Academic Forum


Programs in

The Future

Paper 95.6

May 1996

Europe and World Order
After the Cold War


David P. Calleo

Series Editor : Simon Serfaty
Associate Editor : Tom Lansford

This paper was prepared for a series of round table discussions, entitled The Future of NATO, held at Old Dominion University during the 1995-96 academic year. This Project, directed by Dr. Simon Serfaty, brings together leading analysts in the field of transatlantic relations as well as academics and military officers from the NATO countries. The papers and related meetings are made possible by generous grants from NATO(Office of Information and Press, Academic Affairs), Saclant and Old Dominion University.

Europe And World Order After The Cold War (a)

With the end of the Cold War there has been considerable debate over what kind of international system will emerge to replace the bipolar system that has marked the post-World War II era. One of the key questions concerning the development of any future international system is what kind of role should Europe play in some "New World Order" after the Cold War? The answer really depends on two other questions: What sort of Europe? and What sort of World?

Europe order and world order have been intimately related throughout modern history. European states, it might be said, invented the world system. As early as the sixteenth century, the European powers began conquering large parts of the rest of the world and tying them to Europe through intercontinental empires. Most of the time, Europes imperialism did not so much create a single integrated global system as imprint Europes own divisions on the world at large. That was because the continent itself was not unified but pluralistic, a "Europe of states" that merely extended its own contentious disunity into the rest of the world. Struggles for global empires were intimately related to struggles for predominance on the continent itself. As we know, no European state ever achieved predominance on the continent, at least not for long. Since Europe was never united, the world dominated by Europeans and their rivalries was also never united.

Pax Britannica

One period was a major exception-- the so-called Pax Britannica of the mid nineteenth century, when European states accepted a high degree of global economic integration fostered by a series of international regimes, in particular free trade and the gold standard. Politically and economically, this integrated period was based on British predominance in the world beyond Europe, together with the absence of any effective candidate for hegemony on the continent itself. This state of affairs was the result of Britains defeating France in India and America during the eighteenth century, followed by the defeat of Napoleon in 1815. Economically, British preeminence in manufacturing and commerce, the advantages that came from being the "First Industrial Nation," weighed heavily on the global economic system of the time. In other words, there was a global hegemony of sorts, enjoyed by Britain, thanks in part to a continental balance of power.

This state of affairs endured, broadly speaking, until late in the last century. Its end was marked decisively by World War I. As a political-economic paradigm, however, the Pax Britannica has lived on in the imaginations of nostalgic British and internationalist Americans. Out of the constituent elements of the Pax Britannica, Americans formed their own vision of the ideal global system: open trade, free capital movements with stable and convertible currencies, a high degree of international investment together with a prominent role for international corporations. Behind these economic elements was the political ideal of a benevolent hegemonic power -- able to build coalitions to sustain law and order based on common rules, and rich and skillful enough to sustain financial and commodity markets in their periodic collapses. This vision, a liberal global system sustained by a leading power, has had influence on American policy, both in the Wilsonian program after World War I and the Pax Americana after World War II.(1)

The globalist ideals of the Pax Britannica, or its American reincarnation, have never been unchallenged in Europe, nor even in the U.S. or Britain. Against the integrated globalist and hegemonic vision have always stood various versions of a pluralist, or balance-of-power ideal. Even in the heyday of the Pax Britannica, globalist ideals were being attacked on behalf of pluralist and nationalistic principles. In economic theory, for example, there was the mid-nineteenth century German-American economist, Friedrich List, who has recently become fashionable in unfashionable circles in the United States. (2)

Global Pluralism

List argued that free trade had to be reconciled with the goals of national development -- social, cultural, political development as well as economic. Nation states, in List's view, had the obligation to protect their economies to foster developing industries until those industries could compete on equal terms with the industries of countries, like Britain, which had enjoyed a head start. Without such protection, List argued, free trade was merely an ideology for perpetuating the domination of the strong, i.e. the British, and would hinder the economic, political, social and cultural development of relatively late developers, particularly Germany and the United States. List agreed that once states reached an advanced level of development, they should embrace free trade, which would benefit everyone for the usual economic reasons. Still later, however, the world economy would reach another stage of integration, List believed, and another form of protection would be needed. Eventually, the huge size of the nascent U.S. economy meant that European states would have to develop together a sort of confederal political-economy to give themselves the scale to hold their own against the Americans.

In other words, in the name of global pluralism, and in opposition to global hegemony, List urged the mid-nineteenth century European states to protect the development of their economies against the British and, in the long run, to band together in a sort of European confederal economy to compete with the Americans. In the still longer term, List also expected that European states would have to compete with emerging Asian powers. In the last years of the nineteenth century, the ideal of global hegemony was challenged politically by the Imperial Germans, who wanted to become a "world power" like Britain. During World War I, Germans argued that the British were using the old ideal of a European balance of power to prevent any European power from challenging them globally. And if Germany were not permitted to unite the continent under its hegemony, then all Europe, Britain included, would eventually be dominated by the huge new continent-sized states -- the United States and Russia. As we know, the Germans destroyed the Pax Britannica, but did not themselves succeed in becoming Europes hegemon or a "world power" in the fashion that they wished. Hence the first and second World Wars, Europes self-destruction, and finally the end of Europes predominance in the world at large. After an unstable interregnum, the Pax Britannica was followed by the Pax Americana of our own time, which we now presumably need to replace or remodel for a "new world order," lest we fall into a new interregnum.

Post War Systems

The Pax Americana was rather different from what we sometimes imagine. It was never a simple hegemony; rather it was a complicated set of three or four overlapping systems. The elements of these systems are still around and will, in all likelihood, be the principal ingredients of tomorrows European and world order. These systems were the bipolar strategic system of the Cold War, the global world political economy of the Pax Americana, the European system of the European Community, and a nascent Pan-European system that began forming in the 1960's and 1970's. Each of these postwar systems has had its own dynamic.

The postwar bipolar system has ostensibly collapsed, since one of its two poles has disintegrated. The postwar global system, initially hegemonic, has grown progressively more plural as the U.S. has gone into at least a relative "decline." Hegemonic theory tends to anticipate the decline of the hegemon, thanks to "free riders" in the hegemonic system. In any event, it is the rise of other powers that has made the Pax Americana more plural. Forming a European Union, inspired by good Listian principles, itself changed the global system in a more plural direction. Rising Asian states, also Listian in their outlook, strongly reinforced the pluralist global trend. The fourth postwar system, the Pan European, began to take form with German Ostpolitik, detente, and institutions like the Conference for Security and Cooperation in Europe (CSCE), which opened up the Soviet world and paved the way for its collapse.

Lessons of the Postwar Systems

These four postwar systems were based on certain "lessons" widely drawn from the history of the first half of the twentieth century. These lessons are worth considering because they still tend to dominate our thinking about the future.

One lesson, inspired by a hegemonic view of history, was the need for American leadership, both in Europe and globally. From this perspective, two world wars had demonstrated the need for a hegemonic power. The U.S. had to assume the hegemonic role since Britain demonstrably no longer could. American "isolationism" was, therefore, a great danger to world order, as had been proved by the interwar experience.

A second lesson, inspired by an opposing pluralist perspective, was the need for Europe to form a confederacy not only to end its fratricidal self-destruction but to hold its own against Russia and especially against the United States in the global system. In effect, the old German nationalist argument against the hegemonic Pax Britannica was transformed into a general European argument against superpower domination and a hegemonic Pax Americana. Intellectually, the French took a leading role in this postwar transformation. Charles de Gaulle and Jean Monnet are the conspicuous illustrations of this. For obvious reasons, a Franco-German partnership is the key element in this vision. There were intimations of it in the interwar diplomacy of Aristide Briand and Gustav Stresemann. In the postwar era, from the days of Konrad Adenauer and Walter Hallstein, Germans have inevitably played a critical role -- along with the French, although divided Germanys external situation and internal politics both required greater caution in dealing with the Americans. (3)

A third lesson often drawn from interwar history was economic: something had to be done about capitalism in order to avoid communism or fascism. The 1930's seemed to have demonstrated that capitalist economies, without state intervention, often arrive at outcomes that are morally and politically unacceptable, as well as economically wasteful. One obvious formulation of this lesson came from John Maynard Keynes, who explained how capitalist economies, if left to themselves, can arrive at a condition of chronic unemployment that the market cannot cure by itself. The state, Keynes concluded, had to manage demand. (4)

On the continent, the intellectual rationale varied from country to country, but in general, European governments after World War II were determined to reshape their economic systems. The task, as they saw it, was not mere recovery -- they had no desire to return to the doldrums and political fevers of the 1930s -- but a transformation of their economies into a new phase of sustained rapid growth. (5)

Rapid growth was needed to provide both opportunity for the able and safety nets for the weak. A free capitalist society had to have both. Achieving such a transformation was thought to require active management of the economy by the state or its surrogates. As Keynes had taught, demand had to be adequate to stimulate growth. Such management meant various national mixtures of planning, protection, subsidy, as well as a general European bloc. These European ambitions for national transformation and continental union clashed with the free trade and currency convertibility being demanded by the Americans in the immediate postwar era. A great deal of tension grew up between the United States and Europe in the early days of the postwar era.

Transatlantic reconciliation was greatly helped by the onset of the Cold War, which inspired the Marshall Plan and NATO. Generous aid became available for European transformation and the United States strongly supported European integration. The Cold War made the United States willing to accept economic discrimination against itself in order to facilitate building a European Economic Community. At the same time, the Cold War also created a framework that made the tasks of integration more manageable among the Europeans themselves. Thanks to NATO, Europes own integration did not have to encompass security, which America provided for European states at a low political cost. The Cold War also meant a relatively small Germany and eliminated Eastern Europe as a source of contention and distraction among West European states. Moreover, having a big, disagreeable and plausible common enemy imposed a certain discipline on West European states and transatlantic relations.

At the same time, the Cold War, with its demand for both the guns of NATO and the butter of the European Community, effectively eliminated Keynes old bugaboo -- insufficient demand. Given this favorable Cold War setting, Europe had its economic "miracles" and the European Community developed rapidly and put down deep roots. As Europe prospered and consolidated, it became a more willing participant in an open global system. The same pattern was repeated with Japan. In short, thanks to the Cold War, with its bipolar strategic standoff between the United States and the Soviet Union, the postwar era saw the contemporaneous development both of the global Pax Americana dreamed of by the hegemonic liberals and of the European confederacy that was the ideal of the pluralists.

Despite all these interlocking advantages, serious strains were visible onthe Western side of the postwar system long before the Soviet collapse and, indeed, are still with us. The United States remains afflicted with a "fiscal overstretch" that has accumulated all sorts of unhappy consequences including the paralysis of fiscal policy that has threatened to provoke a real constitutional crisis. (6)

Europe, meanwhile, has had its recurring bouts of "Eurosclerosis," caused by too much butter in the welfare state, along with a degree of social and job protection that has grown dysfunctional. During the past couple of decades, rapid technological change has made it easy to shed workers and export technology, while global competition from countries with very cheap labor has intensified. Together these developments have posed a major threat to Western economies and their postwar prosperity. In such a challenging environment, the old bad habits of the Cold War -- overstretch and Eurosclerosis -- weigh heavily on the future.

The Global Future

In any event, the Cold War is over, even if many of its legacies -- good or bad -- remain. We must now address what happens now to the global system and the European system. In general, there seem to be four main options for the future. The first is continuity or very little change in the present order. The second option is change toward a unipolar world -- a Pax Americana without a rival. The third option would be change toward ordered pluralism based on a multipolar order. And the fourth option would be a collapse -- a "new world disorder."

The first and last options are perhaps more formal than real. The last-- collapse into world disorder -- we can leave as a formal category but are unlikely to pursue as a goal. As for the first-- continuity with little change-- too many things are clearly now changing. The world has obviously grown more plural with the rapid rise of Asia, which severely challenges Western states in fundamental ways. In the process of meeting those challenges, old Western relationships are unlikely to survive unaltered. The United States, for example, is not going to go on paying the bulk of the costs for Europes defense, and Europeans wont go on tolerating an endless series of beggar-thy-neighbor devaluations of the dollar.

What about the second option, a unipolar world system with a Europe that remains an American protectorate? This idea has had a strong rebound with NATOs recent Bosnian intervention, but is still not, in my view, a likely scenario for the future. (7)

Let me suggest three reasons: First, although the United States has great military power, the American public has no real stomach for using it -- unless vital U.S. interests seem clearly involved. Second, the American public is not likely to see vital American interests at stake in the sort of security problems Europe will probably face. America's hegemonic role as manager of European security made sense when the opponent was a nuclear superpower in the middle of Germany. All Europe seemed self-evidently at risk. Europes new security problems, however, are much messier and less clear-cut: ethnic conflicts, border wars, guerilla wars, terrorism, mass migrations, drug trafficking or multinational crime generally. Unlike the apocalyptic but abstract challenges of the Cold War in Europe, todays security problems may call for real fighting, albeit at a low and inconclusive level, one likely to exhaust the patience of an American public that sees its soldiers being killed in obscure and tangled quarrels of remote relevance to American interests. In most instances, resolving todays security problems successfully calls for the steady and long-term application of political-economic pressure. For such a policy the United States lacks means by comparison with E.U. states themselves, and also lacks the vigilant interest and firm commitment needed. American policy can be expected to be fickle and easily blown off course by gusts of mercurial public sentiment, as has been the story in the former Yugoslavia much of the time. (8)

In short, the United States cannot be expected to take the lead in managing Europes new security problems.

NATO Expansion

How does such a judgement square with extending NATO? Enlargement might, of course, recreate the Cold War and thereby end speculations about a new world order. I confess, however, that I still find it difficult to take the whole idea of NATO enlargement seriously, unless there is a major change in the character of NATO itself. Militarily, extension under present circumstances involves enormous new commitments, potentially much greater than during the Cold War. Politically, it runs the risk of creating the problem it anticipates, i.e. a hostile, aggressive Russia. Nor can I understand why Europeans should want such an enlargement -- least of all the Germans, who have the most to lose.

Nor from any broad geopolitical perspectives can I see how it would serve American interests. The U.S. has a major security role in the new Asia that it cannot escape, not because Asian security is more important to the United States than European, but because active America military management is vitally needed in Asia, whereas in Europe it is not. Chinas rapid economic expansion, uncertain politics and aggressive diplomacy, coupled with the heavy build up of military forces throughout Asia, including various threats of nuclear proliferation, all demand a continuing large-scale American involvement. Asia lacks an indigenous counterbalance to engage and contain China. There is also no regional organization to fulfill this task in the manner that the European Union does in Europe. And so long as Japan denies itself a nuclear deterrent, the United States needs to be engaged in the region as Japans protector and Asias general balancing power. For the United States to succeed in this role would seem to require a strong and friendly Russia. If Russia is weak, Siberia becomes too tempting a target and conflict over it seems close to inevitable. A hostile Russia greatly complicates creating cooperative organizations for regional security. A Russia both weak and hostile seems even more disadvantageous. Under these circumstances, picking a needless quarrel with Russia in Europe seems so stupid a policy that is hard to believe that we are serious about it.

A strong Russia, reasonably open and liberal, but also master in its own house, also seems essential for a strong and stable European confederacy. It cannot be healthy for the Germans to be back in Berlin staring eastward and seeing no barrier to the indefinite extension of their influence. Germany would be drawn into such a vacuum whether it wished to be or not. And a Germany drawn out of scale in this way -- unbalanced externally and internally -- will once more seem a menace and will break up the European system.

Balanced Pluralism

These sorts of arguments point to my third option -- a balanced pluralist system for the new world order. Such a system would require a strong Europe and a strong Russia, together with a strong but not overextended United States. In many ways this suggests a sort of reverse domino theory. A strong Europe is needed both to embrace and to contain a strong Russia. A strong Russia, able to hold its own, is needed to define and contain a strong Europe, as well as to permit the United States to play an efficacious balancing role in Asia. A successful pluralist system also requires a United States that has found a coherent focus for its global policies, a United States, in other words, that is not over-extended, has its fiscal and external accounts in order, and is therefore able to join in restoring better order and discipline to the global economy.

What sort of Europe does a balanced pluralist system require? Europe, too, needs to be master in its own house. It needs to strengthen its own cohesiveness, streamline its machinery, deal with Eastern Europe without contracting a fatal case of elephantiasis and take charge of its own security problems. A European-run defense system is thus a primary need. Such a system could be within NATO but a new NATO, where Americans can participate but are not the primary managers of European security. An effective European defense organization is hardly a novel project. There are calls for it every day, recently, for example, from French Prime Minister, Alain Juppé. His goal of a European army of 350,000 seems rather modest by historic European military standards. Nevertheless, if achieved it would transform prospects for a stable global system. A strong Europe able to look after own security would, in itself, be a major contribution to world order. Europe has, after all, been the major seedbed for war in our century. And a strong Europe would also be in a much better position to come to terms with Russia than a Europe that was still an American protectorate.

Generally speaking, a balanced plural order has two fundamental requirements. Major powers must behave in a responsible fashion domestically. They must keep their own internal affairs in order, but not through means that make it difficult for others to do the same. And major powers need to accept their collective and individual responsibilities for sustaining an international order which provides space for the aspirations of everyone and firm resistance to excessive ambitions from anyone.

In today's post Cold War world, whether this kind of balanced plural order can be achieved depends heavily on what happens in Europe. Europe's major states have been building a confederacy for forty years. It will now be put to the test for which it was designed. If Europe rises to the occasion, then the prospects for an orderly world in the next century are not entirely unpromising. If it does not, we have plenty of evidence from history about what to expect.

Europe and the Nation State

In some circles, it has been fashionable ever since the end of World War II to assume that nation states are disappearing -- that they are ultimately incompatible with a global economy, and that, since the rise of the latter is inexorable, the demise of the former is inevitable. Expecting nation states to disappear in the face of a globalizing economy reflects a fashionable but naive economic fundamentalism more dysfunctional than most other forms of religious fundamentalism that trouble contemporary politics. Periods of rapid and disruptive economic change resurrect politics. People naturally turn to political authority for protection. Nation states, the principal repositories of political legitimacy and power, are strengthened rather than weakened. The problem for national leaders is to find solutions that are efficacious at home without breeding conflicts abroad, conflicts that often defeat the domestic policies themselves. This requires balanced international institutions for negotiating and monitoring the inescapable interdependence of national economic policies. Here Europe has taken a leading role. For nearly five decades, European states have been conducting a complex experiment to reconcile domestic needs with regional harmony. The result is a very high degree of mutual interdependence among European states, but managed in a fashion that encourages increasing convergence of national policies around commonly shared norms of fair and good practice. European success has required leadership, but also a complex balance that prevents hegemony. At the same time, the Pax Americana created a world economy that has greatly increased everyone's interdependence and vulnerability on a global level. Interstate political structures are needed to manage vulnerability at this level. As I have tried to argue, the organizing principle of such structures cannot be hegemony and therefore requires a well-structured balance of power. Here, I believe, Europe holds the key to the future. There are maybe risks to Europes reassuming a world role, but the risks of failing to do so seem much worse. And there may be internal benefits as well. In many respects, the postwar United States has found its sense of national identity and discipline out of its world role. Many analysts fear that we have overdone it -- that the Cold War role has unbalanced constitutional arrangements and starved domestic infrastructure -- physical and cultural. Europe has a long way to go before it grows unbalanced in the same way. And perhaps, in assuming a greater role in managing the world, as well as itself, a diverse old Europe of states can find the sense of common identity that it requires.

About the Author

Dr. David P. Calleo is the Dean Acheson Professor and Director of European Studies at the Paul H. Nitze School of Advanced International Studies (SAIS) of the Johns Hopkins University. Before joining SAIS in 1968, Dr. Calleo taught at Brown, Yale and Columbia Universities. He has held Rockefeller, Guggenheim and Fulbright Fellowships, and he has twice been a project director for the Twentieth Century Fund. Dr. Calleo also served as a Research Fellow at Nuffield College, Oxford and as a consultant to the U.S. Under-Secretary of State for Political Affairs.

A widely published scholar, Dr. Calleo has written extensively on transatlantic relations and political economy. His books include The Bankrupting of America: How the Federal Deficit is Impoverishing the Nation (1992); Beyond Hegemony: The Future of the Western Alliance (1987); The Imperious Economy (1982); The German Problem Reconsidered: Germany in the World System, 1870 to Present (1978); America in the World Political Economy, with Benjamin Rowland (1973), and many others.


  1. First presented at the conference "Reflections on the Identity of Europe: Global and Transatlantic Perspectives," held at the Johns Hopkins Bologna Center in March 1996 and sponsored by the Directorate General of Cultural Relations, Italian Ministry of Foreign Affairs.
  1. Charles P. Kindleberger, America in the World Economy (New York: Foreign Policy Association, 1977), pp. 104-23; Kurt Wimer, "Woodrow Wilson and World Order," in Arthur Link, ed., Woodrow Wilson and a Revolutionary World, 1913-1921 (Chapel Hill: University of North Carolina, 1982), pp. 146-73; David P. Calleo, Beyond Hegemony: The Future of the Western Alliance (New York: Basic Books, 1987), pp 27-43; David P. Calleo and Benjamin M. Rowland, America in the World Political Economy (Bloomington: Indiana University, 1973), see Part I, pp. 3-15 and Part II, pp. 16-84.

  2. Friedrich List, The National System of Political Economy (New York: A.M. Kelley, 1966).

  3. David P. Calleo, The German Problem Reconsidered: Germany and the World System, 1878 to the Present (New York: Cambridge University, 1978); Wolfram F. Hanrieder, Germany, America, Europe: Forty Years of German Foreign Policy (New Haven: Yale University, 1989).

  4. John M. Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt Brace, 1935).

  5. Alan Milward, The Reconstruction of Western Europe, 1945-51 (Berkeley: University of California, 1984).

  6. David P. Calleo, The Bankrupting of America: How the Federal Budget is Impoverishing the Nation (New York: William Morrow, 1992).

  7. Richard Holbrooke, "America: A European Power," Foreign Affairs, vol. 74, no. 2 (March 1995): 38-51.

  8. David Owen, Balkan Odyssey (New York: Harcourt Brace, 1995).

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