The EU's fleeting chance for global leadership

The economic crisis offers unprecedented opportunities for reforming global rules and institutions. Furthermore, the Obama presidency - which Europeans expect to be less unilateralist than that of George W Bush - will give the EU a chance to work with the US in tackling a host of international problems. But the EU may prove incapable of rising to either challenge. It may not be able to agree on a convincing set of proposals on global governance. And if Obama finds the EU ineffective - for example, unable to provide more troops for Afghanistan or to speak with one voice on Russia - he will not treat it as a serious partner.

Over the past ten years, the relative shift of power from the West to Asia has been obvious. But it is less clear whether the emerging multipolar world will be multilateral, with a strong role for international institutions, or one based on the balance of power where 'might is right'. The EU, which instinctively favours the former, has a real chance to work with the US to tilt the world towards multilateralism. The EU and the US still account for half of world GDP. Brazil, India and Russia remain regional rather than global powers. Even China - which has growing interests on all continents - is reluctant to appear as a superpower. And although the Bush presidency and the financial crisis have damaged American soft power, the Obama presidency should help to restore it.

But how much clout does the EU have? Ten years after the birth of the European Security and Defence Policy (ESDP) and Javier Solana's appointment as High Representative, EU foreign and defence policy has had its successes: peace (of sorts) in the Balkans; leading the international diplomacy on Iran's nuclear programme; and two dozen ESDP missions that have enhanced stability in war-torn countries. But the EU has failed to fulfil expectations, except perhaps in its neighbourhood.

Many factors constrain the EU. One is dysfunctional institutions. The rotating presidency and the split between the Council of Ministers and the Commission make it hard for the EU to project a single voice in foreign policy. The Lisbon treaty promises improvements. But if it is not adopted the EU will have to find other ways of reforming the machinery.

A more important reason for governments sometimes failing to agree is that they think their interests diverge. Thus Germany and Italy oppose a common EU energy policy towards Russia, fearing that it could undermine their important bilateral energy relationships with the EU's biggest supplier of gas.

The governments would stand a better chance of developing common analyses of a given problem if the EU was not so hopeless at strategic thinking. Even on a crucial subject such as Russia, ministers or top officials seldom sit around a table and thrash out the key issues and arguments. They try to avoid overt conflict and spend too much time on procedure. This weakness extends to the 'strategic partnerships' that the EU manages with powers such as Brazil, China, India and the US. The EU's regular summits with these countries are driven by bureaucratic processes and almost never involve strategic discussions.

One way forward would be for those member-states most interested in a particular issue to meet in a smaller group, informally. They could do some long-term thinking and then report back to the 27, who would take any decision required. Smaller groups have worked quite well for problems like Iran or Ukraine and the model should be used more often. Some member-states may be offended not to be included in every meeting on every part of the world, but in fact most of them do not have strong views on most issues.

The EU's enlargement has in most respects been a great success, but it has probably made agreement on foreign policy - which requires unanimity - more difficult. The EU presidency often finds it next to impossible to line up all 27 governments on divisive issues like Kosovo, Russia and Turkey.

The member-states are now divided over whether enlargement should ultimately extend to all European countries, or stop short of big and complicated places like Ukraine and Turkey. This strategic rift makes it hard for the EU to develop the right policies on institutions, its neighbourhood or Russia. One compromise that could unite the 27 would be an agreement to strengthen the institutions (by the Lisbon treaty or an alternative); to enforce the accession criteria more strictly; and to accept that any European country meeting the criteria should join, even if initially it stays out of some policies.

EU foreign policy would make more impact if backed by a strong ESDP. But the Franco-British strategic culture - which includes a willingness to use force - has not percolated among the other member-states. Defence budgets are falling, military capabilities remain inadequate (the EU mission in Chad depends on Russian helicopters) and a de facto two-tier European defence has emerged. Some of those in the second tier would appear to want the EU to be a big Switzerland: secure and prosperous, caring little about distant problems. EU defence cannot achieve much with 27 countries involved. The militarily serious nations need to form their own leadership group.

One area where the EU - given its multilateral nature - could be expected to lead the world is reform of global governance. The emerging powers need to be better represented. But the EU has been weakened by divisions among its governments (for example on who should sit on the UN Security Council) and by their reluctance to give up their overrepresentation in many international bodies.

And the EU risks forgoing leadership on climate change by failing to back its promises with action (see next article). The Europeans should move quickly to draw up a coherent plan, which should include reducing their representation in bodies like the IMF and World Bank; bringing emerging powers into the International Energy Agency and the Financial Stability Forum; and downgrading the G8 while building up the G20. The Europeans should also get serious about better co-ordinating their policies in the bodies where they retain national seats. The arrival of Obama gives the Europeans a chance to bolster multilateralism - but only if they can learn to be more effective.