Prologue

Since the EU (1992) came into being in the Treaty on European Union, signed in Maastricht in final metamorphoses from the EC (1986) and the original EEC (1957), the EU has negotiated four more treaties. The Treaties of Amsterdam (1997) and Nice (2001) both of which came into force, made alterations to the rule book and voting procedures in preparation for enlargement from 15 to as many as 30 states (see Chapter 9). The subsequent European Constitution Treaty (2004) and its cloned replacement the Treaty of Lisbon (2007) have both been rejected in referendums (see Chapter 9). The EU’s 27 states and single market of 488 million population (cf. USA’s

303 million) still operate quite smoothly under the Nice Treaty’s (2001) rules and QMV procedure. The EU represents 8 per cent of the world’s population and 40 per cent of the world’s trade in goods (double the Americans’ share). Sixteen of these 27 EU states also make up the eurozone, sharing a single currency (Slovakia joined the eurozone, January 2009). The euro’s tenth birthday was in January 2009. The fact that after more than 50 years of existence there are still states that

want to join (viz. Turkey and Ukraine) is testimony to the EU’s attractiveness and success and reveals incidentally the effectiveness of the EU as a ‘soft power’. How did all this start? Why did only six states initially involve themselves

in economic integration? What ideas and influences shaped the organisation? Was federation the motive? This book aims to answer such questions and to strip away the rhetoric

surrounding European integration that belies the often more mundane reality of fact. The story of the EEC is a subject that is often quite mistakenly wrapped in all sorts of assumptions regarding its supposed purpose and goal. Certainly the institutional framework of the 1951 European Coal and Steel

Community (ECSC), EEC and EU were part of a continual resolution of Western Europe’s fundamental predicament. Since the end of World War II in 1945 Western Europe has faced two big problems – Germany and Russia. How to live safely and securely with them remains the fundamental question facing Europe today. The reason for this is the experience and record of the past. In the case of Germany there have been conflicts in 1864, 1870, 1914-18

and most catastrophically 1939-45. For France, which was invaded three times in 70 years, Germany was always the bigger of the two problems. In 1940 France had to surrender in the same railway carriage in which Germany had signed the Armistice in 1918. It had taken Hitler less than six weeks to humble a historic foe. Germany’s victory march through Paris in 1940 followed the identical route to the French victory march of 1918. To end a recurring cycle of vengeance and war was uppermost in French minds. De Gaulle’s post-war government in 1944 even signed the short-lived Treaty of Moscow with the USSR, a mutual defence pact which named the potential aggressor as Germany. Between 1944-48 French policy towards Germany was to try and keep it weak and dismembered, on the principle that ‘French strength lay in German weakness’. In 1948 France had to come to terms politically with the reality of an

emergent West German state and strong economy. These factors plus the economic necessity of access to German markets and coal supplies produced a volte-face in French policy. A Franco-German alliance has subsequently been the bedrock and motor of European economic integration. It flourished from the Adenauer-de Gaulle era, in 1958-63, up to that of Kohl and Mitterrand in the 1980s. The objective of safely incorporating a revived German economy into

Western Europe, in the absence of any formal peace settlement with the defeated, belligerent former Germany, was solved through economic integration: the creation of common markets originally in coal and steel in 1951 and in industrial goods in 1957. This meant that the recovery of German economic power did not pose a political or military threat to Europe in the 45 years following World War II (whereas Japan’s rise to economic superpower status has alarmed its Asian neighbours). The institutional creations (ECSC, EEC) of European economic integra-

tion also formed part of the post-war ‘architecture’ of what was called ‘containment’. This was US President Harry Truman’s policy at the start of the ‘Cold War’ in 1947 of keeping the USSR behind its 1945 frontiers and stopping the further spread of Soviet Communism. From 1947 the US sponsored and encouraged all forms of integration in Europe. Europe was divided by the ‘Iron Curtain’ into two blocs each within a superpower’s sphere of influence – the USSR’s in Eastern Europe and the USA’s in Western Europe. Stalin’s policy of ‘defensive expansionism’ turned East and Central Euro-

pean states liberated by the Red Army in World War II into communist states. This westward extension of the ‘Soviet Empire’ resulted in a chain of ‘buffer states’; an insurance against possible future invasion from the West which also violated the wartime agreement made at Yalta in January 1945 when Stalin agreed with Roosevelt and Churchill to the principles of selfdetermination and free elections for liberated Europe. At the end of the war the two powers which had previously contained the USSR – Germany and Japan – were both defeated. The North Atlantic Treaty Organization (NATO), established in 1949 (a permanent peace-time military alliance

operating on the principle of mutual defence – ‘an attack on one being an attack on all’), and American atomic weapons deterred the USSR militarily. However, security from Soviet Communism and a resurgent Germany was not simply a military issue: it was also fundamentally economic. Economic growth and higher living standards in Western Europe from the late 1940s through to the 1980s enhanced its security against communist influence. Political stability, particularly democratic stability, depended on a sufficient level of comfort and economic satisfaction. European integration, through a common market, provided a superior framework for facilitating this than Comecon (the Council of Mutual Economic Assistance, established in 1949 as a Soviet reaction to Marshall Aid and the OEEC) and the centrally planned command economies of the Soviet Empire’s Eastern Bloc. The radical changes to the European map following the geopolitical

upheavals of 1989-91 upset the balance of power in Europe that had existed since 1945, and marked the end of the post-war era and the old certainties of the Cold War. The fall of the Berlin Wall in November 1989, the peaceful collapse of communist regimes in Eastern Europe (with the exception of Romania), the end of the Warsaw Pact and Comecon and, ultimately, in December 1991 the demise of the USSR itself were events of seismic proportions comparable to the French Revolution two hundred years before in 1789-91 or the Russian Revolution of 1917. Before 1989-91 the big questions were what Russia’s intentions were and

what action might they take. After December 1991 the demise of the Soviet Union ended the conventional military threat to Western Europe from the Red Army. The old Cold War certainties had gone by 1991; the same big questions then applied to the remerged Greater Germany. How would it act with its 80 million population and as the world’s third largest economy? Contrary to the conjectured fears of worst possible scenarios from President Mitterand, Jacques Delors and prime minister Margaret Thatcher (see Chapter 7), Greater Germany’s conduct of affairs was unsurprising. Big Germany became primus inter pares in the EU (after the Nice Treaty 2001) with more voting power in the Council of Ministers than Italy, France and the UK due to Germany’s far larger population. Germany could not dominate decision making because of qualified majority voting (QMV) rules (see Chapter 9). The architecture and institutional machinery set up in Europe 1949-51 proved quite adequate and sufficiently flexible to accommodate the merger of the two Germanys (facilitated by the Basic Law (article 23) 1949); and with the GDR’s automatic absorption, as part of the FRG, into the EC (under the Treaty of Rome (article 227 and Declarations concerning German nationals pp 182-83) 1957). The eventual merged armies of the GDR and FRG were absorbed within NATO following a NATO-Soviet negotiated agreement 1990-91 (see Chapter 7). Subsequent NATO and EU enlargements have incorporated Poland, Hun-

gary, Czech Republic and eventually the three Baltic states and others into

both organisations. Germany felt more secure with Poland in NATO and the EU as it stopped being the ‘last country in the West’. EMU from 1999 meant the end of both the Bundesbank’s de facto ‘DM

Zone’ and what UK monetary economists referred to as the ‘German Dominance Hypothesis’ (GDH) (see Chapter 8). Russia’s invasion and short war with Georgia, August 2008, has revived the

‘Russian question’ once again (Afghanistan, 1979 was the last time Russia invaded a state). Whereas in 1991 the Russian government, economy and military were in disarray this is no longer the case. The Russian army’s operation might be seen as ill judged and indefensible but was considered to be militarily competent by Western military commentators. Although Russia is no longer a superpower it has re-emerged as a regional power in the Caucauses and altered the whole balance of power in that area. This has wider implications not just for the Ukraine and Georgia but concerning future enlargement and possible limits to EU and NATO expansion.