Europe is a shrinking slice of the global economic pie
by Douglas McWilliams
30 August 2012
In American eyes, Europe is history - which is why the United States finds it especially annoying that the continent is causing the world economy to slow down – argues think-tank
It is difficult for a European fully to appreciate how peripheral the continent now appears in American eyes. I have just returned from New York and was surprised to discover the extent to which Europe is seen as irrelevant - except possibly as a source of scenic holiday destinations and, of course, a splendid backdrop for the Olympics.
Admittedly there is an inconsistency. At the same time as treating us as peripheral, many in the United States see Europeans as largely to blame for the current phase of world economic weakness. This feeling is especially strong amongst those close to President Barack Obama, who see his election prospects as being put at risk by a slowing economy and rising unemployment - for which they blame the problems of the euro. But if Europe was as irrelevant as is commonly believed in the US, we would not be important enough to be able to slow down the world economy.
The US attitude starts with the fact that Europe is militarily irrelevant. Other than minor and not wholly successful contributions from the British, Europe has done little in the two recent major American overseas engagements - Iraq and Afghanistan - except carp from the sides. It moves on to observe the failing economies, most of them now suffering negative growth, and concludes that Europe has little to offer the world except history.
Meanwhile, the Middle East is of interest because of the political instability, the links with Israel - especially in New York - and the importance of oil. Russia is seen as having military strength and an increasing economic importance because of its natural resources. China is emerging as a rival superpower both respected and feared if not particularly liked. India is not yet on the map to the extent that its emerging power might justify. Both Canada and Latin America are also less noticed than would seem appropriate, especially given their proximity. Meanwhile, Africa is attracting some emerging interest.
One of the implications of the apparent irrelevance of Europe is that when its leaders try to have an impact on world events, they are greeted with irritation and there is a tendency for American politicians to issue peremptory orders to European leaders to get their house in order with little of substance in ideas to support the impolite demands.
The US view that Europe is of diminishing importance is factually correct. Although, its relevance is more to do with the future rather than the present. In 1980, the European Union - as currently constituted - was 34 per cent of the world economy. This year it will be only 22 per cent and by 2020 it will be, according to our research, about 15 per cent - with the largest European economy, Germany dropping from fourth largest in the world in 2011 to seventh largest in 2020. But last year, the EU's gross domestic product was actually 32 per cent larger than that of the US - $17.6 trillion compared with $13.3 trillion.
But it is not new for Americans to think badly of Europe. The original European emigrants to America made the dangerous journey across the Atlantic because they sought a better life in the New World – not the Old World. And Thomas Jefferson in 1787 wrote: "When we get piled upon one another in large cities, as in Europe, we shall become corrupt as in Europe." Plus ça change.
Douglas McWilliams is founder and chief executive of the Centre for Economics and Business Research think-tank, in the UK
It is difficult for a European fully to appreciate how peripheral the continent now appears in American eyes. I have just returned from New York and was surprised to discover the extent to which Europe is seen as irrelevant - except possibly as a source of scenic holiday destinations and, of course, a splendid backdrop for the Olympics.
Admittedly there is an inconsistency. At the same time as treating us as peripheral, many in the United States see Europeans as largely to blame for the current phase of world economic weakness. This feeling is especially strong amongst those close to President Barack Obama, who see his election prospects as being put at risk by a slowing economy and rising unemployment - for which they blame the problems of the euro. But if Europe was as irrelevant as is commonly believed in the US, we would not be important enough to be able to slow down the world economy.
The US attitude starts with the fact that Europe is militarily irrelevant. Other than minor and not wholly successful contributions from the British, Europe has done little in the two recent major American overseas engagements - Iraq and Afghanistan - except carp from the sides. It moves on to observe the failing economies, most of them now suffering negative growth, and concludes that Europe has little to offer the world except history.
Meanwhile, the Middle East is of interest because of the political instability, the links with Israel - especially in New York - and the importance of oil. Russia is seen as having military strength and an increasing economic importance because of its natural resources. China is emerging as a rival superpower both respected and feared if not particularly liked. India is not yet on the map to the extent that its emerging power might justify. Both Canada and Latin America are also less noticed than would seem appropriate, especially given their proximity. Meanwhile, Africa is attracting some emerging interest.
One of the implications of the apparent irrelevance of Europe is that when its leaders try to have an impact on world events, they are greeted with irritation and there is a tendency for American politicians to issue peremptory orders to European leaders to get their house in order with little of substance in ideas to support the impolite demands.
The US view that Europe is of diminishing importance is factually correct. Although, its relevance is more to do with the future rather than the present. In 1980, the European Union - as currently constituted - was 34 per cent of the world economy. This year it will be only 22 per cent and by 2020 it will be, according to our research, about 15 per cent - with the largest European economy, Germany dropping from fourth largest in the world in 2011 to seventh largest in 2020. But last year, the EU's gross domestic product was actually 32 per cent larger than that of the US - $17.6 trillion compared with $13.3 trillion.
But it is not new for Americans to think badly of Europe. The original European emigrants to America made the dangerous journey across the Atlantic because they sought a better life in the New World – not the Old World. And Thomas Jefferson in 1787 wrote: "When we get piled upon one another in large cities, as in Europe, we shall become corrupt as in Europe." Plus ça change.
Douglas McWilliams is founder and chief executive of the Centre for Economics and Business Research think-tank, in the UK
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COMMENTS
There's considerable irony in the idea that Europe is militarily irrelevant, given that the last two wars that the US engaged in were both on poor pretences: the war in Afghanistan failed to find Bin Laden, the war in Iraq failed to find WMD's (although they did find plenty of oil to plunder to pay for the reconstruction of the country they just destroyed).
And at least we aren't in the habit of killing our own troops and those of our allies, unlike our more gung-ho cousins. One way of seeing it is that, to the rest of the world, the US is becoming increasingly annoying and irrelevant. And unless they get their own debt problems under control, the US is in for a bumpy ride too. Watch out when you lose that 'safe haven' status chaps, then you're really in trouble.
Karim - UK
Interesting but quite frankly, who gibes a damn what Americans think?
James - London
