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Europe's dirty little secret


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Europe's dirty little secret

Anatole Kaletsky

The idea of the EU as a bastion against global competition was always a self-indulgent pipedream

WHATEVER YOU think of European integration, there is something inspiring about 20 million people who, having been told what to do by their most respected politicians and after listening attentively, then do the exact opposite.

This week’s referendums in France and the Netherlands are probably the most significant event in European history since the end of the Cold War. As in Germany after its citizens found that they could smash symbolic chunks out of the Berlin Wall with impunity, everyday life in Europe may go on as before, but nothing will ever be quite the same. But don’t expect to hear much serious debate about the significance of this popular revolt against “the idea of Europe” for many months. The first reaction will be to pretend, or even to believe sincerely, that nothing much has happened.

In France, where I am this week, the referendum result has created a media cottage-industry of dismissive rationalisations. The most popular and reassuring for Europhiles is the idea that the referendum fiasco was nothing more than the latest instance of Jacques Chirac’s notorious inability to read the public mood. President Chirac’s perverse relationship with public opinion took another bizarre twist with the appointment of Dominique de Villepin as Prime Minister. M de Villepin is seen as the alter ego, almost a clone, of the President. His appointment is a direct, provocative rejection of voters’ demands for a new kind of politics.

But while M Chirac may make a perfect scapegoat for the French media, his unpopularity cannot be blamed for the vote in the Netherlands, nor for the anti-EU sentiment in Denmark, Sweden and Britain. The political establishment must therefore move on to its next excuse: people are not voting against Europe, but against globalisation and market economics.

Across Europe, even in such traditionally free-trading countries as the Netherlands, Germany and Denmark, there are widespread fears about global competition and immigration, their impact on national cultures, as well as on wages, pensions and jobs. It is tempting for Europhiles to conclude that votes against the constitution do not really represent antipathy to European integration, but rather to global integration on terms dictated by Anglo-Saxon economic liberalism and the interests of the US.

On this view, which in France has now permeated from the unreconstructed Left to much of the political and media establishment, the constitution should have offered more protection from foreign trade, financial competition, immigration and American culture. The voters would then have welcomed it with open arms.

The obvious problem with this argument is that the French Left’s dream of a protectionist, anti-American Europe has never been feasible because it would be unacceptable to Britain, the Netherlands, Scandinavia or even Germany — not to mention the new members in the east, who rightly see the US as their ultimate military protector against Russia. An anti-American Europe would require nothing less than the dissolution of today’s continent-wide EU and its reconstitution as a tiny club of geopolitically like-minded nations, which might, in the end, be reduced to France, Belgium and Luxembourg.

But there is a deeper error in the Europhiles’ excuse that the referendum results were really a popular protest against globalisation: the vision of Europe as a bastion against globalisation and Anglo-Saxon economic liberalism is not only a political fantasy, but also an economic pipedream.

Europe is more dependent on foreign trade, investment and capital flows than America. Europe’s businesses and banks are more vulnerable than America’s to currency movements and global capital flows. There is no alternative to the capitalist system of economic management which could secure the survival of Europe’s labour-intensive industries against Chinese competition or make its state pensions, welfare benefits and short working hours affordable in an era when pensioner numbers are soaring, while working populations are in decline.

The idea that closer political integration could somehow turn these self-indulgent dreams into a new European “economic model” has been the dirty little secret of the EU project. Of course the citizens of Europe would like ever-rising incomes and ever more job security, in exchange for doing less and less work and retiring earlier and earlier — and they might be tempted to vote for a constitution which guaranteed these fantasies as fundamental human rights. On closer inspection, however, the citizens have begun to realise that their politicians have been selling Europe on a false prospectus.

The single market and the merging of foreign trade policies did genuinely create prosperity, but every subsequent project of European integration not only failed to deliver the results politicians promised but also made conditions worse. The single currency has been the most egregious. In exchange for giving up the basic tenet of sovereignty — the right to mint a currency and thereby manage the national economy — the EU promised economic prosperity and full employment. Instead the single currency has condemned the eurozone to stagnation and mass unemployment.

For years politicians have made Europe a pretext for imposing unpopular policies — cuts in pensions or higher taxes — which they were too cowardly to justify in their own right. But they always promised that giving up sovereignty to Europe would somehow stave off economic reality and make their citizens better off.

After falling for such false promises for decades, voters have finally turned against both Europe and their national leaders. Politicians can no longer abuse the “idea of Europe” as an excuse for failing in their own responsibilities — to manage the economy, to set foreign policy or to balance enterprise with social protection. From now on, Europe will be judged not by rhetoric, but by results. For this, we all owe a debt of gratitude to the voters of France and the Netherlands.


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