Better Luck Next Year

• Share

Squabbling over money is hardly the best way to enter the winter holidays, but it is a fitting way for the European Union to mark the end of a genuinely bad year. As government leaders gather this week in Brussels for a bruising negotiating marathon over the budget for 2007 to 2013, they are looking into a void. "There is no constitution, no economic reform, and it looks like there is going to be no budget agreed," says Denis MacShane, Britain's Europe Minister until last May. "It is probably the unhappiest year in European construction since the end of World War II."

And the malaise goes deeper than simply gridlock in E.U. institutions. The German election this fall satisfied few; Chancellor Angela Merkel presides over a fragile grand coalition that seems unlikely to turn around the country's ailing economy anytime soon. The eruption of riots across France this fall added to a sense that Europe's leaders are out of touch with their citizens. Add to this a summer punctuated by fatal bombings in London and destructive forest fires in Spain and Portugal and 2005 really looks like an annus horribilis. A look at some of this year's lowlights, and what it will take to turn things around:

CONSTITUTION BLUES French President Jacques Chirac now must believe it was a terrible idea to submit the treaty for a new European constitution to a popular referendum. The document — intended to give the E.U. a permanent president, a foreign minister, and a clearer sense of purpose, procedure and identity — hardly seemed controversial, and few were opposed to these features. But the referendum provided a chance for millions to vote not only against Chirac, but also — belatedly — against the E.U. accession of 10 new states and the prospect of Turkey's admission. French voters vented their animosity toward their political élite, and their fears about how globalization might gnaw away at their social-welfare system. Dutch voters rammed home an even more resounding no on the constitution three days later, leaving the project effectively dead and the Union bound to slalom through a welter of existing treaties for at least another couple of years.

THE VANISHING BRITISH PRESIDENCY As Britain took over the rotating E.U. presidency last summer, Prime Minister Tony Blair vowed to chart "a new economic direction" to help Europe "meet the challenge of globalization." Little evidence of that now: especially after the July 7 bombs in London, Blair had more vital concerns than to cajole France and Germany into economic reform. To many observers, he seemed to lose interest in the E.U. as the prospects for a return on his investment faded. In June, Blair said he'd consider giving up the British rebate, secured in 1984 by then Prime Minister Margaret Thatcher to offset her country's scanty proceeds from the E.U.'s Common Agricultural Policy (cap), but only if "the larger anomaly" of big agricultural subsidies was changed, too. The French, the biggest beneficiaries and fiercest defenders of the cap, have insisted they're not open to further discussion on reducing subsidies, not now or in 2008, when Britain hopes to secure a mid-term review of spending priorities. Indeed, the biggest accomplishment Blair can claim is creating a ...

BUDGETARY BROUHAHA On paper, the E.U. budget amounts to a meager sum, roughly 1% of the gross national income of all member states — substantially less than the annual €180 billion-plus they spend, in aggregate, on defense, for instance. Yet the debate over allocating this money creates rivalries that sometimes seem to need all those armies and tanks just to keep the peace. This year, rivalries appear to have metastasized. Under the new British proposal, the 10 new member states would get a total of €14 billion less than they would under a plan put forward by Luxembourg in June. Alberto Navarro, Spanish Minister for European Affairs, saw it as evidence of "a new concept of solidarity … by which the poor give to the rich, especially to the U.K." What particularly rankled the French was that under the proposal Britain would continue to get most of its rebate. Yet the opposition in Britain accused Blair of betraying his own country by trading away as much as j8 billion of future rebates.