Embattled Europe

EUROPE USED TO BE SPLIT BY rivalries between monarchs. Then came the bloodthirsty military dictators. Nowadays European battle lines are drawn mostly over competing economic theories, which might lead to a few flaming Renaults in Parisian suburbs and some political turmoil but on balance represents progress.

That’s about the best spin to put on European affairs in 2005, when the phrase “European Union” was more than ever a contradiction in terms. Europe is fighting over its future economic course. In one corner, led by Britain, are the advocates of free-market capitalism; in the other, led by France and Germany, are those who favor protectionism and a generous social welfare system.

It may seem an unfair fight, given that nations in the latter camp far outnumber those in the former, but Britain enjoys unusual clout because it is far more prosperous, with a strong economy and unemployment below 5% (in France, the jobless rate is about twice as high).

The conclusions one could draw about which economic theory works better might seem obvious, but they aren’t to most Europeans. The conflict played a role in many of the region’s biggest events of the year.

In early summer, voters in France and the Netherlands turned down the EU constitution, a tortuous, 448-article document that was seen by some as a capitulation to Anglo-Saxon capitalism, while others saw it as a continuation of the stalled status quo.


In September, Germany elected free-market proponent Angela Merkel as chancellor, but her margin of victory was so slim that the opposition party still dominates the government ministries. Then came this fall’s riots in France, blamed by some on French chauvinism toward Muslim immigrants but in reality more a result of soaring unemployment caused by government regulations that discourage job creation.

The result of all this is largely paralysis. French President Jacques Chirac lost so much credibility after the constitution’s defeat and the riots that he is essentially a lame duck. Merkel’s hands will likely be tied by a still-potent opposition. Even British Prime Minister Tony Blair, who by all rights should be seen as Europe’s most powerful leader, is showing signs of weakness; in November, Parliament turned down one of his key anti-terrorism proposals.

There is some hope for 2006.

Finland takes over the EU presidency in July, and this month its foreign minister made encouraging noises about renewing the moribund debate over the constitution. Also this month, Blair reached a compromise over the EU budget that asked members to reexamine their spending policies -- particularly the French-backed agricultural subsidies that scuttled a free-trade agreement by the World Trade Organization this year.

In general, though, with Europe consumed by internal bickering, the U.S. stands as the world’s sole superpower. That’s not necessarily a good thing. America needs a strong, unified Europe as an ally, particularly amid the rising power and economic clout of undemocratic nations such as China.