Will EU Sink or Swim?

[Annie]

http://www.washtimes.com/upi-breaking/20050602-053929-2875r.htm

Analysis: The end of the 'European dream?'


By Gareth Harding
UPI Chief European Correspondent


Brussels, Belgium, Jun. 2 (UPI) -- Last year, U.S. author and social critic Jeremy Rifkin wrote a best-selling book called "The American Dream" in which he predicted that the EU's vision of the future would quietly eclipse the United States'.

That EU dream now lies in tatters after the emphatic rejection of the bloc's first constitution by voters in France and the Netherlands -- a double whammy that could deal a fatal blow to the ambitious blueprint for an enlarged union.

If there ever were a European dream, it was based on a sense of solidarity among fellow members of the 25-nation club. Try telling that to the French -- who railed against hordes of east Europeans stealing their jobs during the referendum debate -- or the Dutch, who balked at transferring large sums of money to poorer members of the bloc.

The EU is, in essence, a peace project aimed at preventing war on a continent where states have fought each other for centuries. Over the last 50 years, it has largely met this goal by binding its members so tightly together that war among them has become unthinkable. It has also exported peace and human rights beyond its borders by offering the prospect of membership to fledgling democracies on its fringes.

After the French and Dutch "no" votes there is a big question mark hanging over the whole enlargement process -- perhaps the union's biggest success story to date. The reason many voters in France and the Netherlands rejected the treaty Sunday and Wednesday was because they resented last year's expansion of the bloc to take in 10 poorer Central and Eastern European states and are flatly opposed to Turkish membership of the world's biggest trading club.

In this climate, the chances of Turkey, Ukraine, Albania and the former Yugolsav states -- all of which want to join the EU -- becoming members of the Brussels-based bloc in the near future appear slim. The result is likely to be more instability, if not bloodshed, on the EU's eastern front.

In recent years, Europe's ambition has been to spread its values globally and play a more active and muscular role on the world stage. These hopes will also fade if the constitution is scrapped. Plans to create a EU president and foreign minister -- bringing more coherence and visibility to the bloc's external relations efforts -- will be shelved, foreign policy decisions will remain subject to national vetoes and a European diplomatic corps will have to be introduced by the back door. It is difficult to see how Europe's vision of the future -- whatever that is -- will be able to eclipse America's if EU leaders indulge in another prolonged period of institutional navel-gazing.

The European dream may be utopian, but it has always been backed up by rules and regulations that members have ignored at their peril. The EU is a rule-based body or it is nothing and its legitimacy is based on mutual trust among member states. This is why the decision by France and Germany to rip up the growth and stability pact -- the eurozone's fiscal rulebook -- has had such a devastating impact on smaller countries. One of the reasons Dutch voters said "nee" to the treaty was because they felt bullied by big states that play by their own rules.

"The European dream is a beacon of light in a troubled world," writes Rifkin, somewhat rhapsodically. "It beckons us to a new age of inclusivity, diversity, quality of life, deep play, sustainability, universal human rights, the rights of nature and peace on Earth."

Although many of these values are clearly written into the constitution Dutch and French voters so comprehensively rejected, they were almost invisible in the two referendum campaigns. Instead, voters in both countries exhibited the sort of fears, phobias and prejudices that can only be described as the flip side of the European dream. Xenophobic, mean-minded, nationalistic, introverted, pessimistic and resistant to change -- these were the hallmarks of the "no" campaign in France, and to a lesser extent, the Netherlands.

Some voters in the two EU founding member states had more noble reasons for saying no. They complained that Europe was an elitist project run by unelected Brussels bureaucrats, they protested against high unemployment and sluggish growth, they railed against a lack of leadership in their countries and in Europe as a whole, they worried about the erosion of national identity and they argued that the EU had failed to tackle their everyday concerns. However, the abiding image of the campaign will remain French leftists stoking up fears about Polish plumbers taking French jobs -- hardly an advertisement for liberty, equality or fraternity.

Supporters of the EU have often compared the club to a shark -- if it stops moving forward it will sink. The goal of an "ever closer union" among peoples and states is even written into the union's founding treaty, as if it were an historical inevitability. For almost 50 years, European states have voluntarily handed more powers to Brussels and the bloc has never stopped moving forward, despite numerous crises. If EU leaders decide to scrap the constitution at a mid-June summit, it will mark the first significant step backward for the union in its history. The EU will be in uncharted waters. The question is: will it sink or swim?

Now you know where the next argument lay.

 

[Mr. P]

I think they'll sink..why?..too much diversity..
Same reason the US is in decline IMO.

 

[theim]

I think they'll sink..why?..too much diversity..
Same reason the US is in decline IMO.

I agree. Nobody seems to think it enough to be American anymore, now ya gotta be African-American, Latino-American, Chinese-American, Japanese-American, Korean-American, Italian-American, Irish-American, Russian-American, Arab-American, etc.

 

[Annie]

Here or there:

http://www.opinionjournal.com/editorial/feature.html?id=110006768

The European Disease
Economic anxiety is a product of the welfare state.

Friday, June 3, 2005 12:01 a.m. EDT

No one knows for sure to what extent economic anxiety influenced the decisive "Non!" by French and Dutch voters against the new European Union Constitution this week. But one thing is certain: The French and much of the rest of the European Union have much to be economically anxious about.

The French unemployment rate has hovered around 10% for nearly a decade, and almost half of the jobless have been out of work for at least a year. If the U.S had an unemployment rate as high as France, there would be about six million more non-working Americans--the equivalent of placing every worker in Michigan on the jobless rolls.

Our point here isn't to engage in gratuitous French-bashing. The truth is that the economic anemia afflicting France has become the standard bill of health to varying degrees in virtually all of the nations of Old Europe, particularly Germany and Italy. Once upon a time the intellectual elites in Europe and the U.S. trumpeted the economic accomplishments of European social welfare state policies. Today the conclusion is nearly inescapable that this economic model simply doesn't work to create jobs, wealth or dynamism.

Two Economic Models
Rates for 2003-05 (1Q)
U.S. EU
Unemployment 5.6% 8.7%
Growth 3.7% 1.5%

Source: OECD

As the nearby table shows, the U.S. has substantially outperformed Old Europe in wealth and job creation. The economic growth rate of the European Union nations since 2003 has limped along at about half that of the U.S. In the 1980s and '90s the U.S. created about 40 million new jobs; Western Europe created some 10 million, well over half of which were in the public sector. If this divergence in economic performance continues for 40 years, the American worker will be roughly twice as wealthy as his European counterpart.

The Europeans have created a vast constellation of domestic policy interventions that are cloaked in the seductive rhetoric of compassion, fairness and cultural sophistication. These policies include highly generous welfare benefits for the unemployed; state ownership and subsidy of key industries (such as Airbus); rules that make it difficult to hire and fire workers; prohibitions against closing down plants; heavy protections of labor unions against competitive forces; mandatory worker benefit packages that include health insurance, child care allowances, paid parental leave, four to six weeks of vacation; shortened work weeks; and, alas, high taxes on business and labor to pay for these lavish benefits.

In sum, European nations penalize work and subsidize non-work, and, no surprise, they have gotten a lot of the latter and far too little of the former. By contrast, the U.S. model--allegedly cruel and "laissez-faire"--has done much better both by economic growth and worker opportunity.

The frustrating irony is that, at the very moment in history when Europe's model is in disrepute, many U.S. politicians still want to emulate it. In Congress today there is some bill to provide virtually every social welfare benefit that Europe now offers. And the Congressional Budget Office predicts that if America's federal entitlement programs are not reined in, by 2030 government's share of the U.S. economy will close in on 50% of GDP, or even more than Europe's share today. The good news is that at least Washington has begun to debate how to reform these programs.

Which brings us back to the future of the EU. We have consistently supported European integration, especially the liberalizing and efficient force of the euro. But most of the economic maladies that face France and Germany today are incidental to whether the EU itself gains or loses power in the months and years ahead. In many ways the European Union has always been the right answer to the wrong question. The common market was originally established with economic goals in mind: to reduce trade barriers (which has been a good thing), followed years later by a single, stable currency (another good thing).

But the Brussels bureaucracy has to this day purposely ignored the Continent's central ailments: high tax rates, bloated welfare benefits and industrial policies that pick winners and losers, usually the latter. Those topics are essentially taboo in Brussels, which has pursued an economic "harmonization" strategy in part to inhibit the benign impact of tax cutting and tax competition among member countries by creating a de facto multi-state cartel. The nations that have prospered the most in recent years--Ireland in the 1990s, now the nations of Central Europe--are those that have resisted the harmonizing orders.

Europe is now paying a high price for this failed experiment with welfare state socialism. Today's populist revolt against economic integration in France and Germany suggests that these nations remain mysteriously impervious to the need for change. A bigger mystery is why some American politicians are so intent on repeating Europe's mistakes.

 

[Mr. P]

Perhaps diversity was the wrong term, too broad.
Then again I think it fits well, for the social, cultural and economic
differences in the EU. We see it here too, just not on the same scale....
As the article points out, Not Yet.

The good news is we do have a common Constitution and economy that
binds us together...Lose either and like the EU, we're toast.