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.