Europe's politicians use the E.U. to push painful changes. Now they want it to be popular too

By JAMES L. GRAFF /CARDIFF

here was every reason to expect that last week's European Council Summit would follow the past form of these semi-annual conclaves by dissolving into ritualistic head butting among the assembled European Union government leaders. The two-day summit, held in the Welsh capital of Cardiff, was the swan song of Britain's six-month presidency, which already had its share of nationalistic confrontation in May when British Prime Minister Tony Blair awkwardly midwifed the difficult and contentious birth of the 11-country Economic and Monetary Union. The agenda this time was less pressing; perhaps for that reason conciliation and consolidation were the order of the day. But the issues discussed in Cardiff will prove as crucial to Europe's future as were the EMU debates in May.

The leaders managed to put the E.U.'s budget and the proper limits of its powers firmly on the table for future meetings. The painful issue of expansion is there too, thanks to the start in March of negotiations with the E.U.'s prospective members from Eastern Europe and Cyprus. Bringing in new members will be a gargantuan effort that will require a retooling of the Union's finances and amendments to its founding treaty. Though that has not happened, the Cardiff meeting at least nailed down commitments to make it happen in the future.

That the participants were on their best behavior was all the more surprising given the domestic political concerns some of them are facing. German Chancellor Helmut Kohl, still trailing Social Democrat Gerhard Schroder in his bid for a fifth term as the head of the E.U.'s largest member state, very much needed to bring something positive home from this conference. He had been the loser in May's spat over when and how European Central Bank president Wim Duisenberg would make way for a French successor. This time, Kohl wanted assurances that Germany would not continue as Europe's chief paymaster. Kohl also was keen to see the summit address the fact that the citizens of Europe perceive the E.U.'s institutions as capricious and remote. In a joint letter to Blair, he and French President Jacques Chirac cautioned: "It cannot be the goal of European policy to establish a European central state." They pleaded for a "strong European Union with the necessary scope for action" that at the same time manages "to preserve and foster the diversity and richness of Europe's political, cultural and regional traditions and characteristics."

Who could argue with that? Certainly not Blair. The Kohl-Chirac initiative is in line with his own efforts to improve the E.U.'s image among the British public, where a vociferously anti-Europe tabloid press keeps the irons hot over issues like the E.U.'s two-year ban on British beef exports because of BSE. But that apparent comity among three of the E.U.'s largest members belied a more troublesome difference: Who pays? Kohl traveled to Cardiff with the firm intention of setting the switches for a reduction in his country's share of the E.U.'s budget. Even though Germany pays out the same 1.26% of GDP all its partners do, its relative wealth means it doesn't get as much back: Germany pays 26.3% of the E.U.'s budget but receives only 13.6% of its outlays. Bonn contented itself for now with a mention in the Council's final communique of its view that "burden-sharing should be more equitable" and that a mechanism be created "for correcting budgetary imbalances."

The Germans are adamant, too, that their firm commitment to the Union's Eastern enlargement does not translate into a commitment to pay the lion's share of the cost. The United Kingdom is equally adamant about retaining the rebate in its payments to Brussels, secured by Margaret Thatcher in 1984, which this year amounts to $1.9 billion. The stakes will be high during what a German official promised will be "a most fascinating poker game" as the member states resolve the budgetary issues associated with enlargement by a self-imposed deadline of next March. And Germany will be the dealer, since its term as E.U. president begins in January.

Before that contest begins in earnest, the E.U. leaders promised to grapple with the issue of where the purview of institutions in Brussels ends and that of national, regional and local governments begins. "Subsidiarity"--the principle that decisions be made at the lowest possible level of government and thus as close as possible to the citizens--will be the subject of a conference of government heads in Vienna next October. There they will begin their efforts to square the circle of the E.U.'s central paradox: citizens expect the Union to be more forceful in some ways--foreign policy and crime prevention, for instance--but not to meddle in national politics while being so. Europe's national politicians continue to use the E.U. as a means to push through reforms that member governments don't have the power or courage to enact domestically, thus creating the all-purpose scapegoat of Brussels. Now they also want to make E.U. institutions popular. No one expects that to be easy.