BusinessCompany NewsWill the EU boat float?

Will the EU boat float?

Hopes for a European constitution were shipwrecked following emphatic 'no' votes from the Dutch and French. So what's the future for the EU?

Even by European Union standards, it has been a tumultuous few weeks.


As naturally follows from the particular nature of our collective history, European anniversaries inevitably involve celebration in some quarters and profound reflection and remorse in others. And so it was the celebration of the first anniversary of EU enlargement and the incorporation of 10 new accession countries, mostly from central and eastern Europe, on 1 May.

The celebrations appear to have focused more on what the accession countries have left behind – the direct or indirect shackles of the Soviet Union – as opposed to what they have today, a cohesive, coherent and economically optimistic EU.

This is perhaps not surprising given that few would recognise this up-beat description at the moment. The celebrations were further dampened by the indifferent attitude of the original 15 member states.

Matters were rendered more complex by a second anniversary one week later, marking 60 years since the end of the Second World War. The international focus was on saluting the greatest single contributor in sheer human terms to the end of dictatorship in western Europe – Russia.

Inevitably, though, references could not be avoided to Russia’s role in subsequently drawing an iron curtain over the east. After all, in the case of a large number of EU member states, this curtain was only removed recently.

Coming hot on the heels of these two anniversaries was a third – 9 May is Schuman Day. This recalls the declaration made in 1950 by the French foreign minister, Robert Schuman, in favour of European co-operation and integration based on peace and commercial exchange. In short, the beginnings of the EU we have today.

Now there was a time, not so long ago, when the moral and political turmoil regarding Europe’s past was sufficient to forge a consensus in favour of driving integration forward.

This was subject to the occasional quick-fix or policy opt-out for an EU member state to ensure everyone stayed on board. The whole EU vessel somehow not only stayed afloat but carried on moving. But it is clear the past no longer provides such a motor.

Those hoping to celebrate mass support for the European constitution in France had long revised their expectations before the electorate took to the polls. But the resounding nature of the ‘no’ was not anticipated. The fact that the Dutch electorate followed suit just a few days later clearly hammered home the point.

The official EU response has been to underline that the process of ratification is for all member states to undertake. As the joint European Commission, European parliament and Council of Ministers statement pointed out, the constitution has already been approved in nine EU member states, covering 49% of the EU population.

Only in Spain, however, did ratification involve actually asking the electorate directly. While not underestimating the importance of the Spanish vote, the outcomes of the French and Dutch referenda clearly carry far greater significance, on account of their historic roles as founding members and traditional EU enthusiasm.

So what does all this mean for the EU? The EU’s leaders, who will gather for a summit on 16 and 17 June, cannot act as though nothing has changed. Comments to the effect that the EU will go on regardless would only serve to fuel anti-EU sentiment. Nor can Brussels shut up shop.

The pooling of regulatory and legislative resources – from which the 450 million EU citizens accrue daily benefits – cannot simply come to a halt.

The concept of each member state re-assuming full sovereignty for its regulatory environment is fantasy. It is the case that nation states are losing the ‘full’ control they once held over their regulatory destinies. But this is because it is in their and their citizens’ economic interests to do so.

Consumers have acquired transnational tastes and customs and, in turn, business has internationalised to fulfil market demand. Who today would advocate turning back the clock on all this? What would be the repercussions in terms of what we can buy in our shops, where we can take our holidays and where we plan to retire to?

It is important, therefore, to be clear about what Brussels represents today – a standing regulatory infrastructure to enable EU member states to react to the changing economic realities, shaped by our consumer demand.

If it makes anyone feel any better about the apparent ‘centralisation’ threat posed by the EU, we should be aware that increasing parts of the ‘standing regulatory infrastructure’ are located in other capitals. Thus, the Committee of European Securities Regulators is based in Paris and the Committee of European Banking Supervisors is based in London, among others.

In other areas of regulatory initiatives – for example audit, which is currently subject of EU attention via the eighth directive – a similar ‘standing regulatory infrastructure’ is emerging. This is precisely because existing national structures are not able to deal with the new transnational realities.

They need to talk to each other and on a daily basis. There is no question, therefore, of Brussels shutting up shop. As to the question of how the EU should position itself in the overall ideological matrix of the world’s political and economic community in the future: now this is really where the rollercoaster gathers speed.

Dr Martin Manuzi is director of the ICAEW’s EU office in Brussels

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