The French and Dutch have spoken and everyone is trying to decipher what they said. We know for certain they have strongly rejected the proposed European Union constitution, putting into jeopardy the long-standing movement towards the political and economic unification of Europe. But what is behind this rejection?
Many analysts are attributing the rejection to fear. The Wall Street Journal quotes European Commission President Jose Manuel Barroso as talking of a "federation of fear" emerging in Europe. At the surface, it appears that fear was a factor, at least in France where unemployment rates are high and the specter of "Polish plumbers" and Muslim laborers from Turkey pervaded the pre-referendum discussion. In the Netherlands, with a lower unemployment rate but slower GDP growth and employment growth, fear may have been less intense, but certainly the public is feeling more economic pressure as the government cuts back on its spending on entitlement programs.
But what really seemed to bring the French and Dutch people together was resistance to political centralization. At a time of significant economic challenge as competition intensifies on a global scale, the voting public in both countries simply did not buy the proposition that Eurocrats in Brussels would be in a better position to address their needs than their own government officials. Of course, the so-called constitution (better described as a treaty) did not help matters with voters. Variously described as a 325 page, a 470 page or a 485 page document (whatever, it's a lot of pages - a 325 page version of the Constitution is available as a 1 Mb. pdf file here), it offers little assurance that Brussels would be responsive to the European public. As one analysis summarized the proposed changes, the constitution moves powers away from elected governments to the Commission in Brussels, it shifts powers away from the European Council consisting of the elected heads of governments to unelected members of the European Commission and the European Court of Justice, it leaves the European Parliament relatively powerless and it expands significantly the power of the European Court of Justice, perhaps the most unrepresentative body of all.
Skepticism among voters about the growing power of Eurocrats in Brussels certainly does not translate into confidence in their own government officials. What is truly remarkable about the votes in both countries is that they soundly rejected the recommendations of all major political parties and leading newspapers to vote in favor of the constitution. These votes reveal the profound chasm that has emerged between the public and their own political and press elites.
The "no" votes reflect a failure of political leadership. This failure in part stems from the need for a new grand narrative. As George Parker observed in an analysis in the Financial Times on June 3, 2005:
The EU has a serious existentialist question when its citizens cannot remember why it was created, they do not appear to like what it has become and they are frightened of what it will be in the future. . . . As the union's original emotional power over its citizens - its ability to deliver postwar security and prosperity has waned - they have started to see the EU more as a bureaucratic machine.
Whatever form this new grand narrative takes, European leaders would be well-advised to reconsider the current march towards centralization and "harmonization" of regulatory policies. The answer to Europe's economic challenges is likely to lie less in the halls of the EU headquarters and more in the active experimentation and innovation in public policy in provinces and countries around Europe. This certainly seems to be one of the key drivers of economic growth both in China and India, where local and provincial governments vie to attract entrepreneurial talent and investment. Adam Segal's Digital Dragons: High Technology Enterprise in China analyzes the role that this experimentation in local policy has played in the evolution of China's high tech industry.
Kenichi Ohmae's The End of the Nation State: The Rise of Regional Economies provides a broader and more provocative perspective on the growing economic importance of what he describes as "region-states", defined as "an area (often cross-border) developed around a regional economic center with a population of a few million to 10-20 million." His words on the European Union, written ten years ago, retain their relevance:
In Europe, for nearly four decades, the continent's leaders have been trying to implement the Treaty of Rome. But they have been outrun by events. . . . just when nation states began to lose their primacy as economic actors, Brussels created a supernation state. This is ironic. It is also tragic. Of all the developed world, Europe has the richest and densest history of regionalism. . . . In a borderless world, it could draw upon and leverage that heritage with immense profit. Instead, it has purposely organized itself to stamp that heritage out.
Maybe the people of France and the Netherlands intuitively sense that their future lies in another direction. Perhaps Europe's leaders should take this opportunity to reassess their initiatives on a more fundamental level. They might even discover a new and more powerful grand narrative built upon decentralization, talent building and innovation, both in business and public policy. Certainly the public in two of the six countries that founded the original European Union have soundly rejected the current direction.
The posting asks why European people are rejecting the proposed EU constitution in referendums. It then goes on to ask the purpose of the European Union.
There is a lot of coverage being given these days to the EU, and much speculation that the project will collapse. But, if it does, this still leaves intact the overall framework that politics in Europe is failing to operate within - the global economy.
Hopefully this key problem will be discussed next month at the G8.
Posted by: IJ | June 04, 2005 at 10:13 AM