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The author examines the transatlantic relationship and the North Atlantic Treaty Organization (NATO) in light of the rise of the European Union (EU). Recent tensions in the relationship, the author concludes, are a result of the EU's growing role as a state actor in the international system. Policy differences between the United States (US) and the EU are merely symptoms of the changes resulting from the EU's new role. The author proposes a tentative typology of alliances and concludes that the US and the EU have a co-dependent relationship, with the US subsidizing the EU's pursuit of policies that by accident or design, undermine US interests. The author calls for a reformulation of the alliance that allows both the US and the EU to pursue their own interests while forcing the EU to take responsibility for its own defense.