Country

European Union

Subject

The latest crisis of the European Union

Summary

The political culture that has been established based on near consensual agreement and which fundamentally influenced the evolutionary processes of European integration now elicits signs of disruption. It combined intergovernmental and federalist ambitions successfully; the mutual realisation of considerations of the member states, the viewpoints in domestic politics and of European interests; the common interests of net contributors and beneficiaries, as well as the aims of small and large member states. The weakening of this culture might result in the emasculation of integration, relegating the principles and values into the background, and enhancing the distance of the latter from political union.

The serious problems that occurred concerning the ratification of the European Constitution, accomplished as result of common efforts during the last 3 years and the failure of the European Council meeting on 17-18 June on the Financial Perspective created a crisis in the community. Nothing, but clear-cut visions on the future planned in the long-run can solve this crisis.

Moreover, these visions must be based on consensus between the member states. A compromise on the Financial Perspective might have resolved the current situation and might have rendered in-depth discussions on saving the Constitutional Treaty or the reform of the Union possible. However, it is a minor consolation for all concerned that the European Council decided on the prolongation of the time-period open for ratification of the Constitutional Treaty only one day before the negotiations started on the Financial Perspective.

Analysis

The approval of the Financial Perspective would have been an essential step in order to demonstrate the unity, among other things, to outline the main goals and priorities of the Union till the end of 2013. The Financial Perspective, besides guaranteeing the financial sources, serves as a framework for the actions of the Union, i.e. determines the content of its policies. The agreement would have been significant in light of the difficulties that emerged as regards the ratification of the Constitutional Treaty, since it could have toned down the crisis.

The failure of the European Council and first and foremost the rootcauses, which generated the situation, might result in real crisis in terms of trust, politics, institutions and the economy in the Union. The consequences and impacts of the latter are less spectacular in the short term; these would probably become ostensible in the long term and on the levels of deeper structures.

Apart from the British-French debate on the rebate and agricultural subsidies (direct payments), the focus of the clash of views entailed the reduction in the contribution of net payers. A proposal put forward by the less-developed member states for reaching a compromise on the reduction of available subsidies (direct payments), and the lack of comprehension on behalf of the latter, underpins the concerns in the new member states that European values in the Union are gradually declining.

. These values have been considered by the countries concerned during their transition over the last fifteen years for which they sacrificed a lot, as being a backbone or pillars. The phenomenon of degrading sevalues, their suppression, the lack of willingness of the member states for reaching compromises and the widespread egoism thereof, weaken the public spirit that for all intents and purposes signified the end of the divided Europe and of the feeling of exclusion of new member states.

It transpired yet again after the summit of the European Council of June 2004 - when the parties reached a political compromise on the European Constitution - that in the course of the negotiations, European interests are to be taken into account primarily by the new member states. Many emphasized before the last round of enlargement negotiations (May 2004) that the decision-making processes would not function as well as before due to the new member states, and that the Union might not be able to adhere to the principles of the Nice Treaty. The experiences gained during the first year of membership show just the opposite; in other words, the new member states did not aspire to frustrate decision-making, on the contrary, they are ready to make reasonable compromises. The story is not about the so-called "eager-beaver"-effect, but the fact that the new member states are committed to strengthening the unity of the Union and ensuring its efficacy. This commitment was primarily proved by their willingness to reach a compromise as regards the endorsement of the Constitutional Treaty. The recent crisis and uncertainty might be construed as being a signal pertaining to the gradual weakening of unity.

If the parties concerned fail to agree on the Financial Perspective during the British Presidency, to be sure, the new member states will suffer the most because of the pending impasse in respect of the debate on the community budget. Namely, the Accession Treaty signed on 16 April 2003 calls for a gradual introduction of advantages stemming from the imperatives defined in the Cohesion Funds till the end of 2006 concerning the budget estimates calculated for the new member states. As long as no agreement is reached on the Financial Perspective, the budget estimates set for 2006 will have to be taken into consideration in the course of the calculation of the budget for 2007 based on the inter-institutional agreement of 1999. This would result in a discriminative situation, i.e. the principle of equal treatment as regards the new and the old member states would not be realised in practice in 2007, three years after joining the EU. In this case, the new member states could rely on (could be entitled for) far less financial support compared to the amount based on the Financial Perspective proposed by the Luxemburg Presidency of late. In addition, the suspension of the date for reaching an agreement sets back the preparation for the allocation of resources in the Community as well as in the member states.

The difficulties arose as regards the ratification of the European Constitution and the failure to reach an agreement on the budget, further weakens the European Union on the international scene. The goals laid down at the Laeken-summit, aiming to promote international commitments and performance of the Union is hardly attainable. Moreover, the process of further enlargement of the Union might also be threatened. The situation might have the most obvious disadvantageous impacts on Turkey and Croatia, but the delay of the accession of Romania and Bulgaria - originally set for January 1 2007 - is not excluded either.

How to go on?

The Constitution Treaty - as an outcome of reasonable compromises - represents worthy response to the most important challenges and questions the European Union currently faces.

These are as follows: 1.) should Europe proceed on its own way as it has done in the last fifty years, or would it be better if the old continent abandoned her European model and at the same time, reassessed her notions on the competitiveness and development?

The Constitution Treaty would surely strengthen European values, which play a decisive role in community policies, and would stabilize the European social model by fostering the development

- that focuses on different aspects other than present economic interests - in the long run; 2.) Are the member states able to achieve common goals together or different visions are drawn up along different ruptures/dividing lines within the Union? The latter may cause the weakening and fragmentation of integration.

The Constitutional Treaty could make the functioning of the Union more flexible and at the same time, strengthen the unity of the Union and moderate the degree of fragmentation by reforming the voting system, by the amendment of the conditions of enhanced cooperation and review procedure, and by the application of new, flexible instruments respectively. 3.) Can Europe's approach towards values and the identification of problems have an impact on third countries, i.e. can the European Union play a decisive role globally? Could the creation of the post of a foreign minister in the Union and the establishment of the so-called Foreign Service mean an advance in light of the enhancement of the Union when we are talking about unified international actions and commitments?

These questions must be answered even if the Constitutional Treaty failed. In order to do so, it is essential to examine what Europe means to the citizens and what citizens expect from Europe. During the decades after the Second World War, Europe was able to meet the expectations of its citizens aiming at guaranteeing peace and increasing prosperity. Peace has prevailed in the European Union since the end of WWII. This situation is clearly tangible. However, the welfare and the standard of living are threatened seriously due to the fact that the European economy and especially the German economy have failed to produce a steady growing tendency since the middle of the 90s. Sound programmes, such as the Lisbon Strategy, failed to live up to expectations. Unemployment is a serious and chronic problem. Citizens in the old member states perceive the last enlargement of the Union (May 2004) as a threat to their economic situation, jobs and security.

An improvement in economics and growth might constitute key issues in order to recover from the crisis. If the European Union can achieve tangible results in this respect, the overall opinion on the Constitutional Treaty might change in a positive manner in 1.5 years.

Conclusion

The deepening of the recent crisis (eventual failure of the Constitutional Treaty) might inflict considerable damages on the member states as well as their citizens. It is quite difficult to imagine the progression in any direction without the Constitutional Treaty. No doubt, reforms are necessary if the Union wants to survive on the international scene. The most important goal is to restore trust between the member states as well as the member states and their citizens, to agree upon the Financial Perspective soon and to improve the living conditions of the citizens in a perceptible manner. As long as no results are achieved in these issues further deepening of the crisis may

be predicted.

It is vital for Hungary that nor the difficulties occurred in connection with the ratification of the European Constitution and the failure to reach agreement on the Financial Perspective, neither the impacts of the latter on functioning of the Union in the short and long run be conflicting with our efforts - based on wide-range consensus and backing - made in the last fifteen years. These ambitions were focused on guaranteeing the equal status of Hungary as member state, overcoming peremptorily the inevitable difficulties created by the divided Europe for more decades and bridging the gap quickly in terms of economy of the country. In order to be successful in these intentions the member states must not be blind and egoist in the recent crisis situation and the Union does not choose the fragmentation (creating new dividing lines) and co-operation with only certain players to follow.