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Turbulent times ahead for European Union

Vaiju Naravane

Uncertainty and a certain paralysis mark the European Union, with doubts being cast over plans to welcome new members and strengthen existing internal political ties and institutions.

THE EUROPEAN Union as a political entity is today rudderless and adrift. The double `No' to Europe's new Constitution by France and The Netherlands, two of the EU's founder members, has robbed the 25-member body of its dynamism and sense of purpose. The negative vote has ushered in uncertainty and introduced a certain paralysis with doubts being cast over plans to welcome new members and deepen and strengthen the Union's existing internal political ties and institutions.

Euro-optimists say this is only a passing phase, that earlier EU treaties have been rejected by the Irish and the Danes and that the Constitution Treaty, so ignominiously turfed out by the French and the Dutch, could be "re-submitted" for ratification. There is, however, a profound difference between the earlier and current situations. The Constitution Treaty was agreed upon after months of bickering, compromise, and fine tuning and it would be extremely difficult, some say impossible, to get a revised text that would accommodate specific French or Dutch concerns. In France, in any event, the same text cannot legally be re-introduced since the people have already spoken, and a new amended document appears more than doubtful.

The Constitution would have meant a decisive step forward in the process of building a strong supranational political entity with more powerful European democratic institutions. This dream now lies shattered, much to the chagrin of leaders committed to the idea of a United States of Europe that would challenge U.S. hegemony and power. The defeat of the European Constitution has given rise to an unprecedented degree of shadenfreud, barely concealed malicious glee, on the other side of the Transatlantic divide.

Legally speaking, all 25 members have to ratify the Treaty for it to come into force. From that point of view, the Constitution then is already a dead document, a fact that EU leaders are finding difficult to admit. They have bought themselves time and put off the inevitable by calling for a "pause in the ratification process." Under the revised agreement, the European Council is expected to review the situation in the hope of finding a solution if, by October 2006 (two years after the Treaty's signing), four-fifths of the 25 members have ratified the document with just one or two states failing to do so. But it is highly unlikely that the Treaty could be put to a second vote and in all likelihood, EU leaders will, after a respectable delay, bow to the inevitable and abandon the document altogether.

This leaves the management and the governance of the EU in the hands of earlier, unsatisfactory documents, especially the Nice Treaty. One of the raisons d'etre of the Constitution Treaty was the fact that managing a club of 25 had become hugely difficult with laws designed for a restricted body of ten. The rejection of the Constitution means that the EU will plod along with clearly ill-designed and inadequate instruments of governance. And although further political integration so desired by those dreaming of a strong political union is likely to come to a standstill, the present institutions will continue to function. The EU shall certainly remain an effective and powerful common market; but without a coherent foreign or defence policy, it will again fail to acquire the political clout an entity of its size and economic weight should ideally wield.

The rejection of the treaty has had far reaching political consequences raising questions about whether or not the EU will be able to go ahead with plans to welcome new members. Bulgaria, Romania, Croatia, Macedonia, and other Balkan laggards have all been made promises of eventual membership, some firmer than others. The EU would not like to go back on them for fear of losing influence in the forever unstable Balkans. But many of these promises will now be placed on the backburner. The negative vote on the Constitution also appears to have shot down Turkey's hopes of ever joining the EU, and although accession talks are scheduled to begin in October this year, the mood of EU citizens as opposed to their governments appears to be resolutely against Turkish membership. This opposition has much to do with the rise of Islamic terrorism in Europe. The `No' vote in the referenda especially in The Netherlands but also in France was linked to questions of national identity where Islam was seen as a rising threat from within and where multi-culturalism found little place.

Fate of the Euro

Another factor of uncertainty is the fate of the Euro. The result of the two referenda had an immediate negative impact on the common currency depressing its value against the U.S. dollar and fuelling speculation that certain countries such as Italy, performing badly against international competition, or even Germany would wish to pull out of the Euro zone. This fortunately has not happened but it is quite likely that France and Italy, their protectionist hackles up, might try to bar new EU members from acceding to the Euro zone.

One of the most significant victims of the `No' vote has been the Franco-German axis, long considered to be the locomotive of Europe, and the influence it wields within the EU. Many in Europe who deplored Franco-German attempts to dominate the agenda to their own advantage see this as a positive development, one leading to new leadership roles and challenges. The referendum has severely affected the political fortunes of President Jacques Chirac, while German Chancellor Gerhard Schroeder has suffered a series of electoral reverses, giving rise to uncertainty about the effectiveness of the Franco-German combine and its role in the immediate future.

The French rejection of the treaty has turned Mr. Chirac into a lame duck president with his popularity levels plummeting into the 20s from a high of 80 per cent-plus during the war on Iraq. It is therefore unlikely that France will give the go-ahead to any new EU initiative before the next French presidential election in 2007.

Mr. Schroeder too is in big trouble and likely to lose next September's legislative poll. The new German Chancellor is widely expected to be Angela Merkel, a Thatcherite clone from the former East Germany, who approved of the war on Iraq and has called for closer transatlantic ties. So some strain in the Franco-German relationship is to be expected at least until 2007 when the possible election of Mr. Chirac's ace rival, the maverick right winger Nicolas Sarkozy, might permit a rapprochement. But at this stage it is impossible to predict the direction that might take, simply because Mr. Sarkozy being a populist leader is unlikely to adopt measures unacceptable to his people.

The majority of the French rejected the Treaty on the grounds that Europe was moving too quickly towards the "Anglo-Saxon model" of job flexibility and free market capitalism. It just might prove too risky for Mr. Sarkozy, given the French penchant for violent protests (remember 1968 and 1995 when all life in France came to a standstill?), to join hands with Ms. Merkel and lead France down a path that would favour pro-market reforms. And again, in Germany, other surprises could come our way in the guise of Oskar Lafontaine, the Social Democrat leader who could undermine Ms. Merkel.

Elsewhere in Europe too political instability is in the air. Poland is expected to swing right later this year with the Law and Justice Party finding favour among voters in all the polls conducted recently. In Italy, on the other hand, elections in early 2006 could see Mr. Berlusconi's fractious right wing coalition being replaced by a centre-left coalition led by former European Commission chief Romano Prodi. In this climate of political uncertainty no government is prepared to propose any new initiatives.

One of the debates launched by the electoral campaigns preceding the referenda was which socio-economic model would be best for Europe. The French have insisted that their model ambitiously called the European social model with generous pension and health care schemes, a high level of regulatory protection in the workplace, and high professional taxes would be the best bulwark against the onslaught of globalisation and the attendant erosion of workers' rights.

British Prime Minister Tony Blair claims the U.K. model with low or moderate taxes, deregulation, and highly flexible labour markets is where the future of Europe lies. While the U.K. might be doing relatively well in purely GDP terms, its performance does not hold up when examined on the quality of life index. Essential services, education, and health care remain poor, as does productivity. Most Europeans remain unconvinced by the U.K. model where a vertiginous expansion in low-wage employment has been responsible for the faster growth rate.

These opposing visions of where Europe should go have resulted in greater rivalry amongst European leaders and a jockeying for leadership. There has already been a bitter stand off on the EU budget for 2007-2013 with Mr. Chirac and Mr. Blair exchanging barbs on the Common Agriculture Policy (which sucks up 40 per cent of the EU budget and benefits mainly French farmers) versus the British rebate which means Britain will pay practically nothing to support the ten new EU entrants requiring development funds. Mr. Blair who currently holds the rotating EU presidency is likely to try and carve out a leadership role for himself, something the French are likely to resist. How long Mr. Blair himself will remain in office is another question, although his handling of the London bombings appear to have given him a new lease of life. All in all, tough times ahead for Europe.

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