June 13, 2018

Do We Have to Worry About Western Cohesion?

German Chancellor Angela Merkel speaks to U.S. President Donald Trump during the second day of the G7 meeting in Charlevoix city of La Malbaie, Quebec, Canada, June 9, 2018.
German Chancellor Angela Merkel speaks to U.S. President Donald Trump during the second day of the G7 meeting in Charlevoix city of La Malbaie, Quebec, Canada, June 9, 2018.

Canada was invited to join the group of six largest advanced Western economies in 1976, in Dorado, Puerto Rico. Pierre Elliott Trudeau (“PET”), the 15th Prime Minister of Canada, joined Gerald Ford, Harold Wilson, Helmut Schmidt and others in the format that subsequently became the G7. PET’s oldest son, Prime Minister Justin Trudeau, hosted the latest G7 Summit Meeting in Quebec, on June 8 and 9, 2018.

The G7 emerged in the midst of the oil crisis of the early 1970s, and withstood  the Cold War and the post-Cold War periods (as have NATO and the EU) because the economic and financial interests of the parties were always pursued against a backdrop of shared democratic values and political cohesion vis-à-vis common adversaries. The G8 format (actually G7+1) created in 1998 to include Russia, reverted to the G7 following the illegal annexation of Crimea. The emerging multi-polarization of the world might have been expected to reinforce the cohesion of the G7, but US President Donald Trump has adopted a different approach, one that among other issues disputes climate change and challenges free trade among allied nations. In 2017, in Sicily, the G7 declaration “took note” of US dissent. In 2018, Trump – on board Air Force One, en route to Singapore to meet the North Korean leader Kim Jong-un – withdrew his signature from the G7 declaration. Contentious rhetoric aside, is the cohesion of the West actually crumbling? And if so, what might the consequences be for countries in the Nordic-Baltic region, including Estonia?

First, the G7 leaders could not agree on how to avoid  the protectionist tariffs threatened by Trump that will damage free trade. In fact, the disagreement was 6 versus 1 – this is not a mere US-EU trade dispute. Meanwhile, the leaders of the Shanghai Cooperation Organization (SCO) met on June 10, in Qingdao, China, and were very keen to show progress and common understanding, in spite of India’s refusal to support the Chinese One-Belt-One-Road strategic economic project. The messages from Quebec and Qingdao were very different, and the emerging rivalry between the two organisations is clear. President Putin, referring to Trump’s call for a renewed G8 from which Russia “never left”, claimed that “according to IMF data”, the SCO countries have overtaken the G7 in terms of purchasing power parity (PPP). Putin (like Trump) seems to forget that the G7 is not a security organisation or an unrestricted club of the countries with the biggest GDP (which would include China, India, Brazil, and perhaps South Korea before Russia). As the Quebec communique stated, , the G7 countries are “advanced economies and leading democracies” which “share values of freedom, democracy, the rule of law and respect for human rights and [the] commitment to promote a rules-based international order.” Russia hardly qualifies according to this definition.

Second, some headlines suggest a rising competition between “America First” and “Europe United”, with other US allies including Canada and Japan rallying together with Europe. Economic cooperation, through trade and investments, is the glue of the transatlantic and transpacific alliances under US leadership. Free trade is not – by definition – unfair. Customers prefer durable, affordable and high-quality commodities, including German cars, but also American airplanes and military equipment. The looming trade war inside the G7, involving the entire EU, seems both unnecessary and potentially highly damaging to all sides. The SCO countries could only profit both politically and economically from this.

Third, small- and medium-sized (non-G7) EU member states (especially those,  like Estonia, on the Eastern Flank) will face an increasing dilemma, as their security and prosperity is highly dependent on both the EU and NATO, the latter depending almost totally on America’s commitment to Europe’s defence. There are expectations that at the next NATO summit meeting (in Brussels on 11 and 12 July 2018) that the US will reconfirm its commitment to Article 5 of the Washington Treaty, and further bolster the defence of the Eastern Flank. But President Trump apparently expects that the European allies will commit to reach the level of 2% of GDP on defence expenditures, sooner rather than later. It is difficult to imagine a constructive dialogue on these issues in Brussels, if the tense atmosphere around trade issues persists or even worsens. The EU has been unanimous on trade issues, differently from e.g. the vote in the UN on the Jerusalem status resolution in December 2017, when some EU members abstained. The message that has been given to President Trump is that the EU is not just Germany, Jean-Claude Juncker and Donald Tusk. If this message gets through, the position of countries like Estonia will be made much safer as they will not have to make radical choices between crucial allies in important matters.

Last but not least, there are no signs or reasons to presume that President Trump is ready to review his approach to trade issues in a more conciliatory and constructive way. The European allies must thus find ways to keep trade and other contentious issues away from NATO and America’s commitment to European defence, however difficult that might be.

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