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EU's Cologne Summit Has Decidedly Bureaucratic Smell

At its latest meeting, the European Union did little beyond issue a raft of grand-sounding initiatives that are full of vague language.

LONDON -- This is not a good time for the

European Union

.

Its leaders are involved in forging a messy peace in the Balkans. The euro is wilting against the dollar and many EU economies are barely growing. Millions of Europeans are out of work -- and have been for years. So what does the EU do? As usual, it holds a summit and issues a raft of grand-sounding initiatives that are revealed, upon closer inspection, to be full of vague, bureaucratic language.

Witness the EU summit held in Cologne this past weekend. It was marked by the arrival of Finnish President

Mahti Ahtisaari

straight from Belgrade with the peace agreement he had just signed with Yugoslav President

Slobodan Milosevic

. Despite the warm applause and broad grins when Ahtisaari reached the conference, the "peace agreement" turned out to be no such thing. Substantial issues remained unresolved. The fighting continued.

The same gap between reality and EU leaders' pronouncements was also apparent in the economic sphere, which bodes ill for the euro and Europe's people.

Take the resolutions passed at Cologne on unemployment. Unemployment has been chronically high in continental Europe for over a decade. In Germany, there are now more people out of work than at any time since

Hitler

came to power. The jobless rate in France is 11.3%, and in Spain it's 17.3%.

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Youth unemployment is especially chronic, thanks to restrictive union practices and a high minimum wage: Across the EU as a whole it is 18.6%, in the eurozone 20% for the under 25s. Repeated efforts to reduce joblessness by introducing various artificial government programs (such as in France) invariably fail.

Instead of actually doing anything concrete to remove the established privileges of those in work and thus to stimulate competition and liberate the spirit of enterprise, European leaders simply issue statements, saying that "the fight against unemployment" is "the most important objective of our economic and social policy." The problem is that it is not true. Europe's top priority is to create a monetary union whose overriding goal is price stability.

Price stability may be theoretically compatible with job creation, but it is a simple untruth to say that the latter is Europe's first concern when the former is explicitly enshrined in a treaty which the EU spent 10 years hammering out.

Given that reality rarely impinges on these summit meetings, it is not surprising that the rest of the Presidency Conclusions -- the document which winds up each country's six-month period at the helm of the EU, in this case Germany -- is mere flannel. The EU proposes as a cure for unemployment not labor market reform, not lower taxes, not a more relaxed monetary policy, but instead more summit conferences.

In Europe, the quality of boredom is not twice blessed but infinitely so. Europe solemnly proposes "a continuing dialogue between Council, Commission and the social partners on the co-ordinated employment strategy in the Standing Committee on Employment."

At previous summits, it created "the Luxembourg process" and "the Cardiff process" for getting people back to work. Now, in the "third pillar" decided at Cologne, it has instituted "the Cologne process" of "regular Macroeconomic Dialogue within the framework of the Council of Finance Ministers in cooperation with the Labour and Social Affairs Council and with the participation of representatives of both formations of the Council, the Commission, the European Central Bank and the social partners."

There are pages and pages of this stultifying bureaucratic jargon. Apart from its sheer irrelevance, it reveals the deep philosophical assumptions which continue to underlie European policymaking. The first of these is that governments can cause an economy to create jobs. Instead, all evidence shows that this task should largely be left to the market, which is simply too diverse and too complex for any government to manipulate.

The second mistake is more prosaic. Growth is stimulated macroeconomically by having the right monetary and fiscal policies, and microeconomically by having flexible labor markets. According to the statutes of the

European Monetary Union

, written in stone in the

Maastricht Treaty

, Europe has taken both monetary policy and fiscal policy out of the political domain and put them on an anti-inflationary autopilot. The plane is continuing to fly on a program written in the inflation-prone 1980s. Europe cannot now switch it off without tearing up its own constitution.

John Laughland is a commentator on European political and economic affairs. He has written for several British national dailies and published two books, The Death of Politics: France Under Mitterand and, most recently, The Tainted Source: The Undemocratic Origins of the European Idea.