C Gopinath

What makes EU-type arrangements tick?

C.GOPINATH | Updated on December 02, 2012 Published on December 02, 2012

The European Union was not able to get its budget passed by its members. A two-day summit of the leaders of the 27 member countries ended last week without agreement, because countries who are net contributors to the finances are tired of those they consider free loaders. And the free loaders, of course, feel they are not to blame.

Countries like the UK and Germany who are facing budget pressures at home, grumble about contributing to a community some of whose members are seen as unwilling to make enough sacrifices in spending and farm subsidies.

And countries like Greece and Spain that are in economic difficulties with high debt and deficits feel pushed against the wall and unable to sacrifice more.

These are times that test the vary basis for the collaboration that has been built over the years. Observers who wondered about a Grexit, or exit by Greece that is in deep trouble, are now wondering about a Brixit, or exit by the British, who seem to have had enough about others’ troubles.

The Eurosceptics in the UK are now pushing for less cooperation and would even like a referendum to exit the EU or at least re-negotiate British membership.

That would indeed be a pity for the rest of the world that sees the EU as a shining example of how mature countries can negotiate and compromise for mutual benefit, overcoming centuries-old history of strife.

Net benefit

We should remember that the EU has come this far not because there has always been unanimity among the members, but because they have seen that the benefits in achieving common goals were greater than the price to be paid. Each time they took two steps forward, domestic apprehensions caused them to take one step backward, and that is ok.

And, the marvel of the EU is that even amidst the talk of countries exiting, they have scheduled a meeting on December 13 to talk about a banking-union for the Euro Zone countries, i.e., to have the European Central Bank as a single supervisor.

Many countries around the world have become adept at negotiating trade treaties. The WTO reports that there are over 350 regional trading agreements, but few have progressed beyond talking about economic activity and reducing barriers to trade.

The sticking point, of course, is the difficulty in giving up some sovereignty. One group that seems more ambitious than most is the Economic Community of West African States (Ecowas).

W. African equivalent

Ecowas, which began in 1975, is a regional group of 15 countries with a mission to promote ‘economic integration’ in all areas. More recently, with increasing confidence among some of the member states who have had successful democratic transitions in governance (like Senegal, Liberia and Nigeria), and with economic successes in others (like Ghana), the group wants to grow beyond trade. They have converted their Secretariat into a Commission, and are in the process of restructuring a Community Parliament and a Community Court of Justice. They are developing a strategic plan for their region, have expanded educational collaboration, have a common card for insurance claims, and send missions to observe general elections among their members.

Now, Ecowas has decided to send a military force contributed by the members to try and dislodge the rebels bothering a member, Mali. This comes with the approval of the UN Security Council and is a welcome sign that the region wants to help solve its own problems.

Mali’s problems took a turn for the worse in March when there was a coup. Some say that the coup was in response to weak governmental action against Tuareg rebels who had been seeking independence, but the confusion about who was in charge in the capital gave the rebels a window of opportunity. They took control of the north of the country. Meanwhile, Islamists, riding with the rebels, moved in and instituted their own government. There is little sympathy for fundamentalist movements in this region and the region’s leaders are worried that the disputed area may become a base for terrorist activity. Hence, Ecowas has become the launch pad to fix a common concern.

Just this year, the Norwegians reminded us that the EU is special by awarding it the Nobel Peace Prize for 2012. The committee saw it as a message to the European public to realise the importance of what has been achieved. Ironically, this award is from Norway, a country that is not a member of the EU and twice rejected any plans to join.

Although the current problems in the EU are severe, the disaffections being expressed can be seen as further evidence of the kind of introspection needed so they reflect on why they joined in the first place. There was a similar introspection a few years ago when the attempt to have a constitution was rebuffed by ‘no’ votes in a couple of countries and they all went back to the drawing board. EU’s collaboration process sends a message far beyond Europe.

The members of other hopefuls like Ecowas should closely watch and learn from EU’s turmoil. Solving the problem in Mali will be a good testing ground. Getting nations to collaborate is no easy task.

(The author is professor of International Business and Strategic Management at Suffolk University, Boston, US. >blfeedback@thehindu.co.in)

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Published on December 02, 2012
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