The Heritage Foundation

Backgrounder #1862 on Europe

June 20, 2005

June 20, 2005 | Backgrounder on Europe

Cataclysm: The Rejection of the European Constitution and What ItMeans for Transatlantic Relations

It has already begun. The authors behind the Euro­pean Union's latest effort at centralization, the EU Constitution, are attempting to ignore the cataclysm of its rejection by voters in the Netherlands and France. In both countries, voters turned out in large numbers, with roughly 70 percent of the French and around 63 percent of the Dutch going to the polls. The results were as overwhelming as they were stun­ning, with 62 percent of the Dutch and 55 percent of the French voting no.

This decisive rejection of the next step on the road to an ever closer European Union by two of its found­ing members signals the end of an epoch. Coupled with an almost certain British no vote if the referen­dum had not been abruptly cancelled, two of the three most important states in Europe oppose the document. As The Economist stated, "[R]ejection of the constitution signals that the dream of deeper political integration and, in the 1957 Treaty of Rome's famous phrase, 'ever closer union' is over."[1] This is to be welcomed by freedom-loving citizens on both sides of the Atlantic.

French and Dutch citizens chose to vote no for many disparate reasons. In addition, a number of overarching pan-European issues and forces contrib­uted decisively to the vote: flaws in the actual docu­ment; the economic crisis, which is discrediting the entire European elite; political sclerosis at both the national and European levels, which has left Euro­pean citizens feeling far removed from democratic control of their lives; and the one-size-fits-all phi­losophy underlying the European project, which has less and less to do with a very diverse conti­nent. All of these factors were clearly evident before the vote.

One of the advantages of a conservative view is that it is fundamentally concerned, as Edmund Burke put it, with the world as it is and not as one would have it be. Conservatives saw this result com­ing and properly faced these facts and proposed alternative and better policies for the peoples of Europe and the United States.[2] Given a result made understandable by conservative analysis, the time has come for the United States to urge conservative recommendations upon a confused European elite:

  • Economically, the United States should estab­lish a Global Free Trade Alliance (GFTA), set­ting up an attractive alternative for free-trading European states that are tired of being held back by the economically sclerotic, protection­ist euro-core.
  • Politically, unlike the European elites, the United States should make it clear both that it respects the right of Europeans to decide the ultimate form of political association that the various states wish to have with one another and that the U.S. will not penalize any state for working individually with America on an issue-by-issue and case-by-case basis, as so often happens in practice.
  • Militarily, the U.S. should urge a renewed com­mitment to NATO reform, reminding European allies that NATO remains the only politically secure possibility for a common defense.

What Is Going on in Europe?

The European people have shocked their elites and much of the left in the United States by opting for freedom, sovereignty, and a looser, more nation-based EU than the continent's tired elite could have imagined possible. This-not some false mythical unity promised by centralized Europe's backers-is the true future of the continent. The United States should move quickly to support Europeans every­where who wish to retake control of their political, military, and economic destiny.

A Seriously Flawed Document. When asked by former Italian Prime Minister Giuliano Amato, deputy president of the convention that drew up the European Constitution, what was wrong with it, the author said succinctly, "It has 448 articles to America's 7." There is little doubt that such an immense document failed in its original purpose of making the EU more transparent and explicable to the average citizen.

Beyond the length is its wording, which only a lawyer could comprehend. The constitution was purposely vague so as to hide significant differ­ences of political opinion. For example, the consti­tution commits EU members to a progressive framing of a common defense policy without explaining how it would interact with NATO, which many EU members see as the pre-eminent European security organization. It is also unclear as to how neutral EU member states-such as Ireland, Austria, and Finland-would recalibrate their defense policies to mesh with their more martial EU allies.

Many such discrepancies were to be worked out over time by the unelected European Court of Jus­tice, which would interpret the law with the goal of "ever closer union" as its mandate. This was cer­tainly a ploy for further centralization by the back door. With its opaque language obscuring real political differences and a hidden agenda for elite-driven centralization, this was not exactly a docu­ment that met the Jeffersonian ideal.

This ideal was further ignored in that, in viola­tion of earlier promises, the document would return no powers to the countries and peoples of Europe. It provides for a new European foreign minister, a new president of the European Council, and new voting weights that would make it easier for the large states to get things done over the objections of smaller states, but it is a one-way pro­cess, with power continuing to flow toward Brus­sels without any being returned. With the document's cheerleaders now attempting to rewrite history, it is vital that Americans see that the consti­tution's significant flaws were a major reason for its unpopularity.

An Economic Crisis Rightly Discrediting Europe's Elite. The numbers have been there for all to read. Only with the constitution's rejection have many on the left begun to see how the conti­nent's overly statist economic system has under­mined respect for its leaders. In France, the unemployment rate for workers under 25 years old is over 20 percent. It is little wonder that they were the largest group voting against this elite-driven project. Overall French unemployment hovers around 10.2 percent, with no concerted plan in place to limit government expenditures that account for over 50 percent of French gross domes­tic product (GDP).

Likewise, German Chancellor Gerhard Schroeder has been forced to call national elections following his party's decisive defeat in regional elections in North Rhine-Westphalia, a traditional stronghold of his Social Democratic Party (SPD). The reason for his unpopularity is simple. Earlier in his chancellor­ship, Schroeder rashly said that he should be voted from office if German unemployment reached 3.5 million. It is now near 5 million, the highest figure since the 1930s. Although millions of euros have been thrown at eastern Germany since unification, it is falling ever further behind the economic stan­dards of western Germany.

In Italy, the chairman of the Italian Central Bank recently announced that he expects Italy, already in recession, to experience no growth for the whole of 2005.[3] Italian debt, amounting to 106 percent of GDP, is also a cause for great economic concern. It is not surprising that these economic realities caused Prime Minister Silvio Berlusconi's govern­ment to be routed in spring 2005 elections, losing 12 of the 14 contested provinces. Berlusconi was forced to reconstitute his government, agreeing to de-emphasize corporate tax cuts as a price for stay­ing in power. Italy, Germany, and France are the core states of the euro zone, and their collective economic malaise does much to explain the Euro­pean public's strong dislike of the elites that are driving the EU constitution.

An Arrogant and Out-of-Touch Political Class. Still clinging to statist doctrines once fash­ionable in the pre-Margaret Thatcher era, the con­tinental elite has also increasingly lost political touch with its people on both the national and pan-European levels. For example, of the 10 states that have ratified the constitution, only Spain put the vote to a referendum. Regarding EU enlargement- the dramatic accession of 10 new members, prima­rily from Central and Eastern Europe-not one existing member called for a referendum on such a transformational question.

Even after the no votes, members of the Euro­pean elite are clearly finding it hard to shed their elitist proclivities. Immediately following the Dutch vote, Jean-Claude Juncker, prime minister of Luxembourg and current head of the rotating EU presidency, urged that France and the Netherlands would have to keep voting until they came up with the right response. Others, such as external affairs commissioner Javier Solana, have suggested that parts of the discredited treaty could be imple­mented without further voting, such as establishing an EU diplomatic corps-a step toward further integration. Like the old Bourbon kings of France after the French Revolution, the EU elites seem to have learned nothing.

This arrogance, coupled with economic incom­petence, extends to the national level. France is a case in point. In the past quarter-century, there have been only two presidents of France, Jacques Chirac and Francois Mitterand. Since Charles De Gaulle, the French Fifth Republic has tended to anoint presidents and prime ministers from only one university-L'Ecole Nationale d'Administra­tion. In the aftermath of the vote in France, Chirac appointed a new prime minister, Dominique de Villepin, who has never before held elected office. His rival Nicolas Sarkozy wryly observed, "Villepin talks about the people, but he has never traveled second class."[4]

One Size Does Not Fit All. The very disparity between the Dutch and French political cultures provides another telling reason for the constitu­tion's demise. The Dutch favor NATO and think the European Security and Defense Identity (ESDI) should complement it. The French favor ESDI as a counterbalance to NATO. The Dutch are generally pro-American, feeling that engagement with the sole superpower (as in Iraq) is the best way to pro­mote their national interests. The French yearn to establish themselves as the leaders of a countervail­ing pole to challenge American power. The Dutch, for all their European-style regulation, have a rela­tively open, free-trading economy. The French favor high levels of government expenditure, socialism, and a large dollop of protectionism.

Thus, the two renegades in Europe stand for fun­damentally different foreign, defense, and economic policies but still view the EU as a step in the wrong direction-a compromise that satisfies neither. Maybe two such different cultures do not belong in the same political construct after all. In a Europe of diversity, it would seem that the one-size-fits-all mantra of ever closer integration amounts to just another in a series of utopian efforts to defy gravity. It has hit the ground with a well-deserved thud.

The common denominator in all these instances of systemic failure is that Europeans feel powerless, whether the questions are political or economic. The European elites' challenge in the new era is to reconnect with their citizens in order to remain a relative bastion of stability. While it is primarily up to the peoples of Europe to do this, the United States can make this transition both more assured and more appealing.

Implementing a Transatlantic Agenda for a New Era in Europe

Given the decisive rejection of an overcentral­ized Europe, the United States must clearly reaffirm that the continent will remain the foundation of all future U.S. coalitions well into the 21st century and a primary American interest. In uncertain times, it is vital that the U.S. develop with Europe-collec­tively and, even more important, as countries-a transatlantic agenda that fits the political realities on the ground.

Policy #1: Economically, the United States should immediately help to establish a Global Free Trade Alliance, opening the door to genu­ine free trade with qualified European nations that are tired of acquiescing in Europe's central­ized, overly protectionist trade policy.

Conservatives have long targeted the European Union as the major impediment to completing the Doha Global Free Trade Round. The Doha Round was announced as "The Development Round," designed to help the developing world experience the benefits that free trade would bring through a marked decrease in agriculture tariffs. Here the EU, with its bloated Common Agricultural Policy (CAP), stands directly in the way of a deal. The CAP consumes over 40 percent of the current EU budget. This is a significant drain on European consumers as well as the wider world.

During the French vote, farmers-heretofore strong supporters of President Chirac-voted no in large numbers, fearful that the EU might chip away at their protectionist trough. Following the cata­clysm, it will be much harder to conclude a global deal on trade, given the power that French farmers exert over the weak Chirac government. Because the French have blocking power at the European level, waiting for movement in the Doha Round is bound to be frustrating.

The new situation in Europe offers an opportu­nity both to renew a genuine commitment to free trade and to deepen the transatlantic relation­ship. In economic matters, Europe is far from a monolith. Many individual states have chafed under the protectionist strictures of the common EU policy. In the new era, with the high tide of overcentralization ebbing and a new movement gathering to return power to the lowest sovereign level practical (in European terms, "subsidiar­ity"), a Global Free Trade Alliance is an idea whose time has come.

A GFTA would be an economic coalition of the willing, determined to liberalize trade among its members. It would augment existing bilateral, regional, and multilateral free trade negotiations. It would not be a treaty, but a legislative initiative offering free trade between the U.S. and any other country that has demonstrated a commitment to free trade and investment, minimal regulation, and property rights. Congress would authorize GFTA members' access to the U.S. market with no tariffs, quotas, or trade barriers (or at the least exception­ally low rates) on the single condition that they reciprocate this access to the U.S. and other mem­bers of the alliance.

GFTA membership should be based on objective analysis of a country's commitment to free trade in goods, services, and investment, such as that used in the Index of Economic Freedom, published annu­ally by The Heritage Foundation and The Wall Street Journal.[5] Four of the Index's 10 factors constitute a sound measure of the openness of a country's mar­kets. These four factors are related to trade policy, capital flows and foreign investment, property rights, and regulation.[6]

The Index ranks countries on a scale of 1 to 5, with 1 being the score for the most economically open states. Using the Index, countries receiving a 1 or 2 on trade policy, capital flows and foreign investment, property rights, and regulation would qualify. While only 13 countries would currently qualify for a GFTA, another 18 representing every region of the world qualify in three of the four fac­tors and thus would need only to improve their scores in the remaining factor.

Rather than having a standing secretariat, the GFTA would merely be a formalized meeting of the member countries' trade ministers, staffs, and tech­nical experts. Any specific technical working group would exist only so long as its specific task (e.g., agreeing on common accounting standards) was being addressed. Further decisions on trading ini­tiatives, such as codifying uniform standards on subsidies and capital flows, would be made on a consensual basis to further minimize barriers within the alliance.

The GFTA can change the very way that people and countries think about free trade. Further global trade liberalization would no longer require wran­gling over "concessions." Instead, free trade would be seen for what it is: a policy that gives countries that embrace it a massive economic advantage. As the advantages of the alliance became apparent, the GFTA would serve as a practical advertisement for the enduring global benefits of free trade.

For free-trading European states, a GFTA would offer a viable alternative to waiting vainly for the schizophrenic EU to favor free trade. In 2005, Den­mark, Estonia, Finland, Iceland, Ireland, Luxem­bourg, and the United Kingdom would have qualified for GFTA membership. A GFTA would associate genuine free-trading European nations with other dynamic economies around the world. For example, in 2005, Australia, Botswana, Hong Kong, New Zealand, Singapore, and the United States would also have qualified.

A critical advantage of a GFTA is that it would have no political baggage: Unlike the EU, it is not an attempt to promote any form of political union. In an increasingly loose EU construct in which more powers are likely to be returned to the coun­tries and their people, a GFTA is a powerful incen­tive for free-trading EU countries to loosen the trading ties that bind them to the largely protec­tionist trading regime.[7]

Austria, Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, Sweden, and Swit­zerland are next in line, lagging in only one crite­rion: regulatory burden. If these European countries are going to reform economically to meet the challenges of globalization, they will certainly have to deal immediately with their onerous regu­latory burdens in any case. A GFTA would offer them a reward for undergoing this rigorous reform: a very tangible and valuable economic gain for undergoing a significant change in their common statist economic culture. A GFTA could therefore help to reverse decades of euro-sclerosis, both as a salutary example of the benefits of free trade to those in Europe who doubt its necessity and as a tangible reward for countries that are politically brave enough to face the realities of globalization.

Policy #2: The United States should make it clear that no European country will be penal­ized for working with the United States on an individual, case-by-case basis, befitting the multi-speed Europe that is now emerging.

In the end, the British version of the European Union has triumphed: Enlargement has led to a widening of the union, making it more divided politically and economically between a free-market Atlanticist wing, led by the U.K. and augmented by the Scandinavian countries and the "New Europe" countries of Central and Eastern Europe, and the protectionist anti-American wing led by France and augmented by countries such as Belgium and Greece. This division means that the EU is not likely to be used at present as an anti-American force or, just as critical, to be a major benefit to the transatlantic alliance.

Yet European countries remain vital to any coa­litions of the willing that America is likely to pur­sue. There simply is not another region of the world where so many great powers-the U.K., France, Germany, Italy, Spain, and Poland-are likely to side with America on major strategic issues. For example, the U.S. is coordinating a negotiating strategy with the EU-3 (France, Ger­many, and the U.K.) over the Iran crisis. Poland and Lithuania took the lead in partnering with America during the recent political crisis in Ukraine. France has worked closely with America in supporting the liberation of Lebanon from Syr­ian domination.

Such alliances are likely to prove transitory in the new era, lasting only as long as transatlantic interests are held in common. For example, France is quite capable of working with the U.S. over Leb­anon, where the two countries have common inter­ests, while still trying to lift the European arms embargo on China, a policy that is strongly against American interests. The old-fashioned Cold War terminology of categorizing a state as an "ally" or "enemy" is likely-with a few rare exceptions such as the U.K., Australia, and Poland-to describe lit­tle of this new world. In the new era, gauging vari­ous European states' national interests will remain the key to operating effectively in a world in which most states fall somewhere in between the old notions of ally and enemy.

To make this diplomatic strategy work, the U.S. must ignore earlier blandishments to punish any country when it happens to disagree with Ameri­can policy. During the 40 percent of the time that the U.S. can work with France, it is in America's interests to do so. The President should pursue transatlantic foreign policy the same way that he deals with Congress: aware that he does not want to antagonize Members of Congress today when he may need their votes tomorrow.

The Bush Administration should make it very clear that, given the standoff that is likely to char­acterize most European efforts at making foreign policy, the U.S. welcomes working with European countries on an issue-by-issue, case-by-case basis. It is imperative that the White House find ways to reward transient allies. For example, heeding the Central and Eastern European call for improved visa status at the time of the Iraq war would have sent the welcome message that it is in our allies' practical interests to side with America.

Likewise, without rhetorical bombast, it would be helpful to make equally clear the lack of advan­tage for those who side against America. For instance, reserving contracts for those allies who sided with America in the Iraq war would send the signal that while all countries are entitled to follow any foreign policy they choose, siding against the sole remaining superpower does carry a price. As a result of such an American policy, allies would be more likely to side with the U.S. in the future, just as those siding against America would think twice next time.

Policy #3: Militarily, given the proven lack of a viable alternative, the U.S. should urge a renewed commitment to NATO reform, remind­ing European allies that NATO remains the only politically secure possibility for a common defense.

A report commissioned by the French govern­ment[8] comes to a startling conclusion, noting that the U.S. defense industry is leaving European rivals behind by investing heavily in innovative weapons technologies. The report notes that spending on military hardware in the EU is equal to only one-third of the Pentagon's equipment budget, with EU research spending amounting to only 20 percent of the American figure. At present, France and the U.K. are two of only four European countries that spend 2 percent of GDP on defense. The U.S. spends more than 3 percent. The French report concludes by calling for increased transatlantic partnerships within the defense industry.

Given this wide and growing technological dis­parity and the unbridgeable political schisms within Europe as to whether the European Security and Defense Policy (ESDP) should compete with or complement NATO, the report makes it sound as though the French are very close to throwing in the towel on trying to subvert NATO and establish a European-wide defense force as a counterweight.

The U.S. must move quickly to take advantage of this situation. The U.S. should urge an alliance-wide recommitment to NATO by again advocating initiatives like the NATO Rapid Reaction Force (NRF). The NRF tries to establish the principle of genuine sharing of military risk, which is so vital to the continued political functioning of the alliance.

The NRF, composed of European forces, is to be quickly deployable, highly lethal, and expedition­ary, involving European troops in high-end war fighting. It was agreed to at the Prague NATO sum­mit as part of a series of goals designed to modern­ize the European pillar of NATO. The U.S. must continue to press the Europeans to live up to their commitments made in Prague because NATO has become more vital than ever, especially at a time when a more fluid Europe will require NATO's con­sultation offices.

In addition, the U.S. should continue to press for NATO reform centered around the concept of increasing the alliance's flexibility through the Combined Joint Task Force (CJTF) mechanism.[9] Given the multi-speed Europe that is emerging, full and unqualified approval of specific missions may prove difficult to achieve with NATO in the new era. However, as Iraq illustrates, there are almost always some allies who will go along with any spe­cific American policy initiative. In this new era of a more diffuse, multi-speed Europe, the U.S. must reform transatlantic institutions like NATO by making them more flexible to fit the new geopolit­ical realities if they are to remain relevant.

The CJTF is one such initiative. Until recently, alliance members had only two decision-making options: Either agree en masse to take on a mission or have one or more members block the consensus required for a mission to proceed. Through the CJTF mechanism, NATO members do not have to participate actively in a specific mission if they feel that their vital interests are not at stake, but their opting out of a mission would not stop other NATO members from participating in an intervention if they so desired, as happened when several Euro­pean states chose to send troops for peacekeeping in Macedonia.

Beyond the sacrosanct Article V commitment, which holds that an attack on one alliance member is an assault on all members, the future of NATO consists of just these sorts of coalitions of the will­ing acting out of area. Given that there is now clearly no alternative to NATO, making it more flexible becomes a vital shared transatlantic interest in an era of a politically fragmented Europe. The CJTF strategy of allowing a third political deci­sion-not participating in but also not stopping a coalition of the willing from engaging in a shared mission-is critical to the development of a modus operandi for retaining NATO's institutional primacy in the new era.

Thinking Again About Europe

For American liberals and European federalists, the events of the past weeks have been a shock. This is their own fault, as they violated the first rule of foreign policy analysis, laid down by the conser­vative commentator Edmund Burke: To make the world better, one must see it as it is.

By ignoring the primacy of the nation-state sys­tem and the huge cultural, economic, sociological, military, and political diversity in Europe, the notion of ever closer union is a utopian idea whose time will never come. All Americans and Europe­ans who believe in the transatlantic relationship should be glad for this rude awakening, as it allows things to proceed in a more realistic manner. For the disappointed utopians, a period of genuine self-reflection is imperative.

But that does not let conservatives who saw this coming off the hook. European countries remain America's most important strategic allies, and pre­serving this vital relationship will require creative thinking. By working with a truly multi-speed Europe politically, economically, and militarily, and by fashioning new institutions and ways to work together-such as NATO's CJTF mecha­nism-that reflect the new geostrategic reality, the U.S. can develop closer ties with our essential friends, even in a more complicated world. It is the task of our age.

John C. Hulsman, Ph.D., is Senior Research Fel­low in European Affairs in the Douglas and Sarah Alli­son Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for Inter­national Studies, at The Heritage Foundation.



[1]"The Europe That Died," The Economist, June 2, 2005, at www.economist.com/opinion/displaystory.cfm?story_id=4033308 (June 3, 2005; subscription required).

[2]John C. Hulsman, Ph.D., and Nile Gardiner, Ph.D., "A Conservative Vision for U.S. Policy Toward Europe," Heritage Foun­dation Backgrounder No. 1803, October 4, 2004, at www.heritage.org/Research/Europe/bg1803.cfm.

[3]Tony Barber, "Fazio Sees Italy's Exports Stagnating," Financial Times, June 1, 2005.

[4]Elizabeth Bryant, "Profile: French PM Dominique de Villepin," United Press International, June 1, 2005.

[5]For the most recent edition, see Marc A. Miles, Edwin J. Feulner, and Mary Anastasia O'Grady, 2005 Index of Economic Free­dom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2005), at www.heritage.org/index.

[6]For more detail about the criteria, see John C. Hulsman, Ph.D., and Aaron Schavey, "The Global Free Trade Association: A New Trade Agenda," Heritage Foundation Backgrounder No. 1441, May 16, 2001, at www.heritage.org/research/tradeandforeignaid/ bg1441.cfm.

[7]See Martin Howe, "Could the United Kingdom Join a Global Free Trade Association?" in John C. Hulsman, The World Turned Rightside Up: A New Trading Agenda for the Age of Globalization (London: Institute for Economic Affairs, 2001).

[8]Peter Spiegel, "French to Warn EU It Lags US on Defence," Financial Times, June 6, 2005.

[9]Hulsman and Gardiner, "A Conservative Vision for U.S. Policy Toward Europe."

About the Author

John Hulsman Senior Research Fellow