New Year, New Alliance

Czechs and Swedes have not always seen eye to eye. In 1648, during the Thirty Years’ War, Swedish forces looted the Prague Castle, removing much of the extraordinary collection of art accumulated during the reign of Rudolph II, the Holy Roman Emperor who made Prague the empire’s capital.

Today, the interests of Swedes and Czechs seem much better aligned. Indeed, forging an explicit Nordic-Central European axis in the European Union, emphasizing both the bloc’s security and collective defenses and fighting against heavy-handed economic policy ideas originating in Paris and Berlin, might be the best way to reinvigorate the European project this year.

A case in point: the continuity between the Czech and Swedish presidencies of the EU Council, which have lasted, respectively, through the last six months of 2022 and the first six months of 2023. The Council’s rotating presidency does not really include a strong mandate to set policy agenda, except at the margins; yet presiding countries do use the position to set the tone of the bloc’s discussions and otherwise take advantage of the post’s soapbox to make their priorities clear.___STEADY_PAYWALL___

In the Czech and Swedish cases, the overlap in those priorities has been considerable. Both center-right governments stress the urgency of responding forcefully against Russian aggression and strengthening Europe’s defenses but do not fall into the trap of preaching European “sovereignty” or “autonomy,” which in some circles is shorthand for autonomy from the United States.

The Czech presidency of the Council, begun after Russia’s invasion of Ukraine, was structured around five distinctly geopolitical priorities–managing the refugee crisis and Ukraine’s post-war recovery, energy security, strengthening Europe’s defense, resilience in the European economy, and reinforcement of democratic institutions. It has seen some real accomplishments. Most important, the Council extended earlier sanctions against the Kremlin and ratcheted up the pressure with its eighth and ninth sanction packages, adopted respectively in October and December of 2022. After last year’s brutal crackdown on protesters in Iran, the EU also widened the scope of its Iran sanctions.

In September, Prague hosted the first summit of the European Political Community (EPC), which provides a platform for EU members and non-members to discuss topics of mutual interest. The EPC matters not just to strategically important and closely aligned non-members like the United Kingdom and Norway but also to the countries of Eastern Europe, the Caucasus, and the Western Balkans. Many of those countries aspire to join the bloc but remain years, if not decades, away from a realistic prospect of membership.

The Swedes are likely to continue the heavy emphasis on geopolitics, which also dominated the recent speech to the Riksdag by Prime Minister Ulf Kristersson on the Swedish presidency. “In some respects,” he said, “we know exactly what [the Russian invasion’s repercussions for Swedish presidency] will be: maintaining European unity in our support for Ukraine; expanding the economic, humanitarian and military assistance to Ukraine; continuing to gather countries and resources for Ukraine’s reconstruction; safeguarding international law; demanding accountability; and carefully monitoring Ukraine’s progress as a candidate country. In other respects,” he continued, “we have no idea what the repercussions will be. What will be happening a year after the invasion? Later in the spring, or in the summer of 2023? During its Presidency, Sweden will be prepared to act quickly and resolutely.”

Kristersson also touched on the question of economic resilience, in a tone that departed from the emerging European orthodoxy. On the one hand, he said, “openness must never lead to naivety, or unilateral dependence on Russian energy or Chinese minerals. The EU must therefore spread the risk by safeguarding diversified and mutually deepened trade with other countries.” However, the key to Europe’s economic success is not overregulation and industrial policy but rather the region’s “four freedoms–the free movement of goods, capital, services and people”–as well as a “fair and level playing field for European companies.”

Those are not just platitudes. In recent years, the emerging economic policy consensus in Brussels, driven in part by the distinctly French ideas of “strategic autonomy” and “economic sovereignty,” has become increasingly sanguine about European-level industrial policy and protectionism, even at the risk of harming both the foundations of the single market and the EU’s ability to wield trade liberalization and access to its market as a powerful tool of soft power.

Examples  of this policy consensus, spurred by distrust of an increasingly more protectionist United States and its tech giants as well as by the ambitions of the Chinese Communist Party, include the EU’s unliteral approaches towards data regulation; climate policies, like the Carbon Border Adjustment Mechanism, with significant repercussions for trade, and calls for a European cloud or “Airbus for artificial intelligence.”

Heavy-handed industrial policies, including various privileges for domestic industrial “champions,” were largely discontinued in Europe in the 1980s and the 1990s under pressure from European institutions–for good reasons. To seek to resuscitate them at the European level carries considerable risks. One study by the European Centre for International Political Economy estimated that such policies could cumulatively cause a decrease of 0.5 to 0.75 percent in the GDP of the EU–already a low growth region–even without taking into account likely retaliation by the region’s trading partners.

More important, it will be small, open economies–like Sweden or the Czech Republic–that will likely bear a disproportionate share of these costs, perhaps as much as four times the impact on larger countries like France or Germany.

No wonder the enthusiasts of European industrial policies disproportionately represent large, “old” member states. And given the inevitable effect of such policies as irritants to the transatlantic partnership, it is very much in the U.S. interest that the more skeptical voices of smaller member states get a fair hearing.

It is equally important for Washington that the EU’s foreign and security policies continue to be shaped by governments that fully understand the extent and urgency of the Russian threat. The Czech Republic donated equipment worth almost 10 percent of its annual defense budget to Ukraine; Swedish military assistance exceeds 4 percent of the country’s defense budget. In contrast, France’s assistance, at 0.5 percent, reflects, in part, a reluctance to “escalate.”

President Biden, in a joint press conference with Ukraine’s president Volodymyr Zelenskyy, spoke indirectly about one reason why the United States continues to withhold some forms of aid from Ukraine: the need to maintain unity within NATO. Biden said he had spent “several hundreds of hours face-to-face” with European leaders, making the argument for why a Ukrainian victory was in their interest. They get it, he admitted; but “they’re not looking to go to war with Russia. They’re not looking for a third World War.”

Biden’s admission tells a lot about who the administration’s main European interlocutors are: France and Germany. Yet, the year during which the EU Council is under the Czech, then the Swedish presidency–among the most Atlanticist governing voices on the continent–is a real window of opportunity for the United States. It is right and proper for the United States to celebrate its ties to Europe’s traditional powers, as it did during President Macron’s state visit; yet the potential rate of return on investments in more Atlanticist capitals–from Prague to Stockholm–is far more significant.

Given the return of transactionalism to U.S. foreign policy, it is worth remembering that France and Germany are unlikely to buy American military equipment on a large scale–let alone enlist Westinghouse, as Poland done, in their nuclear energy projects. In contrast, East Europeans, Balts, and Scandinavians might do so.

Most important, it matters greatly to the United States that like-minded European countries succeed at deepening their mutual trust and cooperation and provide counterweights to both the EU’s current drift towards economic protectionism and its blasé attitude to external threats. Swedes and Czechs–alongside a sizeable cohort of other Nordics, Balts, and East Europeans–understand perfectly well that no compromises are possible with the terrorist regime in the Kremlin and that the continent’s economic resilience is undercut, not strengthened, by heavy-handed economic nationalism, particularly if it harms economic and trade links with the United States. Here’s hoping that the voice of this new “new Europe” is heard, loud and clear, throughout 2023.

Dalibor Rohac is a senior fellow of the American Enterprise Institute in Washington, D.C. and a contributing editor of American Purpose. Twitter: @DaliborRohac.

Image: (Flickr: Alisdare Hickson)