PARIS -- While the United States waits fearfully for the real impact of the Persian Gulf to be felt, many in Europe are looking at the first crisis of the post-Cold War era as a rite of passage and a recognition that the decision to create a single European market already is creating new economic realities.
Europe's relative calm in the face of higher oil prices marks the extent to which many in the Old World no longer see their economic fate inextricably tied to that of the New.
If the optimists are right and the continent does not sink back into the "Euro-sclerosis" of the 1970s and early 1980s, the oil crisis may prove a rite of passage, the sign that Europe has become an entity of an economic clout and autonomy comparable to the United States.
"You could call it the economic independence of Europe. There is no question it is greater than it has ever been before," said Paul Horne, the chief international economist for the investment firm Smith Barney, Harris, Upham & Co.
"The single market, four years of export growth, the island of currency stability, the political leadership -- all this contributes to the sense Europe is an independent economic community, and becoming ever more so."
Eric Taze Bernard, a senior economist with Banque Indo-Suez, echoed the theme. The successful absorption of an oil crisis and a U.S. economic slowdown, he said, may prove that Europe has broken the shackles of its dependence on the American business cycle.
The currency markets already have sent that message loud and clear, with the unprecedented flight to German marks proving that traders now see three great currency zones: those anchored by the dollar, the yen and the mark, as British Prime Minister Margaret Thatcher put it at the Houston economic summit.
"The European economies are now much less dependent than they were on the United States business cycle due to the intensification of intra-European commerce and strong incentive for investment in preparation for the single market," Taze Bernard said. "This is of course extremely beneficial for Europeans."
Not all analysts are quite so sanguine. They argue that even if the Europeans have thrown off their old masters on the Potomac, they have traded them for new ones on the Rhine. How Germany, Europe's only economic giant, reacts to the inflationary pressures caused by oil and the depressing effects of absorbing East Germany could spell the rest of Europe's fate.
"Will Germany operate as a locomotive for European economies, as it did not do in the oil crises of '73 and '81?" asked Jonathan Story, a professor at INSEAD, the European business university in Fontainebleau, France.
Business Climate Changes The German question aside, several radical changes in the European business climate since the early 1980s should allow Europe to outperform the United States, and perhaps keep up with Japan, in any troubled waters ahead.
Most obviously, Europe is less dependent on oil than the United States, and it has cut that dependence strongly over the past two decades. The 12 European Community states needed 21.7 barrels of oil per capita in 1988, far less than the American diet of 54.6. Higher taxes on gasoline and oil in Europe, as well as increased reliance on nuclear energy, explain much of the difference.
"This crisis is quite different from the one in 1973, and the essential point is the controlled consumption of energy," said Herve Goulletquer, chief economist of Banque Populaire in Paris.
More fundamentally, a newly resurgent Europe is coming off several solid years of growth and low inflation, with business booming in Germany and elsewhere even as it was faltering in the United States. That has given European governments such as France and Spain some leeway to announce anti-inflationary, pro-investment austerity budgets to fight the higher oil prices -- measures that were not taken in 1973 and 1981 and helped fuel the decades of "Euro-sclerosis."
"The inflationary context is not the same -- there is a slight resurgence in prices, but infinitely less than in 1973," Goulletquer said. "And the people in power remember what happened in 1973, the consequences of an inflationary spiral, so their behavior has been different."
By far the greatest changes, however, have been those associated with the European Community's three-year-old march to a continent-wide single market, to be completed by the end of 1992.
One is the growing strength of the European Monetary System, in which member states' currencies are pegged in narrow zones. In contrast to past crises like the stock market crash of October 1987, the system has been very stable throughout August. That means Europeans face a far more stable business climate than they did in the 1970s and 1980s, when a gyrating dollar wreaked havoc on European businesses.
Then there are the effects, both real and psychological, that the single-market project has had on European business activity since the late 1980s.
Capital spending, which grew twice as fast in Europe as in the United States over the past two years, has been a major motor for economic growth. Most analysts link it firmly to the perceived need by businesses to become more competitive and throw off Old World traditions with 1992 approaching.
"The European grand market has forced the growth of competition, so ... despite a slowdown of growth or a slowdown in profits, investment by enterprises will rebound, because the competitive necessity is still there," Goulletquer said.
Intra-European Community trade has been rising steadily, from 38 percent in 1958 to 55 percent in"If Germany clamps down as it did prior to 1973 and again in 1981, it bangs a huge hole in everybody else's trade accounts. So the key question is, will Germany clamp down, and at what exchange rate." -- Prof. Jonathan Story1986 and 60 percent last year, according to Banque Indo-Suez. That leaves Europe somewhat more protected from a U.S. recession or a loss in competitiveness caused by a falling dollar, Taze Bernard said.
Despite the generally bright outlook, several uncertainties remain. One is what many believe to be the psychological component of the single-market project. Many of the proposed single-market measures have yet to be adopted by the EC's member states. And numerous studies show both the growth in intra-EC trade, as well as the strong economies of scale that the market should encourage, are not yet firmly rooted.
"There's a boom in Europe, but it's pretty precarious," Story said. "The general view is it's associated with the internal market -- confidence has taken off, investment has picked up -- but there's little evidence to date to support that. So it's mainly psychological."
The German Factor But the greatest unknown is the political and business situation in Germany, Europe's biggest trader. German authorities have been predicting 4 percent growth next year even with higher oil prices. But some estimates say a depression in the soon-to-be-absorbed East may knock that down to 2.5 percent, while the spending needed to keep the new regions afloat may spawn inflationary pressures.
"If Germany clamps down as it did prior to 1973 and again in 1981, it bangs a huge hole in everybody else's trade accounts. So the key question is, will Germany clamp down, and at what exchange rate," Story said.
High public spending deficits and public debt are sore spots for many small European countries, including Belgium and Ireland, both with public debt equaling 130 percent of gross national product, as well Greece, Denmark and Italy, where 60 percent of public debt comes due this year.
Finally, Britain, which is not a member of the European Monetary System and is an oil-exporting country, faces its own economic difficulties. Rampant inflation now near 10 percent and the kingdom's tiny manufacturing sector, at 20 percent of GNP the industrialized world's smallest, were its chief concerns before the oil shock.
The high oil price could help the balance of payments in Britain, while its strong currency could weaken inflation by making imports cheaper. But higher oil costs could also trigger an inflationary spiral.
The balance, however, remains with the optimists.
"Japan is strong, the United States is weak and Europe is in very good shape," said Horne, the Smith Barney economist. "Because of the single market ... the European economic outlook is much less vulnerable to a United States recession or an oil price increase."