The Hindu Business Line : The European Union: A time for introspection

WHEN the public expresses its opinion through a ballot (whether at an election or a referendum), the result is usually clear although its meaning sometimes isn't. The two referendums that took place in Europe last week delivered unequivocal results: The French rejected the new Constitution by a 55/45 vote on May 29 and the Dutch 62/38 vote on June 1. Opinions are many as to why the vote went the way it did. This rejection by the two countries was sandwiched by two parliamentary approvals in Germany and Latvia. In all, nine countries have approved the Constitution. Yet, the rejection by the two countries that are not only the founders of the European Union but also members of the smaller Euro currency zone is a shocking development that has thrown the governments in the euro-zone into a tizzy.

Technically, the Constitution approval process is not dead. The procedures adopted earlier provide for the heads of state to meet in 2006 if 20 countries have approved it by then and others have not. They can revise the requirements, give those who rejected it a second vote, and so on. But that is a bureaucratic response to the problem. The political response is to understand what the people want or do not vis-à-vis the future of Europe.

So many issues are intertwined that it is not clear why the `no' vote received a majority. At one end, are the sceptics who are convinced that the rejection is a good thing, which will halt the too-rapid-a-progress towards a unified state. On the other, the EU protagonists are confused, and unsure if the `no' vote means a rejection of the concept of a common union. Let us consider the issues, for they offer valuable insights for several economic groupings around the world that nurture hopes of progressing towards a closer union as the EU did. A fundamental issue is that of nationalism versus a broader European identity and the latter would naturally take a long time to build. Countries of Europe have had a volatile history of wars, rise and fall of empires, and shifting boundaries. The stability of nations and identities emerged only from the early 20 century. Yet, it is an identity that has grown quickly and many are not sure if they want to trade it in for a pan-European identity. They appreciate some benefits such as the common passport and ease of travel that the Schengen agreement gives them, but not what came in its wake.

This issue came glaringly to the fore in the recent past with increased immigration and labour movement across Europe. France has been suffering from a high unemployment rate of close to 10 per cent and the right-wingers have been able to make an argument that jobs for Frenchmen are being taken away by cheaper labour from the newer entrants to the union (`Polish plumbers' became a metaphor in the popular press and a phrase in the campaign for a `no' vote.)

The Netherlands has been shaken by what it sees as the change in its traditional values. Dutch filmmaker Theo van Gogh, who made a film about Islam, was killed by a Muslim extremist immigrant in 2004. More recently, homosexuals who have been accepted in Dutch society for a long time were finding themselves harassed by recent Muslim immigrants who see homosexuality as being against Islam. The Dutch were beginning to wonder if they were losing control over the kind of nation they want to be.

The big expansion of the EU from 10 to 25 nations in 2004 brought in countries such as Poland and the Czech Republic. It was easier for the original members to think of themselves as being European when it only included the familiar nations of the West.

When the former Eastern Block countries joined in the pursuit of the European success, the original members began to wonder if that diluted their notions of Europe. With Bulgaria, Romania, and Turkey now waiting to join the club, the citizens are getting anxious. The economic benefits of coming together was a convincing argument but the political case for a union has not yet been made. The EU was moving along swimmingly as long as it was facilitating trade and commerce. It seemed easier to give up national control on interest rates and other macro-economic policy instruments.

Business enjoyed the ease with which labour and capital could move across borders, the elimination of Customs duties, and everything else that came with it. However, the idea of closer political union always loomed in the background from the beginning. But when the EU tried to speak with a common voice against the Iraq war, it was not a very strong or united one. The US managed to drive a wedge through the Union by referring to the older members as being `Old Europe' and not keeping with the times. There was a grain of truth to this charge for the newer members were adopting many policies and reforming their economies in ways that the older members found difficult to implement.

The Constitution was aimed at taking the economic union even closer politically. Apart from consolidating all the treaties currently in force, it proposed a new post of a Union Minister for Foreign Affairs, a European anthem, removing veto powers for the nations on policies regarding immigration and asylum, and so on. These developments were rather unnerving to a population that had just got used to stable political systems in the second half of the 20th Century.

They were not sure if they wanted to give up the unique features that still differentiated them. As the European Union grew in size and forged closer links, the bureaucracy in Brussels, the seat of the EU administration, also grew; some would say, bloated. Increasingly, national governments pointed their finger at Brussels as an explanation for unpopular measures. Solutions to problems were going to be less in their own capitals. The French wondered if the new Constitution would mean loss of the welfare state policies that they love, and whether they would be forced to accept the free-market liberalism that was now being enshrined in the Constitution.

One nation that is somewhat pleased with the difficulty faced by the EU Constitution is the UK. It was widely believed that the English would reject it when their turn came and with a reputation as a nation of `Eurosceptics' and not being a part of the Euro-zone, it would have seriously questioned how committed the English were to a unified Europe. The French and the Dutch have saved the English from the embarrassment.

Heads of state and governments would meet soon and come up with various legalistic and bureaucratic solutions of how they can proceed with the Constitution. But this is a time for all the peoples of the Union to be involved in a process of introspection. How closely do the people want the unification, how large do they want the union to be (that is, how many states), how fast should new countries be admitted, are all questions that the ruling parties need to go back and understand the feelings at the grassroots to find answers.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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