Mon, Oct 20, 2003 - Page 9 News List

Obituries for Europe are a little premature

Leaders may be sounding the populist trumpet, but the collective ideal is now getting impetus from new members

By Will Hutton  /  THE OBSERVER , LONDON

The EU is a success. Its 25 members are discussing proposals for a new, carefully crafted constitution that will make it at once more governable and more democratic -- a pipedream even 18 months ago. Its new currency reaches new highs against the dollar. It is about to take over peacekeeping in Bosnia from Nato. It is a fast-developing, positive and progressive force.

And yet it doesn't seem like that. This is happening almost despite Europe's leaders. Britain's Euro-skepticism is so ingrained that nobody speaks up for how inspiring and noble European integration actually is. That for Europe to stand together is more important than ever, given the ambitions of the conservative revolutionaries now running the US.

But then, neither do Gerhardt Schroeder, Silvio Berlusconi or Jacques Chirac. These are times when national leaders feed their publics a populist diet of the sanctity of national sovereignty and suspicion of the foreign "other" -- and citizens are more suspicious than ever of appeals for Europe -- witness the scale of Sweden's "no" vote to the euro. If there is a virus spreading across Europe, it seems more Iain Duncan Smith's assertion last week of the mystic privileges of the national "Volk" and defense of the "country he loves" from initiatives such as the European constitution than a belief in making common cause to serve common interests and values.

Berlusconi has promised to fight for Italian interests, Schroeder has accused the EC of being "anti-German" and Paris carefully ensures it does nothing that might risk its public accusing it of putting obligations to Europe before those to France. Its row last week with the EC over casually breaking (for the fourth consecutive year) the terms of the growth and stability pact rules governing the size of budget deficits is a classic indicator of the current European mood.

I am a critic of the pact and believe it has long outlived its purpose; the notion that governments should pledge to keep their budget deficits within a strait-jacket of 3 percent of national output or suffer escalating fines whatever the wider economic circumstances struck me as absurd when the pact was first mooted -- and is even more absurd today. The big economies should not be self-defeatingly cutting spending and raising taxes, thus worsening Europe's sluggish economy, just to meet the terms of the pact. Both Romano Prodi, President of the EC, and Vice-President Pascal Lamy have spoken out against it; they are right.

Discussion please

What should be happening is that France and Germany, with budget deficits exceeding the pact's limits, should be leading an intelligent discussion about changing or abolishing it. Instead, they choose the easier course of doing just what they liked. This might undermine the European process, but what comes first is their national concern rather than constructing sensible rules with which they can comply.

The EC does not want to censure France, knowing that it is intellectually and economically wrong to do so -- and that anyway it will be ignored. On the other hand, it can hardly ignore the provisions of a key economic statute, even if it is silly and in need of reform. So when France shed a crocodile tear last Wednesday and promised to do better in future -- although carefully promising no specific action, merely offering the fig leaf of compliance -- it was gratefully received by the EC.

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