By Frits Bolkestein
Many people are disenchanted with the EU. That is because it has been oversold. It is not and cannot be the answer to all of their problems. Ordinary people worry about crime in the streets, the plague of drugs, their take-home pay, the service in hospitals and the level of education. These matters are decided at the national level, not in Brussels - nor should they be.
The Common Agricultural Policy and regional development funds do not respect this rule. They urgently need reform. Why should German citizens pay for the upkeep of the landscape in France? What makes the bureaucrats in Brussels believe they are better judges of French regional policy than their colleagues in Paris? All non-essential bits of these programmes should be repatriated. That would also help to slim the EU budget.
The EU is a group of states that have decided to carry out certain tasks in a federal manner, such as trade and competition policy. The federal framework applies to the European parliament, the European Court of Justice and (for 12 of the 25 member states) the European Central Bank.
But the EU will never become a federation with a unique federal government, federal army and international personality. The reason is that member states do not want that: not Britain, and not France either. Nor do the Germans want it, even though Joschka Fischer, their foreign minister, spoke some years ago of a "federation of nation states". That concept is a contradiction in terms. In using it, Mr Fischer underestimated his audience. It is an example of the eurobabble that other politicians have unfortunately emulated.
It would be risky to work towards a federal Europe since the EU might instead end up on the road to disintegration as a reaction. We may be seeing that now.
It goes without saying that the EU is of immense value to all who live in Europe. That lends great importance to the debate on what the Union ought to do. It should restrict itself to its core activities: to smooth the path for economic exchange between member states, to solve common problems and to create advantages of scale.
These activities should respect the principle of subsidiarity, which means that whatever member states can do equally well (or better) should not be undertaken by the Union. This principle has been obeyed more in theory than in practice. There are proposals to intervene in the energy efficiency of buildings; the over-indebtedness of consumers; accidents at home; the fat content of food; sexual intimidation; and working time. The EU should not be involved in these areas.
The trouble is that the institutional bias is always to propose more. The European parliament wants the EU to do everything. The European Commission displays the normal bureaucratic instinct: more tasks mean more jobs and more money. And often a member of the Council of Ministers tries to achieve through Brussels what they cannot get at home. Many politicians mistake activity for action.
The error that is steadfastly made is to think that because some cause is worthy, it must be done by Brussels. That is a non sequitur. Yet this sort of thinking is prevalent and has inevitably led to great irritation.
The temper of Europe's electorates has not been improved by the economic climate. Italy, Germany and France are going through a bad patch. Italy loses competitiveness each year. Before the euro it could compensate for this loss by devaluing from time to time. It now faces the need for adjustment in the real economy, which is painful.
Antonio Fazio, governor of Italy's central bank, protects banks against foreign takeovers. Italy's banking scene is one of the most fragmented in Europe. Prices for retail services are, for example, 20 to 30 per cent higher than in the Netherlands.
Gerhard Schr�der, German chancellor, torpedoed some years ago a directive to provide easy rules for cross-border takeovers of companies. Mr Schr�der looks on companies as castles to be defended against all comers, forgetting that the interests of shareholders and management often diverge. He says he wants a European industrial policy but saws off its most important plank. In so doing he shows himself a true corporatist, representative of old-fashioned economic thinking.
Mr Schr�der has welcomed the services directive but now spurns it. Here he joins forces with Jacques Chirac, the French president.
A single market for services promises to generate millions of jobs. The directive creates not a single right that does not already exist. The freedom to sell services across Europe is one of the basic freedoms contained in the Treaty of Rome. But that freedom is frustrated by many bureaucracies. Hence the directive is intended to deal with petty but awkward obstacles.
The French fear "social dumping". But whom does the directive concern? Not employees. So foreign workers employed by a French company are excluded. They do not supply a service. Moreover, any establishment in another member state must obey national laws and collective bargaining agreements. So must posted workers. What remains are artisans and professionals. But there will be no wave of Polish plumbers hitting France; how many of them speak French? And there will be no social dumping.
Martin Schultz, president of the European Socialist party in the European parliament at Strasbourg, has said that if the services directive were passed unchanged, it would mean the destruction of the European social model. How social is an economic model that throws up 12 per cent unemployment as in Germany, or 10 per cent as in France?
Mr Chirac likes to sneer. He told the east European newcomers to shut up about Iraq. He belittled British jobs growth. But surely the French unemployed prefer small jobs to no job at all. There was a time when the Bonn-Paris axis moved the EU forward. The present couple, Mr Schr�der and Mr Chirac, are a drag.
The true heirs of the capitalist revolution now live in Asia. We must meet their challenge. Corporatism is no answer. Nationalism is no answer. Protectionism is no answer. The only way forward is to improve our competitiveness by letting in competition and making markets more flexible.
Will the governments of Italy, Germany and France come out in favour? Probably not. "Old Europe" really does exist, desperately clinging to outmoded economic thinking.
So it is up to the Commission to sound the tocsin, for it cannot brush off the failure of the constitutional treaty as just another incident. Jos� Manuel Barroso, its president, must be clear-headed, fearless and decided. He must show himself a master in restricting the Commission's activities. He must show the member states the way to go. And he must do so now.
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