Monday, 26 September 2005

How Germany twisted the knife

The whole EU project is in a mess. But beware: vested interests have too much to lose not to fight tooth and nail to keep the project in being… And when “keeping the project in being” involves pressing ever forward, there will be dirty work ahead.

Any lingering EU hopes of economic reform have been terminated by the election result

“Bliss was it in that dawn to be alive But to be young was very heaven.”

WILLIAM WORDSWORTH was of course writing about Paris in 1789, but Eurosceptics are starting to feel the same about Brussels in 2005. Being modern-day Brussels, the revolution is neither quick nor bloody, but painfully drawn out and (usually) diplomatic. In the capital of Europe, it is difficult to escape the feeling that, wherever you look, the regime is changing.

The small but increasingly bouncy band of Eurosceptics in Brussels already had springs in their steps from the EU’s constitutional crisis, its budget crisis, its economic crisis, its euro crisis, its crisis of legitimacy and its Turkey crisis. Now there’s the German crisis. This isn’t just a leadership crisis in the EU’s biggest member country. It’s far more serious: it’s a roadblock in the EU’s last remaining escape route from its troubles.

The EU’s malaise is so deep that the 25 commissioners who make up the European Commission, the driving force behind the Union, are holding an extraordinary seminar today to discuss what the point of the EU is. They have all these powers – but what should they do with them? In a month’s time, the heads of government are repeating the exercise at an informal summit at Hampton Court Palace. To loosen tongues, there will be no aides, and only one item on the agenda: “Whither the Union?”

The construction of Europe has been driven forward by the collective effort of building a succession of “big projects” – the single market, the single currency, the accession of Eastern Europe. But the latest grand projet that Brussels strived so hard for, the European constitution, has been guillotined by French and Dutch voters.

Now, whichever direction the EU tries to move in, it gets stymied. There are many who want to build a “common area of justice and security”, harmonising criminal and justice systems – but member states such as Britain have too many doubts. Many in Brussels want to build a common foreign policy, backed up by an EU seat at the UN and a European army, but there are too many national foreign and defence ministers who like having a job.

Tony Blair wants to scrap the Common Agricultural Policy and spend the EU’s trillion-euro budget promoting industries of the future rather than potatoes, but it’s no contest against Europe’s farmers. The philosophical divisions about the purpose of the EU are so great that the members can’t even agree on its seven-year budget.

>From the Brussels and London perspective, the German election did have a silver lining for the next best thing to a big project – Turkey’s membership of the EU. It will now be far harder for the Chancellor-presumptive, Angela Merkel, an avowed Turkosceptic, to block its entry into the Union. But the problem is that the vast majority of the European people in most European countries – including France, Germany and the Netherlands – is strongly opposed. The more the EU courts Turkey, the deeper its crisis of legitimacy.

The European Commission, under free-marketeer José Manuel Barroso, had identified the sclerotic economies and record unemployment as the EU’s biggest problem, and made liberalising economic reforms, including taming welfare systems, its top priority. This was the new big project. The only problem was that the Commission has virtually no powers here: all it can do is shout from the sidelines. But the electorates – damn them – keep shouting back: “No!” Whatever the French voted for in their constitutional referendum, and whatever the Germans voted for in their election, there was one thing they both voted against: scaling back their beloved social model. Germans were offered free-market reforms by Frau Merkel, but her vote slumped. In total, more people voted for left-wing anti-reform parties than pro-reform ones.

Mr Blair and Nicolas Sarkozy, tipped to be the next president of France, saw Frau Merkel’s victory as so essential to economic reform – and so essential to Europe’s future – that they both snubbed Chancellor Schröder by publicly wooing her before the election. But now, even if Frau Merkel becomes chancellor, she will have no mandate to reform Europe’s biggest and most troubled economy. That is the significance of the German crisis: it has all but killed off the EU’s hopes of significant economic reform.

Senhor Barroso has pledged to do what he can to boost reform, in particular to stop his officials pumping out business-hobbling directives, and even to start scrapping them. Promising a new era of deregulation, he said last week that they were no longer in the heroic era of Jacques Delors, issuing “a new directive every day”.

But the prospect of having to scrap one by one the laws that their predecessors put together has sent the Brussels army of idealistic Eurocrats into despair. They came here with a mission to build Europe, not knock it down.

Having healed the divisions of the Second World War, Europe’s “ever-closer union” has run into the buffers, and no one knows where to go. It is often said that the EU is like a bike: stop pedalling forward and you fall over. But, having reached a dead end, the euro-bike is not just standing still but trying to pedal backwards.

The Brussels revolution obviously will not provoke the bloodshed of the French one, but it is producing an eerie, nervous atmosphere. Tensions between member states are sparking bitter disputes. The days of certainty are over. One European diplomat confided: “There’s just a big vacuum.”

Bliss indeed, for the Eurosceptics.

By Anthony Browne
First published in THE TIMES, London, Tuesday 20/9/05