For veteran watchers of European affairs, the notion that Europe has, will, or is in the process of “decoupling” from the United States is an old one. To decouple, in the economic sense, means to break the cycle of dependence and or interrelationship which exists between the United States and European economies. This process is seen by many enthusiasts of the European Union as a building block essential for the rise of a unified and independent Europe.

Those who have argued that economic decoupling is under way have been proven wrong time and time again by the fact that recessionary winds blowing within the United States inevitably lead to economic storms in Europe. Take, for example, the fact that European banks were subjected to “stress tests” designed to assess their health this past week. These tests were conducted because the financial crisis, which began in the United States, has caused banks in Europe to suffer significant losses. American banks underwent the same tests approximately a year earlier.

The notion of decoupling from the United States is being spoken of again, however, but this time it is in relation to China. Unlike the European situation, the decoupling spoken of in this context is more political than economic.

The current theory posits that the United States is fast losing global political clout due to the economic meltdown it has suffered and the ballooning debt it is incurring. This conclusion has led the Chinese government and business leadership to believe that a fundamental shift has occurred in their relationship with the U.S. China is less inclined to accept American dominance in foreign relations in the light of these changed circumstances. Indeed, Chinese strategy now seems to be focused less on what was previously considered the vital relationship between itself and the United States, and more on its own domestic considerations. The following quote from an article by a prominent commentator explains the situation:

“… the Chinese leadership, preoccupied with its own domestic challenges, has made it clear that it has acquired the confidence to look inward, and that its primary goal is to create new jobs and to ensure steady and predictable economic growth. Beijing has every incentive to resist any commitment that distracts from that ongoing project or exposes China to unnecessary risk. Americans will have to get used to a China that is ever more ready to just say no.” (see the link below for the full article on the World Affairs journal web site)

Confidence in their own domestic strength is causing the Chinese government to decouple from the United States and focus on its independent future irrespective of what Washington may think. This is what those who dream (often in French) of a unified Europe have been hoping for since the days when the European Union was called the European Common Market. Could it still happen?

Indeed it may, but oddly enough it could result from fear instead of confidence. In Europe the recent financial disaster has given new life to those hoping for full political unity. The reason lies in the fact that the European Union is economically integrated, however, politically stil segmented. Each nation member state still has a large amount of freedom to chart its own domestic policies (eg. to raise or lower taxes). This means that if one of the member states does something wildly irresponsible which leads to an economic recession in their own state, say like Greece for example, the entire EU may be dragged down the economic hole. This is a situation that is clearly unacceptable.

Having gone too far down the path of economic unity to quit now, the only option left open to Europeans is to find a way to achieve more centralized control within the EU in order to prevent individual states from bringing on disaster for everyone else. Control of this type is not only economic, but also political. The following quote from an analysis published by an independent economic “think-tank” sums up the picture:

“Faced with the threat of contagion from a crisis-stricken Greece, many EU policymakers and commentators are talking openly about the need for a ‘European economic government.’ … in order for the euro to survive in the long run, the economic and monetary union must now be completed with a political and fiscal one.” (Petersen Institute for International Ecomomics)

Crisis often brings people and nations together. To the extent that the individual European nations begin to accept the idea that the further surrender of their individual sovereignty is needed in order to achieve financial stability, their focus, like the Chinese, will turn inward. Furthermore, like the Chinese, focusing on their inward and independent European future would lead to the often hoped for political decoupling by the individual member states from America. The result for America will be that the U.S. will have to increasingly become used to a unified EU which is less likely to be split by the attraction which various, individual member nations have to the United States. In other words, Europe may finally begin to say “no” to Washington in a distinctly unified voice.