Europe, Old and New

The good, the bad and the--well, the French.

Wall Street Journal
Saturday, March 24, 2007 12:01 a.m.

Preparations for the European Union's big 50th birthday party this weekend in Berlin quickly degenerated into a petty brawl over the wording of the declaration for the occasion. Some countries wanted to push the bloc's stillborn constitution, others the euro, still others Christianity. What a fitting tribute to the EU's achievement.

We're not kidding. Such intramural trench warfare, be it over joint statements or milk quotas, is blessedly far removed from the wars that characterized the five decades before the EU's birth. Whatever its shortcomings, the EU can justly claim credit for helping bring peace and prosperity to the Continent's 490 million citizens.

The EU's seeds were planted in 1950 by the Franco-German statesman Robert Schuman. His proposal for pooling strategic resources--coal and steel--among a core of European countries would, in his words, "make it plain that any war between France and Germany becomes not only unthinkable but materially impossible." The Schuman Declaration led to the European Coal and Steel Community in 1952, which in turn paved the way for the 1957 Treaty of Rome that created a European Community, later christened "Union."

Though it won't be widely noted in Berlin this weekend, the Union would not exist without the U.S., which gave its strong backing from day one. The Marshall Plan assisted the Continent's postwar economic recovery, and an American military umbrella has since kept it safe. Whatever the trade or foreign policy disagreements, Washington hasn't wavered in its support for a stable, rich Europe.

This success has sometimes gone to European heads. Some in Brussels truly believe they have created a soft-power utopia that can talk its way out of any trouble, such as a nuclear Iran or Islamic terrorism. In reality, its peace has always depended on the will to spend blood and treasure, often American. Others, especially the French, imagine Europe as a check on the U.S. "hyperpower." Both delusions have helped keep the EU a small fry in foreign affairs. To become a more mature player, Europeans will have to pull their weight in the likes of NATO.

Fortunately, the EU's power of attraction has been effective closer to home. What begun as a club of six has grown to 27. From Greece, Spain and Portugal in the 1980s to the new members from the old Warsaw Pact, the EU has smoothed the path from authoritarianism to free-market democracy.


The bloc's economic record is mixed. This is still a Europe of wasteful farm subsidies, low growth and high unemployment, with rising protectionism and a regulatory zeal unmatched anywhere in the free world. Yet the bad ideas tend to come from bad leaders. When the Brussels bureaucracy and dreams of creating a super-state are checked by a vigilant media and national governments, the Europe construct itself can be market friendly. In the past two decades, the EU on balance has done more to open the door to greater competition than provide a back door, as Margaret Thatcher feared, for welfare policies.

Why? Most crucially, the 1957 Treaty of Rome was inspired by free-market principles. The EU is the world's largest zone for the free movement of goods, capital and people. When individual countries have tried to blunt those freedoms, Brussels has often fought back with vigor. The euro, the world's most successful currency union, has lowered interest rates, promoted internal trade by removing exchange-rate risks and--especially in the Latin countries--made it impossible for governments to inflate their way out of trouble.

Europe's diversity and growing size are also strengths. For each dysfunctional Italy, there's a booming Britain or Estonia or Denmark showing how market-friendly policies pay dividends. In a wider Europe, good ideas squeeze out the bad. The Eastern Europeans have popularized low and flat taxes. Boom-town London is home to hundreds of thousands of Poles and Frenchmen, whose departure is an electoral issue in their native countries, where politicians are realizing they must compete to keep their brightest at home.

On the edges of the Continent, a half-circle running from Spain to Ireland to Finland and down to Eastern Europe is a zone of strong economic growth. In the middle, the big powers of France, Italy and Germany cry out for deeper overhauls. As long as those economies are weak, voters will be anxious about global competition and, in turn, skeptical about opening Europe further. This explains the current unease about further EU enlargement, particularly to Turkey, and the backlash against freeing trade in services and cross-border takeovers.

The Continent's leaders could do worse than use their Berlin party this weekend to send the message that Europe's traditional openness--to trade, people, new countries--is the cornerstone of a half-century of success. These first principles from 50 years ago are still worth fighting for.