Watch Core Europe

What is Core Europe? This is not the expanded Europe of 25 nations, which comes into being on May 1, when 10 new members join the European Union. No, this is a narrower region revolving around France and Germany, with Spain, the Benelux countries, and perhaps eventually Italy playing supporting roles. Core Europe stands distinct from the pro-American British, with their free-market notions, and the poor relations just arriving from Central Europe.

Core Europe's precepts? First, a kind of protectionism lite, which promotes national champions and, when necessary, uses market methods to advance its dirigiste goals. (Paris, after all, encouraged Sanofi to pay big bucks to Aventis investors.) The other traits: a determination to keep U.S. influence at bay and bend EU rules to promote the interests of the core, even at the expense of the periphery. Witness how France and Germany got away with breaching rules on budget deficits last November. Or how Chirac and German Chancellor Gerhard Schröder have coddled Russian President Vladimir V. Putin -- despite the European Commission's more critical stance on Russia.

Yes, this is new wave economic development. Watch how it plays out.

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