3. THE EUROPEAN UNION I: ORIGINS, INSTITUTIONS, & ‘1992’

1. Why is there regional integration?2. The powers of the EU3. European integration ‘theories’4. Origins of European integration5. The EU institutions6. ‘1992’ & the Single European Act7. High Noon in Fontainebleau: A sketch8. Conclusions

1. WHY IS THERE REGIONAL INTEGRATION?

• Attempts at regional integration are not new, but have proliferated since the late 1980s

• What drives formation of regional blocs? * Promotion of trade liberalization? * Desire to address issues generated by growing economic interdependence? * Desire to bind national govts to certain policies? * ‘If you do it ….’? * Uncertainty re future of multilateral trade?

• Why do some succeed, while others fail?

1. WHY IS THERE REGIONAL INTEGRATION (Contd.)

Mattli’s explanation of regional integration

• Demand condition: As cross-border transactions grow, (big) business interests push ever harder for integration (transaction costs!)

• Supply conditions: 1. There must be an undisputed leading state (hegemonic power?) among members to ease distributional tensions (be ‘paymaster’) & serve as ‘coordination focal point’ 2. Economic difficulties to persuade national leaders to forfeit decision-making powers 3. There should be ‘commitment institutions’ to monitor implementation, ensure compliance

THE EMERGING EUROPEAN STATE?

‘Within a decade, the European Communitywill be responsible for 80 per cent of the

economic, monetary & social policyaffecting the member states’

Jacques Delors, president of the EuropeanCommission, in a speech to the European

Parliament in 1988

2. THE POWERS OF THE EU

The EU is the primary source of regulations &policy affecting business in Europe :

• The ECB makes monetary policy• The ‘Stability Pact’ constrains states’ fiscal policies• It makes external trade policy• It makes internal trade policy• It makes state aid & competition (anti-trust) policy• It makes some sectoral policies (agriculture!)• It has an important regional policy• But it does not make very much social policy

3. ‘THEORIES’ OF EUROPEAN INTEGRATION

I. Transnational exchange & ‘neo-functionalism’ (= ‘supranational institutionalism’) • TE (eg. trade) generates pressure for supranational rules & organizations (transaction costs!)

• Supranational rules generate self-sustaining dynamic, deepening integration & spreading into new areas

• Expanding transnational society, supranational organizations & growing density of supranational rules erode states’ capacity to control decisions

3. ‘THEORIES’ OF EUROPEAN INTEGRATION (Contd.)

II. Intergovernmentalism (=intergovernmental institutionalism)

• (Critical) EU decisions are bargains struck between the ‘leading’ member states (D, F, UK)

• Bargains represent LCD of these states’ preferences, except where two big states can threaten third with ‘exclusion’

• Other states can be bought off by side-payments

• Govts are reluctant to cede sovereignty, may use EU to increase autonomy v. domestic interests

• Integration is fitful, contingent, reversible ...

4. ORIGINS OF EUROPEAN INTEGRATION

• War was Europe’s perennial condition for centuries, exacerbated by German ‘problem/question’ after 1870

• France’s traditional German policy – to contain, divide or weaken it – had failed.

• The Cold War made a strong (West) Germany critical

• The three ‘godfathers’ of European integration: * Stalin (inadvertently) * Hitler (inadvertently) * Truman (US president)

THE EU: THE US ‘GODFATHER’

‘Whether Germany is a blessing or a curse for thefree world in the future will be decided not only bythe Germans, but also by the occupying powers. Nocountry has as strong an interest in the answer as

France … Now is the time for a French initiative &leadership, so that the FRG can be quickly & lastingly

integrated into Europe. Any delay will diminish thechances of success. In view of the intensifying East/West conflict, the occupying powers have very little

time left to bind the FRG to the West’

Dean Acheson, US foreign minister, to Robert Schuman, French foreign Minister, 1949

4. ORIGINS OF EUROPEAN INTEGRATION (Contd.)

• French Schuman Plan (Coal & Steel Community) 1950 to: * secure French access to German coal * pre-empt Germany regaining autonomy in key industries * bind Germany as tightly as possible to the West to prevent it coalescing with the USSR

• Germany agrees because: * Adenauer was pro-Western & anti-Communist * ECSC would enable Germany to regain international equality & respectability * Alliance with France would pre-empt Franco-Soviet alliance against Germany

TO MAKE WAR IMPOSSIBLE

“Europe … will be built through concrete achievementswhich first create de facto solidarity. The coming

together of the nations of Europe requires the elimination of the age-old opposition of France &

Germany …. The pooling of coal & steel production… will change the destiny of those regions which havelong been devoted to the manufacture of munitions of war …. The solidarity .. thus established will make it

plain that any war between France & Germanybecomes not merely unthinkable, but

materially impossible”

Schuman Declaration, 9 May 1950

WHY FRANCE LAUNCHED THE SCHUMAN PLAN

‘From the beginning, the effort to organize Europe had had a double purpose: first, to strengthen the Europeancountries, which if left to fend for themselves would becondemned to political & economic dissolution; and second,to bring Germany into the common endeavors so that shewould not repeat her former errors. A democratic Germanyon an equal footing … will have no excuse for rebellion, aloof-ness & dreams of conquest & domination … [France]envisaged the creation of such strong organic bonds amongthe European nations – Germany in particular included - thatno German Government could break them’

Schuman, ‘France and Europe’, in: Foreign Affairs31:3 (April 1953), p. 352.

THE EU: WHY GERMANY SAID ‘YES’

‘Adenauer was .. continually concerned that, in France,those political forces that sought to keep down Germany

by cooperating with the Soviet Union could win the upperhand. Naturally he never forgot the Franco-Soviet treaty

from the winter of 1944 … [The] different continentalEuropean communities, in Adenauer’s view, served the

purpose of preventing a France that was insecure becauseof its economic & political weakness, dangerous & driven

by negative memories [of Germany] from .. taking the path to Moscow’

Hans-Peter Schwarz, Erbfreundschaft, p. 92

WHY GERMANY HAS SUPPORTED THE EU

“No country is more strongly dependent on the furtherdevelopment of the EU than the united Germany. In terms of population, Germany today is one and a half

times as big as France or England, twice as big asPoland, five times as big as Holland, eight times as bigas Belgium. In all of these countries there are worries

concerning the prospective economic power of Germany;in addition to this, there are the awful memories of theHitler era. If our country does not want to isolate itself,

if Europe is not to return to a policy of forming coalitionsas a counterweight to Germany, then we Germans need to be integrated into an EU that functions effectively”

Helmut Schmidt, in: Die Zeit, 6 August 1993

4. ORIGINS OF EUROPEAN INTEGRATION (Contd.)

• French Pleven Plan (European Defence Community): * to rearm Germany (Korean War!) while keeping German army under European, espec. French control * fails because of French Gaullist & Communist opposition

• Economic community proposed by Benelux states, partly to forestall bilateral Franco-German integration

• Franco-German rapprochement in Hungarian & Suez crises & solution of Saar problem (whose is it?) facilitate Rome Treaty 1957

• France insists on CAP as price for industrial trade liberalization

THE EUROPEAN DEFENCE COMMUNITY

‘Only France is to retain additional forces of her own, forthe defense of her overseas territories. No element of thecommon army is at the disposal of any govt acting alone …Not only is the high command integrated, but the same istrue of all units larger than a division … Each will becomposed of officers & men of different nationalities. Therewill be German soldiers but no German Army; Germanofficers at every level but no German general staff; and thesame will hold true for continental France & othersignatory nations’

Robert Schuman, ‘France and Europe’, in:Foreign Affairs 31:3 (April 1953), p. 355.

FAMOUS LAST WORDS?

What a British diplomat said when he leftthe Rome Treaty negotiations

“The future treaty which you are discussing has nochance of being agreed; if it was agreed, it would have

no chance of being ratified; and if it was ratified, itwould have no chance of being applied. And if it was applied, it would be totally unacceptable to Britain.

You speak of agriculture, which we don’t like, of power over customs, which we take exception to,

and of institutions, which frighten us. Monsieur lepresident, messieurs, au revoir et bonne chance”.

5. THE EU INSTITUTIONS

• European Commission (‘executive’, nominated by govts, policy initiator, some autonomous powers) • Council (‘legislature’, govt ministers, weighted votes, decides by QMV or unanimity) & European Council

• COREPER (Committee of Permanent Reps. - Makes ‘90%’ of Council decisions) & its working groups

• The European Parliament (advisory & veto powers)

• The European Court of Justice (strong through direct effect & EU law supremacy doctrines)

6. ‘1992’ & THE SINGLE EUROPEAN ACT

• Integration indeed fitful up to early 1980s: still important non-tariff barriers to trade (eg. standards)

• Milestone ‘cassis de Dijon’ judgement of ECJ; Delors Commission proposes ‘1992’ (economic liberalization & institutional reform, eg. more QMV)

• Two explanations:

1. Alliance of Commission, ECJ, big business (neo-functionalist/transnational exchange)

2. LCD of ‘big three’ govts (intergovernmentalist)

8. CONCLUSIONS

• European integration driven more by politics than economics, to prevent war, not to promote trade or cut transaction costs

• It has been shaped & driven primarily by France & Germany. France wants to bind Germany into Europe; Germany wants to bind France & be bound itself

• Intergovernmentalism seems a more powerful explanation than neo-functionalism or trans- national exchange, but can it explain:

• Day-to-day, as opposed to big, decisions?• The drive for European monetary union?