Europe entering new year beset by problems and bereft of fresh ideas

PARIS - New Year is the time when politicians love a makeover, declaring that old ideas are out and bold and fresh thinking is in.

But New Year's resolutions are tough, and not all leaders of the 25 European Union members have the same ideas.

The EU is mired in some truly awful problems as well as a cacophony of competing aspirations among its 25 nations. Hauling itself out of the mess will need a lot more than a dash of euro-babble and a chorus of Auld Lang Syne in the official EU languages.

Just as 2004 was one of the high points in the EU's history, when 10 countries triumphantly joined the EU club and healed Europe's Cold War divide, 2005 was simply the worst year in more than half a century of European integration.

Some of the oldest, thorniest problems resurfaced - unpleasant nationalism, bitching by heads of state, widening public mistrust of Brussels and squabbles over budgets - to make 2005 an annus horribilis.

The year turned pear-shaped in May, when voters in France and the Netherlands rejected the European Constitution.

The results hit a crucial plan to overhaul EU institutions in order to accommodate the big expansion of 2004. Some analysts blamed the charter for being flatulent and uninspiring. Others saw a kick-the-cat syndrome among disgruntled voters, who used the referendum to express dislike of their own Government or hostility to Turkey's bid to join the EU.

But there lurks a deeper suspicion that Europe's integrationist dream - that has driven the EU since the mid-1950s - is over or marking time.

Never in Europe's post-war history has there been such a clear sign of contempt for Brussels, a sense that citizens feel cast adrift and powerless in a continent of ever more powerful centralised government.

"People will tell you that Europe is not in crisis. It's in deep crisis," Luxembourg Prime Minister Jean-Claude Juncker said bitterly after the EU summit he chaired in June collapsed over plans for the EU's 2007-2013 budget. Like Margaret Thatcher, Britain's Tony Blair loudly defended the British budget rebate and Jacques Chirac, like Francois Mitterrand, cast himself as the protector of the Common Agricultural Policy (CAP), whose chief beneficiaries are French farmers.

It was a strange debate: as if the clock had not moved forward for 20 years.

It took until another summit in December for the time warp to end. The outcome on the budget was a pale compromise whose sole benefit was to prevent paralysis or worse.

A failure "might well have lent at least passing credibility to speculation about the slow breakup of the EU, perhaps starting with the disintegration of the euro area", says John Palmer of the European Policy Centre in Brussels.

EU Commission President Jose Manuel Barroso hopes that after such a year of high drama and low blows, the EU can now enjoy a quiet 12 months in which it can deal with nuts-and-bolts problems rather than existential ones. "We can enter 2006 with more optimism. We can now concentrate on things which are more important for our citizens : namely, growth and more jobs."

But this thinking is more wishful than realistic. In the coming months, the controversial budget, a minefield of compromise, that was reached in December must be approved by the European Parliament.

The European Constitution must be either revived or laid to rest: 13 countries have ratified the charter while two have rejected it, yet unanimous approval is required for it to take effect. In an act of folly or unassailable optimism depending on one's viewpoint, Italy has even minted a two-euro coin to commemorate the constitution. The coin has already become a collectors piece, a clear sign of what collectors, at least, feel about the constitution's chances.

Meanwhile, the EU must make good on promises to Bulgaria, Croatia and Romania to join the club and accelerate entry talks with Turkey, at the risk of inflaming the public's deepening hostility about the cost of enlargement. Such tasks would have been a stern test even in the EU's glory days.

The difference is that, today, there is not a single government in Europe that stands up proudly for the European dream. Elections loom in Italy and later in France, and a new left-right coalition Government is finding its feet in Germany. The task of finding a way forward falls to Austria, which assumed the six-month rotating presidency of the EU on Sunday.

Austria celebrated the occasion with a gala of opera and waltzes in Vienna and a homage to Mozart. It was a lurch into yet another odd time warp and hardly a reassurance that, in the middle of Europe's deepest postwar crisis, bold and fresh thinking is nigh.