[Senate Hearing 106-48]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 106-48

 
    THE EUROPEAN UNION: INTERNAL REFORM, ENLARGEMENT, AND THE COMMON 
                      FOREIGN AND SECURITY POLICY

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON EUROPEAN AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 24, 1999

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate


                      U.S. GOVERNMENT PRINTING OFFICE
56-319 CC                     WASHINGTON : 1999



                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia              PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska                CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon              JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota                 RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas                PAUL D. WELLSTONE, Minnesota
CRAIG THOMAS, Wyoming                BARBARA BOXER, California
JOHN ASHCROFT, Missouri              ROBERT G. TORRICELLI, New Jersey
BILL FRIST, Tennessee
                     James W. Nance, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

                    SUBCOMMITTEE ON EUROPEAN AFFAIRS

                   GORDON H. SMITH, Oregon, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
JOHN ASHCROFT, Missouri              PAUL S. SARBANES, Maryland
PAUL COVERDELL, Georgia              CHRISTOPHER J. DODD, Connecticut
CHUCK HAGEL, Nebraska                PAUL D. WELLSTONE, Minnesota

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

Feldman, Dr. Lily Gardner, Senior Scholar in Residence, Center 
  for German and European Studies, Georgetown University, 
  Washington, DC.................................................    26
    Prepared statement of........................................    28
Gedmin, Dr. Jeffrey, Residence Scholar, American Enterprise 
  Institute; and Executive Director, the New Atlantic Initiative, 
  Washington, DC.................................................    17
    Prepared statement of........................................    21
Rodman, Peter W., Director of National Security Programs, The 
  Nixon Center, Washington, DC...................................    33
    Prepared statement of........................................    35
Wayne, E. Anthony, Principal Deputy Assistant Secretary of State, 
  Bureau of European Affairs.....................................     2
    Prepared statement of........................................     9

                                 (iii)

  


   THE EUROPEAN UNION: INTERNAL REFORM, ENLARGEMENT, AND THE COMMON 
                      FOREIGN AND SECURITY POLICY

                              ----------                              


                       WEDNESDAY, MARCH 24, 1999

                               U.S. Senate,
                  Subcommittee on European Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:13 p.m. in 
room SD-419, Dirksen Senate Office Building, Hon. Gordon Smith 
(chairman of the subcommittee) presiding.
    Present: Senator Smith.
    Senator Smith. Good afternoon, ladies and gentlemen. We 
welcome you to this hearing of the Foreign Relations 
Committee's European Affairs Subcommittee.
    Today's hearing is about the European Union: Internal 
Reform, Enlargement, and the Common Foreign and Security 
Policy.
    Today the committee is convened to discuss the current 
situation in the European Union, and we do so as, literally, 
the defensive arm of our alliance is dropping bombs on 
Belgrade.
    Our first panel will consist of Mr. Anthony Wayne, 
Principal Deputy Assistant Secretary in the State Department's 
Bureau of European Affairs. After we hear from Mr. Wayne, the 
committee will welcome Dr. Jeffrey Gedmin from the American 
Enterprise Institute and the New Atlantic Initiative; Dr. Lily 
Gardner Feldman from Georgetown University; and Mr. Peter 
Rodman of The Nixon Center.
    Today, the EU is holding a summit in Berlin during which 
some of the more contentious issues of internal reform, 
including the Common Agricultural Policy, are going to be 
discussed. The summit's agenda, however, has necessarily been 
dominated by the en bloc resignations of the European 
Commission last week. I fear that we have only seen the tip of 
the iceberg when it comes to allegations of mismanagement 
within the institutions of the European Union. I hope that I am 
wrong.
    I understand that former Italian Prime Minister Romano 
Prodi has been nominated as the new President of the European 
Commission. It is my hope that Mr. Prodi and the new 
commissioners that comprise his team will be successful in 
tackling the fraud and mismanagement that has infected the 
Union.
    With regard to enlargement, I must admit some skepticism 
about why countries in Central and Eastern Europe would want to 
join the European Union. For example, the economies of Poland, 
Hungary, and the Czech Republic are growing faster and are 
experiencing far less unemployment than countries in the 
European Union. Furthermore, excessive EU regulations, taxes, 
subsidies, and labor laws could just as easily hurt the 
economic development of these countries more than EU membership 
would help them.
    One final note. Last night the Senate was faced with a 
difficult decision on whether to authorize NATO air strikes 
against Serbs as a result of that country's brutal crackdown 
against ethnic Albanians in Kosovo. I supported that 
resolution, but I must say that from now on, I will no longer 
have much sympathy when I hear complaints from some about U.S. 
dominance on issues of mutual interest.
    The experience in Kosovo highlights the inability of the EU 
to act together on matters of foreign and security policy. No 
one can deny that, when the crisis in Kosovo first erupted and 
for some time thereafter, countries, such as Italy and Greece, 
were pressing for a policy that differed both in substance and 
in approach from that favored by other members of the EU, 
including Great Britain.
    Its military arm, the Western European Union, refused to 
take action in Kosovo as it has on other instances where 
European interests have been threatened and, instead, turned to 
NATO to address the problems on the continent.
    I look forward to hearing from all of our witnesses this 
afternoon regarding their views on these and other issues.
    Mr. Wayne, we turn to you first and invite your testimony.

   STATEMENT OF E. ANTHONY WAYNE, PRINCIPAL DEPUTY ASSISTANT 
         SECRETARY OF STATE, BUREAU OF EUROPEAN AFFAIRS

    Mr. Wayne. Thank you very much, Senator, for your remarks 
and for taking the initiative to have this hearing on what 
indeed is an important long-term development for the United 
States, even if today our focus is somewhat to the south or 
southeast of much of the EU.
    As you, I think, well know, the origins of the EU come 
directly out of the devastation of World War II, when a number 
of the leaders of Europe at that time came away convinced that 
they had to find a way to bind together the nation-states of 
Western Europe to avoid another world war.
    The United States supported and encouraged that development 
and eventually, through several steps in the process over four 
decades, now, in fact, arrived at where we are with the 
European Union.
    At this point, indeed, as you noted, the 15 members of the 
European Union are about to undertake the largest single 
Enlargement that they have ever tried to manage. This is going 
to be a major challenge for both the members of the European 
Union and for those countries that would like to join.
    We have traditionally and consistently supported European 
integration because we think there is a lot of benefit in it 
for us, and we are supporting this process of integration in 
the sense that we see that there can be, an expansion of the 
zone of stability, prosperity, and democracy to all of Europe.
    The Enlargement does offer the candidate countries the 
prospect, as they see it, of achieving the high level of 
economic prosperity and quality of life enjoyed in the 15 
current members.
    There is some immediate practical benefit in line for the 
potential members. The EU has put forward its own plans to 
spend about $82 billion between 2000 and 2006 in what some have 
called a new ``Marshall Plan'' for the countries of Central and 
Eastern Europe. This will amount to a series of assistance 
efforts designed to bring these economies in line with the rest 
of the European Union.
    Equally important, this process will encourage cooperation, 
reinforce democracy, and greatly reduce the possible damage 
from nationalistic and ethnic tensions. We, of course, are 
seeing and currently experiencing the costs of those kinds of 
tensions in the Balkans at present.
    In the end, if the current round of Enlargement is 
completed successfully, the European Union would comprise the 
world's largest single market, with over 500 million citizens, 
with free movement of goods, people, and services, and capital, 
and with an economy significantly larger than our own.
    Now, as is clear from that potential, our strategic 
economic and commercial interests are inextricably bound up in 
this process.
    The Enlargement will be a difficult process. Unlike NATO 
expansion or what we did with NAFTA, it involves a significant 
transfer of sovereignty from one nation to a central authority. 
It addresses a host of very sensitive legal, social, and 
economic issues, such as the movement of goods and people.
    It is somewhat analogous to us asking another nation to 
sign up to every provision of the Code of Federal Regulations, 
and there are, I have been told, something like 20,000 pages of 
what is called the Acquis Communitaire, the EU's laws and 
regulations, to which these new States would need to adhere in 
the process of Enlargement.
    Now any country in Europe can apply for EU membership. 
Thirteen have done so, so far: Bulgaria, Cyprus, Czech 
Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, 
Romania, Slovakia, Slovenia, and Turkey.
    There are three basic steps in this process. First, there 
has to be an opinion from the European Commission that the 
applicant is suitable to become a member; second, the Council 
of Ministers has to approve opening an accession negotiation, 
which then becomes a very long process; and, finally, at the 
end of that, there will be an accession treaty, which is 
ratified by the European Parliament and the parliaments of all 
the current member states.
    So, talks have begun now with all the applicant countries, 
aside from Turkey and Malta. They are in the middle of talks 
with 6 of the 13 countries. They call these the ``first wave 
countries.'' Those are Cyprus, the Czech Republic, Estonia, 
Hungary, Poland, and Slovenia. They have begun a pre-accession 
process with 5 others: Bulgaria, Latvia, Lithuania, Romania, 
and Slovakia. This just started last month.
    There has, as yet, been no date set for the completion of 
any of these negotiations and, indeed, the year 2003 is thought 
to be the earliest possible date for accession. There are a 
number of predictions among various observers that it will be 
later than that. But nothing firm has been set yet.
    On the whole, we estimate that Enlargement should be good 
for U.S. exports of goods and services to the countries of 
Eastern and Central Europe. As the prospect of EU membership 
and membership itself produces accelerated rates of economic 
growth, our investment in the region should position us to take 
advantage of this further market opening and growth.
    But it is interesting to look at the figures of trade and 
investment.
    In 1997, the European Union accounted for over 60 percent 
of the imports into the countries of Central and Eastern 
Europe. The United States accounted for 2 percent.
    We have made just over 20 percent of the foreign direct 
investment in Central Europe, while EU member States account 
for over 60 percent.
    Now if we compare that to our overall trade and investment 
relationship with the European Union, which is worth about $1 
trillion, you can see that we have a great deal invested in the 
overall relationship and a significant amount in Central 
Europe. There is great synergy in those two promises: a buoyant 
market for our own goods and services and opening that market 
to a wider area. Many of our companies are well ensconced in 
the European Union already.
    Nonetheless, we have been working very hard to ensure that 
our commercial and economic interests are not disadvantaged in 
this process. We are working with both the European Union and 
the member countries to prevent the erection of new barriers.
    There are, and have been some specific cases where 
significant tariff differentials do exist on American goods 
imported into the accession States, and we are working with the 
candidate countries on a case by case basis to deal with those 
problems and to insure that U.S. companies are not adversely 
affected by commercial decisions and, particularly, of course, 
by commercial decisions taken for political reasons.
    At the same time, I think we do need to recognize that the 
European Union means more than just market potential. It has 
the potential to be a very important partner in addressing 
common political, social, and security concerns around the 
world.
    I think if we reflect on a number of instances, we can see 
that where the United States and the European Union are able to 
act in concert toward common challenges, those challenges can 
be overcome and we can do a lot of good together.
    The converse also holds. Where we are not working together, 
we often run into stagnation and blockage in solving those 
problems.
    At present we work on a very wide range of issues, from 
bringing peace to the Balkans and promoting democracy in Africa 
and Southeast Asia, to assisting nuclear waste cleanup in the 
former Soviet Union. We are working to develop and deepen our 
cooperation.
    Many commentators have described the U.S.-EU relationship 
as a zero-sum game; that EU growth and prosperity, whether from 
the success of the Euro or the continuing Enlargement can only 
come at the expense of American power and prestige.
    Certainly, we are and will continue to be economic 
competitors. But with our combined strength, together we can 
also set a global agenda that supports democracy and open 
markets.
    Now, as you said at the opening of the hearing, Mr. 
Chairman, there is an important summit going on in Berlin among 
European Union leaders and it will be hard to predict exactly 
what comes out of that. But they are dealing with some of the 
largest issues on their agenda.
    As Enlargement of the EU requires that the candidate 
countries conform their laws and practices, it also requires 
significant changes and important decisions about resources on 
the part of the EU member states.
    As part of that preparation, the European Commission 
published what they call ``Agenda 2000.'' This proposed a 
number of structural, budgetary, and agricultural reforms that 
would be required to make Enlargement work and work well.
    There are a number of proposals in this reform that, 
indeed, would benefit the United States also. The largest step 
for the EU is reform of the Common Agricultural Policy [CAP].
    We very much hope that this reform will reduce the unfair 
competition faced by our farmers.
    As a whole, reduction in the subsidy and import funds would 
help rationalize the EU economy and, we believe, make it more 
prosperous. Almost half--that is, about $50 billion--of the 
EU's 1999 budget is earmarked for agricultural subsidies. The 
EU's budgetary reform, necessary to bring in new member states, 
would be impossible to undertake if they do not change the 
Common Agricultural Policy.
    The EU originally sought to lower EU commodity prices to 
world levels in order to export without subsidies and to bring 
EU internal prices closer to those in potential new member 
states.
    The agricultural ministers have reached a compromise which 
has been forwarded to the summit that is a step in the right 
direction. But, unfortunately, it falls short of the more 
ambitious goals that had been laid out.
    It is possible, but we do not think too likely, that the EU 
leaders will review that compromise and, indeed, make 
additional cuts. But, in any case, they will be grappling with 
this budgetary debate today.
    The CAP debate pits the net recipients of agricultural 
subsidies, led by France and Spain, against the net payers, led 
by Germany and the U.K. Even the reform that they came up with, 
which had a 20 percent cut in cereals, 20 percent in beef, and 
15 percent in dairy in 2 and 3 stages over a number of years, 
even these reforms have set off massive agricultural protests 
in France, Brussels, and in other places.
    It is our fear that these smaller cuts won't wean the 
agricultural sector in the EU away from its dependence on 
export subsidies. There will continue to be an impact on world 
prices and our trade interests from the CAP policy even after 
these reforms have gone into effect.
    Now I do not want to be mistaken. We are very happy that 
they are reforming CAP. But many of the proposed reforms just 
do not meet the minimum expectations that we had for the 
upcoming WTO negotiations.
    The United States has an ambitious agenda for the next WTO 
round in agriculture, including the elimination of export 
subsidies and the decoupling of domestic supports from 
production. The danger is that the EU will present Agenda 2000 
Common Agricultural Policy reform as a ``fait accompli'' in 
order to avoid substantive negotiations in the WTO on domestic 
support and export subsidies.
    I hope that danger does not turn into reality.
    Some speculate that the EU might be holding back in order 
to have something to concede in the next round and there may be 
further agricultural reforms possible early in the next 
century. But we will have to see.
    Now, one of the other big items in the Agenda 2000 that the 
leaders are grappling with today is to reduce the amount of 
funds available for direct regional transfers to those parts of 
the community which are economically disadvantaged. The 
European Union has set up a process in which the poorer areas 
get economic assistance from the wealthier areas.
    But, as you are going to bring in countries whose economic 
standard of living is lower, that means a number of those 
member States currently who are relatively below the mean will 
become above the mean. A number of these current recipients, 
especially Spain, Portugal, and Greece, are not happy with the 
prospect that they may have some of their subsidies, structural 
and cohesion funds, as they are called, taken away.
    Another area that they are looking at today is how to share 
more equitably the burden of the $100 billion annual budget. 
There are a number of member States, particularly Germany and 
the Netherlands, that complain that they pay too much to 
support the European Union relative to their partners. The 
others, of course, are trying to say no, no, you do just fine 
and we want to preserve the current balance.
    In sum, this is really an effort for the EU to get its 
house in order to be ready for Enlargement. We will be looking 
very carefully at what comes out today from the summit. But it 
is not at all clear that there will be a breakthrough in the 
very short term.
    Let me say a few words about institutional reform that has 
been going on.
    Historically, in every step to expand the European Union, 
there has also been an effort to deepen the Union--that means 
to make a closer integration of decisionmaking in one area or 
another.
    It is often to our eyes and ears pretty arcane stuff to try 
to figure out all the processes that are going on here. They 
are very complex, even to Europeans. They are not immediately 
transparent. But they can make a big difference in how 
decisions are made and, thus, how well we can achieve our 
common goals with the Europeans.
    In 1993, the Maastricht Treaty came into effect. That is 
the treaty that, in its most famous part, committed movement 
toward the Euro, which, of course, has now been completed. This 
was a major step forward in integration in Europe.
    Following the Maastricht Treaty, the EU leaders very 
quickly realized they needed to do some more, both to bring the 
Union closer to its citizens. There had been a lot of criticism 
in Europe for what they called a ``democratic deficit,'' 
meaning that decisions were made by bureaucrats very far away 
from the citizens. Europeans did not understand the bureaucrats 
and did not identify with them. The leaders of the European 
Union saw that and said we need to deal more clearly and in a 
better manner with the problems facing our citizens.
    This led to the Treaty of Amsterdam. The Treaty of 
Amsterdam is going to take a number of additional steps forward 
in the intergration process. One is bringing something called 
the Schengen Agreement into the EU. This has to do with police 
and judicial cooperation, cooperation in fighting against cross 
border crime.
    Another factor brought into the EU is now combatting 
discrimination on the basis of gender, race, religion, 
disability, age, ethnic origin, or sexual orientation. Also, 
for the first time the EU will have a clear role in employment 
policy and in the environment.
    Now there are a number of areas where these changes can 
make the EU a better partner for us. I think particularly about 
working together to fight international drug smuggling and to 
fight international crime. It is clear that on some other 
issues we will have some differences. In the environment, for 
example, we have had some significant differences about dealing 
with global climate change.
    One big area that you have mentioned, Mr. Chairman, that 
will also change a bit with the Amsterdam Treaty has to do with 
how the EU conducts its foreign policy.
    There will be a new High Representative for the Union's 
Common Foreign and Security Policy. The idea is to give the EU 
a greater visibility on the international scene, a greater 
ability to speak with one voice.
    An effective EU with an effective CFSP would be a power 
with shared values and strong Atlantic ties with which we could 
work to solve a number of the global problems and regional 
problems in other parts of the world.
    We do a pretty good job right now in coordinating with the 
European Union on long-term programmatic issues when we are 
dealing with providing development and technical assistance 
over a long period of time to Central Europe or to the former 
Soviet Union, or dealing with providing humanitarian assistance 
to areas in Africa or other places, where disaster has hit. 
There is a lot that we do well together.
    Even recently, in Central America the EU was one of the 
first to step forward with significant assistance in the 
aftermath of Hurricane Mitch.
    But where there have been problems is responding quickly to 
crises and agreeing on common EU positions where we can act 
together with them.
    So the EU hopes that these steps to have a new High 
Representative will help them be a bit more efficient and 
effective in this process.
    One of the other steps they also approved is that for the 
first time they will have something called a ``Common 
Strategy'' where the EU, as a whole, will agree on an approach 
to an area. The first areas they are looking at are Russia and 
the Ukraine. They are doing that right now.
    It remains to be seen how well these changes will work. But 
we look forward to working with the new High Representative and 
the European Union to see if we can improve our cooperation.
    Another area that is currently being discussed that is not 
in the Amsterdam Treaty but that is on the agenda, both in NATO 
and within the EU is the establishment of an operational 
defense identity for the European Union.
    We anticipate that the outlines of an ESDI, as it is called 
will be visible at the April 25 NATO Summit here in Washington 
and then also will be discussed at the EU's European Council 
meeting in Cologne in June. It will focus on enabling the 
European Union to better undertake its responsibilities in such 
areas as regional peacekeeping, humanitarian and rescue 
missions.
    An EU with an effectively functioning ESDI we believe would 
benefit the United States. It would provide us with a Europe 
that has the capabilities and the mechanism to permit it to act 
to deal with problems within Europe, even when we do not want 
to join in that effort.
    We will be monitoring these developments closely, 
especially to insure that the primacy of NATO is not undermined 
in the process.
    Beyond these reforms, the EU leaders have agreed that, 
before the next Enlargement round can be completed, there have 
to be a number of reforms in the EU's institutions and 
decisionmaking processes.
    For example, the European Union arrives at its decisions 
through consensus on many important issues, including external 
relations. This often results, we have seen, in a lowest common 
denominator policy when there are gaps in positions between the 
15 member states.
    The practical effect is that the EU has often been slow to 
respond in crises. While this procedure is difficult with 15 
members, once the European Union expands to 21 members, say, 
the process could be exceptionally slow and difficult.
    We expect EU institutional reform to address the three key 
issues which I just mentioned and others, about which I will 
not now go into detail: the number of commissioners, the weight 
of the votes that each of the member States has in the Council, 
and the extension of a qualified majority voting versus 
consensus decisionmaking on a wider range of policy issues.
    With the advent of the Amsterdam Treaty, we are witnessing 
a dramatic shift in power. I think that might be of interest to 
you. It will give the European Parliament, I think, an enhanced 
role in future decisionmaking.
    With the new treaty, the Parliament will enjoy the power of 
co-decision--that means it has to have a say in any decisions--
on more than two-thirds of all European Union legislation, 
compared to less than one-third today.
    The European Parliament's views will now matter much more 
than ever before and will need to be taken into account as we 
work with the Europeans. In this vein, I urge that you and your 
colleagues consider participation in a recently announced 
initiative by some of your colleagues on the House side and 
some members of the European Parliament to establish a Trans-
Atlantic Legislative Dialog. The goal is to provide an 
opportunity for direct exchange on bilateral issues of concern 
and to help resolve the irritants in relations before they 
become major problems.
    Now let me say just a little bit on the recent Commission 
crisis. Indeed, the group resignation of the Commission derived 
directly from an investigation and pressure engineered and 
required by the European Parliament. They requested a ``wise 
men's'' report on reports of fraud, nepotism, and 
mismanagement. It was in response to this that the Commission 
resigned.
    This was an unprecedented event. So, as you indicated, 
there was and is still a bit of uncertainty about how this will 
all be worked out.
    At the summit today, as you indicated, the member states 
have agreed that former Italian Prime Minister Prodi should be 
nominated as the next President of the Commission. He would 
need to be confirmed by the current Parliament. We believe that 
is the idea. Then, once confirmed by the Parliament, he would 
work with member states and others to designate a new 
Commission.
    The current Commission remains on duty until replaced. 
Throughout this period, we have been continuing our regular 
consultations with the EU on the full range of issues before 
us. Indeed, as you know, we have a number of difficult trade 
issues on the platter right now and we are continuing to work 
those both with the member states and with the Commission to 
try to resolve them.
    We know Mr. Prodi well from his period of prime 
ministership in Italy and we worked with him well then. If 
confirmed, we look forward to working with him in his new role 
as Commission President.
    At the same time, as you indicated, Mr. Chairman, the 
Commission itself has become the object of calls for 
significant internal reform. Subjects currently under 
consideration include tighter controls over spending, more 
transparent procedure for awarding contracts, stricter 
accountability standards, and disciplinary procedures for 
officials who are found to abuse those standards.
    There is a groundswell to bring the European Union back to 
its citizens and to address that democratic deficit that I 
mentioned earlier.
    We are working at this time to insure that our relations 
with the EU are strengthened by the outcome of these events. We 
will continue to use our influence and prestige to encourage 
the EU to become a more responsive, open, and reliable partner 
for the United States.
    Thank you.
    [The prepared statement of Mr. Wayne follows:]

                 Prepared Statement of E. Anthony Wayne
    Time and again this century the U.S. has been drawn into European 
conflict. Seared by the devastation of the Second World War, the 
founders of the European Union dedicated their nations to ending the 
scourge of war on the European continent. With U.S. help and 
encouragement, Western European nations started the European 
integration project that brought bitter rivals together and produced, 
first, the European Coal and Steel Community, then the European 
Community, now the European Union.
    The fifteen member EU is now about to undertake its largest single 
enlargement ever. It will be one of the most important challenges 
facing Europe as it moves into the 21st century. We support this 
historic opportunity to further the integration of the continent by 
peaceful means, extending a zone of stability, prosperity, and 
democracy to new members who have thrown off the yoke of Communism.
    Enlargement offers the candidate countries the prospect of 
achieving over time the high level of economic prosperity and quality 
of life enjoyed by the fifteen current EU members. The EU plans to 
spend $82 billion between 2000 and 2006 in a new ``Marshall Plan'' for 
the counties of Central and Eastern Europe to help bring their 
economies into line with the rest of the EU. Equally important, it will 
encourage cooperation, reinforce democracy and greatly reduce possible 
damage from nationalist and ethnic tension, which have been such a 
tragedy for the people of the former Yugoslavia. In the end, if the 
current round of enlargement is completed successfully, the European 
Union could comprise the world's largest single market with over 500 
million citizens with an economy significantly larger than our own.
    The United States has long recognized the importance of these goals 
and fostered them since we laid the foundations for international 
cooperation in Europe, which eventually blossomed into the European 
Union. Our political, strategic, economic, and commercial interests are 
inextricably bound up in this process.
    Enlargement will be a difficult process for the European Union. 
Unlike NATO expansion or NAFTA, it involves a significant transfer of 
sovereignty from one nation to a central authority. It addresses 
sensitive legal, social, and economic issues like the movement of 
people and goods. The task facing the EU in its enlargement would be 
analogous to the U.S. asking another nation to sign on to every 
provision of the Code of Federal Regulations.
    Any European country can apply for EU membership, and 13 countries 
have done so: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, 
Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia, and 
Turkey.
    The accession process requires (1) an opinion from the European 
Commission on the applicant's suitability to become a member, (2) the 
European Council of Ministers' agreement to open accession 
negotiations, and (3) ratification of the resulting accession treaty by 
the European Parliament and the parliaments of all the Member States 
and the candidate country.
    Accession talks have begun with all the applicant countries except 
Turkey and Malta. We differ from the Europeans in the way we view 
Turkey. We focus on the strategic advantages of including Turkey in the 
EU, while the Europeans see the huge practical, social and economic 
problems presented by the entry of such a populous and relatively 
underdeveloped nation to the community. However, both the Commission 
and the Council of Ministers have recently indicated, however, that 
they consider Turkey a ``candidate'' country.
    We also expect Malta to start its accession conference by the end 
of this year.
    The Commission is in the middle of negotiations with six of the 13 
applicants (the so-called first wave--Cyprus, the Czech Republic, 
Estonia, Hungary, Poland, and Slovenia). Bilateral screening of the 
legislation of five other candidates (Bulgaria, Latvia, Lithuania, 
Romania, and Slovakia) started last month, a necessary prerequisite for 
the opening of their accession negotiations by year's end.
    No end date has been set for the completion of any of the accession 
negotiations. The negotiations themselves will cover thousands of pages 
of EU legislation, which candidate states must adopt. The Commission 
has indicated that, by the end of this year, it would like to set 
provisional dates for accession as a way of promoting the Union's 
commitment to enlargement. The year 2003 is the likely ``earliest'' 
date for accession of the first of the candidates.
    On the whole, enlargement should be a boon for U.S. exports of 
goods and services to the countries of Eastern and Central Europe as 
the prospect of EU membership and membership itself produces 
accelerated rates of economic growth. Our investment in the region, 
together with our very good bilateral relations with each of these 
countries, should position us to take advantage of this future economic 
upswing. In 1997, the European Union accounted for over 60% of imports 
into the countries of Central and Eastern Europe while the U.S. 
accounted for 2%. We had made just over 20% of the Foreign Direct 
Investment, while EU member states accounted for over 60%. Our trade 
and investment relationship with the European Union is worth more than 
$1 trillion. We look to achieve in the East what we now have with the 
West: a buoyant market open to U.S. goods and services.
    Nonetheless, we will ensure that our commercial and economic 
interests are not disadvantaged. When countries accede to the EU, it 
will liberalize trade to us in most areas. We are working with the 
European Union and the candidate states to prevent the erection of new 
barriers to trade. Where none now exists, let none be raised. As 
Eastern European candidate states adopt the EU's Common External 
Tariff, most tariff levels will drop in the countries of Central and 
Eastern Europe. In specific cases where tariff differentials do exist 
on American goods imported in to accession states, we are working with 
the candidate countries to find suitable remedies. We are monitoring 
developments closely to ensure that U.S. companies are not adversely 
affected by commercial decisions made for political reasons.
    At the same time, we must recognize that an enlarged European Union 
means more than market potential. It will be our greatest partner in 
addressing common political, social, and security concerns in the 
world. The European Union is increasingly ``the other power.'' 
Repeatedly, we have shown that, where the United States and the 
European Union act in concert toward common challenges, those 
challenges are overcome. The addition to the EU of countries--such as 
Poland, Hungary, the Czech Republic and others with whom the United 
States has worked closely and productively in their transition from 
Communism to democracy--should reinforce our efforts to create a 
productive, forward-looking partnership with the European Union.
    The United States and the European Union are working side-by-side 
all over the globe to address problems that affect hundreds of millions 
of ordinary people. From bringing peace to the Balkans, to promoting 
democracy in areas as far flung as Africa and Southeast Asia, to 
assisting with nuclear waste clean-up in the former Soviet Union, the 
U.S. and the EU are setting new levels of cooperation.
    We will therefore continue to work with the European Union, both 
during and after enlargement, on problems around the world. We will 
especially strive to make sure that Russia and the other states of the 
former Soviet Union see the enlargement of the European Union as a real 
opportunity from which they too can prosper, rather than an obstacle.
    We do not view the U.S.-EU relationship as a zero-sum game. Some 
commentators seem to believe that EU growth and prosperity, whether 
from the success of the euro or the continuing enlargement, can only 
come at the expense of American power and prestige. Certainly, we will 
be economic competitors, but with our combined strength, together, we 
will be able to set a global agenda that supports democracy and open 
markets. Where we cannot act together, we risk stalemate.
                              agenda 2000
    Much of what I say here may be overtaken by events today and 
tomorrow in Berlin. The Special EU Summit there is hammering out 
compromises on budgetary reform. We cannot predict what tradeoffs will 
be made, but we can outline the issues.
    Enlargement of the European Union requires the candidate countries 
to conform their laws and practices to European Union norms. But it 
also requires preparation on the part of the EU member states.
    As part of that preparation, in July 1997, the Commission published 
``Agenda 2000,'' its proposals for structural, budget, and agricultural 
reforms required for enlargement of the Union. We can benefit from EU 
reform.
    The largest step for the EU is reform of the Common Agricultural 
Policy (CAP). We hope that reform will reduce unfair competition faced 
by our farmers. As a whole, reduction in subsidy and support funds will 
rationalize the EU economy, making it more prosperous. Almost half, 
$50.5 billion, of the EU's 1999 budget is earmarked for agricultural 
subsidies, and the EU's budgetary reform will be impossible without 
reform of the CAP. The EU originally sought to lower EU commodity 
prices to world levels in order to export without subsidies and to 
bring EU internal prices closer to those in potential new member 
states.
    The member-state Agriculture Ministers have agreed on reform of the 
Common Agricultural Policy that right now unfortunately falls short of 
the goal. It exceeds the earlier $43.7 billion target spending level by 
$6.8 billion. It is possible but not likely that, when EU leaders 
review the compromise agreement this week at Berlin, they will propose 
additional spending cuts.
    The CAP debate has pitted net recipients of agricultural subsidies, 
led by France and Spain, against the net payers led by Germany and the 
UK. The Agriculture Ministers' compromise calls for support price cuts 
of 20% for cereals over two years, 20% for beef over two years, and 15% 
for dairy products. Farmers would receive compensation for lost income 
in the form of direct income supports rather than price supports.
    Even these cuts are engendering farmers' protests, yet the small 
cuts are unlikely to wean European agriculture from its dependence on 
export subsidies. The CAP will continue to have an impact on world 
prices and our trade interests. Further cuts will probably be necessary 
before new Member States could join in the Common Agriculture Policy.We 
are glad the EU is reforming the CAP. There is a long road to travel to 
bring the EU into a more open and efficient world agricultural market. 
Many of the proposed compromise agricultural reforms do not currently 
meet our minimum expectations for the upcoming WTO negotiations. The 
United States has an ambitious agenda for the next round of WTO 
agriculture negotiations, including the elimination of export subsidies 
and de-coupling domestic supports from production. The danger is that 
the EU will present Agenda 2000 Common Agriculture Policy reform as a 
``fait accompli'' in an effort to avoid substantive negotiations in the 
WTO on domestic support and export subsidies. Others believe the EU is 
holding back so that it has something to concede in the next round.
    In a debate that largely pits the less developed south, against the 
wealthier north, Agenda 2000 reform also seeks to reduce the amount of 
funds available for direct regional transfers to aid those parts of the 
Community which are economically disadvantaged. Under a proposed 
compromise, eligibility for these monies would be tightened to areas 
with greatest social and economic welfare needs. This is obviously 
unpopular with current recipients, especially Spain, Portugal, and 
Greece.
    Agenda 2000 also seeks to achieve a more equitable sharing of 
member states' financing of the EU's $100 billion annual budget. Some 
member states like Germany and The Netherlands have complained they pay 
too much to support the European Union relative to their partners. The 
proposed Agenda 2000 agreement seeks to redress this imbalance by 
changing the method by which the Union raises its funds. Also on the 
table is the United Kingdom's $3 billion annual rebate. Won by Prime 
Minister Thatcher in 1984, the rebate seeks to rationalize the UK's 
relatively large contribution with its relatively small return from 
Brussels.
    The EU conceived Agenda 2000 as a major effort to put its financial 
house in order in anticipation of enlargement. It is important to note 
that, in an effort to safeguard the enlargement process, EU leaders 
have agreed to exclude from budget-cutting consideration the projected 
expenditures linked to enlargement. Despite this carve-out for 
enlargement, it is not clear that any breakthrough on the EU budget 
will be forthcoming in the short term.
                          institutional reform
    Historically, every enlargement of the European Union to include 
new member states has been preceded by the member states' deepening the 
level of internal cooperation. This ``deepening'' usually includes 
fundamental reforms that give EU institutions a greater say over 
actions of member states and change how the EU legislates and makes 
decisions. The current enlargement process appears to be no different.
    To American eyes and ears, these innovations often seem arcane, 
bureaucratic, and complex. Nevertheless, they do serve to permit member 
states to pool their sovereignty while protecting their people's 
interests. We have to learn to work with the new institutions, and 
insure they help us further our agenda.
    With the entry into force of the Maastricht Treaty in 1993, the 
leaders of the European Union committed themselves to a most ambitious 
step toward integration, the launch of the euro. As of January 1, 1999, 
for the first time, participating EU member states have a common 
monetary policy, conducted by a European Central Bank. This important 
project is considered an important stimulus for still further 
integration of the European Union.
    In the next major step in the integration process, and to prepare 
the European Union for new member states and bring the European Union 
closer to its citizens, EU leaders negotiated and agreed upon the 
Treaty of Amsterdam in 1997.
    Expected to enter into force this spring, the Amsterdam Treaty will 
incorporate the ``Schengen'' accords on the abolition of border 
controls, giving EU institutions more say over the control of the 
European Union's external borders, including immigration and asylum 
policy. The new Treaty also increases EU attention to police and 
judicial cooperation and the fight against crime. It commits the 
European Union to combat discrimination on the basis of gender, race, 
religion, disability, age, ethnic origin, and sexual orientation. For 
the first time, it also places employment and environment at the center 
of EU policy concerns.
    On one hand, these changes should result in a European Union that 
is a better partner for the U.S. as we confront the global challenges 
before us, particularly international drug trade, and transborder 
crime. Nonetheless, on issues such as the environment, reaching 
agreement with the EU could well become more difficult.
    The Amsterdam Treaty will also result in major changes in the way 
the European Union conducts its foreign policy. A new ``High 
Representative'' for the Union's Common Foreign and Security Policy 
(CFSP) will give the EU greater visibility on the international scene. 
An EU with an effective CFSP would be a power with shared values, and 
strong transatlantic ties with which we could work globally to solve 
problems. Now we do well coordinating with the EU on long term 
programmatic issues. A better-integrated CFSP would enable the EU to 
act effectively in crises as well. We anticipate that the new ``Special 
Planning and Early Warning Unit'' will permit greater coordination of 
U.S. and EU policies. In the near future, more foreign policy decisions 
will be taken by qualified majority voting instead of unanimity. A new 
type of decision--the ``common strategy''--will be introduced to 
establish general policy guidelines and give greater coherence to EU 
foreign policy. The EU has decided to focus initially on a common 
strategy with respect to Russia.
    Our hope is that with these changes the European Union will become 
an even stronger, more responsible foreign policy partner after the 
entry into force of the Amsterdam Treaty.
    Another critical reform currently being discussed that may affect 
U.S.-EU cooperation is the establishment of an operational defense 
identity for the European Union. We anticipate that the outlines of a 
fresh approach to European Security and Defense Identity (ESDI) will be 
visible at the April 25 NATO summit here in Washington and the June 3-4 
European Council meeting in Cologne. It will focus on enabling the 
Union better to undertake its responsibilities in regional 
peacekeeping, humanitarian and rescue missions, and other so-called 
``Petersberg tasks.'' An effective EU with a functioning ESDI would 
benefit the U.S. It would provide us with a Europe that has the 
capabilities and the mechanisms to act when NATO chooses not to. We 
will monitor this development closely to ensure that the primacy of 
NATO is not undermined. We have emphasized the three ``D's'' in 
discussing ESDI with our European friends: no duplication of NATO 
structures, no de-linking from NATO's core missions, and no 
discrimination against non-EU members of NATO.
    Beyond these reforms, European Union leaders have agreed that 
before this next enlargement round is completed, there must be further 
reform of the Union's institutions and decision-making processes. For 
example, the European Council arrives at decisions through consensus on 
many important issues, including external relations. With members 
representing nations as disparate as Sweden and Greece, this often 
leads to a lowest common denominator policy. The practical effect is 
that the EU is slow to respond in a crisis, and while this procedure is 
difficult with fifteen members, once the European Union expands to 21 
members, the process could grind to a halt.
    We expect EU institutional reform to address three key issues: the 
number of Commissioners, the weight of votes for each member state in 
the Council, and the extension of qualified majority voting to more 
policy areas.
    Currently there are 20 Commissioners, with the five largest 
countries each having two. EU leaders must decide how this formula can 
be revised to ensure that a larger European Union can still operate 
efficiently. Member states have indicated that a larger Commission 
would be too unwieldy and have been trying to design a formula that 
would accommodate new members without increasing the number of 
Commissioners.
    The member states must also re-assess the weighting of their 
relative voting power in the Council at the same time; they may also 
extend ``qualified majority voting'' to most of the policy and 
legislative decisions they take. This would mean less reliance on 
achieving unanimity, thus potentially increasing the speed and 
efficiency of the decision-making process.
    With the advent of the Amsterdam Treaty, we are witnessing a 
dramatic shift in power which will give the European Parliament a 
greatly enhanced role in future EU decision making.
    Under the Treaty, the European Parliament will enjoy the power of 
co-decision with the Council of Ministers on more than two-thirds of 
all EU legislation, compared with less than one-third today.The 
European Parliament's views will now matter much more than ever before. 
We will need to take this into account as we work with the Europeans on 
our trade, agricultural, environmental and other interests. In this 
vein, I strongly encourage you to participate in the recently 
established Transatlantic Legislative Dialogue, which will provide the 
opportunity for direct exchange on bilateral issues of concern and will 
help us resolve irritants in our relations before they become major 
problems.
                           commission crisis
    In response to a highly critical wise men's report tasked by 
Parliament on fraud, nepotism, and mismanagement in the European 
Commission, the entire Commission resigned on March 16. This is an 
unprecedented event in the history of the European Union, and we are in 
uncharted territory.
    Member states, especially the German presidency, have taken on the 
resolution of the Commission crisis, and EU leaders at the Summit now 
going on in Berlin have chosen former Italian Prime Minister Prodi as 
the next Commission President. Once confirmed by the current 
Parliament, Prodi will work with the member states to select his 
Commission. The EU is aiming to have that new Commission confirmed by 
the newly elected Parliament in July. Commission legal experts tell us 
that under the Community treaties, the Commissioners will remain on 
duty until replaced. Throughout this period, we have been continuing 
our regular consultations with the EU on the full range of issues 
before us. We realize progress could become more difficult. We know Mr. 
Prodi and have worked well with him before. It confirmed we look 
forward to working with him in his new role as Commission President.
    In many ways, the resignation of the Commission reflects the major 
institutional change the Union is undergoing. A change that will propel 
further change. The Commission itself has become the object of calls 
for significant internal reform. Subjects currently under consideration 
include tighter controls over spending, more transparent procedures for 
awarding contracts, stricter accountability standards, and disciplinary 
procedures for Commission officials.
    There is a groundswell to bring the European Union back to its 
citizens, to address the EU's ``democratic deficit'' effectively. We 
are working to ensure that our relations with the European Union are 
strengthened by the outcome of these events. We will continue to use 
our influence and prestige to encourage the European Union to become a 
more responsive, open, and reliable partner for the United States.

    Senator Smith. Thank you, Mr. Wayne. That was excellent 
testimony.
    I wonder if you can comment on a headline. As a preface to 
that, I would say I have always been of a mind that, as 
Americans, we should support Europe in however their self-
determination takes them. My belief has always been that that 
will raise the European vote and, therefore, improve life for 
them and us as a trading partner and as an ally.
    But I notice this headline: ``The New Europe: Menace or 
Farce.'' This is going to be read by a lot of people in this 
town.
    I wonder if you think that either ``menace'' or ``farce'' 
characterizes the European Union accurately. How would you 
characterize it?
    Mr. Wayne. Indeed, Mr. Chairman, I would not choose those 
words to characterize their relationship.
    Senator Smith. I didn't think you would.
    Mr. Wayne. I think what indeed is clear is, first, that we 
have an extremely important economic relationship with the 
European Union. As I said, it is worth $1 trillion, and there 
are at least 6 million people--3 million on each side of the 
Atlantic--directly employed by companies originating on the 
other side of the Atlantic. This does not include all of the 
secondary employment that comes from that.
    Senator Smith. The thesis of one of the articles is, 
essentially, that this is being done to decouple the United 
States and Europe, to put up trade barriers and, seeing it as a 
zero-sum game, that this is a way to make America lose so that 
Europe can win.
    Do you think they see it that way?
    Mr. Wayne. No, I don't think so.
    I mean, of course, on both sides of the Atlantic there is a 
wide range of opinion, and I cannot speak for every opinion. 
But no, I don't think that is the driving force at all or even 
an important consideration in the majority on the European 
side.
    In fact, we have undertaken with the European Union and 
with the blessing of all the member States a range of 
initiatives, indeed to deepen the integration across the 
Atlantic and to reduce the additional barriers.
    Last May, in London the President and the leaders of the 
European Union agreed to launch a new process called the 
``Transatlantic Economic Partnership.'' Then we worked until 
December, when we had a concrete action plan which we put 
forward. This talked about 10 very important areas to reduce 
regulatory barriers while maintaining high standards of health, 
safety, and protection of consumers; indeed, to allow freer 
exchange back and forth across the Atlantic.
    One of the important points to remember is that, with 
Europe, we can take these kinds of steps and feel much more 
secure that we are talking about the same kind of level of 
standards on both sides to protect our citizens.
    So, there is a whole active program going on to deal with 
further taking down of barriers, to bring us closer together.
    In fact, if you look at some of the high profile disputes 
that we have been having, some of that is a direct result of 
the degree of integration of our two economies right now, which 
has been increasing under what is called ``globalization,'' 
most broadly, in many commentaries. The degree of integration 
across the Atlantic has increased.
    So when on one side or the other side of the Atlantic 
somebody undertakes what they may consider in their head a 
regulatory reform only affecting their side, there are 
immediate shock waves on the other side of the Atlantic. This 
is a problem that we have to deal with. But it really is a 
measure of the health of the economic relationship that we 
have.
    Just to answer on the other, menace, part of this, 
certainly as we look at the relationship, we see a great 
potential for cooperation in dealing with problems that neither 
of us can deal with by ourselves effectively.
    When we can combine the assistance resources and the 
diplomatic resources of Europe and the United States to deal 
with a regional problem somewhere else, it is much more likely 
that we can get a better outcome working together than we could 
working alone.
    So we see that potential and, try to work with it.
    Senator Smith. I was in Poland not too long ago. I am 
generalizing now, but, essentially, what they told me they were 
being told in their accession talks is raise your taxes, accept 
our regulations and you may get in but you still won't sell us 
your potatoes.
    Mr. Wayne. Right.
    Senator Smith. I guess my comment is why would a country 
like Poland, whose economy is coming out of communism and doing 
very well, or a country like Estonia, that seems to be adopting 
a Hong Kong model, want to get into the European Union, which 
are essentially socialist democracies--heavy statist, welfare 
systems? Why would they want to be part of that if they are 
actually trying to improve their standard of living?
    Mr. Wayne. It is because the standard of living at the EU 
is so much higher than theirs. They are growing at wonderful 
rates and, as you said, at higher rates than any in the EU.
    Senator Smith. Will they retard their rates of growth if 
they accept the high taxes and regulatory burdens of the EU? 
That is up to them, I know.
    Mr. Wayne. My guess--I am not speaking as a trained 
economist here--my guess is no, that they are going to continue 
growing because they have a dynamic space to grow in right now. 
They are not at the more mature level economically of the 
European Union.
    So I think they will probably continue to grow well.
    Senator Smith. What is your sense of what Britain will do? 
Will they get fully integrated or will they just stand apart or 
take a hybrid approach to it?
    Mr. Wayne. I think the U.K. has gradually moved closer and 
closer to the European Union. The big next challenge is whether 
they will join the Euro.
    It is clear that there are still divided opinions in the 
U.K. about that. The government is certainly preparing the 
ground for a decision to be made to do this.
    There is strong sentiment in the business community 
favoring further integration. But there is strong sentiment 
elsewhere in society the other way around. I just really cannot 
predict right now where in 2 or 3 years opinion will be in the 
U.K.
    But it is very interesting that the U.K. has taken the lead 
in proposing internal reforms to the Commission in the midst of 
this current crisis. They have really come in, and Blair has 
said we need a ``root and branch'' reform of how things are 
done here.
    So there is no pulling back from being involved in European 
Union affairs. And, in fact, part of the new reflection on the 
European Security and Defense Initiative was initiated by Tony 
Blair.
    Senator Smith. Can you briefly comment on Norway and Turkey 
as it relates to the European Union? I, at least, would regard 
them as European. Certainly there is no question about Norway. 
But they are not a part of this and they are not a part of the 
foreign policy apparatus, apparently.
    Mr. Wayne. That is correct.
    Norway did undertake negotiations to join the European 
Union with the last wave of entrants, with Sweden, Finland, and 
Austria. They then went to the voters and the voters said ``no, 
we don't want to join.''
    This had to do with the opinion of the Norwegian people. 
They saw more benefit in staying out than in coming in and, in 
a sense, overruled their officials and the government at that 
time, which had wanted to come in.
    Now they still have a very, very close economic 
relationship. They have negotiated something that is almost the 
same as full membership in a number of economic areas. But they 
do not sit at the table with the other EU leaders when they 
make a number of the big decisions.
    On the part of Turkey, I think it is fair to say that there 
are divided opinions in the European Union about Turkey, about 
when and if Turkey will become a member, though the European 
Union of late has been calling Turkey a ``candidate country.'' 
There have been a number of proposals put forward by the 
Commission to deepen the Turkey-EU relationship.
    We think that, there is a shared perspective, that Turkey 
is very important to Europe, that there should be a closer 
relationship between Turkey and Europe. It is not a surprise 
that we have been perhaps more enthusiastic supporters of 
Turkey moving closer to the EU than certain members of the EU. 
This will remain, I think, an issue that will have to be worked 
on by the European Union.
    But I think there is general agreement that that 
relationship is a very important one.
    Senator Smith. Thank you very much, Mr. Wayne. I appreciate 
your testimony and your answers to questions.
    We will now call up Dr. Jeffrey Gedmin from the American 
Enterprise Institute and the New Atlantic Initiative; Dr. Lily 
Gardner Feldman from Georgetown University; and Mr. Peter 
Rodman of The Nixon Center.
    If you would just allow me a moment, I want to find out if 
there is any vote pending immediately.
    [Pause]
    Senator Smith. There is a vote scheduled at 3. Let's start 
the testimony and I will quickly go over and vote and will come 
right back.
    Why don't we start with Mr. Gedmin.

  STATEMENT OF DR. JEFFREY GEDMIN, RESIDENT SCHOLAR, AMERICAN 
ENTERPRISE INSTITUTE; AND EXECUTIVE DIRECTOR, THE NEW ATLANTIC 
                   INITIATIVE, WASHINGTON, DC

    Dr. Gedmin. Thank you, Senator, Mr. Chairman, for the 
opportunity and invitation to testify today. I have prepared a 
statement which I submitted for the record. But I am happy to 
summarize my statement before answering any questions you might 
have.
    First, Senator, I should mention that you did hold up the 
weekly issue of The Weekly Standard. You asked Mr. Wayne if he 
agreed with the language, ``Europe: Menace or Farce.'' I am the 
author of one of those two articles and I must say I did not 
choose that language, either.
    I am the ``menace'' guy and I would not argue that Europe 
is a menace--not yet. At any rate, I do want to go on record as 
saying I still adore the Europeans. I am just deeply skeptical 
about some of what they are doing.
    Let me make brief remarks about two areas that you have 
already discussed with Mr. Wayne today. One is the European 
Union's enlargement and second is what the European Union wants 
to do with a deeply integrated Europe that perhaps one day 
adopts a common foreign and security policy.
    First of all, on the subject of enlargement, I think it is 
important to remember that in 1989-1990, our West European 
allies faced a strategic choice in the midst of stunning 
changes--the fall of the Berlin Wall, German unification, 
dissolution of the Soviet Union. The European Union had a 
chance either to concentrate on widening the EU and including 
the new democracies of Central and Eastern Europe or deepening 
and concentrating, then, on internal consolidation of power.
    In my view, it would have been a better choice to 
concentrate on widening, rather than deepening.
    You, Senator, have raised very interesting questions as to 
why our friends in Central and Eastern Europe wish to join this 
institution. That is an interesting conversation in and of 
itself, genuinely. But the fact is, as you well know, they do--
desperately and intensely. They do. It is the only game in 
town.
    I think that the West Europeans could have served 
continental and transatlantic interests more effectively had 
they been a little more open and inclusive institutionally.
    Broadly speaking, I think there are three reasons why, over 
the last decade, West Europeans have put their eggs in the 
basket of deepening.
    The first has to do with Helmut Kohl's argument. His 
thesis, as you know and as you will recall, is and was if we 
don't internally unify Western Europe, if we do not create 
economic and political unity--and, remember, they were talking 
about West European unity, and that is unity of the EU members. 
You rightly pointed out that there are other European countries 
that do not belong to the European Union, including Norway and 
Western Europe. Kohl's argument was that the opposite 
alternative would lead to new dissolution, maligned 
nationalism, and lethal fragmentation in Europe.
    I must tell you that I have never bought this argument, as 
much respect as I have for Helmut Kohl. It strikes me as an 
argument that maintains that we must stop ourselves before we 
kill again.
    It has always struck me that if we have so much confidence 
in our democratic allies in Europe and in Germany, they should 
have a little more confidence in themselves.
    The second reason why the European Union chose to focus on 
internal deepening rather than enlargement in my view has to do 
with an argument advanced, including by people like Germany's 
current Chancellor, Gerhard Schroeder, that deepening of the 
European Union is a key to modernization. This is the principal 
means by which we can become competitive in the global economy.
    Well, here, too, I must tell you that I found this rather 
puzzling. I just looked at the statements of two leading 
politicians in Europe today. Tony Blair, for example, contends 
that the adoption of the Euro, for instance, will make the EU 
``more efficient and less subsidized, more open and less 
heavily regulated.''
    Across the Channel, though, French Finance Minister, 
Dominique Strauss-Kahn, calls the Euro ``a tool in the service 
of a better society, of a better social model; that is to say 
the European model, based on greater solidarity than in the 
United States.''
    I read this as code words for shielding inefficiencies and 
protecting against what Strauss-Kahn calls ``the free market 
illusion.''
    The third, and I think the most interesting and compelling 
reason why West Europeans have concentrated on deepening 
integration rather than enlargement in the last decade, is 
rather actually appealing, seductive, and most problematic for 
American policy. This is that a stronger, more self-reliant 
European Union will not only be more capable of tending to 
problems and security in its own neighborhood, it will also be 
a more effective partner of the United States both within the 
transatlantic community and around the world.
    Let me conclude, Mr. Chairman, by just giving you three 
reasons why I am skeptical of this overall thesis. Of course, 
it has been said today and it bears repeating that we, as the 
United States, for decades have supported European integration 
and over the last decade we have supported the West Europeans 
in their ambition for a Common Foreign and Security Policy and 
also the so-called European Security and Defense Identify 
which, as we have discussed today, would mean the Europeans can 
act on their own without American participation but relying on 
NATO assets.
    Now, briefly, I have three points of skepticism.
    The first has to do with the general emerging political 
climate in the European Union itself, which I believe has 
tendencies, not dominant today, but tendencies which, at their 
best, are anti-hegemonic in sentiment and, at their worst, 
outright anti-American.
    Of course, the French are notorious and to cite our French 
friends is probably a little unfair because it is so 
predictable. The French Interior Minister keeps telling us we 
have our interest, the Americans have theirs. And, doubtless, 
we don't have to go through all the mischief vis-a-vis Russia, 
Serbia, or Iraq that the French have put on our table.
    But it is worth noting that leading French politicians 
quite explicitly say that the ``raison d'etre'' of the new 
European Union should be to represent European interests in the 
world, not transAtlantic interests, certainly not American 
ones, and that the European Union should be ready to play the 
role of counterweight vis-a-vis the United States, either 
directly or outflanking us in international institutions.
    Now before one says well, that is the French, that is 
predictable, and that is part of the love/hate relationship, I 
would hasten to add that our friends the Germans, too, become 
now, in my view, increasingly prickly about American leadership 
or what they would call American hegemony.
    I took careful note of Helmut Schmidt's comments recently. 
The former German Chancellor said that the arrival of the Euro 
``means that the United States can no longer call all the shots 
in the world.''
    I take note of German commentators who argue that with 
European unity, Europe will no longer ``be seconding U.S. 
global policies.''
    Finally, I make the observation that it is not only the 
French but other West Europeans and the Germans, too, who refer 
now to America as the rogue super power and focus great 
attention on the United Nations; this is to say the U.N.'s 
Security Council should become the sole, indisputable legal 
basis for the use of force in international relations.
    Now there is much talk about the need and the desire to 
uphold international law. But in my view, this is a desire 
amongst some of our allies to check American power and room for 
maneuver.
    Before leaving this point, let me just mention that I do 
believe there is much we can do in the United States to alter 
the style and substance of our leadership. The rules of the 
game have changed and allies are tired of being junior 
partners, and understandably so. But I also worry at times that 
the old, maligned nationalism of the Nation-State that Helmut 
Kohl was so committed to getting rid of could become replaced 
by a new, maligned nationalism of a European Super State.
    The second point I want to mention has to do with burden 
sharing and our desire and the West European desire to become 
self-reliant and to take care of security in its back yard.
    Of course, we have had, already, two instances in this 
decade--Bosnia and Kosovo--and the results have not been very 
good. But I would like to point out that in my view, I think we 
Americans should not underestimate the structural and 
historical obstacles to the West Europeans doing what we want 
them to do.
    I mention two points. First of all, the EU, with all its 
desire for institutional fixes, still hasn't and will not have 
for any foreseeable future a national leader. I think Bismarck 
had something when he said that every alliance needs a horse 
and a rider.
    I think in crisis people need leaders and I think that the 
European formula institutionally may be a formula for common 
foreign and security policy, but the common part may often be 
for paralysis, inaction, and lowest common denominator 
politics.
    The other point I want to make is the American argument 
continually and persistently that the West European friends 
need to spend more on defense. In fact, I think that is true. 
But I don't think that is a panacea.
    I think that we have to remember that one of the reasons 
why we at times have been so successful--that is, Americans and 
American leadership--is that we have successfully combined 
military power, military power with the unwillingness, the 
determination not to appease dangerous tyrants. And for reasons 
of history, culture, and temperament, I don't think our West 
European friends share the same lessons in the same way.
    The last and final point, Senator, that I would like to 
make has to do with the EU as a partner in helping America 
defend a liberal world order--something that I am for but that 
I think we are far from, in fact.
    First of all, I point out that it is important to remember 
when we are nostalgic about the days, the good old days, of the 
cold war, when, as we are told frequently, things were 
conceptually so much easier, that when it came to our allies, 
things were never easy, as you know. Whether it was coping or 
contending with crises like martial law in Poland, the Soviet 
invasion of Afghanistan, battling Marxist insurgencies in 
Central America, getting the European Community to help us 
react when Americans were taken hostage in Tehran in 1979, in 
general, the West European friends reacted with temporizing, 
reacted with equivocation, and were often reluctant to go 
along.
    Today, the scene has changed dramatically. West Europeans 
without the cold war feel less dependent on the United States. 
Generational change in underway and, as we are discussing 
today, they are busy developing European institutions with 
minimal American participation and consultation.
    I think we have to be very sober in our expectations. Take 
one example--how difficult it has been for us: bipartisan 
consensus, as it has existed at times in the United States, to 
convince our West European friends of the danger of the Iranian 
threat.
    I should tell you that I just read in a German newspaper 
last week an interview with German Chancellor Gerhard 
Schroeder, who just announces unilaterally to his interview 
partner that ``it is time now to improve the already 
traditionally good relations between Germany and Iran.''
    Finally, Senator, in closing let me just mention that by no 
means in my view, by no means should this be an argument for 
disengagement from Europe. I think we need allies. Some of the 
best allies we have are in Europe, and the allies still need 
us.
    I think it is terribly important, when we are working on 
these problems, to realize that we do want more burden-sharing, 
but I believe that we want to be a super power. That has costs 
but also benefits.
    I believe that it makes sense to support the choices our 
European colleagues make. They are sovereign, democratic 
Nation-States. But I think of what Deputy Secretary of State 
Strobe Talbott says: for this process we have ``hopes and 
apprehensions.''
    I would like to see us emphasize much more the 
apprehensions, openly and candidly.
    Finally, when our West European friends tell us that most 
important to their part is the project of European integration 
and deepening of the European Union, we should challenge them 
to transfer at least some of this energy to deepening of the 
Atlantic community and NATO.
    My overall fear is this. In the future, I think Americans 
will be increasingly unwilling to support a NATO that looks 
backward. However, Europeans today I think are far from taking 
this project in the future and looking forward.
    Thank you, Senator.
    [The prepared statement of Dr. Gedmin follows:]

                Prepared Statement of Dr. Jeffrey Gedmin

    Mr. Chairman and Members of the Committee, I want to thank you very 
much for the invitation to appear before you today to testify on 
developments in Europe and within the European Union specifically. With 
NATO poised for airstrikes against Serbia, a mission designed to stave 
off a humanitarian catastrophe in Kosovo, I welcome the opportunity for 
this conversation with you about issues that are not unrelated. In my 
view they are issues of strategic concern which relate directly to the 
long term health of Atlantic Community.
       1. west europe's strategic choice: deepening over widening
    After the stunning changes in Europe between 1989-91--including the 
fall of the Berlin Wall, Germany's unification, and the dissolution of 
the Soviet Union--West European leaders were faced with a strategic 
choice: to widen the European Community to include the new democracies 
of central and eastern Europe and to help consolidate the gains of Cold 
War victory; or to concentrate on ``deepening'' the European Community 
by promoting greater West European internal unity through economic and 
political consolidation and harmonization. At the time, West European 
leaders were fond of saying that both processes--widening and 
deepening--were compatible, complementary, and by no means mutually 
exclusive.
    A decade later we know differently. Deepening is on track. Eleven 
of the fifteen members of the European Union adopted a single currency 
on January 1 of this year. And monetary union is now to be followed by 
deepening economic and political union, features of which include the 
West European ambition for a European Security and Defense Identity 
(ESDI) and ultimately a Common Foreign and Security Policy (CFSP). 
Meanwhile, ten years after the fall of the Berlin Wall, not a single 
nation from the old Soviet bloc has been admitted to the European 
Union; nor is any single nation on the verge of becoming a member of 
the EU--not this year, not next, not the year after. In my view, 
American interests, Western interests, and European interests would 
have been better served had the European Union acted over the last 
decade as openly and inclusively as its sister institution NATO has 
acted.
    What explains this pattern of behavior, what one might describe as 
a form of West European isolationism? There have been primarily three 
different arguments driving the EU's inward looking, self-absorbed 
behavior of recent years. First, there was the argument advanced by 
German Chancellor Helmut Kohl. Germany is the country in Western Europe 
which most closely shares the American interest in seeing to it that 
the doors to Western institutions of consultation and cooperation are 
open to the young democracies of the east. And Germany has been the 
leader among West European countries in providing by far the largest 
amount of assistance to central and eastern Europe and the Newly 
Independent States of the former Soviet Union since the end of the Cold 
War.
    At the same time, however, while in power Helmut Kohl's government 
remained principally preoccupied with deepening of the EU. 
``Unification'' as a cure all to Europe's ills has been an idea of 
statesmen, princes, and poets on the continent for centuries. And in 
step with the historical ethos--and, one should add, acutely conscious 
of Germany's own tragic history in this century--Kohl devoutly believed 
that economic and political unity would serve as antidote to Europe's 
darker inclinations. Simply put, unity would once and for all, in 
Kohl's view, lock in cooperation and lock out the demons of malign 
nationalism, blood rivalry, and lethal fragmentation.
    In my judgment, Helmut Kohl's thesis, however sincere, was simply 
out of date and out of step with developments in modern, democratic 
Europe. At the beginning of this decade, liberal democratic nation-
states existed throughout Western Europe. And without having ceding 
inordinate amounts of sovereignty or democratic control to 
supranational institutions in Brussels or elsewhere, West Europe's 
democracies were doing just fine. It was the central and eastern 
European democracies that needed help. It was on this part of the 
continent where stability was needed. But for the new democracies, the 
EU's doors remained closed. I think U.S. envoy Chris Hill pointed in 
the right direction, incidentally, when last year he criticized West 
Europeans for ``toasting themselves and claiming that they have 
achieved a united Europe'' while the Balkans go up in flames.
    Others have argued (and Germany's new Chancellor Gerhard Schroeder 
belongs to this second school) that deepening of the EU--including 
specifically the adoption of the euro--will help modernize the 
economies of Western Europe and better permit the EU to compete in a 
global economy. But here, too, the argument is hardly persuasive. In 
fact, the divergence of views within the EU itself is striking. British 
Prime Minister Tony Blair contends that the euro will make the EU 
``more efficient and less subsidized, more open and less heavily 
regulated.'' Across the channel, though, French finance minister 
Dominique Strauss-Kahn calls the euro a ``tool in the service of a 
better society, of a social model, that is to say the European model . 
. . based on greater solidarity'' than in the U.S.--code words for 
shielding inefficiencies and protecting against what Strauss-Kahn calls 
the ``free market illusion.''
    Finally, they are those across the West European political 
establishment who have argued that an economically and politically 
united Europe--and I always want to remind that what they are 
developing thus far is a united Western Europe--is an essential part of 
a maturation process. A united Europe will be better equipped, they 
contend, to care for security in its own neighborhood. And a united 
Europe will be a stronger partner for the United States both within the 
transatlantic community and around the world. This third argument is 
the most interesting, most compelling, and the most problematic for 
U.S. policy. Before pointing out what in my view some of problems with 
its assumptions are, though, let mention that West Europeans have not 
abandoned the project of EU enlargement.
                 2. eu internal reform and enlargement
    Making the EU fit for enlargement. That's what the ambitious 
reforms known as Agenda 2000 are primarily about. Reform of the EU's 
finances, farm, and regional policies is necessary if the EU is to 
start admitting poorer countries from central and eastern Europe. EU 
officials report that progress on Agenda 2000 has been made; and that 
remaining problems will be resolved at a special EU summit which takes 
place today and tomorrow in Berlin. (At the same time, negotiations 
with five applicant countries from eastern Europe and Cyprus have been 
creeping along since last November). What's more, the mass resignation 
of the European Commission recently, EU officials argue, ``should not 
delay enlargement.'' \1\ Nevertheless, it is hard to find grounds for 
optimism.
---------------------------------------------------------------------------
    \1\ With an annual budget of $100 billion, the Commission 
negotiates trade issues and is the final arbitrator on antitrust policy 
and other economic matters.
---------------------------------------------------------------------------
    To be sure, German Chancellor Gerhard Schroeder, whose government 
currently holds the rotating EU Presidency, will push hard in Berlin 
for a full agreement on outstanding issues, probably arguing that the 
EU's credibility is at stake in light of the European Commission 
fiasco. But success will be in the eye of the beholder. As for the EU's 
farm deal, for example, the Economist writes recently that it is 
largely:

        an Augustinian package of promises and postponements: yes, we 
        will cut subsidies, but not yet. Cuts in prices guaranteed to 
        farmers for beef, cereals and milk will be phased in, but 
        farmers will be paid directly instead. A review of the quota-
        ridden diary industry will take place in 2003, but quotas will 
        stay in place until 2006 at least.\2\
---------------------------------------------------------------------------
    \2\ The Economist, March 13, 1999, p. 40.

    Meanwhile, difficult issues relating to the financing of the EU 
budget have yet to be resolved. These issues include Germany's wish for 
a reduction in its net contribution, and pressure from other EU 
countries for cuts in or the elimination of the UK's budget rebate 
negotiated by Prime Minister Thatcher in the 1980s.\3\ Regardless of 
what comes out of the Berlin summit, I expect EU enlargement to proceed 
at a snail's pace. Before Christmas, senior European officials were 
already confiding privately that ``slippage'' could be expected in the 
current pace. More to the point, a senior adviser to the Prime Minister 
of one EU country told me recently, ``publicly, everyone's for 
enlargement; privately, there's really little enthusiasm.''
---------------------------------------------------------------------------
    \3\ Prime Minister Blair has thus far refused to consider giving up 
the rebate Great Britain received from the EU budget that Mrs. Thatcher 
secured as compensation for the comparatively limited aid British 
farmers receive from the EU.
---------------------------------------------------------------------------
3. common foreign and security policy (cfsp) and european security and 
                        defense identity (esdi)
    There remains considerable enthusiasm in West European capitals for 
the project of deepening integration, however. In fact, just as NATO 
engages in its debate about a revised Strategic Concept, the EU is 
devoting considerable energy to modernizing its own institutions, 
outlook, and mission.
    Support for European integration has been a hallmark of U.S. 
foreign policy for decades. And the administration has welcomed new 
steps, including the arrival of the euro and the parallel movement in 
recent years toward defense integration. In the 1991 Maastricht Treaty, 
the EU committed itself to the development of a Common Foreign and 
Security Policy (CFSP). And since that time, the European Union has 
taken some practical steps by encouraging, for example, EU foreign 
ministers to develop common analyses; and by agreeing to adopt the post 
of ``high representative'' for foreign policy (Mr.CFSP), to act as EU 
spokesman. In the 1994 NATO Brussels Summit initiatives and in the 1996 
NATO agreement in Berlin, the U.S. pledged to support the creation of 
the so-called European Security and Defense Identity (ESDI)--presumably 
another move forward in the EU's transition from adolescence to geo-
strategic adulthood. As British Defense Minister George Robertson puts 
it, ``without effective military capability to back up European foreign 
policy, we are wasting our time.''
    In theory, ESDI means that NATO's European members, relying on NATO 
assets, would in the future be able to undertake missions in which U.S. 
forces would not participate. And the U.S. position has been clear: 
Yes, to ESDI, as long as this trend does not, as the Secretary of 
Defense puts it, ``undermine or supersede NATO institutions and 
missions.'' \4\ In theory, it sounds like West Europeans taking 
responsibility. It sounds like burden-sharing. And for these reasons, 
enthusiasm in some circles in Washington has been equally clear. Such 
steps toward greater European responsibility would fit well, for 
example, with the idea of those, like Senator Kay Bailey Hutchison, who 
argue for an increasingly neat division of labor in the alliance: 
``Europe leads with the United States as backup on the European 
continent; the United States leads with European and other allies as 
back up in the rest of the world.''
---------------------------------------------------------------------------
    \4\ ``Report on Allied Contributions to the Common Defense: A 
Report to the United States Congress by the Secretary of Defense,'' 
March 1999.
---------------------------------------------------------------------------
    Any honest discussion of these developments must recognize however, 
in my view, that these trends carry promise and peril. Deputy Secretary 
of State Strobe Talbott talks about ``hopes'' and ``apprehensions.'' As 
he put it recently, ``We want to see Europe define its identity and 
pursue its interests in a way that not only preserves but that 
strengthens the ties that bind [us together].'' Of course, this is 
exactly the question. Can and will the EU define itself in a way that 
strengthens the transatlantic bond? A recently published article on 
``Building a European Defense Capability,'' coauthored by a respected 
American, French, and British analyst, contends that any argument 
``that a stronger, more assertive Europe will undermine NATO as well as 
U.S. interests is simply wrong.'' I'm skeptical about the certainty of 
such statements; just as I'm struck by the vehemence of the authors' 
tone.\5\
---------------------------------------------------------------------------
    \5\ ``Building a European Defence Capability.'' Kori Schake, Amaya 
Bloch-Laine, Charles Grant. Survival. Spring 1999, p. 21.
---------------------------------------------------------------------------
    The EU and its members are entitled to their choices. And of 
course, we want to encourage our allies to shoulder greater burden 
within the alliance. But I'm not at all certain that it remains in the 
American interest to continue offering unqualified support for 
deepening European integration. Not, at least, without asking hard 
questions of our allies and ourselves. And not without considering 
carefully what we can simultaneously do to strengthen Atlantic ties in 
security, trade, and political cooperation.
    West European officials increasingly argue, for example, that an 
economically and politically unified EU is the best vehicle to advance 
Europe's interests in the world. Fair enough. But should we not be 
asking what those interests are? And whether they are compatible with 
American interests, and what we frequently view as, common 
transatlantic objectives?
    For clues to the answers, start by considering the current French 
lament of America as ``hyperpower.'' French President Chirac speaks of 
a new ``collective sovereignty'' to check American power and sees the 
EU as playing a crucial role. Meanwhile, French mischief has directly 
encouraged Russian support for Slobodan Milosevic's Serbia. French 
Foreign Minister Hubert Vedrine has advocated accommodationist policies 
toward Iraq, noting that the French position is that ``of all 
Europeans, . . . the Arab world, the position of the Russians, the 
Chinese.'' And France's interior minister, Jean-Pierre Chevenement, 
fondly says: ``We have our interests and the Americans have theirs.'' 
For those of us who still like to believe in the idea of the West, our 
French friends are not very inspiring these days.
    Of course, French mischief--and outright anti-Americanism--are 
nothing new, of course. But consider the changed conditions of the 
post-Cold War world. With the Soviet threat gone, our allies across 
Western Europe are feeling less dependent on the United States. 
Generational change is underway, and younger politicians--on both sides 
of the Atlantic, of course--no longer have the same intuitive reflexes 
about the importance of transatlantic relationship that their 
predecessors had. And, as we've started discussing, West Europeans 
remain busy developing their European institutions with great 
enthusiasm--and often minimal American participation or consultation. 
It is in this wider context that I believe we should consider 
developments within the European Union.
    At the summit between French and British leaders in the French port 
of St. Malo in December, there was talk of Europeans' working ``within 
or outside NATO'' in the future. The tone and level of interest our 
British allies are now taking in European Security and Defense Identity 
is striking and unprecedented, even with all the predictable footnotes 
about how great European independence will not undermine the 
transatlantic link. I believe it's appropriate, then, for Americans to 
ask whether the special relationship with Britain is to fade as the 
United Kingdom seeks amalgamation with a European federal state. 
Incidentally, under majority voting in a future Common Foreign and 
Security Policy, it is possible that our British allies could find 
themselves at times prevented from joining the U.S., as they did in the 
bombing of Libya during the Reagan administration, for example, because 
the EU's majority dissents. I believe it's also appropriate to ask, 
when the British and French issue a communique affirming that ``the 
European Union needs to be in a position to play its full role on the 
international stage,'' what exactly Europeans envisage this role to 
be--and how it will relate to NATO.
    I should mention that there are those among our European allies who 
genuinely believe that the developments we are discussing are fully 
compatible with Atlanticism and a strong NATO which retains its unity 
and credibility. There are others, though, who promote in various ways 
a different vision for the future of U.S.-European relations. Former 
German Chancellor Helmut Schmidt boasts, for example, that the arrival 
of the euro means ``the United States can no longer call all the 
shots'' in the world. Prominent German commentators applaud the fact 
that a stronger EU, as they see it, means that Europe will no longer be 
``seconding U.S. global policies.'' French and German leaders alike 
these days insist that the United nations assume greater power and 
influence and hold alone the ``indisputable legal basis'' for the use 
of force in international affairs. Support for the idea in Western 
Europe grows. The Europeans apparently argued initially that the use of 
force in Kosovo required explicit UN authority. There are noises about 
dangerous precedents and the need for stronger international law. The 
primary intent, in my view, is the EU's desire--and of course, the 
desire of others--to check America's room for maneuver.
    Having said all this, it's clear--and understandable--that West 
Europeans have tired of playing the junior partner in the alliance. 
Simply put, our allies want to assert their new feelings of 
independence, and they want to be treated as grown-ups. All fair and 
reasonable. There's increasingly prickliness about American hegemony 
throughout Western Europe. And we can do our part in adjusting the 
style and substance of our leadership at times. At the same time, 
though, one wonders whether the old nationalism of the nation-state 
which Helmut Kohl was so determined to bury, may be reborn in a malign 
supranationalism of a European superstate. Even if such a scenario does 
not develop, it's still wrong, in my view, for the U.S. to assume that 
the new EU will share our analysis of problems and our goals in the 
world.
    Although it is easy to be nostalgic, it was, in fact, never easy 
with our allies during the Cold War. Remember the Europeans opposed 
American efforts to resupply Israel during the 1973 Yom Kippur War and 
to forge a unified Western response to the oil cartel's embargo and 
price hikes. Remember that after U.S. embassy staff was taken hostage 
in Tehran in November 1979, the United States appealed to its EC allies 
for support in applying sanctions, to no avail. When the Soviet Union 
invaded Afghanistan, the Europeans mustered condemnation and little 
more. When martial law was declared in Poland in December 1981, the EC 
offered a temporizing response--and massive resistance to U.S.-
sponsored sanctions. When the U.S. battled Marxist insurgencies in 
Central America in the 1980s, the Europeans equivocated; when an EC 
commissioner warned, for instance, of the danger of ``external 
intervention feared by all,'' he was understood to be referring as much 
to the United States as the Soviet Union. And those were the days of 
Cold War dependency.
    And today? I am concerned that NATO's new Strategic Concept, to be 
unveiled at the Washington Summit next month, will paper over important 
fissures that are not easily mended. Is a united EU ready to join the 
U.S. in promoting and defending a liberal world order? I'm doubtful. 
And if we want to promote a common strategic culture we have enormous 
work to do. To take but one example, remember that our policy of 
containing Iran has faltered in large part because our allies have been 
unwilling to take the Iranian threat seriously. And now, despite 
interesting but also contradictory signals from Tehran over the past 
year, Gerhard Schroeder calmly tells a German interviewer that ``the 
time is ripe for an improvement in the traditionally good'' relations 
between Germany and Iran.
    And what about the EU in its own neighborhood? West Europeans are 
desperate to do more. And rightfully so. Remember Luxembourg's foreign 
minister Jacques Poos in 1991, who declared that this was ``the hour of 
Europe.'' He also said, ``if one problem can be solved by the Europeans 
it is the Yugoslav problem. This is a European country and it is not up 
to the Americans. It is not up to anyone else.'' I don't think it's 
premature to say that with Kosovo a second chance has already 
tragically come and gone for the Europeans to solve a problem in their 
neighborhood without the help of the Americans.
    And with all the institutional fixes in the works, and all the 
obsession with new structures, mechanisms, and institutional 
arrangements, it's hard to imagine the EU--which lacks a natural 
leader--moving in times of crisis beyond the suffocating confines of 
lowest-common-denominator politics. Nor am I confident that our West 
European allies are otherwise on the right course. Defense spending 
remains low. Our allies spend about 2.2 percent of GDP on defense, one-
third less than the United States. In Germany, defense spending as a 
share of GDP dropped by 1.5 percent last year, down by almost half from 
its 1990 level of 2.8 percent. And conscientious objection reaches 
record levels.
    But there's more to the story. American leadership has been 
successful when the United States has combined military power with the 
determination not to appease dangerous tyrants. Even if the EU were to 
grow its own autonomous military capability, there is no reason for 
Americans to assume that Europeans, with the advantages, but also in 
instances the obstacles created by their different history, culture, 
and temperament, will pursue policies in which we would have 
confidence. When the West Europeans tried to ``lead'' in Bosnia earlier 
this decade, we should not forget that leadership often took the form 
of traditional power politics, with major powers siding with 
traditional regional proteges, and often turning a blind eye to the 
victims of aggression.
    All these points of skepticism that I've raised today should not be 
misconstrued as an argument for U.S. engagement from Europe. On the 
contrary. America, the lone superpower still needs allies, just as 
Europe, its own superpower pretensions notwithstanding, still needs the 
United States. Issues like Bosnia and Kosovo cannot be solved without 
American military power and leadership. NATO's enlargement--and the 
expansion of freedom and prosperity into Central and Eastern Europe--
cannot happen without active American support and participation. At the 
same time, terrorism, proliferation, rogue states and other new threats 
are effectively combated only when America and the alliance of 
democracies band together. With all our differences, that's how the 
Cold War was won. It is my hope that a successful Washington Summit, 
the promotion of new Atlantic initiatives--and a healthy dose of 
skepticism regarding deepening European integration--will help keep the 
Atlantic community together and moving forward on the best possible 
path.

    Senator Smith. Thank you very much.
    If we could stand in recess, I am going to go to vote. I 
will be right back and we will carry on.
    [Recess]
    Senator Smith. I apologize. There were two votes, not one. 
But we are now back and I appreciate your indulgence. This is 
such an important topic and I want to make sure each of you has 
a chance to contribute to the understanding of this committee 
on this issue.
    Dr. Feldman, we will go to you next.

   STATEMENT OF DR. LILY GARDNER FELDMAN, SENIOR SCHOLAR IN 
 RESIDENCE, CENTER FOR GERMAN AND EUROPEAN STUDIES, GEORGETOWN 
                   UNIVERSITY, WASHINGTON, DC

    Dr. Gardner Feldman. I'm Lily Gardner Feldman, Senior 
Scholar in Residence at the Center for German and European 
Studies, Georgetown University.
    I am pleased to address the committee today, Chairman 
Smith, and request that a longer written version of my 
presentation be submitted for the record.
    Senator Smith. Without objection, that will be done.
    Dr. Gardner Feldman. I will confine my remarks here to the 
5 to 7 minutes I have been given.
    Both the internal character and the external profile of the 
European Union are changing in ways that are significant for 
the United States, especially given the European Union's status 
as America's most important partner in global commerce and in 
global problem solving.
    It behooves the United States, then, to appreciate and 
anticipate the nature and consequences of the EU's internal 
deepening and external widening which, I believe, unlike my 
colleague, have been twin goals since 1989.
    I congratulate the committee for recognizing the importance 
of the European Union by holding this hearing.
    I will divide my remarks today into three parts: first, an 
outline of three scenarios for how enlargement of the European 
Union could occur; second, an indication of the institutional 
and policy reforms that will determine which scenario likely 
will prevail; and, third, a specification of enlargement's 
implications for the United States.
    Let me begin with the scenarios for enlargement of the 
European Union.
    The scenarios for near-term expansion of the EU relate to 
the six candidates with whom negotiations already are 
underway--Poland, the Czech Republic, Hungary, Estonia, 
Slovenia, and Cyprus--and not the other seven applicants, 
including the special case of Turkey.
    The presumed date of accession would be 2004-2005, with a 
20 year transition period to fulfill all the obligations of 
membership.
    There are three main scenarios for enlargement: (1) the 
total failure of enlargement, due to member State opposition or 
growing influence in candidate countries of the probable 
``loser'' economic sectors, or the refusal of the European 
Parliament to grant its assent to widening in the absence of 
major deepening; (2) the achievement of enlargement involving 
minimal reform and a divisive and piecemeal process. This means 
perpetuation of the European Union as a hybrid, yet 
functioning, organization that combines ``flexible 
integration'' of moving toward a common goal at different 
speeds; ``variable geometry'' involving a permanent core on 
certain issues coexisting with countries who opt out; and the 
pillar system of supranational, mixed, and national 
competencies.
    Some of the six current candidates may not make it into 
this untidy entity.
    Finally, the third scenario is the realization of 
enlargement with all candidates in the context of overall, 
fundamental reform of institutions and policies from which the 
EU would emerge as a decisive, coherent actor with a sense of 
direction, streamlined instruments, and a reinvigorated agenda.
    I predict that scenario two will prevail due to current 
developments in policies and institutions that affect the 
internal and external functioning of the EU. Simultaneously, 
the EU is racing uphill and spinning its wheels.
    I will turn now, then, to the second part of my 
presentation, institutional and policy reform.
    The EU has demonstrated remarkable progress in the area of 
Economic and Monetary Union and, thus, its capacity for 
fundamental change. Yet key areas of institutional and policy 
reform necessary to facilitate the basic functioning of a 20 or 
21 member body remain unresolved.
    The EU's special summit in Berlin today and tomorrow 
probably will reach a compromise on the future financial 
framework, reform of the Common Agricultural Policy, and 
alteration of the apportionment of Structural Funds. But that 
compromise will fall short of the far-reaching proposals of the 
Commission or the current German presidency of the EU.
    Similarly, the Cologne summit in June will agree to a 
procedure for resolving the key institutional issues not caused 
but magnified by enlargement, namely the distribution of seats 
in the Parliament and Parliament's decisionmaking role, the 
size of the European Commission, and the reweighting of votes 
in the Council.
    Fundamental change in the EU is highly complicated. Turmoil 
in the Commission and the attendant public disappointment with 
the EU's efficacy make some institutional reform likely, 
particularly in the European Parliament and the Commission.
    But it will be highly contested and probably will not 
involve including areas like Common Foreign and Security Policy 
in the EU's supranational competence. The final say in that 
area will remain with Nation-States.
    These developments amount to incremental change, leaving 
the EU as a patchwork quilt arrangement and a multi-tiered 
organization. This outcome does not preclude enlargement, but 
it renders it more difficult, with specific consequences for 
the United States.
    In closing, allow me to address these implications.
    I deem the first scenario of enlargement's total failure 
unlikely. Due to the EU's political commitment to success, a 
lot has been invested in this project. I also doubt the third 
scenario of enlargement with thorough-going, effective reform.
    Nonetheless, U.S. officials should still contemplate both 
scenarios for they would change fundamentally U.S.-EU 
relations.
    So what are the implications for the United States of the 
second scenario of incremental reform preceding enlargement? It 
will have positive economic and political benefits for the 
United States if it spurs further trade liberalization and the 
compensation negotiations for trade diversion are not 
acrimonious.
    The second scenario's enlargement implies a continued 
partnership of relative economic equals between the United 
States and the EU, particularly if economic and monetary union 
is successful. But the United States will need to continue to 
live with the frustration of a messy partner.
    Enlargement will increase EU credibility on the European 
continent in U.S. eyes if the United States accepts that EU 
power will remain economic and diplomatic and not become 
military.
    Enlargement will permit consolidation of international 
political cooperation between the United States and the EU in 
traditional conflicts and in newer areas such as global climate 
issues and international crime if the United States recognizes 
that the European Union must still devote energy to ongoing 
internal reform to guarantee that enlargement is an asset and 
not a liability.
    The EU faces greater challenges today than at any time 
since its founding. The United States should continue to 
support staunchly the process of integration, including 
enlargement, but it should pay more attention to the specific 
character and consequences of those changes.
    Thank you, Senator Smith.
    [The prepared statement of Dr. Gardner Feldman follows:]

             Prepared Statement of Dr. Lily Gardner Feldman
   introduction: the importance of the european union for the united 
                                 states
    In the current six-month German presidency of the European Union, 
the fifteen member-states face a fuller agenda than at any time since 
the 1955 Messina conference that led to the Treaty of Rome and the 
creation of the European Economic Community in 1957. The magnitude of 
the challenges confronting the European Union (EU) was clear to the 
world in the unprecedented resignation of the entire 20-member European 
Commission on March 16, 1999. German Chancellor Gerhard Schroder, who 
holds the rotating presidency of the Council of the European Union, has 
deemed the resignation a ``crisis'' but also an ``opportunity'' for 
redefinition and renewal.\1\ Both the internal character and the 
external profile of the European Union are changing in ways that are 
significant for the US, especially given the EU's status as America's 
most significant partner in global commerce and international problem-
solving.
---------------------------------------------------------------------------
    \1\ Speech in Brussels, March 17, 1999.
---------------------------------------------------------------------------
     Combined, the US and the EU account for more than 50% of global 
trade, and produce approximately 50% of goods and services in the 
world. The EU represents the largest commercial partner for the US with 
an annual value of trade of some $250 billion, and is twice as large a 
market for the US as Canada and Japan together. The US and the EU are 
each the largest investor in the other's market; one in 12 US factory 
workers works for a European company; the jobs of some 7 million 
Americans are related to transatlantic trade.\2\ Trade disputes over 
bananas and hormone beef may be bitter, but they are dwarfed by the 
immense flow of goods and services between the US and the EU. 
Partnership and mutual dependence extend beyond commerce. The US and 
the EU together account for 90% of all humanitarian aid. The EU is a 
central financial donor in key areas of conflict such as Bosnia and the 
Middle East, and plays a significant political role in the peace 
processes of those regions. The US and the EU cooperate significantly 
in confronting human rights violations, the proliferation of weapons of 
mass destruction, and cross-border crime. In President Clinton's words, 
the EU is ``perhaps our best natural partner for the 21st century.'' 
\3\
---------------------------------------------------------------------------
    \2\ Address by Stuart Eizenstat, Under Secretary for Economic, 
Business and Agricultural Affairs, Johns Hopkins University, May 4, 
1998.
    \3\ Quoted in Eizenstat, ibid.
---------------------------------------------------------------------------
    It behooves the US, then, to appreciate and anticipate the nature 
and the consequences of the EU's internal deepening and external 
widening. I will divide my remarks into four parts: (1) an overview of 
the enlargement process; (2) an outline of three scenarios for how 
enlargement of the EU could occur; (3) the identification of 
institutional and policy reforms that will determine which scenario is 
the most likely; (4) and a specification of the implications of 
enlargement for the US.
        significance of enlargement and the process of expansion
    The current round of enlargement of the EU is the most challenging 
ever undertaken in terms of number of applicants (10 in Central and 
Eastern Europe plus Cyprus, Malta which recently reactivated its 
application, and Turkey as a special case); the magnitude of economic 
and social differences between applicants and current member states; 
combined size of population; vastness of territory; and organizational 
challenge (actual negotiations have started with six countries, to be 
joined by Malta at the end of 1999, but simultaneously a screening 
exercise for eligibility is being conducted with six potential 
candidates).\4\ Sir Leon Brittan has noted that complete enlargement, 
i.e. with all applicants, would mean an EU of 540 million citizens; a 
GDP that well exceeds that of the US, and a 20% share of world trade 
outside the EU.
---------------------------------------------------------------------------
    \4\ For a detailed analysis of the enlargement process and its 
implications for US-EU relations, see: Lily Gardner Feldman, "The 
European Union's Enlargement Project and US-EU Cooperation in Central 
and Eastern Europe," in Fran Burwell and Ivo Daalder, eds., The United 
States and the European Union in the Global Arena (Macmillan, 1999).
---------------------------------------------------------------------------
    At the 1993 Copenhagen European Council, the EU specified the 
political, economic and human rights criteria for membership:

  -- ``stability of institutions guaranteeing democracy, the rule of 
        law, human rights and respect for the protection of 
        minorities;''
  -- ``the existence of a functioning market economy as well as the 
        capacity to cope with the competitive pressure and market 
        forces within the Union;''
  -- ``ability to take on the obligations of membership including 
        adherence to the aims of political, economic and monetary 
        union.'' \5\
---------------------------------------------------------------------------
    \5\ Bulletin of the European Communities, No. 6, vol. 26, 1993, p. 
13.

    Most American officials have recognized that the EU expansion 
process distilled in fulfilling the three criteria is more intricate 
and arduous than NATO enlargement, yet at times chastise the EU for 
slowness. Some American politicians have been less understanding of the 
complexity of the task, as reflected in the 1998 NATO enlargement 
debate when some former and current senators attempted to set as a pre-
condition for NATO membership the accession of Central and Eastern 
European states to the EU. ``Moving the goal posts'' or lessening the 
criteria serves neither side: it would undermine the EU's achievements, 
and would engender in the candidate countries a false expectation of 
what membership entails.
    The EU could have been more vocal earlier (it is now) in its belief 
that enlargement can occur, but it has tried to make the process 
digestible through a ``pre-accession strategy'' of devising incremental 
steps toward membership and adoption of the whole complex of existing 
EU legislation and regulations (some 80, 000 pages). The strategy has 
escalated from trade and cooperation agreements to complex Europe 
Agreements and Accession Partnerships, from specific and ongoing 
screening (by criterion and sector) of whether the candidates and 
would-be candidates meet the Copenhagen requirements to ``twinning'' 
arrangements for strengthening institutional and administrative 
capacity in the candidate countries through the secondment of EU 
advisors.
    The process of preparing countries for enlargement has involved a 
monumental aid package (6.7 billion Euro, or some $7.7 billion, in the 
main aid program, PHARE, for the period 1995-99; beginning in 2000, aid 
will amount to some 3 billion Euro, or $3.5 billion, annually), and 
significant loans (1.7 billion ECU from the European Investment Bank in 
1997 alone, with plans for 7 billion Euro, $8 billion, over three 
years). According to the EU Ambassador to the US, Hugo Paemen, between 
1990 and 1999 the EU has provided $85 billion in aid to Central and 
Eastern Europe, the ``equivalent in today's dollars to the US Marshall 
aid for the reconstruction of Europe after World War II.'' \6\ Clearly, 
the EU is serious about enlargement.
---------------------------------------------------------------------------
    \6\ Lecture to the Center for German and European Studies, 
Georgetown University, March 15, 1999.
---------------------------------------------------------------------------
            scenarios for enlargement of the european union
    In developing scenarios for near-term expansion of the EU the 
reference point is the six candidates with whom negotiations already 
are underway: Poland, the Czech Republic, Hungary, Estonia, Slovenia, 
and Cyprus. The EU is reluctant to specify dates for actual accession, 
for as Commissioner van den Broek has noted ``While speed is desirable, 
quality is essential.'' \7\ Candidate countries, however, seem to be 
aiming for 2002 or 2003. The assumption of these scenarios is accession 
in 2004-2005 with a twenty-year transition period for the complete 
adoption of the acquis communautaire.
---------------------------------------------------------------------------
    \7\ Press conference, Vienna European Council, December 11-12, 
1998.
---------------------------------------------------------------------------
    There are three main scenarios for enlargement:
    (1) The total failure of enlargement, due to member-state 
opposition, or growing influence in applicant countries of the probable 
``loser'' economic sectors, or the refusal of the European Parliament 
to grant its assent to widening in the absence of major deepening.
    (2) The achievement of enlargement, involving minimal reform, and a 
divisive, piecemeal process. This means perpetuation of the EU as a 
hybrid, yet functioning organization that combines ``flexible 
integration'' of moving toward a common goal at different speeds; 
``variable geometry'' involving a permanent core on certain issues 
coexisting with countries who opt out; and the ``pillar system'' of 
supranational, mixed and national competences. Some of the six current 
candidates may not make it into this untidy entity.
    (3) The realization of enlargement with all candidates in the 
context of overall, fundamental reform of institutions and policies, 
from which the EU would emerge as a decisive, coherent actor with a 
sense of direction, streamlined instruments, and a reinvigorated 
agenda.
    I predict that scenario 2 will prevail due to current developments 
in policies and institutions that affect the internal and external 
functioning of the EU. Simultaneously, the EU is racing uphill and 
spinning its wheels.
                  internal reform and external profile
    Three areas of EU reform bear directly on enlargement: the so-
called ``leftovers'' from the Amsterdam Treaty; key areas of economic 
and political union; and the Agenda 2000 plans to facilitate expansion 
through policy reform and stable financing of the EU. In all three 
areas, there is both progress and standstill.
Amsterdam ``Leftovers''
    The 1997 Amsterdam Treaty (which will soon go into effect following 
France's ratification on March 16) was unable to reach agreement on 
some key institutional questions whose need for reform has been 
magnified by the prospect of enlargement, to avoid what German Foreign 
Minister Joschka Fischer has termed an ``institutional heart attack.'' 
\8\ Institutions that operate with difficulty among 15 member-states 
will not be able to function with 20 or 21 members.
---------------------------------------------------------------------------
    \8\ Speech to the European Parliament, January 12, 1999, 
Strasbourg.
---------------------------------------------------------------------------
    The EU put off at Amsterdam major expansion-related issues 
involving the Parliament, the Commission and the Council, even though 
institutional reconfiguration for enlargement was a key aim:
    (1) The size of the European Parliament (although it was agreed 
that the total number of members should not exceed 700 after 
enlargement), together with the issue of proportional distribution 
among member-states, and the further expansion of European Parliament 
rights to fill a democratic deficit as the EU tries to spread democracy 
eastward.\9\
---------------------------------------------------------------------------
    \9\ For a detailed discussion of the institutional issues, see: 
Michel Petite, The Treaty of Amsterdam, Jean Monnet Paper Series, 
Harvard University, 1998.
---------------------------------------------------------------------------
    (2) The size of the Commission with a plan of one national per 
member state with the first wave of new member-states, and the 
convening of an intergovernmental conference one year before there are 
more than 20 EU members to evaluate the Commission's composition and 
functioning.
    (3) Further extension in existing EU programs of qualified majority 
voting (as opposed to unanimity), as well as reweighting the Council 
votes. Large member states, especially Germany, are concerned that 
enlargement will only magnify the existing disproportionate weight of 
small states in all three institutions.
    The European Council in Cologne at the end of the German presidency 
is scheduled to decide on the procedure for resolving the institutional 
questions, which would then occur at an intergovernmental conference in 
2001. The Commission's recent demise, in part due to the European 
Parliament exercising vigorously its right of investigation, could 
augment the Parliament's decision-making role and clarify its 
composition, especially after the June 1999 elections for the European 
Parliament. Both Prime Minister Tony Blair and Chancellor Gerhard 
Schroder, who are emerging as the EU's leadership duo, have called for 
a strong commission president, a reversal from the previous British 
position which preferred a weaker, controllable president.
    The charges of personal lack of accountability, based on dubious 
employment arrangements with nationals of particular commissioners, 
could in 2001 hasten the reduction of the Commission from the planned 
20-member entity to enhance and make effective the Commissioners' 
commitment to act supranationally, devoid of national connection. With 
regard to the extension of majority voting in the Council, or Council 
decisions to extend new supranational competences to the Commission, 
prospects are less auspicious, and indeed the chances of a paralyzed 
Commission in the near-term are high. Given the Commission's central 
role in monitoring the candidates' progress toward meeting the 
Copenhagen criteria, the enlargement process could become more drawn 
out and cumbersome. A hobbled Commission also has implications in a 
major area of policy development it has championed: Common Foreign and 
Security Policy and a European Security and Defense Initiative.
Key Policy Developments
    Fortunately, the EU entered the third stage of Economic and 
Monetary Union (EMU) before the Commission crisis, and while EMU 
demonstrates a flexible arrangement (Sweden, Denmark, and the UK have 
chosen not to join now; Greece did not meet the criteria), it shows a 
monumental capacity to surrender key areas of national policy to EU 
authority. The opposite appears to be the case with Common Foreign and 
Security Policy (CFSP) which remains an area of intergovernmental (as 
opposed to suprantaional activity).
    Efficiency and coherence in CFSP might now improve as the Amsterdam 
Treaty provisions begin to go into effect: a High Representative for 
CFSP, who is the Secretary General of the Council; a Policy Planning 
and Early Warning Unit; a new troika of the Presidency, future 
presidency, Commission and High Representative; closer ties with the 
WEU and inclusion of the Petersberg tasks of peace-keeping, crisis 
management and humanitarian operations into the Amsterdam treaty; and 
the possibility of flexible decision-making in the form of 
``constructive abstention.''
    Recent developments in CFSP and the related European Security and 
Defense Initiative (ESDI), including Prime Minister Blair's October 
1998 initiative in Portschach and the joint French-British December 
1998 St. Malo declaration suggest more movement along the lines of 
creating a core of countries to develop a European capacity for 
military action when the US does not wish to participate, a plan 
embellished by German Foreign Minister Fischer at the EU Foreign 
ministers' meeting in mid-March, 1999. These suggestions emphasize the 
uniqueness of NATO for collective security, but recognize the need for 
greater European assets and capabilities to permit autonomous military 
action. Fischer's proposal for an EU Military Committee with military 
representatives has met resistance from the British, the neutrals, and 
the Netherlands, and there is still considerable divergence over 
merging the WEU into the EU, as well as Fischer's idea of regular 
meetings of Defense Ministers. While ESDI may now become more focused, 
efficient, and purposeful, it will involve coalitions of the willing. 
CFSP's character likely will stay intergovernmental and its initial 
decision-making (as opposed to implementation) will remain unanimity-
based, despite German efforts to render it supranational and grounded 
in qualified majority voting.
    Developments in EMU and CFSP have implications for enlargement, 
both in the character of the EU that is expanding as noted above, and 
in the role the new members will play in these two areas. The first 
five Central and Eastern European countries will not meet the EMU 
criteria for a long time, but their currencies are already being linked 
now to the Euro. The first wave of Central and Eastern European 
accession will intensify the tangled mess of uneven participation of EU 
member states in the WEU, but the candidate countries are also 
committed to CFSP, for with a self-image as small, vulnerable states, 
the Central and Eastern European countries ardently want to 
collectivize their security risks and burdens. The fulfillment of NATO 
membership in March 1999 has eased the military aspects of security for 
Poland, Hungary, and the Czech Republic, but the broader conception of 
security--foreign policy, diplomacy--rests in the EU, particularly for 
Estonia and Slovenia who are not likely candidates for NATO membership. 
As part of the process of enlargement, through the ``structured 
dialogue'' Central and Eastern European ministers have participated in 
a consultative way in deliberations in CFSP, and have coordinated their 
policies with the EU in international organizations and in third 
countries, as well as in transnational issues such as international 
crime.
Agenda 2000
    All three Agenda 2000 issues will be the focus of the special EU 
summit in Berlin on March 24-25, 1999: (1) the future financial 
framework of the EU for the period 2000-2006, and the related issue of 
gradually reducing the burden for the net contributors (Germany, the 
Netherlands, Austria and Sweden); (2) reform of the Common Agricultural 
Policy, which accounts for 50% of the EU budget, in terms of price 
reductions for crops and agricultural products, compensation for 
farmers, and a rural development policy to replace lost agricultural 
employment; (3) and alteration of the system of apportioning structural 
funds, which make up 30% of the EU's budget, by reducing and 
simplifying the number and nature of needy regions. Following 
Chancellor Schroder's meetings in member-state capitals, there is 
German optimism that compromises can be reached in all three areas, but 
they will fall short of the major overhaul Germany and the Commission 
have proposed. Success in Berlin would send a signal to the candidate 
countries, according to Foreign Minister Fischer ``that the EU is 
seriously preparing for their accession . . . whereas failure in Berlin 
would endanger the schedule for enlargement.'' In light of the public's 
negative reaction to the Commission, compromise on reform in Berlin 
would also demonstrate to skeptical EU citizens the community's 
capacity for fiscal responsibility, accountability, and belt-
tightening. The three domains of reform--Amsterdam leftovers, key 
policy questions, Agenda 2000--will be addressed during the remainder 
of the German presidency, either now in Berlin or at the June 1999 
European Council summit in Cologne. The outcome will be mixed, 
reinforcing the character of the EU as an incremental actor, a 
patchwork-quilt arrangement, and a multi-tier organization. Such an 
outcome does not preclude enlargement, but it renders it more 
difficult, with specific consequences for the United States.
   implications for the united states of the three scenarios for eu 
                              enlargement
    The first scenario--the failure of enlargement--could increase 
American involvement in Europe as a stabilizing factor, but, under 
Congressional pressure, it also could push the US to react adversely to 
EU indecisiveness. The failure of enlargement could increase NATO's 
burden and make it the premier organization, further antagonizing 
Russia. For the US, a fragmented Europe would be more difficult to deal 
with than the current collage of actors and authorities; and it would 
be much less calculable. It would undercut US aspirations of working 
with the EU to solve global problems. American officials consider such 
a scenario of failure disastrous, for it would invalidate the 
conception of security that combines the strengths of both NATO and the 
EU. While the failure scenario is unlikely--due to a sufficient degree 
of dynamism in the EU, a growing political commitment to proving to 
citizens the capacity for efficacy, and a large investment in a 
successful outcome--American officials should contemplate failure and 
prepare for it.
    The second scenario will have positive economic benefits for the US 
if it spurs further trade liberalization, and the compensation 
negotiations for trade diversion are not acrimonious. It implies 
continued partnership of relative economic equals between the US and 
the EU, particularly if economic and monetary union is successful, but 
the US will need to continue to live with the frustration of a messy 
partner. Enlargement will increase EU credibility on the European 
continent in US eyes, if the US accepts that EU power will remain 
economic and diplomatic, and not become military. Enlargement will 
permit consolidation of international political cooperation between the 
US and the EU in traditional conflicts and newer areas such as global 
climate issues and international crime, if the US recognizes that the 
European Union must still devote energy to ongoing internal reform to 
gurantee that enlargment is an asset and not a liability.
    The third scenario--enlargement coupled with thorough-going, 
effective institutional reform--eventually would establish the EU in a 
position of dominance on the continent, with the US playing a 
supporting role. The third scenario could imply greater economic and 
political competition between the US and the EU. It could also mean the 
addition of military resources to the EU's international profile 
through a complete integration of the WEU into the EU, and a unified 
CFSP within the supranational ambit of the EU. While improbable in the 
near term, given the multiple challenges and crisis of confidence in 
the EU, the community method of progress on occasion has amounted to 
great leaps forward in the face of stagnation, impasse, and sclerosis, 
for example the Single Market Program, and Economic and Monetary Union. 
For the purposes of long-term planning, the US should envision such a 
European Union even if it is not to be anticipated in the next decade.
    The EU is confronting now and in the next months monumemtal 
challenges. The US should continue to support staunchly the process of 
integration, including enlargment, but it should pay more attention to 
the specific character and consequences of change.

    Senator Smith. Thank you, Dr. Feldman.
    Mr. Rodman.

  STATEMENT OF PETER W. RODMAN, DIRECTOR OF NATIONAL SECURITY 
           PROGRAMS, THE NIXON CENTER, WASHINGTON, DC

    Mr. Rodman. Thank you, Mr. Chairman. I, too, have a 
prepared statement which I would like to submit for the record.
    Senator Smith. Without objection.
    Mr. Rodman. Thank you very much.
    My focus is on the political and security dimension of 
these issues, the so-called Common Foreign and Security Policy 
of the EU and also the defense initiative, the British-French 
initiative to develop an EU defense capability which was 
launched in December at a summit in Saint-Malo in Brittany.
    The British-French document in Saint-Malo was ambiguous 
about how this EU defense entity would link with NATO, whether 
it would be ``inside'' or ``outside the NATO framework.''
    Let me make five points about these issues.
    My first point is that I would say the jury is still out on 
whether this EU defense initiative is a problem for NATO or 
not. I suspect from my conversations with British and French 
diplomats that they are not sure what this really means 
operationally or institutionally. They have not fleshed it out. 
It is just a vague idea.
    If it is done in the right way, it could be more effective 
in the alliance. It could have a burden-sharing value. If the 
Europeans are able to coordinate their efforts, then that is a 
way to maximize their effectiveness in the defense area if it 
is in the NATO framework.
    As I say, the British and French have been going out of 
their way to reassure Americans that that is what is meant. But 
none of us really knows how it will evolve. None of us really 
knows how this EU institution will fit into NATO or link with 
NATO.
    The fact is the Europeans are doing it for their own 
reasons. They are doing it to promote their own autonomy. They 
are not doing it to ``bear our burdens.'' So I think, again, 
the jury is still out.
    The second point is that the role of Britain is pivotal. 
Britain, under Tony Blair, has shown, of course, an 
extraordinary dedication to the special relationship. The 
British have stood with us in these Iraq crises, much to the 
annoyance of a lot of their European partners. So perhaps we 
should trust the British, and we should trust the intentions of 
the British who, I do believe, have no intention of disrupting 
the NATO alliance.
    But Britain, under Tony Blair, is also taking unprecedented 
steps toward Europe. In fact, this new initiative in the 
defense area actually was a British idea. The general 
interpretation of it is that Tony Blair, because he was not 
going into the common currency, was looking for another way to 
show that Britain was a good European. That makes a lot of 
sense.
    On the other hand, in the last few weeks, the Blair 
Government has taken a number of preparatory steps to enter the 
common currency. So you see the British moving toward Europe in 
both dimensions. I think this testifies to the very strong 
gravitational pull that Europe seems to exert on this 
particular British Government.
    Over time, it could conceivably lead to a future British 
Prime Minister who hesitates about whether to stand with the 
United States in some controversial crisis. I cannot prove that 
this is going to happen. I don't think Mr. Blair intends for 
that to happen. But, again, this is the gravitational pull of 
Europe on this British Government.
    If such a thing were to happen, of course, it would be a 
major shift in transatlantic relations.
    My third point is this. In the formative stage of all of 
this in Europe, the United States has a right and a 
responsibility to weigh in with its concerns. The relationship 
with the United States is precisely what is being affected. The 
relationship with the United States is at the core of what is 
being developed in Europe.
    As Dr. Gedmin was describing, there are a lot of statements 
by Europeans that they want to be more equal to us or they want 
more autonomy from us. A lot of what is being done is being 
done somehow vis-a-vis us or with us in mind. I think we 
obviously have a right to comment on what we think is healthy 
for the future of the Atlantic alliance.
    My fourth point is, I give credit to the administration 
because I believe that this administration has been making 
these points to the Europeans after Saint-Malo, mostly in 
private. I was happy to see in Mr. Wayne's prepared statement 
what they call the ``three D's,'' these criteria by which we 
will judge what they are cooking up. They are: no duplication 
of NATO functions; no decoupling or delinking; and no 
discrimination against countries like Turkey, which are not in 
the EU.
    So I am happy that they are now doing this more publicly 
because the United States should say these things publicly in 
order to emphasize what we are concerned about. I would add 
that the Congress too should express itself in some fashion to 
indicate that we care a lot about whether these institutions 
develop in a way that is consistent with NATO's integrity or 
not. The Congress could do this in a ``sense of the Congress'' 
resolution or in some legislation. You would know better how to 
do this.
    If Congress did that, it would strengthen the 
administration's hand as the administration tries to make these 
points to the allies.
    In addition, if the United States seems to be silent on 
these points, this undercuts people in Europe, Atlanticists in 
Europe, either in governments or in opposition parties, who 
have the same concerns. I know people in Europe who are worried 
about the implications of some of these recent initiatives. 
They would be demoralized if they thought the Americans were 
being totally passive here.
    So that that is an additional reason for us to make clear 
that we care about how this evolves.
    My fifth point is a word about Kosovo. Obviously, this is a 
separate subject and a huge subject. But there is a connection 
in two respects.
    One is that the earlier hesitations about Kosovo had a lot 
of influence on Tony Blair. It was last fall that Tony Blair 
developed some of these ideas about an EU defense capability. 
One of the arguments he made was: ``Look at how hesitant the 
Europeans were as the Kosovo crisis developed. Look how we were 
dependent on the United States, incapable of doing anything on 
our own.'' He thought that should be remedied.
    Now today we are at the other side of the coin. Whatever 
one thinks about the wisdom of being there, I have to say that 
once we are committed, now that we are committed, it is a test 
of our effectiveness as a leader in Europe.
    I pray that, whatever the administration is undertaking, we 
should prevail. This is because if this effort should fail, if 
we should fall on our faces, which is not inconceivable, and if 
this American-led operation should somehow turn out to be 
ineffective, one of the consequences of it could be to spur 
some of these impulses that we have seen in Europe--to somehow 
cut loose from us, to develop an institutional framework that 
is not dependent on us. I am not sure how it would work. But 
this would very much weaken our leadership in Europe on these 
questions that we have been discussing.
    So, obviously, there is a lot at stake in this Kosovo 
operation. But one of the things at stake is really our 
influence in Europe and the evolution of some of the things we 
have been discussing here today.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rodman follows:]
                 Prepared Statement of Peter W. Rodman
``nato and the european union's `common foreign and security policy' ''
    Mr. Chairman, members of the Subcommittee:
    I want to commend the Chairman and this Subcommittee for holding 
this hearing on a topic which is very important to American strategic 
interests but which has received amazingly little public attention in 
this country.
    Our disputes with the European Union (EU) range over a variety of 
topics, from bananas to American cultural exports to Middle East 
policy. Many of these disputes go back years. But we are at an 
important and historic new stage of Europe's integration, which is 
bound to bring some further changes in the way Europe and America deal 
with each other.
    In my view, the problem in our relations goes deeper than the 
specific disputes. Or, to put it another way, the disputes are now 
exacerbated by a structural problem: Since the collapse of the Soviet 
Union, and America's emergence as the sole superpower, Europe has 
accelerated the process of its integration with the purpose, in large 
part, of building a counterweight to what it sees as American 
dominance. Europeans are quite explicit about it. This is my concern, 
especially as Europe now moves from Economic and Monetary Union (EMU) 
toward a Common Foreign and Security Policy (CFSP). There is a greater 
eagerness than ever before in Europe to be more of an equal to the 
United States and to enhance its autonomy from the United States. To a 
considerable degree, this is a natural and healthy phenomenon. Beyond a 
certain point, it can do harm to vital common interests.
    The EU's Common Foreign and Security Policy is the subject I wish 
to focus upon. Let me organize my comments around two propositions:

  -- First, CFSP in a strict sense raises issues of procedure more than 
        it does of substance.
  -- But, second, for better or worse, implicitly or explicitly, 
        Europe's relationship to the United States is at the heart of 
        what is being changed.
                     cfsp: procedure and substance
    As the Europeans seek to develop their Common Foreign and Security 
Policy, they like to cite a reputed complaint by Henry Kissinger that 
``Europe'' didn't really exist until there was a single telephone 
number he could call to find out what ``Europe's'' policy was.
    The story is apocryphal. In fact, ironically, when Kissinger was in 
office, his complaint was exactly the opposite.\1\ The Nixon 
Administration intended 1973 to be the ``Year of Europe,'' when the 
United States, after several years of preoccupation with the Soviet 
Union, China, and Indochina, turned once again to revitalizing its 
Alliance relations, and in an historic year when the European Community 
(EC) was expanding from six members to nine, including Britain. The EC 
in 1973 also launched its first experiment in foreign policy 
coordination, designating the Foreign Minister who was in the rotating 
chair of the Council of Ministers as its foreign policy spokesman. This 
happened at the time to be the Danish Foreign Minister, Knut Borge 
Andersen.
---------------------------------------------------------------------------
    \1\ See Henry Kissinger, Years of Upheaval (Boston: Little, Brown, 
1982), pp. 700-707.
---------------------------------------------------------------------------
    The procedure didn't work. Secretary Kissinger found the Danish 
Foreign Minister an able and charming man, but, through no fault of his 
own, not capable of negotiating with the United States. If the U.S. 
Secretary of State asked a complicated question, the Danish Foreign 
Minister couldn't answer without going back to Brussels and 
renegotiating the EU consensus. If Kissinger asked another question, or 
made a proposal, the same problem arose again. Meanwhile, while this 
ritual continued, the United States was asked to sever its bilateral 
communication with all the European nations that were its closest and 
most important allies. The procedure died an unlamented death, which is 
one reason that there were no further attempts at such a unified 
foreign policy for nearly two decades.
    The Maastricht Treaty of 1991 revived the idea of a Common Foreign 
and Security Policy. Later this year, in accordance with the further 
agreement at the Amsterdam Summit in 1997, a High Representative for 
CFSP is to be appointed. He (or she) will likely be a senior person--
probably a retired politician rather than a professional diplomat or 
civil servant. But it is not clear that he or she will be able to 
escape the burdens of the unfortunate Mr. Andersen.
    Leaving aside the unworkability of dealing with the United States 
in this manner, there remains the strong concern of some major European 
states that ``Mr. (or Mme.) CFSP'' should not have such autonomous 
authority that it derogates from the national sovereignty that these 
states are likely to insist upon for the foreseeable future in vital 
matters of policy. The French, in particular, are far from being 
federalists yet in the national security field.
    In another sense, of course, Europe has long enjoyed a certain 
coordination in its foreign policy. Many an EU or EC summit has made 
pronouncements on foreign policy issues--the most famous, perhaps, 
being the Venice Declaration on the Middle East in 1980. That document 
insisted on a role for the Palestine Liberation Organization (PLO) in 
the peace negotiations, at a time when the United States was firmly 
conditioning such a role on the PLO's prior acceptance of UN Security 
Council Resolutions 242 and 338 and of the existence of Israel, and its 
renunciation of terrorism.
    If a consensus exists on a topic, the EU can pronounce on it even 
under pre-CFSP procedures. It already has an ambassador-level Middle 
East envoy who keeps in contact with American counterparts on the Arab-
Israeli peace process. It has already taken unified positions of 
complaint against a number of American actions, particularly our third-
country sanctions against Cuba, Libya, and Iran.
    Thus, it is not yet clear whether the appointment of a ``Mr. (or 
Mme.) CFSP'' will make a significant difference in the EU's ability to 
``make'' foreign policy. The real question is what degree of consensus 
will exist in Europe on what issues. Middle East policy, especially in 
the Persian Gulf, may find the Europeans more united against us as time 
goes on. This may vindicate the prediction of British Conservative 
politician Michael Portillo, who said in January: ``The United States 
didn't need the latest Iraq crisis to tell it that a European policy 
based on consensus isn't going to be pro-American.\2\
---------------------------------------------------------------------------
    \2\ Michael Portillo quoted in New York Times, January 4, 1999, p. 
A23.
---------------------------------------------------------------------------
    A great deal depends on Britain's pivotal role. As on many other 
issues, the British have stood solidly with us in the whole series of 
Iraq crises since the Gulf War, much to the frustration of other 
Europeans who deplored, for example, last fall's U.S.-British bombing 
of Iraq that Mr. Portillo referred to. The question is whether, over 
time, Britain will be drawn more and more by the gravitational pull of 
Europe to the point where a Prime Minister in the future will be more 
reluctant to stick with the United States.
                    relations with the united states
    The fundamental issue here is whether the new steps in European 
integration are being driven by, and will in turn intensify, an impulse 
to differentiate from the United States in substance. It is clear that 
the Economic and Monetary Union is meant to create an economic 
counterweight to the United States. Even so stalwart a friend of the 
United States as Helmut Kohl declared in 1996 that Europe needed to 
``unite our powers to realize our common interests,'' including to 
``assert ourselves against the trade blocs of the Far East and North 
America.'' \3\ All the more so the Common Foreign and Security Policy, 
which Dutch Prime Minister Wim Kok explicitly described last fall as 
building a ``counterweight to the United States.'' \4\ The French, of 
course, are even more passionate on this. French Foreign Minister 
Hubert Vedrine has stated:
---------------------------------------------------------------------------
    \3\ Helmut Kohl, address at Catholic University, Louvain, Belgium, 
February 2, 1996, reprinted in Internationale Politik, Vol. 51, No. 8 
(August 1996), pp. 82-84.
    \4\ Wim Kok quoted in Der Standard (Vienna), October 27, 1998, p. 
2.

          Today there is one sole great power--the United States of 
        America. . . . When I speak of its power, I state a fact . . . 
        without acrimony. . . . But this power carries in itself, to 
        the extent that there is no counterweight, especially today, a 
        unilateralist temptation . . . and the risk of hegemony.\5\
---------------------------------------------------------------------------
    \5\ Hubert Vedrine, remarks at a conference of French ambassadors, 
Paris, August 28, 1997.

Europe's role, he went on, was to be a ``factor of equilibrium'' to 
ensure the emergence of a more ``multipolar'' international system.\6\
---------------------------------------------------------------------------
    \6\ Ibid.
---------------------------------------------------------------------------
    The most significant recent development in CFSP is the Anglo-French 
initiative, proclaimed at a summit last December in Saint-Malo, in 
Brittany, to promote an EU defense capability. The wording of the 
Saint-Malo declaration refers ambiguously but disturbingly to the 
possibility of autonomous European military operations either ``within 
NATO's European pillar or . . . outside the NATO framework.'' \7\  Both 
the British and French governments have since sought to reassure the 
United States that the primacy of the Atlantic Alliance will always be 
respected.\8\ But, again, the British role is pivotal. The whole idea 
was an initiative by Prime Minister Tony Blair first broached last 
October, reversing Britain's long-standing opposition to such an EU 
project. It was widely interpreted as a way for Britain to appear a 
``good European''--indeed, in a field in which Britain could be a 
natural leader in Europe--at a time when Britain was holding back from 
the EMU. But now, in recent weeks, the Blair government has taken 
preparatory steps to join the EMU. Thus, the UK is moving toward Europe 
on both fronts. All this testifies to the strength of the gravitational 
pull of Europe on this British government. The momentum of EU 
institution-building is more powerful than that in the Atlantic 
Alliance. Where will this lead?
---------------------------------------------------------------------------
    \7\ Declaration on European Defense, UK-French Summit, Saint-Malo, 
3-4 December 1998, reprinted in Survival, Spring 1999, pp. 23-24.
    \8\ E.g., Tony Blair, ``It's Time to Repay America,'' the New York 
Times, November 13, 1998, p. A29; French Minister of Defense Alan 
Richard, ``The Future of the Atlantic Alliance,'' address at the 35th 
Conference on Security Policy, Munich, February 6, 1999.
---------------------------------------------------------------------------
    The jury is still out on this question, with respect to the EU 
defense initiative. Measures taken by the Europeans to coordinate their 
own defense efforts more effectively could have a great burden-sharing 
benefit to the Alliance. This is something that Americans, and 
particularly the Congress, should welcome.\9\ On the other hand, the 
Berlin NATO Summit in 1996 developed a concept for autonomous European 
military actions within the NATO framework, through such mechanisms as 
Combined Joint Task Forces (CJTF) that could have U.S. logistical or 
other support even if U.S. forces were not involved. The new Saint-Malo 
concept is, of course, an EU concept, not a NATO one. How it fits into 
or is linked to NATO is not yet clarified.
---------------------------------------------------------------------------
    \9\ Kori Schake, Amaya Bloch-Lain3, and Charles Grant, ``Building a 
European Defense Capability,''Survival, Spring 1999, pp. 20-40.
---------------------------------------------------------------------------
    As a practical matter, the United States may have little to worry 
about. The Europeans are shrinking their defense budgets with such 
abandon that it will be a long, long time before they have an 
autonomous capacity to act militarily without U.S. backing. So the odds 
are that this EU concept will be empty without the constant involvement 
of NATO. If managed wisely, it could all work out for the better. 
However, the more that either EMU or CFSP has an anti-American 
undercurrent, and the more that EU efforts seem to take a form that 
tears at the integrity of NATO procedures, then concerns could only 
mount in this country that damage is being done to the Alliance. If 
NATO is thought by Europeans to be dispensable, the same idea might 
catch on here (though I would think it a strategic disaster for the 
United States as well as for Europe)
    The Clinton Administration, I understand, has raised questions in 
private with European governments about the meaning and direction of 
Saint-Malo. It is right to do so. Its goal is, and should be, not to 
block an important EU initiative but to focus on specific concerns that 
could spell damage to NATO's integrity and efficiency. Administration 
spokesmen can speak to this more authoritatively than I, but I 
understand that they have stressed certain criteria that they call the 
``3 D's'':

  -- no duplication of NATO functions or personnel in any new EU 
        structures;
  -- no decoupling of Europe from NATO; and
  -- no discrimination against key allies (referring, e.g., to Turkey, 
        which would be excluded if the present Western European Union, 
        or WEU, of which it is an Associate Member, were to be 
        abolished and folded into the EU, of which it is not a member.)

    Perhaps it is time for the Administration to speak out publicly on 
these points, to make its concerns clearer at this important 
informative stage. Certainly, the Congress could declare itself in the 
same vein, in a ``sense of the Congress'' resolution or as part of 
other related legislation. If not, our silence may only undercut those 
Atlanticists in Europe, whether in governments or in opposition 
parties, who are themselves worried about the implications of recent 
initiatives.
                                 kosovo
    A final word on Kosovo. The issues discussed here are more 
fundamental issues of transatlantic relations; they long antedate the 
Kosovo crisis and will be with us long afterwards. But it is clear that 
Kosovo has helped to drive recent developments. Prime Minister Blair, 
in launching his initiative last fall, complained of how ``hesitant and 
disunited'' the Europeans were over Kosovo, and of how inappropriate it 
was for Europe always to have to wait for the (sometimes equally 
hesitant) Americans.\10\ An EU defense capability was meant to remedy 
this.
---------------------------------------------------------------------------
    \10\ Prime Minister Tony Blair, address to the North Atlantic 
Assembly, Edinburgh, November 13, 1998, p. 11.
---------------------------------------------------------------------------
    Kosovo, of course, is a huge subject in itself which I do not want 
to belabor here. But, part of the stake we have in handling Kosovo 
correctly lies in the impact that our actions might have on this 
European impulse to develop the capacity for autonomous action. On the 
one hand, encouraging our European allies to bear more of the 
responsibility in the Balkans is the right thing; that's what we want. 
On the other hand, if we fail to provide the degree of leadership or 
support without which the NATO effort will fail, then we risk spurring 
the wrong kind of reaction in Europe--a greater desire to cut loose 
from us. That is not what we want.
    If we wish to remain a leader in Europe and retain an influence 
over events, we cannot abdicate. We must remain relevant to major 
security challenges taking place there. A position of leadership 
doesn't come for free.
    I thank the Chairman and the members of the Subcommittee.

    Senator Smith. Mr. Rodman, I agree with your assessment of 
the potential consequences, not all good consequences, that 
Kosovo could have on this transatlantic relationship if it 
turns out badly. But it does seem to me that the Europeans are 
wanting a win-win but may be going another way. As they talk 
about a European defense initiative, they are all cutting their 
military budgets. The technology gap between the United States 
military and their own continues to widen.
    I don't know how realistic this is or what our response 
should be. Is there something in our response to them that 
needs to change?
    I sense very strongly when I go over there that they love 
us and they hate us. There is a way around that, but that is 
the body language if not the words.
    Mr. Rodman. Well, we are schizophrenic, too, or maybe I am, 
because I share what many Americans have always thought, the 
idea that the Europeans should do more--that it is healthy, in 
fact essential, that they improve their ability to act.
    I have always thought that coordinating among themselves 
was one way to improve their effectiveness, whether or not they 
were willing to add to their budget. There is truth in that.
    But we have always preferred that they do it in the NATO 
framework, which is really the only serious security 
organization in Europe, and that they not do anything that 
tears at the integrity of the NATO procedure.
    So my nervousness is that they are starting down a road of 
an EU framework. You may be right that, as a practical matter, 
they may never be able to do anything that is without us. I 
mean, their ability to do anything in the future without us may 
never materialize. Therefore, maybe we have nothing to worry 
about.
    But at the formative stage of something, it is important to 
shape it, to make sure that they get it right, that this is not 
something that tears away at the cohesion of NATO.
    If it is within the framework of NATO, then more power to 
them in every sense of that word. Since the 1996 Berlin NATO 
decision, there is a framework that the alliance has worked out 
to give the Europeans greater responsibility if they wish to 
use it. Obviously, we should encourage that.
    Senator Smith. The Germans now are saying nothing outside 
of our boundaries in NATO without a mandate of the Security 
Council--excuse me--the French are saying that. The Germans are 
saying renounce first use of nuclear weapons.
    These are fundamental doctrines, rather a change from those 
fundamental doctrines that NATO has had. I don't expect our 
country would ever use nuclear weapons to start a war, even 
though we used them once to end a war.
    How serious is this? Is this for domestic consumption? Are 
they serious about this? If they are, I just have to say 
publicly that I cannot imagine anything that would, in addition 
to perhaps the consequence of NATO doing badly in Kosovo--I am 
not saying that we will; I voted for it and I hope we will 
win--but if you put on that an overlay of these challenges to 
the fundamental nature of what NATO is, there could be a 
stampede out of that alliance if they are not careful in how 
they talk to us about that.
    I wonder how real this is. Is it for domestic consumption 
or are they serious about it?
    Mr. Rodman. I think we will win these two debates. As for 
the no-first-use debate, my impression is that it is domestic 
politics in Germany, that it was part of the coalition treaty 
of the parties that won. We have firmly rebuffed it, and we had 
British and even French support. The other two nuclear powers 
in NATO have no interest in this. So we have won that debate. I 
think it is settled.
    The U.N. mandate is a much tougher issue because there is 
widespread support for it in Europe. The French and the Germans 
and a lot of others like this idea that there should be some 
restraint on the United States through the Security Council.
    That issue is a central point, as you know, in the 
Strategic Concept, so-called, that is being finished for the 
NATO summit. I suppose by April, by next month, that will be 
resolved. I suspect that there is a way to paper it over.
    Our position is that, of course, we never will act in a way 
inconsistent with the U.N. Charter, and case-by-case is the 
American preference. I expect that we will stand firm on that 
and it will be papered over in some way.
    So maybe both of these issues will prove to be temporary 
issues.
    Senator Smith. If that is a serious proposal on their part, 
that is going to meet with serious resistance among the 
citizenry of the United States.
    Mr. Rodman. The administration I think understands that.
    Senator Smith. It will start with me. But I will be on the 
majority side.
    I would imagine all of you probably have opinions about 
some of the ideas that you have heard discussed here, about the 
statements of the others. If you want to offer opinions or 
clarifications, I would enjoy hearing them.
    Dr. Feldman.
    Dr. Gardner Feldman. On this ESDI question, I think it is 
important to look at all of the statements, beginning with Tony 
Blair's statement in Potschach, which really started this, and 
then Saint-Malo and then Fischer, Joschka Fischer also said, 
first of all, that NATO is the unique organization for 
collective security; and, second, that one of the reasons for 
contemplating this obviously was perhaps to do it within the 
NATO context, to have an effective European component, but also 
to contemplate--and this was Blair, not Germans who started 
this--but also to contemplate situations in which the United 
States did not want to act.
    So I don't think this should be construed as anti-American 
or challenge to the United States. I think it is an effort to 
be a partner. I think it is a very incipient effort. It has a 
long way to go. But I think we have to commend that it is not a 
challenge to the United States.
    I think if we see it as a challenge to the United States, 
then I think it could go in the wrong direction.
    I agree that there wasn't the potential for it to become 
something major. But I do think it is an effort to be a 
partner.
    On no first use, I think that was absolutely a domestic 
issue. It was an issue within the Greens, that Fischer had to 
give something within the party. I don't think we should 
overplay that or exaggerate it. I think that the SPD, when 
Scharping was here, the SPD has tried to tone this down.
    I don't think it is a big issue.
    On the U.N. mandate question, again, I don't think this is 
an effort to try to contain the United States. I think this is 
very much a question of German history and Germans wanting to 
limit the exercise of military power for themselves, and that 
it has to be in an international framework because of German 
history.
    I think those are points that I would like to add to what 
has been suggested.
    Senator Smith. Dr. Gedmin.
    Dr. Gedmin. Senator, I would add a couple of remarks.
    First of all, on ESDI and similar parallel movements, I 
think it is fair to generalize that there are two schools in 
Europe right now, in Western Europe, with lots of hybrids. But, 
broadly speaking, there is the school that Peter Rodman 
referred to--those Atlanticists who are of like mind who 
believe that Europe should move from adolescence to 
geostrategic partnership and adulthood and that it can be a 
partner within the transatlantic framework. And we want to work 
with them, we want to do everything we can to make sure that 
tendencies do not move toward delinking and decoupling.
    I do believe, however, though it is usually only the French 
who say so openly and publicly, I find more and more West 
Europeans who will say privately that we do want an EU which 
creates a voice for us that is separate and distinct from the 
United States so that when we choose, we can work in opposition 
to the United States and move in our own direction.
    Now, look--fair enough. They are free, democratic, 
sovereign Nation-States. But let me use that as a segue to the 
U.N. issue.
    I had a German politician say to me recently--and it 
contradicts what one of my colleagues has said--yes, it is 
true. One of the reasons why we are so fond of using the U.N. 
as the indisputable legal basis for use of force is because for 
us littler guys, it can check the unilateralism of you bigger 
guys. Then he added: I know that that is in our interest; but I 
must confess, maybe it is not in yours.
    Well, I am sure it is not in yours. I agree with you, 
Senator, I think that's something we should massively resist.
    I also think that what my colleague, Dr. Gardner Feldman, 
said about Germany and history does play a role. But I don't 
think anybody believes that the predominant issue of the day is 
how do we check German military power and adventurism abroad.
    In fact, most of our time is spent trying to tease them out 
a little bit so that they will send a few medics with us here 
and there.
    Senator Smith. Interesting.
    Mr. Rodman, do you have anything further to add?
    Mr. Rodman. There are different scenarios which would test 
whether this EU capability is a problem or not. The easy 
scenario is a case where the Europeans want to do something on 
their own and they have our blessing. This is the case that the 
Berlin procedures contemplate, that maybe we would give 
logistical support or they would be able to use NATO assets. 
But it would be done with our blessing.
    So it obviously fits into the NATO framework, and yet it 
might be an autonomous European action.
    The ``contingency that dare not speak its name'' is the 
case where the Europeans want to do something and we don't like 
it, we don't want it to happen.
    Senator Smith. What might that be?
    Mr. Rodman. Well, if it is in NATO and if the only 
procedures that exist are in NATO, then they cannot do it. If 
it is a truly independent capability--and I think you are right 
to say the bottom line may be that they may never have this 
capability--but if it is a truly autonomous and independent EU 
capability, it would be totally free of dependence on the 
United States, to put it politely.
    That is the theological issue.
    As a practical matter, we may never have to face that. I 
mean, can you envision a case in Europe where they would want 
to do something and we would violently object? I think our 
interests are congruent enough, certainly in Europe, that it is 
hard to imagine a case where that kind of conflict would 
develop.
    Senator Smith. I think back to the Suez Canal.
    Mr. Rodman. Well, outside of Europe is different. That is 
where a lot of cases do exist.
    Senator Smith. That is the only thing that comes to my 
mind.
    Mr. Rodman. Well, Middle East contingencies are exactly the 
category that would come to mind.
    That is the test of all this. The question is, how much do 
the Europeans now insist on having something that could evolve 
in that direction, to give them that capability?
    I think we ought to firmly steer it in the direction of 
staying within the NATO framework, which has practical 
advantages for everyone and obviously meets this concern.
    Senator Smith. As you look at phase 2, if phase 2 becomes 
necessary in Kosovo, meaning ground troops, and the Europeans 
have proposed a presence of 20,000 troops with only 4,000 of 
them being U.S. troops, is that a European effort to say we are 
going to try to bear a bigger part of the burden?
    Mr. Rodman. Yes, and I would give them credit for that.
    Senator Smith. We should encourage that.
    Mr. Rodman. Absolutely. I think this is a case where we 
seem to be cooperating and having a common strategy. I hope it 
is crowned with success.
    Senator Smith. Let me pose a hypothetical.
    Should a phase 2 become necessary, the Kosovars are 90 
percent of the population of Kosovo. When the Serbs have lost 
their military power to wage war, why shouldn't they be the 
ground troops? Why shouldn't we arm them?
    Mr. Rodman. If the NATO effort fails, the only other 
leverage we have is the Kosovars themselves. It is an option 
which I think our governments have chosen not to use. It is 
what used to be the Nixon Doctrine--your first resort should be 
to help people on the ground who are willing to fight for 
themselves.
    This is something we have chosen not to use. Therefore, we 
are required to substitute NATO's military leverage, and we are 
about to find out whether this is effective.
    Senator Smith. I think that is going to be an interesting 
debate in the U.S. Senate, should it come to that. I think we 
have to hold out the possibility of ground troops. But, 
frankly, I am hard-pressed to understand why we should ignore 
the people who have a stake in this.
    I said to Madeleine Albright yesterday and I said to Strobe 
Talbott a minute ago on the phone, when you talk about 
autonomy, you are talking about imposing a political 
arrangement on an area that nobody supports anymore.
    The Kosovars want independence. The Serbs want to dominate 
Kosovo. And we are trying to say go back as you were. It does 
not seem to me that that is an achievable political end.
    So when you go and bomb someone, you have taken a side 
there. I don't know whether you can go back to just saying hey, 
we are neutral again after we have justly eliminated his 
capacity to make war on his neighbors and destabilize this 
area.
    Mr. Rodman. I don't know whether the other allies would go 
along with the strategy of arming the Kosovars. I just don't 
know.
    Senator Smith. My question is why not? What is the motive? 
What is the European fear of the Kosovars?
    What I am being told is that they don't want, they don't 
necessarily like these Kosovar Albanians. They don't like them 
coming into Germany. This is creating lots of tension in other 
countries, all these refugees pouring out of the Balkans into 
their country. Therefore, they don't want an independent 
Kosovo.
    Am I missing it?
    Dr. Gedmin. I cannot fully and definitively explain it, but 
I share your analysis. It is true. In Europe, there is less 
sympathy for the Kosovars. Broadly, and I think also 
disturbingly, if I may generalize, Senator, when Europe has 
taken a lead in the Balkans in the last decade, frequently, not 
always, it has had an inclination--``it,'' the Nation-States of 
Western Europe--an inclination to lean toward traditional power 
politics and associations with regional proteges. And, often, 
when we have pushed very, very hard, or I believe we should 
have pushed perhaps harder at times, to draw a distinction 
between victim and aggressor, which is so important for any 
kind of enduring peace settlement, the Europeans have been 
fonder of leaning on the victim rather than the aggressor.
    Now I don't know if that helps to explain or not.
    Senator Smith. Yes.
    Dr. Gedmin. The other thing I wanted to add as an 
observation, if I may, is I hope that, whatever we do after 
this initial phase of military bombing or air strikes, we 
develop some sort of success strategy, which I don't think we 
have. I hope that exit strategy, as important as it is, takes a 
back seat. And I hope that bean counting over how many 
soldiers, which is important, too, takes a back seat.
    It seems to me that if we, the United States, believe that 
stability and security in Southeastern Europe is in our 
interest, and staving off a humanitarian catastrophe is just 
and in our interest, the first and single criterion ought to be 
how do we prevail. How do we guarantee a success?
    I am very doubtful that we have such a success.
    I am interested--I have not thought deeply about it--but I 
am interested in your idea of arming the people, as we tried to 
do in Bosnia, by the way. The idea was let's level the playing 
field to create a deterrence so that the Slavic Muslims can 
defend themselves.
    I am keenly interested in your idea not only as an interim 
solution, but it seems to me, by the way, that any solution 
like that has to be--and I am going to be quite politically 
incorrect on this--has to be part of a larger and a longer-term 
strategy aimed at the source of the problem. And we know the 
source of the problem has a name and an address.
    I would venture to guess that, whether Milosevic comes to 
the table of not in 1, 2, or 3 weeks, as long as he and this 
regime is in power, you and your colleagues will be discussing 
the problem in the Balkans in one form or another next year and 
the year after. I believe that.
    Senator Smith. My big fear, once a decision is made to pull 
the trigger, is that they don't finish the job. Frankly, what 
that means to me is removing Mr. Milosevic's capacity to wage 
war on his neighbors and his own citizens.
    Now beyond that, how democracy takes hold and how they 
develop in Kosovo and Serbia is really their business. But it 
is our business that this is occurring in the backyard of our 
international commitments. It is in our interest to make sure 
that he does not continue to foster regional instability.
    I mean, he sits geographically among our NATO allies. I 
just would hate to see the administration do half the job. That 
is what I have said to them and I hope they follow through 
because a lot is at stake in this.
    If we mishandle Kosovo, it will have long-term implications 
for the willingness of the American people to support NATO and 
to support our continuing leadership of the Free World. I think 
a big debate has erupted in the homes of Americans all over our 
country.
    Thank you all for your testimony and your comments. It has 
been very enlightening for me and I am grateful to you.
    Dr. Gardner Feldman. Thank you, Senator Smith.
    Mr. Rodman. Thank you.
    Dr. Gedmin. Thank you, Mr. Chairman.
    Senator Smith. We are adjourned.
    [Whereupon, at 4:13 p.m., the subcommittee adjourned.]

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