EU – US Economic Relations: On the Verge of Subsidy War
The war in Ukraine, along with the already exacerbated conditions following the COVID-19 pandemic, has affected the macroeconomic atmosphere. The war has reduced trade, and increased prices of food and energy, along with the residual impacts of the COVID pandemic, which exhibits the slowing economic growth and the implementation of Green Deal policies around the world. The GDP of the EU for the first quarter of 2023 has exhibited marginal growth, while the economic forecast for the rest of the year further depicts improvement, especially in the northern countries of the EU. Inflation in the EU remains relatively high, although numbers have gradually declined in comparison to the last quarter of 2022. The United States, a major exporter, never being a defendant in Russia’s fossil fuel imports the U.S. is in a more secure economic position. FED attempts to combat inflation with higher interest rates, while President Biden has signed The Inflation Reduction Act (IRA), which created a dispute between the US and the EU. The IRA includes trade-distorting subsidies, including local-content requirements prohibited under World Trade Organization rules–US approval of this act could potentially strike a blow to the international trading system that could trigger protectionism in other countries. The IRA will likely harm Europe through its competitiveness effect, forcing the EU to take an opposing stance on the bill.
What effect does the IRA have on transatlantic economic ties? Which negative effects may the subsidy battle have on companies on a micro-scale? How would this influence EU and US relations with China? Would economic liberation between the EU and the US support political alignment against China? Are Western sanctions against Russia worth it? Are sanctions still working and worth the cost the Western allied nations are facing?
EU – US Political Relations: Geopolitical Partners with Divergent Inclinations
The Russian invasion of Ukraine has brought about a geopolitical rapprochement between the EU and the US. Defeating Russian imperialism has become a unifying goal. Russia is attempting to drive a wedge between the collective West, the transatlantic partnership which appears to be stronger than ever. The West has imposed massive and unprecedented sanctions against Russia in response to the war. One of the consequences of the Russian invasion is the generally declared intention of accelerated integration of Ukraine into the EU. However, this is facing increased opposition from individual member states, especially in the light of frequent cases of proven corruption and abuse of power. The admission of Ukraine to the EU would certainly increase the already severe emigration from the country, and at the same time it would contribute to a large transfer of the political power within the EU to the East. It is also a question whether, due to the ongoing war, it would be worthwhile to exempt Ukraine from some of the provisions of the Copenhagen criteria and allow it to enter the community more quickly. With the passage of time, interest in the hasty adoption of Ukraine may decline depending on the development of the war situation. The West has imposed massive and unprecedented sanctions against Russia in response to the war of aggression. Particular attention is dedicated to sanctioning countries assisting Russia in evading Western sanctions, such as Iran, Turkey or China. While the EU and the US seem to be unified in their approach toward Russia, their stances toward China have become increasingly disputed in the transatlantic partnership. Both US political parties possess similar views with the agreement to label China as a main rival for foreign and national security administrations, yet the European stance towards China is perceived in Washington as ambiguous. The geopolitical divergence between the member states recently manifested in Macron’s notorious interview when he claimed: “The worst thing would be to think that we Europeans must become followers on this topic and adapt to the American rhythm or a Chinese overreaction.”
What are the benefits and concerns of the integration of Ukraine into the EU? We have already seen the long-term negotiations associated with Turkey’s accession to the EU. Will Ukraine face the same delays? There are many Balkan countries on the EU’s “waiting list”. Will Ukraine be the next one? What are the challenges the transatlantic partnership faces concerning China? What would be the implications in the relations between the West and China, if Beijing provides military assistance to Russia?
EU – US Security Relations: The Aftermath of Russian Aggression
Russian aggression creates unprecedented threats to European security and thereby has strengthened military cooperation between the EU, the US, and the UK. A strong transatlantic commitment to supply Ukraine with heavy artillery, intelligence, and other forms of support plays an important role in preventing the collapse of the Ukrainian state and enables the realization of Ukrainian counter-offensive measures. However, the prolonged full-scale conflict is depleting Western reserves of ammunition and disposable military equipment, and thus creating pressure on the development of additional military capacities. The public debate in the US and certain EU member states are increasingly emphasizing the need for a foreseeable timeframe of Ukrainian success on the battlefield. The investment in Ukraine is not a charity, but rather a question of national security and collective Western identity. The defense of Ukraine is also defined as the prevention of a possible invasion of other neighboring countries. Russia is surprised by the unprecedented support of Kyiv and the combativeness of Ukrainian forces. The lasting support of Ukraine by Western allies creates a major question regarding the prospect of Ukraine joining NATO. Ukraine aims to join the coalition in the foreseeable future, however, nobody can provide a guaranteed future membership.
How would granting membership to Ukraine change the power dynamic between NATO and Russia? What security measures are required to make sure former Soviet states are left autonomous and uninvaded? Would beginning the application process of Ukraine to NATO provoke further Russian aggression? How would the EU, along with the US, continue to counter-combat disinformation in the face of abundant media influence?