BRUSSELS, Oct. 24 (UPI) -- The European Union is at a critical crossroads ahead of this week's Hampton Court summit of the 25 member states, say two of Europe's leading think tanks. Britain's Center for European Reform in Britain and France's Institut Montaigne published Monday a joint plan to get the EU back on track.
"Critics have called into question some fundamental EU policies, such as the euro and the common agricultural policy. Politicians ask whether the Union is really capable of making Europe stronger and more competitive. Many voters across the EU seem to have lost faith in the European project," the joint report begins.
But equally this crisis represents an opportunity, the report says, adding the draft constitution, rejected by Dutch and French voters this summer, should not be revived. And all reform should start with two principles.
"The EU has lost its sense of purpose, and with that, its popularity. The Union has helped to bring peace across the continent and wealth for most of its inhabitants. But citizens are hardly aware of these benefits. Most EU policies directly benefit only a small number of people, such as farmers or exchange students. For many others, the EU has become a problem, rather than a solution: it appears cumbersome and opaque; it adds layers of bureaucracy; it seems to make competition for jobs fiercer by embracing low-cost countries," the report cites as the first principle.
The second principle is: "There is a notable absence of political leadership. The Franco-German alliance has become mainly defensive. No single country, or grouping, has replaced the duo as Europe's 'motor of integration.' The European Commission now rarely takes the initiative and it does not have the support of some larger member states."
The think tanks propose a moratorium on significant treaty change for five years, and focus instead on projects and policies that can deliver tangible results for its citizens and on strengthening its role in its neighborhood and the wider world. It should adopt a more flexible model that allows different member states to reform and integrate at different speeds.
This should start with the 11 countries that share the euro currency. The members of the eurozone share a common currency and a common interest rate so it would make sense for them to better coordinate their budget and reform policies. The eurozone countries should try once again to produce a better set of fiscal rules: the watered-down stability and growth pact is both weak and incomprehensible. Moreover, the eurozone countries should have a reinforced dialogue on structural reforms at the level of heads of state and government, not only finance ministers, who lack the political clout to make controversial reform decisions.
"If some West European countries wanted to work together to harmonize their tax systems, they should be able to do so, provided this does not harm the functioning of the single market. Many large companies in the EU would welcome a harmonization of tax bases (the rules that determine on what the tax is levied). A subset of EU countries could also abolish the preferential tax treatment that they grant wealthy citizens from other member-states who live within their borders," the report says.
Facing growing threats from cross-border crime and international terrorism, as illustrated by the London and Madrid bomb attacks, the EU countries must co-operate more in justice and home affairs.
"Education and innovation are the keys to building the kind of 'knowledge economy' that will allow Europe to compete in a globalize economy. Currently, Europe hosts only two of the world's top 20 universities (both in the U.K.). The EU should use money from its common budget to convert half a dozen universities into 'centers of excellence.' Only universities with well-respected research departments, an interdisciplinary approach and strong business links would be eligible. And for continued EU funding, they would have to attract a large share of foreign students and professors, forge alliances with other top universities around the world and reach certain targets on teaching and research, for example on the number of patents filed," the report says.
The EU's recent decision to distribute research funds on the basis of objective criteria and peer review is good in principle, but the new council needs to be independent from EU institutions, should have a budget of at least $2 billion a year and it should gradually take over the management of EU R&D funds from the European Commission. Moreover, the EU should finally adopt the long-overdue "community patent," to enable companies to file a single patent across 25 countries.
"To face the challenge of aging populations, EU countries should compare their policies on child care, flexible working hours, housing, immigration and figure out why some countries have higher birth rates than others. The EU should establish a 'European demographic institute' to gather information and commission research on demographic trends, as well as promoting best practice for policies to mitigate demographic decline and its impact on the EU economy," the report says.
On further enlargement, the EU should declare that it will only admit European countries if further enlargement does not threaten its own internal functioning and cohesion.
"A more effective EU foreign policy requires a stronger EU defense policy. Given how much the EU governments spend on defense -- some $180 billion a year -- they have very little military capability to show for it. They would get more value for money if they opened up protected defense markets, agreed on more common procurement of defense equipment, and co-coordinated spending on military R&D.
"Rightly or wrongly, many Europeans perceive the EU as opaque and undemocratic," the report says. "The Council of Ministers (the EU's main decision-making body) could decide to open its legislative work to public scrutiny: it should meet in public whenever it discusses or votes on new EU laws. EU governments would then no longer be able to blame 'Brussels' for measures they themselves have supported. Moreover, one-third of the EU's national parliaments, representing one-third of the EU population, should be able to hold up a 'red card' to the Commission if they consider that one of its proposals does not respect the EU principle on subsidiarity (which says that the EU should only act if it can do better than national or regional governments). The Commission would then have to withdraw the legislative proposal in question."
"National parliaments should play a larger role in EU policy-making," the report goes on to say. "In particular, the EU's national parliaments should make more efforts to discuss EU draft laws before the Council of Ministers votes on them. And each of them should be entitled to send three to five observers to the European Parliament on a rotation basis, to take part in committee work and question MEPs during plenary sessions. Also, European Commissioners should come talk to their national parliaments at least once a year to keep them informed and involve them better in the EU decision-making process."
The EU budget needs a thorough overhaul, the report says. In the medium term, the EU should reduce its farm spending, increasingly concentrate regional aid in the poorest member-states and refocus spending on innovation and education.
The members of the European Parliament should meet only in Brussels, rather than forcing them to travel between there and Strasbourg (costing the EU $200 million a year even before the 2004 enlargement). The Strasbourg parliamentary building could become the EU's first academic centre of excellence or a research centre for technology.
The EU needs to make a bigger effort to "sell" the benefits of EU integration. Every May, the Commission, together with the national governments, should organize a big media campaign on "The EU and you," to explain how the EU adds to economic prosperity, improves security, protects the environment or helps poor people around the world. Moreover, the EU should co-finance one school trip to another EU country for all children aged 10-15. And it should pay for language classes in poorer EU countries so that more and more EU citizens are able to take advantage of freedoms offered by the EU.
