Obama's US sets the recession-fighting tone and Barroso's EU can only follow

The European commission president is fooling himself with claims that the Americans are coming round to Europeans' way of thinking on the recession and climate change
David Gow in Brussels
guardian.co.uk, Wednesday December 10 2008 11.33 GMT

European commission president José Manuel Barroso. Photograph: Lefteris Pitarakis/AFP
Back in a dark and gloomy EU capital swept by snow and sleet after a sunny week in high-altitude New Mexico and there's palpable hubris in the air.
Europe has persuaded itself it has led the world in solving the banking crisis; now it thinks it can show Barack Obama how to reboot the global economy out of recession.
Ahead of a crucial EU summit this week, José Manuel Barroso, the European commission president, offered the US president-elect a transatlantic economic pact, a joint platform based on European ideas of how to stimulate the economy.
The Americans, an unusually combative Barroso opined, are coming round to Europeans' way of thinking — and not just on the recession but on climate change, with Obama set to adopt a cap-and-trade system for reducing carbon emissions pioneered by the EU.
His assertion of European power, both of ideas and policies, coincided with a series of papers from thinktanks such as the European Council on Foreign Relations (www.ecfr.eu) and Centre for European Reform (www.cer.org.uk) urging a "rewiring" of the US-EU relationship under Obama.
Sad to say but all these ambitious dreams are likely to be dashed. In New Mexico, a Republican red state turned Democrat blue on a huge popular swing on November 4, most people had never heard of Belgium or knew where it was located and the EU was an unknown entity.
What was the price of gas in Europe, they asked as they filled their pick-ups and SUVs at $1.60 a gallon (compared with $4 in the summer). $7 or $8 a gallon? Crazy, we'd riot at those prices. Oh, and isn't Europe being overtaken by Islamic terrorists?
Europe simply doesn't figure on the New Mexican radar screen. Instead, the crowds watching the lighting of the Christmas tree and children dancing the flamenco near the plaza in Albuquerque's old town or the few shoppers in Native American stores in upstate Taos are banking on Obama to lead them out of the crisis. So, one suspects, are a lot of Europeans.
Expectations of the first African-American to occupy the White House are as high — and burdensome — among largely respectful Americans as among the 200,000 over-joyed Germans and other Europeans who thronged the Victory Pillar in Berlin in early summer to hear him promise a new, multipolar start in US foreign relations.
He has already made an impressive start in the transition, setting the strict parameters for the bailout of the auto industry, and there are plenty of reasons for thinking it is he, rather than Gordon, Nicholas or Angela, let alone José, who will continue to set the tone in the coming months.
First, it is clear that EU leaders are divided among themselves about how to tackle the recession. For all the talk about the EC's €200bn (£175bn) stimulus package being a "toolbox" of measures for the 27 governments to choose, there is little or no sense of coordination.
Rather, it seems as if Germany, the EU's biggest economy yet pilloried so far for the paucity of its stimulus package, is waiting for an Obama lead before rebooting it, possibly with tax cuts. And it's not the only country to lie in waiting for the word from the White House and the Hill.
So far, Obama has talked of a $500bn stimulus package and maybe one twice as large despite the huge budget deficit he will inherit from Bush. Barroso is right to say it contains similar elements as the EC's plan: public investment in infrastructure, green technologies, innovation and energy efficiency.
He is also right to say US infrastructure, notably its power grids and schools, lags far behind that of a modernised EU. But he clearly underestimates the sheer scale of the likely Obama package: already up to three times that of the EC plan for stimulating a European economy that is $3tn larger than the US (on CIA figures for 2007). And, like Bush's discredited team, Obama will look more to Beijing, with its mammoth package, than to Brussels, centre of what the National Intelligence Council calls a "hobbled giant" in a paper the new president is bound to have studied.
Second, the new president is likely to dash EU hopes for a breakthrough in global trade liberalisation talks — the so-called Doha round — despite the push given at the G20 summit in Washington in mid-November. The US farm lobby, the 22 senators from farm states and, not least, Obama's base in Illinois, the second biggest of those farm states, point to a failure of the seven-year-old talks.
It's not that the new president is protectionist or ignores the dreadful import of the 1930 Smoot-Hawley Tarrif Act that provoked the Great Depression. Indeed, his centrist cabinet appointments, not least that of New Mexico governor Bill Richardson to head the commerce department, signal a pro-free trade stance. But, among all the conflicts of interest he'll have to balance, Doha may prove expendable.
Third, for all of Barroso's fine talk of the EU's continuing ambition to lead the world in fighting climate change and of the congruence of economic stimulus and low-carbon sustainability, there's plenty of evidence that Europe's own policies are in some disarray.
The keynote emissions trading scheme, supposedly the model for Obama's cap-and-trade plan, is at risk of being watered down, under business and national pressure, to the point of meaninglessness as countries and industries are granted exemptions from proposed auctions of carbon allowances. Countries such as the UK are also hoping to meet much of their green targets through projects in emerging economies or developing countries.
Obama's own $150bn plan to invest in new energy-saving technologies and slash CO2 emissions by 80% by 2050, along with his plans to create 2.5m jobs, owe more to Arnold Schwarzenegger of California than to Stavros Dimas of the EC.
The new US president, with his unruffled calm, embodies America's "can do" approach to life and its problems. Europe, a bigger bloc of 500m disparate peoples and cultures, has yet to walk the talk. It still waits for its lead to come from Washington.