Document Type

Article

Disciplines

International Law

Abstract

"Operation Iraqi Freedom" dramatically raised the level of transatlantic conflict even as it deepened political fault lines within an expanding European Union. By announcing a novel doctrine of preemption and unilateral action, the United States served notice that it would no longer make significant concessions to gain UN Security Council or NATO approval for future military interventions. Franco-German opposition to the war and subsequent American-led occupation indicated that the nations of Europe - acting individually or collectively - now appear to represent the only potential systemic challenge to America's global economic and military hegemony.

To be sure, the nature and significance of the European challenge should not be exaggerated. The wars of Yugoslav dissolution clearly revealed the limitations of the European Union (EU) as a geopolitical entity. A common foreign and security policy cannot develop simply as a result of institutional tinkering or modest peacekeeping missions, and the war in Iraq showed that the United States is adept at playing on Europe's own divisions. However, many observers now contend that the EU is a "civilian power" capable of challenging the United States in the economic arena. This article addresses the political implications of the Economic and Monetary Union (EMU), the linchpin of European integration, for transatlantic relations and the future of American hegemony. The extent to which the nations of Europe can individually and collectively challenge American economic hegemony will depend on the success of the single market, the ability to devise a consensual constitutional and social settlement and, above all, the capacity of the EMU to serve as a vehicle to promote regional autonomy and growth.

I argue that the EMU as presently constituted does not provide an adequate basis for such a challenge. Since its inception in 1999, the euro has succeeded in gaining the confidence of financial markets and, to a limited extent, establishing itself as an international reserve currency. However, because the EMU serves as the key institutional expression of Europe's neoliberal regulatory project, its logic derives not primarily from an "integrationist" impulse, but rather from the desire of European capital to revise the terms of the post-World War 11 social settlement.' As such, the EMU as presently conceived does not provide the adequate economic and political underpinnings for deeper regional integration or a fundamental challenge to American economic hegemony. The growing conflicts over the Stability and Growth Pact are the inevitable result of a monetary union bereft of strong federal institutions and social solidarity.

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