Ultima Thule

In ancient times the northernmost region of the habitable world - hence, any distant, unknown or mysterious land.

Thursday, March 10, 2005

That's how the EU cookie starts to crumble

By Aussiegirl

Well, shucks, I hate to say I told you so -- but -- I told you so. The European Union is already starting to crumble under its own bureacratic weight, and just as I predicted, the power of the new Eastern European states is much larger than that of the faded aristos in their silk breeches spouting "la haute culture" of the Old World and looking down their long noses at those upstart Eastern Europeans. Eventually if the New European states get strong enough economically, they will make their own union, a federation which will be more of an alliance of similarly minded states. France is so over. Quel dommage!

An analysis by
By Graham Bowley published in the International Herald Tribune outlines the first cracks in the gigantic edifice of the EU.


BRUSSELS Marek Grela, Poland's ambassador to the European Union, keeps a big painting outside his office in Brussels, a modern take on the Zeus-Europa myth: a naked Europa being kidnapped by an ugly mechanical bull.
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For some in Western Europe, that is a fitting image of what the new EU countries of Central and Eastern Europe have done to the bloc since they joined in May.
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According to these critics, these new countries have taken over Europe's economic agenda, forcing a stronger focus on low taxes, liberalization and competition. They affected the cogs and gears of the Brussels institutional machine Tuesday, when several new countries opposed Germany's attempt to water down the EU's Stability and Growth Pact amid fears that it would undermine the euro.
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These young former Soviet bloc nations have also promoted a new muscularity in European foreign policy, especially toward Russia. And they have caused the EU to finally confront the question about what sort of entity it will be: a political state, or a looser body whose main preoccupation is trade and economic growth and spreading democracy around its borders.
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"Enlargement has answered the question," said Charles Grant, director of the Center for European Reform in London. "Europe is going to be a big, sprawling complicated monster."
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The accession of the 10 countries, most of them from Central and Eastern Europe, is the chief difference between the EU under Jose Manuel Barroso, the new president of the European Commission, and the Union under his predecessor, Romano Prodi.
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It has caused Barroso difficulties from the start of his term in office.
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Last autumn he put forward Rocco Buttiglione, a Roman Catholic from Italy, as justice and home affairs commissioner but then had to withdraw him because Buttiglione's conservative views on homosexuality and marriage enraged liberals in the European Parliament.
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The uprising was mainly about an assertion of independence from the commission and national governments by the deputies, whose numbers were swelled by the new accession nations. But Barroso's position was made harder by Poland's lobbying in Buttiglione's favor. In the clash of cultural values, the big Catholic country of the east proved less liberal than countries in Europe's more progressive western reaches.
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Last month, Barroso faced another rebellion after he tried to drop Spanish and Italian as working languages in some commission briefings, and promoted German alongside English and French.
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It was a way to save money, and to work more efficiently in an EU of 20 languages. It was also recognition that, along with English, German is the foreign language spoken most by the populations of the new member states. Italian and Spanish - and even French - have become more peripheral since enlargement. After a flurry of letters from the Spanish and Italian ambassadors, who detected a blow to national prestige, Barroso is now rethinking how to make the Babel of the new Europe work.
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However, the effects of enlargement go deeper than language.
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In ministerial councils, Grant said, the meetings are now so crowded that debates are often stage-managed speeches, and the real work is increasingly done in small subgroups away from the main table.
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This has led to a fracturing of the 25. In finance, the 12 euro-zone countries gather on the evening before the official meeting of all 25 finance ministers to work out a unified approach. Foreign policy, most publicly toward Iran, is being conducted by the so-called EU3: Germany, France and Britain. This threesome meets separately with Italy and Spain to discuss matters of justice and home affairs. Gerhard Schroeder, the German chancellor, and Jacques Chirac, the French president, from Europe's original elite, now dine together every few weeks in Michelin-starred restaurants along the French-German border, a relatively new move that is partly a defensive reaction against enlargement.
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The new EU countries might be expected to feel excluded by these new arrangements. But this Europe of shifting subgroups and alliances is one favored by the new nations. Having only recently thrown off the communist yoke, they desire integration in some areas but fiercely guard their independence in many others.
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"As a country that regained its independence 15 years ago we are cautious about reforms that lead to more federalism," said Eduards Stiprais, Latvia's ambassador to the EU. "We want to improve the existing structures without really moving to that. I don't believe in the United States of Europe."
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The new countries have tried to increase the EU's focus toward external policy. In particular, they want to use the EU as a tool to stabilize democracy in nations on their eastern borders, and even bring them quickly into the EU's embrace by offering them full membership.
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This was clear during the disputed presidential elections last year in Ukraine, when Poland and Lithuania engineered robust European backing - against reservations by countries like France - for Viktor Yushchenko, Ukraine's new reformist and Western-minded president.
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But perhaps the biggest impact of the new countries is in business. After the stagnation of communism, they want to catch up with the West and have introduced aggressively liberal market reforms, including lower taxes to lure foreign investment and promote growth. At times, their models are more China and India than Germany or France. Estonia, Lithuania and Slovakia have each introduced a uniform low tax rate on income or profit levels.
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Slovakia has a 19 percent flat tax on income, capital and consumption. Hungary plans a reform that would extend its 18 percent income tax rate to more income levels, according to Tibor Draskovics, the minister of finance.
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The result is that many of the Eastern nations are now growing more than twice as fast as their wealthier but more sclerotic and higher taxing Western neighbors. "The strong element that the people of Central Europe bring to the EU is that they are hungry for success," Jean Lemierre, president of the European Bank for Reconstruction and Development, said in an interview.
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This pro-business message is one that ambassadors like Grela have brought into the councils of Brussels. But they are also causing a backlash by the big Western nations, which have become more nervous and defensive since enlargement. Austria has cut tax rates to compete. But France warned the new countries last year that they must raise taxes and stop luring away French investment and jobs.
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Last week, this fear of the Eastern hordes led Germany and France to derail a proposed new rule, the European Commission's services directive. That law would have allowed service businesses, including companies from the lower-cost nations, to operate all over Europe but still be accountable to their own national regulations.
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Its supporters maintained that it could have transformed Europe. Services account for nearly three-quarters of the EU's gross domestic product, according to the commission.
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But France and Germany halted the law because they did not want cheap, less regulated labor from countries like Poland undercutting their businesses.
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The U-turn was a big setback for Barroso, who had put the extension of the single market to services at the center of his new focus on growth and jobs. This may be the legacy of accession for the EU and for Barroso. As the first commission president to deal with the full consequences of the latest expansion of the EU, Barroso's job was to help the Union to digest its 10 new members and get all 25 working together.
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But in the great push and pull of forces in the European project, enlargement is adding to those pulling the EU apart, just like the rampaging bull in Grela's painting. And this is true especially for Germany and France, which originally were the strongest proponents of continental integration.

1 Comments:

At 11:51 AM, Anonymous Pindar said...

Aussiegirl, the EU is beginning more and more to look like a bad vaudeville routine. What we need now is a giant hook to pull all of them offstage and let the real performers get on with world business.

 

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