LONDON — Three major speeches have been made recently by European leaders about the future of the European Union. The first was by Joschka Fischer, the German foreign minister, the second by French President Jacques Chirac and the third by Tony Blair, the British prime minister.
An important debate on the nature of the EU in the first part of the 21st century has begun. It is likely to continue for some time before a new European vision is formulated. In the meantime, the EU faces many important and difficult issues. It is impossible in a short article to do more than set out in very general terms what the issues are.
Regulations to set up a single market in traded goods have been generally successfully applied, but a single market has not yet been achieved in services, although progress is being made, e.g., in regulation of financial services.
Many argue that the single market can only be truly achieved through the acceptance of the single currency by all EU members. Some say that, to be effective, a single currency requires not only independent central banks but much greater cooperation on fiscal policy, including taxation and pensions — in other words, moves toward political as well as economic union.
Greece is due to adopt the single currency next year, but in a recent referendum, the Danes opted to retain the Danish krone for now. This decision will hardly encourage Sweden, which has not yet opted to join European Monetary Union, to adopt the euro as its currency.
The vote has also been used by British opponents of the single currency as a reason for further delaying a referendum on the issue. The euro’s weakness has been cited by opponents as another reason why Britain — whose pound has remained strong (too strong for many British exporters) — should not join, at least at a later stage. British hesitations about adopting the euro may be defensible in present economic circumstances, but if it is maintained for too long, it will undermine British ambitions to play a leading role in the EU.
While the single currency dominates British thinking on Europe, there are other difficult issues that must be tackled if the intergovernmental conference on reforming the EU, to be held in Nice under the French presidency before the end of this year, is to be successful.
Agreement has to be reached on the number of European commissioners and how they will be chosen. The four largest EU countries (Britain, France, Germany and Italy) are ready to have only one commissioner instead of the two they have had, but the other member states, who have each had one commissioner, are reluctant to share a commissioner. If each member state, including the applicant countries in Central and Eastern Europe, is to have one commissioner, the commission will be unwieldy and ineffective. The problem will be to find an acceptable way in which commissioners can be elected/selected to represent member states.
A reduction in the size of the commission will not, however, solve the problem of reaching quicker decisions as long as each member state maintains the right to veto policies. This means that qualified majority voting will have to be extended, and the way in which votes are allocated to member states will need to be modified to make it more proportional to population. The new countries applying to join the EU will certainly demand fair representation.
The arguments may seem esoteric to Japanese readers, but they touch national sensitivities. If no acceptable solutions are found, Euro-skepticism among member states and applicant countries will rise.
A successful conference in Nice is an essential prerequisite for opening the way to Central and Eastern European countries who are negotiating to join the EU. The applicant countries — among which Poland, the Czech Republic, Hungary, Estonia and Slovenia have been given priority — face a huge task in adapting their systems and laws to comply with European law. But financial issues may be more important and difficult to resolve than legal ones.
The Common Agricultural Policy is the most expensive program run by the European Commission. If it were to be applied without modification to the new applicant countries, with their large and comparatively backward agricultural industries, the costs would put a huge strain on the EU budget.
The costs of the CAP should be cut drastically: not only because it is far too expensive for European consumers, but to make it easier to bring in applicant countries. But German and French farmers who benefit hugely from the CAP will vigorously oppose any reductions in funding of programs of interest to them. One way round this problem would be to delay the application of the CAP to applicant countries, but this would be a strong disincentive to them to make concessions in other areas in their negotiations for early entry.
The EU has been providing significant funds to help develop the more backward areas of member countries. If similar criteria were to be applied on an equal basis to the applicant countries, huge additional sums would be required. In theory, the EU could deal with this issue by reducing the amount available for regions in existing member states, but this would cause an outcry in the states most affected and possibly lead to their vetoes of the applications from Central and Eastern Europe.
Another difficult issue is posed by rules on the free movement of people within the EU. In Germany in particular, where unemployment remains high, there are fears about an influx of people from the east when the applicant countries are admitted to the union. Recognition is growing, however, that the aging population of Western European countries may make more immigration necessary, and this issue could become less acute over time.
The complexities and costs of enlargement are formidable, but there are strong political imperatives behind the proposed enlargement of the union. The EU is not a superstate and is unlikely to become one for a long time, but greater cooperation, if not integration, between members is essential and desirable.
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