Few, if any, leaders are prepared to recognise a simple truth: neither European enlargement nor monetary union, for that matter, can succeed without far more flexible labour markets.
Back in 1990, we should remember, the then West Germany absorbed the former East Germany.
So what can be learnt from that experience?
Martin Wolf, Financial Times 30/3 2005

Last week was a dismal one for the European Union. As my colleague, Wolfgang Munchau, argued in the Financial Times on Monday, the European leaders reduced the stability and growth pact to a scrap of paper, removed the liberalising thrust of the services directive and failed to focus the Lisbon agenda on priorities. Though not alone, Jacques Chirac, the French president, was the leader of these naysayers.

Behind all this lies something even more disturbing: a desperate desire for integration shorn of inconvenience. Few, if any, leaders are prepared to recognise a simple truth: neither European enlargement nor monetary union, for that matter, can succeed without far more flexible labour markets. Mr Chirac condemned such "ultra-liberalism" as the new communism. This is a breathtaking conflation of freedom with its opposite. But his response to modest reforms also shows how far Mr Chirac is from recognising today's realities.

Back in 1990, we should remember, the then West Germany absorbed the former East Germany. United Germany's population was roughly a third bigger than that of the old West Germany. The impact of last year's EU enlargement was an increase in population of only 20 per cent (see chart). Yet, in relation to the old EU of 15, these economies are at least as poor as the former East Germany was in relation to West. So what can be learnt from that experience?

Now turn to today's Europe. The EU also guarantees freedom of movement of goods, services, labour and capital, which are fundamental pillars of the EU's single market. The EU, too, has a currency union that the new members are expected to join. In principle, therefore, integration should generate strong pressures for wage and price convergence inside the enlarged EU, even though language, distance and differing qualities of institutions will be far bigger obstacles than they were in the case of Germany.

Yet, it is also clear that neither Gerhard Schröder, Germany's chancellor, nor Mr Chirac, to name but two, is willing to accept another possible outcome of integration: still greater downward pressure on real wages at home. That is why the services directive, with its proposal that service providers resident in the EU be entitled to operate freely, has been so contentious. This idea, we are now told, is "social dumping", a malign form of behaviour incompatible with the vaunted "European social model".

The recent enlargement is modest in scale. Bulgaria, Romania, the Balkans, Turkey and perhaps Ukraine are also in the wings. Inclusion of all these countries would add more than 60 per cent of the population of the EU of 15.

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Nils Lundgren om optimala valutaområden

Snabbkurs om EMU

Few have realised the most dangerous feature of EMU:
it has locked Germany into a seriously uncompetitive real exchange rate
Martin Wolf, Financial Times, March 31, 1999

Utvidgningen

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Tjänstedirektivet blev ett rött skynke och i demonstrationstågen fördöms Bolkestein som en Frankenstein
Veckans viktigaste lärdom: ledarna i det gamla EU är ännu inte mogna för det nya Europa
Rolf Gustavsson SvD 27/3 2005

Tjänstedirektivet blev ett rött skynke och i demonstrationstågen fördöms Bolkestein som en Frankenstein som hotar "den europeiska modellen". Agitationen har lett till att ingen EU-ledare vågar försvara Bolkestein, inte ens högermannen José Manuel Barroso, som i denna strategiska fråga under sin korta tid i EU-kommissionen hunnit inta alla tänkbara positioner.

Vad vittnar det om? Jo, att EU-utvidgningens hyllade historiska hjältar från toppmöten i Göteborg (2001) och Köpenhamn (2002) numera lider av eftertankens kranka blekhet. De politiska ledarna i det gamla EU har nu litet yrvaket upptäckt att östutvidgningen inte bara handlar om att EU-anpassa de nya medlemmarna. De gamla måste också anpassa sig till de nya villkoren när länderna i Öst- och Centraleuropa - helt enligt läroboken - försöker utnyttja sina konkurrensfördelar, bland annat låga kostnader.

Reaktionen avspeglar veckans viktigaste lärdom: ledarna i det gamla EU är ännu inte mogna för det nya Europa.

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Observera att Lilla Helgonet Margot Wallström står bakom kommissionens förslag till tjänstedirektiv
Rolf Englund 24/3 2005

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