If Europeans listen carefully to the "chatter" coming out of America today, they will hear the faint sound of the last air escaping out of the American unipolar bubble. For much of the post Cold war period, the political establishment in Washington has had an inflated sense of American power and strength that ironically was often encouraged by European anxiety over the American hyperpower. The Bush administration was able to play on this sense of American preeminence as well as on the fear provoked by 9/11 to take the United States to war in Iraq while ignoring the concerns of its closest friends and allies. The bubble not only helped the Bush administration to sell the American public on an illegal war but also to hide the corrosive effects that the ideology of empire abroad and privatization at home was having on American society.

America's two Gulf crises have each in their own way brought Americans back to reality. The chaos and violence in Iraq has painfully shown the limitations of American military power to subdue a small insurgency or to establish order in a part of the world where US forces are not welcome. Similarly, the natural disasters on the Gulf Coast have lifted the veil on the effects of years of neglect of America's basic infrastructure and what happens when the country is governed by an economic philosophy that reduces a large proportion of the working public to minimum wage jobs without access to good schools or adequate health care. They have also raised pubic anxiety over America's deteriorating fiscal position and the endless borrowing from abroad, especially from rising powers like China, which are increasingly challenging America's position in many parts of the world.

The administration's troubles in Iraq and at home have for now put an end to much of the American gloating over the superiority of the American model. It has also cut short the contempt many in and around the Bush administration have displayed for Europe and its contribution to international peace and stability. The administration has attempted to put a new face on U.S.-European relations, seeking better relations even with old Europe in a bid to gain more European help on Afghanistan and Iraq and in dealing with Iran. The French rejection of the EU constitution may have produced some momentary glee in neoconservative circles but many traditional Atlanticists, both within and outside the administration, are today more worried about a politically paralyzed Europe that is unable to continue with European enlargement than they are with a Europe that may emerge as a rival.

American foreign policy elites have always been of two minds on Europe. On the one hand, they have worried that Europe may become too strong and become a serious counterweight to American power, limiting Washington's freedom of action. They have thus supported European enlargement as a way of diluting European power and providing Washington an opportunity to play on divisions within Europe, such as it did in the lead up to the Iraq war. The larger Europe becomes, so the thinking has been, the more difficult it will have in developing a coherent position to challenge the United States and the more open it will remain to American influence.

On the other hand, many of these same elites have at other times worried that Europe may become too weak, too divided, and too absorbed in its own problems to support US foreign policy objectives, whether it be underwriting the stabilization of Turkey and contributing to other US foreign policy goals in the Middle East. Added to this set of worries is a more recent concern that Europe itself may become a launching pad for future terrorist attacks on the United States if it is not able to assimilate its growing Muslim population into the European mainstream-an almost mirror image of the European concern that American policies in the Middle East would destabilize its Muslim neighborhood leading to the further radicalization of Muslims in Europe.

Thus, for much of the past decade, there has been a tug of war within Washington between two positions. One position, represented by neoconservatives and hard-edged nationalists close to the administration, has disparaged Europe's power and has sought to exclude Europe as much as possible from involvement in the Middle East in part because it is perceived to be too pro-Palestinian and too committed to a policy of constructive engagement with so called rogue states like Iran. This group has tried to preserve America's freedom of action internationally by avoiding commitments to tight-knit alliances as well as to international law and institutions even as they justified their policies with moralistic rhetoric reminiscent of Woodrow Wilson.

The other position, represented by many traditional foreign policy thinkers associated with moderate Republicans and centrist Democrats, including leading figures in the Clinton administration, has been to try to enlist Europe as a supportive junior partner-contributing forces in Afghanistan, working with and providing assistance to the Palestinians, supporting and helping to stabilize Turkey. The United States would set the goals for American-European policy, particularly in the Middle East, albeit with some consultation of Washington's NATO allies, and European nations would support those goals with money and peacekeeping forces and by providing legitimacy for American actions. In short, Europe would be a consensual supporter of American hegemony, that was legitimated where possible by multilateral institutions but that would rest on American unilateral power if necessary.

Largely missing from America's foreign policy discourse has been any notion of Europe as a truly equal partner with the United States-let alone any idea of Europe as an important independent power in a multipolar world that would work with the United States and other powers in jointly managing world problems. But with the United States bogged down in Iraq and with new powers rising in Asia, there is a new appreciation for the tradition of American internationalism associated with the good neighbor policies of Franklin Delano Roosevelt and with America's early postwar commitment to the creation of the United Nations and the Bretton Woods institutions.

Indeed, the unfolding collapse of the American project in Iraq, together with a new understanding of the limits to American economic and military power, is beginning to reshape the political map of the United States in a way that has created an opening for more progressive internationalist voices for the first time in several decades. Europeans, I believe, have a great stake in seeing this progressive thinking find a greater foothold in American politics because it would help balance the unipolar tendencies of both American nationalists and neoconservatives and would help pull traditional Atlanticists in a more progressive direction-that is, away from American hegemony and toward greater multilateralism.

What are the main tenets of the American progressive internationalist tradition? And why should most Europeans seek to encourage it?

First, progressives like myself accept the multipolar view of the world most closely associated with French-German thinking: namely, that an international system with multiple powers can not rest on the power of one dominant power alone. We do so because we understand that the world has outgrown American power and that the maintenance of international peace and security must be a shared goal and burden, not an American "right" or prerogative. In our view, the United States can no longer afford both its post-Cold War unipolar aspirations and a decent progressive society at home. That is why we favor a community of power and why we welcome a Europe that can be an equal partner and that can serve as a check and balance against America's worst tendencies as well as a check and balance with the United States on the rising powers in Asia.

Second, we believe that such a community of power system has to be inclusive; it has to include as many powers as possible without paralyzing the system, even if they do not share fully America's liberal democratic credentials or even Western values. The last time the world had deprived two major industrial countries, Germany and Japan, what they considered their rightful place in the sun, the result was World War II. Today, the United States and Europe need to help find a place not only for China and India, but for other emerging powers, including potentially revisionist regional powers like Iran. So like many Europeans, we tend to favor a policy of constructive engagement and mutual appeasement over a policy of isolation and punishment, recognizing that sometimes that this will result in painful compromises.

Third, we understand that a multipolar system must rest on a broader legitimacy than power alone. That is why we, like many Europeans, favor giving stronger weight to international institutions that would help ensure cooperation and bestow legitimacy on the leading powers. In other words, multipolarity needs to be accompanied by multilateralism or a form of international governance based on the rule of rule. Multilateral institutions are needed to help pool resources and to form a world public sector to address international problems no one country alone could handle. We therefore are in favor of revitalizing and reforming the Bretton Woods institutions and expanding the missions of U.N. specialized agencies. We are also in favor of encouraging the development of regional organizations modeled on the European Union.

Fourth, we understand that peace and international stability rests as much on economic prosperity as it does on collective security. Like many Europeans, we take seriously the lessons of the last century: namely, that widespread unemployment, especially among young men, together with rising expectations, can create the conditions for destructive radical movements and social upheaval. Such was the case in Europe and Japan in the 1920s and 30s, and such is the case today in nearly all of the countries that make up the Greater Middle East, and such will be the case if growth falters in China and India. We therefore give priority to economic development and job creation in both our international economic policy and our foreign policy.

Finally, progressives in the American internationalist tradition believe that the world economy has to be managed and it has to be based on principles of ample demand, full employment, and a stable international financial system. We therefore reject much of the neoliberal prescriptions of the past two decades. The greatest achievement of the post-war period was an economic philosophy that made the world economy safe for the social welfare state and full employment, whether it was American-style public-investment led and middle class consumer-oriented Keynesianism or European style social democracy. Our overriding priority must be the preservation and expansion of this achievement.

These fundamental tenets of American progressive thought suggest a much different U.S-European relationship-that of equal partners in an emerging community of power committed to building a more durable system of international governance. They also suggest a much different agenda for U.S-European world policy. Here I would like to touch on what I see as the two overarching priorities for U.S-European cooperation in the decade ahead.

The first priority is for a new U.S.-European strategy to dampen the Bin Laden inspired Islamic revolution in the Greater Middle East. Developing a common policy on peace in the Middle East and the modernization of the Arab world will be the true test of the transatlantic relationship in the years ahead. The United States cannot succeed in offering an alternative to the status quo in the Middle East without greater European involvement and support. And Europeans cannot be safe without a radical shift in American policy. In recent months, European governments have moved closer to the Bush administration-in supporting the current road map on the Israeli-Palestinian issue, on America's muscular promotion of democracy, and on the goal of terminating Iran's nuclear program. But this set of priorities does not address the underlying causes of Islamic extremism or provide a sound basis for Western policy.

Key aspects of American policy-its support for Israel's occupation of the West Bank and Gaza, its invasion of Iraq and heavy military footprint in the region, its failure to address Islamic grievances, and its deaf ear to Arab economic and political concerns-is in part responsible for Islamic extremism. A better approach to Islamic extremism therefore would be to lower America's profile in the region and to patiently contain Bin-Ladenism as its burns itself out by denying it the foreign imperial enemy it needs to succeed. And the best way to lower Washington's profile is for the United States to share responsibility with the European Union, NATO, Russia, and the United Nations as well as with the region's countries. The European Union, in particular, must take more responsibility for promoting economic development and for advancing human rights protections in the region around the European Rim, from the Magreb to the Levant. Europe, after all, has more at stake and has proved more adept at promoting economic reform than has the United States. Washington can help by redirecting its current aid efforts toward the key priorities identified by the UNDP reports on the Arab world-education, employment, and the empowerment of women-and by supporting internationally financed public works projects to provide jobs and economic opportunity to young people in the region.

As part of this effort, progressives in Europe and the United States need to change the conversation of Western policy from its current emphasis on democratization and winning hearts in minds in an ideological war with religious overtones to the universal language of jobs, economic opportunity, and human rights. As Afshin Molavi of the New America Foundation has documented, what the people of the region want most is jobs and economic opportunity-understandably so, since unemployment runs as high as 25 percent in many Arab countries and even higher among the two-thirds population under 35.

European powers must also be willing to take a more assertive posture on the Israeli-Palestinian issue and the Persian Gulf. In this connection, European leaders must be willing to speak more candidly to both the American leadership and the American people about the Middle East. In so doing, they need to make the following points. First, as long as Israeli tanks and settlements occupy Palestinian territory no America can be safe from Arab anger. Second, the current road map is a prescription for Israeli absorption of more Palestinian territory and thus for more Palestinian radicalization, and that the international community must move more quickly toward the establishment of a Palestinian state along 1967 lines with some modest territorial adjustments. Third, there can be no peace in the Middle East and in the Persian Gulf as long as the United States seeks to isolate Syria and Iran, and that the focus of EU and US efforts must shift from trying to stop Iran's nuclear program to incorporating Syria and Iran into a larger diplomacy aimed at containing the conflict within Iraq.

Engaging the United States in this way may cause greater U.S-European tensions in the short term. But European leaders must understand that American policy will not change-or will change very slowly-unless it is firmly challenged by Europe, and that more progressive voices in the United States will be undercut if Europe is seen as acquiescing in current American policy.

The second other major priority for U.S.-European relations must be to develop an international economic policy framework that preserves and expands the great social welfare achievements of the twentieth century, which are increasingly threatened by a form of global capitalism that pits the aspiring middle class in emerging economies against the working middle class in Europe and the United States. In the last decade, Europeans were too slow to challenge Washington's neoliberal globalization agenda, which led to the Asian financial crisis in 1997-98 and now they are paying the price of an international economical system that encourages developing and newly industrializing economies to develop through low-wage exports and by building up large current account surpluses.

The economic success of China and India, both with more than one billion people, has given new urgency to this question. Up to now, it was assumed that globalization could be a positive sum game. As developing countries expanded their manufacturing, the United States and Europe would gain more jobs, especially more skilled jobs, in the service sector. With the right policies, especially policies aimed at improving the education and skills of American and European workers, nearly everyone would gain. But the combination of China's success as a low-wage manufacturer, and India's increasing success as a low-wage services provider, has called into question that conventional wisdom. American and European workers are now competing with Chinese low-wage workers in the manufacturing sector but also with low-wage computer programmers in the service sector. Meanwhile, China and India have crowded out other developing economies that cannot match China's low-wage efficiency.

The problem is that we are building a world economy that is too small yet too risky and too dependent on American consumption to accommodate both the aspiring middle classes of the developing world and the existing middle classes of the developed world. We are doing so because we are relying on a 19th century economic philosophy that ignores the lessons of 20th century. Like in the decades prior to the great depression, rising productivity gains made possible by the spread of industrialization and technology and the opening up new production centers and labor markets have created a glut of capacity, savings, and labor. The entry of China and India alone in the global economy has had the effect of more than doubling the world's potential labor force. The bad news is that this has put downward pressure on wages in both the developed world and developing worlds. This in turn has caused a fall in global aggregate demand in relation to global supply, creating a classical 1930s-style Keynesian problem relieved only by America's debt-led consumption, which is unsustainable.

The good news is that these developments have set the stage for a new golden age of rising middle class prosperity-but only if the United States and Europe shift their economic thinking from the neo-liberal export-oriented nostrums of the 1980s and 90s to the Keynesian ideas of the 1940s and 50s. Indeed, the solution to our economic Keynesian problem is to translate those productivity gains into rising wages and living standards in the newly industrialized and developing worlds-so that working men and women there can consume more of what they can produce and so that the world economy can grow in a more balanced way.

For this reason, Europe and the United States must make full employment and ample demand the guiding principle of international economic policy much as Roosevelt's policies did in the 1940s. We must become the champion of an International Labor Office and a world labor movement that would support the establishment of unions in low-wage economies and that would fight Victorian-era working conditions in the world's factories. We must support public investment projects funded by international financial institutions to soak up excess labor and to give the unemployed in places like Egypt and Morocco a sense of economic opportunity. We need to put our weight behind the equivalent of New Deal programs, like the TVA and the Conservation Corps, and expand the efforts of U.N. specialized agencies, such as the World Health Organization, to bring basic health care, education, housing, and clean energy into the reach of billions of people and to relieve poverty in Africa and South Asia. We should also reorient the missions of the IMF and World Bank to support full employment and to channel excess savings to public and social investment projects in the developing world. In short, we need to create institutions at the global level to do what the New Deal did for our national economies in the last century.

Our goal should be a New International Deal to build a global middle class and to eliminate global poverty. Rather than encouraging emerging economies to develop through the export of manufactured goods and their component parts, we should champion what might be called middle class oriented development aimed at increasing domestic consumption. Help emerging economies to grow by expanding home ownership, by investing in public infrastructure, and by creating more small and medium-size businesses, much as we did in the last century, not by exporting more jobs.

This agenda requires as much a change in thinking in Europe as it does in the United States, where expansionary economic policy still finds favor in practice. Europe itself suffers from its own Keynesian problem because the "organized deflation" that the European Stability and Growth Pact has imposed on European economies. Breaking the grip of the European Central Bank is as important to preserving European social democracy as is raising wages in the rapidly growing newly industrializing economies in Asia. If American progressives can help Europe in both these tasks it will have honored America's long close alliance with Europe and the great achievements of postwar Europe.