Europe’s New Watershed

The people of Belgrade have presented Europe with another watershed. Shadows from a decade of Balkan wars may at last be lifting. Clear heads, clear sights, and — most important of all — clear public consent will be needed if Europe is to move forward. In this regard, it is important to draw the right conclusions from Denmark’s No vote in its recent referendum on whether or not to join the euro.

The Danes are no more anti- European than anyone else. Xenophobia is no more widespread in Denmark than in other European countries. It was not just an unholy alliance between the extreme Left and extreme Right, as some concluded, that defeated the euro.

Denmark’s No must be regarded as a warning to Europe’s leaders — they should be far more careful when starting an open dialogue with their electorates on basic European issues, such as Europe’s role in assuring Balkan peace. Otherwise they might run into the same saddening surprise as their Danish colleagues, where four out of five Members of Parliament voted Yes on a policy only supported by 47% of their constituents.

My assertion that Danes are not anti-Europeans finds support in a recent Eurobarometer poll: Voters in all EU-countries were asked if they regard enlargement of the Union with the applicant countries in Eastern and Central Europe as a priority. This was supported by close to 60% of Danes. Indeed, Denmark topped the list. In France and Germany support was a meager 20%.

Were other governments to follow Denmark’s example and call a referendum on the euro, most would probably lose. Let me recall the situation in 1992, when a small majority of Danish voters (less than 1%) rejected the Treaty of Maastricht. President Mitterrand reacted by calling for a similar referendum in France in order to support the Treaty. Surprising almost everybody in France, the referendum came as close to rejection, as Denmark had been close to approval.

This time Danish voters once again rejected the advice of their political establishment. What went wrong in Denmark might happen in other countries as well. Danish political leaders failed to convince their constituencies that the euro should be regarded as a positive element in the creation of a Europe whole and free. Economic arguments failed to win them over — the decline of the Euro vis-a-vis the dollar obviously playing an important psychological role in this. But too little emphasis was put on the political arguments.

The Economic Monetary Union was created before the Berlin Wall came down in 1989. As a new Europe began showing its face, the single currency was the bright creation of visionaries who saw the chance of making an even tighter relationship between European countries. Germany’s political leaders — the Kohl-Genscher-generation who had experienced the war — understood that a united Germany would represent such a concentration of economic strength in Europe that it would inevitably disturb political balances within the EU.

Hence, German leaders concluded that they had to share their country’s dominating position in monetary policies with others. As Hans Dietrich Genscher used to say in those days, “If you want to avoid a German Europe, you must create a European Germany.” It was a sacrifice and was met with much resentment in German financial circles. They doubted the willingness and/or ability of other European countries to fight inflation. But the Germans did it. We all owe them for that.

The euro has experienced a hard but promising start. It should not come as a surprise that the euro started to slide against the dollar, considering the differences in economic performance between America and Europe. And it should not come as a surprise that the markets have tested the willingness of European political leaders to keep quiet where monetary affairs are concerned. Recent intervention and support from America and Japan showed that the euro is here to stay and that the markets believe in its success.

The common currency is but one step in bringing together a peaceful Europe. This is the key message, but it was not delivered successfully to the Danes. This is why the result of the Danish referendum should be taken as a warning that great efforts must be made to convince Europe’s citizens of the euro’s political importance — and of the importance of enlarging the European Union.

Enlargement of the EU eastward is the great challenge of the coming years. Of course, living standards are not as high in Eastern Europe as in the West, but the hope — for both applicant countries and those in the Balkans — must be that ongoing democratization and economic reform will mean eventual membership in the EU.

Undoubtedly, expansion will provide the “older” democracies with new growth markets. The benefits of this will more than compensate for the economic costs of enlargement. But even stronger than this economic common-sense argument is the political imperative: if we maintain a divided Europe, we will never reach the Europe of liberty and peace that was the original vision of the founding fathers that wrote the Treaty of Rome.

The new democracies of Eastern and Central Europe and the Baltic states are eager to participate in the EU. The brave crowds in Belgrade demonstrated the desire of Serbs to rejoin the family of Europe. All want to take part in the growth and solidarity of a Europe where democracy and respect are the ruling civic concepts, not brute military power. The Danes failed to link this with the role of the euro. The events in Belgrade have provided another moment for that too long postponed debate on the larger goals of the European integration to take place.