The future of the EU STEPHEN WALL
If the euro falls, what price peace?
From the time of its founding fathers, the dream of post-war Europe has been political union as well as economic prosperity. But with its economy in crisis, the danger is that Europe’s core values of solidarity and peaceful coexistence will be lost
exchange and interest rates, could only work if there were significant fiscal transfers from the rich to the poor member states. And that would not happen unless economic and mon- etary union were accompanied by political union, which, for her, meant an unacceptable sacrifice of national sovereignty.
I
t was Margaret Thatcher, speaker of unpalatable truths, who first said it back in 1990. A single currency, in which nations gave up the right to set their
Those countries that signed up for the single
currency in 1991 were committed to a political union. But they explicitly ruled out fiscal trans- fers and the rules they set (the stability and growth pact) to try to effect the economic convergence essential to a successful single currency were soon breached by France and Germany, the very countries that had invented and imposed them on others. So they willed the end, but not the means of achieving it. That conflict between the European ideal and national self-interest is not new. Jean Monnet, the inspirational genius behind the European project, saw that in post-war Europe, France had coal but no steel-making capacity. Germany had that capacity but no coal. Monnet detected the risk of renewed conflict and persuaded French and German leaders to create a supra-national authority to manage and share their coal and steel resources. From that sprang the idea of the European Community, in which nation states would vest some of their sovereignty in supra- national institutions in order to develop a single European market and a series of com- mon policies, which would so intertwine their interests that war between them would become unthinkable. It was always in Monnet’s mind that this organisation of member states would even- tually pool so much of their sovereignty that they would form a single political federation. Five of the six founding members shared his view. De Gaulle’s France did not and, in the mid-1960s, de Gaulle boycotted the European Community for six months in an unsuccessful attempt to unravel some of what Monnet had created. De Gaulle wanted, instead, a powerful union of nation states, led by France in part- nership with Germany. The boycott ended but for 10 years from 1958 the political devel- opment of the European Community was held to ransom by de Gaulle. His vision of a militarily strong Europe, independent of the United States for its defence, put him at log- gerheads with every other member state. De Gaulle’s successors were, unlike him, committed to the notion of a European polit-
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ical union. Even when the Community grew to embrace other European countries, includ- ing Britain, the commitment to political union was maintained. Precisely what it meant was not defined but, for most, economic and mon- etary union with a single currency was to be the key ingredient. That it took more than 30 years to bring the single currency into being is a measure of the difficulty of recon- ciling conflicting national interests and of the impact of world events such as the oil crisis of the 1970s and the collapse of the post-war Bretton Woods monetary system. When, in 1990, the President of the
EuropeanCommission, Jacques Delors, said that the ultimate objective should be a federal structure with the European Commission as its government, answerable to the elected European Parliament and with the European Council (the heads of the Community’s Governments) as a kind of senate, Margaret Thatcher was the only European leader to say “no, no, no”. Nevertheless, there were already signs that the commitment of other member states to political union had become more rhetorical than real. At French insistence, the Common
Agricultural Policy still accounted for nearly half of the Community’s budget, despite the fact that agriculture represented only around 6 per cent of the European Community’s GNP. There was not enough money to support other more pressing policies that would have increased the integration of the member states. With German reunification, the German
Government’s interest in political union waned. The collapse of the Soviet Union removed a threat that had helped bind the Community members together. The countries that signed up to the single currency gave to the European Commission and European Parliament only a walk-on part, making one of the core struc- tures of any political union the creature of the member states, outside the guardianship of the independent institutions. The European Community has always been a project led by the elites of its member states. For most of its history, outside Britain at least,
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