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2005-06-11

UK isn't everything, multi-speed EU, and national reforms 

I have been reading around a bit in the current debate on what next for the EU. The topic has a tendency to provoke lofty political speculation. For people like myself who have an unhealthy inclination for such non-concreteness, it is therefore rather dangerous territory. Health advisory: Don't think about the future of the EU for more than fifteen minutes a day.

At two opposite poles of the range of different conclusions from the referendums in France and the Netherlands, there are two arguments which establish a kind of symmetry, I'll call them "EU, become like UK" and "UK, get lost".

EU, become like UK. On June 2nd, Timothy Garton Ash wrote in the Guardian
Blairism is the answer to Europe's ills - but we need someone else to deliver it
The combination of economic and social policy exercised by the Labour governments under Blair are the only successful model so far of a European response to globalisation, writes Garton Ash. The leaders of France and Germany, in contrast, are not only weak, but they also lack a working political programme to address current challenges to the European model that the French voters wanted to preserve. However, the UK is unqualified as a messenger of its correct policies, because it is abhorred or feared across the continent. Blair will have to work behind the scenes if he wants success. [On a point of local interest, Garton Ash wants Blair to wait for and make use of the Austrian EU-presidency in the first half of 2006.]

UK, get lost. On the Vienna-based 'Euroblog - a Northern perspective' written by Swedish expat Bengt O. Karlsson, you'll find the pamphlet The perfidious Albion, which discusses the prospects for a compromise over the EU budget and for a European economic policy that would heed the voice of the French population and others:
The economic policy of Europe must be overhauled and redirected towards employment creation and a fair distribution of the production gains. This will require an active financial policy and a reconquista of the abdicated political responsibility by reducing the influence of the monetarists and despite the protests of the market fundamentalists, the only winners from present conditions.
There is only one obstacle: the UK, which spoils everything with its free market sensibilities and its insistence on the British rebate.
It is strange that the UK does not take its policy to its logical consequence and leaves the Union. It would be a gain for everyone, particularly for the British.
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I believe that the importance of specifically the British position is exaggerated in both of these arguments. Garton Ash neglects the complexity of the political landscape of the EU25, where many governments support rather similar policies to the UK in many areas - think of, starting in the west, Ireland, the Netherlands, Denmark, Austria, Czech Republic, Slovenia, Slovakia, and the three Baltic states. The personal fate of national leaders such as Blair, Chirac, and Schroeder is less important than Garton Ash wants us to believe - and as an aside, the importance of the eventual replacement of Schroeder with Merkel and Chirac with Sarkozy will therefore also be more limited than is widely assumed (for example by Will Hutton in the Observer, who seems to believe that Sarkozy would make a big difference).

I agree with Karlsson that the persistent disagreements among EU countries are a key problem of the EU at this time. But I believe neither that these disagreements would disappear upon an eventual exit of the UK, nor, in fact, do I agree with those optimists on the left of the political spectrum who argue that there is a window of opportunity now to commit the whole EU to the social agenda of tax and labour law harmonisation (for example Austrian Green-politician Peter Pilz in DerStandard [DE]: "The constitution can now only be achieved through a social turn").

Nosemonkey had an intriguing post at Europhobia, 'EU Pick 'n' Mix', in which he argued for a multi-speed EU as a consequence of the referendums - I counted four different speed-levels in his taxonomy. Yet, as a commenter remarked:
the way in which the EU splits over any one issue is always slightly different, case by case. Granted, there's a pretty clear 'liberal arc' most of the time (UK, Ireland, Scandinavia, Central Europe) but it's not always the same. Eg. on the working time issue a couple of days ago Austria, Germany and Italy backed the UK, but Sweden and Finland were with France etc.
For the medium term, I'm cautiously optimistic that the EU bureaucracy, whose sophistication one should never underestimate, will come up with ways to manage multiple incongruent and temporary groupings of countries in different treaties all within its institutional boundaries, but for the short term I don't think this can be the solution to the current deadlock.

The solution for the short term will have to come from the nation states themselves: each of them will have to find its own way to a sustainable reform process that achieves adaptation to the challenges of the global economic environment, and thereby defuses the time-bomb of populist chauvinism. National traditions and social sensitivities vary widely between member countries, and no single recipe will fit all countries. Relatively liberal member states will have to be patient with the speed of reforms in the more statist member countries, or risk to alienate voters there to the political processes at EU level, as has happened in France. On the other hand, the more statist member countries will need several electoral generations of responsible politicians who abstain from scare-mongering and populism. A lesson of the last years from some such countries has been that liberalisers will meet massive popular resistance. The biggest political challenge lies exactly where socially ambitious political forces in statist countries will have to define reforms that are acceptable to their electorates, but that are still able to trigger economic growth and thereby reduce unemployment in a sustainable manner. Personally I regret that the Red-Green coalition in Germany seems to have ultimately failed this test under particularly difficult conditions, at least for now.


2 comments:

Thank you for this balanced and well argued posting (much better than a 'pamphlet' ;-) By and large I can agree with your last paragraph. But I belive that a key phrase -whether you intended it to be so or not- in your argument is the following: "many governments support rather similar policies to the UK in many areas" (my italics). The population, however, in several of those countries do not trust their governments for reasons, I believe that I tried to explain in my original posting. That's why the econonomic policy must undergo a fundamental reorientation, mainly at the national but also at the EU level. I do not belive that there are great differences between conservative and leftist governments - by and large they have all succumbed to the neo-liberal, thatcherite, ideology. That is why every election or referendum tends to become a vote of no confidence in the sitting government, irrespective of political color.

Bengt O.

Euroblog - A Northern Perspective
htrtp://www.karlsson.at/euroblog.htm
 

Bengt O., thanks. I'm an oppositional type of personality and also would like to see many things changed, but I'm not sure I'd agree to a fundamental reorientation of economic policy in the (Keynesian?) direction you seem to favour. Probably we'd have to discuss details in order to see whether we want something similar or not.

For example, yesterday I read in an analysis of the much slower economic growth in Europe than in the US that one reason was the comparative sluggishness of the European service sector, which accounts for 70% of GDPs by now. It is clear that services are highly regulated in many European countries. Deregulation looks tempting as a (liberal) tool to accelerate growth in services. What would the recipe of the opposite of neo-liberal, thatcherite ideology be on this issue? I have to say that I don't believe in deficit spending to increase demand and thereby growth, mainly because that is not sustainable.
 
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