Trump escalates tensions with Europe

Trump’s explosive interventions during his visit to Europe in mid-July – which included insulting German chancellor Angela Merkel during the NATO summit in Brussels and humiliating British prime minister Theresa May in an interview with Murdoch’s Sun newspaper – only confirm the widespread impression formed during the G7 summit in Canada in June that the US president is doing his best to turn the world order upside down.

Longstanding US allies, along with the country’s major imperialist competitor, China, are in the president’s sights. The EU, in particular Germany, has become a target for Trump’s barbs.

There are two elements to Trump’s offensive. First is a political project to build the populist right internationally. Second is an imperialist project to push against EU challenges to US power.

Immigration is at the heart of Trump’s project to build an alt-right international, which includes leaders of the Italian, Hungarian, Polish and Austrian governments and significant opposition parties in Germany and France. In his interview with the Sun, the president incorporated all the talking points of the populist right on both sides of the Atlantic:

“Allowing millions and millions of people to come into Europe is very, very sad. I think you are losing your culture … It changed the fabric of Europe and, unless you act very quickly, it’s never going to be what it was, and I don’t mean that in a positive way.”

This builds on his speech in Warsaw in July last year when he declared that the “fundamental question of our time is whether the West has the will to survive”. This was a clarion call for “Christian Europe” to hold at bay the barbarian masses gathering at the gates.

Trump wants to manufacture a sense of crisis around refugees and immigration to build a larger and more virulent racist electoral base in both the US and Europe. White nationalism is central to Trump’s control over the Republican Party and, he hopes, success at this November’s mid-term elections. Economic nationalism is the second string to the populist right’s bow, hence the president’s support for Brexit champion Boris Johnson as future Tory prime minister in Britain.

The centre parties have only helped the populist right by embracing much of their agenda. Liberal icon Emmanuel Macron of France, for example, oversees wide-ranging “national security” laws that target the country’s Muslims. He is also calling for the reintroduction of national service.

The second element underlining Trump’s attacks on the EU and Germany is imperialist rivalry – a desire to renegotiate the relationship with US allies to its advantage.

US attitudes to Europe have long been shaped by the belief that whichever power controls the Eurasian land mass controls the world. That was the basis of competition between the US and Russia as the Second World War entered its final stages.

Following the war, the US poured money into Western Europe through the Marshall Plan, the aim of which was to help rebuild the West as a bulwark against Russia. The US oversaw the formation of NATO in 1949, including the establishment of permanent US military bases in many Western European states.

US intervention into Western Europe was welcomed by the local ruling classes. The US helped to set up and secure power for centre right parties that then ruled for several decades, squeezing out Communist parties with a mass following in France, Italy and Greece. More, the US offered them military protection via US bases and a fleet of ships and nuclear-armed submarines and bombers.

The European Economic Community (the forerunner of the European Union) was the economic counterpart to these military and political initiatives. The US viewed the EEC, formed in 1957, as a stable, pro-business bloc that could host US multinational companies, allowing them to expand their operations in Europe.

The rulers of EEC member states also understood the benefits of the EEC: the French ruling class viewed it as a way to restrain politically a resurgent Germany, while Germany viewed it as an expanded market for its industrial companies.

The EU challenge

As the EU enlarged, it emerged from the shadow of US capitalism. The establishment of the single European market in the 1990s and the euro in 2002 created opportunities for the consolidation of nationally based European companies into companies with continental and global reach.

Germany, as the largest country and most powerful economy, stands at the centre of this process. Over the past two decades, the German ruling class has forced down wages and eroded social welfare to lower business costs, reduce domestic consumption and boost exports. It has run up a huge trade surplus. Business has prospered.

The German ruling class has leveraged its economic strength to enhance its political influence. The European Central Bank operates from Frankfurt. The German ruling class has used its authority within it to bail out Greece and other states owing debts to German banks, safeguarding their bottom lines. Also, over the past decade, the value of the euro has dropped against the US dollar, ensuring continuing competitiveness for German exports in world markets.

The emergence of the EU as an economic force in global capitalism presents the US with a range of challenges. First is the sheer size of the EU economy, which, at US$21 trillion, is bigger than the US, with a GDP of $19 trillion. The EU runs a trade surplus in merchandise and commercial services with the US of more than $90 billion.

European companies negotiate as equals with US businesses in some industries. The Fortune top 100 list of big businesses features more European than US companies. And the EU has repeatedly challenged the US in international trade cases brought before the WTO.

Particularly galling for the US is that EU member states, most of which are NATO partners, continue to enjoy the benefits of US military protection while contributing much less to the collective military effort. European members of NATO spend 1.5 percent of their GDP on their military, as against America’s 3.6 percent. Germany in particular raises US ire – it spends 1.2 percent and is widely regarded in NATO circles as an ineffective military power.

Successive US presidents have demanded that EU governments lift their military spending. In 2014, president Obama won a commitment that they would meet a target of 2 percent of GDP by 2024.

White House pushes back

Trump argues that US industrial power – and its ability to project military power globally – is being eroded by German (and Chinese) companies undercutting US-made goods. Trump’s solution is to raise the costs for German capitalists exporting goods to the US, through tariffs, while cutting the costs of doing business at home through tax cuts, deregulation and further weakening trade unions.

He is also more insistent that US NATO partners spend more on their militaries, urging them to meet the 2 percent of GDP target by January and increase it to 4 percent by 2024 – a massive increase. Part of the motivation for this is to bolster the profits of Wall Street: a large part of the European military budget goes on US-made military hardware.

But the broader agenda is to force Europe to bear more of the cost of NATO and to expand its combat capacity. It must be emphasised that Trump is operating in line with his White House predecessors and with his press critics who furiously object to other elements of his presidency. Ensuring that Europe remains within the US sphere of influence, not Russia’s, is a core principle of US foreign policy. A bolstered NATO is the means to do this.

Not that European governments are averse to increasing their military outlays. NATO allies have committed to building more formidable air, land and sea forces capable of rapid deployment. But Trump is trying to increase the pace.

Finally, Trump is trying to use Brexit to weaken the EU. The president hopes that engineering a hard Brexit, pulling Britain out of the EU’s orbit, may strengthen the US against the European bloc. A hard Brexit would also put the US in a stronger position to negotiate an independent trade deal with Britain, its fourth largest export market and biggest destination for overseas investment.

In the rivalry between the two Atlantic blocs, the US enjoys big advantages. Germany’s trade surplus with the US makes it vulnerable to a trade war. Because it imports much less from the US than it exports, Germany has much less capacity to inflict pain on US capitalists.

More profoundly, the EU lacks a unified state. This allows the US to play member states off against each other. Understanding the huge financial cost involved in doing so, EU states have no wish to break from NATO and build a rival military bloc. Nor do they want the euro to challenge the US dollar in international financial markets. And, with Britain out in 2019, the EU will soon lack a world-leading financial centre on a par with New York.

The EU depends on the US not just for defence against Russia but also as guardian of oil supplies from the Middle East. China wants a bigger role in Europe; it hopes to take advantage of the turmoil emanating from the White House. But it is almost inconceivable that the big EU powers will abandon the US in favour of the emerging Asian giant.

Trump can play brinkmanship with Merkel and other European leaders, therefore, because the EU needs the US – as a market, as the backstop to the world financial system and as military guarantor – more than the US needs the EU.

The working class has no interest in backing either side in this contest. The costs of the emerging trade war, escalating racism and nationalism and growing military budgets will all be borne by the working class of each country. Our alternative is to fight the system that breeds this constant drive to militarism and to build a world that prioritises meaningful work, education, health care and housing.