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As European Union leaders meet in London to wrangle over European Union budgets and the Anglo-Saxon versus the French model, global investors have already voted and have been handsomely rewarded.

Many American investors seem to have written off Europe as a quaint low-growth low-return destination. This sort of attitude has caused them to miss some great opportunities. Let's look at a few.

Ireland was always seen as on the fringe of Europe. Its population of 4 million people (the United Kingdom is 15 times larger) was always viewed as a bit of a laggard. Into the 1960s, citizens had to pay for secondary education, and as late as 1987, Irish gross domestic product was only 69% of the average of the nations that eventually formed the EU. The unemployment rate was 17%.

Suddenly, its economy took off. Average GDP growth rates in the 1990s were 6.9%, and by 2003, Irish GDP was 136% of the EU average with an unemployment rate of 4%. How can we account for this remarkable turnaround? As usual, it is not due to one event, but rather to a confluence of policies, timing and action.

In the late 1980s, a grand deal was struck: Labor would moderate its demands, freer trade was pursued and corporate tax rates were brought down to zero for multinationals investing in Ireland. Education was also noticeably improved for its relatively youthful population, especially in the technology area.

Within a short time, Ireland became the low-cost production base in Europe, and the money flowed in. Foreign direct investment was the key, and now 1,100 multinationals * many in the tech sector *established manufacturing and R&D operations in Ireland. More than 25% of all American investment in Europe goes to Ireland and Dell is its largest exporter. This, in turn, led to an export boom. The stronger economy also sharply increased labor participation, especially among Irish women.

The resultant rise of Dublin as a booming city and a major financial hub also led to a tourist boom with more than 6 million annual visitors. Instead of talented Irish workers migrating to the U.S. for opportunities, they were coming home in droves.

You can see how every action spins off and helps build sustained growth and momentum. Every action led to another in a virtuous cycle, but the key ingredient for success was undoubtedly massive inflows of capital * capital from foreign direct investment, from EU subsidies, from exports, from stronger domestic capital markets and from migration. Good pro-growth market policies together with sizable amounts of capital can lead to economic miracles.

The challenge for Ireland now is to maintain its competitiveness and momentum in the face of greater competition and higher costs plus a potential property bubble. Congestion in Dublin, which represents 33% of the population and 40% of GDP, is a bottleneck on growth.

The New Ireland Fund is a closed-end fund that has done quite well. Over the last ten years, it has an average annual return of 13%, and during the last year, it was up more than 35%. It trades at a 10% discount to its net asset value and is managed by the Bank of Ireland

Next, let's take a quick look at the host of this week's EU summit, the U.K., which has benefited greatly from its openness to the world. London has grown in the last 20 years by 800,000 to reach almost 7.5 million. There are 300 languages spoken in London, and the number of nationalities is approaching 100. The U.K. is one of only three European countries, together with Sweden and Ireland, that have given workers from Eastern Europe free access to its labor markets. Since last May, 175,000 have accepted the invitation. The iShares MSCI United Kingdom Index is up 12% over the last 12 months.

While the American discussion of the flat tax doesn*t seem to go any further than the local Starbucks, many of the countries of Eastern Europe have already adopted one. The flat tax, combined with Eastern Europe's low cost structure, access to new EU markets, and a strong work ethic have led to a surge in growth. Because Eastern European stock markets are thinly traded, why not use the iShares MSCI Austria Index as a proxy? Austria serves as a gateway to Eastern Europe and functions as its financial, transportation and logistical hub. Austria has also cut its corporate tax rate from 34% to 25%. The Austrian ETF is up 40% over the last 12 months.

Germany's GDP growth has been anemic, but the iShares MSCI Germany Index is up 16% during the past year. The reason, firms such as ABB and Siemens are not waiting for the politicians to tell them what to do. They are searching the globe for opportunities and winning big contracts.

Even the broadest European indices are doing well. The iShares MSCI EMU Index is up over 15%, and the iShares S&P Europe 350 Index is up almost 16% during the past year. By comparison, the S&P 500 is up a little better than 6%.

Don*t buy into the media's no-growth, no-opportunity label for Europe. It has some of the world's best multinationals and controls 40% of the world's wealth. Especially as U.S. markets continue to churn without making any forward progress, a new investment in *Old Europe* could be a wise move for your portfolio.

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