Feckless Europe Kowtows to China

For many years yet, the U.S. will be the world's pre-eminent power. A Europe intent on disarming itself had better pray this state of affairs continues.

Get ready for Pax Sinica.

Photographer: Soe Than Win

Earlier this week Larry Summers said he could "think of no event since Bretton Woods comparable to the combination of China's effort to establish a major new institution and the failure of the U.S. to persuade dozens of its traditional allies, starting with Britain, to stay out of it." This may be remembered, he says, as the moment when the U.S. lost its standing as the world's economic leader.

Gideon Rachman also sees Washington's embarrassment over the China-led Asian Infrastructure Investment Bank as a commentary on U.S. decline. British and European policy makers see China getting stronger and America, relatively speaking, looking feeble:  They "are making decisions that reflect a cautious adaptation to this wind of change."

I see it a little differently. Europe's decision to support the AIIB over U.S. objections reflects its own weakness more than America's. And it gives further proof, if proof were needed, of Europe's fathomless geopolitical complacency.

First, I should mention that I do think it was a mistake for the U.S. to oppose the creation of the AIIB. The new bank may be capable of doing some good: Promoting loans to build new bridges and power plants is a pretty benign way to throw your weight around. China's leadership in multilateral endeavors of this sort should be welcomed rather than resisted.

The U.S. has also been wrong to persist, year after year, in the mismanagement of the existing multilateral lenders, especially the World Bank -- and to deny China the voice in those institutions its economic status now demands. If not for that, China might not have set out to build the AIIB in the first place.

None of this excuses the calculation that Britain and the EU presumably made. Participating in the AIIB might bring them some modest commercial benefits and, more important, it ingratiates their leaders with the rulers in Beijing. But those gains are nothing set against the cost of undermining their alliance with the U.S.

For many years yet, despite China's rise, the U.S. will be the world's pre-eminent military power. A Europe intent on disarming itself had better pray that this state of affairs continues. Britain's government, which likes to think of itself as a staunch U.S. ally, is engaged in yet another round of military cuts. In this, it's merely catching up with its EU partners, who've long made institutionalized helplessness the organizing principle of their national defense.

If and when Iran develops nuclear weapons, the direct and indirect threats to Europe will be far greater than the danger to the U.S. Is Europe capable of deflecting or delaying Iran's ambitions without U.S. leadership?

Russia's leader Vladimir Putin is dismantling Ukraine; testing the limits of the West's commitment to defend, among others, Poland and the Baltic states; and helping to promote political instability in Western Europe. Militant Russian nationalism is a much greater threat to Europe than to the U.S. In balancing Russian military power, Europe relies wholly on NATO -- that is, on the United States.

China is a long way from Europe, but an EU capable of living up to its own leadership pretensions should weigh its global interests with care. Yes, it rightly wants to get on with the world's biggest emerging power -- but it should also want to draw China into a rule-following system of global governance. The best way to do that is to act, so far as possible, in concert with the U.S. By giving China its big diplomatic win on the AIIB -- an act so craven that it even took Beijing by surprise -- it has set that cause back.

If Europe is ever ready to look after itself, it can smile contentedly at U.S. decline and shape its own strategy for dealing with Russia, China and Iran, to name just three. For now, it would do well to understand who needs whom.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.