Monday, March 10, 2003
Damage - 10th March 2003, 23.07

On Airstrip One, I have been careful to maintain a sceptical stance on Blair's foreign policy and have noted the schizophrenic objectives that appear to be sending out different messages to different audiences. American bloggers may be more inclined to view Blair as a wholehearted ally but British bloggers have taken a more nuanced view and none have wholeheartedly signed up to their interpretation. The war on Iraq grabs attention and other aspects of foreign policy have been accorded less significance - an understandable choice of subject given the current crisis that we face. And, vice versa, though more may be written on Europe here, that does not mean the Iraqi crisis is not considered to be extremely important. Both David Carr of Samizdata at the weekend and Iain Murray today have both posted important contributions towards a more balanced view of the Blair administration.

Another aspect of the current crisis is the potential damage that the United States and the European Union may have suffered from this rift. An article in the Financial Standard (Kenya) acknowledges the anecdotal evidence of a gradual consumer backlash in the United States. It also details a more worrying development: of distrust between US and EU trade officials; of a more juandiced approach towards areas where both sides depend each other in economic relations; and more negative repercussions for the World Trade Organisation's Doha Round.

But more is at stake than politics and diplomacy. At issue, too, are business and trade relations between the US and Europe, according to faculty members at Wharton and Insead, the French business school. Just how far the disagreement over Iraq may affect business remains to be seen. No one is predicting anything like an out-and-out trade war or a rush of Americans pouring bottles of Bordeaux into Boston Harbour. But faculty members say the impact of the Iraq issue on commerce may nonetheless be serious as ordinary consumers and corporate strategic planners alike begin to make decisions based on the friction that has affected the political climate in Berlin, Brussels, London, Paris and Washington.

The irony is that, any action that damages the economies of France and Germany, will have a knock-on effect in the rest of the European Union and its hinterland in Central Europe. If the United States wishes to help Poland, Hungary and all the other post-communist countries that signed letters of support, then it should support deregulation and reform in Germany and France. Of course, Germany and France need to support the post-communist countries since there are few other growing markets within their reach.


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