One of the unwritten laws of international relations is that any decision, however good, becomes a bad idea if taken at the wrong time and poorly presented. It is no surprise, then, that the European Union's decision to lift the arms embargo on China is contentious: the timing is wrong - following Beijing's anti-secession law on Taiwan - and it was poorly sold in Washington as "symbolic". If symbolism is there, it is that allowing China to divide the Atlantic is self-defeating. China's leaders could not have asked for more.

Whatever the eventual compromise - a more stringent European code of conduct that satisfies some of Washington's concerns is what is needed - the quarrel over arms sales to China reflects a long-standing asymmetry. The US views east Asia through the lens of the American security guarantees not only to Taiwan but also to South Korea and Japan. The Europeans have practically no security commitments while they develop growing economic ties, although they benefit from a balance of power that others maintain. The US is over-exposed and the EU has a free ride in the region.

But the debate also hides divergent perceptions: foremost, a difference over the link between economics and security. The American view is that engagement with Beijing - in trade, diplomacy and anti-terrorism co-operation - must be combined with military containment. The Europeans believe that extensive engagement is going to make military containment superfluous, at least over time. Washington and China's worried neighbours cannot afford the luxury of detachment. Yet it would be wrong to dismiss the European argument for large-scale engagement as simply a case of strategic irresponsibility, as implied recently by Robert Zoellick, deputy US secretary of state, during his Brussels visit.

It is not just a thirst for contracts that inspires the EU's choices; there is also a deeply ingrained belief in the evolutionary power of rising prosperity, applied to one of history's most amazing economic takeoffs. In Europe's view, China's economic integration is a de facto security policy, making military conflict too costly and therefore unlikely. For Washington and some of its Asian allies, the opposite may be true: economic rise and nationalism are feeding each other.

The US, too, has its share of inconsistency when it comes to China policy. The Bush administration is incoherent when arguing that Europe would be rewarding Beijing for too little progress on human rights: Washington has rewarded China in many ways since 1989, from accession to the World Trade Organisation to "partnership" in the war on terrorism. Engaging China is an essential element of US policy too and includes commercial exports of military-related technologies. In addition, America's bargaining position is weakened by its massive reliance on Chinese money to finance the budget deficit. Interdependence is a reality for Washington, not just the fluffy rhetoric of Brussels bureaucrats.

What follows from this? The Europeans should recognise America's military predicament in Asia, and on the arms embargo should avoid the mistake the US has often made: a lack of consultation to head off disputes with allies. Delay is the logical option. The US should engage Europe in a dialogue on China's future and, on the arms embargo, be ready to discuss a follow-up arrangement, based on more stringent rules on technology transfers. This is an opportunity to develop a trade-off between the EU's readiness to devise effective controls on dual-use technologies and the US's willingness to open up the transatlantic defence market. The opposite outcome - a quick end to the EU embargo and US retaliation on defence technology transfers across the Atlantic - would be a worst-case scenario for all.

It will never be easy to reconcile the two different Chinas imagined by the US and Europe. One is an economic giant that will inevitably, and soon, translate its weight into political and military influence coloured by aggressive nationalism, aiming to establish itself as the main power in east Asia. The other China is a rapidly evolving society that can only thrive by integrating itself so much into the world system that it will be politically transformed beyond recognition. No one knows whether China will become a nationalistic superpower or a responsible multilateral player, but a transatlantic dialogue must now be opened on how the world should respond. This would be good timing.

Marta Dassù, director at the Aspen Institute Italia's International Programs, and Roberto Menotti, research fellow, are co-authors of Europe and America in the Age of Bush (Survival)

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