The Genesis of the EC

Yesterday (23 June) Prime Minister Tony Blair said he did not think Europe quite realized the competitive challenge it faced from countries like China and India. Whereby he insisted he wanted to reinvigorate the EU, not wreck it.

As of May 2005 one could argue, there is no Europe. There is France, Germany, Hungary, Ireland and so on. As sovereign countries, they have entered into a series of important economic agreements. But none of these countries have abandoned their sovereignty. Decisions on war and peace or lesser foreign policy issues remain in their hands, not in those of Brussels. It is unlikely that any broad consensus on any of these issues will be reached by all of Europe, and anyone basing their policies on what "Europe" will do will be as misguided as those basing policies on what "Asia" will do. These are geographic and to some extent cultural expressions.

When the European Economic Union was formed the French negotiated significant agricultural subsidies for France called the EU Common Agricultural Policy or CAP. Margaret Thatcher dug her heels in and demanded a rebate of English taxes to equalize the CAP subsidies going to France. Chirac recently stated that it is time for England to give up her rebates. That rebate is currently around €4.6 billion (or $5.7 billion). Blair is quite adamant that this is not something for the British to give up (quote): "...if people want a reconsideration of the rebate there has to be a reconsideration of the reasons for the rebate. This is not some special thing that has been given as a special privilege to Britain. This is a mechanism of correction for something that would otherwise be grossly unfair.

While many see the 1948 Hague Congress was a pivotal moment in European federal history, the Genesis of the EC goes back to the 1920s, before the rise of Hitler, as a way to prevent a recurrence of the First World War. The chief problem they were designed to solve, the national rivalry between France and Germany, paled into insignificance beside a new, much greater threat, identified by Churchill in his other famous speech of 1946, given at Fulton, Missouri. Then he spoke of how, from Stettin on the Baltic to Trieste on the Adriatic, ‘an iron curtain has descended across the Continent.

Although it was Churchill’s Fulton speech on 5 March 1946 which made this phrase famous, the term ‘iron curtain’ had been used many times before, not least in a widely reported article by Josef Goebbels in Das Reich on 25 February 1945, in which he warned that German surrender would lead to Soviet occupation of most of the Reich and eastern Europe, dividing the continent by ‘an iron curtain’ of ‘enormous dimensions’. Churchill himself, in a cable to President Truman on 4 June 1945, wrote ‘I view with profound misgivings ... the descent of an iron curtain between us and everything to the eastward’. Another phrase was given general currency through the Fullton speech when Churchill urged the continuation of ‘a special relationship between the British Common-wealth and Empire and the United States’.

One thing the Utopian visions of the 1920s all had in common, from the League of Nations itself, to Pan Europa and Briand’s European Federal Union, was that they were all based on the idea of nations coming together to co-operate on an ‘intergovernmental’ basis.

Most influential on the birth of the later EC however was Arthur Salter’s collection of papers published in 1931  titled:  The United States of Europe, in which he addressed the possibility of building a federal Europe within the framework of the League of Nations itself. Because the League, had become largely a regional organisation, Salter saw that it might be adapted to provide a framework for a politically united Europe. In an essay entitled ‘The United States of Europe’ Idea he drew on the model of how Germany had been politically united in the 19th century, through establishing a Zollverein, a’common market.  His ‘United States’ would work in the same way, raising its funding through a common tariff on all goods imported from outside.

The central source of authority in this new body, Salter urged, must be reserved for the ‘Secretariat, the permanent body of international civil servants, loyal to the new organisation, not to the member countries. The problem with giving too much power to a Council was that they would always remain motivated primarily by national interest:

‘In face of a permanent corps of Ministers, meeting in committees and “shadow councils”, and in direct contact with their Foreign Office, the Secretariat will necessarily sink in status, in influence, and in the character of its personnel, to clerks responsible only for routine duties. They will cease to be an element of importance in the formation or maintenance of the League’s traditions.’ (Salter, Arthur (1931), The United States Of Europe, George (London, Allen & Unwin), p. 134.).

The Secretariat, Salter argued, would be above the power of national ministers, run by people who no longer owed any national loyalty. ‘The new international officer needed for the League’s task’ he wrote, ‘is something new in the world’s history.’

What Salter was describing, of course, was precisely the ‘supranational’ principle by which nearly three decades later his friend  Jean Monnet would inspire the setting up of the European Economic Community, deliberately intended as an embryonic ‘United States of Europe’.

By now, however, as Europe plunged into the Great Depression, the shadows were gathering over such dreams: 1932 saw the death of Briand himself, the most distinguished champion a’United States of Europe’ had yet won to its cause. The next year brought the rise to power of Adolf Hitler. His idea of how Europe might be united was very different.

In 1941then,  Churchill appointed Salter to head a British mission to Washington, to press on the Americans the need for a vast programme of new shipbuilding, this would eventually lead to the ‘Liberty ships’ which were to provide Britain with such a vital lifeline. (Dictionary of National Biography 1971-80, 1985, Oxford, Oxford University Press).

At the end of February 1943, after the Allies had retaken French North Africa, he was sent by President Roosevelt to Algiers to arrange for arms shipments to the Free French forces. Here he found bitter rivalry developing between the two French generals who could claim to act as leader of the Free French, de Gaulle and Giraud. In his efforts to resolve this dispute, Salter’s friend Jean Monnet formed a close alliance with the politician sent out by Churchill to act as the British Cabinet’s Political Representative in the Mediterranean, Harold Macmillan.

Macmillan records how he and Monnet had extensive conversations about the future of France and post-war Europe, and despite their reservations about de Gaulle’s high-handedness, agreed he was the only man of sufficient stature to lead a government in exile.

In 1947, at the Albert Hall in London, Churchill conjured up his vision of a’Temple of World Peace, which would have ‘four pillars’: the USA; the Soviet Union; a’United States of Europe’; and, quite separately, ‘the British Empire and Commonwealth.  Ironically, this was almost the only point on which Churchill and Monnet were agreed. If a’United States of Europe’ was to be brought about, it would be without Britain.

But it where however  two of the most active campaigners for integration, Josef Retinger and Churchill’s son-in-law Duncan Sandys, who in fact had gone to America to lobby for support for their campaign for European unity. Here they met two key figures, William J. ‘Wild Bill’ Donovan, founder in 1947 of the CIA, and his colleague Allen Dulles, later to become head of the CIA under President Eisenhower (and whose brother John Foster Dulles was to be Eisenhower’s Secretary of State). These two very senior members of the US intelligence community had recently joined in support of Coudenhove Kelergi another early proponent of a pan-European idea to form a Committee for a Free and United Europe. And a  new organisation was set up, the American Committee on United Europe (ACUE).

From this time on, as  academic research has established, the ACUE was used as a conduit to provide covert CIA funds, augmented by contributions from private foundations such as the Ford Foundation and the Rockefeller Institute, to promote the State Department’s obsession with a united Europe, in what one historian has called a’liberal conspiracy’.( Joshua Paul of Georgetown University, Washington, reported in Daily Telegraph, 19 September 2000, and Coleman, Peter ,1989, The Liberal Conspiracy: The Congress For Cultural Freedom And The Struggle For The Mind Of Europe (New York, The Free Press).

Over the next few years, ACUE funding was secretly channelled to a range of individuals and organisations working for European integration, from politicians such as Paul-Henri Spaak and trade unions to such influential British magazines as Lord Layton’s The Economist and the intellectual monthly Encounter.  However, the major beneficiary of ACUE funding was the European Movement. Between 1949 and 1960, it was kept afloat almost entirely on $4 million of CIA money, these contributions amounting to between half and two-thirds of the Movement’s income. ACUE funds were also used for a range of other purposes in Europe, including the financing of anti-Communist parties. In 1948, for instance, the CIA paid $10 million to support the Italian electoral campaign of Alcide de Gasperi a staunch supporter of European integration.  This substantial contribution was intended to help avert an Italian civil war in which the Communists might prevail. (See Spaak, Paul-Henri, 1971, The Continuing Battle: Memoirs Of A European Boston, Little, Brown and Company).

This  culminated when the ‘Action Committee for the United States of Europe, issued its inaugural manifesto on 15 October 1955. By this time the principal roles in the British government however had changed. The ageing Churchill had retired, succeeded by Anthony Eden, who led his party to election victory in May 1955.

 

Macmillan became Foreign Secretary.

Eden’s Cabinet considered the Six’s invitation to join the talks just beginning in Brussels. Despite rejecting British participation in any supranational egitimizen on principle, it decided on 30 June to send Russell Bretherton, an under-secretary of the Board of Trade. Much would later be made that only a civil servant rather than a minister was sent, but the talks were intended to be technical discussions rather than negotiations. But bids to turn both the OEEC and the Council of Europe into supranational bodies were rebuffed.

All this was, of course, to be repeated  a few years later when Jean Monnet, now head of his Action Committee for a United States of Europe, began discussing with the Prime Minister of Belgium P.H.Spaak the next leap forward. It was Spaak who more than anyone was responsible for guiding the project towards its greatest breakthrough of all, the Treaty of Rome. And it was Spaak who steered Monnet into accepting what was to become the central deception of the whole story, when he urged that all mentions of political or ‘federal’ union should be suppressed and that the project should be sold to the world as no more than a’common market’, designed to promote peaceful economic co-operation, trade and general prosperity.

Britain’s post-war record in promoting European cooperation on an intergovernmental basis however was second to none, from the OEEC and the Council of Europe to NATO and the WEU. This was precisely why Jean Monnet and Spaak were  determined to keep Britain out of their project at all costs: not least by making membership of the EEC conditional on joining Euratom, on terms they knew would make it impossible for the British to accept.

When Britain then persisted in trying to promote intergovernmental co-operation through free trade, the OEEC, the FTA and EFTA, Monnet used all his influence behind the scenes, not least through the USA, to sabotage those efforts. Only when he became seriously alarmed that his old ally de Gaulle was trying to subvert the project from within, by dragging it back towards intergovernmentalism, did Monnet go through that U-turn which led him to want Britain in. From Britain’s point of view, the story can then be understood better in terms of psychology than of rational political calculation. Britain’s change of heart over ‘Europe’ around 1960 stemmed more than anything from her post-Suez loss of national self-confidence and from the onset of that collective inferiority complex which resulted from comparing the performance of her own faltering, obsolescent economy with the new-found ‘dynamism’ of her Common Market neighbours.

On the other end France -in to the launch of the euro was first to object to the Maastricht criteria, and was then in 2003 leading the opposition to the Anglo-American coalition to topple Saddam Husein.  During the latter period then France’s president at the time led the way in pushing for that ‘directoire’ form of inter govern-mentalism which would egitimize France’s right to play top dog in settling Europe’s affairs for some time. By comparison, the role played by Germany, tucked in alongside France as her closest ally but inhibited by her wish to show she had forsworn her old nationalistic arrogance and the shame of her earlier record, was insignificant.

On 1 January 1999, more than 30,000 people joined a street party in front of the European Central Bank in Frankfurt to celebrate the launch of the Euro and the first economic union in Europe since the Roman Empire. A band struck up a stirring tune to mark the historic day. Curiously, it was not Beethoven’s ‘EU Anthem’ but Land Of Hope And Glory. (The Guardian, 2 January 1999.)

Now June 2005, Tony Blair and Jacques Chirac met a few weeks ago, and the conversations were, in diplomatic terms, frank. Not surprising given the fact that not only German, Dutch and Belgian’s , but today also more than one million French, citizens are living abroad. The countries where Frenchmen have moved to in hordes (US, UK, Switzerland, Asia…) are indicative of what they are looking for. The new entrepreneurs are moving to the Anglo-Saxon world, to be able to create. The old entrepreneurs, who have been successful, are moving to Switzerland, to avoid the punitive French tax rates.

Young French (and all over Europe) entrepreneurs and those with ambition will increasingly vote with their feet. Young creative types are moving to places where there is more opportunity. Many others are going to Eastern Europe, where taxes and constricting rules are fewer and opportunities are greater.

Gerhard Schroeder in Germany has essentially thrown in the towel on trying to get reform through his own party. What meager reforms he has gotten has been with opposition support. The German economy is on the verge of recession (with 10% unemployment) and his own supporters are upset with him because he urges reform which means his base will have to cover their share of the cost. But his version is reform-lite.

He has called for elections this fall, essentially asking his own party to give him a vote of no confidence. The polls suggest it is quite possible that the conservative Christian Democratic Union (CDU) could win an outright majority. They would have three years to put reforms in place and hopefully see them make a difference in the economy. The CDU would move Germany to a more free market model.

In the beginning, this would almost surely mean higher unemployment. But it might also force the European Central Bank to actually cut interest rates. Germany is the true linchpin of the European Union.

But just like we have done with other continents and countries, to understand Europe today, one has to understand its past.

 

A Short True History of Europe

After the fall of Constantinople in 1453, forty years before Columbus' discoveries, a succession of metropolitan leaders brought the European centre of gravity from Amalfi to Venice, then Genoa and the Iberian cities. Ottoman occupation would create a secluded East, while the West was taking off. The Spanish reconquista pushed Arabs to Africa and tore `Europe' from the Mediterranean however . The discovery of the `New World,' economic dynamism north of the Mediterranean, the reconquista in the West, and Ottoman occupation of the Levant shifted the core of Europe from Italian cities to Iberian and Northern ports and raised an imaginary about `superior' cultures.

Perhaps the essentialisation of Europe was never more conspicuous than in the period of colonialism. In the sixteenth century, during the age of exploration, expansion, and Protestant Reformation, `Europe' was redefined in a context of eurocentric power relations and unequal geopolitics and was mapped as the centre of the world in colonial domination. It was even personified as Queen Europe reigning over the `New World' in a posture of superiority. In the 1572 Atlas of A. Ortelius in Antwerp, Europe was represented as a queen with the rest of the continents at its feet . This eurocentric representation was combined with the clash between Christendom on the one hand and Islam, as well as pagan cultures, on the other, along with their myths and legends. Europe was a land of Christian faith, but also of colonial superiority and arrogance. Its southern boundary was defined against Islam, even if this meant geographical distortions, such as the one in the Iberian peninsula until 1492, when the Moors were finally defeated. In the sixteenth century, Europe excluded Egypt, the whole of Mediterranean Africa and the Middle East, basically on the divide of a Christian versus an Arab world.

Sixteenth-century maps of Christendom drew a border with the South of the Mediterranean, but were also ambiguous on the eastern side of Europe. The exclusion of Slavs, despite their Christian persuasion, first on cultural and later on economic grounds, rendered Europe's eastern boundary rather fuzzy. At the turn of the seventeenth century, some strongly argued to exclude Russia from the European order, on grounds of inferiority. Russians reciprocated by distancing themselves from Europe, which they considered as "a speech act; it is talked and written into existence. This meant the rupture of geographical continuity, especially after Turkish conquests and extensive reborderings creating basic problems in defining Europe for quite a long period.

The Enlightenment next offered a new perception of `Europe' as a system of sovereign states rather than a community of believers. In place of a semi-goddess or a queen, we now find Europe as a secularized region where technological development unfolded, capitalism was rising, and imperialism remained powerful. Its epicentre shifted further to the northwest and away from the Levant, and Mediterranean cities were surpassed by Northern ports, which now became dynamic metropolitan leaders. Bruges, Antwerp, Amsterdam, then London, and finally the towns of the industrial revolution. The Mediterranean fell from core to peripheral status in the global economy and the Euro-Mediterranean imaginary was dropped from mappings . The sea which used to bridge civilization, became a border. The core of Europe was consolidated toward the one we know today and new spatialities evolved with the emergence of nation-states. Historiography considers the Peace of Westphalia in 1648 as the beginning of this process. It established the principle of sovereignty for each prince's territory and gradually nation-states rose and became the regions bounded by hard borderlines.

Fractured from within, with rivalries and wars, Europe emerged in the mid- I940s with hopes for peace, reconciliation, and unification. A new narrative has been under construction since the first postwar years, with the basic drive of discur¬sively transforming the `dark continent' into a unified Europe. The emergent narrative has been contested by multiple voices since Churchill and Schuman and has involved several different spatialities since the European Coal and Steel Community as we have seen in part 1 otf this tree part article, united the West versus its eastern `others' during the cold war. Ambiguities of the past, especially the ones concerning the fragmentation of the Mediterranean and the boundaries of Europe on the East, have followed us into the mid-twentieth century, when De Gaulle referred to a Europe "from the Atlantic to the Urals," hinting at the partition of Russia into two parts. Another ambiguity was expressed by Churchill in Zurich on 19 September 1946, in his proposal for a United States of Europe -without the UK.

The hardest boundary that Europe has ever known was the `Iron Curtain,' which was also named by Churchill. `Iron' sends us to a notion of impenetrable enclosure and a checkpoint of extreme restriction of movement in the heart of Europe. The visibility of the cold war has dominated the landscapes of many regions and cities, especially Berlin, with its wall built in August 1961 as a material symbol of the Iron Curtain. Similarly, a fence split Gorizia/Nova Gorica (a single town in Italy/Slovenia) and several barbed wire borders encircled `free Europe.' However, boundaries remained undefined and in fact confusing in cases such as Prague, which despite its location to the northwest of Vienna was considered as a city of the `east' .Eastern Europe, especially the Balkans and the USSR, were the Second' World and became the other' for the `First World' of Western Europe and the United States.

For many centuries, the River Don was the boundary between European and Asian sections of Russia. This was rejected in the eighteenth century and the Ural Mountains came to mark the eastern frontier of Europe with the erection of boundary posts, where prisoners to Siberia used to pause . In European discurse, all this was the East, a notion ambivalent cognitive geography of Europe. It has been crystallized especially since 1992, when the Maastricht Treaty was signed after the end of the cold war. The narrative includes anniversaries, days of celebration of Europe, and landmarks in its development (e.g., 9 May 1950), as well as `heroes' and visionaries of European integration, such as Robert Schuman and Jean Monnet, giving their names to metro stations, streets, and University Chairs in Brussels, Paris, London, Florence, and throughout Europe.

By implicitly equating "Europe" with the European Union after successive territorial formalizations, the new narrative influences the construction of new spatialities in cultural and social life. It attempts to place `Europe' as a constructed spatiality in parallel with the nation-state, by passing legislation, regulations, and treaties in the EU. It creates a European postnational political culture by regulating hierarchies of borders and negotiating Europe's spatial limits and multilayered bordering. This ranges from a diverse set of national boundaries whose significance has been changing to external borders under negotiation, especially since the Schengen treaty. The tiers and hierarchies of borders of Europe shift during the new world order and the fluidity of its territory causes significant shifts in the domains of culture and identity, besides the important global restructuring in the economy, politics, and social organisation.

The debordering of cold-war Europe, the porosity of East-West boundaries, and the permeability of the Mediterranean were effectively renegotiated in the 1990s, with Berlin as a place of effective symbolism. In Europe, the collapse of the `Iron Curtain' did not mean the melting of borders. In fact as soon as the curtain was lifted between West and East, the borderline was hardened elsewhere: Europe was rebordered. At the turn of the new millennium, as Gorizia was considering the demolition of its fence between Italy and Slovenia when the latter was becoming a candidate EU member state in the 1990s, a barbed wire enclosure was built around Melilla, the Spanish town in Morocco. In fact the current globalization narrative overemphasises external forces shaking the principle of national sovereignty and challenging the system of nation states or even superseding it. It also underestimates hardened borders around the United States after 9/11 or in fact around Europe, for that matter.

Thus despite such key developments as globalization and the emergence of the EU, states and their borders retain their relevance on at least three levels: security, political, and administrative jurisdiction and individual status . The spatial recalibration of Europe has not undermined the importance of the nation-state as an imagined community. The principle of 'subsidiarity' was partly devised as the pole opposite to 'Europeanization' within one and the same institutional discourse, in order to calm rising euroscepticism in the face of centralistic decision-making processes. This contradiction is mirrored in the tendency of a postnational political culture to essentialise the nation-state in the context of the EU dominant bureaucratic narrative.

The social construction of boundaries, often in line with the dominant narrative. The Schengen Agreement has created several types of borders and often bizarre hierarchies . The Treaty, signed in Luxembourg in December 1998, was initially expected to loosen up, "relax," or "demolish" internal EU borders, while tightening external ones . It originally included Germany, France, Italy, Spain, Austria, Portugal, Greece, Belgium, the Netherlands, and Luxembourg. Seven countries decided to move ahead and implement it. Since then, the five Nordic countries have acceded to the Agreement. The unusual element here is that Norway and Iceland are not EU member states! Though Schengen was for EU members only, it was initially rejected by some member states while it was accepted by non-members (including Switzerland, recently) raising absurd issues of migration, transactions, and border hierarchies more generally . Soon afterward, a new border was erected in 2002 with the EMU, the Euro currency zone, which facilitates the free flow of capital and payments among twelve of the then fifteen EU member states.

There are thus several types of borders in and around the EU today (Map 4): those specified by Schengen around member states and those around non-members; those with candidate members and long-term candidate members for whom discussions for inclusion will start in the future; there are EMU borders; and borders with memories of bipolarity and of the `Iron Curtain.' There also is the question of Europe beyond the mainland and here, besides Melilla and the Canaries there are French lands further afield, in the Caribbean and in the Indian Ocean (Lewis and Wigen 2001: 4). Such examples of the several tiers of borders, internal and external, augment the tensions between nationalism, regionalism, and federalism. The multiple hierarchy of borders also undermines the ideal of a borderless Europe as promoted by the Schengen Agreement, surrounded by hard EU bound¬aries. Deconstructing the bureaucratic narratives we find differing political philo¬sophies in space and time that create its diversity and contradictions.

But the most important tiering and the greatest shift in borders has followed developments in Eastern Europe. These culminated in 1989 and then again in 2004 when eight among the ten new member states accepted into the EU are East European countries: Latvia, Lithuania, Estonia, Poland, Hungary, Slovakia, the Czech Republic, and Slovenia. Most Eastern European countries are still excluded, of course, especially the Balkans. Two of the states of former Yugoslavia, still derelict from civil wars and the Kosovo bombings of 1999, have not even applied for EU membership. Bulgaria and Romania were not accepted during the present round of EU expansion, on economic grounds. With the accession of Turkey before the Balkans or at least before Albania, Serbia, and FYROM, we may soon see a deformed EU map with a big hole down its southeast, incompara¬bly larger than the Swiss `hole'. Though the Balkans are predominantly Christian, their population, along with Ukranians and Georgians, are not treated as Europeans but as `others' when they migrate to the EU, just like Afghans, Iraquis, Africans, and other peoples further afield. The Balkan people are' one boundary shift away from European citizenship, but this shift is surrounded by ambiguity, though their geography is much more `European' than that of Algerians and Moroccans, whom France failed to integrate into Europe. But that is yet another story.

From an economic point of view, today, the European Central Bank is focused on the needs of the three major economies - Germany, France and Italy. The rest of Europe is not only ignored, but is directly harmed by the inability of Germany and France in particular to impose economic discipline on themselves.

It is now clear that economic discipline will not be coming anytime soon. Therefore, France and Germany will continue to drag down the rest of the eurozone. And so, for the first time, respectable voices - i.e., those deemed respectable by the European elite - are raising serious questions about the future of the euro. The issue is not really so much the future of the currency as the fact that, in May, the euro's future became a reasonable topic of conversation.

 

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