The pull of a free and prosperous Europe

By Martin Wolf

Financial Times

Published: February 2 2005

The defining moments of this year's World Economic Forum were, for me, neither the hopes of peace in the Middle East nor the pledges of additional assistance for Africa. I have heard both too often before. The inspiring moments were, instead, the statements by Recep Tayyip Erdogan, Turkey's prime minister and, still more, by Viktor Yushchenko, the newly elected president of Ukraine. Both leaders declaimed their countries' European destiny.

By virtue of their size and location, Turkey and Ukraine are much the most important countries now requesting entry. Many in the European Union hope to wake up from these twin nightmares. If they had been in that hall, they would have realised the magnitude of their delusion.

Mr Erdogan remarked that joining the EU would lead to a "reconciliation of civilisations". Mr Yushchenko was able to state that "the people of Ukraine declared that they chose to be part of Europe during the Orange Revolution". On the wintry streets, millions declared that they wished to be free. What better definition can there be of what the EU stands for?

The world’s freest countries
Heritage Foundation Index of Economic Freedom 2005 ranking, EU members shaded
Rank Rank
1 Hong Kong 11 Chile
2 Singapore 12= Switzerland
3 Luxembourg 12= US
4 Estonia 14 Sweden
5= Ireland 15 Finland
5= New Zealand 16 Canada
7 UK 17 Netherlands
8= Denmark 18 Germany
8= Iceland 19 Austria
10 Australia 20 Bahrain
Sources: The Heritage Foundation; The Conference Board; Goldman Sachs
In Davos, these two impressive leaders stated the desire of their peoples to share in the liberty and prosperity of contemporary Europe. That is what Harvard University's Joseph Nye means by soft power. It alters a people's aspirations and so what they demand of their leaders. Some question whether this is power at all. Yet the name does not matter. Call it "attraction" if you prefer. What matters is its palpable reality.

In a contemporary democracy, power depends on consent. In Ukraine, we have seen a demonstration of what happens when that is withdrawn. Non-violent protest destroyed the legitimacy of a corrupt elite. As even the loyalty of the police and the army dissolved, force became impossible to exercise. Soft power won inside Ukraine.

Yet Europe's attraction created that power in the first place. Turkey and Ukraine prefer freedom to serfdom, democracy to dictatorship, prosperity to poverty and peace to war. They aspire to join a club of states built on these values. Such fervour deserves its obvious reward. Both these countries must gain membership.

In the immediate aftermath of the 60th anniversary of the liberation of Auschwitz, we recognise the truth that many Europeans quite recently embraced the opposite of these values. It must never be forgotten that the US then played a decisive role in rescuing Europe from itself. Human beings are capable of almost unimaginable wickedness. But we must believe in their ability to learn. Europe, it seems, has learnt from its follies and crimes.

The post-second world war successes of western Europe undermined the communist dictatorships of the east, as they had earlier induced transformations in Portugal and Spain. In the aftermath of their collapse, the aspiration to join the EU then drove political and economic reform in much (though not, alas, all) of central and eastern Europe.

This then is the Europe that Turkey and Ukraine wish to join. Who could blame them? Quite a few people, seems to be the answer. For, irony of ironies, as Turkey and Ukraine seek to join, the UK may be on its way out. If the UK turns out to be the only country to reject the new constitution that might well be the outcome.

Chart

What then motivates this deep-seated hostility? Part of the reason, no doubt, is the pardonable British view of themselves as rescuers of Europe. Another part is the sense of security of a country that has remained unconquered for almost a millennium. Yet another is the sense of themselves as an island-people with ties to the English-speaking countries across the oceans, especially the US.

Nevertheless, there is another more contemporary reason: the belief that the EU's economy is a calamity. If true, the desire of Turkey and Ukraine to join would be quite foolish. It is not, however. The EU is not the collapsing behemoth of fevered imaginings.

A compelling indication of this truth comes from the 2005 Index of Economic Freedom, compiled by impeccably conservative Americans.* No fewer than 10 of its top 20 countries are EU members (see chart). Luxembourg, Estonia, Ireland, the UK and Denmark are all ranked above the US. True, Italy is 26th and France 44th. But this variation proves that the EU does not compel countries to follow bad policies; it merely allows them, within limits, to do so. The UK's recent success similarly shows that membership is far from a hindrance to good performance.

Equally, the EU's recent economic performance is less dismal than many suppose. Output per hour worked is quite similar in the US and the pre-enlargement EU of 15 members. Employment is rising in the EU, though the proportion of the population of working age at work is still far lower than in the US. True, according to the Conference Board, the business research group, productivity grew a percentage point a year more slowly in the EU of 15 than in the US between 1995 and 2004 (see charts). Yet several members managed faster growth than the US or were not far behind.

Chart

None of this is to suggest that the EU's economy is functioning perfectly. Aggregate demand has been far too weak in recent year, while the economies of the three big eurozone economies remain over-regulated. But the EU continues to provide the opportunities for rapid catch-up exploited, in the recent past, by Ireland, Portugal and Spain. More important, it has forced political reforms across the continent. The EU has been far more successful in generating economic and political reform in its "near abroad" than the US has been in Central and South America. The EU offers the reward of a voice in the continent's affairs. The US, at best, offers economic opportunities.

The EU is an achievement for which many, including the US itself, can take great credit. Its attraction to its neighbours is overwhelming. It is now easy to imagine an EU with an aggregate population of well over 600m. Yes, such an EU would be unwieldy. No, it would not be the great power dreamt of by many Europeans. But it would also be more than a free trade area. Such an EU would be a zone of prosperity, peace, freedom and democracy, stetched across Europe. Turkey and Ukraine believe in it. Why should the rest of us not do so, too?

* The Heritage Foundation and The Wall Street Journal

martin.wolf@ft.com