Opening the meeting, Joelle Attinger, President of the European Institute, stressed the need to strengthen the economic partnership between the U.S. and Europe. Even amid the acute current economic slump, the U.S. global trade deficit with grew by 1.1 percent in October – a reminder of the need for maintaining strong transatlantic cooperation.

She introduced the keynote speaker, Jurgen Thumann, the European Co-Chair of the Transatlantic Business Dialogue and CEO of Heitkamp and Thumann. She noted his continued outstanding business success as a transatlantic entrepreneur in the steel and plastics industry.

Mr. Thumann stressed the importance of “synergy” between the US and the EU on trade and broader economic cooperation. “The current global recession”, stated Mr. Thumann, “will force the US and the EU to closely examine the importance of transatlantic business dialogue.” In confronting the current crisis, he said, “the roots of the crisis are not European, but it will do no good to ‘fingerpoint.’”

In presenting the European perspective to an audience of 80 participants, he frequently invoked the German perspective – notably Berlin’s conviction about the need for continued support for the Transatlantic Economic Council by the incoming U.S. administration and by the new president of the EU, the Czech Republic. For example, he said, transactions between US and EU businesses already account to 1.7 billion euros a day and that impressive figure could be raised by three per cent if all remaining non-tariff and similar barriers could be removed – a process that could be encouraged by the TEC.

In his talk at the European Institute, Mr. Thumann often developed points made in a letter he released earlier the same day to Daniel Price, the U.S. head of the TEC and Gunter Verheugen (who is the Vice President of the European Commission, Commissioner for Enterprise and Industry), European head of the TEC (they are due to meet the following day with the Transatlantic Business Dialogue in Washington, DC, for one of their annual meetings). Thumann stressed continued support for the TEC while administrations are changing, adding that, from Europe’s viewpoint, the incoming Obama administration “must support this relationship.” In his letter to Mr. Price (who is Assistant to the President for International Economic Affairs and Deputy National Security Advisor for International Economic Affairs), Thumann, along with James Quigley suggested three priorities on the TEC:

1. Renew focus on innovation and investment, especially in energy, healthcare, and aviation, which are key issues for transatlantic cooperation in 2009

2. Use regulation in a positive way to stimulate economic growth, innovation and sustainability without diminishing global competitiveness of American and European business

3. Expand the focus of the TEC to include energy and climate change and adopt a robust work plan to drive transatlantic collaboration

Mr. Thumann added the experience and strength of the transatlantic dialogue and marketplace make him “confident” that the EU and the US, working together, will succeed in surmounting the crisis. “I am confident we will succeed,” concluded Mr. Thumann.

As President Dmitri Medvedev formally recognized the independence of South Ossetia and Abkhazia in a televised announcement, Aleksandr Solzhenitsyn must have been rolling over in his grave and thinking, “I told you so.” Solzhenitsyn, who passed away earlier this year, had always argued that Russia had a strong soul that needed to be tamed or it would cause trouble.

The Kremlin seems to have decided to go with trouble, at least for the moment. The recognition decision comes a day after U.S. President George Bush and German Chancellor Angela Merkel explicitly warned Russia not to extend formal recognition to the republics, according to Stratfor, a U.S. company offering on-line intelligence. Furthermore, the Kremlin is hammering home the point - to Western governments - that it disdains their condemnations as insignificant. Meanwhile Russia is consolidating its footholds in Georgia and conceivably its spheres of influence in its “near-abroad” of countries formerly in Moscow’s orbit.

The west promptly denounced the Russian decision. German Chancellor Angela Merkel called the decision “totally unacceptable” and UK foreign minister David Milliband stated that “Georgia’s independence and territorial integrity cannot be changed by decree from Moscow.” In this situation, such strong rhetoric will need to be backed up by effective support for Georgia as well as with a new stance toward Moscow. Otherwise western bravado can backfire in the face of determined Russian action.

Russia will continue to use parallels to the Kosovo ‘precedent’ to contradict immediate or delayed reactions from Western leaders. The West will continue to say Kosovo was a ‘unique’ case and all other avenues had been exhausted. The rest of the states in the Caucasus will be watching closely-in the next few weeks for further developments in this conflict. Russia has made an audacious move, and the west is on the defensive. But Moscow must be wary of unleashing a backlash with secessionist regions, such as Chechnya, already on edge.

Georgia will desperately need the help of its Western allies if it is to assert its independence, but it may find the pressure from a muscle-flexing Russia and an indecisive West so unbearable that the nation loses its viability. In the longer run, Russia may have gone too far by using its military force when the lack of real dialogue frustrated Moscow. The danger is less that the attack will goad the west into countervailing action and more that the Russians may have edged themselves closer toward one of their chronic weaknesses: isolation.