History shows us that today's rising economic power is tomorrow's superpower. So it was with Britain and the United States. So it is now with the European Union (EU).
Preoccupied with problems in the Middle East, most Americans paid little attention to the real significance of the recent lifting of steel tariffs, imposed by the Bush Administration 21 months earlier.
Explained at the time as necessary to protect U.S. steel from unfair cheaper imports, but cynically interpreted as trying to woo voters in the steel-producing states, the Bush administration had no choice but to lift them when faced with retaliatory tariffs on American products by the EU. The EU was specifically going to target products from key states in next year's elections, thereby threatening a second term for the president.
What is being overlooked here is the rising power of the European Union.
For weeks now the American dollar has been losing value on international currency markets, while the euro has been gaining. The euro is now over $1.24. The rise and decline of currencies reflects international confidence (or lack of confidence) in a currency or its government. It is generally thought that the change in the exchange rate is not so much due to confidence in the euro as a lack of confidence in the dollar.
The rising clout of the EU is about to be felt further.
A continuing dispute over the Foreign Sales Corporation tax (FSC) provision seems likely to result in the imposition of EU tariffs on American goods in March. The Financial Times reported Dec. 10 that "the EU, emboldened by its victory last week over the US on steel tariffs, hopes to emulate the tactics in the tax dispute by setting a firm deadline for sanctions if the US does not comply with a World Trade Organization ruling."
The tax provision "provides $4bn in benefits annually to US exporters," reports the Financial Times, pointing out that "the EU strategy carries far higher risks than in the steel dispute . . . Repealing the FSC will require both houses of Congress to pass contentious Tax legislation in the face of intense lobbying by US companies that want to maintain tax breaks or win new ones."
The same day as the Financial Times report appeared, the EU again flexed its muscles in response to a Bush administration decision that precluded some nations from bidding on reconstruction work in Iraq. Those countries opposed to the war in Iraq, announced the Bush administration, would not be eligible for the big contracts about to be given to Western companies seeking to help rebuild the devastated country.
Criticism came quickly from France, Germany, Canada, Russia and China, all affected by the decision. Russia threatened to hold Iraq to its multibillion-dollar debt incurred by Saddam Hussein.
"Canada threatened to stop sending aid to Baghdad. The European Union said it would study whether global trade rules had been violated. Across Europe, response was swift and angry . . . to the U.S. order barring firms based in some allied countries—opponents of the Iraq war—from bidding on Iraqi reconstruction jobs" (Associated Press, Dec. 11).
The issues dividing the EU and the United States are set to get worse, with the EU likely to become stronger at American expense. A little over four months from now, the EU gains another 10 members, 10 more European countries set to become full members of the trading bloc May 1, making the total membership 25. Add to that figure a number of nations that are candidate countries, including Turkey, and dozens of countries around the world that are closely tied economically to the rising European power.
It's not too difficult to see where tomorrow's superpower is coming from. Bible students already know that in the last days a European-centered superpower will rise, a successor to the Roman Empire, described as a "beast" in the books of Daniel and Revelation. While the attention of U.S. media is on Iraq, developments in Europe are often ignored--yet this area is of growing vital interest to the United States.