LEARNING THE WRONG LESSON:

After EU election, 'forget about reforms' (Katrin Bennhold, June 16, 2004, International Herald Tribune)

Two days after most European governments were dealt a stinging blow in elections for the European Parliament, France, one of the worst-hit countries, came face-to-face with one of the sources of its malaise.

The countrywide strikes Tuesday by workers of Electricité de France, to protest the utility's planned privatization, are emblematic of widespread unease with economic reforms in the continent's largest economies.

This unease may tempt the freshly bruised leaders in France, Germany and Italy who are preparing for the next round of national ballots to water down some key economic reform initiatives and to stall others, analysts said.

"Forget about reforms for the next few years," said Lorenzo Codogno, economist at Bank of America in London. "After the elections, there is clearly a risk that the process is put on hold." [...]

Before last year's pension reform, transport workers and other public sector employees repeatedly went on strike. "There is pressure to slow down with the reforms" after Sunday's ballot, said Christian de Boissieu, president of the Council of Economic Analysis, which advises Prime Minister Jean-Pierre Raffarin of France on economic policy. "Maybe governments need to conduct the reforms more gradually - that would be a democratic response."

Would it help if Chirac, Schröder and Berlusconi indeed backed off reform plans? According to Daniel Gros, director of the Center for European Policy Studies, being hesitant about reform does not necessarily win votes.

"Just look at Sunday's results: In the countries where reforms are part of everyday life, governments were not punished," he said, pointing to Spain and Belgium.

"Governments got punished in countries where they hesitated about reforms and only passed them half-heartedly,' he said. "In a nutshell: They talked about reform all the time, but then didn't do that much." As far as electoral strategy is concerned, "that's the worst of both worlds," Gros said.

Having managed, at least for now, to dodge the bullet of greater centralization and bureaucratization, they now propose to stop or slow free market reforms and maintain each centralized, bureaucratic state? Was anyone in Europe paying attention during the 20th Century?

Posted by Orrin Judd at June 16, 2004 8:51 AM