Predictions of European decline rely on an outmoded understanding of power. On all issues that require power with – rather than over – others, Europe has impressive capacity.
Joseph Nye in The Utopian:
The key question in assessing Europe’s resources is whether Europe will develop enough political and social-cultural cohesion to act as one on a wide range of international issues, or whether it will remain a limited grouping of countries with strongly different nationalisms and foreign policies. In other words, what is Europe’s power conversion capability?
The answer varies with different issues. On questions of trade and influence within the World Trade Organization, Europe is the equal of the United States and able to balance American power. The creation of the European Monetary Union and the launching of the Euro at the beginning of 1999 made Europe’s role in monetary affairs and the International Monetary Fund nearly equal to that of the U.S. (though the 2010 crisis over Greek debt dented confidence in the Euro.) On anti-trust issues, the size and attraction of the European market has meant that American firms seeking to merge have had to seek approval from the European Commission as well as the U.S. Justice Department. In the cyber world, the EU is setting the global standards for privacy protection.
At the same time, Europe faces significant limits on its degree of unity. National identities remain stronger than a common European identity, despite six decades of integration, and national interests, while subdued in comparison to the past, still matter. The enlargement of the European Union to include 27 states (with more to come) means that European institutions are likely to remain sui generis, and unlikely to produce a strong federal Europe or a single state.