What a NATO Exit Would Mean for the U.S. and Europe

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Wharton's Mauro Guillen and Penn's Brendan O'Leary discuss the future of U.S.-Europe relations.

President Donald Trump last week rattled many European leaders when he described the 28-member North Atlantic Treaty Organization (NATO), formed in 1949 after World War II, as “obsolete.” He made that comment — along with other controversial statements regarding Germany and the European Union — in an interview that appeared in the Times of London.

“The linchpin of American policy since the late 1940s has been to promote European integration and to have NATO as a bulwark, largely against Soviet and then Russian aggression,” said University of Pennsylvania professor of political science Brendan O’Leary. “Those needs have not gone away,” he added, predicting that there will be a “tremendous pushback” against Trump’s remarks. Trump’s comments might encourage NATO member-states to begin increasing their own military spending to “ensure that in the future, they have the capability of becoming independent of America if they need to be.”

Trump’s statements about NATO — along with his reiteration of his “America First” slogan — have raised concerns about how the U.S. will manage its obligations in various alliances. “It’s not obvious that being protectionist is in the best interests of the American people. I actually believe that it’s not,” says Wharton management professor Mauro Guillen, who is also director of The Lauder Institute. He also took issue with Trump’s slogan: “It is preposterous for a president to say ‘America First,’ as if previous presidents didn’t put the country first.”

Guillen and O’Leary discussed the implications of Trump’s comments about NATO and the European Union on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

Impact on Trade and Investments

Trump’s views on NATO could hurt U.S. trade and investments in the long run, according to Olivier Chatain, professor of strategy and business policy at HEC Paris and a senior fellow at Wharton’s Mack Institute for Innovation Management. “The U.S. is one of the largest beneficiaries of a stable and safe Europe, both in security and in commercial terms,” he said. “This is the result of 70 years … of a consistent grand strategy, the centerpiece of which is NATO. Taking steps towards a short-termist and myopic transactional policy will dilute political capital and goodwill.” He predicted that “ultimately, the position and the standing of the U.S. in Europe will suffer.”

“It is preposterous for a president to say ‘America First,’ as if previous presidents didn’t put the country first.”–Mauro Guillen

Chatain noted that the role of NATO is as much to protect members from external aggression as it is to guarantee peace among alliance members, especially in Europe. In that respect, the relatively low defense spending in Europe compared to the U.S. is a feature of the system, not a bug, “even though European countries could indeed spend more than they do now,” he said. “The alternative NATO seeks to prevent is more military rivalry among European powers, with disastrous effects not only for Europe — as shown with two World Wars, the Yugoslavian civil war as well as the Kosovo crisis more recently — but ultimately also for the U.S., because it will not be able to stay away from [such crises].”

Chatain noted that Trump is taking a short-term view when he complains about the cost for the U.S. of participating in NATO, even as the alliance’s member-countries buy military hardware from the U.S. “In the great scheme of things, NATO is an insurance policy against the U.S. getting drawn into bloody European crises,” he said. “Seeing a U.S. president missing this fundamental point is presumably very disturbing for allies, especially those who share a border with, or are close to, Russia, a country that has militarily invaded two of its neighbors in recent years (Ukraine and Georgia).”

Trump may have already damaged the U.S. relationship with NATO with his statements, he adds. “Even if the U.S. secretary of defense issues a reassurance, allies will wonder who really calls the shots in the [Trump] administration.”

Fear in the Air

Meanwhile, fear has gripped parts of Europe over the implications of the U.S. walking away from NATO. “As a European, I feel for Eastern Europe because [countries there] are at the forefront of Russian aggression,” said Guillen. His friends in Lithuania “are scared to hell,” he added. The Soviets had occupied Lithuania in 1940 — along with Estonia and Latvia — “and they feel it could happen again.”

“The linchpin of American policy since the late 1940s has been to promote European integration and to have NATO as a bulwark, largely against Soviet and then Russian aggression.”–Brendan O’Leary

In a motion of solidarity with NATO’s Eastern European countries, the Obama Administration in early January began sending troops to Poland, and increasing its presence in Germany, the Netherlands and Belgium. “[The administration was] trying to do something that would make it harder for Trump to make a move in the other direction,” said Guillen. “Eastern Europeans — Poles, Czechs, Romanians and Lithuanians — have angst. They are in fear. They know that the EU is not ready to confront Russia.”

“If Eastern Europe fears that Trump is closer to Russia, it will balance closer to the center of Europe,” O’Leary predicted. He expected the Baltic States and Poland to seek more support essentially from Germany and France, but also from Spain, Italy and other members of the EU and NATO. But Guillen was skeptical about Germany’s ability to confront Russia, noting that it is dependent on Russian supplies of natural gas for 40% of its needs.

A Growing Misalignment

Trump’s disenchantment with NATO comes against the historical backdrop of a widening gulf between the members of that alliance and the U.S. “The seeds for the demise of NATO and the close integration between Europe and the U.S. had been planted in the early 1990s,” Wharton finance professor Joao Gomes said. Destabilization of Europe started with the fall of the Soviet Union, which led to the reunification of Germany, the collapse of the Warsaw Pact, the integration of many Central European countries into the EU and, more dramatically, war in the Balkans.

NATO became “less crucial to the survival of Europe after 1990, [when] the continent turned internally to integration issues, and relations with the U.S. became less important,” Gomes noted. Matters have come to a stage where the U.S. and Europe “are unavoidably more distant now. It is largely a consequence of a more multilateral world where each [country] faces different issues and has very different neighbors.”

“In the great scheme of things, NATO is an insurance policy against the U.S. getting drawn into bloody European crises.”–Olivier Chatain

In fact, former President Barack Obama had recognized those and other trends and “purposefully moved away from Europe until the end of his own administration, when he finally came to realize the real possibility of Europe’s disintegration,” said Gomes. “President Trump is, like others here and in Europe, searching for a new framework.”

To Russia with Love

Trump’s apparently friendly rapport with Vladimir Putin is also unsettling for many in Europe. In fact, U.S. ties with Russia could return to the partnership the two countries shared in the 1990s when Boris Yeltsin was president of Russia, Gomes predicted. That partnership was “highly successful” for the U.S., he recalled. But the big difference now is that Russia will benefit more, he added. “Russia will use the close partnership to expand its area of influence while the U.S. retreats, at least partially.”

According to Gomes, “The key novelty [in Trump’s Russia stance] is choosing friendship with a major power instead of a host of smaller countries like we did [prior]. This is the end — or at least a halt — of the Russian containment policy that started with allowing Eastern Europeans to join NATO.”

Russia will try and use its newfound “closeness” with the U.S. “to advance or consolidate its area of influence,” said Gomes. As a consequence, “Central and Eastern Europeans, such as the Baltic states, have some reason to worry, but this is very far from being 1945 all over again as some suggest,” he added. Neither the appetite nor the resources exist for those confrontations, he noted.

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