America Confronts Old and New Europe

US Secretary of Defense Donald Rumsfeld's petulant remark of last year about "old and new Europe" was right for the wrong reasons. He meant it to refer to Europe's divisions, but in May, ten additional states joined the European Union. The expanded Europe truly forms a new Europe. Should America be nervous?

Fifty-four years after the announcement of the Schuman Plan that began to knit together the economies of France and Germany, the EU now has 25 countries and a population larger than that of the United States. Eight of the new members are former Communist countries that were locked behind the Iron Curtain for nearly half a century. Their attraction to the Union is a sign of the appeal - the "soft power" - of the idea of European unification.

Of course, this new Europe faces many problems. The per capita income of the new countries is less than half of that of the fifteen members they are joining. Concerns have been raised about the influx of cheap labor. But average GDP growth rates in the new members are twice as high as in the original members, and this can provide a welcome stimulus to stagnant labor markets and sluggish economies.

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