The United States and the EU: America’s role in EU crisis management

2015-05-03

 

Both actively present, America and the EU are the biggest world actors in several international spheres, especially in the economic and the political spectrum. Sharing a common goal of asserting global dominance and spreading western culture, they have been cooperating for a long time.

In 1990, the Transatlantic Declaration formalized relations between the EU and the US. Five years later, the New Transatlantic Agenda outlined a new framework for their relationship, including four areas for joint action: promoting peace, stability, democracy, and development; responding to global challenges; contributing to the liberalization and expansion of world trade; and improving communication and ensuring a long-term commitment to their partnership.

There’s an on-going dialogue between the two powers, and these thematic dialogues ensure that many actors contribute to the transatlantic political process by encouraging legislators, businesspeople, consumers, scientists, academics, and citizens’ groups to build links with counterparts across the Pond. Some of these important dialogues and partnerships include: Transatlantic Trade and Investment Partnership (TTIP), Transatlantic Economic Council and Transatlantic Legislator’s dialogue.

When faced with a crisis, EU foreign relations come into the spotlight as each partner attempts to offer a certain kind of assistance, given that important assets are at risk. „The U.S. is tied into the global economy through interest rates, through trade, through exchange rates, through credit spreads, through bank borrowing costs, and so if Europe spirals downward, it will certainly impact us,“ as economist Richard H. Clarida stated. Looking at the Eurozone issue, from early on, many US spectators began contemplating how the crisis overseas may affect the global trade and most importantly how it may affect US economy.

There are several channels of exposure between U.S. institutions and Europe. Obviously, there’s direct exposure. But that’s relatively modest from the point of view of branches of U.S. banks holding securities against Europe. But obviously U.S. banks are global and have operations in many of the European countries.

Were there to be an unraveling or severe dislocation, then the contagion would not be directly on the balance sheet [of U.S. banks], but on just the overall re-pricing of risk. The cost of the capital of the banks would go up, spreads would go up–and as credit spreads rise, the assets on banks’ balance sheets would lose value, even if not directly tied to Europe. So clearly, a disorderly Greek exit or just unraveling of the commitment to the Eurozone would have serious repercussions in the U.S.–over and above any direct exposure.

Seeing that, the so-called “Greek Exit” could affect the US in ways the economy might not be able to handle; this means that economically the US-EU partnership is much stronger and influential on visible levels. Political cooperation and relations have also proven to be significant. A great example would be taking into consideration the tremendous progress made by both parties when it came to tackling the Iranian Nuclear Crisis.

After both parties placed heavy economic sanctions on Iran, and even encouraged other world powers to consider the threatening developments that may take place if Iran does not cooperate and does not proceed with transparency, success began to bloom when talks continued and the 2013 interim agreement was signed and both sides (P5+1 and Iran) continued to implement the agreement into foreign and internal policies in 2014.

As of February 19th 2015, a report by the Director General of the IAEA confirms that Iran is upholding its commitments under the interim deal, including additional provisions from the November 2014 extension. The report notes “Iran has continued to provide the Agency with managed access to centrifuge assembly workshops, centrifuge rotor production workshops and storage facilities.”

These negotiations, meetings and diplomatic talks are proof that EU-US relations are solid and ongoing. Due to extensive cooperation on a wide range of issues, the relationship between the United States and The EU is often called the transatlantic partnership. The two sides have many common values and concerns, and have grown increasingly interdependent in terms of security and prosperity.

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