The US, UK and EU – Instability in a Time of Change
“The old world is dying and the new world struggles to be born; now is the time of monsters.”
When Labour came to power in June last year, the possibility of Donald Trump becoming US President again already loomed large. With President Biden’s decision to stand down, the storm-cloud slightly receded from Labour’s foreign policy horizon – Democrats and Labour have always enjoyed a more politically comfortable relationship. But as the initial bubble of goodwill for Kamala Harris deflated, it became clear that Labour would have to face the fact of a difficult trans-Atlantic relationship with a Trump Presidency which had learnt from its first period in power and would be likely to hit the ground at full speed with policies with which Labour disagreed (in particular around tariffs).
What I think few predicted was the incredibly and immediately percussive force with which the newly-invigorated President would actually hit that ground. On issues from Ukraine to regulatory enforcement, the rules-based international system and upholding global institutions, the impact has shuddered what seemed only months ago to be unmoveable and immutable pillars of the International Order. With the Pax Americana questioned by its very progenitors, NATO, the WTO, the WHO, the IMF and a host of other international organisations were shaken to their very foundations as policies perhaps offering short-term returns have been prioritised over the long-term dividends offered to the US by the post-war norms of international stability and cooperation stability.
Implications for the UK
PM Starmer came to power intending to re-build the UK’s relationship with the EU after nearly a decade of Brexit bickering and bitterness. Six months in, he was finding the going tough. It was hard to find common ground – whether on student mobility or on reducing bureaucratic hurdles for exporters – and the ingrained hostility of large parts of the UK media and the Conservative opposition meant Starmer’s room for granting the necessary concessions was limited. Finding the entry point for a more emollient relationship was difficult.
But then, President Trump’s antipathy towards President Zelenskyy, the withdrawal of military and intelligence assistance and the votes in the UN with Russia, China, Belorussia and North Korea sent politicians in European capitals (which had drastically under-invested in their own security for decades, secure under the protecting curve of America’s defensive umbrella) scurrying to inspect their empty defence cupboards. The EU was suddenly faced with new and unsettling realities and found itself desperately in need of a defence strategy. Since the UK is one of the few European States to have maintained a credibly deployable Armed Forces; one of only two with nuclear weapons; and the European State with (by some way) the most formidable intelligence relationship with the US the search for a defence strategy opened a UK-sized hole.
Starmer had found his role. Armed with the Trumpian goodwill that an invitation for an unprecedented second State Visit had bought, with the promise of a US-UK trade deal (the double-edged sword Holy Grail of the Brexiters) in his back pocket and comforted by the reassuring words ‘Special Relationship’, Starmer found himself at the centre of attention - convening conferences, offering military support, building Coalitions of the Willing (now reportedly including up to 30 countries) welcoming Zelenskyy with open arms to Downing Street. Cajoling European Governments, for so long back-markers on military expenditure, into a massive increase in defence commitments. And in the background, through the excellent services of Jonathan Powell, delicately re-threading the twisted US-Ukraine relationship so publicly blown-up in the White House.
Ironically, given how much President Trump dislikes the EU and had welcomed Brexit as a way of weakening it, his policies have pushed the UK back to where it always should have been - at the heart of Europe.But if things look rosy for the UK at the moment, I am not sure how long that state of affairs will continue. The UK believes that it can continue to play its historical ‘bridge’ role between the US and the EU. However, even though the UK is not directly in the line of fire of Trump’s economic policy (with a positive trade deficit in manufactured goods and no border disputes and – ironically – sheltered by Brexit from the tariffs on the EU), there are no exemptions from the US global tariffs on aluminium and steel and the generalised economic impact of the volatility and uncertainty of Trump’s presidency will affect the UK’s economy as it will all others. Given President Trump’s antipathy towards the EU, how long he allows the UK to ride both horses and how long Starmer is able to maintain an ambivalent posture in the face of the economic impact of Donald Trump’s aggressive trade policy remains to be seen.
The UK is likely to be presented with a brutal decision in the near future: US or EU. Public opinion and the instincts of the Labour Party lean towards the EU. But self-preservation may force the heart to give way to the head. That dichotomy will present the government and companies with a series of difficult and painful policy and commercial decisions.
And for the EU
And the UK is not alone in facing a period of considerable uncertainty. President Trump reserves a special hatred for the EU. It is not only a powerful (if heavily-regulated) economic rival to the US, but – as a supranational force – it runs counter to his nationalist agenda. It is therefore another irony of Trump’s policies that one of the consequences of his stance on Russia and Ukraine may end up reinforcing the EU on the world stage.
The combination of Trump’s sudden change in direction of defence posture and the fact that his global vision is the exact opposite of the EU’s premise that the path of globalisation was a one-way street and that interdependence bred security and forced European leaders into some very significant policy adjustments.
As one commentator noted ‘Germany used to rely on Russia for their energy, for China for trade and the US for security. Now all three of them are gone’. Friedrich Merz the incoming Chancellor, until recently a confirmed trans-Atlanticist, is now – along with President Macron - leading the charge for European defence independence, re-working his country’s constitution and legal framework to enable deficit spending on re-arming the country to the tune of €1 trillion. In France, Macron is seeking to make reality of his long-stated ambition to create European Strategic Autonomy, offering extend his country’s nuclear umbrella to cover the whole of the Continent. In Poland the PM announced defence spending is expected to reach 4.7% of GDP and increasing Poland’s army to 500,000 troops with compulsory military training for all adult men in place by the end of the year. There is open talk of the country seeking its own nuclear deterrent. In Brussels, the Commission successfully proposed €150bn in loans for European defence spending; relaxed the rules on spending and debt so that Europe could potentially raise a further €650bn over the next four years to spend on weaponry and infrastructure (including an ambition to achieve ‘tech sovereignty’); is driving forward plans to establish new financial instruments to support Europe’s defence, complete the EU single market, and push for a larger common EU budget, better tailored to the new strategic challenges facing the continent.
Across the Continent, as shares in munitions companies have soared, officials have been scratching their heads about how quickly the European defence sector can be reanimated and consolidated – creating a massive defence industry is not something that can happen at the flick of a switch. And how to explain to their populations that money, in short supply, will be spent on weapons, rather than books; on fighter jets rather than hospital beds; on tanks, rather than trains. And how, perhaps above all, to avoid complacency and persuade their voters that the comfortable pre-Trump state of US security guarantees has gone forever and that Russia will therefore continue to present a threat to them even after any truce has been signed and the guns fall silent in Ukraine.