France’s ''Non'' On Iraq Is The First Of Many

As obnoxious as many Americans find the current behaviour of French President Jacques Chirac, there is clear method behind his apparent madness. It is true that during past crises, France has usually ended up alongside its American and British counterparts - as during the Cuban missile crisis or the first Gulf war. Many have assumed that for all of its Gaullist posturing, France would eventually fall in line on Gulf War II as well.

This may not come to pass, despite Monday’s announcement that the government would seek tight deadlines to force Iraqi disarmament (thereby potentially paving the way for a shift in policy). France is playing a longer game here, largely based on a two-fold calculation in relation to its external relations with the US on the one hand, and its concomitant desire to organise the European Union in a manner that best maximises French influence and ensures the long term viability of the euro on the other. The country’s policy making elite increasingly sees America as a decaying, overstretched empire; it may therefore no longer wish to throw all of its eggs into the American basket. Related to this perception of inexorable American economic decline is the recently manifested tendency to resist further eastward expansion of the European Union, given the latter bloc’s pro-American proclivities in foreign policy, which France views as inimical to the cohesion and effectiveness of the European Union and therefore fundamentally contrary to the long term success of the euro as a viable reserve currency alternative.

In regard to France’s "declinist" view of the US, this may not be a totally unrealistic proposition. Martin Wolf of the Financial Times, for example, has noted the paradoxical position of the US today: it is both the world's greatest power and its biggest debtor. This has allowed it to deploy guns and consume butter. The costs of this policy are coming home to roost: The US current account deficit today is nearly 50 per cent bigger than its defence spending. The trade deficit hit a record $435.2 billion last year. The recently announced 2003 budget forecasts a $304 billion deficit, but this figure excludes the deficits of agencies that are guaranteed, backed or sponsored by the U.S. government, a bailout of which could render the final number substantially higher, even before adding the cost of the Iraq war and any other new outlays.

That this combination should worry US strategic planners is obvious. That it may also deeply concern its allies has been given less consideration by commentators unremittingly hostile to France’s current position. But it is undoubtedly legitimate for a country like France to question the US ability to perpetuate its huge deficits in the absence of sustained multilateral co-operation and further economic discipline. Indeed, one of the original rationales for the establishment of a currency union was a desire to develop a legitimate alternative to the crumbling dollar reserve system.

But what kind of monetary union has always been a subject of active debate. For a long interval between the signing of the Maastricht Treaty in 1991 and the critical year for economic assessment, 1997, it was commonly assumed that EMU would initially take the form of a limited number of countries, all of whom were well within the so-called convergence criteria (e.g. exchange rate stabilisation, the convergence of consumer price inflation and government bond yields, some upper limits for government borrowing and public sector debt in relation to GDP, etc.). However, so great was the prize of sharing a common currency and enjoying broadly similar borrowing costs to those of France and Germany that very strenuous efforts were made by all 11 original participants to comply with the convergence criteria. By the spring of 1998, when the official reports on Maastricht convergence were prepared by the European Monetary Institute and the European Commission, the only obstacle to Italy’s participation was its high government debt ratio. But since Italy’s ratio was scarcely worse than Belgium (and there was never any question of excluding any of the Benelux countries), Italy could not be excluded. Italy’s inclusion made the acceptance of "wide and weak" version of EMU inevitable, and this came into being at the start of 1999. In spite of their ultimate acceptance, this broader version of EMU was received with misgivings on the part of France and Germany, and has been cited as a persistent structural weakness of the monetary union itself.

The rationale for a smaller euro bloc was predicated on sound economic principles: it was felt that the long-term success of the currency project was more likely to be secured in a zone which consisted of a smaller group of nations with a more cohesive set of economic and political philosophies. As we have noted previously, pooled national sovereignty, greater monetary and fiscal co-ordination, are surely more feasible where the countries involved have comparable political and economic structures and similar social outlooks. Such a policy might lead to a convergence in the direction of American neo-liberalism or continental European social democracy. But whichever direction, the end product takes it is far more likely to succeed than a half-baked compromise amongst a larger group of nations that embrace fundamentally different systems, ideologies, etc.

It is in this context that one should read President Chirac's comments at a press conference last week that, "it takes just one country not to ratify [EU enlargement] by referendum for the thing not to work." In addition to the threat posed to French dominance of the EU, the French President was also implicitly reflecting longstanding misgivings about the EU’s push eastward in light of the resultant additional difficulties that this would throw up for the union.

A long-standing structural weakness of the EMU is the absence of a true federal authority to coordinate fiscal policy across the continent. Foreign policy disagreements, coupled with an even greater lack of economic convergence implied by the entry of the less developed economies of Eastern Europe, makes the pooling of political sovereignty implied by such fiscal coordination more problematic. France is not unique in expressing concerns about this eastward expansion. In fact, the only country to hold a referendum on the Treaty of Nice (which is supposed to confirm the entry of a number of Eastern European EU hopefuls, such as Poland and the Czech Republic), Ireland, initially rejected the proposal (although under considerable pressure, the country has since held a second referendum which has reversed the position).

Thus far, none of the other current EU members have announced plans to hold a referendum. Until Chirac’s outburst it was assumed that they would endorse enlargement in less risky parliamentary votes. One of Chirac's aides told Le Figaro, however, "There were no threats in the president's remarks … but if applicant countries think they can join Europe and benefit from its financial advantages without complying with its rules and political ways, they are very much mistaken. It was better to tell them this before they joined."

In fact, the French President has probably let the cat out of the bag. In the interests of "true democracy", Chirac is now likely to call a referendum to endorse the decision to allow Eastern European hopefuls to join the EU. Fearing a huge dilution of its traditional influence and prerogatives, the French electorate is almost certain to vote no in this plebiscite, thereby halting the eastward expansion of the European Union once and for all. However unpalatable to Eastern Europe (and Turkey), the result of a smaller EU will also be a correspondingly more cohesive Federalist structure. This is more likely to ensure the long run success of the currency union. France’s "non" on Iraq, therefore, might be the first of many such refusals in the future.

In regard to the external aspects of France’s Iraq policy, President Chirac senses a world deeply uneasy about the American policy on Iraq. His government has therefore seized the opportunity to change the dynamics of the post-Cold War world. In the words of Washington Post columnist Charles Krauthammer:

"During the Cold War, Charles de Gaulle and his successors had tried breaking free of the United States by ‘triangulating’ with the Soviets. De Gaulle withdrew France from NATO's military structure. France kept offering itself as a ‘third force.’ That posturing went nowhere because France, like everyone else, depended ultimately on American power for defense against the Soviet threat. With the end of the Soviet threat, everything changed. A unipolar system emerged with the United States dominant and unchallenged. The Iraq crisis has provided France an opportunity to create the first coherent challenge to that dominance--and to give France a unique position as leader of that challenge. Last Friday at the Security Council was the high water mark. France stood at the head of an impressive opposition bloc--Germany, Russia, China, perhaps seven other members of the Council and dozens of other smaller countries--challenging American policy, and, implicitly, American hegemony. The world has not become bipolar. But we have just witnessed the first serious breach of the post-Cold War unipolarity--engineered not, as many expected, by Russia or China, but by France."

Krauthammer is clearly no fan of the French President, but he is undoubtedly correct to note that the country’s actions vis a vis Iraq and the Eastern European countries which support the Anglo-American position do have more than mere emotional pique or political pandering behind them. Among the benefits of being part of what Secretary Rumsfeld derisively terms "Old Europe" is an overriding sense of history, a quality for which America and her policy makers are not generally known. In 1965, President Charles de Gaulle loyally warned his American friends that their B-52's would not be able to do anything against Vietnamese nationalism – de Gaulle’s own country had learned that from its devastating defeat at Dienbienphu in 1953. Iraq has many historical parallels, which a "new world" country in love with modernity and somewhat contemptuous of the past might be inclined to ignore.

In the words of Regis DeBray, a former adviser to French President Francois Mitterrand, "The United States compensates for its shortsightedness, its tendency to improvise, with an altogether biblical self-assurance in its transcendent destiny." Although DeBray was making reference to American diplomacy, one could easily make the case that economic policy making in the past several years has been characterised by the same shortsighted, haphazard quality.

Anyone looking beyond the might of America’s military machine and at the economy itself might draw similar conclusions to the French. Ever increasing quantities of debt are like termites chewing away at America’s hitherto strong national foundations; it is increasingly a nation suffering from the classic early symptoms of what Paul Kennedy, the Yale historian, describes as "imperial overstretch".

We have discussed Kennedy’s book, "The Rise and Fall of the Great Powers" before; but it is worth repeating its central thesis. According to Kennedy, there exists a dynamic for change, driven chiefly by economic structures, political systems, military power, and the position of individual states and empires throughout history. In regard to the US, Kennedy’s main point was that:

"…although the United States is at present still in a class of its own economically and perhaps even militarily, it cannot avoid confronting the two great tests which challenge the longevity of every major power that occupies the ‘number one’ position in world affairs…This test of American abilities will be the greater because it, like Imperial Spain around 1600 or the British Empire around 1900, is the inheritor of a vast array of strategical commitments which had been made decades earlier, when the nation’s political, economic, and military capacity to influence world affairs seemed so much more assured. In consequence, the United States now runs the risk, so familiar to historians of the rise and fall of previous Great Powers, of what might roughly be called ‘imperial overstretch’: that is to say, decision-makers in Washington must face the awkward and enduring fact that the sum total of the United States’ global interests and obligations is nowadays far larger than the country’s power to defend them all simultaneously."

Kennedy prophetically wrote these words in 1988. They seem to express America's current economic and political predicament perfectly today.

There is much discussion about the enormous deficits implied by the Bush economic proposals. Even on short-term Keynesian grounds, it is difficult to make the case for any kind of stimulus that might be derived from the budget’s proposed tax cuts, many of which the President himself acknowledges are long term and structural in nature. Now place this budget within the context of the recent record trade deficit reported last week, and add to that the enormous estimated costs of a long term military occupation of Iraq now being mooted publicly in the US press. Taken in aggregate, one can begin to envisage why a country like France might find this time appropriate to loosen the historically close transatlantic ties that have generally characterized Franco-American relations for over two centuries. America's economic position even has seldom appeared more vulnerable, even discounting the heightened risks that emanate from its ongoing war against terrorism.

Seeing this, France may now believe there is relatively little to lose by confirming its anti-war stance. Clearly, much damage has already been done and France will likely derive few benefits from switching sides at this late stage, so why bother given that this would simply reinforce an impression of President Chirac as a cynical political opportunist?

For all of the historical spats between the two great republics, France’s current relations with the US are the worst they have been in years and its position in the EU is being challenged by the countries of "new Europe". While exclusion from a post-Saddam Iraq may cost it dear, France might be calculating that it can absorb these short term costs. In the case of Eastern Europe, it can single-handedly arrest the eastward expansion of the Union and thereby perpetuate its dominance in a smaller and more political and socially cohesive monetary union. The greater the success of this union, the more likely the euro can match or supplant the US as a legitimate reserve currency alternative, a clear long term French objective since the days that de Gaulle railed against the "unlimited overdraft facility" available to the Americans under the dollar reserve currency system. Rightly or wrongly, therefore, President Chirac might be calculating that staying out of a war could open other doors in the Middle East. The country may well conclude that its interests are best served by continuing to say, "Non", not just to the United States, but increasingly, to its Eastern European allies and, the United Kingdom, all of whom the French public increasingly sees much as de Gaulle used to view "Perfidious Albion" when he rejected the UK’s entry into the EEC in the early 1960s: namely, as American Trojan Horses designed to perpetuate a split in the EU and thereby weaken France’s traditional dominance of this organisation. This is something Tony Blair might also wish to consider should he continue to make the case for Britain’s own embrace of the euro post the invasion of Iraq, assuming, of course, that he is still Prime Minister in a few months’ time.

- Marshall may be contacted at mauer1959@aol.com

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