President Jacques Chirac
Brussels — These are febrile times for the European Union; the club is entering a critical period without a political compass.
Founding members such as France and the Netherlands, once solid supporters of European integration, have shaken Brussels with the negative or hostile tone of their debates on the EU constitution.
Meanwhile José Manuel Barroso, European Commission president, has virtually disappeared from the debate, to the relief of President Jacques Chirac, who regards him as the unacceptably liberal face of Brussels.
However, Europe faces big political and economic decisions in the next few months.
The most imminent is the question of the next seven-year EU budget, which is supposed to be agreed at a summit in Brussels on June 16-17, but which may now be shelved for months.
Jean-Claude Juncker, prime minister of Luxembourg, holder of the rotating EU presidency, has had to put off any serious negotiations until after the French referendum, and now has the added complication of elections in Germany this autumn.
Mr Juncker said a deal was becoming "less and less likely", adding: "I believe our presidency will end badly."
The budget debate could become an acid test of the extent to which European solidarity still exists, since it will require national sacrifices on all sides.
Germany will have to open its chequebook to help countries such as Poland and Spain while facing severe economic problems of its own; Britain will have to negotiate over its cherished budget rebate; net recipients will have to accept that they are not going to get as much money as they hoped.
The next big question relates to Turkey, whose spell in the EU waiting room is supposed to end on October 3, when it is due to start membership talks.
The German conservative opposition - which could be in power by October - is firmly opposed to Turkish membership, while Ankara's accession is a priority for countries including Britain and Italy who want Europe to look outwards.
People in Brussels expect friction over the future direction of economic policy, with France in the vanguard of those trying to defend "social Europe" from the forces of globalisation.
Supporters of Mr Barroso say he will relaunch his "jobs and growth" initiative soon after the French referendum is out of the way, starting with proposals to reform Europe's state aid rules.
The document, drafted by Neelie Kroes, the EU competition commissioner, calls for tighter rules on state aid. It says government subsidies should be submitted to a rigorous economic test.
The future of draft laws to liberalise Europe's services sector will also come back to the fore.
Tensions within the 12-member eurozone could also rise, with a debate on whether to discipline Italy over its rising budget deficit, and an increasingly tense stand-off between politicians and the European Central Bank over the level of interest rates in the single currency area.
The end result, according to the Brookings Institution, is that Europe would "inevitably focus inwards", turning its back on a bewildering and changing world.
That is precisely the kind of introspection that the constitution, with its ambitious plans to raise the EU's role in the world, was supposed to avoid.
* Britain is losing £200bn (€290bn, $365bn) a year from its membership of the EU, according to a cost analysis to be published next month by the Institute of Economic Affairs, a conservative think-tank, The Business newspaper reported yesterday.
Direct contributions to the EU budget, higher food prices due to the Common Agricultural Policy, higher costs for manufactured goods, lack of competition in services, and red tape are imposing high costs on Britain, the report claims.
source: http://news.ft.com/cms/s/dfcb9b9c-d0a7-11d9-abb8-00000e2511c8.html 29may2005
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