Amidst the effort by millions of Americans to get to know people who would like to be the next President – some of whom they had never seen before – there may be another challenge in the coming months. Like it or not, these same Americans may also have to get to know many more people who live on another continent , people who may have a decisive influence on the outcome of both their futures, on the U.S. presidential election in 2012 and well beyond it.

Take, for example, Mario Draghi, the next head of the European Central Bank. Or Evangelos Venizelos, the Finance Minister of Greece. Try Enda Kenny, the Prime Minister of Ireland, Pedro Coehlo, prime Minister of Portugalor perhaps Ivan Gasporic, the President of Slovakia. There are a lot of players on the European stage, and many of them will have a direct impact on their own economic destiny, as well as that of the United States in coming year.

Of course some European figures are more prominent in the US, particularly German Chancellor Angela Merkel or French President Nicolas Sarkozy. But as powerful as they sometimes appear, the complicated and often convoluted process of politics in the European Union makes deciphering the levers of influence a challenging task − one that is growing in importance for Americans.

A Wake Up Call
Just as the course of the US into economic free fall three years ago was a wake up call for Europe, so is the uncertain course of the Euro and indeed the European project of major importance, for better and for worse, for the US today. The degree of interdependence, (indeed, in clinical terms, codependence might be the better description) is becoming increasingly transparent – something that Americans are not used to understanding or accepting.

If either side of the Atlantic slips into a recession – or if there is a sovereign default within one of the world’s major currency zones – the threats emerging are predicted to be equal to or worse than what was seen in 2008/9.

For the United States, the implications are at once economic and political. In the midst of a presidential campaign and a Congressional battle over the 2012 elections, no one is capable of predicting the outcome. The state of the economy in the coming months will be decisive for both winners and losers. However, that state will be in no small measure impacted by economic trends around the world, especially by how things play out in Europe. The stability of both transatlantic trade relations, as well as the health of American banks, is dependent on what happens in Europe and at home. This can easily be seen in the gyrations of stock markets in the US and Europe, as both are tracking each side’s every move.

The sense of vulnerability being felt in the US is generating both irritation and fears, as well as references to wanting the world to be what it used to be – a world in which the US was dominant and exceptional.

Shrouded in Uncertainty
The sluggish pace of response in Europe to the debt crisis in Greece, along with the potential for more crises in other European countries, has made both the US government and US banks extremely nervous, particularly having just gone through the their own mess of the last three years. Combine this uncertainty with the political unpredictability in the US about the outcome of next year’s elections and the result is a paralysis, one that is helping to maintain high levels of unemployment and a vicious circle of blame and accusations about the roots of the threats we all face.

In turn, while Europeans struggle with great difficulty to forge a consensus among themselves, they have been quick to point a finger at the economic mess we all find ourselves having emerged, in part, due to irresponsible fiscal and monetary behavior in the US and the apparent inability of forging a political consensus in Washington to deal with it. Add to that the expectation that nothing will get resolved until after the 2012 elections a year from now, and you have a formula for both fear and fuming on both sides of the Atlantic.

Deepening Interdependence
There is nothing new about this advancing web of interdependence but it is becoming that much more tangible to Americans and Europeans, for better and for worse. It can lead to much more elaborate tools of cooperation but also a good deal of backlash among electorates which resent it. As the old expression goes, familiarity can breed contempt.

Events some eighty years ago demonstrated what can happen when governments turn inward and make the wrong decisions in the name of national interests. In the initial phase of the the Great Depression, the decisions made in Washington, London, Berlin, and elsewhere in Europe toward cutting spending and raising taxes resulted in domestic turmoil, and seeded the ground for the war which eventually shook Europe to its core and enveloped the world in a global war.

That same war was to catapult the US into the leader of a new economic system that emerged as the basis of the post war recovery, in large measure based on the US dollar and the dominant role of the US economy. Today that role is in transition and the signatory status of both the US and the dollar is hotly debated. Yet the fact is that there is no replacement candidate for the privileged role which the US has been playing for the past several decades. The uncertainties in Europe, epitomized by the struggle over the future of the euro, remind us that the United States of Europe remains a political goal, not yet a reality. China is intentionally dodging responsibilities in dealing with its own currency and have actually assisted the United States in its course toward debt as far as the eye can see.

Shared Vulnerablities
All the leading countries engaged in forging a new framework to avoid another world wide depression are being forced to face questions about both the role of governments in responding to the crisis, as well as the challenge of regulating markets while encouraging them to create the most important commodity needed: jobs. Just how to accomplish that without engaging in a zero sum game of winners and losers is supposed to be the lessons we drew from the last century.

The shared vulnerabilities are all on prominent display and extend around the globe. The United States has had two dramatic wake up calls to remind us of that situation: 9/11 and the economic crisis we entered in 2008 and are still in. Europe is right there with us, for better and for worse. To respond to its challenges, Europe is going to need to answer its own wake up calls to remind them that the time to widen its responsibilities, both economically and politically, has come. Right now, the national centrifugal forces operating against that response are serious. We see that in national election battles on both sides of the Atlantic. The euro remains a currency without a state, and the European Union remains an ongoing process, moving sometimes ahead, sideways or occasionally backwards. The danger of the euro imploding is real. Even as the dollar might face increasing pressure generated by the skyrocketing debt, the ability of the euro to step into the global role of the greenback is not there –yet.

Basis of a Privileged Parternship
The second half of the twentieth century was in many ways a peculiar one. The first half of the twenty-first century will look different, as will the roles of those countries which will compete with each other at multiple levels.

For the US, that will require learning the ways of those competitors, be they in Europe or in Asia, and adjusting to new equations of power and influence. However, before doing so, the U.S. must take a long look in the mirror and get its own fiscal and political houses in order. Up until now, the dollar has been attractive as a primary port for the world. According to Barry Eichengreen in his book Exorbitant Privilege, the U.S. has enjoyed this position because it has filled the criteria for such a role, in that it is “large, rich, and growing. It is attractive because it is powerful and secure. For both reasons, the economic health of the country issuing the currency is critical for its acquisition and retention of an international role.” That rule applies to both the United States and to a Europe in pursuit of a stronger economic and political union. That is the basis of a privileged partnership.

This essay appeared in the October 7, 2011 AICGS Advisor.