The EU in disarray

"We are in deep crisis... we have failed", said Luxembourg prime minister, Jean Claude Junker whose country had still been the EU president. After the failed summit the European commission President Manuel Barroso admitted dejectedly, "We are certainly not in good shape". Inevitably the summit collapse was followed by a spate of accusing statements by EU leaders seeking to prove that they were not personally responsible for the failure.

German chancellor Gerhard Schroeder blamed the summit debacle on the hardline stance taken by Britain which refused to accept any change in its 4.6 bn euro annual budget rebate and the Netherlands which demanded a radical cut in its contribution to EU coffers. French president Jaques Chirac was adamant that British prime minister Tony Blair's stubborn stance on the rebate was the sole reason for summit debacle. Blair in turn said he could have accepted a review of London's budget refund if France, a major beneficiary of EU farm subsidies had agreed to slash the bloc's expenditure on agriculture. Farm spending currently takes up 40 per cent of the EU budget.

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The recrimination and bad-tempered exchanges among the EU leaders are likely to continue for months. But the problems besetting the EU are not just the fault of this or that nation. A visibly dejected Junker told reporters that the summit fiasco war in fact the result of a widening philosophical gulf created among the EU's prominent members. Some nations want to build politically integrated EU while others are content with big free trading common market.

The Luxembourg Prime Minister accused Britain of ensuring a complete reorientation of the EU's economic policy by revamping the budget. For his part Britain's foreign secretary Jack Straw blamed the summit's collapse on the member countries that are trapped in the past and refuse to reform their economies. But he agreed that Europe was divided and the division was based on whether you wanted a European Union that would be able to cope with the future or one that would be "trapped in the past." According to Blair EU needed a thorough debate on where its funding should go in 21st century and called for redirecting moves towards biotechnology, high-tech and education. Blair claimed that his ideas concerned modernisation and not any ideology. If not all some nations like Netherlands and Sweden favoured Blair's ideas and demanded throughout the summit a budget revamp before they would give any spending plan a green light.

The economic divide in the EU is really between Blair's liberal reforms and deregulation and the social welfare model espoused by France and Germany. The gap between the two is unlikely to be bridged anytime soon. To make things worse the decision making in the EU has now been rendered difficult given the fact that the bloc is now comprised of diverse nations including many poorer Eastern European countries. The new Europe is, in fact, a far cry from the cohesion club of rich nations that it used to be.

Even if the bloc had survived crisis in the past, putting the EU back on its feet has become far more difficult with the ever growing numbers of EU's squabbling family members fighting long and hard to preserve their national interests. Moreover, the expanded club is no longer propelled by powerful France-Germany alliance which once pioneered European integration, brought in the euro currency, forged even last year's enlargement and helped launch EU's common foreign and security policy. Berlin-Paris axis has been diluted because of the shifting alliance of the new members. The political future of both Chirac and Schroeder is uncertain.

The repercussion of EU's setback and its shattered dream of countering the US' unilateralist policy in global politics would cast a gloom not only in Europe but across various parts of the world where people are inspired by EU model of regional cooperation for development and prosperity. The leading nations of Asia who saw emerging multilateralism in Europe's attempt to reassert its global standing will be disappointed. However, even the doomsayers will not predict EU's disappearance. The new dynamics would grow within Europe itself to put it back on track and initiate a forward move afresh. One of the silverlinings is the shifting of November 2006 deadline for constitutional ratification to 2007 by when there might be new leaders running the countries like Germany, France and the Netherlands to turn the tide of popular mood in different direction with its profound impact on the making of new Europe.

Brig ( retd) Hafiz is former DG of BIISS.