Washington — Seasoned NATO observers know to expect few surprises when Chicago hosts the first NATO summit on U.S. soil in 13 years. After an ambitious effort at Lisbon in 2010 ushered in NATO’s new strategic concept, Chicago was always meant to be more about implementation than big or new ideas. Indeed, preoccupation with other things — e.g., the ongoing impact of the financial crisis, the effect of electoral cycles, and evident disagreement between allies on a few fundamental issues — dampens expectations for the “deliverables” to be announced in Chicago.

Watch Video of Mark Jacobson Explaining What to Expect at the Chicago Summit

Measured expectations are understandable. This is a summit that must go smoothly and, thus difficult issues may be deferred. NATO member states wish to demonstrate collectively that the most successful military alliance in history is evolving to meet the challenges of the 21^st century. Collective defense, enshrined in Article 5, which mandates that an attack on one is an attack on the whole, remains the cornerstone of this understanding. Likewise, in the wake of its strategic rebalancing to Asia, the United States will look to reassure its European allies that NATO remains the “indispensable alliance.’” Meanwhile the same European allies will seek to reassure the United States that they have understood its insistence on the need for more and better burden sharing.

Discussions at the summit will focus on three key areas — revitalizing NATO’s defence capabilities, continuing the process of transition in Afghanistan, and strengthening NATO’s valuable partnerships not only in Europe, but across the globe.

Smart Defense is a key component to NATO’s plan for revitalizing its capabilities. According to this concept, member states commit to share resources and capabilities and to collaborate on future acquisitions aimed at eliminating unnecessary duplication and expense. Around 20 Smart Defense projects will be announced in Chicago, but questions will remain of how “new” or how “shared” these programs really are. For example, both the expansion of Baltic Air Policing and development of Allied Ground Surveillance were galvanized by the Smart Defense initiative, and both are welcome, yet some may argue these are hardly “new” initiatives. The Alliance will also announce “interim operational capability” for Ballistic Missile Defense, but the challenge will be maintaining European financial contributions to what will remain substantively a U.S. project.

The key question is whether the announcements in Chicago will indicate a change in NATO’s mindset. Can this new formulation of cooperative defense, burden sharing, and interoperability succeed where earlier, similar initiatives have stagnated? Can the Alliance find ways around longstanding concerns, including over important issues of national versus alliance interests?

On the second day of the summit, 22 International Security Assistance Force (ISAF) partners will join the 28 NATO members for discussions on Afghanistan, NATO’s top operational priority. The discussions will focus on five key issues: NATO’s shift to a supporting role in 2013; training and financial support for the Afghan National Security Forces (ANSF); partnership with Afghanistan beyond 2014; and reconciliation and long-term international support for security, economic, and development commitments to Afghanistan. Once more, the messages will be clear, but the details less so. Most immediately, the pre-election promises of the incoming French President Francois Hollande have already required some careful backpedaling to avoid upsetting NATO’s principle of “in together, out together.” And there are more elections to come. Pakistan’s invitation to Chicago also signals a possible warming of this key relationship. But more difficult conversations will be left for the Tokyo Donors Conference on Afghanistan in July.

There has been clear progress in Afghanistan, where, 75 percent of the population is now under the protection of Afghan-led security forces; moreover Afghan forces now lead about 40 percent of conventional and special operations missions. The U.S. strategic partnership agreement and other bilateral pacts have informed Afghans that they will not be abandoned, but that considerable challenges remain, not least receiving the financial commitments that will be required of cash-strapped allies.

Although Chicago is not intended to be an enlargement summit, there will be a meeting of those states aspiring to be part of NATO intended to signal that the door remains open and that nations should be free to choose their own alliances. Expect careful choreography attempting to disguise differences between member states on the pace and nature of any expansion.

Also expect the Alliance to go to considerable lengths to acknowledge how important partnerships beyond the 28 nations have been — not just for operations in Afghanistan, but especially in Libya, where for the first time Arab nations placed their military forces under the NATO command and control umbrella. With an eye towards the future, some nations, the United States in particular, will urge the Alliance to envision NATO as the hub of a global network of partnerships.

Some Alliance members will seek in the post-2014 period to retrench because of global austerity, instead confining NATO’s focus to missions “in area” while deferring “out of area” operations. This would be a mistake. Indeed, the debate over NATO’s relevance after the Chicago Summit will confront a different reality: there is no more “out of area.” Rather, future challenges confronting NATO will most likely emanate from the instability well beyond its familiar field of vision.

Mark Jacobson is a Senior Transatlantic Fellow in Washington, DC, and Sarah Raine is a Non-Resident Transatlantic Fellow in Berlin, both with the German Marshall Fund of the United States.

WASHINGTON — Individual success has long been equated with consuming more. Building a larger house translates into extracting more resources to build, heat, and cool it. Fossil fuels are consumed to drive us to our workplaces, to power a multitude of home electronic devices, and to fuel the container ships and trucks that bring us furniture from far afield. More than 50 percent of U.S. households today have three or more televisions, while the average household size is just 2.6 persons. Up to 80 percent of energy use and greenhouse gas emissions in developed countries is tied to household activities, including waste disposal and the delivery of goods and services to households.

People around the world observe North American and European consumption habits and desire to emulate them. But if everyone were to consume like a typical North American, we would need five planets. Europeans come out a little better; their consumption requires three planets. Some 3 billion people are expected to enter the global middle class in the years ahead, and sustaining their consumption will require asking ever more of the planet and of our governance institutions.

For their part, national policymakers and government agencies often seek to increase consumption as an antidote to sluggish economic growth. And they have continued in the belief that prosperous lifestyles must mean extracting, growing, shipping, and consuming more, and reacting with indignation when others get in the way. When China limits rare earths, it is accused of playing a geopolitical game. When navies are deployed to the Gulf of Aden to protect oil tankers and container ships from pirates, rarely does anyone ask why we need those goods whose passage we are paying to safeguard. Today, many of the top resource challenges of our time are being discussed as geopolitical and security concerns, whether rare earths, fracking, the KeystoneXL and Nabucco pipelines, or agricultural export bans to regulate food prices. But it is all the more reason that reducing our resource use — whether energy, water, minerals, or agricultural products — should be viewed as a first-order strategic concern, not just a feel-good one for environmentalists or those concerned about excessive materialism.

Positive signs that the consumption question is being debated are apparent. The U.S. military has embarked on a substantial energy efficiency campaign because it sees its overconsumption as a security vulnerability. European Union officials are tentatively pushing for greater sustainability and increases in resource efficiency across the continent. A number of environmental think tanks have recently issued reports about the opportunities presented by redefining growth and reducing the material demands of wealthy societies. The U.S. National Intelligence Council has affirmed its concern over the implications of climate change with a major report on water scarcity. And several organizations have recommended moving beyond GDP as a measure of prosperity. But none of these strategies can succeed via technological and industrial changes alone: they require behavioral changes by informed citizens and consumers.

Simply telling people to use less and tighten their belts has never been a successful strategy, politically or culturally. Strategic thinkers on both sides of the Atlantic must approach material consumption and the globalized trading system as an opportunity to address the geopolitics of overconsumption. Policies that induce big gains in resource efficiency and reductions in resources consumed at home are critical to meeting the strategic and moral imperatives of a complex, interconnected, and resource-constrained world. Many policies that would help set us on such a course are included in the Transatlantic Academy report, Global Resource Nexus. These include taxes on resource extraction, use, wastage, and pollution; serious funding for much-needed research on accelerating resource efficiency; a suite of national policies to ramp up energy efficiency and reduce energy demand that are already being used by leading states, cities, and companies; and the establishment of transatlantic dialogues on new models of prosperity that use far fewer resources. Opening such dialogues and gradually reforming taxation and regulation to incentivize resource efficiency and reduce wastes of all kinds would be excellent first steps on a path toward greater sustainability and security.

Corey Johnson is the Joachim Herz Fellow and Stacy VanDeveer is a Senior Fellow at the Transatlantic Academy in Washington, DC.

WASHINGTON—We are witnessing a period of increased resource nationalism, in which governments begin to seize control over natural resources, often leaving private corporations out in the cold. Currently this phenomenon hits troubled Spain the hardest. If record high unemployment and under-aged royals shooting themselves in the foot were not enough, Argentinean President Cristina Fernandez de Kirchner decided to nationalize the Spanish-owned oil company Yacimientos Petrolíferos Fiscales (YPF) while Bolivian President Evo Morales sent special forces to seize control of Spanish power grid operator Red Eléctrica de España. On the other side of the Atlantic, executives of mining companies have confronted persistent rumors that the African National Congress wants to nationalize South Africa’s mining industry.

Resource nationalism is also evident in the United States and Europe. The intended purchase of California-based Unocal by the China National Offshore Oil Corporation (CNOOC) was stymied by the U.S. House of Representatives on national security grounds in 2005. And the Spanish government blocked the takeover of electricity giant Endesa by German rival E.ON in 2007.

The United States and Europe have a direct interest in developing a coordinated strategy to reduce resource nationalism. Historical evidence suggests that nationalization and market protection often have unintended effects and that the real solutions lie in adaptive measures to make markets work better, a principle in the spirit of the Atlantic Charter. A key aspect of any strategy to counter resource nationalism requires a deliberate attempt to engage countries in the wider Atlantic realm, including in Africa and Latin America.

The Southern Atlantic basin contains a treasure trove of resources and opportunities: unconventional natural gas is currently being extracted in several parts of the United States, and reserves have been detected throughout the Americas all the way down to Argentina. Meanwhile, Canada is cashing in on its unconventional oil resources, and Brazil has become a pioneer in deep-sea offshore drilling, and uses its vast land areas to grow biofuels and produce food for export. Africa has become known as the last frontier in terms of untapped resources — holding not only energy resources, such as those off the coasts of Namibia, Sierra Leone, and Angola, but also huge mineral reserves, such as phosphates in Morocco and the Western Sahara and bauxite and iron ore in Guinea. In turn, the United States and European Union can offer their southern neighbors stable markets, technological and institutional expertise, and financial resources.

There are, however, serious obstacles to overcome, both in North America and Europe. Trade barriers, information deficits, tax competition, national interests, and a lack of sound regulation have brought about international distortions, protective behavior, deteriorating labor conditions, material leakages, food waste, and environmental pressures. Consider the state of the European Union electricity and gas market, business relations with poorly-governed mines in the developing world, disruptive support schemes for biofuels, and weak environmental regulation linked to unconventional energy resources in the United States and Canada.

Getting our own house in order is conditio sine qua non when looking to strengthen cooperation with partners in the wider Atlantic. Already, the United States has done some important work in reporting and certifying supply chains for some critical materials while the EU has made strides in resource efficiency and sustainable energy. But the transatlantic community must dramatically improve resource efficiency and put in place economic incentives such as cutting environmentally harmful subsidies, getting rid of trade barriers, putting effective prices on using resources, and addressing environmental concerns with sensible regulations. Establishing common standards for key products and processes in various industrial sectors would have multiple benefits, including efficiency gains that would reduce resource use. Businesses should also improve their supply chain management by following the OECD Due Diligence Guidelines.

Better-functioning markets will not prevent resource nationalism per se, but they will decrease incentives for governments to display nationalistic behavior. In the Transatlantic Academy’s recent report, The Global Resource Nexus , we suggest a number of other key actions to counteract nationalistic trends, including: the coordinated mapping of available resources to increase transparency, environmental impact assessments to minimize pressures on water and food resources, open access data hubs to make market information more widely available, greater capacity building and training, and better alignment with development cooperation strategies that include support for infrastructure development, human security, and democracy.

Austerity threatens foreign aid budgets on both sides of the Atlantic. But this is no time to abandon less-developed parts of the world. Instead, it should be seen as a unique opportunity to coordinate our efforts to encourage the sustainable development of resource endowments in the wider Atlantic and beyond. Counteracting resource nationalism and protectionism by establishing a barrier-free and well-governed market should be in the common interest of every country in the Atlantic basin.

Tim Boersma is Junior Fellow and Raimund Bleischwitz is Senior Fellow with the Transatlantic Academy in Washington, DC.

WASHINGTON — International disputes over offshore resources are on the rise. From the Arctic to the Falkland Islands and the Eastern Mediterranean, quarrels over access rights for fish, minerals, oil, and natural gas are becoming increasingly heated and potentially violent, as detailed in the Transatlantic Academy’s recent report, The Global Resource Nexus . By far the most dangerous case concerns the South and East China Seas. This large maritime region straddles important sea lanes and is host to several overlapping territorial claims. Some disagreements date back to the end of the Cold War, others as far back as World War II. Not only do these seas harbor substantial fish stocks and provide passage for some 30 percent of the world’s seaborne trade, they are also believed to host significant hydrocarbon resources. As a nexus point for international trade, energy supplies, and big power politics, the China Seas represent a glaring example of an offshore resource dispute that the transatlantic community cannot afford to ignore.

Several recent incidents in the South and East China Seas suggest cause for concern. While disputes between China and the Philippines over the Spratly Islands, the Scarborough Shoal, and the Macclesfield Bank date back decades, tensions markedly increased in the late 2000s as oil prices rose. The latest encounter at the Scarborough Shoal resulted from the attempt by a Philippine patrol vessel to arrest Chinese fishermen just 220 kilometers off the Philippine island of Luzon. In September 2010, two Chinese fishing boats allegedly rammed a Japanese coastguard vessel. December 2011 saw the death of a South Korean coast guard captain at the hands of Chinese fishermen. And in March 2012, China arrested two Vietnamese fishing boats near the Paracel Islands. In a further assertion of China’s rights last week, the China National Offshore Oil Corporation (CNOOC) started drilling its first deep-water oil exploration well in the South China Sea, 320 kilometers southeast of Hong Kong.

While the triggers for many of these clashes were fishermen who most likely had little knowledge of or respect for international maritime law, the speed and manner of escalation is reflective of long-standing tensions between the coastal states in the region. Unlike many other offshore boundary disputes, these disagreements about boundaries are fundamental, deriving from China’s claim of historic rights over large areas of the China Seas. The provisions of the United Nations Convention on the Law of the Sea (UNCLOS) that address the demarcation of Exclusive Economic Zones appear to be unacceptable to China. As the largest and most powerful country in the region, China believes it has both the right and the clout to have its way. Its behavior in these seas over the last few years also reflects bureaucratic tensions between institutions that wish to secure their own private interests and foreign ministry officials who wish to present China as a responsible international citizen.

Irrespective of who in China is responsible, the net result is that other littoral states are strengthening their own maritime forces and going to considerable lengths to ensure that the U.S. military remains engaged in East Asia. Recent statements by the U.S. government, including its intention to establish a new base in Darwin, Australia, suggest U.S. maritime power will continue to be a dominant presence in the region. The danger is that if China eventually decides to impose its will on the China Seas, it will have the economic leverage and military assets to back up its rhetoric, although that day has fortunately not yet come. And although the European Union emphasizes the need for the peaceful resolution of these disputes on the basis of international law, particularly UNCLOS, the United States cannot take this approach as it has not ratified this convention.

The apparent clarification by a government official in February that China does not claim sovereignty over the entire South China Sea provides an opportunity for the transatlantic community to persuade China to submit its claims to UNCLOS in order to resolve these disputes peacefully. A useful first step, however, would be for the U.S. Senate to ratify UNCLOS. Only then could the transatlantic community act together to bring China to this multilateral forum.

Geoffrey Kemp and Philip Andrews-Speed are Senior Fellows with the Transatlantic Academy in Washington, DC.

WASHINGTON—Two official reports issued earlier this month have dampened the economic outlook on both sides of the Atlantic. First, the U.S. Department of Labor indicated that the U.S. economy added only 115,000 jobs in April, which represents a slowdown from previous months and is well below what is needed to seriously dent staggeringly high unemployment. An astonishing 12.5 million Americans remain unemployed.  The situation is even worse in Europe, where the European Commission’s spring economic forecast, released on Friday, anticipated rising unemployment over the near-term. The average unemployment rate increased in 19 out of 27 EU member states in the year ending March 2012.

Take a closer look at the data, and the situation seems even more dire. While the U.S. economy added 201,000 jobs per month on average between January and April – a number on par with the best years of the 2000s – previous job losses have been steep. Add to the official figure the 7.9 million involuntary part-time workers and the 2.4 million who stopped seeking work in the previous four weeks and the picture becomes truly grim. Even more troubling and unusual for the United States, 5.1 million Americans are long-term unemployed, which means they have been out of work for more than six months. The average duration of unemployment remains around 40 weeks.

On the other side of the Atlantic, several European countries are struggling with jobless numbers that are extraordinary even for a continent familiar with persistently high unemployment. While the unemployment rate for the 17-country eurozone rose to its highest levels in 15 years in March, the average masks vast disparities. Spain and Greece are both reporting unemployment rates well above 20% and youth unemployment above 50%.  Along with Portugal, these countries alone account for 95% of the increase in EU joblessness since late 2010. And there is little reason for optimism in the short-term. With many countries relapsing into recession, the EU Commission forecasts that overall employment will deteriorate even further this year.

It would be dangerous to accept the current situation as the new normal or a necessary byproduct of painful economic adjustments. The long-term consequences of unemployment, often referred to as “scarring effects,” are dramatic. The deterioration of skills, loss of work experience, and social stigmatization lead to decreases in long-term earning potentials, often leaving workers with considerably lower salaries even 15 to 20 years after losing a job. For young people entering the workforce under such circumstances the prospects are especially daunting, as studies show a severely increased risk of recurring unemployment and diminished earnings throughout their careers. Significant and widespread negative effects on health, including on overall life expectancy, and on the families of unemployed persons are also well-documented.

Going beyond the level of personal tragedy, the unemployment trend represents bad news for the long-term economic and geopolitical prospects of the United States and Europe. High unemployment signifies a massive waste of economic potential in the near-term, and possibly even in the long-term. National, state, and local budgets are directly impacted both by diminishing tax revenues and increased spending on unemployment benefits, making the challenges of deficit reduction even more daunting. If today’s struggling youth, who are part of tomorrow’s tax base, suffer from lower potential earnings on a large scale, budgets will be impacted long into the future. Long-term unemployment threatens to turn cyclical problems into structural ones, possibly even raising the natural unemployment rate of countries. For Europe, there may even be severe political consequences; young people confronted with persistently high unemployment rates are unlikely to be strong supporters of the European project.

Even in the midst of austerity measures in Europe and tightening budgets in the United States, more needs to be done to prevent the current crisis situation from turning into the new normal. A first step could be to allow for a slower pace of fiscal consolidation in troubled countries such as Spain. As long as these economies are caught in a vicious cycle of deteriorating growth and rising deficits, they will not be able to escape the crisis. In the United States, this could translate into phasing in necessary budget adjustments over time and only after the economy has recovered further, while immediately increasing public spending in infrastructure and education through aid to states. This would create jobs in the short-term and help to tackle structural challenges in the future. An expansion of hiring credits – subsidies to employers that hire – could also help increase employment. In any case, a failure to address the jobs crisis now will make any necessary long-term adjustments increasingly difficult in the future.

Peter Sparding is Program Officer with the Economic Policy Program of the German Marshall Fund of the United States in Washington, DC. 

Image by Michigan Radio. 

WASHINGTON — After a long period of stasis, Chinese politics have entered a dramatic new phase. While no one expects major change to arrive quickly, the previous sense of inevitability about China’s internal trajectory is beginning to give way to growing unpredictability. For a long time, the animating China challenge for policymakers in the United States and Europe had been the integration of a rapidly rising power into the global economic and security order. Now they will need to do that while navigating a nation in political transition.

The echoes of Tiananmen Square have been coming thick and fast. Chen Guangcheng’s escape to the U.S. embassy evoked leading dissident Fang Lizhi’s getaway 23 years ago. The fall of populist Chongqing party boss Bo Xilai, after his wife had been linked to the murder of a British businessman by his own police chief, has been widely deemed China’s “gravest crisis since 1989.” Even Premier Wen Jiabao’s last-ditch attempt to push through political reforms has revived fading hopes that the man who stood at Zhao Ziyang’s right hand as he tearfully told students in the square that “we came too late” might yet prove to be the spiritual successor of the liberalizing party secretaries of the 1980s.

The last decade had seen most of China’s public life conducted in the shadows, as the fourth generation of China’s communist leadership turned anti-charismatic politics into an art form. Little of the transformative excitement of China’s rise could be found in speculation about back-room maneuvering in the party headquarters at Zhongnanhai or President Hu Jintao’s leaden pronouncements. While the odd story spilled out of the black box — the anointing of Vice President Xi Jinping as China’s next leader or the ousting of Shanghai party chief, Chen Liangyu — the lid quickly closed again. The main factions in the party, the Youth League and the princelings, made a good show of resolving their differences through consensus. And the narrative took hold that Beijing had established a model of adaptive authoritarianism — economically open, responsive to public opinion, but repressive when confronted with real political dissent — that could see off any challenges to its rule for a long time to come.

But now, from the top levels of government to the leading lights of the Chinese blogosphere, the sense that China’s ossified politics is at a turning point has become pervasive. The failures of the party to make progress on curbing corruption and social injustice or tackling the next phase of China’s economic reform have run up against rising public expectations and a rapidly changing communications environment. From the outrage over attempts by the authorities to cover up last year’s high-speed train crash to the expulsion of corrupt party officials and police by the villagers of Wukan, incidents that could once have been discreetly suppressed now cascade across bulletin boards and microblogs. The result is an unprecedented set of opportunities to shape the attitudes of the Chinese public — and pressures to respond to it.

Some of the figures who have sought to ride this new wave of popular opinion have been dissidents and activists, whether Liu Xiaobo’s Charter 08 manifesto, the shadowy progenitors of calls for a “Jasmine Revolution,” or artist Ai Weiwei’s performance-taunting of the party. But it has been the populist appeals and public rifts among top government officials that have proved even more potent. Bo Xilai’s populist campaigns had the barely-concealed goal of translating his public support into a coveted seat on the next politburo standing committee, making his Maoist revivalism and “Chongqing model” of governance a matter of national debate. The ramifications of his spectacular demise are still being felt, with speculation increasing that China’s first leadership transition in a decade may need to be delayed in order to deal with the political fallout. Bo’s most forceful opponent, Wen Jiabao, used his last annual press conference not to reflect on ten glorious years at the helm of government but to make an open call for the urgency of reform, or risk China facing “historical tragedy.”

Hopes that outside powers can stay above the fray will be in vain. The United States and Europe have already had to deal with the protagonists of these dramas literally knocking on their embassy and consulate doors. From Nobel Peace Prize winners to jailed artists, support and protection for dissidents is becoming once again a more active factor in day-to-day relations with China. De facto involvement in factional battles will at times be unavoidable. And for all the geo-strategic and geo-economic issues that are now at stake, at important junctures — such as last week — even these risk being overshadowed by raw domestic politics.

Andrew Small is a Transatlantic Fellow with the Asia Program of the German Marshall Fund of the United States in Washington.

WASHINGTON — A new narrative is taking hold in U.S. public opinion, best expressed by Nobel Prize-winning economist and New York Times columnist Paul Krugman: Europe is in revolt. The French are. The Greeks are. Sunday’s elections were “referendums on the current European economic strategy.” Voters, adds the Washington Post, “redrew Europe’s political map Sunday in a powerful backlash against the German-led cure for the region’s debt crisis: painful austerity.” Half a dozen European leaders, or so the story goes, have lost their jobs as result of a voter backlash against European cut-and-reform policies. The poster children are the leaders of Italy and Spain, Ireland and Portugal, the Netherlands, France, and Greece.

So let’s review the evidence. Prime Minister Silvio Berlusconi of Italy did not have to quit because of his unpopular austerity policies. Quite the opposite, he was pushed out of office last year because he did not cut expenditure or reform the labor market and thus brought his country to the brink. Voters in Portugal, Ireland, and Spain did throw out pro-reform and pro-austerity governments. But they replaced them with leaders who are equally committed to deficit reduction, structural reform, and sustainable growth. The Dutch government did fall because anti-immigrant, anti-austerity populists withdrew their support of the ruling coalition. But the Dutch debate is not between austerity and deficit spending. It is about how to urgently balance the budget, and nothing suggests that the Dutch find their basic economic strategy wanting. Leaving aside France and Greece for a moment, there seems to be enough evidence to suggest that more factors are at play than simple pushback against the cutters and slashers. Two possible explanations suggest themselves.

First of all, anti-incumbency is a strong force during times of economic distress. Americans know this phenomenon well, and every analyst of the U.S. presidential race will quote unemployment numbers as a determining factor. So, why not look at Europe in the same way? It turns out that leaders of countries that weathered the economic crisis well have a good chance of being reelected. Examples? Sweden, Poland, and Germany. However, in countries with growing unemployment and shrinking economies a “throw-the-bums-out” sentiment tends to predominate. This helps to explain why voter volatility and anxiety might produce a change in personnel, but not always a dramatic shift in economic philosophy. In fact, although the number of people affected by austerity has risen and, consequently, so have frustrations with this policy, no credible mainstream policy alternative has emerged. Certainly, a growing minority of voters cast their ballots with fringe groups to register their protest. Yet, nothing suggests so far that the center in the core countries is not holding.

Secondly, a period of political rebalancing is in the cards for Europe. For the past few years, Europe has largely been governed by the center-right. See Britain and Germany, France and Holland, Spain and Portugal. Italy’s technocratic government isn’t exactly left-wing, and neither is the European Commission under President José Manuel Barroso. Such unison of political preference will not last forever.

This is where France comes in. Clearly, voters wanted a change. Some did not feel well-represented by an erratic personality such as Nicolas Sarkozy. Some fundamentally opposed austerity. But another large group feels like many moderate European socialists and Social Democrats traditionally do: they want to be administered with a basic sense of social justice  — especially when the social safety net needs to be cut. Francois Hollande, now president-elect of France, has appealed to this sense of fairness throughout his campaign. That’s what his proposal to tax the super-rich at a 75 percent rate is all about, that the burden of upcoming budgetary adjustments should not be borne by the ordinary citizen alone.

The program that the French electorate endorsed is a far cry from a rejection of austerity. Hollande wants to balance the budget a year later than Nicolas Sarkozy would have. That’s a marginal difference masquerading as a difference of principle for the purposes of a campaign. Hollande wants to increase the capital of the European Investment Bank (EIB). If the lending capacity is boosted along the lines of his proposal, the EIB will be able to spend the rough equivalent of 0.1 percent of Europe’s economic output. Not exactly the type of stimulus that Paul Krugman and the U.S. proponents of borrow-and-spend would like to see. Francois Hollande will not end Europe’s cut-and-reform policies, but will rebalance them, thereby prolonging austerity’s limited half-life.

Which leaves just Greece to be explained. Here, there is no doubt: The Greeks are indeed in revolt against austerity and, quite appropriately, their established political class. But Greece is an outlier. In terms of state structure, competitiveness, solvency, willingness to adjust, and now voter preference, it remains the European exception. But that is not enough to prove the case of the impending end of austerity in Europe.

Thomas Kleine-Brockhoff is a Senior Transatlantic Fellow who leads the German Marshall Fund’s EuroFuture Project in Washington, DC.

BRUSSELS — The results of the Greek elections are widely seen as heralding a new period of uncertainty for the country, and potentially for Europe. Beyond signalling a repudiation of austerity measures, the outcome in Greece has some potentially disturbing political and security implications, for Athens and for transatlantic partners. A chaotic and polarized Greece will be a more isolated, distracted, and unpredictable actor in international affairs just as new forces of stability are needed in the Eastern Mediterranean.

The Greek election outcome can be read as a systemic rejection of politics and governance as it has evolved in Greece since the end of the junta and the restoration of democracy in 1974. Voters did not simply rebel against the traditional centrist parties, leading political personalities, and a very unpopular bailout deal with the European Union and international creditors. They also voted to sweep away a system widely seen as corrupt and ill-equipped to deal with the critical problems facing the country. Even sophisticated Greek observers, well aware of the risks of a go-it-alone strategy outside the eurozone, have become skeptical about the curative effects of an austerity plan aimed at restoring competitiveness when there is little productive capacity to revive. The old European-oriented order has few adherents in today’s Greece.

This failure of domestic governance and the collapse of the old political establishment may be at the heart of the current political chaos, in which the formation of a stable coalition is unlikely without new elections. But international issues are also a key part of the Greek equation, and they could well take center stage in the next phase of the Greek drama. Like many of its neighbors, Greece is a sovereignty-conscious society, wary of external influence and perceived manipulation by larger powers. Decades of integration into the European mainstream have weakened but not extinguished these impulses. They are now on full display. The rejection of policies imposed upon Greece by international partners, including sweeping austerity measures, drew voters to new parties on the extreme left and right.

The prevailing discourse is unashamedly populist and nationalist, and the principal objects of Greek rage are foreign. The Coalition of the Radical Left, which took second place in the election and may hold the key to any new government, has put opposition to the international financial plan for Greece at the top of its agenda. Golden Dawn — the neo-fascist party that garnered some 8 percent of the vote and would be entitled to 21 seats in parliament — goes much further, explicitly targeting both international partners and the foreign migrants who have arrived in large numbers over the last decade. The party’s xenophobic and sometimes violent behavior is likely to fuel international concern, and may have an effect on Greece’s standing out of proportion to its real influence. This fraught political landscape will contribute to Greece’s isolation, precisely when closer ties to international partners and investors are needed.

More broadly, the chaotic conditions in Greece will deprive the region of a promising force for moderation and stability, from the Balkans to the Levant. A nationalist mood in Athens will threaten the all-important détente that has prevailed in Greek-Turkish relations for the last decade. At a time when competition over energy resources in the Eastern Mediterranean is becoming more intense, drift or deterioration in this critical relationship would bode ill for crisis management. The recent deepening of Greek-Israeli ties, and the ability of Athens to play a useful mediation role in the Palestinian-Israeli dispute, will be impeded by the lack of a credible, focused partner in Athens. Further social instability and even political violence in Athens — all a distinct possibility in the absence of a stable government — could affect the prospects for development and European integration in Greece’s Balkan neighborhood. In sum, Greece’s domestic political woes may grab the headlines, but over time, the geopolitical implications of a more isolated and nationalistic Greece may be even more profound in a region of unquestioned strategic importance for its Euroatlantic partners.

Ian Lesser is executive director of the German Marshall Fund’s Transatlantic Center in Brussels.

WASHINGTON — On Sunday, Parisians once again took to the Bastille, although this time, it was to celebrate the election of a new president. François Hollande ousted Nicolas Sarkozy in the run-off vote and will next week become the second socialist president of the Fifth Republic. In the midst of a deep malaise, the French asked for a head to fall, and obtained it. But it remains difficult to understand what the people really voted for or what they truly wanted out of this election. And it is because of such uncertainty that this revolution, should it even be one, will not spread.

Hollande campaigned on change, a proven recipe for success, but it is likely that a majority of the French electorate voted Sarkozy out of office, rather than Hollande into it. The French call it alternance, or the necessary change in political leadership for the democratic process to be fully viable. Left or right, and time permitting, alternance is unavoidable, but explains why political transition occurs smoothly in France, without the cacophony of other political systems in Europe. Parliamentary elections will be held in June and, notwithstanding a surprise, the newly appointed president should receive the support of a socialist majority.

While the French presidential election did not throw the country into turmoil, it did reveal some deeper scars, and the immense task that lies ahead to reunite the people. The country may be split in two, or three, even four, but  the election process did not create instability. Even the growing extremes are not in a position to hold government responsibilities. As always during a presidential election, the debate was passionate, sometimes crossing self-imposed red lines, and drawing the voters to the ballots as turnout topped 80 percent. But this time, it seemed personal. Voters did not explicitly vote against austerity. Although they shared broader concerns over jobs, growth, youth, and education, it was the relationship between the people and their president that was being put to test. That, certainly, will change.

In Brussels, the transition from “Merkozy” to “Merkollande” will also take place. François Hollande will not revolutionize EU affairs nor will there be a complete reversal of France’s foreign and European policy. Incentives for growth will be adopted, but as complements of fiscal consolidation. What will be negotiated as a compromise for an agreement in late June in Brussels remains to be seen, but austerity measures will not swiftly disappear. Looking farther ahead, the challenge is greater. Member states have to decide how much individual sovereignty they are willing to give up for the sake of a common future. President Sarkozy went further in the French concept of the gouvernement économique than anyone could have anticipated. By placing the intergovernmental process at the very heart of the resolution of the crisis, he and German Chancellor Angela Merkel set the tone and pace for the much-needed discussions on Europe’s political future. It is no surprise that François Hollande will meet Angela Merkel on May 16, a day after his inauguration, as he will need to show results quickly to assert his credibility in Europe and at home. Hollande’s meeting with U.S. President Barack Obama ahead of the NATO Summit in Chicago will also be closely watched.

It is still unclear what the French electorate really wants or if François Hollande will become the statesman he convinced the majority of voters he could be. What is certain is that the French public has asked for a different type of politics and leadership. France is struggling to answer the fundamental questions of its social values and economic principles. If there was one point of consensus, it was that beyond the crisis lies the preservation of the Republic’s core principles.

Guillaume Xavier-Bender is Program Associate with the Economic Policy Program of the German Marshall Fund of the United States in Brussels. 

WASHINGTON — That Europe has not lost its luster and power of attraction despite the eurozone crisis was made evident in an unlikely part of the continent: the Western Balkans. Beyond the excitement of this weekend’s French and Greek elections, Serbia also held presidential, parliamentary, and local elections. The message from the voters, after the mist of electoral rhetoric had been dispelled, was two-fold and clear: there is a sense of deep concern and dissatisfaction with the political class but also of belief in the need to pursue the paths of democratic reform and European integration.

In the presidential election, the incumbent, Boris Tadic, and his main opposition rival, Tomislav Nikolic, both qualified for the May 20 run-off, with most polls predicting a narrow victory for the pro-reform and pro-European Boris Tadic. In the parliamentary elections, both sides claimed a slice of victory, with Nikolic’s Serbian Progressive Party (SNS) winning the popular vote, but Tadic’s Democratic Party (DS) more likely to form a government with like-minded coalition partners. The allies of the DS will probably include the third-place Socialist Party of Serbia (SPS), led by former Slobodan Milosevic spokesperson turned Europe- and reform-oriented Ivica Dacic (who made a strong showing, doubling his vote over the previous election), the Liberal Democratic Party (LDP) of Cedomir Jovanovic, and possibly the Union of Regions of Serbia (URS) led by outgoing Minister of Economy and Regional Development Mladjan Dinkic, and smaller parties associated with Hungarian and Bosniak minorities, among others. The situation mirrors the post-electoral dynamics of the 2008 elections.

The global economic and financial crisis has not bypassed Serbia. The economy’s growth rate has plummeted, and rising unemployment, now at 24 percent, and falling standards of living are paramount concerns. Serbia has nonetheless continued to consolidate its democracy, knowing that it lost much time and energy during the 1990s under Milosevic and that it must play catch-up, however difficult the current socio-economic climate. That is the principal explanation of what can be considered a largely rational vote on the part of voters. But Serbia also suffers from all the ailments of modern-day politics. There is widespread disenchantment with the political class and political institutions, in particular the parliament, which translated into abstention and a sizeable number of blank protest votes being cast.

The good news is that the deeper political sociology of Serbia has continued to produce stable democratic habits and increasingly pro-European majorities since the 2000 electoral victory over Milosevic. The outgoing government completed its full four-year mandate, and these elections proved to be free and fair. The results were accepted by all political and civic actors despite some complaints about the media coverage of parties. Kosovo was also relegated to a secondary issue. Perhaps the most significant difference with the 2008 elections is that the vast majority of political parties are in the pro-European camp. For the first time in 20 years, the ultra-nationalist right-wing Serbian Radical Party (SRS) fell below the required threshold and will not be represented in parliament. In all, anti-European parties tallied only 16 percent of the vote.

Serbia’s achievements over the past four years are significant: the progressive consolidation of democracy, the acquisition of full candidate status toward membership in the EU, a visa-free regime for travel to the EU, the full collaboration with the International Criminal Tribunal for the Former Yugoslavia, the arrest of Radovan Karadzic and Ratko Mladic, the beginning of the dialogue between Belgrade and Pristina, continued and strengthened regional cooperation, and numerous important infrastructural projects, including the beginning of production of Fiat cars in the industrial heartland of Serbia. Yet in this difficult global environment, a strong government is required that continues a reform-oriented program leading to European integration, including tackling corruption, reforming loss-making public enterprises, pursuing robust judicial reform, creating a more investment-friendly environment, diminishing public spending, and negotiating a mutually acceptable solution to the issue of Kosovo with the help of the European Union, the United States, and other international bodies. If all of this can be accomplished, Serbia can successfully avoid the path that Greece appears on today and, within the mandate of the incoming government, approach the doorstep of full membership in the European Union.

Ivan Vejvoda is Vice President for Programs at the German Marshall Fund of the United States in Washington, DC.