• 2004-05-06
Now that the requisite gazillion words have been pronounced and penned about the glory of the May 1 enlargement of the European Union, the time has come to return from the stratosphere and engage in more sober reflection on the future of the economic union.

Originally the union was created to facilitate fair trade in a group of war-ravaged economies, and gradually this was embellished with the noble idea of unifying the continent so as to prevent any further war. But even then the primary focus remained economic: removing trade barriers, fostering competition and improving the lives of ordinary citizens. More countries joined the community in the '70s and '80s, and then came the equivalent of the Big Bang: the Berlin Wall fell, the Warsaw Pact disintegrated and the Soviet Union collapsed. Suddenly the appetite for expansion seemed unlimited, and lo and behold, last Saturday it reached a zenith.
But in the meantime, the rest of the world wasn't twiddling its thumbs. The United States experienced an enormous economic boom in the '90s, while China, having rethought its communist ideology after the massacre of Tiananmen Square, began accepting the basic principals of capitalism. It is now one of the fastest growing economies in the world (one of the main reasons for high petrol prices, by the way) and could very well overtake the United States in two generations.
Europe's leaders, of course, were not blind to any of this, and the first signs of concern appeared at the end of last century. Finally, in March 2000, they met in Lisbon to come up with a set of priorities that would put the European Union back in the fast line of economic development. A comprehensive plan was adopted to "put the spark back among the stars," including encouraging competition, investment, innovation and better education.
It couldn't have come sooner. After spending years of energy in the '90s on the euro, agricultural policy, expansion "targets," Eurocrats forgot - or just didn't have enough time for - the core business of the union: competing on the world market. Thus one could say that the Lisbon strategy was a "return to community roots," and security aside, this is precisely how the merit of future results should be measured.
In this sense, the 10 new members bring a new dynamism to a somewhat stagnant union (indeed, their economies are growing twice as fast as older members). Unfortunately, not everyone sees it that way. German Chancellor Gerhard Schroeder recently criticized so-called "tax dumping," the practice whereby countries - usually smaller ones - get businesses to redomicile thanks to low tax rates - e.g. Estonia. But is this not part of competition? Why shouldn't a small Baltic country be allowed to lure small enterprises away from, say, tax-cumbersome states like Germany, where the government machine has become bloated beyond recognition?
The debate, of course, is crucial and revolves around the European constitution - itself an enormously awkward document that does much to centralize power in the union. Britain, which adheres to Estonia's viewpoint on tax sovereignty, has threatened to torpedo it. And as long as the constitution contradicts "the Lisbon strategy," it is right to do so. The new members should be given the chance to help revive the great European idea.