Can Europe rise to the geo-economic challenge?

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What is "geo-economics" and does the concept help us understand some of the shifts that seem currently to be taking place in international relations? Over dinner during the ECFR Council meeting beneath the frescoed ceiling of the spectacular Renaissance Villa Madama on Monte Mario outside Rome, we discussed these questions with Ian Bremmer – best known for his idea of a "G-Zero World". Bremmer argued that, although there was currently much discussion about a "return of geopolitics", in particular since the Russian annexation of Crimea, both Europe and the US were increasingly using economic rather than military tools to pursue strategic objectives. This is as the American strategist Edward Luttwak suggested they would in a famous essay, “From Geopolitics to Geo-economics”, which was published in The National Interest in 1990 as the Cold War was coming to an end.

However, Bremmer argued that there was a significant difference between the strategic objectives that Europe and the US used such economic tools to pursue - which could lead to disputes between them in the future. For Europeans, "geo-economics" was an alternative to geopolitics: in the context of globalisation, they tried to use economic power to integrate other powers such as China and Russia in what they saw as a win-win game. Perhaps the best example was the relationship between China and Germany; On the other hand, the US used economic means for geopolitical aims according to a zero-sum logic. In particular, because of the dominance of the dollar and its ability to act in a unified way, the US was able to take unilateral action to "hurt bad guys", as Bremmer put it.

In the discussion afterwards, several members of the audience questioned whether it was really the case that Americans used economic power in such different ways. After all, like Europeans, the US had also tried to integrate rising powers into the international economy. In particular, since the Clinton administration, US policy towards China was based on the assumptions that increasing economic interdependence would lead to democratisation and make China a "responsible stakeholder", as Robert Zoellick famously put it. However, Bremmer said, US policy is now changing – even Zoellick himself seems to be backing off the idea of China as a "responsible stakeholder", if his op-ed in the Financial Times on 12 June was anything to go by. So the question is: are Europeans also ready for a re-think?

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