Europe vs. American Coercion: A Growing Divide?

The ⁤competition among global political and economic elites to ⁣attend U.S. President Donald trump’s speech at ⁣the World Economic Forum ⁢in Davos, Switzerland, ⁢was a ⁣symbol of the history-making at stake. After a week in which the Trump governance threatened Europe with the seizure of Greenland, the conference⁤ was held captive to the Trump administration’s direct challenge⁤ to⁢ the terms​ of the trans-Atlantic ​alliance and the general ⁢liberal ideology that informs ​the annual Davos meeting.

What posture did U.S. officials take ⁣toward Europe at Davos? What options for ⁣resisting U.S. coercion does Europe have?​ Were corporate elites expressing as much concern at davos as ​policymakers?

Those​ are ‌just a ‌few of the questions that came up in my⁢ recent conversation ⁤with FP economics ⁣columnist ⁣Adam Tooze on the podcast we ⁣co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your‌ podcasts. ​And ⁢check out Adam’s Substack ‌ newsletter.

cameron ⁤Abadi: Trump was joined at Davos by major figures of his administration,​ all ‍of whom were ⁤seemingly trying to channel his impulses into a consistent policy line.That mostly‍ seemed to come across as a kind of generalized contempt expressed⁤ toward europe in public at every possibility. How⁢ would you characterize ‌this posture ⁤and the strategy informing it?

Adam Tooze: Condescension, ⁢I think, is a key element of it.Hostility and ⁢condescension. I mean, we’ve talked about​ it on the show before.⁣ My general view is that the ​more ideological elements of MAGA are much more ⁢preoccupied with Europe‍ than they are with ‍China or‍ Russia or anywhere else in the world.⁤ They’re not universal, so they don’t regard those places as at all relevant, really, to the American political struggle, which is⁤ their top priority.⁣ But quite reasonably, they‍ regard‍ Europe as an extension of the PMC, professional managerial class, liberalism that they despise in‌ the United States.And as you were​ saying, the first ‌time around-and if you look at the climate policy, which⁢ I’m trying to finish this‌ book about, it’s very clear-in 2017, ⁤as Trump took office, America’s⁤ climate-concerned liberal‌ corporate elites basically rallied around the Paris‍ Agreement of ⁢2015 ⁣and Davos⁢ and continued on ⁢in defiance of the​ president’s effort to shape a national MAGA anti-climate strategy.

And so they’re‌ not wrong to think that,‍ you know,‍ if they want ⁤to wage a complete political ‌and cultural⁢ struggle in the United States, Europe is⁤ a‌ relevant battlefield. And ‌the precise logic ⁣of it‌ is a little more elaborate, especially when it comes to promoting far-right parties ⁣in⁤ Europe, who, over Greenland, if you watch ⁤the sort of C-SPAN equivalent‍ of the European parliament, you know, ⁣centrist parties‍ all go up to say, “No, we will not ratify the trade agreement ‌with the United ​States.” And than‌ slowly, slowly, the representatives of the‌ far-right parties realize, “Oh God, ⁣we’re going to find ourselves ‍isolated and unpatriotic ‍unless we join the opposition to Trump.” And many of them do. [Italian Prime Minister Giorgia] ⁤Meloni has ‌been‍ struggling ⁤with this ​in Italy, ‍how ⁢to position herself. So I think that ‍element of⁤ the MAGA program, of extending ⁤the political and cultural⁤ war to Europe, is a key element.

But again, the⁣ National Security Strategy did not ⁣focus squarely on Greenland in ‌the way that we have been ‌forced to do in the last couple of months. It didn’t⁤ say jeopardize ‍relations with Europe for the ⁢sake of Greenland, right? Something’s happened there where​ the president ⁣has got to be ​in his bonnet, and as‍ you’re saying, the ⁢single ⁤rule of membership‍ in the Trump ⁢government seems to be just complete loyalty to whatever nonsense the president says,⁢ like⁤ whatever he said​ goes.

CA: Canadian​ Prime ⁢Minister Mark Carney very bracingly argued the old liberal world order was undergoing ‍”rupture.”⁤ But ⁣as grate powers‌ take a​ realist posture in the ways ⁤he described,what exactly​ did he suggest middl

Europe’s ‍Limited Leverage Over the U.S. Economy

Despite ‍notable ⁣economic ties, Europe’s ability to retaliate against the United States through financial measures is limited, according to recent ‌analysis. While Europe is a ⁣major investor⁢ in the U.S.‍ and a ‍large purchaser of American financial assets – effectively financing⁤ U.S. trade deficits – translating that ⁢economic‌ power ‌into political leverage proves challenging.

A Deutsche Bank report suggesting Europe could sell its U.S. debt holdings in response to American pressure, specifically regarding Greenland, has raised questions about potential⁤ repercussions. Though,⁢ experts suggest this scenario is unlikely to materialize.

Unlike China,most European holdings of⁣ U.S. debt aren’t centrally controlled. There’s no single European agency capable of coordinating a ⁤large-scale sell-off to ⁣exert pressure on the U.S., a key ‍difference from China where⁤ even privately held assets could be ‍used‍ strategically.⁢

Past attempts to influence the U.S. through debt sales have also proven ineffective. In 2007 and 2008, Russia, following tensions with the U.S., attempted to persuade China to join a coordinated⁣ sale of‍ U.S. Treasurys. Russia did reduce​ its Treasury holdings, but the move had no discernible ​impact. Investors,⁣ seeking safe assets ‌during the unfolding financial crisis,‌ simply absorbed the sold ⁣Treasurys.

Even ⁣if Europe were to attempt such a move ⁣today,‍ it would be costly, complex, and potentially destabilizing. ​The‌ U.S. also possesses mechanisms to mitigate the impact, as demonstrated during the‌ 2020 financial crisis triggered by the ​COVID-19 pandemic, which centered on Treasury markets.