EU losing direction and vision

Published September 30, 2005

BRUSSELS: Stunned by public rejections of the European Union’s first constitution, the power-wielding bodies of Brussels appear to have lost their vision and sense of direction.

The danger of a drift into paralysis looms at a key moment for the bloc, which is due to start long-delayed negotiations with Ankara on Monday on its bid for Turkish EU membership.

A hung parliament in Germany and uncertainty over the future leadership of France, Britain and Italy are robbing EU decision-makers of the will and scope to find Europe-wide answers to the 25-nation bloc’s economic and social problems.

“There is a profound political vacuum at the heart of the Union at the present,” said John Palmer of the European Policy Centre, a Brussels-based think-tank.

Financial markets are concerned that coordinated EU efforts to bring reform to euro-zone economies have lost momentum.

“We are not moving in the right direction,” said Michael Hume, European economist at London-based bank Lehman Brothers.

French and Dutch “No” votes to the EU’s constitution in May and June plunged the most ardent backers of European integration into a crisis of confidence that deepened when EU leaders failed in mid-year to agree on the bloc’s future long-term budget.

Conservative Angela Merkel’s failure in Germany’s Sept. 18 election to win enough backing for a platform of economic reforms has raised doubts over whether citizens of the main euro zone countries will tolerate any overhaul of social models that many economists see as financially unsustainable.

The uncertain mood is not helped by a whiff of “fin de regime” in Paris, Rome and London. France’s Jacques Chirac, Italy’s Silvio Berlusconi and even Britain’s Tony Blair face questions over their political future.

“I want to avoid paralysis in Europe,” Jose Manuel Barroso, head of the EU’s executive Commission, declared at a combative news conference last week, insisting the EU “could not run on autopilot”.

Barroso urged EU leaders to take a reality check: put the constitution on the back burner, cut EU red tape and focus on Europe’s real problems, chiefly its lack of jobs and economic growth.

However, his strategy, such as it is, has won few admirers.

Members of the EU parliament have threatened legal action against a move to scrap 68 proposed pieces of EU legislation without prior consultation, while Barroso’s failure to produce a plan to rescue the constitution is viewed by some as defeatist.

“The Commission has needlessly heeded calls to keep its head down,” said Palmer, bemoaning what he sees as a lack of direction coming from Brussels’ largest EU institution.

Others fear a further weakening of the political authority of the Commission, already undermined by a drive led by France and Germany this year to water down euro-zone fiscal austerity rules of which it was supposedly the guardian.

“That would be a shame because the Commission is at least an enthusiastic supporter of reform,” said Lehman Brothers’ Hume.

Few other players look better placed to provide answers.

Britain, holder of the EU’s rotating presidency, wants a summit in London next month to focus on economic reforms and is keen to push rules liberalising Europe’s services sector.

Yet after Germany’s vote — in which Merkel was seen to have scared voters away with pledges of more flexible hire-and-fire policies and other liberal reforms — it can expect resistance from both Berlin and Paris on anything deemed too radical.

“The EU has a France weakened by its referendum and a Germany destabilised by its parliament vote,” said Bernard Poignant, the leading French Socialist in the European Parliament. “But this couple must be solid for it to restart.”

Others play down suggestions of crisis, noting that the euro currency is still stable and that talks with membership candidate Turkey are due to start as planned on Oct. 3.

“You might be forgiven for getting the impression that Europe is falling apart at the seams, dissolving or collapsing,” European Parliament President Josep Borrell said on Tuesday.

“It’s not a matter of our project collapsing but of a need to revive it,” he added in a debate.

Early signs suggest the debate on how to ensure that revival is likely to be loud and noisy.

French conservatives, including 2007 presidential hopeful Nicolas Sarkozy, have put the case for a core group of five or six EU nations to lead future integration efforts — not a proposal likely to please the bloc’s smaller states.

Danish Prime Minister Anders Fogh Rasmussen hit back with a call on Tuesday for the EU to divert its resources away from the agricultural aid of which French farmers are major beneficiaries —a guaranteed red rag to Paris.—Reuters

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