Bidding farewell to the year 2017 which saw strained U.S.-Europe Union (EU) relationship, Washington and Brussels are set to be embroiled in a troubled 2018, experts have said.
Since the inauguration of his administration in January 2017, U.S. President Donald Trump has fallen foul of European leaders over a string of issues ranging from security affairs, trade and economic issues as well as foreign policies.
Experts held a bleak outlook of the transatlantic ties in 2018, saying that the U.S.-EU relationship is now in a crisis, though it still remains important.
DIFFERENCES ON SECURITY ISSUES
"Some European nations are querying to what extent the Trump administration is willing to support Europe and the transatlantic relationship, certainly in defence matters," said David Criekemans, an assistant professor at Antwerp University.
However, the differences between the two sides on NATO budget-sharing began even prior to Trump's inauguration, when in early January 2017 the then-president-elect poured scorn on NATO, calling it "obsolete" and claiming that the European partners were not paying their fair share.
On the occasion of his maiden summit with NATO in May last year, Trump made a sideswipe at 23 members of the 28-state military alliance for "still not paying what they should be paying and what they are supposed to be paying."
Trump groused about the "massive amounts" they owed, hinting that the United States may not honor the organization's mutual defence clause if European allies fail to ratchet up their defence spending.
Several European countries which are due to make major defence purchases in 2018 are bearing the brunt of pressure from the Trump administration, Criekemans said.
"Trump thinks in a mercantilist way and puts major pressure on European nations to 'buy American,' for instance with regard to the new generation of fighter jets," he said.
But heavyweight EU members are tinkering with the idea of paddling one's own canoe in the defence sector.
"France also is in the game and pursues a strategy to build up the European defence industry, in which Paris would like to play a major role," Criekemans said.
TRADE, ECONOMIC TENSIONS DOWN THE ROAD
Trade and economic affairs are vexed for Trump as well. The U.S. president slammed Germany for maintaining a "massive trade deficit" with the United States, saying it was "very bad" and promised things would change.
Major decisions on some trade cases are on the table of the U.S.president, allowing him to impose tariffs and quotas on foreign products, said Gerhard Stahl, a visiting professor at the College of Europe in Bruges, Belgium, and the Peking University HSBC Business School.
"The EU is committed to a rule-based international system. If the biggest trading partner is questioning this system, the EU will have to develop further its own trade and investment policy based on European priorities," Stahl said, underlining that "such a development creates the risks of further tensions between major international economic powers."
Another fault line is tax policy and tax evasion. Stahl said the EU started to take measures against major international companies which are using tax havens and loopholes in national legislation to avoid paying taxes.
An effective policy against tax evasion needs the cooperation of the big economies, he said. But "it seems clear that the U.S. government is not prepared for such tax cooperation, instead, it is engaged in international tax competition to gain economic benefit and attract international investment."
Another issue which Washington is incongruous with Europe is the regulation of financial markets.
In the wake of the 2007 financial crisis, the EU has tightened screws on financial markets, requiring financial institutions in the EU to reduce risky financial activity and to provide more transparency, Stahl said.
In contrast, the U.S. government intends to reduce regulations for the U.S. financial industry, Stahl said. "This undermines the European policy of stricter control of financial markets and gives American banks a competitive advantage," he added.
DIVERGING VIEWS ON INTERNATIONAL POLICY
More notable, the United States is running an international policy which is drifting away from its European counterparts.
An obvious sticking point is climate change. Trump declared in July 2017 that he was unilaterally pulling the United States out of the Paris Climate Agreement, claiming it was a "bad deal," despite heavy lobbying from his European counterparts to stay in the broad-reaching and ambitious pact.
Criekemans said that the federal United States is "out of the game for now" because of Trump's policy, while the American states and cities remain quite active in energy transition and innovation.
He particularly referred to the state of California, saying it "conducts its own 'foreign policy' supporting the companies in the new green tech sector, such as the e-car builder Tesla."
"European countries are very eager to work together with them and attract foreign direct investment so as to develop their own energy transition," said Criekemans.
Taking the Iran nuclear deal, for instance, Stahl said that the EU is committed to the hard-wrought deal which will allow the lifting of sanctions and the reestablishment of economic ties with Tehran. On the other hand, the U.S. government is casting doubt on EU policy, creating hurdles for European banks to finance investment and business activities in Iran.
With regards to the international organizations like the United Nations and World Trade Organization, Stahl said that the EU and its member states will continue to support and strengthen them. In contrast, the U.S. government is reducing its political and financial support.
All odds notwithstanding, Criekemans said, the relations between Brussels and Washington remains important in a rapidly changing world, "which implies major geopolitical challenges for the 'Old Continent'to adapt its foreign policy to these new realities," said Criekemans.
