In 2022 something good came out of something bad. Russia’s invasion of Ukraine resulted in a remarkable show of unity and determination from the democratic world. The US, EU, UK, Japan, South Korea, Canada and Australia have imposed unprecedented economic sanctions against Russia. Multibillion-dollar military and economic aid was provided to Ukraine. Germany has promised historic changes to its defense and energy policies. Finland and Sweden have applied to join NATO.
China’s hostility towards Taiwan and its claim of a “borderless” partnership with Russia have also triggered a reaction in the Indo-Pacific region. Japan announced a significant increase in military spending. The Philippines has strengthened its ties with the US. Four countries – India, Japan, Australia and the United States – hosted the summit. Democracies in Europe and Asia have also started working closely with each other. Japan, South Korea and Australia participated in the NATO summit for the first time. This year, maintaining the unity of the advanced democracies will be much more difficult. The active and active leadership of the United States has played a decisive role in the response of the democratic world to the Russian-Chinese partnership.
But there are serious tensions between Washington and its allies. The Western coalition openly disagrees about future military aid to Ukraine. This was evident at the Allied meeting in Ramstein on Friday, when Germany resisted strong pressure to allow Leopard tanks to be transferred to Ukraine.
Headlines have focused on Germany since the Ramstein meeting, but divisions within the Western alliance are more complex. There is a hawkish wing, which includes Poland, the Nordic countries, the Baltic countries and the UK, and it pushes for the rapid transfer of more modern weapons, including tanks, to Ukraine. America is somewhere between the hawkish and the overly cautious Germans. Hawks worries that the Biden administration has allowed itself to be intimidated by the threat of nuclear war and therefore has been too timid about delivering advanced weapons such as long-range missiles. But the criticism is muted because the US is by far the largest donor of military and financial aid to Ukraine.
These conflicts are still under control. But if the situation for Ukraine worsens in the spring, mutual accusations may cross this line. There is also an economic dimension to the tensions between the US and Europe – many in the EU accuse Washington of protectionism, providing large subsidies for green industry and electric vehicles inside the US. The US response is that Europe should only provide its own subsidies for green technologies, and this seems unrealistic to many. Allowing states to subsidize their own industries could explode the EU single market, while the EU’s single subsidy regime would immediately spark controversy over how the money is raised and spent Gone.
Behind this is a growing fear that the US is overtaking Europe economically and that the war in Ukraine is accelerating this process. European industrialists point to America’s key advantages: cheap energy, plentiful land, technological leadership, and a global reserve currency.
China is also important in this system. Confrontational language and attitudes towards Beijing are now commonplace in American politics. Most European and Asian governments are still hedging the risks. Right now, China is the biggest potential rift between the US and its Asian allies. Japan, Australia, South Korea and the Philippines are US treaty allies and agree on the need to strengthen military deterrence to China. But everyone fears just how far America can go.
I noted this controversy when I chaired the World Economic Forum’s meeting on Japan last week. US contributor Stephen Palyuka, the outgoing co-chairman of Bain Capital, has argued that the world’s democracies will increasingly trade among themselves and become less dependent on economic autocracies. The chief executive of Tokyo-based beverage conglomerate Suntory Holdings was wary of the argument and welcomed the fact that Japan’s trade with China is growing.
Singaporeans – a major US trade and security partner – are openly concerned about the extent of US sanctions on technology exports to China. They fear that this will escalate dangerous tensions between the US and China. There are also fears that US efforts to localize supply chains will make the industry less efficient and fuel inflation.
All this tension could make it difficult for democracies in Europe, Asia and the Americas to work together in the year ahead. But the divisions within the “Global West” can be mitigated by concrete political measures. American politicians are becoming increasingly aware of European concerns about the Inflation Reduction Act and may try to replace the law. A more clearly defined US policy on technology exports to China would also reassure allies.
Above all, the NATO allies need to agree on a common position on arms supplies to Ukraine – and do so quickly, before hostilities escalate this spring. The unity among Democratic allies achieved in 2022 is invaluable. In 2023, it cannot be lost.