JOANNE MYERS: I'm Joanne Myers, Director of Merrill House Programs, and on behalf of the Carnegie Council I'd like to thank you for joining us for our Books for Breakfast program. This morning we have T.R. Reid as our guest, and he will be discussing his book, The United States of Europe: The New Superpower and the End of American Supremacy.
Often it is easy to overlook the significance of a much publicized event, so on May 1st when the European Union expanded its membership to include ten new members, bringing the total to twenty-five, this long-anticipated event seemed almost anticlimactic. Yet, in reality, this was an epochal event in European history, for what began as a former coal and steel trading arrangement had grown from a common market into a globally powerful international community.
This enlargement not only increased the population of the EU, making it larger than that of the United States, but with its increased membership it now has more trade than the United States, is richer in GDP than the U.nited States, and the European Union has more votes on the Security Council and on every other international body than does the United States.
Step by step, the architects of the European Union have not only dismantled the barriers to the free movement of people and goods, but they have gradually turned this new Europe into an entity determined to be a superpower. Europe, according to our guest this morning, is now a force to be reckoned with, whether we in America like it or not.
As an introduction to the new Europe, I believe that Mr. Reid will be the perfect guide. For most of the past decade, he was the London Bureau Chief for the Washington Post. From this vantage point he witnessed the newly emerging and powerful Europe firsthand and was able to gather a great deal of information about Europe's changing social, political, and economic landscape. Using the skills of his craft, he has astutely analyzed why Europe has come together, and in such a strong manner. In lucid terms and with eye-opening observation, he spells out how the European Union has become a burgeoning superpower that threatens to overtake the United States in many historically dominant areas.
Mr. Reid took a circuitous path to his present post that finally led him to writing for The Washington Post. He majored in classics at Princeton, and subsequently worked as a teacher, a naval officer during the Vietnam War, a lawyer, and a few other jobs along the way. As a reporter for the Post, he has covered Congress, national politics, and four presidential campaigns. He has spent most of the past decade overseas as the paper's Bureau Chief in Tokyo and, as I mentioned earlier, in London as well. Our guest is the author of six books in English and three in Japanese, including The Chip: How Two Americans Invented the Microchip and Launched a Revolution. And now, with the publication of The United States of Europe, we may want to question whether he too is about to launch a new revolution, but this time a geopolitical one which illuminates a new and strong Europe challenging the United States.
At the present, Mr. Reid is the Post's Rocky Mountain Bureau Chief. Through his coverage of global affairs for the Post, his films for National Geographic, books, and his lighthearted commentaries on National Public Radio, he has become one of the nation's best-known correspondents. Please join me in giving a very warm welcome to our guest this morning, T.R. Reid. Thank you.
T.R. REID: Good morning, everybody. Thanks for coming. My publisher paid for this trip, so I feel obliged to point out that my book makes great Christmas giving. Solve all your problems right there.
It's really fantastic for me to come to this lovely house, Carnegie Council in New York City. I'm from Colorado. This is quite exciting for me. I'm just delighted about two things. I'm delighted that so many people came out on a December morning in New York to hear a talk about the European Union; and I'm delighted that the Carnegie Council exists, that this organization is here, because just your existence disproves one of the, I think, vicious stereotypes about our country in Europe, and this is the sense, the very strong sense, in Europe that Americans are insular, that we're ignorant of and indifferent to the rest of the world.
You know, they constantly think we don't know languages, we only care about the United States—I was on the BBC once and the guy said, "Oh yeah, you Americans with your World Series, where only two countries are allowed to play," that kind of thing—you know, the way Americans speak French is they say it in English only louder. You've heard all this kind of thing.
I dealt with this kind of notion—I think it's bologna myself—that America is insular, all over Europe in debates, TV shows, radio shows, and academic forums. One day I went to the Oxford Union, this great debating society at Oxford University, where the two sides make the argument and then the students vote.
The resolution was: "Resolved, this house condemns the ignorance of the United States of America." Gwen Davis from the State Department and I were asked to come in and argue—what do you argue? "No, we're not ignorant," that's what I wanted to say.
We walked into the Oxford Union and were met by this kid who's the president of the Oxford Union, which means in about twenty-five years he'll be Prime Minister, if you look at their history. He was a very nice kid. He said, "Thank you so much for coming. I just want to tell you your side is going to lose." The kids at Oxford knew we were ignorant.
How do you deal with this? You know, that's a pretty bawdy, raucous organization. "Resolved, this house condemns the ignorance of the United States of America." We're insular, we don't know any languages, we don't know anything about the rest of the world.
Well, there are two arguments. To me the most tempting one is: "Oh yeah? Well, if we're so stupid, how come we're the richest, most powerful country in history?" The kids didn't like that. So then I tried facts—you know, "What do you mean we don't know languages? Do you know there are 125,000 American citizens whose first language in the home is Cambodian; there are three newspapers in the United States published in Polish with a circulation of half-a-million apiece? I don't think there are 500 people in all of Britain who speak Polish and not twenty-five who speak Cambodian," says I.
My opponent was George Galloway, a leftie member of Parliament. He was not impressed. He stood up and said, "Yeah, they have Cambodian speakers, but they imported them. That's cheating."
As a reporter, I thought my job was to tell Americans we should see ourselves as other see us, we need to know this, so I spent a lot of time when we lived in Europe tracing this America bashing. It's a great national pastime. They really like it. So I watched a lot of TV, I read a lot of crummy books and articles, I went to many academic seminars where they bashed our country.
A lot of it was drek, let's face it. But occasionally I saw some very good theater, including the hottest play for the last two years on the West End in London. Perhaps some of you have seen it. This is "Jerry Springer, the Opera." Do you know this? I think it's coming to New York. This is kind of an acid test of our will to laugh at ourselves.
"Jerry Springer, the Opera" started in the National Theater on the South Bank. It's about as establishment as you can get. Like many successful plays there, it then moved to the West End. If you go to London, you have to tell the concierge the first minute you arrive that you want this ticket. It's a very tough ticket to get.
I scored this ticket. "Jerry Springer, the Opera" has two jokes basically. First of all, the poster for this thing explains it all. It says: "All the elements of grand opera—triumph, tragedy, trailer park trash." That's what they're doing. They're doing a "Jerry Springer Show" with all the paraphernalia of grand opera. They have a chorus, they have septets, they have duets, they have big arias.
At one point, the lead soprano, who is an American named Peaches, steps to the front of the stage, and the orchestra is going "oom pah pah, oom pah," and you can see this is going to be the big aria of the night, and her aria is "My stepbrother's girlfriend used to be my dad," which is right out of "Springer" if you think about it. You get this joke. It gets old fairly quick, but it's pretty good for a while.
And then the second joke in "Jerry Springer, the Opera," is they have gathered every stereotype that Europeans love about our country. So every American in this play is incredibly fat; everybody is hauling a gun, and they tend to pull it out when they get mad; everybody has a lawyer standing behind them who's taking down notes and hoping somebody spills coffee. That's the big joke, "spill coffee on me, I'll get rich" kind of thing. And if this isn't bad enough, at the end of the first act, the Ku Klux Klan dances on the stage, with their pointed hats and their white robes, and they burn a cross right on the stage—you know, this "typical day in America" kind of thing.
It's funny, but it's debilitating, it's wearing, for an American to watch this. I was sitting next to this very nice British woman who got the ticket that morning from her next-door neighbor. I think she thought she was coming to a real opera, and she was kind of dumbfounded. I was kind of dumbfounded. I turned to her and said, "You know, our country really isn't like that." And she said, "Oh don't worry, dahling. Look on the bright side. At least it's providing employment for a lot of really fat opera singers."
Anyway, my point is they think we're insular, they think we don't know the rest of the world. Everybody loves stereotypes. We have stereotypes about the French, the Irish, the Poles, and they have their stereotypes about us, which I think are largely wrong.
On the other hand, I do want to point out that I think the Europeans understand—even the most lefty America-bashing Frenchman understands—the large virtues of our country. I think they really sense our openness to innovation, the way we've opened our arms to new ideas, new products—we love them—and new people from all over the world. I think they really get that. I think they really admire the youthful vigor of our country and our willingness to take on any challenge, the sense that "we can do it." I think they like that. I think those virtues are not as strong in Europe. They're there, but not as strong as they are here.
And when you talk to everybody in Europe—particularly in the eastern half of Europe, everybody has a cousin or a grandson or a neighbor who has emigrated to Tallahassee or Portland or Denver or something. One thing they really like is (a) we take these people in, we let them become American citizens; and then when they do become American citizens, we have a big ceremony with a judge or a senator to give a speech and say, "Hey, welcome to the family."
This doesn't happen in Europe. You know, you can become a citizen of a European country, and here's how you do it, at least in Britain here's how you do it: you go up to the ninth floor of the municipal building, you hand over fifty Euros as your tax, a guy stamps a piece of paper, and you're in. That's it. So they really don't have the notion of the grandeur of becoming a member of the national family that we have.
May I just say the Europeans also feel dissed by us. They don't feel that we understand one very important fact of Europe, which is why I wrote my book really, and that is that they have pulled off in the last half-century, and particularly in the last ten years or so, a crucially important geopolitical revolution; they really have come together. I think it's fair to say that Europe is more united today than at any time since the Roman Empire.
You know this. Usually I can astonish American audiences by telling them this. I've got this group here today that already knows that Europe has a president, it has a parliament, it has a constitution, it has a Bill of Rights that applies to every citizen, every person on the continent. It has a court system that can overrule the highest courts of any member court. It can overrule the legislature.
While I was in Britain, the European Court of Human Rights ordered the British to allow homosexuals in their military, which the Brits had been arguing about for thirty years and had never been able to do. What really astonished me was the next morning the Brits did it—"Okay, a court in France told us we have to do it, we'll do it," because they signed up to the European Convention on Human Rights and they're going to live by it. Well, actually it's the Brits who wrote the European Convention on Human Rights, so they should.
Europe has a flag, it has a national anthem, it has a pretty much standardized passport. Border controls are basically gone. Last fall I drove from the Arctic Circle to the Mediterranean, going through eight countries. I never changed currency, I never got anything stamped in my passport. This kind of ticked me off. I always liked getting all those visas stamped in my passport. It's like driving from New York to North Carolina, very similar.
I had teen-agers in Europe so I pay a lot of attention to pop culture. I argue in the book quite strenuously that I think there's a single European culture emerging. It's very strong. They have a single sport and single hero—that's of course David Beckham of Real Madrid, who is huge all over the world, bigger than Michael Jordan, bigger than Tiger Woods I'd say.
I think there is clearly emerging a common language of Europe. The French don't like this, but it's English. The language of European T-shirts, baseball caps, brand names, bumper stickers, posters, is English.
You know, Belgium is a country with three official languages, French, German, and Flemish, depending on what part you're in. But you go into a post office in Belgium and they have the slogan of the Belgian Postal Service on the wall. You know what it is? "Belgian Stamps Are Cool." My argument is that a common language is emerging.
And this common culture is strongest among the younger cohort. These are people aged fifteen to forty, who are known as "Generation E." Generation E are young professionals, college graduates, who are workers. They may live in Edinburgh or Toledo or Tallinn, and they are Scots and Spaniards and Estonians, but they're Europeans. You talk to a Scot and say, "What are you? Are you British?" "Oh no, mate. A Scot today is a European who lives in Scotland or a Scot who lives in Europe." That's what they'll tell you. I think this feeling is very strong.
And I think that sense, sometimes called "a single European home," reflects the reason that Europe came together, which of course, as we said, is they decided that they had no choice but to reorganize their ancient continent. In my book I say this is fairly inspiring. It's a noble motivation.
You know, they had three brutal wars, from the Franco-Prussian War through World War II. It depends on which historian you ask: 60 or 70 million Europeans were killed in these three wars. Every thirty years they had a brutal war on the continent. In the total rubble after World War II, a group of visionaries decided they better do something or they would do it again. Many of these people were Catholics driven by a moral imperative to end war, because you could look at Europe, with the Iron Curtain coming down, the countries were rebuilding their military before they rebuilt their cities, and you could see another brutal, lethal war coming to Europe. A group of visionaries said, "No. We've got to reorganize. We've got to find some new way."
One of the leaders of this movement was Winston Churchill. I'm sure you know this, that Churchill single-handedly galvanized the British and the British Empire to fight Hitler at a time when all of Europe had fallen to the Nazis. You know, the Nazis were bombing civilian neighborhoods in London every night while we still had an Ambassador in Berlin sipping champagne with Goebbels and Hitler. We were neutral. Churchill galvanized the world to fight. He was seventy years old. He had three or four hours' sleep for seven years. This was the hardest-working man in the world. On May 8th of 1945, VE Day, he won, the Nazis surrendered, and the war was over in Europe.
You all know how the British people thanked him. Three weeks later, there was a national election and they dumped him. His wife Winnifred looked at him, and he was just a shell, he was seventy years old, he was sick as a dog, he hadn't slept in years. She said, "Well, Win, maybe it's a blessing in disguise." Churchill of course said, "Well, at the moment it's bloody well disguised."
I became friendly in London with a wonderful guy, a Conservative Member of Parliament, Nicholas Soames, and Nick Soames is Winston Churchill's grandson. In 1946, when he was a young kid, Nick Soames was living in Chartwell, Winston Churchill's home, and he had been ordered never go in granddad's study because granddad was in there thinking big thoughts. You know, he wasn't running the country anymore so he had big thoughts.
One day Nick Soames was playing with his toys on the floor and on the radio, he heard the BBC announcer say something totally astonishing: "Winston Churchill is the greatest man in the world." It totally blew him away.
So he broke the rule. He ran into his granddad's study and said, "Grandpapa, is it true? Are you the greatest man in the world?" Churchill said, "Of course. Now bugger off," because he was thinking, as he described it, about the future of Europe.
We know that in 1946 Churchill gave two famous speeches about the state of Europe. One was in Fulton, Missouri: "An iron curtain has fallen across the continent." But the speech that the Europeans know better is one he gave in Zurich three months later in which he said, "I want to speak to you today about the tragedy of Europe," and he said, "We've had these three brutal wars and we're going to do it again. Anybody can look and see we're going to do it again unless we reorganize our ancient continent, and the model is going to be the great republic across the shining sea."
You know how Churchill talked; he was quite eloquent. He said, "We have to build a sort of United States of Europe." In a war-torn, ravaged, fearful continent, that notion just caught on like wildfire. It caught on with me too, as you can see; that's what I named my book "The United States of Europe."
I argue in the book one of the amazing things about this is that it worked. They have had internal civil wars in Europe, they've had some problems with internal terrorism, but in sixty years there hasn't been a war between European nations, and there is not going to be. I think anybody can see that. You go to the continent, you drive through eight countries without a border guard, you talk English to everybody, you see the same songs on the same European MTV everywhere you go. There is not going to be another war. This continent is now too organized and too unified. It really worked. So that to me is a noble motivation for forming a new kind of union in Europe and an admirable result.
But I argue in my book there was also a somewhat less noble motivation for this—you know, the basics: power, greed, money, or other reasons—because if it's 1946 or 1947 and you're a Spaniard or a Hollander or French or British, the world has kind of caved in on you. Until then, these countries ran the world. They had global empires. They had the biggest economies. Now the age of empire is coming to an end, their economy and their infrastructure is total rubble, and suddenly these great world leaders are kind of minor planets orbiting around a very bright American sun, and they had to do something.
I think any intelligent person could see that Britain, Italy, even Germany and France, none of those countries was ever going to be able to challenge the political and financial power of the United States. But Britain, Italy, Germany, Hungary, Sweden, Spain, Portugal, Greece together, yes they could. I think this is a key motivator for the Europeans coming together. In European academic thought this is known as the "counterweight theory." They were going to build a counterweight to American power.
If you go to European summits—I made a big mistake when I was based in Europe for the Washington Post. I stupidly told my editor I was really interested in the European Union, I saw it as a great historic development. So they said, "Great, you can go to all the summits," because nobody else wanted to.
You know, the European summits are pretty boring. There's a bunch of prime ministers and every one of them comes up and says, "We're building a superpower. Look out, United States." I heard it over and over.
But I finally concluded it's true, they are doing this, they are building a force that can stand up to us. They have more money. They have more trade, as we said. Europeans now have so much trade they make most of the rules that govern world commerce. This goes from the fact that the Europeans forced Microsoft to rewrite Windows. Our own Justice Department failed at that, but they had the clout to do it.
Simple things. I personally drink Kentucky bourbon. I like bourbon. I think it's the quintessential American drink. I've drunk it everywhere I lived in the world. You go into a liquor store today to buy a bottle of bourbon, and it doesn't come in a pint or a quart. Have you noticed this? It's a 70-centiliter bottle. Now I ask you: do you think Americans stormed the liquor stores and demanded to drink their bourbon by the centiliter? No. The Europeans told them to do it, and Europe has that kind of power in the world.
You remember the last big legislation that passed Congress before the members went home for the election this fall was this new tax bill in which they repealed a twenty-five-year-old tax subsidy that we had for American exporters. This is a very popular tax among American exporters. It probably helped with our balance of trade deficit, and nobody wanted to repeal it, except for Pascal Lamy, a Frenchman who's the European Commissioner for Trade.
Here's what he did. He went to the WTO, where Europe is a controlling force now because of its trade clout, and said that this tax subsidy for American exporting companies is illegal, it's a violation of WTO rules, and he basically forced the WTO to impose tariffs on the United States, billions of dollars a month in tariffs.
Lamy was asked what he was doing. He said, "This is simple. The name of the game is to change U.S. law." This is a Frenchman telling us to change our law.
The Speaker of the House, Dennis Hastert, responded I think exactly correctly. Here's what he said, quote:
"My gut feeling about this is that we fought a revolution 230 years ago to stop Europeans from telling us what taxes to pass in this county." And then Hastert goes on in this same speech on the floor, the Senate House floor, and I'm quoting: "But the fact is we have to do it. The EU and the WTO have a sword to our heads. We don't like it, but we have to do what the Europeans are telling us to do."
And they did it; they eliminated this tax subsidy. Now, it seems to me if Europe has the clout in the world to make us make expensive changes at great cost that we don't want to do to our laws, that's power. That's my argument.
Now, I've been traveling the country talking about this. Fortunately for me, people are buying my book. I called my friends in Europe and said, "See, we're not insular. People are buying books about the EU. That's pretty good." They still say, "No, no, you're ignorant." They don't buy my argument.
But Americans have said to me, "What do I care? It's nice if they found an alternative to war. It's good that they filled a big market over there. It's a bigger market than the United States or Japan. This is a very good thing for American companies. If you make your product or get your product into any of the twenty-five EU countries, it can go everywhere without any tariff, any border control. I think it's a good thing for American tourists. Don't you feel traveling in Europe is just easier today? No border controls. You really don't have to worry."
In my house I've got a house full of junk that I have picked up at airports because I'm leaving Lisbon and I'm going to use the last of my escudos. When am I going to use them again? You know, I've got a house full of junk from the Lisbon airport and Schiphol in Amsterdam. Now when you leave Lisbon you're going to take those Euros to Berlin with you, or Helsinki, and use them. So I think in many ways it's a better deal.
But I always say to Americans: "Look, if you don't think this matters, here's what I want you to do. Place a call to Boston to a guy named Jack Welch." Jack Welch is the legendary CEO of General Electric, a great corporate leader, brilliant, studied in business schools all over the world.
When I was in London, there was a very good friend of mine there called Richard Portes, who's a professor at the London Business School. This is one of perhaps two or three schools in Europe that has tried to build a business school on the Harvard-Stanford model. In most of Europe university education is free; this is part of their welfare state. But the London Business School charges 25,000 pounds a year, and they get it; people are willing to pay this.
Anyway, Richard taught a course on Jack Welch's management style. You know, they teach this everywhere. After twenty years of running GE very successfully, Welch announced just before his retirement that he had one more great achievement to do, one more great contribution to American industry and to GE's stockholders, and that was he was going to buy Honeywell, another great industrial titan. This was the biggest industrial merger in history, a $45 billion merger. Nobody tried something this big. There had been financial mergers this size, but nothing on this scale in the industrial world.
Jack Welch is so persuasive and his timing is so good, he just happened do this two months after a Republican administration took over in Washington, and that merger just sailed through our Justice Department. The Antitrust Division stamped it clean, just like that.
And while they were popping the corks up at GE headquarters, somebody said, "By the way, Jack, you have to go to Brussels and meet an Italian named Mario Monti."
"Oh, what's an Italian doing in Brussels?" "Well, he happens to be the antitrust czar for twenty-five European countries, the biggest market in the world."
So Welch goes over, he gets on the plane with his phalanx of high-paid antitrust lawyers—maybe some of them are in this room, I don't know—and they're thinking strategy, and they decide that their strongest weapon is Jack Welch himself. He's so smart and so persuasive and so likeable, the best thing is to send him in alone to make the pitch to Mario Monti.
So they go to a restaurant in Brussels, and Welch—charming guy, very American, charming, casual—walks in and he says, "Mario, call me Jack." Monti says, "Mr. Welch, we have a regulatory proceeding underway. I feel it would be more appropriate if you referred to me as Signor Monti." Right then he knew he had a problem.
In my book I describe in great detail how GE and the Bush Administration totally botched the negotiations with the EU. They never understood the ambitions, the drive, of the EU, Mario Monti's need to be an antitrust power independent of Washington, to make his own rules and to impose those rules on the world.
In the end, Mario Monti called Welch one day in his suite in Brussels and said, "Jack, you can now call me Mario because the transaction's over. In two weeks at the European Commission meeting"—that's their cabinet, the European Commission—I'm going to recommend that we reject this merger."
Okay, so it's over. So Welch lost. But no, Jack Welch is not a quitter. He has never been a quitter. That's why he was so successful. So he hangs up the phone and immediately calls the White House Chief of Staff, Andrew Card, and says, "They can't do this. This is a company in Connecticut buying a company in New Jersey and some Italian in Belgium is telling us no."
And sure enough, George W. Bush got on the phone to several European prime ministers and said, "This is wrong. You can't do this." Completely wrong thing to do, the worst blunder of the whole deal, because the last thing this proud, strong, rich European Union wants is to have some swaggering guy in Washington telling him what to do. It's not going to work.
In my book I list many other occasions where the Bush Administration and the Clinton Administration failed to figure this out. They just didn't understand how to deal with Europe because they don't understand the drive there, the counterweight theory.
Anyway, when the thing did come up for vote, they didn't even debate it. That merger went down twenty-to-zero in the cabinet, and it was easy. I mean the European cabinet ministers were showing backbone, which is quite easy. If you're sticking it to two American companies, why not?
So Jack Welch had to come home to his Board and say, "I'm sorry, we spent a year's time on this, a lot of money and effort, and we have nothing to show for it." It ended his career with a humiliating failure.
I argue in the book that this completely turned around the business press, which had always been great cheerleaders for Jack Welch. That's how we reporters are—you know, we switch on a moment. And then Jack Welch became the poster child for corporate excess. As you know, his marriage fell apart. None of which has a lot to do with the EU, but it's so interesting I threw it all in the book anyway.
And here's my key point—are you ready? So he spent, according to members of the GE Board, about $50 million on antitrust lawyers working on this merger, maybe $30 million on investment bankers. They would have paid more, but the bankers tend to charge you when the deal is done and the deal was never done. So he spent $75 or $80 million to learn the lesson about the drive and strength of the new Europe. For twenty-five bucks you can learn it from my book. We're talking a big bargain here.
So that's the short take. I feel that this audience knew all this, or knew much of it, but I've been traveling America talking about this, and it's very interesting to see the reaction. "You're kidding me" is usually the reaction. People don't know. Anyway, thank you so much.
JOANNE MYERS: I think after that presentation there's only one thing to say: you have to read Reid. I'd like to open the floor to questions.
Questions and Answers
QUESTION: I wonder if you could carry on with what you were saying, which was very interesting—and I must say I am going to buy your book—about the problems of the military relations within and outside of NATO between the United States and the European members of NATO.
T.R. REID: Yes. Looking at the military situation in the large, my sense is that there is just a different world view, a different mindset. As I said, I think the key motivator for the European Union in the first place was to find some alternative to war. If you talk to European academics or politicians, they tend to think that war is an anachronism, it's not the right thing to do, it's a waste of time and money.
So Europe has something that I call the "European army," because I'm a journalist and we simplify. They call it the ERRF, the European Rapid Reaction Force. It allegedly is 60,000 soldiers, and I think the French carrier Charles de Gaulle is part of this force. It's independent of NATO. Its commander has nothing to do with NATO. But I don't think it really exists. It's a commitment by all the member countries to send these 60,000 soldiers and sailors if needed, but they've never done it, and I don't know if they would.
I think Europe would much rather spend the money on its welfare state. You know, Europe is a place where university education is free, doctors make house calls and you don't get a bill. In many European countries, if you have a baby, the government pays either the mother or father to stay home and raise the child for the first year. In Norway it's two years now. I think they'd rather do that than spend money on the military.
And I don't see Europe becoming a military power. I think it's a pretty smart bet on their part. They're gambling that you can be a superpower in the 21st century without military power. What do you think? Are they right? I don't know. But they've got a good deal going. We pay about 70-to-74 percent of the cost of NATO, their defense shield. We have 100,000 American troops based in Europe. You tell me why. I can't understand it. But boy, I'd take that deal too, if somebody were going to protect me, and I'd spend the money on free university education. That's what I'd do. So I believe that's the choice they've made.
Maybe Britain, with somewhat different ambitions, is willing to spend money on the military. I don't think anybody else in Europe is. If you just take just in 2004, in this year's budget, just the growth—I'm not talking about the base number, just the growth—in Pentagon spending, the amount it went up over 2003 is greater than the entire military budget of any EU member nation. I mean they're a pipsqueak compared to us.
Here's what I think is a very interesting insight. John Hume is a member of the European Parliament. He's a French professor from Ireland. He's Irish. He'll say anything. I like John quite a bit. He won the Nobel Peace Prize. He's a terrific guy. One day I was talking to John. He loves the EU, so he was a key source for my book. I said, "John, you keep talking about superpower. You're a pipsqueak. There's not a nation in Europe that could stand up to the National Guard of Indiana, much less the American military." Here's what John said—and I believe this really reflects in my view the European mindset—he said, "Well, if being the biggest military in the world means you get to send 150,000 soldiers to Iraq for ten years, you can have it."
QUESTION: Thank you for a refreshing talk. I think the EU should sponsor you on your tour in the United States. Mr. Monti did the same thing to Volvo when it tried to merge, so it's not only Americans.
T.R. REID: Yes, I agree with that, and Volkswagen too.
QUESTIONER: I think we have an ocean of prejudice and ignorance on both sides of the Atlantic and we have a real problem. Security-wise, if you read European newspapers now, you will see two things dominating, Iraq and the Ukraine.
You see in the Ukraine how the EU is taking on a new role as mediator, not only Solana but interestingly, using Poland's president and Lithuania's prime minister side by side. They are a troika going in there, showing the newcomers' potential force.
I think the new challenge for the EU will be the eastern front, if you count Turkey for instance. Turkey will be our big issue; but if you also look to the next Iraq or the next problem for us —Uzbekistan for instance—there you can see how the United States and Europe will go different roads again, because for America Uzbekistan is now kind of an ally in the so-called "war on terror", but for us in Europe it's a despicable dictatorship. So we will have problems there. We will be fully engaged in the enlargement of the EU, Turkey and Ukraine and so on, while the United States will be fully engaged in Iraq, I guess.
So my question to you is: where can we find the next common project for the United States and Europe? We had many of them before.
T.R. REID: That's a really good question. I think the question gets to a basic point, which is that for Americans there is a lot of good in the power and ambition and wealth of Europe. One thing is they can take up roles that in the last twenty-five years probably would have been America's—what should I say?—duty in the world. It's not Colin Powell who's in Kiev working on this corrupt election; it's Solana, it's the Europeans doing this. We're using the Europeans to handle the tough work in Iran on the Iranian nuclear situation because we're tied up next door. That's a good thing for us. I think it's a good thing that there's another powerful, wealthy, ambitious force in the world willing to take on some of this.
I'll give you an example. I used to live in East Asia. I think the Bush Administration—you can argue with me about this—but I think they've just really bungled American policy towards North Korea. I think it has been a disaster. In 2001 President Bush basically cut off the North Koreans: "We're not going to talk to you any more." One month later, Chris Patten, who was then the Minister for External Affairs—a typically European title—of the EU was in Pyongyang with a delegation of ten saying, "How can we work with you?" because they saw the opening.
I think the Mideast is the obvious place where the Europeans are tilting very strongly to the Palestinian side. The Bush Administration is clearly pro-Israel; it sees Israel as another victim of terror. That's clearly a place where the two sides can work together. According to the British papers, which may be right—I think their source on this was Tony Blair himself—the British papers reported that when Tony Blair was at the White House three weeks ago, he got a commitment from Bush to come to Europe in January-February and talk about a joint approach to the Mideast, which I think Blair feels is a key resolution for the problem of terror. We've got to do something about the Mideast to handle fundamentalist Islamic terror. That's a good thing. I think that is a place where the two sides can work together.
My argument in the book is we've got to realize (a) that the European are ambitious, they want to be a counterweight to the United States, they don't always like the way we do things and want to set their own standard in the world; and (b) this can be good for us. Let them help us out. We don't have to run everything; we can work together.
QUESTION: May I make two points and then ask you a question? The first point is that your overall point of the United States of Europe, I think you're right it goes back to Winston Churchill, and many people have that in mind, whatever it may mean. But your subtitle is about superpowers, and it seems to me that if Mao Zedong was right and power grows out of the barrel of a gun, I think you are also right in saying that Europe isn't looking for that. It's looking to be super-influential, rather than super-powerful, and I think that's an important difference which is important for Americans to understand too, because Europe is not trying to rival the United States as a power in the military sense. I think that's hugely important, and we don't want any more misconceptions on that.
The question I have for you is really this. You have lived I think for ten years in Europe, mostly in London I gather?
T.R. REID: Yes.
QUESTIONER: And by the way, congratulations. To have spent ten years in London and come away a convinced European is a feat. But my question is this. You obviously felt very much at home in Europe. You've gone back now to Colorado. I'd like to know whether you feel equally at home and whether you see yourself as living in the same society with the same values or in a different one.
T.R. REID: Wow, that's an interesting question. My kids are very angry at me for leaving London. It's a fantastic place to be a teen-ager. Here's the deal: the reason I went home was I married a Coloradan. I don't know—is anybody here a Colorado native? So you're probably just like my wife. They're real snobs about this. You know, they're proud of it and they won't call anybody else a native. My argument always has been I should get more points for moving there voluntarily as an adult.
In 1989, when we were living in Colorado—I was the Rocky Mountain correspondent to the Washington Post—I said to my wife, "Gee, if you'd just go overseas with me for a couple of years, I promise we'll come home." We came home in 2003, so it was pretty long, so I really owed her.
Do I feel I'm in the same society?
You know, I cover politics. I think the politics are fundamentally different. If we have red states and blue states, Europe is deep, deep blue; it's way left of us. I think one of the things I noticed most strikingly was—you know, in America the term "welfare state" is an epithet, it's something that a politician throws at his opponent. If they want to waste money helping the poor or something, "you're building a welfare state."
I think a key difference is the Europeans love their welfare state; they're incredibly proud of it. In my book, many Europeans talk about how this is the real difference between Europe and America: they care for everybody, and they think that's government's role, and they pay outrageous taxes—even by New York standards they pay outrageous taxes—to fund this.
I'll tell you how this hit my family, if you want to hear. We moved to London and totally loved it. You know London. It's a fantastic town. We liked a lot about living in Europe. But one thing we couldn't stand was the taxes. You know, in Britain there's a 17.5 percent sales tax on everything you buy. Colorado is 7 percent. Denmark is 25 percent. Britain has actually a fairly low tax by European standards. My wife and I would say, "Why do they pay this? Americans would revolt."
About five days after we got to London, we were still unpacking boxes, one of my daughters wakes up and her ear is like the size of a baseball, bright red, oozing pus, just full of pain, a terrible situation. We had no idea what to do. We had been in this country a week maybe—no doctor, no nothing. What do you do?
So we went out and got in a cab. He said, "Mate, your daughter's ear looks pretty bad." "What do I do?" I said. He took us to St. Mary's Hospital, right next to Paddington Station. It's a grotty old hospital, the paint is peeling, they have buckets catching the leaks from the roof. But we went into the emergency ward—they call it the casualty ward—and a very authoritative nurse came up and saw my daughter and said, "Come on over here, young lady." They called the doctor. They took her in a room. The guy drained the pus, cleaned her ear, reduced the swelling, and gave her a very stern lecture about how to use pierced earrings. She was fourteen at the time.
My daughter came out of that room just beaming. She was cured. So you can imagine how her parents felt. We were just thrilled. The heck with the peeling paint, this was great service. I pulled out my checkbook and went over to the window, and the nurse said, with enormous pride, "Oh, no, no, no. We do it differently here. We wouldn't charge you for medical care."
While we were walking out of that hospital with my relieved daughter, my wife turned to me and said, "That's why we're paying the 17.5 percent." Now, to me that's a big difference in mindset. We would never pay 17.5 percent in Colorado. You know, in Colorado I'd get exactly the same care for my daughter's ear and today, six year later, I'd still be fighting the insurance company over who should pay for it. To me that's a fundamental difference.
QUESTION: Just a small comment and then a question. The next time you go to Oxford for a debate, there was an article recently in the Financial Times that stated that Harvard University has far outstripped Cambridge and Oxford in the nature of its education, in its support system, and its freedom and growth. So maybe that will help with your vote.
The question that I have is about the next chapter, with Boeing and Airbus and the World Trade Organisation in Europe. It sounds as if we're coming to a real head-on-head, and I'm wondering if you'd comment what you think is going to come out of this particular chapter.
T.R. REID: I talk about Boeing and Airbus a great deal in my book. I go through several case studies of how European companies came along and out-innovated and out-marketed Americans.
And of course Boeing is a terrible example in my view. For decades Boeing owned the world passenger jet market. At some point it had 70 percent of that market. It was always number one. In 2004, for the first time, Airbus, which is basically an EU production—it's a combination of four or five different European countries—Airbus passed Boeing in global passenger jet sales. Boeing is now second by some measures. Depending on the Euro-dollar exchange rate, Airbus could have 60 percent of that market in two years.
This is terrible for us. Boeing is the biggest exporter in the United States. If we're going to do anything about our balance of trade deficit and be a force in the world, we need a strong, competitive Boeing. This is quite bad.
Boeing's answer has been basically bureaucratic. I mean they went to the World Trade Organisation and said, "Well, Airbus gets subsidies, Airbus is a government creation, it's a subsidized institution. You should put a surcharge on their prices so that we can compete."
And you know what? Boeing is right. Airbus was created by the EU, with huge government subsidies, specifically to compete with Boeing. That was the whole point. Airbus now says they're making money, and they are, they're a profitable company, and they're paying back what they now call loans—they didn't call them loans before, but they do now.
So Boeing is basically right. But here's what's happened. We have badly muddied the waters around our case, and Airbus has now gone into the WTO with its own case, and their argument is that Boeing gets even more subsidies. I don't know how far back into The Wall Street Journal you read, but if you read The Journal carefully, you will see that in the last two months two senior Boeing executives have been convicted and are facing jail terms for cutting secret deals with the Pentagon. My paper, the Washington Post, just published some emails from the Secretary of the Air Force in which he clearly said "don't give this business to Lockheed; don't give it to Airbus; it has to go to Boeing."
This totally undermines our case. We can't win this case in the WTO. I don't think it's true that Boeing gets the kind of subsidies that Airbus does, but we've messed it up just enough that I don't think we can win this case. It's a very interesting argument.
I'll tell you what I think Airbus did. Airbus was smarter than Boeing because they guessed better about the future of the airline industry. This was before 9/11. Airbus saw all these cheap, low-cost airlines coming up. There are more of them in Europe than there are in the United States. We have Jetblue and ATA, but Europe has Buzz, Easyjet, Go, BMI, British Midlands started a low-cost airline which is called "Be My Baby," BMI Baby—don't you love that? I love that.
Part of their business model is these cheap airlines only use only one kind of plane, and therefore they save on parts, they save on maintenance, they save on training, and they only have to train their pilots to fly one plane. Airbus figured this out, and therefore they sell the first five planes to these new airlines for nothing, very cheaply; and then if that airline makes it, they're going to sell them the next 500 planes and they raise their price. This is the argument I make in my book, that they outsmarted us.
I'm going around the country now selling my book, and people will say, "Ah, they're a bunch of socialists over there. They're socialists with their fat welfare state and their high taxes. We don't have to worry."
You know, Motorola is a great American high-tech company. When the world cell phone market took off, Motorola was number one in global market share. But now Nokia and Erickson, two European companies, and Panasonic in Japan, have all passed Motorola. The notion that we can sit back and not worry about these lazy socialists in Europe is complete bologna. That's really why I wrote the book, to let Americans know that.
QUESTION: I think I would agree very much with what one of the previous questioners said, namely that maybe the counterweight approach is not really the best way to analyze what is happening in Europe historically. Maybe I can refer to the very strong relationship that somebody like Jean Monnet has built with the Americans over the war period and afterwards, and even up to the present day. I don't think the intention was ever to build a counter-power to the United States.
But what is certainly true—and I commend you on writing this book to explain it in much more detail—is that the Europeans are doing their own thing; they have a strong will and maybe historical vision to realize they are an important historical project, and of course they need to have the means and the instruments to realize that. I think it is very important that our American friends should be fully aware that it is really happening. I know there was a lot of skepticism on this side of the Atlantic that something like the Euro would ever come into being, but now, as you mentioned, it is there.
But my question would be, your talk—which was very interesting and illuminating—was mainly telling us what is happening. But if you were a counselor to Mr. Powell or Dr. Rice, what would be your recommendation on what the fundamental American posture should be as against these evolutions which are happening right now? Thank you.
T.R. REID: I just want to say that I went to a lot of European summits, and they're constantly talking about building a superpower. I know that European diplomats at the UN perhaps feel they shouldn't say that. You know, Tony Blair's formulation is that the Euro-skeptics in Britain hate Brussels, they hate the Eurocrats; they get off on hating Brussels the way we in Colorado like to hate Washington. Blair's line always is: it's not a superstate; it's a superpower, not a superstate. That is some distinction that I guess matters in British politics.
Could I just read you something, in answer to what you said, that a European prime minister said? This would have been at the Barcelona Summit in the summer of 2002:
"What we are doing here is historic. We are building a new superpower. The European Union is about the projection of collective power, wealth, and influence. This collective strength when we work together means the European Union can stand on par as a superpower along with the United States." Now, the fellow who said that was our strongest ally in Europe, Tony Blair. I think they are trying to build a superpower.
QUESTIONER: A counterweight. That's a different thing.
T.R. REID: No. They talk counterweight. I understand what you're saying.
If I were talking to Condoleezza Rice, I would say two things: first of all, let's use it. Here's an ambitious force in the world that has the brain power and the wealth to help us out. Both sides of the Atlantic believe in free democratic institutions, we believe in free markets, we both have very strong protection for individual liberty. Let's work together. Don't fight with them. They can help us.
The second thing I would say to Condoleezza Rice is that the Europeans feel dissed. They're angry at America because of the people we send to represent our country in Europe. As I'm sure you know, if you want to be the U.S. Ambassador in London or Madrid or Paris, the way to do it is definitely not to build a twenty-year career in the foreign service and get a degree in European studies. That would never work. The way to do it is to be a relative or a huge contributor to the guy who gets elected president. This is true under Democrats and Republicans; it's not a partisan statement at all.
I list how much people paid—I should say contributed —for their four-year lease in these beautiful homes that our ambassadors have: $680,000 for Switzerland, $840,000 just to the second Bush for London. Our ambassadors in Europe include three baseball executives who worked with President Bush when he was with the Texas Rangers, a horse breeder from Lexington, Kentucky—on and on and on—somebody who happened to marry a guy who sold fabric in St. Louis and made a lot of money at it. These are the people representing our country. If I were Condoleezza Rice, I'd dump the lot of them and replace them with pros.
QUESTION: You hadn't mentioned immigration. My simple question is: how big a challenge is this to the integrity of the EU, the sense of European-ness, what is happening, the Islamic beachheads, and so forth?
T.R. REID: This is a very good question. Ten thousand people—maybe more—sneak into the European Union each day. It's a wealthy place. They can get there and get jobs. And it's borderless—you know, if you can get across the Russia-Poland border, you can get all the way to the Atlantic. The British are trying to keep immigrants out; they're not doing a very good job of it. The Europeans don't like it. I don't know what people feel about this in New York. Where I live in Colorado, the anti-immigration movement in America is very, very strong. We have a bunch of congressmen in Colorado whose whole career is fighting immigration—put soldiers on the border kind of thing. That feeling is quite strong in many European countries—though not Spain, I think. Spain is the greengrocer for this rich new Europe, and they need people to work on the farms, so they take Moroccans and Algerians who come across the Mediterranean to work there. But many European countries don't like it. I think they had better wake up.
And the other thing is this immigration is creating Islamic, and in some cases fundamentalist Islamic, neighborhoods and centers in European Cities. As you saw in the Netherlands recently, they're having some trouble digesting this.
My argument to the Europeans—of course I don't live there, so it's easy for me to say—is that I think it's a good thing. They need it. They are not producing European babies. They make very good cell phones and cars, but they're not producing enough babies to support this expensive welfare state.
They need these young Muslim and Chinese workers coming in. Just like our illegal immigrants, they pay taxes, even though they're probably never going to get anything out of it. So I think Europe needs these people just to deal with the demographic problem, and they need people to do the kind of work that illegal immigrants do.
I argued to them that assimilation is a very powerful force. Almost all schools in Europe are public up to the university level. These Muslims and Chinese immigrants, come in and they send their kids to the European schools. I think they're going to be assimilated. You look at some Muslim who's a member of Generation E, speaking English, and Estonian or something, or Swedish, and they're pretty European.
Of course there are some fundamentalists left. I compare it to the situation in the late-1950s/early-1960s when the first wave of anti-Castro Cubans came to Miami. They didn't like American values. If anybody said anything good about Fidel Castro, they shot them. They didn't believe in the First Amendment and tolerance. Today that Cuban community in Miami is incredibly vibrant, incredibly American; they're Republicans, Democrats, libertarians, or socialists. They have really become Americans. They have assimilated very strongly.
I argue to the Europeans that that's going to happen with their new wave of immigrants—and anyway, they need them economically. Easy for us to say. You know, they're not going to write for American newspapers; they're not going to take my job. But that's what I argue to them. I think in the long run it's going to be a good thing. But boy, they're uncomfortable about it now; they're very edgy.
JOANNE MYERS: Thank you very much for a really terrific presentation.