The European Union in crisis. A way back

EVEN by the low standards of Brussels, last week's EU summit was a bad-tempered affair. European leaders hurled epithets at each other ranging from tragic and pathetic to shameful and egotistical. The outgoing president of the European Council, Jean-Claude Juncker of Luxembourg, concluded that the EU was not in crisis: it was “in deep crisis”.

Most people agreed; yet the conclusion is worth a moment's reflection. After all, these comments came after the summit's failure, in a marathon session lasting until midnight, to settle the EU budget for 2007-13. Yet no multi-annual budget has ever been agreed until the spring before it came into force - meaning, in this case, March or April 2006. And every budget negotiation for 25 years has featured blazing Franco-British rows over the common agricultural policy (CAP) and the British budget rebate. In historical terms, the Brussels meeting was just business as usual - hardly a crisis.

However, Mr Juncker is still right: the EU faces a crisis, but in the proper sense of a turning-point. It springs not from a budget row that will surely be settled over the next year or so, but from the decisive rejection of the EU constitution by the voters of France and the Netherlands. The summit accepted that, since these two countries' no votes will stop the constitution coming into force, other countries should now be free to put ratification on hold. But it offered no response to the broader signal from disgruntled voters, of dissatisfaction with the EU's structure, remoteness and working methods.

The task of formulating such a response will now fall, ironically, to the man most widely vilified for the summit's budget failure: Britain's Tony Blair, who takes over the EU presidency from Mr Juncker. Mr Blair's stubborn defence of a rebate that will soon leave Britain as only ninth-biggest net contributor, as a share of national income, compared with fourth today, may be unappealing, though it is hardly worse than the battling for the CAP by France's Jacques Chirac. But his broader argument, that the whole budget should be re-examined, is surely right - if only because it would be a logical corollary of a re-examination of the EU's purpose.

An early priority for Mr Blair ought to be to bring the EU closer to its citizens, a purported objective of the ill-fated constitution. He could suggest useful changes even without a new treaty. One would be for the Council of Ministers, representing national governments, to meet in public when it legislates. Another would be to put flesh on the EU's much-flouted principle of subsidiarity (acting at the lowest level of government). The European Commission might be invited to send all draft legislation to national parliaments; if, say, a third disagree or think the matter should be dealt with at national level, the commission could promise to revise or withdraw it.

A second priority for Mr Blair must be to keep the EU's doors open to new members. This will require the EU's leaders to make a better fist than they have so far of persuading voters that further expansion is in their own interests. Such a case ought to be relatively easy to make for the countries of the Balkans, where a failure to provide the stability and the path to greater prosperity promised by EU membership would cost the rest of Europe dear. But it will be a lot harder in the case of Turkey, and other countries such as Ukraine.

The third big task for Mr Blair is to encourage EU countries to stay on the path of economic reform, the only long-term way to revive growth and reduce unemployment. This too will be tricky, as many voters dislike economic reform as much as they do the EU; and they particularly hate lectures from the British. Here, however, a re-examination of the budget might help. If a start could be made in cutting the CAP, or renationalising its financing, and if cuts could be made to regional-fund spending in rich countries, more could be spent on research, education and the other goals of the EU's much-mocked Lisbon Agenda of economic reform. Such extra cash could become a useful carrot to stimulate reform, or to compensate those who might lose from it.

Lonely at the top

Mr Blair will not find his EU presidency at all easy, not least because his relations with Mr Chirac, Germany's Gerhard Schroder and several other EU leaders were so poisoned by the summit rows. But he can console himself with one thought: that he may yet outlast many of his rivals. Mr Schroder is likely to lose the election in September to Angela Merkel, who is more sympathetic to Mr Blair's aims. The unpopular Mr Chirac will last longer, but surely not beyond the presidential election in the spring of 2007. Even Mr Juncker may be on the way out: he has promised to resign if his voters reject the EU constitution in their referendum on July 10th. That might be enough to persuade even the euro-friendly folk of the grand duchy to say no.

Editorial says that the EU needs to have a fundamental debate about its future.

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