The Atlantic Ties

By Joaquín Roy Reprint | | Print |

BARCELONA, Sep 26 2012 (IPS) - The growing importance of the Pacific rim has been a dominant narrative of recent years. One reason is the entrance of Chinese interests into Latin America and growing economic ties between Asia and the U.S. and Europe. The feverish mythology of globalisation also contributed to advancing this transformational tale. The Pentagon is positioning the bulk of its fleet in Pacific ports as if it expected another Pearl Harbour.

This trend, however, runs counter not only to the course of the last 500 years of history but to the current situation as well, both of which testify to the enduring power of the transatlantic ties.

For a start, it should be recognised that the establishment of a free-trade zone among the countries in NAFTA (North American Free-Trade Accord) and the European Union (EU) would create the largest economic area of the planet and one without competition from any alliance in Asia. The U.S. and the EU alone comprise the largest and most prosperous market on the planet, accounting for 54 percent of the gross world product (GWP) in absolute terms and 40 percent of global purchasing power. EU-U.S. trade accounts for 30 percent of the world total while their trade in services accounts for 40 percent. Whether in goods or services, each region is the most important and irreplaceable supplier of the other.

The U.S. and Europe are also the primary source and destination of direct foreign investment for each other, accounting for more than 60 percent of all domestic investment and 75 percent of foreign investment. For example, American investment in Holland from 2000-2010 exceeded by a factor of ten U.S. investment in China; and American investment in Britain was seven times greater than its investment in the Asian giant.

In the same decade, 60 percent of the foreign investment by U.S. companies was in Europe, while the figure for European companies’ investment in the U.S. was 75 percent.

The EU and U.S. account for 80 percent of foreign development assistance worldwide. While their combined population (800 million) is but 12 percent of the global total, they generate over 50 percent of the gross global product – 28 percent by the EU and 25 percent by the U.S. In the decade mentioned above, the combined EU/U.S. contributions in foreign development assistance exceeded 100 billion dollars.

Turning our gaze towards the South, while trade links between Europe and Latin America are relatively modest, the dependence of the latter on the U.S. and Europe is unrivalled. Europe is the second largest investor in Latin America and the largest donor. Spain in particular owes its globalisation to the operations of its companies in Latin America. After English, Spanish is the second most spoken second language in the world with the second largest number of students.

While the U.S. is criticised for its cyclical periods of apparent disdain for Latin America – like the present – these are always followed by a rediscovery of the continent as its natural partner (or victim). While the U.S. is frequently accused of considering Europe as its guaranteed ally and trusted economic partner, when Europe’s problems set off alarm bells (as with the current euro zone crisis), Washington reacts and knows what its priorities are and where its interests lie.

In all of the above, the strength of transatlantic triangle has been definitively proved. Indeed, the very name derives from the myth of Atlantis. This triangle continues to be more valuable than the vague network at the opposite shores of the Pacific because of a number of factors, strategic and economic, that have little to do with history and human and social ties.

Neither the ascent of the BRICS (one of which is Brazil) nor the dawn of Asian trade with Latin America is enough to override more than half a millennium of coexistence and shared values which underlie the great strength and durability of the Atlantic triangle. If there is an ideal macroregion for strategic alliances (to use EU terminology), it is to be found from Alaska to the Tierra del Fuego and Saint Petersburg to Santiago de Chile, from the Bosphorus to California, and Panama to Gibraltar. (END/COPYRIGHT IPS)

(*) Joaquin Roy is Jean Monnet professor and director of the European Union Centre of the University of Miami (jroy@Miami.edu).