COLUMNS

EUROPE’S FEAR FACTORS

Globalism and Muslim immigration fuelled the constitutional No vote

DONALD COXE June 20 2005
COLUMNS

EUROPE’S FEAR FACTORS

Globalism and Muslim immigration fuelled the constitutional No vote

DONALD COXE June 20 2005

EUROPE’S FEAR FACTORS

Essay

DONALD COXE

Globalism and Muslim immigration fuelled the constitutional No vote

OLD EUROPE is rebelling against its political elites. First, German voters in North RhineWestphalia booted out Gerhard Schröder’s socialists. Within days, French and Dutch voters overwhelmingly rejected Europe’s new constitution. Six months ago, the odds against that trifecta would have been more than 10 to one. These sequential tsunamis have spread across the Atlantic, driving the American dollar to a seven-month high against the euro, and sending the yield on the benchmark U.S. Treasury bond to a 14-month low.

The pundits attribute the European votes to rage against their leaders. You’ve also no doubt read that 70 per cent of French farmers voted non to keep the European Union’s financial largesse flowing into their troughs. Although most observers focused on the two national constitutional votes, those outcomes were presaged by the election in North Rhine-Westphalia, Germany’s most populous state—and its most reliably socialist. The outcome there was about as improbable-based on decades of history—as New York City voting for George W. Bush.

That the proposed European constitu-

tion begins with a series of official endorsements, starting with “His Majesty the King of the Belgians,” was obviously not a selling point, nor that it is about 30 times as long as the U.S. constitution, its oft-cited model. But Europeans have long known that their elites love red tape and verbosity. The EU’s rule book is more than 80,000 pages long— and growing. Perhaps France’s most pervasive gift to the world was to give us the word “bureaucracy” and to demonstrate just how elegantly stultifying bureaucracy can be. Former French

President Valérie Giscard d’Estaing drafted this monstrosity. That a Frenchman would be its author was reasonable, if only because the French have more experience with drafting constitutions than anyone.

In all three of these electoral exercises, the huge majority who united in voting against their leadership had no clear common ground about what it was voting for. In Germany, there was resentment against the cheap labour rates among the economies of the new EU club members. In France, National Front leader Jean Marie Le Pen was shoulder-to-shoulder with the Communists. In the Netherlands, many of the neesayers were mad that the euro had replaced the guilder. What could the European Parliament and the commission possibly do to satisfy these naysayers? In retrospect, the rumblings for this year’s volcano began with the French presidential election of2002. At the end of the first round of voting, France awakened to the horror that Le Pen had run second on an anti-immigrant platform, ahead of the socialists. That forced the French left to vote for Jacques Chirac in Round Two, because electing someone widely viewed as a racist was unthinkable. The EU had put Austria into the penalty box when its incoming government included a party headed by just such a no-no.

Future historians will probably look at this year’s rebellions as the first concrete proof that once-confident Europe has become beset by two fears: fear of globalism’s challenges to the Eurozone’s high-cost structures, and fear that their national population makeups are being transformed by the rising tides of Muslim immigrants, some of whom defiandy reject European mores. The generous social programs that western Europe could afford for so many decades have become burdensome through lack of babies—of the “right” kind for maintaining national characteristics. The rapid aging of Old Europe is a problem no Brussels bureaucrat can solve.

Demographers (mostly from the Arab world) have recently been publishing forecasts of how many decades, based on current immigration and birth rate patterns, it will take for Muslims to become the majority in various continental nations. The growing Muslim minority had been at the heart of the bitter debate about the inclusion in the constitution of a statement that Europe is a Judeo-Christian society. Holland’s prime minister, Jan Peter Balkenende, was one of the strongest proponents of this losing cause, and his resultant limp campaign in favour of the constitution was said to be based on his resentment that French secularists had triumphed in defeating the Judeo-Christian clause. His tiny country already has a large Muslim minority that resists integration into Dutch values. The slaughter of filmmaker Theo van Gogh for “insulting Islam” was a shock to the famously tolerant Dutch, as is the ongoing need to provide 24-hour police protection for several public figures who have been marked for execution.

Apart from widespread concerns that Islamic extremists threaten domestic cultural solidarity, the soaring costs arising from Europe’s rapid aging have forced even such

leftists as Schröder to cut social programs. The tax burden to finance those benefits that Germans have long taken for granted, combined with restrictive labour rules, have contributed to the nation’s nearly 12 per cent unemployment. Germany remains Europe’s export powerhouse, but its productivity can no longer finance BMW-class benefits for growing numbers of pension-

WESTERN Europe can no longer afford retirement at 55 or 60, with long vacations and free health care

ers and unemployed. Were Germans producing babies as happily as they did just after the Second World War, the nation could handle those costs.

Despite what some economic reform advocates claim, demography trumps the debate about which model works best for Europe. Chirac can blame liberals, Schröder can blame rampant capitalism, and workers in western Europe can blame cheap labour from the new eastern EU members. But, because of demographic collapse, no economic system can provide enough resources to finance retirement at 55 or 60, along with long vacations and free health care.

Japan was the first major economy to slide

from growth to decay because of the cumulative effects of a greying population. With similar birth rates, Europe would have joined Japan during the 1990s, but the influx of millions of mostly youthful people from North Africa, Turkey and eastern Europe postponed the onset of stasis. Most EU leaders say they wish to continue the same immigration policies and plan to admit Turkey into the club. Liberals applaud the population movements such policies produce, arguing (correctly) that they increase the totality of human liberty.

For a while, European voters went along, however grudgingly. Then the Madrid bombings, the uncovering of active al-Qaeda cells in several cities and the van Gogh murder forced Europeans to think about the risks to their societies from Islamization. Since public opinion polls showed this disillusionment could lead to defeat for the proposed European constitution, money began flowing from Europe into the U.S., which suddenly appeared more politically stable. Suddenly, indeed, the U.S. looked to have an economic model that could absorb a huge Hispanic inflow without creating serious social problems. The greenback soared in foreign exchange markets, and the stock market turned upward after nearly three months of declines.

Chirac et ses amis have given America France’s best gift since Lafayette’s day. Europe has just begun to count the cost. 171

Chicago-based Donald Coxe is Global Portfolio Strategist, BMO Financial Group. dcoxe@macleans.ca