Stuart E. Eizenstat Interview: Conversations with History; Institute of International Studies, UC Berkeley

Politics, Law, and the
Search for 'Imperfect Justice': Conversation with Stuart E. Eizenstat, former
Deputy Secretary of the Treasury; April 30, 2003, by Harry Kreisler
Photo by Jane Scherr

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The Changing U.S. Role in the World

In the Clinton administration you had many hats -- at State, undersecretary; deputy secretary in Treasury, ambassador to the European Union, and so on. I want you to comment on the fact that the economic dimension seems to have been much more important during the Clinton years than it had been previously with Carter, and is, obviously, now less important after 9/11. Talk a little about that and the extent to which you were able to move between these roles to attempt to implement a kind of a new economic vision of American foreign policy.

I think what had happened between the Carter and the Clinton administrations, Harry -- and it had already begun in the Carter years, but it accelerated -- was what we called the globalization of the world economy, the incredible integration. What now happens in Thailand, [such as] when the baht fell in 1997 and caused the Asian financial crisis, can cause a crises in our own markets. What happens in Brazil in 1999 can have a dramatic impact in the U.S. and in Europe. The world is an integrated, economic whole, and therefore, economics has to be a more crucial part of foreign policy than it was during the Carter years. It's not that we ignored it. In fact, we had the cataclysmic impact after the hostages were taken and the radical revolution in Iran of having oil shut off, and having oil prices go up 120 percent in one year, between '79 and '80. The double-digit inflation and double-digit interest rates for which President Carter was blamed (and which lost us the election in 1980, I think, frankly, more than the hostage crises) was caused in significant part by that economic impact of a political event 5,000 - 7,000 miles away.

But today, certainly, economics and diplomacy are integrally interdependent, because economics is such a critical part of foreign policy, and because of the globalization of the world economy.

Now, with regard to that particular problem, your posting as our ambassador to the European Union was critical, and it was an important time in assessing where Europe was going. Share with us some of your thoughts about the dynamic you were seeing in Europe at that time.

It was a very exciting time, between 1993 and 1996, to be ambassador to the European Union, because the European Union was becoming a real integrative institution. After World War II, the U.S. encouraged European integration; after all, there had been three wars going back to the 1870s involving France and Germany, two in the twentieth century alone, bringing in the United States and doing untold damage to people and institutions throughout Europe and in the United Sates. We wanted to create a new model in which former enemies could be integrated so tightly, and economically as well, Harry, now, with one currency. You can't go to war against your own currency; that's one of the important pieces of the euro. We wanted Germany and France, and the other countries in Europe, to be tightly integrated. Now, some people said, "Well, gee, that will create a more difficult economic competitor." Perhaps. But in terms of bringing peace and stability to Europe, it's been critical.

I was there at a very formative time, when the European Union was developing into a serious institution. The euro was getting off the ground. The common market had become a reality, so you could ship a product from Italy to England as easily as you could from California to New York. And, yes, there are still different cultures. We'll never have a United States of Europe in the same way we have the United States of America. There are too many different cultures and languages and so forth. But we have a real institution now, which is an important force for stability and for prosperity. It sometimes creates tensions with the United States, but in the long run, it's very important for our interests. I saw it in a very important part of its formative stage.

There must have been a compelling sense at that time, because the Berlin Wall had fallen a few years before, of the possibilities of democratizing the greater Europe, so to speak, of seeing the development of democratic institutions in the former Eastern bloc.

One of the things that I was reporting back to Washington, Harry, in the 1990s -- '93 and '94 -- was two trends I saw occurring, both of which were believed to be long-term dreams that might never come to reality. The first was the creation of this common currency, the euro, which has now come to existence. But the second is the very point you were raising. I could see that there was an impulse, for the first time, to unite the continent of Europe, east and west, with the fall of communism and democratic free-market principles; a tremendously exciting vision that people felt would be decades off.

I was reporting this in 1994. Next year, in May of 2004, ten years later, we'll have the European Union being enhanced by Poland, the Czech Republic, Hungary, and nine or ten total countries coming in and creating a 25-country European Union with almost 500 million people without artificial barriers. The first time in the history of war-torn Europe, they will have a peaceful Europe around democratic free-market principles. That's very important. A great challenge for Europe and a great challenge for us, but one that I think holds great, great, positive attributes for the people of Europe.

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