Will Mega Europe Move Forward?

What does Mega Europe mean for the world? Starting in just two years, Europe plans to bring in 10 new nations from the old Soviet bloc as members of the European Union. That will create the world's largest economic zone, with 26 different nations and a mind-boggling set of rules to manage the enterprise. It's clearly good for job creation in Brussels--and maybe very good for the world. There are rich, creative ideas and voices in Eastern Europe, and they come from upstart nations much hungrier than those in the West. Allied with these feisty new members of the EU, Old Europe may get an adrenaline shot as it strives to accommodate and assimilate a new and striving populace.

Or maybe not. Europe's sad postwar history has been to smother innovation, entrepreneurialism, and markets in general with handouts, regulations, and penalties. That makes Continental Europe different from the U.S., China, most of Asia, and even its own market-driven neighbor, Britain. When its differences with the world at large were just economic splits, history shows they usually got managed. That's not the case today. Now terrorism, sharp divisions over social values, and the Bush Administration's campaign to target Saddam Hussein have opened a political chasm between Europe and those outside its borders. When German Chancellor Gerhard Schröder vowed never to back George W. Bush on Iraq to get himself reelected, and one of his ministers likened Bush to Hitler, that wasn't politics as usual from an ally.

The truth is that Mega Europe is coming together at a time of great fluidity in geopolitics. The U.S. in its effort to rid the Middle East and the world of weapons of mass destruction and terrorism finds itself now drawn to nations on the periphery of Mega Europe--Russia, Turkey, and Britain. Indeed, in their criticism of the U.S. war on terrorism and of their objection to an invasion of Iraq, Europeans appear to be drawing away from the U.S. into a world of their own.

Europeans will now have to decide whether Mega Europe means a retreat from a new world of hazard and uncertainty as it plunges deeper into its own massive task of integration--or whether this new Europe is ready to search for a new voice and foreign policy and an expanded military role as it seeks to reengage with the world.

    Before it's here, it's on the Bloomberg Terminal.