaulle, who inspired a generation to fight – but by a group of almost anonymous technocrats who were dedicated to taking the gun out of Europe’s future. The key figure was Jean Monnet, a small, unprepossessing, stocky French official, who reminded the journalist Anthony Sampson unavoidably of Agatha Christie’s Hercule Poirot.

Monnet’s contribution was a vision of how not to have a vision. He took Valéry’s observation and turned it into a dictum for the organization of Europe. He let the fear of conflict drive European unity and left its goal vague, allowing everyone to feel that Europe was going their way. To this day, Europe is a journey with no final destination, a political system that shies away from the grand plans and concrete certainties that define American politics. Its lack of vision is the key to its strength.

Monnet’s first principle was to avoid blueprints. The ‘Schuman Declaration’, which the French and the Germans signed to launch the European project in 1950, makes the lack of plans a cardinal principle: ‘Europe will not be made all at once, or according to a single general plan. It will be built through concrete achievements, which first create a de facto solidarity.’³ Monnet had worked in the disastrous League of Nations after the First World War and understood the need to start with concrete forms of co-operation rather than an illusory idea of the international community. He tried to bind France and Germany together by uniting the production of coal and steel: the industries that had built the weapons of war would now provide the foundations for peace. Monnet’s tactic was always to focus on technical details rather than the big political questions that attract headlines. He tried to tackle contentious issues by breaking them down into component parts – it is a lot easier to get agreement on coal and steel tariffs than war and peace. And once the governments of France and Germany were sucked into endless negotiations, they were less likely to go to war.

The best way to change the facts on the ground was through gradual change – what Monnet called engrenage. Each agreement to co-operate at a European level would lead inexorably to another agreement that deepened European integration. Once Europe’s leaders had agreed to remove tariffs, they focused on non-tariff barriers such as regulations, health and safety standards, and qualifications. When many of the non-tariff barriers had been addressed by the creation of a single market, Europe’s leaders focused on the single currency. Wider and wider groups of politicians and civil servants now had a stake in European integration. Thousands of meetings took place between officials from different governments, which meant, quite simply, that they got to know each other very well. They would therefore think spontaneously of other things they could do together.

Monnet’s bizarre working practices set a pattern that the European Union’s workings would follow. Stanley Cleveland, one of Monnet’s disciples, describes his method:

Whenever Monnet attacked a new problem he would gather a bunch of people around him…He would begin a sort of non-stop Kaffeeklatsch. It could go on sometimes for a period of one or two weeks – hours and hours a day…Monnet would remain silent, occasionally provoking reaction, but not saying much…Then gradually, as the conversation developed – and it often took several days or even a week before this happened – he began venturing a little statement of his own.⁴

Monnet would start with a very simple statement, almost a slogan, to see how his companions reacted. He would then expose a little more of his thinking, turning the slogan into a few sentences and then a couple of paragraphs. As his companions objected and told him what was wrong with what he said, he would reformulate his ideas until they were acceptable to everyone in the discussion. Monnet would produce up to thirty drafts of a memorandum, speech, or proposal. The purpose of this constant iteration is identical with the purpose of the EU’s current never-ending process of policy formulation, negotiation, and review: to remove any and all conflicts or obstacles around an issue. The product would be an outward simplicity for a complex idea.

What Monnet created was a machine of political alchemy. Each country would follow its national interest, but once the different national interests were put into the black box of European integration, a European project would emerge at the other end. For the Benelux countries, the Second World War had drastically exposed their vulnerability to the big powers in Europe, so they needed to find a way of reining in France and Germany; but also, as small European powers, their only real prospect of exercising influence was through some kind of unified inter-state system. For Germany, and also to an extent Italy, the major goal was political rehabilitation from their position as pariah states. Membership of a European community also represented a buttress against the threat from the East, and an opportunity to get rid of the allied market restrictions that prevented the necessary access to markets for Germany to rebuild. For France, German containment was the key goal, backed up by the prospects for economic growth which access to German markets and productive capacity offered – what Jacques Delors described as the marriage contract on which the EEC was founded.⁵

All of these were calculations of national interest, and yet the outcome of their filtering through Monnet’s European institutions was a solution to the problem of European conflict.⁶ In Europe today, war is not simply undesirable – it is inconceivable. The founder of liberal economics, Adam Smith, developed the evocative idea of the ‘invisible hand’ of the market to explain how a system of perfect liberty, operating under the drives and constraint of human nature and intelligently designed institutions, would give rise to an orderly society rather than a ‘war of all against all’.⁷ In many ways, Monnet’s genius was to develop a ‘European invisible hand’ that allows an orderly European society to emerge from each country’s national interest. ⁸ And that is possibly the most powerful element of Monnet’s vision: he did not try to abolish the nation-state or nationalism – simply to change its nature by pooling sovereignty.

Europe has been able to extend itself into the lives of Europeans largely unchallenged by seeping into the existing structure of national life, leaving national institutions outwardly intact but inwardly transformed. The ‘Europeanization’ of national political life has largely gone on behind the scenes, but its very invisibility has seen the triumph of a unique political experiment.

The Invisible Political System

The Palace of Westminster, London. It is 11.30 a.m. on a Thursday and the Secretary of State for Agriculture, Margaret Beckett, is preparing to take questions – just as her predecessors have done for three hundred years. The daily prayers have been said and MPs are settling down on their green benches – behind the sword-lines that were originally introduced to stop the opposing front benches from stabbing each other while they spoke. The MPs are tired and anxious to get off to their constituencies so the chorus of ‘Hear, Hear’ and the waving of order papers is even louder than usual.

Although the trappings of ‘Question Time’ have not changed in centuries, this façade of continuity hides the fact that over half of British agricultural legislation is made to implement decisions taken by our ministers in Brussels.⁹ Although the House of Commons can hold Margaret Beckett to account, the key decisions are not made by her alone. Instead they are made in negotiations with her counterparts in gatherings of European agriculture ministers and the various technical committees that meet between three and four hundred times a year.¹⁰ But for a visitor to the House of Commons, or even a British farmer, nothing has changed because the policies are not implemented or ratified at a European level. The farmer will continue to deal with the national Ministry of Agriculture, the national customs and excise authorities, the national vets and health and safety executives who have become the custodians of European policy.

This invisible Europeanization of power is happening across the spectrum of British politics. There is no longer a single national ministry that has not met with its counterparts in some EU forum or another, including defence ministers, transport ministers, and even home affairs ministers. The best estimates are that up to a third of British legislation and two-thirds of economic and social legislation are made by British ministers with their European colleagues in Brussels.¹¹

While Europe has seeped into the bloodstream of national politics, it is careful to take a back seat. It is the House of Commons, national civil servants, and national law courts that ratify and implement European decisions. Because national governments are the agents of European power, the European Commission can remain small and discreet. The European Commission has a total staff of 22,000 – less than many large city councils. This gives it barely half a civil servant per 10,000 citizens, as against 300 per 10,000 on average for the national civil services.¹² Some Eurosceptics have unfairly argued that Europe is a stealthy federalist project. In fact, every single step has been voluntary and has been debated and agreed by national parliaments. It is, however, deliberately low profile so that its builders focus on making policy work rather than political grandstanding.

The European Union is about enhancing rather than destroying national identities. Brussels, the antithesis of an imperial capital, is in many ways a microcosm of Europe, representing and encapsulating European history. Almost every invasion and political project – from the Roman Empire, through Napoleon to the Third Reich – has come through and absorbed it. And today its population, architecture, and ideology is a haphazard over-layering of their legacies. A third of its population is foreign¹³ (with the rootless, well-paid elite of Eurocrats living side by side with the socially excluded immigrants of European empires past, Moroccans, Congolese, Rwandans). It is the capital of a country with no real sense of national identity (and a constant jockeying for position between the Walloons and Flemings who inhabit it).

The expat’s burden of carrying his home in his head means that there is no risk of going native. Few of the Eurocrats who move to Brussels even try to fit in. Many of the British cling to their roots by recreating a little England. Despite living in one of the culinary capitals of Europe, they fill their cupboards and fridges with pre-packaged, ready-made parcels of home: Bird’s custard powder, Walkers crisps, Heinz baked beans, Wall’s sausages, and Savlon cream. And this is nothing compared with the patriotic fervour of the Greeks, who kit themselves out in fancy dress and dance through the streets on their national holiday. Or the Irish, whose legendary St Patrick’s Day celebrations spill out of the dozens of Irish pubs that are scattered around the city. Brussels is an unobtrusive vessel that allows powerful national identities to flourish – the living embodiment of the British Conservative Party sound-bite of being ‘in Europe, not run by it’. By keeping a low profile at home and working through national structures, Europe has managed to spread its wings without attracting much hostility. As it becomes a force to be reckoned with on the world stage, it can act in the same way. When European troops go overseas they rarely wear European uniforms. They often serve under the flags of NATO or the United Nations. Where Europe has established protectorates, such as in Bosnia and Kosovo, its special representatives do so in the name of the United Nations as well as the European Union.

European power even has a low profile in the economic sphere. The EU economy is the same size as that of the USA, with comparable levels of capital investment in the economies of other countries, and yet that economic muscle – in many respects greater than that of the USA – just isn’t noticed in the same way. Anti-globalization is almost exclusively an anti-American phenomenon, even within the USA itself, when its antithesis, globalization, is just as much a European phenomenon. The intrusion of McDonald’s provokes the bile of economic nationalists and opponents of globalization everywhere. All of that movement’s hate figures – Starbucks, Gap, Nike – are universally identified as American companies. In some respects, the attack on the World Trade Center demonstrates this paradox – an attack on the heart of the global economy naturally took place in New York because American economic might is so blatant. Europe’s comparable might simply lacks that profile.

This even extends to America’s occasional fears of a foreign economic takeover within the USA. The 1980s saw remarkable levels of nail-biting and hand-wringing within the USA over the rise of Japan and its putative takeover of the commanding heights of the US economy. European investment in the USA now easily surpasses that of Japan, yet it barely merits a mention in American analysts’ dissections of European weakness.

The most obvious reason for Europe’s invisibility abroad is the dark episode of European colonial history that means there is a real reluctance in Europe to adopt the trappings of empire. But there is a deeper reason for this respect for local cultures. The European vision has never aimed to establish a single model of human progress: it is about allowing diverse and competing cultures to live together in peace. This was captured most dramatically when the Northern Irish politician John Hume was given the Nobel Peace Prize. In his acceptance speech he talked of the European Union as the most successful peace process in history: ‘The European visionaries demonstrated that difference is not a threat, difference is natural…The answer to difference is to respect it…The peoples of Europe created institutions which respected their diversity – a Council of Ministers, the European Commission and the European Parliament – but allowed them to work together in their common and substantial economic interest.’¹⁴

This diversity also has the unexpected effect of making the European Union stick to its principles. An example illustrates this well. When the Berlin Wall fell in 1989, there was no agreement on which former Communist countries to let into the club. Because Europe’s leaders failed to agree on the final borders of the European Union they decided to make entry open to anyone who met the ‘Copenhagen Criteria of democracy, the rule of law, and economic liberalism. Lurking in the background of this decision was a desire to exclude some countries. Several member-states were particularly keen to use the agreement to lift the bar of membership so high that Turkey would never be able to join, creating tough standards on human rights and respect for minorities that they felt would remain beyond the Kemalist republic’s reach. However, these very criteria have driven Turkey to reform itself, and they will pave the way for a modern and democratic Turkey to join (despite the lack of enthusiasm for Turkish membership from many EU members). The same happened with the Maastricht convergence criteria for monetary union – designed at least in part to keep the profligate Italians at bay – which had the effect of ending Italy’s profligacy and allowing it to join.

In all of these cases, member-states have struggled to agree on their final destination and taken refuge behind processes which reflect European values. Ironically, they have chosen to project their values to the European level in order to defend their interests at a national one. This creates a strange situation where nations have interests and no values and the EU has values but no interests.

Jean Monnet’s prediction at the outset of the European project was that, ‘We are starting a process of continuous reform which can shape tomorrow’s world more lastingly than the priciples of revolution so widespread outside the West.’¹⁵ But because the European project is at best half-glimpsed, hidden behind national legislatures and national executives, it is easy to miss. To the naked eye, power has not moved from the governments that remain the seat of legitimacy, and politics continues in the age-old ways. Ironically this very invisibility has allowed the European project to spread so far and so fast, creating an inexorable momentum for its own development. By coming together and pooling their sovereignty to achieve common goals, the countries of the European Union have created new power out of nothing. The silent revolution they have unleashed will transform the world.

CHAPTER 2 ‘Divided We Stand, United We Fall’

1968 was a year of revolutions. What started in the Sorbonne in Paris as a protest about an outdated curriculum and the threat of a reduction in student numbers soon spread like wildfire around Europe and the United States. But the excitement was not limited to universities. Dee Hock, a middle manager in a bank in Seattle who had dropped out of community college after just two years, was starting a revolution of his own – one that could hold some important lessons for the European Union. Many have argued that Europe’s divisions will stop it punching its weight in the world, but Hock’s example shows that you can take over the world without developing a centralized bureaucracy.

Hock’s journey started when the bank’s headquarters appointed him to a committee that was working on a business strategy for its ailing credit card, Bankamericard. The backdrop was bleak. Credit cards had only existed for ten years and the infant industry was in chaos. Banks had dropped millions of unsolicited cards on an unsuspecting public that had no experience of credit facilities of this kind. Losses were thought to be in the hundreds of millions of dollars. Card owners were bankrupted, politicians were alarmed, and the media launched a feeding frenzy of blame-calling.

Instead of developing a new business strategy, Hock persuaded his superiors to start a new kind of organization: Visa. He was determined to move beyond the hierarchical companies that were products of the industrial revolution and create an organization based on biological concepts – a network. He wanted to create a franchise that would have global presence, but maintain competition between individual banks so that they would be driven to innovate.

The basic principle was to create a company that did not have shareholders but members. These members would own the company for ever but could not buy or sell their part of the company – which meant that it would be impossible for any individual member to gain control of the overall organization. Hock wanted to create an organization that would be both highly decentralized and highly collaborative. Authority, initiative, decision making, wealth – everything possible was pushed out to the periphery of the organization, to the members. What began with just a handful of modest banks in just twelve states grew into an organization that is now owned by over 21,000 financial institutions in 150 countries. Today Visa is responsible for the largest single block of consumer spending ($2.7 trillion annually), services 600 million people, and continues to grow at a rate of 22 per cent a year.¹

In spite of its enormous economic power, Visa is effectively a skeletal organization with a tiny central administration and only three thousand employees in twenty-one offices around the world. It relies for its strength and success on enabling others to flourish. And that, says Hock, is exactly how it ought to be. ‘The better an organization is, the less obvious it is,’ he says. ‘In Visa, we tried to create an invisible organization and keep it that way. It’s the results, not the structure or management that should be apparent.’²

Network Europe

Although he predated Dee Hock and came from a very different world, the principles that Monnet promoted bear a remarkable resemblance to those that have turned Visa into one of the most successful companies in global history. Though very few people realize it, the European Union he gave birth to is already closer to Visa than it is to a state: it is a decentralised network that is owned by its member-states.³

The headquarters of the EU Council says it all. The Justus Lipsius Building looks like it has landed in Brussels from outer-space – obliterating the genteel Art-Deco surroundings with its marble footprint. Clad in heavy grey stone and reflective glass, this anonymous rectangular building covers some 215,000 square metres, circling a mammoth atrium with 24 kilometres-worth of corridors of power.⁴ Like a Russian doll, the external shell has replicated itself infinitely inside, housing dozens of rectangular rooms – each containing a rectangular table with a hole in the middle. The tables are neatly set up for European negotiations with placenames for the twenty-five member-states, long, thin microphones, notepads, and bunches of red pencils. In some of the rooms there are booths for interpreters to translate between the twenty EU languages. This building is like a factory for European agreements. And because the EU is a network rather than a state, negotiation is not a part-time activity: it goes on every single day, around the clock. Like the banks that own and control Visa, it is the national governments that set the agenda for the future of Europe.

Four times a year, all the EU Heads of Government gather here amid a fanfare of publicity, with a media party that runs to the thousands. There are between 80 and 90 meetings a year⁵ of various formations of the Council of Ministers, which brings national ministers (agriculture ministers, finance ministers, health ministers, etc) together to agree policies in each of their areas. Working under the ministers are groups of national civil servants. The ‘Committee of Permanent Representatives’, made up of ambassadors from all the member-states, is responsible for agreeing 90 per cent of the European Union’s legislation.⁶ Working under it are dozens of ‘working groups’ that prepare agreements in each of the different policy areas.

The process is complicated, but it allows every country or parliament in the network to have some say. Before decisions even reach the magic circle in Brussels, national parliaments can mandate their governments to stick to a clear national position. After decisions have been taken, they then face a tough process of scrutiny from the 723 directly elected members of the European Parliament who represent citizens from the twenty-five member-states.⁷ Finally, the laws that are agreed are upheld by the European Court of Justice, made up of judges appointed from all the member-states and which acts as a supreme court.

In seminar rooms across the world, historians and political scientists are trying to understand and categorize the European Union. The usual parlour game is to guess which country the EU will end up copying. Will it be the USA – perhaps the 1850s confederal model? Or will it be a constitutional federal democracy like post-war Germany, or the Swiss system where national political debates are much less important than local scuffles and the needs of the secretive banking economy? Some predict an overpowering bureaucratic state on the Napoleonic model, while others fear we will build a political system so divided that it could collapse like the French Fourth Republic. Some Americans, in particular, are impatient for the Union to unite; to develop a federal structure; to have a constitution that clearly separates the executive, judiciary, and legislature; to elect a single president; and to give the European Parliament law-making powers like national parliaments. In short, to get a ‘single phone number’.⁸ But Jean Monnet’s genius was to create a political structure that is quite different from the traditional nation-state.

Although some federalists still dream of a country called Europe, and the European Union sometimes pretends to be a state with its flag, passport, and anthem, it is fundamentally different from a state. Like Visa, it is a decentralized network that exists to serve its member-states. The EU is a skeletal organization that leaves the real power to its member-states, which are responsible for implementing and overseeing the vast majority of the European Union’s activities. This revolutionary structure has allowed the European Union to grow with the support of its members. But it has also fundamentally changed the nature of global politics.

Reversing the Balance of Power

If Europe’s peaceful twenty-first century will benefit from the wisdom of an American banker, the horrors of the first of half of the twentieth century can be traced back to a banker from Italy. The man in question was Lorenzo de’ Medici, whose family ran Florence in the fifteenth century. At that time it was one of five city-states that dominated the Italian peninsula – along with Rome, Naples, Venice, and Milan. These cities were immensely wealthy and in perpetual competition: at that time Florence had a higher annual income than the King of England, while Venice’s revenue was double that of England and Spain.⁹ In 1454, Francesco Sforza, the ruler of Milan, approached de’ Medici to propose an alliance between their two states. He wanted to gang up on Venice before it grew too powerful. De’ Medici agreed, but insisted that they must not destroy Venice as one day its power might itself be needed to stop Rome. His reply contained the historic phrase: ‘the affairs of Italy must be kept in balance’. He is credited with being the first person to talk explicitly of a ‘balance’ of power, a principle that became one of the key foundations of European order (or disorder) for five hundred years.¹⁰ The system was based on the mechanical idea that groups of states needed to be brought into equilibrium – like the scales that bankers used to measure gold – so that no single one could dominate the continent.

Europe’s invention of small nation-states – and a system to stop any one of them overpowering the others to create an empire – was a mixed blessing. The fierce competition between them spurred them on to develop the most advanced technology in the world, and allowed a continent that was a sleepy backwater to overtake the empires of the East and assume global dominance.¹¹ But the logic of the balance of power was also perpetual war: the Thirty Years War, the Franco-German War, the First World War, the Second World War, and the Cold War were all fought to stop any one country rising to hegemony.

All that has now come to an end in Europe. No one fears a rising Germany or France because all the countries of Europe have formed themselves into a network that is bound together by laws and regulations.¹² Instead of competing with each other to build up arsenals of weapons or build regional alliances, their interests are defended through mutual vulnerability, pooled sovereignty, and transparency. But outside the warm womb of the European Union, the balance of power lives on: between India and Pakistan, in the Middle East, in Central Asia, and the Far East.

Although these countries are all trying to balance each other, no one is trying to check Europe’s rise. In fact, Europe has even managed to reverse the very idea of the balance of power. As its strength grows, it is becoming a powerful magnet for its neighbours who want to join it rather than balance it. The American political economist Richard Rosecrance has shown that this is the first time in history that a great power has arisen without provoking other countries to unite against it. In a remarkable survey of the formation of empires and states he shows how every major power from Spain in the sixteenth century through France, Britain, and the United States in the nineteenth century to Germany, Japan, and the Soviet Union in the twentieth century and the USA in the twenty-first century has provoked its neighbours to unite against it.¹³ So why has Europe managed to become more united and powerful without attracting hostility?

One argument is that Europe is an economic rather than a political superpower. Walter Russell Mead argues that economic might draws people in while political power creates hostility. He explains this theory by comparing economic power to the carnivorous sundew plant: ‘a pleasing scent lures insects towards its sap. But once the victim has touched the sap, it is stuck; it can’t get away. That is sticky power; that is how economic power works.’¹⁴ There is something in the claim that economic power doesn’t create the same fears in its neighbours as political power, but it does not explain why the United States, China, Russia, and India look more benignly on the growth of the European economy than they do on each other’s economic development. There is an entire industry of US foreign policy thinking based on the need to balance China’s growing economic power, even though by some definitions its economy is still smaller than Italy’s, but there is very little concern about a European Union whose economy is the largest in the world.

The most compelling explanation comes from the unique nature of the European Union: as a network rather than a state. International relations scholars have compared the relationship between states to billiard balls on a table. They have a hard shell and repel each other when they clash. But while it is easy to clash with another state, it is difficult to clash with a network that is made up of a cacophony of different voices. The point of a network – or club – is that it doesn’t have a hard centre like a billiard ball, so when you try to balance it, you are often sucked into a process of engagement with its different members. The most surprising example of this was the crisis in Iraq.

The Beast with Twenty-Five Heads

There are few creatures more potent in Greek mythology than the Hydra, a beast with the body of a serpent and nine heads. Each time you chopped one head off, two others would grow in its place. With its many member-states, the EU is like a modern day hydra – as Colin Powell discovered when he tried to build an international coalition for invading Iraq. Each time he managed to sign one country up, he found another one still had doubts. In the immediate aftermath of the invasion, the conventional wisdom was that the Americans had won – dividing the European countries and prevailing on some of them to invade Iraq on American terms, without a United Nations mandate and against the wishes of a majority of European citizens. A headline in the Financial Times on 12 March 2003, as troops prepared to invade Iraq, seemed to say it all: ‘Europe is the first casualty of war.’¹⁵

Most people think that Iraq was a disaster for Europe, and I shared their distress at the political fall-out from the crisis. But with hindsight we can see that some good came out of it. The European project has survived the transatlantic train crash, and its multilateral agenda has in fact made a comeback. Though the Continent was divided on tactics for handling the United States, all EU countries shared three fundamental goals: to preserve the transatlantic alliance, to restore the authority of the United Nations, and to prevent unilateral preventive war from being established as a norm. Europe has somehow met all these objectives – not by putting up a united front, but by engaging the Americans with competing factions. The negotiations in the run-up to the war were reminiscent of the routines in so many Hollywood detective movies where the ‘bad cop’ scares the suspect into submission, while the ‘good cop’ wins his trust. Between them they manage to get him to confess.

In 2003, the transatlantic relationship seemed as if it was on the cusp of being discarded when the American Defense Secretary, Donald Rumsfeld, grouped Germany with ‘problem states’ like Iran and Libya and Germany’s justice minister compared George W. Bush to Hitler. Robert Kagan’s fashionable thesis that Europe and the United States were two tectonic plates inevitably moving apart seemed irrefutable. ¹⁶ In retrospect, however, the fact that some European countries supported the war meant that the transatlantic relationship survived. As long as Bush needed Blair alongside him, there was at least an incentive for America not to be too destructive towards a political project valued by the British government.

The United Nations was sidelined and mocked during the 1990s – powerless in the face of civilian massacres in Rwanda and Somalia, ignored over Kosovo, and starved of dues by big donors. But during the run-up to the Iraq war it became the crucible in which the arguments were aired and decisions on the basis for war were made. For the first time since the Cuban missile crisis, dramatic presentations at the United Nations dominated the media, and international public opinion rallied to its cause. Now the United States has turned to the United Nations to give credibility to the beleaguered Iraqi Governing Council – not something that would have seemed likely at the time of the invasion.

Most importantly, the doctrine of preventive war seems to have disappeared into the desert sands. The US national security strategy had outlined a doctrine of war that would allow the USA to attack potential enemies before they posed a direct threat to US security. At their most hubristic, the neoconservatives argued that the USA could take advantage of its victory in Iraq by unleashing a ‘democratic domino effect’ in Iran and Syria. The political and economic costs of invading Iraq make another occupation impossible for several years. France and Germany have made any future action harder by refusing to commit troops to Iraq or pay for reconstruction.

This success was a direct result of Europe’s structure. While the US administration was pursuing its policy of divide and rule – and talking separately to each of the Hydra’s heads – the European heads were busy watching each other and adapting their positions accordingly. There was certainly no ‘grand plan’ behind the approach of individual countries and, as the crisis reached its apotheosis, there was very little dialogue between the competing camps; but the actions of each European government were carried out in the knowledge of what the other camps were doing. The French and Germans could only afford to take a very aggressive approach because they knew that the ‘New Europe’ led by Blair, Aznar, Miller, and Berlusconi would stay on good terms with Bush. Equally, Tony Blair knew that, however far he went to support American action, it was likely that this would be a one-off that would not be repeated in Iran or Syria because of the depth of opposition in France and Germany. The fact that the European powers had such a strong consensus on the strategic goals – of Atlanticism, support for international law, and opposition to unilateral preventive war – meant that without any formal attempt to co-ordinate their positions, it was likely that these principles would shine through.

The European Union does not just have a ‘good cop’ and a ‘bad cop’: it is like an entire police force of good and bad cops. Other countries will always be able to find someone in the European system who is more sympathetic to their cause, and this will tend to draw them into a process of negotiation from which it is often hard to escape. The ‘good cops’ will then often hide behind the ‘bad cops’ in the EU system and manage to extract concessions. For example, British and Nordic enthusiasm for enlargement to the East allowed the countries of Central and Eastern Europe to ‘keep faith’ as they embarked on painful processes of internal reform. At the same time, French doubts allowed the European Commission to exact concessions from them in the protracted negotiations for accession. The key feature of this ‘good cop, bad cop’ dynamic is that, even though the disagreements are genuine, the core objectives of all European countries tend to be the same: a commitment to multilateral action; democracy, human rights and the international rule of law; negotiation and engagement rather than military force. Therefore, countries that seek to play Europeans off against each other tend to get pulled back to these basic principles.

However, in spite of all this success, many Euro-enthusiasts are not advocates for ‘Network Europe’. Even those who concede that the network works well for economic policy, because like Visa it gives its members access to economies of scale without removing the competition that drives innovation, will say it is hopeless for foreign policy. But as we have seen, the development of ‘Network Europe’ has paradoxically allowed the EU to become a global power to be reckoned with, not just ending the balance of power in its own backyard, but reversing it.

Our ‘Network Europe’ has not come about as a result of a conscious plan. It is the product of an uneasy truce between the traditional visions of a European superstate and a European free-trade area – but no single vision has managed to achieve unanimous support. And it never will. As Europe develops in the future, we must embrace its unique structure, and reform it to make it work to our advantage.

Of course, we need to get better at managing the divisions within Europe. The wounds inflicted by the Iraqi disagreements run deep, and Europe cannot afford to rip itself apart every time a major international issue arises. One lesson from the Iraq war is that Europeans can have greater influence if they develop a common position before a crisis erupts, as they have done towards Iran. However, we must recognize that the persistence of different views is a strength rather than a weakness, and that the EU’s structure is robust enough to accommodate disagreements of monumental proportions. Samuel Beckett said that if at first you don’t succeed ‘Fail, fail again, fail better’. The genius of Europe is that it carries on trying. And from every setback it has emerged stronger.

CHAPTER 3 Europe’s Weapon is the Law

The bland features of Hans Blix became an unlikely fixture on our television screens and in our newspapers in early 2003. With his weapons inspections, this softly spoken balding former diplomat became the personification of hope and peace. The other familiar figure in those tense few months was Donald Rumsfeld, the ebullient American Secretary of Defense. The former wrestling champion also promised to destroy the Iraqi will to fight: not by relying on inspections, but using ‘shock and awe’ to scare Iraqis into submission.

The conflict went beyond the situation in Iraq. The two men became archetypes for different worldviews: the pyrotechnic might of the United States military was the perfect foil to the United Nation’s preference for inspections. One offered to contain the Iraqis by spectacular displays of power, the other by keeping them under constant surveillance.

Unfortunately, spectacle and surveillance were just two sides of the same impotence, because both attempted to control Iraq from the outside. Unlike Europe’s transformative power, which changes countries permanently, this kind of power lasts only as long as there is a crisis and huge amounts of international pressure and resources. As soon as the media and the political circus move on, the problems return.

The Bush Administration has used the crisis in Iraq to show that Europe’s obsession with international law is a sign of its terminal weakness. It depicts it as a modern-day Prometheus bound up in red tape, at the mercy of devouring predators. But what was it that transformed Europe from being an incubator for world wars into a transmission belt for peace and democracy? The simple answer is: international law. The law is Europe’s weapon of choice in its campaign to re-shape the world.

Power as Spectacle

Machiavelli famously said that it is better to be feared than to be loved. But he also warned that it is vital not to be hated. Donald Rumsfeld ignored the second part of this injunction when he ordered the Pentagon to implement the principle of ‘Shock and Awe’. The report by the National Defense University, which coined the term, called for displays of firepower so dramatic that they would sap America’s enemies’ will to fight in the same way that the nuclear bomb had worked on Japanese fighters in Hiroshima and Nagasaki in the Second World War.¹ In an age of terror, Rumsfeld and his colleagues were looking to turn the tables on their enemies. They would use violence not to achieve specific objectives such as conquering a town or destroying a weapons factory, but as an end in itself: an instrument to enforce discipline on ‘tyrants and terrorists’ around the world.

This was part of a broader strategy to respond to a post-9/11 world in which terrorists could procure weapons of mass destruction from ‘rogue states’. Pre-emptive strikes were intended to help restore the viability of deterrence – by making it clear that the USA would severely punish any state that considered sharing destructive technologies with terrorists. By making an example of Iraq, Rumsfeld hoped to be able to send a message to Iran, Syria, North Korea, and any other country thinking of equipping itself with weapons of mass destruction.

Using brute force to convey a message is not new. But now this idea of ‘power as spectacle’ can be perfected with the technology of the twenty-first century: ‘daisy cutters’, ‘bunker-busting’ nuclear bombs, squadrons of F16s, and the like. The problem with expressive violence is that its effects soon wear off. Rulers in the past found that they needed to up the ante with ever more gruesome executions and other displays of might, such as the gut-wrenching execution of Robert-François Damiens, who was ripped apart by four galloping horses for attempting to kill Louis XV of France in 1757. And even if fear can be maintained, it becomes increasingly expensive and ultimately counter-productive as it creates resentment among the very people it is seeking to control.

That is what has happened with Iraq. There were almost monthly displays of firepower between 1991 and 2003 to keep the regime on its toes. When this was felt to be failing, the logic of the allies’ position compelled them to invade in 2003. The initial effect was successful. Saddam was removed, and Iran, Syria and Libya were initially cowed by the brute force of the invasion. But soon the effects wore off. Already the regimes in Tehran and Damascus feel emboldened by the fact that 130,000 US troops are bogged down in Iraq. And as the continued presence of foreign forces acts as a magnet for insurgency, the Syrian and Iranian regimes look on with relief at the transformation of a potentially popular war of liberation into an unpopular and bloody occupation.

However, the fatal flaw of ‘power as spectacle’ is that it is essentially destructive. It can stop people doing bad things, but it is not a good way to build and govern a complex society. In Afghanistan the allied invasion had no trouble removing the Taliban regime, but the allies failed to rebuild Afghanistan from the roots up. In spite of a veneer of democracy, the underlying realities of rule by warlords, corruption, and nepotism remain the same. As one American soldier wryly put it: ‘We thought we had bought the Northern Alliance, but it turns out that we had rented them.’ Once the superpower’s attention had been diverted by the war in Iraq, its power to transform the Afghan Republic began to wane.

This kind of power is inefficient because it is always imposed on unwilling subjects from outside, rather than changing the wiring of society from the inside. This is what led modern societies to move from ‘power as spectacle’ towards ‘power as surveillance’.

Power as Surveillance

The French philosopher Michel Foucault showed how, from the nineteenth century, advanced societies moved from relying largely on the deterrence of visible expressions of might to discipline enforced by making potential subjects of power visible, through regulation, official papers, CCTV and prisons. Foucault argues that the shift from spectacle to surveillance allowed modern societies to be policed at a fraction of the cost of the ‘Ancien Régime’. The key was finding ways to record and monitor the behaviour of citizens in a systematic way through the development of timetables, identity cards, photographs, medical records, and laws.

The United Nation’s weapons inspections were developed because military power is expensive and short-lived in its effects. By getting the international community to insist that Iraq complied with treaties that Saddam himself had signed, the UN felt that it would have the legitimacy to change Iraq. And by sending Hans Blix and Mohammed Al Baradei to triple-check every single Iraqi claim, they knew they would not have to take Saddam at his word. Weapons inspections are the direct opposite of power as spectacle: it is not the strength of Blix and his team that needs to be on show, but the behaviour of the Iraq regime and sites they are inspecting. This was power as surveillance.

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