EU faces crisis after France rejects EU charter

washingtonpost.com
EU faces crisis after France rejects EU charter

By Timothy Heritage
Reuters
Sunday, May 29, 2005; 10:41 PM

PARIS (Reuters) - France overwhelmingly rejected the European Union constitution on Sunday, pitching the EU deep into crisis and dealing a potentially fatal blow to a charter designed to make the enlarged bloc run smoothly.

EU leaders said after a referendum "no" vote that the treaty was not dead and member states should continue the ratification process. But British Foreign Secretary Jack Straw said the rejection raised profound questions about the future of the EU.

The heavy defeat dreaded by EU leaders could weaken France in the 25-member bloc, stall European integration and unsettle some financial markets. It also wounds President Jacques Chirac two years before presidential and parliamentary elections.

"The French people have given a huge smack in the face to an entire system that has the nerve to tell us what to think," said nationalist French politician Philippe de Villiers, a leading opponent of the charter. "The constitution is no more."

Chirac swiftly conceded defeat in a televised address to the nation as the "No" camp celebrated a crushing victory with about 55 percent of votes to 45 percent and hinted that he might respond by dismissing his unpopular prime minister.

Such a resounding defeat in a country that has been a key pillar of the EU reduced the chances of a repeat vote on the treaty, which is intended to make EU decision-making easier and requires the backing of all member states to go into force.

The Netherlands holds its own referendum on the EU constitution on Wednesday and Dutch ministers urged voters on Sunday to ignore the result in France. A Dutch "No" vote, as opinion polls forecast, would plunge the EU even deeper into crisis.

But Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the EU's rotating president, said nearly half the 454 million EU citizens had already backed the charter and added: "The European process does not come to a halt today."

He said EU leaders would review the situation at their next regular summit on June 16-17, adding that it would be impossible to renegotiate the treaty.

CHIRAC PROMISES CHANGES

As a large crowd of flag-waving treaty opponents celebrated victory in Place de la Bastille in Paris, a major landmark of the 1789 French Revolution, Chirac dropped his heaviest hint so far that he plans to remove Prime Minister Jean-Pierre Raffarin.

"I intend to respond ... by giving a new and strong impetus to the action of the government," Chirac said in his address.

Many voters used the vote to punish the government over France's economy and high unemployment. Chirac, 72, ignored calls by some members of the "No" camp to step down.

The euro fell just over half a cent in early trading in Asia to 1.2516/19, down from 1.2573 in New York on Friday, despite already falling in recent weeks partly because of doubts about the fate of the constitution.

"The euro is the currency of Europe and investors are going to have worries about the future of economic policies in a zone where citizens cannot get a common view," said Chloe Magnier, an economist at French broker CM-CIC Securities.

Economists said the result could also hit the Turkish lira because it could be seen as a protest against Turkey's efforts to join the EU, would probably weigh on business sentiment in France and could slam the brakes on economic reforms there.

Many voters resent what they see as France's declining role in the Union, especially with the expansion to 25 members last year, and say the treaty enshrines economic policies that have failed to stop the loss of jobs to low-wage economies.

Britain's Straw declined to say whether London still planned to hold its own referendum next year.

"This raises profound questions for all of us about the future direction of Europe," Straw told reporters. "What we want now is a period of reflection."

"The referendum result is a blow for the constitutional process, but not the end of it," German Chancellor Gerhard Schroeder said. "It is also not the end of the German-French partnership in and for Europe."

Nine countries have approved the treaty, including Germany which alongside France drove creation of the post-World War II economic alliance that developed into the European Union.

If the constitution does not survive, the EU will continue to operate under its current rules. But the system is widely seen as unworkable for a Union intent on enlarging further, and decision-making could soon become paralyzed.

The constitution was signed by EU leaders last October in Rome after long and tough negotiations.
© 2005 Reuters

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Why did French voters reject the EU constitution?
Reuters.uk, UK - 2 hours ago
PARIS (Reuters) - French voters rejected the European Union's constitution on Sunday for a host of reasons, not all of them to do with the contents of the ...
Voters feared charter would chip away at national identity The Herald
EU business group: French vote has message for ECB Reuters.uk
'The decision creates a difficult context' Times Online
Financial Times - Reuters.uk -

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