Europe Update

Council on Foreign Relations
New York, NY

RICHARD R. BURT:  Well, thank you.  We’re going to get started right away, so we can keep on schedule here, but I’m delighted to be the presider or facilitator of what I hope will be a very interesting European update.  The reason I think it will be interesting is we have not only two experts on the subject, but two recent authors on the subject.  Some of you may have seen both Lord Patten and Ambassador Schnabel’s books reviewed recently in “The Wall Street Journal.”  I’d like to make just a few administrative remarks to get us off and running.

First of all, the council people have told me to please turn off your cell phones.  What I am going to do is preside over an informal kind of give and take between our two speakers for roughly 20, 25 minutes, and then we will turn it over to you, the members, to make comments and ask questions.  And I expect that we will get everybody here out the door by 2:00 o’clock. 

We are lucky to have Chris Patten and Rock Schnabel with us today.  In Rock’s case, it’s easy for me to make an introduction.  He’s an old friend.  He has served in several high-level U.S. government jobs prior to his last post as ambassador to the European Union.  He served in several high Commerce Department positions during the Bush-41 era, and prior to that was the U.S. ambassador to Finland.  He’s also an accomplished investor, and asset manager, and currently is a co-chairman of Trident Capital in Los Angeles.

Chris Patten is the chancellor of Oxford.  I should say both Oxford and Newcastle Universities.  He just briefly mentioned to me that being chancellor of Oxford University is like being the Dalai Lama: it’s an appointment for life, but of course he came to those positions as the European Commissioner for External Relations in Brussels.  He was a long-time member of the House of Commons and chairman of the Conservative Party.  And perhaps one of his best-known roles was the last British governor of Hong Kong during a very turbulent and interesting period where he received a lot of attention in both the Chinese and the British press, to say the least.  (Laughter.) 

Let me get us started, gentlemen, by—maybe I’ll begin by throwing a question to Rock Schnabel, but it’s also a question to Chris, so I’d like you both to take this on.  The reason I start with Rock is I purview—looking at his book—perusing his book, I notice that part of his book deals with the—some of the issues and problems that the EU and the member states of the EU have had with dealing with the very large Muslim minorities that live in many of those countries.  And he argues in his book that if the countries or the governments play their cards right that actually the EU could help or could become a—and I’m quoting here—“a cradle of Islamic democracy.”  And I wonder how he would reflect on that terminology in the light of what is happening today in Europe and in the Middle East with the Danish cartoon debate. 

ROCKWELL SCHNABEL:  Well, thank you, Rich.  (Laughter.)  I’m so happy that we got together before this session talking about some of the issues I really wanted to talk about.  And of course where I ended up in this job was there was a reason for it.  But when I accepted the job, I realized in going around the country that basically 75, 80 percent of most Americans at large had no idea what the EU was all about, so it very quickly started to have an effect on my family, because I had been offered the job to go to Italy as the ambassador, and my family is saying, “You’re going to the EU, but nobody knows what it is.  What is the job?  Where do you go?  Do you have a house?  Do you have an embassy?” 

Anyway, nobody knew, so therefore I ended up writing this book for the one—for the simple reason that I wanted to get a message out to that 75 or 80 percent of America that had no idea of what the EU was about, and yet it is affecting all of us—all of us in this room, all of us in New York, all of us in this country—in a major, major way. 

The issue—obviously, the issue of what is going on right now, which is incredibly, incredibly serious, it—we saw it manifested in Brussels when Chris and I were there.  No question about it.  We had demonstrations in front of the embassy frequently.  We had a lot of intel on movement of—Muslim movement that was very disconcerting, and yet my book and the whole discussion comes from a degree of optimism.  And some people think that maybe that comes from a degree of naivete.  I don’t believe so. 

I was born and raised in Europe and educated and came to the United States as an adult, and realized that this optimism thing is very contagious.  You actually pick it up in the United States.  You don’t find very much of that in Europe.  You have it here, so you start approaching things in a different way.  And I believe that when you talk to the Muslim population of Europe, and a lot of the Muslim population are people that are—there’s a large percentage in some countries, but it’s not overwhelming.  And yes, the ones we read about, of course, are certainly very serious, but they are becoming integrated.  And yes, the second and third generation frequently do speak the local language, are going to schools, and so on.

I think we read a lot of the very negative side of it.  I think that Europe—one of the key things in Europe is the demographic issue.  Europe needs to find immigrants to address that issue and needs to be able to address the problem of creating jobs for them.  So you get back to basically an economic argument in my judgment, and that is you need growth in order to create jobs.  As long as—what happens in the United States, when immigrants come in from all over the place, Latin America particularly, these people arrive frequently illegally, but they are assimilated in the community, in the economy, because there are jobs.

The problem in Europe is there has been very little growth, so there are no jobs.  The people that are hit with that rather immediately are people that are newcomers, and they are excluded from society, particularly because they don’t have jobs.  So if you found a way to create wealth in Europe, which I believe, by the way, is happening, that that issue, and particularly the Islamic issue, can and will be addressed through that process.

BURT:  Chris, Rock has essentially suggested that the economic rationale for integrating these populations in Europe will be more powerful than the cultural gaps.  Do you accept that?

CHRIS PATTEN:  Not totally.  Let me just deal with the issue of the cartoons for a start.  Would I think it was tasteful to have cartoons in a newspaper showing Christ bombing Iraq?  No.  Would I think it was tasteful to have cartoons making fun of the Holocaust?  No.  Do I think the cartoons that appeared in the Danish newspaper were tasteful?  No.  Do I think governments should apologize for the fact that these cartoons were published and were repeated in other newspapers, including—and were also shown on BBC—do I think governments should apologize for that?  Absolutely not.  And one of the important liberties we have in Europe is freedom of speech.  One of our important values is tolerance.  But if you put those two things together—and they’re not legislated for on the whole and they involve people knowing the constraints which they should themselves apply, and in this case I happen to think that the newspaper editors and others overstepped a mark.

The economic issue is in some respects easier to deal with than the cultural and civilization issue.   There are between 12 and 14 million Muslims living in Europe, and we’ve had problems in two or three countries.  Undoubtedly, the result in the Dutch referendum had something to do with the scale of the immigrant community.  We had the riots in France, which had, I think, everything to do with economics and if you leave school and you are called Pierre in Paris and you don’t have any qualifications, you are 25 percent likely to be without a job.  If you leave school at that age, and you’re called Ishmael, you’ve got a 45 percent chance of being without a job.  And I think labor market flexibility has much more to do with unrest in France than cultural issues.

In Britain, we of course had this year and last year the terrible bombings in London by young men, at least two or three of whom seemed to be seamlessly involved in the community.  For me, the most important aspect of those horrors was the complete lack of targeting of Muslims afterwards.  People went back to behaving normally and almost straightaway.  The only real controversy was whether or not it was right to hold a national service and to commemorate those who have died, because some people said that that was treating too seriously what was criminal activity.  I was rather proud of the way that Britain responded, and I think it sent out entirely the right signals.  We have in Britain today more Muslims attending mosques on Friday than members of the Church of England go to church on Sundays.  Things have moved and they’ve moved a long way. 

But what we have to get across to our migrant communities is that while we respect their traditions and their religion and their culture, while we don’t try to define Europe in terms of Christian civilization, which is bad history and offensive modern politics, nevertheless, we do define ourselves in terms of our tolerance and we cannot accept that it’s necessary to be intolerant in order to show due respect to somebody else’s civilization. 

And my own view is that what has happened makes even more important the case for Turkish entry into the European Union and even more difficult to persuade people of that case, but I believe passionately that Europe has a real chance of redefining itself through the issue of Turkish membership in the European Union in a way which demonstrates how you can create a tolerant community and build bridges between the Western Christian and the Islamic world, but it’s going to be a very difficult task.

BURT:  Chris, I want to come back to this issue of Turkey.  In fact, I hope it will come up in our broader discussion, but I want to move right now to—I guess I’d like to say the other really timely issue about Europe and perhaps the greater Middle East and that’s the problem of Iran. 

It’s striking that the EU three, Britain, France, and Germany, have taken the lead in addressing that issue with Tehran.  And it’s also striking that the Bush administration has by and large been increasingly supportive of that process.  It now looks as though the issue will go with some short delay to the UN Security Council.  And I guess the question that a number of Americans are asking, and particularly people in the Bush administration are asking is when it comes to the crunch in the security council will the Europeans, not simply the EU three, but the European Union, be prepared to support a stringent enough regime of sanctions and perhaps other measures to dissuade the Iranians from exercising this nuclear option.  And if that fails, even take maybe more forceful steps or will we see a weaker response that could then create real differences between the Bush administration and Brussels?

PATTEN:  Well, first of all, can I saw how much I welcome the fact that the administration in Washington and the European Union are working together on this.  And I recall a time when I came to Washington, was told that Iraq was wimps and real men were interested in Iran, and I’m glad that that is—and something which has been put behind us and put to one side. 

Having said that, I think it is perfectly clear that the European Union—that all 25 member states will be prepared to work with the United States on—and work through the Security Council to isolate Iran and, if necessary, to put in place a sanctions regime.  But will anybody else?  Not just the Chinese and the Indians and the Russians, but the Brazilians and the South Africans and the others, because what worries me—and in the case of Iran, a country which we’ve made much more significant in the region through policies on other parts of the region—(laughter)—what worries me is that we’ve constructed a policy box in which I’m not aware of any option working particularly well.  And I don’t myself think that the military option is remotely wise, and I would hope that sanctions might work and—though I’m pretty dubious about sanctions.  Then I think you come back very quickly to a very unpalatable point that the international community does not feel as Europe and America does that Article IV the Nuclear Nonproliferation Treaty denies countries the right to complete the fuel cycle, and that’s really the toughest issue.

I wonder whether we’ll ever be able to resolve this issue without looking again at the Nuclear Nonproliferation Treaty, which I’m absolutely convinced needs to be toughened up, but there are implications for those of us with nuclear powers, if that is the outturn, and I wonder whether we can actually deal with the question of Iran’s nuclear ambition, which are, of course, related to nationalism and to what’s happened previously to Iran, not least when we were looking the other way and Iraq was dropping chemical weapons on Iran.  I wonder whether we can deal with it as well without looking at the whole issue of regional security, and I think we’re in a box in policy on Iran, and I don’t know any easy ways of getting out of it without trying to redefine the box. 

BURT:  Rock?

SCHNABEL:  It was in February that the president came to Brussels and said that he would come to talk to the European—to Europe, to the EU.  I remember before we went into one of the meetings where you’re briefing the president, which is one of the functions of an ambassador, I guess, I said only one thing really—or two things.  I said, humility, listen.  I said the third thing, EU, EU, EU.  We’re here to talk to the EU.  We’re not here to talk to any one of the countries as such.  We’re meeting with the leadership of the EU, and it was a major, major thing.  And the Europeans, by the way, of course, interesting—I found out later on, they knew exactly how many times he said EU, because they were counting.  (Laughter.)  Fact. 

It was in those meetings that the Europeans convinced the president to change our position—the administration’s position on the view of how to approach Iran on this issue, and that they had a dialogue going with Iran, which the United States, as you recall, after the administration (or as ?) the president left there the administration basically did a 180 and agreed to work with the Europeans to see what would come out of that approach. 

It has turned out that now a year or so—or short of a year has gone by, and we are now at the point where we thought we would be maybe a year and a half ago, and that is to take this issue to the Security Council.  And as Chris says, it’s very true of course, that a number of countries, including South Africa, have abstained and you don’t know where they’re going to go on this whole issue. 

I found it interesting when I was there that one night I had a dinner with the Israeli ambassador to the EU who said to me point blank, we have been telling the United States for years that the issue isn’t Iraq.  It’s Iran.  And you’ll see that—I mean, this goes back several years for that matter and, of course, that is the real issue.  I have heard positions at one point expressed by some of the people in the administration that the next rung on the agenda was Iran.

I think if you read the article this morning on the cover of “The Wall Street Journal” about the neorealists as opposed to the neocons in the White House today that the feeling and the atmosphere has dramatically changed, and I think that Condi Rice is very much a part of that.  So at the moment it’s a multilateral approach to the issue, which, of course, is incredibly, incredibly serious. 

BURT:  Rock, let me raise a different question as a maybe lead-in to our broader discussion, and that is you have titled your book, if I’m not mistaken, “The Next Superpower?”  If you took a poll of people asking them who will be the next super power, I would venture to say 90 percent plus of those respondents would say China, not the EU.  And that’s not because the EU isn’t collectively and with a gross domestic product and so on an important economic and in some ways political power; it’s more, I think, questions about where—what’s the end point of this EU process. 

There was a time when I was posted in Germany when Germans in particular would tell me that they thought that this was all moving towards the creation of a United States and Europe and not only growing economic integration, but political integration—(inaudible)—the ETC, the Europe—the collaboration on foreign policy, the creation of people in (quotes ?) potential “European foreign ministers.”  In the last 12 months, I think a lot of questions have been raised about the continuation of the integration process.  For one thing, the broadening process would arguably in some respects make integration more difficult.  Chris Patten talks about Turkey and there’s reference to Ukraine becoming a member of the EU, other states.  As you broaden this net, integration seems—particularly in the political realm, seems more and more difficult. 

And secondly, you’ve seen some of the core members of Europe express real political frustration with the EU.  The French and Dutch referendum, for example, on the new European constitution, which may have not been so much of a response to the constitution itself, but some concern and some doubts about the enterprise and its value.  So I’ll start with you, Rock, but then, Chris, I’d like you to pick it up is what is the vision.  What’s the vision for this process, which for the last 40 years has been—40, 45 years has been remarkably successful, but it seems to me to be at an important turning point? 

PATTEN:  Well, first of all, if I had to do it all over again, I probably would change the title.  It was just published in France last week, and they used something like the U.S. and the U.S.—pardon me, the U.S. and EU together, i.e., it doesn’t refer to this superpower thing.  The fact of the matter is, Europe today—I mean, economically is a superpower.  Yes.  China, of course, it’s going to be out there, if they could resolve a few problems that we’re all aware of, such as massive unemployment, and environmental problems, and AIDS and such, but—it’s not a one-way street, in other words, but that is the logical—and you will get that answer.  And I agree, that’s why maybe it would have been better.

Conversely, it brings up the discussion.  And that’s, I guess, what we’ve been trying to do in a book.  They are, in effect—they have a larger economy than we do today.  Very few people are aware of that.  They have a tremendous amount of influence in the world today by writing regulations that is making life terribly difficult for American companies.  We used to write the international standards.  The Europeans are to a large extent today.  Most of the new regulations in Europe are written in Brussels.

So my argument was that when Mr. Welch flew in sort of a celebration flight to Brussels to sign up this last major acquisition of Honeywell that he had to do before he retired, little did he know that this little man who he didn’t really know who it was, Mario Monti—

PATTEN:  Super Mario.

SCHNABEL:  Super Mario—a professor from Italy, wonderful man.  I liked him very much, and an intellect—said no.  And Mr. Welch, who did walk on water up until that time, all of a sudden found out he didn’t.  And the president of the United States called Mr. Mario Monti and called the president of the European Union, and nothing happened.  They lost the deal.  And now the courts have even said it’s—there’s no deal.  Never happened.

The next CEO of GE came in to see me early on.  We both started about the same time.  And he said, “What’s this EU all about?”  Well, he’d done his homework.  And one of the things he did very quickly was he moved his headquarters from London to Brussels and made $45 billion worth of acquisitions since that time. 

The point being—and Bill Gates—Bill Gates figured out what it was all about and what’s happening  there—has very large offices there.  They, too, a couple of years came around, signed a major deal, and all of a sudden he was hit with a major fine of $500-$600 million. 

The point is that even at those levels, people weren’t really aware of the immense power of the EU that is growing by the minute.  If you go—I had a meeting with Secretary Snow there, one of the last things I did with his counterpart, Commissioner Grieve, in Brussels and we walked into a room like this meeting room.  There was an enormous window out and we were kind of waiting for Mr. Grieve to arrive, and we were looking outside, and we could count 19 cranes.  And I remember when I first went to Hong Kong and I flew in there, you should cut—you can smell, you can just taste the activity.  It was many, many years ago.  Brussels is just like it.  It’s got more cranes than—maybe not than Shanghai, but certainly up there.  There is something major, major, major happening.  A lot of people just don’t know. 

So my point was, you may not agree that it will be a superpower in all aspects, but they are certainly going that direction.  They have stated they want to be the most competitive economy by the year 2010.  Will they be there?  Who knows?  They may not be.  It may take a while.  It may never be there, but one thing you cannot afford to do is to allow the train to get out of the station and not be on it in some fashion.

BURT:  But Rock, let me pin you down.  If it’s not going to be a superpower, it’s certainly not going to be a unitary state, so what is—what kind of political entity will this future Europe be?

SCHNABEL:  Well, there are people—and I think it was Churchill that at one point said—didn’t he, Chris?—that you were talking about the possibility of a United States of Europe.  Way, way, way back, obviously.  There are people that believe something like that could happen.  I think it—from where we sit today, it won’t, but Europe is developing enormous and has developed enormous economic powers.  With that goal, political powers and the influence of the EU today is getting greater by the minute.  The military part of it is very much in its infancy, but nonetheless, Europe—the EU has taken over certain activities as an EU, including in Bosnia as of the end of last year. 

So you can say it’s not really happening.  The fact is, it is and it is affecting all of our lives.  And the business as such during the very difficult time that we went through there in the years I was there, primarily because of the Iraq war, but also Kyoto, the criminal court issue, a number of different things, but during that very difficult time, the stabilizer was the economic integration between the two, which is enormous and growing.  So I think essentially you have to be aware of what is going on with that power.  Whether you call it a superpower or not, that is where the question mark comes in. 

PATTEN:  Well, to borrow from Kennedy’s Latin primer, let me begin with two (known?) questions.  Is Europe going to be a superpower?  No.  The European population will fall during the first half of the century, and with the steepest falls in the large, most Catholic countries.  Extraordinary that the Pope had such a—the last Pope had such an influence, an impact on the political geography of Europe, but not much of an impact on the way that Europeans make choices about families. 

And so a big fall in population: 22 percent in Italy, 15 percent in Poland, 8 percent in Spain; and 20 percent fall in our working age population; fall in the share of world trade, fall in the share of world output.  Superpower?  No.  And significant economically?  Yes, but not a superpower.  And not so significant economically unless we repair the real deficit with the United States, which is not spending on defense, on which we spent more.  But the real deficit is our spending on learning and knowledge.  We spend half of what America spends on research and development, and our universities are half as well funded in terms of higher education.  First 30 years of the last century, America won 3 percent of Nobel prizes.  Since 1970, you’ve won 60 percent more Nobel prizes than Europe put together.  Not a superpower. 

United States and Europe?  No.  There was a vainglorious argument at the beginning of the EU Constitutional Convention.  Mr. Giscard, who is a great man, my main sponsor to be president of the European commission, but not best known for his Franciscan humility—(laughter)—and President Giscard argued that the work he was doing was like the Philadelphia convention two centuries ago—complete bilge.  (Laughter.)  The Philadelphia convention, subnational entities were working together to create a nation state.  What we’re doing in Europe—proud ancient nation-states working together to see how we could share sovereignty in a legal framework which is acceptable to national parliaments and electorates.  Completely different, and it’s not going to change.

What can we be and what can we do?  It’s ramshackle.  It sometimes appears to stagger from crisis to crisis, but the wonder of it is that we do manage to share sovereignty across such a wide area of activity to such a profound degree.  That’s what’s extraordinary.  And in the single market, in terms of trade policy, in terms of environment policy, in terms of competition policy, it makes Europe—as Rock was saying, it makes Europe an extremely important player. 

But I think that we’re more important for another reason, and that is, in my judgment, we’re more aware even than when Peter Drucker used to argue this case 40 years ago that national frontiers are porous.  But even powerful nation-states, even the most powerful nation-state there has ever been, the United States, can’t actually manage to cope with global problems on its own or deal with global opportunities. 

And if you’re an ASEAN member or if you’re in the Mercosur Group or if you’re in the San Jose Group in Central America, people increasingly look at the European Union as an example of how to manage sovereignty in a way which makes you more capable of dealing with global problems from organized crime to epidemic disease to energy—how you can deal with those problems better by working with your neighbors; a recognition that very often you increase de facto sovereignty by giving up a bit of de jure sovereignty. 

And that’s what I think Europe offers for the future: a paradigm of how to manage that.  Not perfectly.  This is made out of the crooked, crooked timber of humanity, and not perfectly because it depends a lot for its smooth running on the leadership given by national leaders in Europe, and we have been extremely unfortunate in the last few years.  I mean, now, happily, Chancellor Schroeder has moved on to better-paid employment and President Chirac will not be with us for much longer.  Some of us will be able to contain our grief within the bounds of public decorum.  (Laughter.)  Mr. Blair, unfortunately, and I hope he will recognize this fact—Mr. Blair was a very, very serious victim in terms of his political standing in the United Kingdom and, more, his political standing in Europe with the position he took on the Iraq war.  Whether he was fatally winged, well, we shall wait for history, but I happen to think he probably was.  But we haven’t been lucky in our leaders.

And even though there are 25 member states, there is no European position which provides the sort of partnership which we should give America, unless France and Britain and Germany agree on things.  That speaks no disrespect to any Spanish, Italian, Polish, Estonian, Latvian, Lithuanian or others present.  And so I hope Angela Merkel will give a rather better European leadership than her predecessor, and I hope that we will recognize that we should be partners, not rivals, of the United States.  But I hope the United States will also recognize that partners are allowed to have from time to time opinions of their own. 

BURT:  Rock, you want to make a brief comment?

SCHNABEL:  Just very, very quickly.  Yeah, the demographics issue, as Chris alluded to, no question, is one of the key problems.  In the United States has been immigration.  It has been addressed (as that ?), and I think in Europe you’re going to see that, whether they like it or not. 

And secondly, the addition of the ten new countries that just joined, I think, is having a tremendously favorable effect—positive effect on the rest of Europe.  That’s 100 million people, give or take, highly educated, poorly paid, that are pressing their way into the rest of Europe.  You see it in Ireland.  You see it in France.  Some of the older people, older generation may not like it, but it’s going to happen.  You can’t stop it.  And I think that that is in effect reviving things, if you will, in old Europe. 

BURT:  The famous Polish plumber.

SCHNABEL:  Yeah.

BURT:  I’m going to now open this up to the floor.  Please state your name, give us your affiliation if you’d like, and direct your question to one or both of our guests.  Yes. 

QUESTIONER:  John Brademas.  Do I need a mike?  John Brademas, Third Congressional District, Indiana; Brasenose College, Oxford and New York University.  I have two questions.  The new president of Vassar College studied at Brasenose.  The new leader of the Conservative Party studied at Brasenose.  Is Brasenose taking over the world?  (Laughter.) 

My second question goes to Turkey.  A bit of background.  In 1967 as the only Greek-American in Congress, I opposed U.S. military aid to Greece following the coup that overthrew young King Constantine.  Seven years later, the colonels attempted to overthrow Archbishop Macarios.  That brought their downfall, but triggered two invasions of Cypress by Turkish armed forces equipped with weapons supplied by the United States.  I led a group to call on Henry Kissinger—members of Congress—saying that’s against American law; you should enforce the law.  He did not.  The result is that as of today there are 36,000 Turkish troops occupying Cypress. 

I was in Istanbul a few weeks ago on the eve of demonstrations by Turkish nationalists against the ecumenical patriarchate there.  I made a speech on that subject 20 years ago in New York.  I made a speech in the Bosphorus University five years ago very sympathetic to Turkish entry into Europe, but I’ve been surprised—and this is what I want you to comment on—there have been no voices, at least that I’ve heard, from the EU or European member states insisting that the Copenhagen criteria be observed and that an EU member state should not be militarily occupying another EU member state, nor have I heard any EU protestations against the attacks on the ecumenical patriarchate.  Indeed, only a few protestations about the attacks on the Turkish novelists, which have since been withdrawn.

I agreed to serve on the American Friends of Kotchik (ph) University, so I’ve held out the right hand of friendship from my perspective.  Why is there such enthusiasm for Turkish entry into Europe despite the outrageous behavior of Turkish authorities in respect to Cypress and in respect of the ecumenical patriarchate?  I yield back the balance of my time.  (Laughter.) 

PATTEN:  Can I respond on that?

BURT:  Go ahead, yeah.

PATTEN:  First of all, you wouldn’t, of course, expect a Balliol man to agree that (BNC now ?) around the world.  There is still some way to go.  And Turkey—Turkey can only be accepted as a member of the European Union if Turkey meets the political as well as the economic criteria for membership and that will require of Turkey, first of all, to demonstrate that the democracy and the rule of law are properly bedded down in Turkey.  Secondly, that Turkey is prepared to face up to its history, its treatment of the Armenians, and its treatment of Kurds.  It will also have to accept that the Kurdish minority should be treated properly in modern Turkey.

All those things are absolutely clear and unless Turkey moves along that road, then it won’t be accepted.  And I have to say again, as I said earlier, that the problem is not that Turkey is facing an easy path.  It’s actually facing an extremely difficult path because of hostility to Turkey on various grounds expressed by a number of people from Pope Benedict to President Giscard.  I’m not sure whether that was going up or down when I said that.  (Laughter.) 

But—it’s called in literary criticism a hanging but—but I think Cypress is in a slightly different situation.  When we accepted Helsinki in 1999 that Cypress should be a candidate to membership of the European Union, there was a commitment on behalf of the Greek side in Cypress that they would work with us to agree a UN-brokered settlement on Cypress.  Well, with some difficulty there was a UN-brokered settlement, and then the new Cypriot government led by a lawyer who had previously been well known for his activities in helping Russian entrepreneurs and businessmen—how can I put it politely?—bank their money appropriately.  Is that right?  The new government, the Greek Cypriot government, not only reneged on the agreement, not only put up resistance to the UN settlement, but and even more appallingly refused to let the European Commissioner for Enlargement, Gunther Verheugen, go into Cypress to explain the terms of the deal, and took a very active part in lobbying its employees against the deal—every Cypriot teacher, policeman and so on.  So in the referendum on the UN settlement, it went down. 

QUESTIONER:  It’s called democracy.

PATTEN:  It’s called democracy, but in our view, John, we thought it represented a resiling by the Cypriot government from the agreement they entered into in 1999 when we’d accepted them as an EU candidate, so we now have Cypress in the European Union, but no agreement on the political future of Cypress.

I very much hope that that will change in the next months and years, certainly before the Turkish issue becoming serious.  Turkey has begin a negotiating process which will last 10 or 12 years.  I hope we won’t see a divided Cypress for another 10 or 12 years.  And I hope that if we don’t, and if Turkey has during that time shown that it shares our values, we won’t after 12 years with Turkey having done everything we asked of them turned around and say to Turkey, well, afraid that even despite all this, you can’t come in because you’re Muslim.

BURT:  I agree.  Well, you know—

SCHNABEL:  There’s one—

BURT:  Go ahead.

SCHNABEL:  There’s just something, quickly, that I just found very interesting.  When I went there was—particularly at the university level where we’d used to—where we’d have discussions, and that is that the younger Turks themselves are saying, yes, it’s a ten-year process and we’ll see what happens, but things are dramatically changing in Turkey leading up to the ultimate ten-year date or whatever that may be.  It may well be in their judgment that at that time the Turks themselves will choose not to join.

BURT:  Well, it may in fact—that may even happen sooner than that if the—

SCHNABEL:  Good.

BURT:  —EU accession process is principally used or perceived in Ankara as a way of leveraging them on this issue and other issues.  It becomes much too politically sensitive for any Turkish politician to support EU accession.  In fact, the polls show that public support for EU accession is going down.

PATTEN:  Can I just add one very—but I do it very politely, one word of advice.  In my view, it’s not hugely helpful when American administrations or politicians generously offer Turkey membership of the European Union, which does happen from time to time, as Rock knows.  (Laughter.)  And we had the—in the run-up to one of the European councils when we were discussing Turkish membership for the European Union, we had the slightly unsettling site of the deputy secretary of defense as he then was, Paul Wolfowitz, going to Turkey to scold the generals for not taking a tough enough line with the elected government over involvement in the Iraq war.  This wasn’t in our judgment the way one necessarily wanted democratic governments in the European Union to operate, but—

BURT:  Now, Dick Gardner.  We’re not going to stay on Cypress and Greek—Greece/Turkey issues.

QUESTIONER:  Dick Gardner, Columbia University.  Rock Schnabel, in his excellent—and Balliol—his excellent book in Chapter 6 raises the issue of U.S. diplomacy vis-a-vis the European Union.  And my question to him and to Chris Patten is this: has the U.S. figured out really how to lobby the EU effectively either through its bilateral relationships with the member governments who have to take decisions in Brussels or in its direct relations with the European Commission and the institutions in Brussels?  Are we doing that in the best way on vital issues that affect both of us?

SCHNABEL:  Do you want me to go first?

BURT:  Yeah.

SCHNABEL:  Dick, I—first of all, I think it’s been a process, and I think if you turn the clock back five years or ten years that it was probably not done very well.  I think that it is improving over time. 

The number of people visiting—coming to the EU doing exactly that has increased dramatically, so much so that I got a comment recently from somebody at the EU that said, “Is there any way that you could slow down the traffic because every other day there’s another mission from the United States coming around to talk about something?”  The cooperation between the EU mission in Brussels and our bilateral embassies is very intense on all issues, so you’re basically lobbying the individual countries on the issue, and then you lobby and that is coordinated.  And I think it is working better today than it’s ever been in the past.  So, yes, there’s a tremendous dialogue. 

I think there is a very good ambassador from the EU in Washington today.  I know that Chris was very involved in that; an outstanding gentleman who’s been here, I’m told.  I think today, and he told me the other day at lunch, by the way, he thought that the dialogue between the United States and the EU today was at a better level and more productive than it’s been.  And this is the ambassador speaking.  I’m not—I wasn’t the one that was saying that, in other words, but I think it’s good and actively being pursued. 

I think there is a recognition on the part of this administration that wasn’t there at one point, that the EU is vitally important to the United States, that we have to work—per what Chris was saying, I couldn’t agree more: we have to work with the European Union at all levels to address the major issues of the world.  And of course, we’re starting at poverty and we’re talking about terrorism.  We’re talking about—and yes, the economic issue is coming into play there, too, so the answer to your question is yes.

PATTEN:  Yeah, I mean, very briefly.  Yes, you’ve got much better at it.  I think there’s more of an understanding now that the European Union isn’t an alliance.  It’s about serious sovereignty sharing.  I think particularly in technical sectors, there is much more comprehension on the economic, regulatory, security issues. 

We used to feel a bit—if I’m absolutely honest—on the European side that there were occasions—this was particularly true over security matters, occasions when you would tell us what the outcome of negotiations should be, and then we had to take it from there.  But I think it’s got so much better in the last few years, and I pay tribute to Rock and his predecessor and for all that they did in order to accomplish that objective.

SCHNABEL:  Right back here.

QUESTIONER:  Dorothy Zinberg of Harvard University and Balliol appointments committee.  Thank you.  I wanted to go back to Iran if I could for just a second.  What’s so striking for someone who’s sat in this room for a long time is the absence of the word Russia.  Nobody has mentioned Russia.  And my question is whether or not there is an interim position that has been expressed about Russia now taking enriched uranium from Iran.  Is this a position that the European Union would have a position on?  And if it did, would it make a difference?

PATTEN:  Yeah, the European Union would, I’m sure, leap at the Russian compromise if the Iranians would buy it.  My own strong doubt is that I don’t think the Iranians will buy it.  I think they will play with it in order to try to hold off a Russian decision on how it should vote in the Security Council, but my own worry about this issue is there is not an easy way through and that, as I said earlier, we’ve constructed a box for ourselves, from which we have great difficulty escaping.

I have to say this is in my experience one of the few serious issues on which the Russians have been helpful in the last few years, but that’s a subject for perhaps another day.  It’s a subject on which I have profound and comprehensive prejudices.  (Laughter.) 

BURT:  It’s my understanding that both the EU three governments, as well as the Bush administration, have essentially endorsed the Russian enrichment proposal. 

Right here.

QUESTIONER:  Frank Ferrari at Pro Ventures.  Could I follow up on the question of cooperation between the administration and the European Union on the Palestinian issue and the recent elections and the victory of Hamas?  How do you see, one, the European Union responding to that as the European Union?  And then, two, how do you see the differences between the United States and the European Union being played out on that issue?

BURT:  Very good question.  Chris?

PATTEN:  Well, I used to be one of the quartet—and oddly named because there was six of us—(laughter)—and perhaps particularly ugly named in other circumstances.  The secretary general of the Arab League, Amre Moussa, used to talk about the quartet sans troi—(laughter)—which was by and large what it was.  And I don’t want to go over old contrivances and old ground, but to some extent we made a contribution—the quartet and the lack of involvement—active and effective involvement for so long in the issue, we made our own contribution to the victory of Hamas, though so did Fatah and Arafat and the existing administration. 

The question now or the immediate question, leaving aside future discussions with the Israeli government, the immediate question is whether we fund the Palestinian Authority even though it will depend on a Hamas majority in its legislature, or whether we leave it to the Arab states—the Gulf states to fund it.

If we leave it to the Gulf states to fund it, let’s be clear, it will collapse.  There is a vast difference between their rhetoric on their Palestinian brothers and the size of the checks which they sign.  So the question is, does the European Union and does the United States keep the Palestinian Authority going or not.  And with the best—(inaudible)—in the world, it seems to me very difficult for us to provide assistance to the Palestinian Authority unless Hamas make it quite clear that they have given up the use of violence and terrorism, and I think it’s incredibly difficult to see how we can morally or sensibly get around that.  It may be enough for them to say that they’re continuing the agreed cease-fire, so and for the time being or for the time they’re involved in government, but it’s a very difficult issue for us to duck. 

If they don’t have Hamas members in the government, but have a government of technocrats—and some people think that that would get us off the hook, I don’t really believe it myself.  I don’t think we can avoid that very simple question.  If Hamas does make that sort of commitment, I think that should probably be sufficient for us to continue providing through the World Bank money which could be properly supervised and administered. 

The real problem with funding the Palestinian Authority hasn’t been the money that’s been provided in the last three or four years through the IMF and the World Bank.  The real problem was the money that was provided before then—before we started implementing this council’s own recommendations on reform and support for the Palestinian Authority.  The real problem was before the disruption of those payments of tax by the Israeli authorities when, undoubtedly, Arafat was pocketing the money and Fatah were pocketing the money themselves.  In the last three or four years, working with the IMF and the World Bank, we’ve established a pretty good and reasonably foolproof system, most recently working through the finance minister and Salam Fayyad, who is an excellent man and I’m sorry didn’t do better in the elections. 

BURT:  Anything on this?

PATTEN:  No.

BURT:  Back here. 

QUESTIONER:  Bal Das from InsCap Partners.  A question for both the ambassador and the chancellor.  On the issue of Islam and Islamic civilization, do you see really deep down a fundamental difference in perception in how to approach it between the views in the United States and Europe?  Thank you.

PATTEN:  Yes.  Yes, I do.  I don’t think Europeans believe that we’re involved in a war on terrorism.  First of all, to borrow from a very good article in “Foreign Affairs” two or three years back, we had some difficulty in accepting the idea of a war on proper nouns.  (Laughter.)  And it is not to underestimate the appalling atrocities suffered in this city to say that we’ve actually lived—most of this or a lot of us; Spanish, British—with terrorism of some form or another for a large part of the last century.  Most of my political life when it hasn’t been in Asia or in Europe, has been involved in dealing with Irish terrorism.  After the Belfast Agreement, I had the job of reorganizing the police service in Northern Ireland. 

So I don’t think we regard ourselves as in a war with Islamic terrorism.  I think we regard terrorism, much of which today is committed by jihadist extremists, as something we’re going to live with and deal with and for the indefinite future.  We’ve had the wars of the knights.  We’ve had the wars of the city-states.  We’ve had the war of the nation-states.  We’ve had the wars of the industrial societies.  This seems to me to be the thought of struggle which liberal democracies are going to have to face for some time. 

I think it was your own Texan anarchist, Albert Parsons, who once pointed out the extent to which dynamite have made everybody equal and everybody free, and there’s a terrible sense in which that’s true of technology and terrorists today.  So the first point is I think that this is a struggle that we’re in for years, and not simply a war in which one day we’ll win and there’ll be retreats and armistices and so on. 

Secondly, it is not in any way to suggest moral equivalence.  It is not in any way to suggest appeasement to say that we should try to understand the causes of what is happening, and we should try to distinguish between political Islam, missionary Islam, and Jihadist Islam.  I think we understand—I think our understanding of Islam is extremely poor.  And we should try to understand, for example, why it is that in many Arab countries—not, I say, Islamic countries because three-quarters of Muslims live outside the Arab region—why in so many Arab countries people associate what we think of as opportunity and opening of markets with licentiousness and greed and Western imperialism, and why they also associate a return to religious simplicity with the use of violent methods against other parts of the world.  I think these are enormously complicated issues and I don’t think that this is a war. 

I’d just make one final point.  The most encouraging thing to come out of surveys of opinion in the Arab world, for example, a wonderful survey done by Zogby International on the Arab League countries called “What Arabs Think,” the most encouraging thing is on the whole they didn’t have a very different view about—of values from us.  On the whole they share our values.  It’s our policies they don’t like.  It’d be much more difficult if they liked our policies, but couldn’t stand our values, because we don’t change our values. 

BURT:  Rock is going to get the last word here, since we’re at 2:00 o’clock.

SCHNABEL:  Okay.  Well, very quickly on that subject, of course, it is true that the United States—the war on terrorism, the concept is accepted by a lot of people.  Also a lot of people disagree, but it’s something that is—widely was used in the campaigns and is being discussed widely, whereas in Europe that whole issue—the whole war—the use of the word war is not accepted.  On that subject, that’s just a one-liner. 

Chris mentioned very briefly that I think you referred to some of the times that you had to slightly maybe be impolite and tell the United States to take a hike when we were talking about issues such as Turkey.  What is wonderful about dealing with somebody with Chris’s background is that we could actually totally disagree on issues and have a dialogue.

PATTEN:  Yeah.

SCHNABEL:  And that’s why this thing is working, and that is why you have people of his quality representing the EU at that time. 

The last question I had, Chris, for you was this and I’m quoting something from the Friedman book.  An d you mentioned you are—

PATTEN:  Tom Friedman’s book?

SCHNABEL:  Right.  “The Earth is Flat”—“The World is Flat.”  And I did that at a luncheon the other day at Harvard with the faculty, and I asked that question.  And I’m fascinated, or was fascinated, by the answer.  But anyway, he says the EU debate today between “Franco-German shorter workweek, six-week vacation, never fire anyone, high unemployment social model versus less protected, but more innovative, high employment, Anglo-Saxon model preferred by U.K., Ireland, and Eastern Europe.”  Do you agree with that?

PATTEN:  Yeah, I think it’s a bit of an oversimplification.  Let me—but by and large, there are differences to labor market flexibility in France and Germany and Italy and other European countries, and by and large the other European countries have been doing rather better.  But there is a huge difference between the way the French corporate world behaves and the way the French government talks. 

The French corporate world is incredibly smart at selling insurance, cars, airplanes, taking over our public utilities and running them rather effectively.  You then have this extraordinary political speak with the French government now agreeing that yogurt should be a strategic interest—(laughter)—that—(inaudible)—into champagne and casinos should be protected, so that takeovers of French companies defended on those grounds, even when last year Pernod Ricard took over a British firm, Allied Domick (ph), which for God’s sake makes beefeater gin.  What is more British than that?  And if we got in the way, the French would have regarded us as behaving absolutely ludicrously, so there is this disjuncture.

Nevertheless, the basic point that Tom makes is true.  Germany, I think, is becoming more competitive.  Unfortunately, it’s non-inflationary growth rate at about 2, 2.2 percent is far lower than it should be because of its labor market flexibility.  A real difference in flexibility, a real difference between Europe and America is that not only do you take productivity growth in pay rather than leisure.  And you work now, I think, three—the average American works 300 hours a year more than the average European, but that you’ve reacted to technology with a more flexible labor market in ways which increase employment and increase social equity to levels that would be unacceptable in Europe.  We don’t have the levels of social inequity, but we have levels of unemployment that would be totally unacceptable in America.  And there’s a real difference and there’s no point in pretending otherwise, but I think we have to—as ever, I don’t think there’s a third way.  That, I think, is sort of Blairite, Schroederite-speak, but I think if I was designing a real world, it would be one in which the Europeans were more flexible in their labor markets, and you were a bit more mindful of social inequity, but that’s perhaps for the Almighty.

BURT:  Yeah.  I am now going to bring this to an end.  I will make one observation, which I think is actually kind of interesting.  If we had been having this discussion two or three years ago—and not just two or three years ago; maybe five or six years ago, most of the focus I think would have been on what you might call problems within the European-American relationship. 

Most of our conversation, most of the questions and most of what our two guests have talked about is really about how does Europe and the United States relate to external challenges.  We are now focused on problems in the greater Middle East, but they’re not the only issues, and I think it does suggest that the relationship has evolved.  We still have a number of internal issues we have to grapple with, but I think figuring our strategies for working together—partnering in some respects, resolving differences in others—has become a major theme of the EU-U.S. relationship, which I think is basically a constructive development.

I want to thank everyone for coming today, but of course in particular Chris Patten and Rock Schnabel, and we look forward to seeing you again at the next European update.  Thank you, gentlemen.  (Applause.)

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