2.0 Why Look for "Alternative Centres of Power"?

The first chapter of this book ended with the dissolution of the Soviet Union in December 1991. With one superpower gone, the United States became the only state with global military reach, an economy nearly twice the size of any rival, and an alliance system that spanned every ocean. Many writers in the 1990s called this a "unipolar moment". But by the early 2000s a different question was being asked all over the world: could other centres of political and economic power gradually limit America's dominance?

The answer that emerged is the focus of this chapter. In Europe, the European Union^? brought together former enemies into a single market and partial political union. In Southeast Asia, the ASEAN^? grouping built a uniquely informal regional order. In East Asia, the rapid rise of China after Deng Xiaoping's 1978 reforms produced the largest economic transformation in modern history. Japan and South Korea also emerged as "Asian miracles". Together, these are sometimes called the contemporary alternative centres of power — and India's foreign policy now has to engage every one of them.

2.1 The Question of Europe After 1945

When the Second World War ended in 1945, Europe lay in ruins. Its cities had been bombed, its economies shattered, and the very assumptions on which European states had built their relations had been broken. The continent that had dominated the world for four centuries had nearly destroyed itself in two wars within a single generation. The leaders who survived were forced to confront a question that came to be called the "Question of Europe" — should the continent be allowed to slide back into its old rivalries, or should it be rebuilt on entirely new principles and institutions?

Two outside developments pushed Europe towards a new beginning. The first was the start of the Cold War between the United States and the Soviet Union. As Stalin tightened his hold over Eastern Europe, the United States decided that a strong, recovering Western Europe was essential to contain Soviet power. The second was a change in American policy itself. Unlike after the First World War, the United States did not retreat back across the Atlantic but stayed deeply engaged in European affairs. The combination produced an extraordinary American programme of financial and security support that made European integration possible.

2.1.1 The Marshall Plan and the OEEC (1948)

In June 1947 the American Secretary of State, George Marshall, offered massive financial aid to revive Europe's broken economies. The programme was officially called the European Recovery Programme but became universally known as the Marshall Plan^?. Over four years, the United States transferred more than $13 billion (the equivalent of well over $150 billion today) in food, fuel, machinery and credit to Western European countries. The money was conditional: recipients had to coordinate their recovery, lower trade barriers among themselves, and move towards economic cooperation rather than isolation.

To channel the Marshall aid, sixteen Western European states set up the Organisation for European Economic Cooperation (OEEC) in 1948. The OEEC quickly became more than a mere distribution office — it became a forum where European governments began to talk to each other about trade, currency, agriculture and industry. For the first time since 1914, Europeans were sitting around a single table and discussing common economic problems.

2.1.2 NATO and the Council of Europe (1949)

Economic recovery alone was not enough; the western half of the continent also needed a security shield against the Soviet Union. The United States therefore led the creation of the North Atlantic Treaty Organisation (NATO) in April 1949, binding North America and Western Europe in a common defence pact. In May of the same year, ten European countries signed the statute of the Council of Europe — a forum dedicated to political cooperation, human rights and the rule of law. The Council of Europe was not a military body, but it gave political integration its first institutional address.

2.2 The Long Road to Maastricht

From 1948 onwards, European integration advanced step by step. Each treaty added a layer; each crisis revealed both the limits and the necessity of further union. The story is best told as a timeline.

2.2.1 The Treaty of Paris (1951) and the Treaty of Rome (1957)

In April 1951, six countries — France, West Germany, Italy, Belgium, the Netherlands and Luxembourg — signed the Treaty of Paris establishing the European Coal and Steel Community (ECSC). The choice of coal and steel was deliberate: these were the industries of war, and pooling them under a common authority made it almost impossible for France and Germany to ever fight each other again. This was the first time European states had handed over a part of their sovereignty to a higher European body.

Six years later, on 25 March 1957, the same six countries signed the Treaties of Rome, creating the European Economic Community (EEC) and the European Atomic Energy Community (Euratom). The EEC built a customs union — common external tariffs and free movement of goods, services, capital and labour within the community. From this single market grew everything that followed.

2.2.2 The European Parliament (1979) and Schengen (1985)

For two decades the EEC was an economic body run mainly by ministers. The first directly elected European Parliament sat in June 1979, giving European integration a popular democratic dimension for the first time. In June 1985, the Schengen Agreement abolished passport checks at the borders between participating countries. A traveller could now cross from France into Germany the way an Indian crosses from Punjab into Haryana — no checkpoint, no stamp.

2.2.3 The Maastricht Treaty (1992) — Birth of the European Union

The collapse of the Soviet bloc between 1989 and 1991 changed everything. Suddenly, the eastern half of the continent was free to look westward, and the western half had no Cold War rival to define itself against. On 7 February 1992, in the Dutch city of Maastricht, the leaders of the EEC signed the Treaty of Maastricht^?, which formally created the European Union.

The Maastricht Treaty did three revolutionary things. First, it laid the foundation for a common foreign and security policy, so that the EU could speak with one voice in world affairs. Second, it created machinery for cooperation on justice and home affairs — police, immigration and the rule of law. Third, it set out the path to a single European currency. From 1993, the EEC was renamed simply the European Community, and the broader political project was the European Union.

2.3 The Euro and the Eurozone (2002)

The single currency was the boldest promise of Maastricht. After ten years of preparation, on 1 January 2002, the euro^? entered everyday use as the new cash currency in twelve EU members. Old national currencies — the German mark, the French franc, the Italian lira, the Spanish peseta, the Greek drachma — were withdrawn and replaced by a common note and coin. Today the eurozone has expanded to twenty member states, with countries such as Slovenia, Slovakia, Croatia and the Baltic states joining one after the other.

The euro is the second most traded currency in the world. Because so much oil, gas and manufactured trade is now invoiced in euros, the currency exerts a real check on the long dominance of the United States dollar. EU economists say that the euro can pose a challenge to the dominance of the US dollar in international payments — though for now the dollar remains ahead.

2.4 Why the EU is an "Alternative Centre of Power"

The European Union has slowly evolved from an economic union into something that increasingly behaves like a nation state. While its attempts to adopt a written EU Constitution failed in 2003, the Union nonetheless has its own flag, anthem, founding date and currency, and a measure of common foreign and security policy in its dealings with other countries. The EU uses four kinds of influence to shape the world.

2.4.1 Economic Influence

The EU is the world's third-largest economic bloc. Its combined GDP is projected at roughly $19.35 trillion in 2024 — close to that of the United States and well above any other single country except the US. The euro can challenge the dominance of the US dollar. The EU's share of world trade is also far larger than that of the United States, allowing it to be assertive in trade disputes with the US and China and giving it considerable influence over its closest neighbours, as well as in Asia and Africa. The EU is also a key bloc inside international economic organisations such as the World Trade Organisation (WTO).

2.4.2 Political and Diplomatic Influence

One EU member, France, holds a permanent seat on the UN Security Council, while several other EU members regularly serve as non-permanent members. This has enabled the EU as a group to influence positions taken by the United States — for example, the long-running dialogue with Iran on its nuclear programme. The EU's preferred method is diplomacy, economic investment and patient negotiation rather than military coercion. This was effective in its dialogue with China on questions of human rights and environmental degradation.

2.4.3 Military Influence

Although the EU is not a military alliance like NATO, the combined armed forces of EU members are the second largest in the world, and the EU's combined defence spending is second only to that of the United States. One member, France, possesses a national nuclear arsenal of approximately 335 nuclear warheads. The EU is also the world's second most important source of space and satellite-communications technology.

2.4.4 Supranational Reach

As a supranational organisation^?, the EU can intervene simultaneously in economic, political and social affairs. But this reach has clear limits. EU member states still have their own foreign and defence policies, and these often disagree with each other. For example, in 2003 Britain's Prime Minister Tony Blair joined the United States as a partner in the invasion of Iraq, and many of the newer EU members joined the US-led "coalition of the willing"; meanwhile Germany and France firmly opposed the same American policy. This split shows how far the EU still has to travel before it can act as a single international actor.

2.5 The Limits of European Union — Euro-skepticism and Brexit

The EU's expansion has not been smooth. The biggest enlargement in 2004 brought ten new members — Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia — many from the former Soviet bloc. Bulgaria and Romania followed in 2007 and Croatia in 2013, taking the EU to 28 members. But the process has not always been easy. Citizens in many older member states have been reluctant to give the EU powers that were once held by their own national government. Citizens in many newer member states have wondered whether the EU's rules and regulations come at the cost of national identity.

2.5.1 Euro-skepticism

From the very start there has been a deep "Euro-skepticism" in some parts of Europe about the integrationist agenda of the EU. The British Prime Minister Margaret Thatcher famously kept the United Kingdom out of the European single currency. Denmark and Sweden resisted the Maastricht Treaty's plan to adopt the euro and continue to use their national currencies. These reservations limit the EU's ability to act as a single bloc in matters of foreign policy and defence.

2.5.2 The 2003 Constitution Failure

The EU's most ambitious project — to draft a single written Constitution for Europe — was launched in 2003. But when the draft was put to referendum, voters in France and the Netherlands rejected it in 2005. The Constitution failed. A more limited Lisbon Treaty was eventually negotiated and came into force in December 2009, but the dream of a fully fledged constitutional EU was put aside.

2.5.3 Brexit (2016–2020)

The sharpest blow came from the United Kingdom. In a referendum held on 23 June 2016, 51.9 per cent of British voters chose to leave the European Union — an event known by the contraction Brexit^? ("British exit"). After four years of negotiations, the United Kingdom formally left the EU on 31 January 2020, becoming the first member state in history to do so. The EU is now a Union of 27 members, having lost one of its largest economies and one of its two nuclear-armed states.

2.6 The EU at a Glance — Why It Matters for India

For India, the EU matters in three quiet but real ways. First, the EU has long been India's largest trade and investment partner, and bilateral trade now exceeds $130 billion. Second, EU member states (especially Germany, France and the Netherlands) are leading sources of advanced technology, machinery and renewable-energy investment. Third, the EU has been a steady partner of India on climate change and sustainable-development goals at the UN. As Indian foreign policy widens, the EU has grown from a distant European customer into a strategic partner.