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U.S. VERSUS EU

Did the French Do Us a Favor?

[ NO ] The continent's usefulness is its unity

June 05, 2005|Charles Grant | Charles Grant is director of the Centre for European Reform in London.

The Dutch and French referendums have not only killed the European Union's constitutional treaty, but also, quite probably, the wave of European integration that began about 20 years ago.

The loss of the treaty is also bad news for the United States, for three reasons:

* The treaty would have made the union a more effective international partner.

The union's current arrangements for coordinating foreign policy are pitiful. The presidency changes every six months, when a new country takes on responsibility for representing the EU.

Foreign policy is inefficiently divided between Javier Solana, the foreign policy chief who sits in the Council of Ministers, and Benita Ferrero-Waldner, who runs external relations in the commission.

The constitution would have merged those two jobs into a single "foreign minister," producing a position to chair meetings of the national foreign ministers and to replace the rotating presidency.

And it would have created an EU diplomatic service so that the foreign minister would be better equipped to steer EU foreign policy.

* The Dutch and French referendums are bad economic news. The United States is concerned about slow growth in Europe.

The EU has been pressing for reforms to make its economy more competitive by reducing regulations and encouraging both entrepreneurship and research and development.

The telecom, energy and postal industries have indeed been liberalized, but labor market reform has been inadequate.

The French "non" will make economic reform harder to achieve.

President Jacques Chirac has interpreted it as a vote against Anglo-Saxon-style free-market economic reform.

His new prime minister -- Dominique de Villepin -- is a diplomat who has never shown any interest in free-market causes.

France would like to harmonize company taxes, establish higher levels of social protection across the EU and stop investment from shifting to low-tax, lightly regulated East European countries.

Although France lacks the ability to force the rest of Europe down that path, it will do its best to thwart EU-driven efforts at economic reform.

* EU enlargement will slow down or stop.

The United States has favored a wider union as a way to bring stability, economic vigor and democracy to the continent.

The carrot of EU membership forced would-be members to carry out painful political and economic reforms.

But the union's "widening" has been inextricably linked to its "deepening" -- the movement to give the organization greater unity.

France, Germany and other core countries have always feared that widening would dilute their influence in the EU and turn it into the kind of loose free-trade area that former British Prime Minister Margaret Thatcher always had wanted.

But they acceded to successive waves of enlargement (1986, 1995, 2004) because they also won agreements to deepen the organization.

Now the Dutch and French referendums have killed the idea of a constitution to deepen the organization; political elites in the core countries do not want more widening.

Further, a lesson of the two referendums is that voters are hostile not only to future enlargement but also to last year's expansion, which added eight East European states.

Sadly, the EU will now spend the next few years arguing about institutions, diverting time and energy from real problems in the real world.

If the treaty had been passed, the EU's leaders could have focused not only on economic reform and enlargement but also on strategic questions, such as those posed by the Middle East, Russia and China.

The death of the constitutional treaty will leave the EU weaker, divided and self-obsessed -- hardly an ideal partner for the United States.

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