As the American foreign policy establishment has been preoccupied in recent months with such things as the fall of Suharto, the Indian bomb, and Kosovo--all serious issues--an event of much greater long-term significance has received scant attention.
This is the adoption of a common currency--the euro--by the members of the European Union. This has the potential of changing the basic structure of world politics by bringing the brief era of the single superpower world to an abrupt end. For a common currency implies political unity. While Americans worry about the emergence of China as a rival that will challenge the supremacy of the United States, a United Europe will be a much better equipped and more convincing candidate for that role.

That is the geopolitical significance of the creation of European Monetary Union (EMU). Despite that significance, however, the event has received very modest attention in the American media. In so far as they have paid attention to EMU, the main theme has been that of uncertainty. Until a few months ago, there were serious doubts as to whether the thing would get off the ground at all; then, once it became clear that it would, uncertainty shifted to prospects of its success. In the first half of May, for example, the New York Times published two articles on the subject under the titles "Europe's Colossal Coin Toss" and "Rolling Some Big Dice in the Euro Casino"; and when the Washington-based magazine International Economy ran a symposium on the subject, it put on its cover two huge dice. Newt Gingrich characterizes the common currency as "an extraordinary experiment--and an extraordinary gamble." James Glassman, in a generally favorable analysis of the move toward the euro in U.S. News and World Report, acknowledges that it is "the greatest financial experiment in the past quarter century, and no one can foresee its consequences." The emphasis on the element of risk and uncertainty, then, is pronounced.

There are exceptions, of course, and some influential figures come down unambiguously on one side or the other. The distinguished Harvard economist, Martin Feldstein, writing in Foreign Affairs and the New York Times, insists that the EMU venture is a serious mistake, pregnant with political and economic trouble. So does the New York Times columnist William Safire. On the other hand, Jeffrey Garten, dean of the Yale School of Management, writing in Business Week, asserts firmly that EMU will succeed, and that the United States should be bracing itself to meet the challenge it will pose.

Garten at least acknowledges that EMU will represent a serious problem for the United States. The Clinton administration's position is that it will do nothing of the kind. If uncertainty has characterized the media, serene confidence apparently prevails in official circles. The assumptions there are that, as a major step toward European integration, EMU is, without qualification, a good thing, and that there will be a complete harmony of interests between the anticipated United Europe and the United States of America. Thus President Clinton: "I have never felt the United States should feel threatened by the prospect of a European Currency nor by the prospect of European integration in general" (Euro magazine, September 1997); and again, "An integrated Europe is America's natural best partner for the 21st century" (Financial Times, May 5, 1998).

Officials express themselves a bit more guardedly, but convey essentially the same message. In the same issue of the Financial Times, for example, Lawrence Summers, deputy secretary of the Treasury, puts it in conditional terms: "If EMU is good for Europe, it will be good for us." But the qualification here--the "If" word--refers only to the euro's prospects of success and does not challenge the assumption of a harmony of interests across the Atlantic. It is still taken for granted that European and American interests coincide on this issue, that it is a plus, not a zero, sum game. The prevailing line is that the only thing that would cause problems for the United States is the failure of EMU, not its success.

All this is very questionable. American conventional wisdom about Europe reflects the mental habits of half a century, rather than serious thought about the particular issue of EMU (or, for that matter, about that other contentious issue, the expansion of NATO). For nearly fifty years it has been an article of faith for Americans that European division is a bad thing, the cause of wars; that Europe should therefore be urged to integrate; and that a federal United States of Europe, created in emulation of the United States of America, would be the best outcome of such a process of integration. All very comfortable and reassuring, but are these assumptions likely to hold as things proceed? I think not.

Henry Kissinger has identified a paradox concerning the future of EMU: "It is difficult to see how the European Monetary Union can succeed. It is even more difficult to imagine that it will be permitted to fail" (Washington Post, May 12, 1998). The fact is, however, that it is almost certainly going to do one or the other over the next few years, and it is worth considering now what would be the consequences for the United States of either outcome.

The reasons why EMU might fail have been well rehearsed by its critics. It is, allegedly, putting the economic cart before the political horse. It is imposing a single currency on what is not a single economy. It will deprive individual countries and economies of the shock absorbers and safety valves necessary to cope with local and regional economic problems--the "asymmetrical shocks" that will occur inevitably to economies in different stages of development and different phases of the trade cycle. It will require the peoples of Europe to endure stern measures, imposed not by their own government but by an external body in which foreigners will always constitute a majority--conditions that, as former European Commissioner Christopher Tugendhat suggests, will "become a gift to every xenophobic and chauvinistic politician in Europe." There will be serious differences--there are already--concerning the priorities and policies of the European Central Bank. Before it has proceeded very far, the whole project will demand a degree of political unity going far beyond the Europe of nations envisaged by De Gaulle, a condition that will prove unsustainable in a highly differentiated continent lacking a common language and culture. And so on and on.

The political and economic strains are clearly going to be very formidable. Given the enormous political capital vested in it, should these cause EMU to end up as a dismal failure the consequences will be dire. These consequences will include the discrediting of whole political establishments, the collapse of the momentum of what has been the central driving idea in the continent over the last decade, a resulting conceptual void and a general demoralization, and bitter mutual recrimination and scape-goating (both within individual countries and among them)--in short, political turmoil on a serious scale. Kissinger anticipates that the Europe that would result would be "either extremely left wing or extremely right wing, or a combination of both."

All this would be a matter of extreme concern for the United States. It would mean that a major part of the world's "zone of peace" would have become a zone of turbulence. Anti-Americanism would certainly be a prominent feature of the scape-goating process. At the same time, Washington would be required to take a leading part in sorting out the mess. All pretty bad--and especially bad because there would be no mechanisms in place to reverse the process; that is, to allow easy and peaceful withdrawal from the union by those who had become thoroughly disenchanted with it (as some Americans will recall, a state of affairs roughly analogous to that existing in their own country in the period leading up to the Civil War).

From all this it might seem self-evident that, indeed, for America the success of EMU must be far preferable to its failure. But success would also have its serious downside. A very successful EMU, with the political unification it would necessarily involve, would amount to the creation of a second, and rival, superstate. It would have a larger economy and a larger population than the United States, as well as comparable intellectual, scientific, and technological capital--a combination of features that the Soviet Union never had and that China will not have for a long, long time. As to what kind of policies this new superstate would pursue, one cannot be certain. But if one believes, as I do, that there is a lot of accumulated but suppressed resentment in Europe of its subordination to and dependence on the United States over the last half a century, then one would expect the expression of that pent-up resentment to be a cardinal feature of the new superpower's behavior--certainly in the form of an assertion of independence and difference; probably in the form of competition, obstruction, and rivalry; possibly in the form of outright hostility.

That resentment is today most evident in the case of France, but it should not be assumed that it is restricted to France. Even as things stand today, most European states disagree with the United States over a host of issues, among them extraterritorial sanctions, the power of international criminal courts, Arab-Israeli relations, and the policy of dual containment in the Persian Gulf. If, as happened earlier this year, France can stymie U.S. policy toward Iraq even with a weak partner like Russia, how much more will it be capable of thwarting Washington's will if and when it has the weight of "Europe" behind it?

In his discussion of this issue, Kissinger poses it in terms of a prospective competition between Britain and France as to whether an attitude of Atlantic cooperation or Atlantic challenge should come to characterize a European foreign policy. But put in those terms it is surely no contest. Britain is at best going to be a late arriving, reluctant, and somewhat marginalized member of Europe; France is at its heart and dominates its powerful bureaucracy. But what about Germany--might it not restrain, and prevail over, the French in foreign policy? That seems very doubtful. The Germans are largely passive in foreign policy, self-distrusting and full of self-doubt; indeed, it is precisely a distrust of his own people that has seemed to motivate Helmut Kohl most strongly in his insistence on a rapid move toward a united Europe. The French, on the other hand, have strong views and are expert at playing games of diplomatic chicken to get those views accepted. In the shaping of a new Europe, it is not unlikely that an implicit bargain will be struck: the Germans will substantially have their way on economic policy and expansion to the east, in return for which the French will be allowed to make the running on foreign policy, especially in its Atlantic and global dimensions.

If indeed this happens, the consequences for the United States will not be pleasant, and there will be a strong feeling of resentment on this side of the Atlantic at what many Americans will regard as base ingratitude. For just as Europeans have resented their dependence on the United States over the last half century, Americans will surely and bitterly resent any effort to displace them (first regionally and then globally) as the dominant power, especially should it look capable of succeeding.

There was an interesting foretaste of this recently at a meeting at the American Enterprise Institute, a Washington think tank. In the discussion following a talk by former British Defense Minister Michael Portillo, one senior fellow, a specialist in foreign policy, characterized an anticipated attempt by a European superpower to compete with the United States for the position of dominance as "malign." He did so with the air of someone making an obvious point. To his credit Portillo immediately disassociated himself from that view, but it may be a sign of things to come. Certainly those Americans now fond of describing their country as "the sole remaining superpower", "the benign hegemon", and "the indispensable nation"--and their ranks include not only ardent conservatives but the current secretary of state--would fiercely resent being seriously challenged, let alone displaced, by a more populous and prosperous Europe.
If all this is right, then a smashingly successful EMU would mean not a strengthening of that entity known as "the West" but its sundering. A few years ago I wrote an article for Foreign Affairs arguing that, in its political sense, "the West" was a construct essentially born of a shared sense of danger and fear, not of natural affinity, and that it tends to break up into its constituent--and rival--parts in more placid periods. I believe a successful EMU process leading to European political unity would prove this true.

If both dismal failure and smashing success hold out unattractive prospects for the United States, what is the best outcome that could be hoped for from an American point of view? When I put this question to Portillo at the AEI meeting, he first answered that he considered failure preferable to success. But after further thought he said, "What I really aspire to is untidiness." I suppose that I mean something similar when I say that moderate and inconclusive success or failure, spun out over an extended period, would be a better outcome than a sudden and spectacular conclusion in either direction. But whether such moderation is going to be possible is a moot point. It is in the nature of big gambles that they tend to be a matter of double or quits, all or nothing at all.

This analysis will no doubt strike some as unduly alarmist. But after half a century without serious conflict in the West, and in the wake of the triumphant end of the Cold War, the main cause for concern today stems not from the exaggeration of danger but from complacency and a facile optimism. Someone once said--was it Henry James?--that those who lack the imagination of disaster are doomed to be surprised by the world. At the beginning of this century, after decades of peace had dulled its sense of danger, a prosperous and self-satisfied Europe experienced such a disastrous surprise. Today, action based on a set of mutually reinforcing assumptions--that liberal democracy has triumphed decisively and permanently; that democracies do not fight each other; that the market economy will indefinitely produce the goods; that interdependence naturally creates harmony; that nationalism is an artificial, invented phenomenon; that being "whole" is Europe's proper and natural condition--risks producing more very nasty surprises, unless it is balanced and restrained by an awareness of the possibility of disaster.