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Why the EU faces an increasingly uncertain future

AFP, BRUSSELS
Wednesday, Dec 14, 2005, Page 9

"This crisis is not only about the EU constitution or the budget negotiations, but it runs deep into the core of Europe."

Jean-Claude Juncker, Luxembourg prime minister

Failure to strike a budget accord this week would deal a new damaging blow to the crisis-wracked EU, still reeling from the rejection of its constitution earlier this year, analysts warn.

Although most point out that it would not be immediately catastrophic -- there is still time to find a compromise on the 2007-2013 funding plans -- there is no doubt it would further damage the EU's already badly tarnished image.

British Prime Minister Tony Blair is warning bluntly that if a budget deal is not done before the start of 2007 it would leave the EU newcomer states with a vast shortfall in funds.

"It would cast a real shadow, not just over the European Union, but over the future of [EU] enlargement too," he told reporters last Friday.

Questions about the direction of the half-century-old bloc have snowballed this year since French and Dutch voters dealt spectacular "no" votes to the EU's long-gestated draft constitution.

That historic charter, the first-ever such document, was supposed to prevent decision-making gridlock in the European bloc after its "big bang" expansion from 15 to 25 members last year, with more candidate nations waiting in line.

The "what-is-the-EU-for?" debate was fueled further by EU leaders' landmark decision in October to open membership talks with Turkey, a vast, mostly Muslim country which, opinion polls show, most Europeans do not think belongs in the club.

So EU leaders will be painfully aware that another public display of acrimony would only add to the sense of a body which struggles to agree on anything any more.

"There is an existential crisis," said Guillaume Durand of the European Policy Center, describing the EU as an institution increasingly isolated from ordinary people.

Britain's Blair has come under fierce fire for refusing to surrender London's long-cherished EU budget rebate, while proposing to cut funds to the poorer EU newcomer states in central Europe.

The budget standoff is not yet an all-out crisis: Officials note that in the bloc's last long-term budget negotiations a deal was only struck in the spring before the round began -- a scenario which, if repeated, would leave the door open until next March.

"For the EU it wouldn't be a disaster. You could still have another go in early 2006," said Katinka Bayrisch of the Center for European Reform in London.

But she added: "It would be a blow for the British presidency," noting that: "Budget negotiations won't get any easier."

Britain currently holds the bloc's rotating presidency, which it will relinquish at the end of the year.

EU foreign ministers on Monday embarked on a week of meetings aimed at breaking the deadlock over the bloc's budget, with pressure on London to come up with fresh proposals to end the standoff.

Britain will unveil the budget proposals on the eve of a summit of EU leaders tomorrow and Friday, where London aims to broker a deal on the 2007-2013 budget.

But some say the EU's problems are in any case much more serious, and can be traced back much further than this year.

Last year's elections to the European Parliament, for example, saw both a record low turnout and a record high vote for openly anti-EU parties, reflecting the surge in euro-apathy and euro-skepticism.

"This crisis is not only about the EU constitution or the budget negotiations, but it runs deep into the core of Europe," Luxembourg Prime Minister Jean-Claude Juncker said in a newspaper opinion piece.

Specifically he said EU leaders had failed to appreciate the increasingly euroskeptic mood of people Europe-wide, notably when they decided to call their latest treaty a "constitution," with all the superstate fears that would evoke.

"As we yielded to the temptation to clad our laudable ideas in grand words, we failed to recognize that, rather than inspiring the Europeans, we actually scared them," he wrote.

Blair warned last Friday that the fundamental differences of view on the budget are unlikely to change under the Austrian or the Finnish EU presidencies, in the first and second halves of next year respectively.

"If we cannot get a deal now and we cannot get a deal in the next year, then in 2007 the budget under the rules is transferred to the European Parliament to deal with on an annual basis," Blair said.

"In my view that would not be a good idea," he said.
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