The European Coalition in a Fragmenting World

European integration has grown unfashionable. Those whose interests follow the foundations have long since migrated to "transnationalism," "trilateralism," "globalism" or "problems of advanced societies"; those more attuned to governmental circles reflect the current official displeasure at an "inward-looking" European bloc. Indeed, Europe's collective endeavor seems to provoke American analysts to irritability and even contempt. For those enamored of various versions of Pax Americana, the development of a powerful European bloc is now seen to threaten U.S. hegemony and global order. But even many who presumably desire a strong Europe, and a more plural world order, seem bitterly disappointed with Europe's progress. Europe, it appears, has not measured up to American expectations; it appears to lack will, vision and legitimacy. Its Community has become a supermarket rather than a superpower.

This common view may, however, prove wrong. For in today's extremely fluid international situation, further disoriented by the energy crisis, Europe's coalition shows signs of a new vitality. Europe's states, confronted by a dislocated world system, have significantly heightened their mutual cooperation, as well as made a major effort to extend their influence in the Mediterranean and Middle East. The importance of these efforts has, I believe, been insufficiently recognized, in great part because of widespread misconceptions about the nature of the coalition which the European states have been building.

II

Throughout Europe's postwar history, most American analysts have never understood the character of European integration. Consequently, both American hopes and disappointments have been inappropriate. Most have been derived from Monnet's vision of European union as a supranational, technocratic way station toward an Atlantic Community. Whatever its virtues, Monnet's vision has never been the relevant model for European integration. The Europe of the Six or of the Nine has never been a nascent federal state-fated to be governed by trans-European political parties or cosmopolitan technocrats. Instead, the European Community has always been a confederal bloc. States have joined it not to give up their sovereignty, but to protect it. This point, so universally misunderstood, is central to any realistic assessment of Europe's elaborate interstate structure, and consequently its regional and global roles.

As de Gaulle's longtime Foreign Minister, Couve de Murville, once observed, sovereignty is never absolute, but always conditional. No nation can escape from interdependence with the external and internal realities which set the frame within which its government must operate. Couve's view seems obviously true. Our American historical experience may allow us to conceive of sovereignty as absolute freedom, but no modern European state has long been able to ignore a highly constrained framework of powerful neighbors. Hence, in the perspective of European historical experience, it seems unrealistic to define sovereignty as absolute freedom for a state to do as it pleases, and to regard commitments undertaken by a state to its neighbors as losses of effective sovereignty. Recognizing sovereignty as always relative and conditional, a more realistic view would see interstate commitments as a means of increasing rather than diminishing effective national sovereignty.

In practical terms, national sovereignty can more usefully be compared to the idea of free will for the individual. Neither requires an absolute exemption from an external environment of things and people, but rather the capacity to choose for oneself within the context of objective historical possibilities. For a nation, as for an individual, the context is often rather limited. A limited context, of course, does not necessarily mean a loss of freedom. Freedom, practically speaking, lies in realizing whatever version of the good life animates the national community. These notions invariably contain a desire not only for peace and prosperity, but also for independence, in the sense of not being run by foreigners. Sometimes, of course, a nation or individual defines its own self-realization in such a way as to demand domination over neighbors. The function of an international system, we might say, is to curb such pretensions by organizing the resistance of neighbors to protect their independence.

In any event, states constantly make commitments which limit their theoretical freedom of action. And, to return to my first point, they make such commitments not from a desire to alienate freedom, but in the hope of increasing it. In today's world, freedom-or sovereignty in a practical sense-means the capacity to shape the national environment in order to advance toward the goals desired by modern societies. Achieving such goals, we have come to believe, requires a high degree of mutual economic access. In particular, for modern industrial states with limited home markets, the capacity to sustain high technology-needed probably for prosperity and certainly for self-esteem-requires a high degree of economic integration with neighbors. Hence, in these matters as in others, states enter into integration arrangements to enhance rather than to give up their freedom. As long as these arrangements do, in fact, advance the goals, without causing an intolerable sense of being dominated by external forces or alien elites, a state will retain its commitment to integration. When that integration, however, begins to threaten self-determination-either by interfering with national goals or robbing a state of effective control of its domestic environment-a state will tend to withdraw from integration, insofar as it is able.

All these rather abstract considerations are highly relevant to understanding the nature of European politics. Europe's union is a confederal union of states. The states of Europe have entered into their mutual engagements because they believe, in today's world, they are best able to pursue their national goals in close partnership with each other rather than separately. The political foundation of Europe's confederacy lies, in fact, in the external threat to the self-determination of its states. Whereas after the decline of the Turk the greatest threats to European independence came from inside Europe, since World War II the principal threats are once again external. European states singly are no longer able to protect their self-determination against states on the scale of Russia and the United States. Were it not for the superpowers, Europe would probably not need a union of states. Europeans would return to elaborating further those animosities to which they would so clearly prefer to cling. In short, they would go back to fighting each other.

Confederal structures have obvious weaknesses, and perhaps less obvious advantages. Confederations are only as strong as the political impulse to cooperation among the constituent national states. Membership remains conditional. Recalcitrant partners cannot easily be coaxed or compelled into general agreements. As interests must inevitably vary, confederations have a strong tendency toward divisiveness, a condition which tempts outside manipulation. On the other hand, the looseness of the confederal structure may have many advantages. Among independent states, when no one power is strong enough to dominate the rest, a tighter constitutional structure may cause particular conflicts to spill over and provoke a general breakdown of cooperation. A confederal structure, by its very looseness, allows numerous escapes and hence limits conflicts. In external policy, moreover, a confederal structure, if it lacks the unity of a national state, also permits a greater flexibility in approaching other powers and offers a less salient target for retaliation.

III

Over the past twenty-five years, Europe's thrust toward union has grown within the possibilities set by the general world position of Europe's states. Since World War II, Europe has been an American military protectorate. Europe's defense against Russian pressure has depended directly upon the American alliance. Europe's economic prosperity has similarly come to depend upon a world system of access to raw materials and markets, a system sustained by American imperial power. At the same time, thanks to the Common Market and the generosity of American policy, Europe's dependence has not been unduly expensive for European interests. Indeed, Europe's states have known unparalleled military security and economic prosperity, and without any great sacrifice of the capacity to sustain and shape their own domestic societies as they have pleased.

In recent years, however, dependence has grown less comfortable. Three new features of the postwar system have contributed to this unease. First, the United States has gradually moved toward a general understanding with the Soviet Union. The basis of that understanding has clearly been a mutual acceptance of the status quo, in particular the European status quo. For Europe in general, and Germany in particular, the territorial status quo, however comfortable, is far from ideal. Hence, faced with the opportunities and dangers of détente, European powers have taken their distance from American diplomatic hegemony and cultivated "Eastern policies" of their own; to some extent, these Eastern policies have been coordinated.

A second element of unease has come from the gradual collapse of the world monetary system. The United States has never been able to finance adequately its worldwide military and economic policies. Several years of basic deficit have sapped America's huge reserves. Accumulating dollar balances-held mostly by Europeans and Japanese-have helped fuel worldwide inflation, whose consequences threaten the economic and social stability of Western Europe's nation-states. Hence the initiatives in recent years to build a European monetary union, which could, if necessary, uncouple Europe from a U.S.-dominated international monetary system. A monetary union would encourage stable relations among the Europeans, even if within an international system of floating exchange rates. Otherwise these floating rates, essentially a cover for negotiated devaluations, threaten the postwar open trading system among the Europeans themselves.

Finally, the oil crisis has brought a new element of trouble. For the crisis not only poses immediate dangers, but reflects the gradual breakdown, signaled by the Vietnam War, of that postwar world order built and sustained by American power, which has guaranteed Europeans unimpaired access to raw materials and developing markets. America's gradual loss of power, coupled with policies which bitterly antagonized the Arabs, together resulted in an oil embargo which seriously threatened Europe's economic prosperity. And the oil crisis not only presented Europe with a grave and immediate danger, of long-term significance, but also revealed Europe's inadequacy to face that danger.

In short, the postwar system seems to be changing rapidly and Europe's position with it. How will the changes affect Europe's future, and in particular the fate of its confederal coalition?

There seem two alternative views. The first sees Europe gradually declining from postwar prosperity and security, based upon an inexpensive dependency upon the United States, to a less comfortable subordination to either one or the other of the superpowers. Europe, it is thought, has been living in a fool's paradise, in which European societies have enjoyed the fruits of a world security and prosperity without having to worry about sustaining the political and military foundation. In a more straitened world, which will come from the relative collapse of American power, Europe, far more dependent upon the international system than the United States or Russia, will be the principal victim. Either Europe will be "Finlandized" as a Russian dependency, or else will become another Canada or Mexico to the United States.

A second view sees Europe, its vital interests no longer reliably guarded by American hegemony, intensifying its union and independence. In the comfortable climate of the 1950s, Europe's states were understandably reluctant to proceed to more intimate cooperation. But the growing threats to European domestic sovereignty, in the sense in which we have defined it, will, it is thought, make European governments increasingly willing to proceed further into their confederal union. In other words, the challenge to the economic security of Europe's national states is seen as resulting not in the collapse of their coalition, but in its intensification and further extension. Such a development, after all, would not be an illogical reaction to the present historical situation. A European bloc would seem the natural response of Europe's developed middle powers faced with a fragmenting world order. In the end, the United States will probably not be able to reestablish its global hegemony and reverse the trend of recent years. Meanwhile the costs of breakdown will grow. Monetary disorder has already brought inflation to the danger point for Europe's social stability. The oil crisis has shown Europe the costs of dependency on an alien power, particularly when that power is no longer able to maintain its sway, and can less and less afford generosity to its clients.

It is not, and indeed has never been, difficult to develop abstract arguments that a strong bloc would be in Europe's best interest. Most observers, however, find it difficult to believe that the European states have, in fact, been building such a bloc, and with reasonable success.

IV

Does European behavior in the oil crisis indicate the first or second alternative? In the usual view, it suggests the first. On the one hand, the European states are said to have failed to hold together in the face of Arab pressure, most notably in the instance of the selective embargo against Holland. On the other hand, they have also seemed to give way to American pressure to treat energy policy on a "global" basis; in other words, to follow policies set by the United States. Hence, in the Washington Energy Conference in 1974, the Europeans abandoned their carefully worked-out common position and left France in angry isolation.

American policy in the oil crisis seems unambiguous. We have sought to break the producers' cartel, and thus reassert something of our old mastery over the world's oil supply, and, at the same time, to use Europe's sudden vulnerability as a means for reestablishing our European predominance, badly shaken by the monetary troubles of recent years. Both ends are served by a users' bloc, organized under our leadership, to treat with the oil-producing OPEC countries collectively and to control the recycling of funds to those European countries in acute balance-of-payments difficulties. Meanwhile, American policy frowns on separate national initiatives-both on general ideological grounds that problems such as food and energy can only be resolved on a "global" basis, as well as on the tactical grounds that the Western states can bargain successfully only if united. European states, we reckoned, would have to accept our strategy and leadership because the oil crisis had so weakened their trade and finance that no reasonable alternative was left them. Such views were further encouraged by widespread estimates which saw the bulk of the oil profits and new trade being directed to the United States.

This general view of the crisis and its effects has seemingly been confirmed as the European states, France excepted, have joined the International Energy Agency (IEA), the American-inspired structure which purports to deal with the energy crisis on an Atlantic (or "trilateral") rather than a European scale.

There is, however, a different interpretation of these events. The oil crisis, while it has caused serious domestic and intra-European frictions, has, on balance, also proved a powerful impulse toward the formation of a European bloc with special relations with the Mediterranean and Middle Eastern countries. That impulse has already resulted in an array of special agreements between the European countries and the oil producers, as well as a new degree of economic cooperation among the European states themselves.

The initial stages of the oil crisis caught the European governments badly unprepared. Years of unsuccessful wrangling over a common energy policy had left a heritage of obstinate inaction in the whole field. Emotional differences over Israel, plus the usual split over Atlantic versus European orientations, impeded further any common European stance toward the Middle East. These European divisions were neither frivolous nor cowardly, but deeply rooted in respective national interests and policies. Too much has been made, in my view, of Europe's supposed failure to stand up to the Arabs, in particular in face of the selective embargo against Holland. The European states faced a crisis of major significance. Their vital economic interests threatened, they could hardly afford to lose their heads over the fleeting satisfactions of rhetorical solidarity. In due course, discreet diplomacy persuaded the producers to drop the embargo. Meanwhile, more serious negotiations went forward.

The Europeans found their best tactic in shifting the negotiations away from immediate confrontation to a framework of long-range regional economic development. Within such a perspective, the European bargaining position became much stronger. As the principal customers for Arab oil, Europeans could argue convincingly that their prosperity and Arab development were interdependent. The Arabs were demanding a major shift in real resources to promote their economic development. The Europeans, while accepting the shift, could not make it if they were ruined in the process.

Nearly all these approaches, however, were made in bilateral negotiations, which many observers have criticized as yet another indication of weakness and disunity. But under the circumstances that prevailed, bilateral approaches were clearly the most efficacious tactic. At best, negotiations en bloc would have been extraordinarily inflexible for both sides. Even if they had managed to surmount the difficulties of coordinating nine governments, each with diverse interests, perspectives and connections, the Europeans in all probability would have found an equally baffling diversity among the producers. Moreover, bloc negotiations would have been particularly vulnerable to American displeasure. In short, a European bloc negotiation, even if possible, was not self-evidently preferable to an overlapping network of individual national deals-each of which drew upon special connections and blandishments.

Bilateral negotiations have, in fact, gone forward rapidly. Not only have significant agreements been concluded, but considerations of long-range planning and mutual interest have come into play and modified, to some extent, the original atmosphere of hectic confrontation.

The next step might conceivably result in a comprehensive agreement between the European Community, as such, and a bloc of Mediterranean and Middle Eastern states. Exploratory negotiations have begun and may perhaps eventually lead to some framework for organized cooperative planning. The European Community (EC) has had impressive experience in negotiating such agreements; for example, a comprehensive treaty, the ACP-EEC Convention of Lomé, was signed in 1975 with 46 countries in Africa, the Caribbean and Pacific. The Convention allows nonreciprocal access to European markets for nonagricultural products, makes special provisions for stabilizing various agricultural commodity prices, and also provides substantial financial and technological aid. Elaborate joint machinery is to supervise the Convention's application and carry forth some joint economic planning.

The same general approach-which involves access, aid, technical assistance, stabilization of export earnings and discussion of economic plans-is being proposed in agreements currently being negotiated with both the Maghreb and the Mashraq (Egypt, Jordan, the Lebanon and Syria) states. While these multilateral experiments are interesting, the diversity on both sides may preclude too formal an arrangement among European and Mediterranean and Middle Eastern countries. And, with the traditional American opposition to such initiatives, formal bloc structures may provide too easy a target for American displeasure. The same European-Mediterranean linkage may be achieved more practically through an expanding network of limited agreements and bilateral understandings, especially if general economic coordination increases among the European states themselves.

In any event, structured economic ties between the Europeans and the Mediterranean and Middle Eastern countries have grown with impressive speed since the oil crisis. Intergovernmental and private agreements, involving several billions of dollars in trade and technological exchange, now link Britain, Denmark, France, Germany and Italy with various major Mediterranean and Middle Eastern states.1 Significantly also, the great bulk of surplus oil funds has not gone to the United States as many predicted, but to European capital markets. Of the $55 billion of surplus funds in 1974, $37 billion has gone to short-term investment. Of this sum, $20.5 billion has gone to the Euro-currency market and an additional $6 billion to European national capital markets. By contrast, only $10.5 billion has gone to the American short-term market. Estimates for 1975 suggest a sharp falling off of even that limited degree of Arab recycling to the United States.2 To be sure, the United States managed to increase its trade to the oil producers in 1974 by 81.8 percent, thus capturing 26 percent of the collective imports of OPEC countries. Nevertheless, collective European trade also increased by 59.4 percent and still accounted for more than 53 percent of the collective OPEC imports. European imports are predominant in the big markets of Nigeria, Egypt and Algeria and have a strong position in Iran.3

Nothing, of course, guarantees that present trade and investment patterns will develop into an intensely interdependent European-Mediterranean-Middle Eastern economic community. Still, the economic logic is not without force. The Arabs and the Iranians have the oil and the Europeans need it.4 Moreover, oil is not the only basis for their interdependence. Countries like Iran, Algeria, Iraq or Egypt see oil wealth as the platform for a general industrialization of their economies. To achieve such a goal, they require a stable long-range partnership, involving not only investment but also technological help and market access. Before the oil crisis, Arab weakness was itself an obstacle to any such stable relationship with Europe. The price increases obviously give important bargaining weight to Mediterranean and Middle Eastern countries. Nevertheless, their oil is a finite asset, of enduring value only if Europe's economies and governments remain healthy and friendly. Under these circumstances, Europe's great industrial strength, as well as the dependence of Arab wealth and domestic development upon general Western prosperity, serves to provide the foundation for an interdependent European-Mediterranean relationship. Since the oil crisis, the relationship is more balanced and thus perhaps more stable.

A European-Mediterranean bloc will presumably have to be built in opposition to the American attempt to control Western relations with the Arabs. Europe's success in any significant degree will mean a major external extension of an independent European political-economic influence. That Europe should appear to be embarking upon such a course is, in itself, a significant trend.

But, as I have admitted all along, the trend may not be that which predominates. Commitment to a European-Mediterranean regional bloc runs risks and involves a long-range shift of wealth to the oil-producing countries of the Mediterranean and Middle East. Such shifts are always painful, even if they create new opportunities. For these and many other reasons, including sympathy with Israel, many in Europe would welcome a reassertion of American hegemony in the Middle East, even if Europe lost thereby an opportunity to escape from its own Atlantic dependence. Nevertheless, it can hardly be argued that no obstacles impede a reassertion of an American hegemony-either over the oil producers or the Europeans.

Under the circumstances, European governments hedge their bets and follow both the regional and the Atlantic strategies. Even if the American pledge to share oil may be doubted by some, and our schemes for self-sufficiency are generally taken with a grain of salt, still, as long as European states are free to pursue their regional strategy, they see little harm can come from indulging American diplomacy. Thus, they join the International Energy Agency. Real benefits, moreover, can come from planning for new emergencies, sharing technologies and gaining better intelligence about the oil companies and their marketing practices. And the elaborate financial arrangements could be vital in some new crisis, even if European governments prefer the International Monetary Fund and the European Community facilities and, indeed, have already weathered the worst of their payments crisis through direct loans or borrowing on private international capital markets. Politically, the IEA's multilateral framework may prove a useful check upon American enthusiasm for confrontation, while at the same time the threat of a unified Atlantic strategy encourages the producers to adopt a more friendly stance toward the Europeans. In short, for the Europeans, the Atlantic-oriented International Energy Program remains a useful option to keep open, a political and economic insurance policy in the event of catastrophe, but not a submission to American hegemony.

The oil crisis has not only prompted the European states to a more aggressive foreign policy, but seems to have encouraged another significant trend: a heightened cooperation among European states in domestic economic management. Machinery for regular organized consultation on a broad range of policy questions is now in place. The European Council-a regular summit-meets four times yearly and is serviced by a Committee of Political Directors with numerous subcommittees.

Franco-German economic cooperation has been notably close in recent months. The two governments have determined to coordinate their anti-recession strategies. The Germans have increasingly been driven toward the view that Europe must be treated as a single monetary unit, with funds recycled from surplus to deficit countries; hence, in August 1974, a $2 billion German loan to Italy.5 Germany's evolution comes less from any sudden increase in altruism than from the growing realization that German prosperity-so closely linked to exports-cannot isolate itself from depressed demand among its principal customers, the great majority of whom are in Europe.6 German aid has been used to encourage domestic policies which promise some reasonable hope of ultimate redress. April 1973 saw a European Monetary and Cooperation Fund, possibly the nucleus for an EC central bank. The new institution is to settle intra-Community monetary claims, multilaterally, manage the "snake," and, with resources of 1.4 billion units of account, run the EC's system of short-term credits. As a general consequence of these developments, domestic economic policy will increasingly become entangled in complex negotiations within a general European frame. Europeans-in their current crisis-may well have taken a large step toward a real economic and monetary union.

None of these developments, of course, is particularly surprising. European integration has customarily moved forward through a series of crises. A new problem creates a solution, generally involving a higher degree of interdependence, and a new equilibrium of power. In the absence of a new challenge, the status quo between narrower and broader interests can be expected to persist indefinitely. With a new crisis, which threatens the economic or political security of the members, the impulse toward a new level of organized cooperation quickens once more. In the end, the oil crisis may prove to have been another beneficent emergency on the way toward a European confederation.

V

Triumphant optimism would, however, be premature. Crises may not always prove beneficent. The impulse toward European union would have to prevail not only over the usual frailties which afflict all governments and societies, but against a series of general European weaknesses, some of which appear to be growing worse. The oil crisis has created profound dislocations in a financial structure already severely weakened by inflation. The strains of adjustment may prove too great for the system to handle. A general financial breakdown may result in the collapse of economic integration among the European states, despite all enlightened efforts to recycle liquidity and preserve demand. Moreover, the transfer of real resources demanded by the Arabs may prove impossible for the existing political regimes to manage in societies used to full employment and steady growth.

While these problems are general for all European states, they fall more heavily on some than on others. The two countries hardest hit-Italy and England-are also those whose regimes, persistently unable to cope with severe national problems, have seemed to be moving toward a fundamental political crisis. While we cannot here review these situations, two general observations may be made. First, elites in both countries have been inclined to see membership in the European confederacy as a way to side-step their fundamental national problems. Europe, however, has not proved a panacea. By their nature, confederations, especially economic confederations, are unions for the healthy. An industrial nation can participate in an open regional system only if its government can induce the discipline to sustain that competitiveness. Whereas France was often said to have stayed in the Common Market in spite of de Gaulle, the reverse was true. Without the strong government and fundamental resolution of France's endemic political crisis which Gaullism provided, France could never have sustained a close economic union with Germany.

To be sure, a confederation can help buy time or provide capital to finance a nation's rejuvenation. But that nation must be following a policy which, in turn, leads to a resolution of its difficulties, not to perpetual subsidization by others.

What happens if a member proves incapable of sustaining its membership? It is not necessarily a catastrophe if a state in serious difficulty distances itself from a confederal grouping. On the contrary, as a full member, the weak nation may harm both itself and the whole. Its government, by impeding common action, often imposes a blackmailing tax on the general association which strains its cohesion and dissipates its strength. A weak partner, in its quest for subsidy and fear of domination, is always easy prey for manipulation by external powers. A reforming government, moreover, often finds the strong measures needed to restore the national situation difficult to reconcile with the liberal discipline of a common market.

Temporary British or Italian withdrawal from full participation in the European construction may not prove an unmitigated catastrophe. Indeed, the endemic weakness of Britain and Italy is a persisting vulnerability for the broader European confederation.

A second problem lies not in the excessive weakness of some members, but in the growing strength of Germany. The postwar situation has favored a European confederacy both because Europe has been menaced by domination from without, and, at the same time, been unusually free from threats of hegemony from within. The major economic power, West Germany, has not been on a scale sufficiently beyond a rapidly growing France or even a declining Britain. Germany, moreover, has suffered from major and obvious political and military vulnerabilities. Indeed, the dominant European power, if any, has been France; her revival has been a key element in the postwar European equation. But French ambitions have been kept in check by European rivals, always confident of American support. In any event, French resources do not permit a hegemonic role, particularly in competition with the United States. Hence a rough balance has seemed to preclude the dominance of any one of Europe's major states.

Today, with the enfeeblement of Britain and the economic difficulties of France after the oil crisis, a German hegemony seems more plausible. In addition, American policy sometimes flirts with encouraging a growth of German pretensions in order to frustrate the less vulnerable and more independently minded French. Should Germany, in fact, move into a position that threatened dominance, the confederation might well break apart, for reasons too familiar in modern European history. France might turn, for example, to a closer relationship with the Soviet Union, perhaps in combination with a left-wing Italy, Portugal and Spain.

Such an evolution, while not inconceivable, seems unlikely unless a major economic breakdown plunges France into political and social chaos. Otherwise, with a fast-growing, technologically oriented economy, better balanced and hence less vulnerable than the German, a strong political system, and substantial nuclear prowess, France ought to be able to hold her own in close partnership with Germany. The potential mischief of militant American support for Germany cannot, of course, be altogether discounted.

A third major obstacle to a European confederation lies in its military dependence upon the United States. The continuing American protectorate has been a powerful constraint upon European independence in the diplomatic and even economic spheres. Might Europe ever disengage from that military protectorate? Greater independence would presumably mean endowing the European coalition with a serious military dimension. As long as military dependence has not been particularly expensive--directly or indirectly--no great impulse toward autonomy was to be expected. Still, the French and, to a lesser extent, the British have provided themselves with a technological base which might serve for a European nuclear force; and the technological problem has perhaps now grown easier. Should their military dependency grow to be a liability in dealing with the non-hegemonic world which appears to be developing, the European states will have a motivation lacking within the comfortable postwar American imperium. In short, not even the military problem need prove intractable.

VI

The present world situation is hardly one which lends itself to successful long-range forecasting. Many believe the current oil crisis, combined as it is with the Arab-Israeli dispute, will end in the breaking of the OPEC cartel, either by economic pressure or, perhaps, by military force. Such a resolution might seem, among other things, to restore the postwar world system we have constructed and ourselves to predominance within it. No one can really say. As they await the outcome, the European states hedge their bets. They give the Americans rhetorical victories in world conferences, but as devoid of substance as possible. They join elaborate American arrangements for sharing oil, just in case they may need them, but only as long as they are not gravely compromised in their more serious private arrangements.

Anyway, Europe has gradually been evolving into an increasingly cohesive economic and political confederacy. In reaching out to integrate their Mediterranean neighbors, Europe's states have found a new vocation for their energies and a broader sense of their collective interest. Any apparent disintegration of the postwar international system ought generally to encourage this European evolution. The oil crisis can be seen as a major sign of such a systemic disintegration. Its effects on Europe can plausibly be read as a further intensification of Europe's impulse toward union and expansion. Current analysis tends to ignore this impulse and focus instead upon Europe's tactical embarrassments and strategic inhibitions. The emphasis seems overdone. While, in today's fluid situation, I am far from insisting that the trends I sketch must inevitably prevail, they do seem more in accord with the general evolution of the world system in the past decade, an evolution, on balance, away from hegemony and toward pluralism. And I remain skeptical that the evolution to pluralism is likely to be reversed.

Footnotes

1 Bilateral trade agreements include those linking Iran and Iraq and Denmark, France, Germany and Italy. Iraq, Iran and various sheikhdoms are also involved in some substantial cooperation agreements. Some very large agreements with private companies are signed or in prospect. For a summary of bilateral trade increases, see The Hudson Letter, June 2, 1975, International Herald Tribune (Paris).

2 World Financial Markets, Jan. 21, 1975, and April 15, 1975, Morgan Guaranty Trust Company of New York.

3 The Hudson Letter, loc. cit.

4 In 1973, imported oil met 60 percent of the energy needs of the Common Market countries (42 percent from the Arabs). By country: Britain 27 percent (30 percent Arab), West Germany 59 percent (38 percent Arab), France 77 percent (53 percent Arab), and Italy 84 percent (60 percent Arab). By contrast, U.S. 17 percent (4 percent Arab). International Economic Report of the President, March 1975, p. 8.

5 On August 31, 1974, Italy received a $2 billion credit against collateral of about one-fifth the Bank of Italy's gold holdings, valued at 80 percent of the average of the previous eight weeks' London price. Drawings were to carry interest charges based on the rates of six-month treasury bonds in New York. The loan, for six months, could be extended to two years, at which time Bonn could redeem any remainder by selling the gold at market prices.