By Stephen Fidler
The first days of the Trump administration has done nothing to comfort European governments' growing anxieties about the consequences of his presidency for their own continent. President Donald Trump talks and behaves a lot like Candidate Donald Trump.
Having heightened security fears by raising doubts about America's defense commitments to Europe, he has also raised questions about whether the U.S. will put up tariff walls in an effort to protect American jobs.
He has also made his opinions clear about the European Union, saying he expects other countries to follow the U.K. out of the door.
"I don't really care whether it's separate or together, to me it doesn't matter," he said in a recent interview with two European newspapers. Former Italian Prime Minister Mario Monti has described him as "the potential disaggregator of the European Union."
Speaking in Davos last week, British Chancellor of the Exchequer Philip Hammond said the new U.S. administration had delivered an even bigger dose of uncertainty to the EU than Brexit, and posed more questions for the bloc than it does for Britain.
The most significant impact would be on "Europe's rather delicate relationship with Russia," he said. Anything that called into question the U.S. defense umbrella over Europe would unsettle the newer members of the bloc from Central and Eastern Europe for which "security is a much more important consideration than the economy."
Even for the U.K. as it leaves the EU, Mr. Trump's presidency is at best a double-edged sword. He has shown interest in negotiating a preferential trade agreement with Britain. But his statements suggest that he sees imports into the U.S. as taking jobs from Americans, a view that economists associate with 18th-century mercantilism and that calls into question U.S. leadership of the global trading system.
Some Europeans say Mr. Trump doesn't appear to put much faith in markets at all. "He seems to be pro-business and anti-market," Jyrki Katainen, a former Finnish prime minister and current vice president at the European Commission, said this week. "That's the worst combination that we can find."
But in the setback, there may be opportunity. EU governments may be forced to fall back on their own devices.
"I've made my mind up that in the coming years we are on our own -- which may be a good thing," Dutch Finance Minister Jeroen Dijsselbloem said Thursday in Brussels. "Maybe that's what Europe needs to really work together in a better and more productive way, to sort out its own problems, to strengthen its own economic balance,its own defense situation...It's up to us now."
In defense, the trend had already turned even before Mr. Trump took office because of Russian actions in Ukraine -- though the continent remains heavily dependent on U.S. firepower. In 2015, a long period of declining military spending stopped, and last year it began to rise. Many governments, particularly in Eastern Europe but including Germany, have pledged further increases in spending.
On trade, European officials believe they will have to strengthen links with other countries if the U.S. is going to turn its back. Two senior officials said that trade negotiations with other countries in Latin America and Asia have accelerated since Mr. Trump was elected.
"We've definitely seen more interest from other countries too. It's a boom," said one. Another said the bloc would cooperate more closely with China on climate policies if the U.S. doesn't want to anymore.
Giles Merritt, president and founder of Friends of Europe, a pro-EU think tank, said Mr. Trump's example may strengthen the hands of mainstream politicians across Europe ahead of elections this year in the Netherlands, France, Germany and, probably, Italy as they confront the insurgent politicians that have been influencing policy in Europe for more than a decade now.
"Perhaps mainstream politicians become more attractive and populists less attractive," he said. "It depends on how divisive Trump is."
Another development that could push EU governments closer together is any sign of Anglo-American cooperation that is seen as hostile to the bloc, he said. The first clues could come from British Prime Minister Theresa May's meeting with Mr. Trump this week.
Mr. Merritt said it is too early to tell whether Mr. Trump will be a catalyst for intensified EU cooperation.
Indeed, no one has won much money in recent years betting that the bloc will outperform rather than underperform expectations, with the possible occasional exception of the actions of the European Central Bank. But with twin challenges from Russia and the U.S., if the EU doesn't get its act together now, it probably never will.
(END) Dow Jones Newswires
January 26, 2017 15:03 ET (20:03 GMT)
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