Yanks go home . . . but not just yet

The American and European elites are increasingly at loggerheads. But on this side of the Atlantic,

Most imperial powers are accepted by the elites of the states or regions they dominate; their unpopularity is more often with the people, who usually come to see imperial power as a threat to their national expression.

This is not true of the United States and it is only one of several respects in which it would be wrong to describe it as an imperial power at all. The US remains popular with most ordinary people, who scramble to imbibe its culture, buy its products and sometimes to become its citizens. This is because it has mastered the art of making things quick, attractive and easy - in films, TV programmes and music, in food, and in technological applications. Its image of open classlessness still calls across the oceans.

Anti-Americanism is really an elite phenomenon, particularly in Europe. And in the past week it has received an enormous fillip from the US government's decision to slap sanctions on a range of European luxury goods in retaliation for EU discrimination against American banana traders; from a US court martial's acquittal of a military pilot whose low-flying jet caused the death of 20 people when it cut a ski-lift's cables in an Italian resort last year; and from the execution for murder in Arizona of two brothers, German citizens, despite appeals for clemency from Germany. (One brother opted to die by gassing - his death throes lasted 17 minutes - so as to dramatise the event in his birthplace.)

Stephen Byers, the British trade secretary, called the US sanctions over bananas "irrational and unacceptable", while Sir Leon Brittan, the EU vice-president and chief trade spokesman, said that they were "an illegal measure . . . flying in the face of the World Trade Organisation . . . [typical of the] sanctions-happy American policy". Massimo d'Alema, the Italian prime minister, complained to Bill Clinton at an Oval Office meeting of the court martial's "inexplicable" judgment and brushed aside an offer of compensation to the families of the dead, saying "it's a question of who is responsible". Karsten Voigt, a German foreign affairs minister, spoke of a "moral gulf" opening up in the Atlantic.

On its side, the US now sees itself as an exceptional state which is shouldering exceptional responsibilities alone. Madeleine Albright, the US secretary of state, said last year that "America walks taller and thus sees further than other states". It was as frank a statement as we are likely to get that the American governing class has assumed a late-20th-century version of the white man's burden, and expects both support and sympathy for bearing it.

America does not disguise its growing contempt for allies who, it thinks, are mired in archaic practices. Robert Rubin, the US treasury secretary, refers to Europe as a museum, with a British room, a German room, an Italian room and so on, each with interesting exhibits, but nevertheless detached from the modern world.

With these views on each side, some kind of clash is inevitable, possibly to the extent of threatening the western alliance itself. The banana war, despite its slightly risible main subject, is serious. If the WTO cannot solve it, it is greatly weakened; the EU, or its individual members, will certainly retaliate. The crisis is deepened because the main US banana trader, Chiquita, is headed by a 79-year-old Christian rightist named Carl Lindner who makes big donations to both the Democratic and Republican parties and who, as a result, got to sleep in Lincoln's bedroom in the White House. To the rest of the world it looks very much as if the US government is favouring one of its paymasters against the dirt-poor Caribbean countries whose banana imports get preference from the EU trade regime.

But there are larger issues around. The EU's new-found confidence from the successful creation of its single currency moved it to seek a more ambitious trade settlement, known as the Millennium Round; that effort to further open up the trade in goods and services across the Atlantic is now threatened. Trade in textiles, steel, audio-visuals and foodstuffs are all, in varying ways, subject to barriers, the complexity of which is enough to tie up negotiators for years. Even more important, the euro now challenges the dollar as a world currency. If one becomes too strong or weak relative to the other, the resulting tensions are superpower tensions, rather than simply those between the US and another, inevitably much smaller, country.

This is the new architecture of the relationship between Europe and the US. The design fault is that the US has a trade deficit of nearly $300 billion - acquired from being the "shopper of last resort" to the rest of the world, Europe in particular. That is already fuelling protectionist pressures, the more so because the euro is presently weak and is lowering the price of European goods as well as raising those of American imports. "The bilateral relationship," says Fred Bergsten, the former US assistant treasury secretary and director of the Institute for International Economics, "is drifting dangerously towards crisis."

There is more. In effect, the US has run the major international institutions - the International Monetary Fund, the World Bank, even the UN itself - for the past decade. It has been in charge of reforming Russia, bailing out Latin America, sustaining South-east Asia, hurting Saddam and Gaddafi, supporting Israel, sorting out the former Yugoslavia, saving innocents in Africa, pushing for civil rights in China. It has had more failures than successes in these ventures. Charles Maynes, a former editor of the US journal Foreign Policy and now head of the Eurasia Foundation, says: "Since 1991 the US has based its foreign policy on three key assumptions - that the [market's] invisible hand requires no guidance to bring world stability as well as growth; that the major cause of ethnic tension is evil leaders; and that the main military mission remains deterrence. Others in the west have followed the American lead. All three are false."

One could leave it there; indeed, much comment has left it there, with the assumption that the Europeans and the rest of the world have a pile of legitimate grievances to lay at the US door, that America has failed dismally in being the unchallenged superpower and that, even if it stands taller, it sees no further than the rest of us.

That would be a dangerous delusion. The US court martial's decision does seem inexplicable. But the US bases provide Italy's defence, allowing Italy a defence budget of 1.5 per cent of GNP (including carabinieri) compared with the US expenditure of around 6 per cent. The US is giving all of us security on the cheap, with the partial exception of Britain and France.

Second, as Maynes observes, "others in the west have followed the American lead". The new international economic order, especially the work of guiding the former communist states to capitalism and democracy, has been run by the Group of Seven, not a group of one. To be sure, it would need a strong nerve to dissent from the US in such a forum, and probably a coalition of six to counter the one effectively. But no one tried. The failure - which is not total, since some countries, such as Poland, Hungary, the Czech Republic, Estonia, Latvia and Slovenia have done quite well - is shared.

Third, if the implicit conclusion is that the world does not need a policeman-cum- banker, none of the countries now groaning under the US yoke is saying that and probably none believes it. Instead, the Europeans - when more self-critical - admit that they have put little flesh on the bones of a common foreign and security policy. Their militaries, including those of Britain and France, are highly dependent on the US for communications and logistics. Their policy elites do not have any better idea what to do about Russia, the world's most intractable economic (and soon perhaps security) problem, than do their US equivalents.

We thus have the worst of worlds: a sense of grievance without an accompanying ability to make things better. Europe presents a challenge to the US but, if it is to avoid a debilitating struggle, it must transform that challenge into a working partnership that tames US arrogance and makes it (our Prime Minister's favourite word) more inclusive.

The world cannot be run by one power, but neither can it be run by two. Europe will succeed in its aim to be a large player if it brings into a more active relationship not just the smaller rich countries, but the poor countries, large and small. That means a dialogue with the US that punctures its soaring sense of destiny - but that gives it a role in a serious partnership, which is not yet constructed.

This article first appeared in the 12 March 1999 issue of the New Statesman, Yanks go home . . . but not just yet

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.