Crisis agenda looms as confused EU returns from break

EU: Its constitution, budgets, service market deregulation and even Turkey - these issues all point to EU schisms, writes Honor…

EU: Its constitution, budgets, service market deregulation and even Turkey - these issues all point to EU schisms, writes Honor Mahony in Brussels

Even with the benefit of the long summer break, it is clear the problems facing the European Union have not become any easier.

Officially back to work this week, it has no plan how to solve its constitutional crisis and no deal on its budget from 2007. It faces a dispute over Turkish EU membership and is stymied by a lack of credible leaders. But perhaps the most basic problem facing the EU is an existential one - it is no longer clear what it stands for and where it is heading.

In past days, France and Germany could be relied on to work in tandem and Europe-as-a-peace-project was a tangible value in the aftermath of the cold war.

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Now, the two supposed engines of the EU are often out of kilter. Successive opinion polls show prosperity and jobs come highest on the list of citizens' concerns and they expect the EU to deliver. But this is where it cannot deliver as progress depends on action at national level.

And here governments differ strongly in their approaches to jobs and social welfare - neatly illustrated by the fact there are almost as many definitions of the European Social Model as days of the week.

What this social model means has become such a defining question for the EU in recent months that leaders are to devote a whole summit to it in October.

And while it is tempting to say it sounds like a typical "talking-shop" exercise, the answer to what it means underlies many of the tough issues facing the bloc.

It is directly relevant to the debate surrounding a law to open the EU market in services, seen as one of the main reasons why French voters said No to the European constitution in May.

For some, the law epitomises a rampaging Anglo-Saxon liberalism that would result in a driving down of wages and social security in the EU. For others, including the commission and several of the new member states, it is a way to create jobs.

Due for a first reading in the European Parliament in a few weeks, the kind of law that emerges in the end will be a strong reflection of how the EU views itself.

A more practical problem facing the EU leaders now is the lack of a budget deal. In June, member states fell out over how to finance the bloc between 2007 and 2013. On the one side was France arguing for the status quo. On the other was Britain, saying more money should be spent making the EU grow economically.

The longer it takes to reach a deal, the more likely EU aid will be delayed, with the poorer new member states being worst affected by the hold-up. Britain, distracted by its domestic problems, appears inclined to leave the issue until 2006, when it will fall to the next EU presidency, Austria, to tackle it.

The EU constitution is another area where there is no obvious answer to hand. The legal solution, as all 25 member states have to ratify the document for it to come into force, would be to put it to Dutch and French voters again. But this is, for the time being, politically unworkable.

A change of leaders in both counties, not due until at least 2007, would perhaps make the idea feasible but this means the EU will remain stuck in its constitutional impasse for the next two years.

One way of camouflaging EU problems would be inspirational leadership - something clearly lacking at the moment.

In France and Germany, both leaders look to be on their way out - President Chirac in 2007, and Chancellor Schröder in three weeks' time - while Britain's relationship with the EU is simply too ambiguous.

The head of the European Commission, meanwhile, has failed to make his stamp either on the institution or Europe.

All this does not bode well for the EU's most immediate problem: Turkey. As foreign ministers meet later this week, the bloc risks being plunged into an another internal wrangle as member states fight about whether to open talks with Turkey at the start of October. This is just what the EU does not need.

Another dispute coming hot on the heels of the pre-summer upsets would serve to underline the impression the EU is in a constant state of angry navel-gazing.

But to stave off this impression, the EU needs to be seen to be acting rather than reacting, and shaping rather than letting events happen to it.

This will mean finding a response to Luxembourg premier Jean-Claude Juncker's assertion in June that the EU is split between two visions - that of further integration and that of a purely free-trade zone.