ALONG WITH GROWTH, A SHIFTING IDENTITY

by Michael Rowe

SUMMARY: The questions that face Europe are not only difficult to resolve, but also awkward to define. This is because the definition depends largely on how Europe sees itself.

(The International Herald Tribune, "European Union", 8-12-1994)

Should Europe dig deeper before it spreads wider? Should it do the opposite, or both at the same time? Is Europe above all a market, or does it have a soul?

The entity now known as the European Union began with a vision; since then it has often functioned like a bad-tempered working party. "Its whole history has been made up of a succession of crises followed by bursts of progress," commented former French President Valéry Giscard d'Estaing at a recent meeting on the Ecu organized by France's financial futures exchange.

Just a state of mind?

Starting from its treaty origins in the mid-1950s, the EU has developed a set of institutions that in many ways resembles the trappings of a sovereign state. These include a directly elected parliament and a court of justice, not to mention a star-spangled flag, a hopeful anthem and a standardized passport. Thanks to EU directives, money, goods, services and workers are free to move around the EU.

Yet if a reporter were to travel around the EU asking people in what entity they lived, it is unlikely that many would answer "Europe." Moreover, only a small percentage of EU citizens opt to live permanently in another member state.

Some Europeans do not even think of themselves primarily as citizens of the nation state they inhabit. When Barcelona was advertising its Olympic games a few years ago, the city fathers must have puzzled the wider world by informing it that Barcelona was the capital of a country called Catalonia.

The rise of regions

Yearnings for regional autonomy may make it harder for the governments concerned to meet the convergence requirements of the Maastricht treaty. Yet, paradoxically, a federal Europe could also boost the power of regions in relation to national governments. Jordi Pujol's "Generalitat" in Catalonia is not the only regional authority eager for direct funding from Brussels and more scope in which to weave cross-border networks.

As the EU grapples with internal doubts and inconsistencies, it is also under pressure from two main external forces. One of these is the need to compete in world markets, which will become freer and more demanding as a result of the latest GATT round and the creation of the World Trade Organization.

The other is the defense headache posed by turbulence in Eastern Europe and war in the former Yugoslavia. The growing reluctance of the United States to continue shouldering the major part of this responsibility adds further urgency to the EU'S moves to establish a workable common security policy.

Beyond economic issues "The strategic issues that now face Europe's leaders are much vaster than the deals on economic cooperation that they were able to play around with between the

end of the Second World War and the Berlin Wall," argues Jonathan Story, professor of international economics at INSEAD, the French business institute. "If these are to be addressed, EU member states can no longer afford to indulge in their little backyard squabbles."

Economic and military pressures may both bring Europeans closer together, but each of these suggests a different sort of Europe. The first will tend to break down internal frontiers in the search for strategic business advantages and economies of scale. The second emphasizes national military capabilities and the older relationships between big nations and small ones. Is Europe capable of simultaneously waving its flag to discourage conflict while beating the drum for trade?

Michael Rowe