- The Washington Times - Thursday, December 8, 2005

The European Union has suffered so many ignominies and defeats in preceding months that chronicling them may seem an exercise in schaudenfraude. Unfortunately for Europe, the EU is in the throes of yet another crisis.

With a Dec. 15-16 summit looming, members have not been able to reach a consensus on a long-term budget and talks have become increasingly contentious. At the same time, the EU is emerging as the lead spoiler of the ongoing global trade round. Those problems have been preceded by the pyrotechnics that swept France in a dramatic display of religious and social explosion; a political crisis that has left the EU’s largest economy, Germany, without clear leadership; and the failure of the EU to create a constitution.

After French voters turned down a draft EU constitution in May, officials put on a brave face. The European Union, they said, does not really need a constitution. The need for a budget, though, cannot be denied: How else can the organization function?

Britain, which is currently heading the revolving EU presidency, has put forward a 2007-13 budget, which would significantly reduce development funds for new East European members. It also proposes that Britain’s annual refund from Brussels, which was originally negotiated by then-Prime Minister Margaret Thatcher in 1984, should continue to grow. Britain has maintained that it will not surrender any of its rebate, worth $6.5 billion this year, if the EU does not commit to a cut in farm subsidies — another bitterly divisive issue.

The reactions to the British budget have been remarkably bilious. Lithuania’s former president, Vytautas Landsbergis said, “The proposal and the pressure applied on new member states bring disgust.” EU Budget Commissioner Dalia Grybauskaite was only slightly more tactful in suggesting that Britain was not acting as an impartial broker on its own rebate: “I hope we will find somebody else more honest around the table.” Swedish Prime Minister Goran Persson said the budget was brazenly pro-British.

The EU’s failure to act on the farm subsidies that Britain has been pushing for will cause it to emerge as the world’s lead trade spoiler, if it does not take swift action. During a meeting of the Group of Seven industrialized nations over the weekend, India and Brazil said they would allow access to their services and industrial markets if rich countries improved their offer on agricultural tariffs and subsidies. The offer is one that rich countries cannot in good conscience refuse. The farm subsidies of wealthy countries lower global prices and endanger the livelihoods of farmers in poor countries.

The United States has said it would lower its farm subsidies in tandem with other wealthy countries and responded almost effusively to the offer by India and Brazil. “Having key players and members of the [Group of 20] Agriculture Group such as India and Brazil state their willingness to engage and contribute to an ambitious result will help the preparations for the upcoming Hong Kong ministerial and the longer-term goal of completing these negotiations by the end of 2006,” said Christin Baker, spokeswoman for the U.S. Trade Representative.

The EU remains mired in its self-defeating position on farm payouts. EU stubbornness could cause the global trade round to fail, at a significant economic cost to itself and the global economy. In the process, the EU would also mar its global credibility and leadership. EU officials had originally floated the idea that the round would benefit mostly developing nations, so it was therefore dubbed the Doha Development Round, since it began in Doha, Qatar. If the round fails, the EU will appear glaringly insincere to the developing nations it claims to champion.

The European Union has been facing consecutive setbacks and challenges. Fundamentally, European nations are not willing to surrender the sovereignty that a unified Europe demands. Europe’s expansive social safety-net has not neutralized economic discontent and cultural clashes. The union is on the decline. Members are being forced to redefine the parameters of European greatness.

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