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The EU Back at Square One

Rebellion Against Brussels

Part 2: NEXT PAGE: Uncertainty in 'New Europe'

As he heard the news of the French vote, Warsaw nationalist leader Roman Giertych exclaimed: "Vive la France." Only the governing Left, discredited by scandals and divided by internal rivalries, still desires a referendum in Poland. "Why should we let the French and Dutch decide for us?" Prime Minister Marek Belka has said, in support of the Yes campaign. But it remains questionable whether Europe has found the right backer in Poland. If the unpopular governing parties do too much to support the constitution, it could be the lengthy document's kiss of death.

In Prague, the EU constitution has a powerful adversary: President Vaclav Klaus has fulminated against it from the heights of Prague Castle. In fact, he's the only European head of state who has openly opposed the constitution, which he has decried as being undemocratic and overly bureaucratic. He says it threatens to erode the right to self-determination of European states. Klaus has also compared the EU to the Soviet-era Eastern European economic bloc. After the French vote, he immediately rejoiced that the text was now a "thing of the past."

In truth, nobody knows how Europe is supposed to find its way out of this impasse. Schroeder and Chirac, who have always been prolific when it comes to launching political initiatives, now have only one thing in common: They are both lame ducks. The expanded EU, it appears, has emancipated itself from the German-Franco leadership duo. The drafting of the constitution, a process led by a Frenchman, was the first attempt to at least partially rescue the French dream of a powerful Europe that could serve as a counterweight to the United States, a superpower they had long distrusted.

With the German-French EU locomotive off-track for the first time in recent memory, Chancellor Gerhard Schroeder quickly moved on his own in a bout of hectic crisis management. He wanted to invite the heads of the other five EU founding member states to Berlin in order to shore up Chirac and Balkenende and, at the same time, show that the core states of the European integration project still shared their commitment to greater unity.

However, given the dramatic strength of the rejection of the constitution at home, Balkenende preferred to pass on the largely symbolic gesture. But Schroeder didn't want to let the ball drop. On Thursday, he flew to visit Luxembourg's prime minister Juncker, to discuss possible ways out of the crisis. And on Saturday he invited Chirac to dinner in Berlin.

"Any kind of hectic reaction is wrong," Schroeder believes. And one of his advisors says that European leaders should meet in the coming months for fireside chats to discuss the EU's future. "We will be unable to avoid a fundamental debate over the kind of Europe we want," the advisor says.

A cloudy future

Additionally, the period of reflection that the British and others have called for is also inevitable. For this debate is about more than a controversial draft constitution. The questions go to the very core of the European project.

Are the entire foundations of European unity up for debate? Will countries leave the euro and return to their national currencies, like the deutsche mark and the Dutch guilder? Will it be full-steam reverse out of Brussels and back to nation-states?

Experts are now considering, in the event the crisis heightens, scenarios in which countries could leave the EU. And, paradoxically, the very constitution rejected by the Dutch and French would have made exiting the Union possible. In a letter to his European partners, Chirac last week ensured that: "France is in no way questioning its historical role in the expansion of Europe. France is one of the Union's founding nations. It will continue to occupy its complete place there -- and I will personally guard it." But such a statement begs the question: Did Chirac ever harbor any doubts about that role?

One thing has become clear from the very different, contradictory and largely domestic political considerations that led the French and the Dutch to reject the constitution. A not insignificant group of European citizens are no longer willing to prostrate themselves before the altar of a Europe that presents them with legislative fait accomplis and which sees the democratic will of the people as a disagreeable impediment to progress or as a pro forma rubber stamp for decisions reached in the high echelons of EU bureaucracy.

For a number of years, this unease has been growing. With its non-stop flurry of regulations and decrees, Brussels has become entangled in almost every part of daily life. Almost everything is regulated, there is less and less room for regional differences and there are fewer exceptions. The people of Europe feel like they're being spoon fed, like they're being told what to do and that decisions affecting their lives are coming from a foreign entity. The major successes of Europe -- peace and open borders -- on the other hand, are taken for granted and seen as banalities.

EU politicians have been following this phenomenon for quite some time. But with the exception of cheap promises to increase democracy, not much has happened. The pledges to push as many decisions as possible down to the lowest political levels regionally, have not been followed by action.

The budget battle

People are also angered by what they see as unbridled expenditures. The EU already has trouble finding appropriate ways to spend its €100 billion annual budget. Many see much of what the EU allocates for aid and subsidy programs as wasted, sometimes even grotesque. Year after year, the European Court of Auditors issues reports showing all the things that could be done if current programs were slimmed down and made more efficient.

But measures to curb spending in Brussels are just as hard to implement as subsidy reductions are at the national level. Because of the EU's expansion in 2004, which brought onboard 10 new, mostly former Eastern Bloc countries that get back more in subsidies than they pay into the Union's coffers, the European Commission is keen on increasing the budget from its current level to €158 billion. Of course, the main recipients of this financial blessing haven't even been properly integrated yet. And standing just behind them are the next accession states -- Romania and Bulgaria -- as well as candidate states like Turkey. Each will want their own piece of the pie.

Both politically and economically, fundamental decisions must now be made about the future course of the European Union. Should the EU maintain its goal of a strong political union, as desired by Germany and France, or is the British idea of the free movement of goods, people, capital and services sufficient?

Will the EU follow the example of the Anglo-American economic model, where profits are more valued than job security? Or will there be a continental-European counter model, which secures the social system without falling back into protectionism? Up until now, those questions haven't even been answered. On the one hand, Europe dreams of becoming a super state like the US, a world power. But with each crisis that pops up, Europe also attempts to cobble together solutions piecemeal rather than tackling them head on.

A growing number of people are calling for the failed draft constitution to be broken up into smaller pieces and for sections to be implemented -- including the appointment of a president and a foreign minister or, for example, improved voting mechanisms in the European Council. Martin Schulz, who leads the Social Democratic faction in the European Parliament, has called for anything that "could foster more efficiency, greater democracy and more transparency" to come into force as quickly as possible.

Yet even efforts to implement the constitution piecemeal would require the ratification of all member states -- and that's something that most politicians are afraid to do given the current situation.

A radical "new beginning" which would go back to the foundations and rebuild the EU, as Italy's euroskeptical deputy prime minister, Giulio Tremonti, has suggested, could also bring with it incalculable dangers. These are times in which extremists and populists are achieving ever-greater success with their anti-Europe slogans, and a boundless debate could greatly damage it or even lead to the collapse of what former German Chancellor Helmut Kohl -- one of the great architects of EU unity -- called the "European House".

Competing visions

Now that they have been forced into a timeout to rethink the European Union, leaders need to figure out exactly how much the 25 member states actually have in common.

Germany and France on the one side and Britain on the other, must also determine the direction in which they wish to steer the EU. British Prime Minister Tony Blair, whose country takes the reins of the six-month rotating EU presidency in July, has decided to use the opportunity to dismantle the illusion of a European super state. He would much prefer a Europe based on a strong economy -- one based on competition, deregulation and free trade. Blair believes the rest can be better arranged through close cooperation between individual European nations, bypassing institutions in Brussels.

But in Germany and France, voters are seeking more protection and less competition. And now that Chirac has lost his ability to carry through with his European policies, Schroeder now wants to rally the troops in opposition to Blair's vision of Europe.

In Schroeder's view, any decisions on how to react in the wake of referenda on the constitution should be withheld until after all 25 EU member states have decided on the matter. When British Foreign Secretary Jack Straw said London would shelve its planned referendum earlier this week, the chancellery refused to comment directly on the development. But spokesman Bela Anda pointedly stated that any country taking over the helm of the EU presidency had a "special responsibility for processes in the EU, in this instance for the constitutional process." In other words: If Blair permanently shelves the referendum in order to avoid a political defeat, he will be held responsible for the constitution's failure.

Meanwhile, the British apparently are already attempting to dissuade the Poles, Danes and Czechs from pressing ahead with the ratification process.

One area where the Germans see an opportunity to exert more pressure on London is the debate over the EU budget between 2007 and 2013. In the chancellery, the belief is that Europe can't handle three simultaneous crises -- rejection of the constitution, fear of future EU expansion and unresolved finances. In order to avoid a collapse of the EU, at the very least, a fast solution is necessary for the budget crisis.

At the Brussels summit next week, Luxembourg's Juncker is expected to deliver a draft agreement. Under pressure from the EU's most-important paymasters -- led by Germany and the Netherlands -- Juncker is expected to propose shaving billions of euros from the proposed EU budget. However, in order to make that happen, Britain would have to give up part of the so-called "UK rebate," a discount of several billion euros negotiated by Margaret Thatcher in 1984. "We expect them to make concessions," one Schroeder source told DER SPIEGEL. "Twenty four countries are of the opinion that the British privilege needs to be changed."

But it's arguable that this threat will do little to sway Blair. The freshly re-elected prime minister may opt to wait in the hope of gaining new allies within the EU -- ones who share more neoliberal views like his own.

He could be right, too. Soon enough, he may have those potential partners in Angela Merkel, the Christian Democratic Union's candidate for the German chancellery and in France's Nicolas Sarkozy, the Chirac rival who has his eyes on Elysee Palace.