Crisis on the continent


Until a few weeks ago, Europe seemed on an unstoppable course toward economic and, perhaps eventually, political union. Last fall, the European Community thought it had put the final touches on the job when it met at the Dutch city of Maastricht and hammered out a treaty that would lead to a common European currency by decade's end.

Then came the Danish shock: Earlier this month, to the horror of Europe's policy elite, a referendum on Maastricht by the voters of Denmark ended with a rejection. Although the margin of rejection was thin, the Danish vote has galvanized the opposition to European unification across the Continent, and suddenly the whole process seems to be in doubt. Why is European unity in trouble? It is doubtful that Danish voters were responding to the provisions of the Maastricht treaty, a document so technical that almost nobody understands it. Instead, they were expressing their unease with the state of Europe. Indeed, it is not too unreasonable to compare the sudden wave of European opposition to Maastricht with the American tidal wave of opposition to incumbent politicians. Both reflect the public's sense of economic and social problems out of control and a growing distrust of leaders who are perceived as complacent and out of touch.

Behind the glittering facade of the new Europe, with its promise of a vast new economic and political superpower, lies a deeply troubled continent. Europe's problems are different from ours, but they are just as serious -- and Europe's leaders have done just as little as our own to address them.

Jobless woes. Europe's biggest problem is unemployment. After a few good years in the late 1980s, European jobless rates have started rising again; for almost 20 years the Continent's overregulated markets have yielded few new jobs for a growing work force -- a condition referred to as ''Eurosclerosis." In France, for example, the unemployment rate, after dipping briefly at the end of the 1980s, is once more above 10 percent (compared with 7.5 percent in the United States) and seems set to rise. Admittedly, generous government benefits make unemployment less painful in Europe than in America. On the other hand, most unemployed Americans find new work within a year, while many Europeans never find a job.

Unemployment in Europe is highly concentrated in a number of depressed regions, such as the old coal and steel towns of Belgium and Northern France and the decaying north of England -- regions the American visitor, dazzled by Paris or London, rarely sees. The most prosperous parts of Europe have jobless rates of less than 3 percent, but large tracts have sustained rates of more than 20 percent.

This is part of a broader European weakness, the huge disparities in prosperity across regions. In America, the richest states have per capita income only about 60 percent higher than the poorest; for European regions, the difference is more than 200 percent. Billions of dollars have been spent to try to raise the incomes of lagging nations like Greece, Portugal and Ireland; although there have been some success stories, like the modernization of the northeastern part of Spain, economic backwardness in much of Europe has defied solution.

High unemployment has fed growing hostility to immigrants and supplied the fuel for Europe's still small but increasingly vocal extreme right wing. To many Europeans, immigrants -- especially immigrants from the Muslim nations on Europe's southern flank -- are a threat. They are seen as taking scarce jobs from natives; if they become unemployed, they receive support from governments that already impose far higher tax rates than we see in the United States.

Beset with these deep-seated economic and social problems, many European governments are in serious trouble. Italy, for example, has a budget deficit that is more than twice as large relative to the size of its economy as our own. Germany, staggering under the huge costs of subsidizing its new eastern lands, is running large budget deficits and for the first time in decades faces a wave of strikes. France's Socialists and Britain's Conservatives cling to power, but only because their opposition is deeply divided and distrusted by the voters.

None of these problems is new. In fact, it was precisely the perception of European stagnation that led key leaders to advocate bold moves toward European union, in the hope that such moves would reinvigorate the economy. This was a calculated gamble, since there was always the risk that a push toward unity would end in disillusioning failure rather than triumph. Until the Danish bombshell, it looked as if the gamble had paid off. Now, astonishingly, a few thousand unhappy voters have put the future of Europe on the line.

Originally published, 6.29.92