Postwar
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To most onlookers—including many of their local critics—the unpleasant regimes of southern Europe were thus not so much morally bankrupt as institutionally anachronistic. And, of course, their economies were in essential respects similar to those of other Western nations and already well integrated into international markets for money, goods and labour. Even Salazar’s Portugal was recognizably a part of the international system of capitalism—albeit on the wrong end of it. The emerging middle class, in Spain especially, modeled its ambitions no less than its dress upon managers, businessmen, engineers, politicians and civil servants from France or Italy or Britain. For all their backwardness, the societies of Mediterranean Europe already belonged in a world they now aspired to join on equal terms, and the transition out of authoritarian rule was above all facilitated by the opportunity afforded them to do so. Their élites, who had once faced resolutely backward, now looked north. Geography, it appeared, had triumphed over history.
Between 1973 and 1986 the European Community passed through one of its periodic bursts of activism and expansion, what one historian has called its ‘sequence of irregular big bangs.’ French President Georges Pompidou, released by De Gaulle’s death from the mortgage of his patron’s disapproval—and more than a little perturbed, as we have seen, by the strategic implications of Willy Brandt’s new Ostpolitik —made it clear that he would welcome Great Britain’s membership of the EC. In January 1972, in Brussels, the EC formally approved the accession of Britain, Ireland, Denmark and Norway, to take effect a year later.
The successful British application was the work of the Conservative Prime Minister Edward Heath, the only British political leader since World War Two unambiguously and enthusiastically in favor of joining his nation’s fate to that of its continental neighbors. When the Labour Party returned to office in 1974 and called a referendum on UK membership of the Community, the country approved by 17,300,000 to 8,400,000. But even Heath could not make the British—the English especially—‘feel’ European, and a significant share of voters on Right and Left alike continued to doubt the benefits of being ‘in Europe’. The Norwegians, meanwhile, were quite distinctly of the view that they were better off outside: in a referendum in September 1972, 54 percent of the country rejected EC membership and opted instead for a limited free-trade agreement with the Community, a decision reconfirmed in an almost identical vote twenty two years later.236
British membership of the Community would prove controversial in later years, when Prime Minister Margaret Thatcher opposed the emerging projects for ever-closer union and demanded that Britain be refunded her ‘overpayments’ to the common budget. But in the Seventies London had problems of its own and, despite the price-inflationary impact of membership, was relieved to be part of a trading area that now supplied one third of Britain’s inward investment. The first direct elections to a new European Parliament were held in 1979—until then, members of the European Assembly sitting in Strasbourg had been selected by the respective national legislatures—but aroused little popular interest. In the UK the turnout was predictably low, just 31.6 percent; but then it was not especially high elsewhere—in France only three out of five electors bothered to vote, in the Netherlands even fewer.
The adhesion of three ‘northern tier’ countries to the EC was relatively unproblematic for newcomers and old members alike. Ireland was poor but tiny, while Denmark and the UK were wealthy and thus net contributors to the common budget. Like the next round of prosperous additions, in 1995, when Austria, Sweden and Finland joined what was by then the European Union, the new participants added to the coffers and clout of the expanding community without significantly increasing its costs, or competing in sensitive areas with existing members. The newcomers from the South were a different matter.
Greece, like Ireland, was small and poor and its agriculture posed no threat to French farmers. Thus despite certain institutional impediments—the Orthodox Church had official and influential standing and civil marriage, to take one example, was not permitted until 1992—there were no powerful arguments against its admission, which was championed by French President Giscard d’Estaing among others. But when it came to Portugal and (above all) Spain, the French put up strong opposition. Wine, olive oil, fruit and other farm products cost far less to grow and market south of the Pyrenees; were Spain and Portugal to be admitted to the common European market on equal terms, the Iberian farmers would offer French producers stiff competition.
Thus it took nine years for Portugal and Spain to gain entry to the EC (whereas Greece’s application went through in less than six), during which time the public image of France, traditionally positive in the Iberian peninsula, fell steeply: by 1983, two-thirds of the way through an acrimonious series of negotiations, only 39 percent of Spaniards had a ‘favorable’ view of France—an inauspicious beginning to their common future. Part of the problem was that the arrival of the Mediterranean nations entailed more than simply compensating Paris with a further increase in the Community’s support payments to French farmers; between them Spain, Portugal and Greece brought an additional 58 million people into the Community, most of them poor and thus eligible for a variety of Brussels-funded programs and subsidies.237
Indeed, with the accession of three poor, agrarian countries, the Common Agricultural Fund took on heavy new burdens—and France ceased to be its main beneficiary. Various carefully negotiated deals had thus to be reached to compensate the French for their ‘losses’. The newcomers in turn were duly compensated for their own disadvantages and for the long ‘transition period’ which France succeeded in imposing before allowing their exports into Europe on equal terms. The ‘Integrated Mediterranean Programs’—regional subsidies in fact if not yet in name—that were provided to Spain and Portugal upon entry in 1986 had not been offered to the Greeks in 1981, and Andreas Papandreou successfully demanded their extension to his country, even threatening to take Greece out of the EC if this was denied!238
It was in these years, then, that the European Community acquired its unflattering image as a sort of institutionalized cattle market, in which countries trade political alliances for material reward. And the rewards were real. The Spanish and Portuguese did well enough out of ‘Europe’ (though not as well as France), Spanish negotiators becoming notably adept at advancing and securing their country’s financial advantage. But it was Athens that really cleaned up: despite initially falling behind the rest of the Community in the course of the Eighties (and replacing Portugal as the Community’s poorest member by 1990), Greece profited greatly from its membership.
Indeed, it was because Greece was so poor—by 1990 half of the European Community’s poorest regions were Greek—that it did so well. For Athens, EC membership amounted to a second Marshall Plan: in the years 1985-1989 alone, Greece received $7.9 billion from EC funds, proportionately more than any other country. So long as there were no other poor countries waiting in line, this level of redistributive generosity—the price of Greek acquiescence in Community decisions—could be absorbed by the Community’s national paymasters, chiefly West Germany. But with the costly unification of Germany and the prospect of a new pool of indigent applicant-states from Eastern Europe, the generous precedents of the Mediterranean accession years would prove burdensome and controversial, as we shall see.
The bigger it grew, the harder the European Community was to manage. The unanimity required in the inter-governmental Council of Ministers ushered in interminable debates. Decisions could take years to be agreed—one directive on the definition and regulation of mineral water took eleven years to emerge from the Council chambers. Something had to be done. There was a longstanding consensus that the European ‘project’ needed an infusion of purpose and energy—a conference at The Hague back in 1969 was the first of an irregular series of meetings intended to ‘re-launch Europe’—and the personal friendship of France’s President Valéry Giscard d’Estaing and German Chancellor Schmidt in the years 1975-1981 favored such a
n agenda.
But it was easier to advance by negative economic integration—removing tariffs and trade restrictions, subsidizing disadvantaged regions and sectors—than to agree on purposeful criteria requiring positive political action. The reason was simple enough. So long as there was sufficient cash to go around, economic cooperation could be presented as a net benefit to all parties; whereas any political move in the direction of European integration or coordination implicitly threatened nationalautonomy and restricted domestic political initiative. Only when powerful leaders of dominant states agreed for reasons of their own to work together toward some common purpose could change be brought about.
Thus it was Willy Brandt and Georges Pompidou who had launched the first system of monetary coordination, the ‘Snake’; Helmut Schmidt and Giscard d’Estaing who developed it into the European Monetary System (EMS); and Helmut Kohl and François Mitterrand, their respective successors, who would mastermind the Maastricht Treaty of 1992 that gave birth to the European Union. It was Giscard and Schmidt, too, who invented ‘summit diplomacy’ as a way to circumvent the impediments of a cumbersome supranational bureaucracy in Brussels—a further reminder that, as in the past, Franco-German cooperation was the necessary condition for the unification of Western Europe.
The impulse behind Franco-German moves in the Seventies was economic anxiety. The European economy was growing slowly if at all, inflation was endemic and the uncertainty resulting from the collapse of the Bretton Woods system meant that exchange rates were volatile and unpredictable. The Snake, the EMS and the écu were a sort of second-best—because regional rather than international—response to the problem, serially substituting the Deutschmark for the dollar as the stable currency of reference for European bankers and markets. A few years later the replacement of national currencies by the euro, for all its disruptive symbolic implications, was the logical next step. The ultimate emergence of a single European currency was thus the outcome of pragmatic responses to economic problems, not a calculated strategic move on the road to a pre-determined European goal.
Nevertheless, by convincing many observers—notably hitherto skeptical Social Democrats—that economic recovery and prosperity could no longer be achieved at a national level alone, the successful monetary collaboration of Western European states served as an unexpected stepping stone to other forms of collective action. With no powerful constituency opposed in principle, the Community’s heads of state and government signed a Solemn Declaration in 1983 committing them to a future European Union. The precise shape of such a Union was then hammered out in the course of negotiations leading to a Single European Act (SEA) which was approved by the European Council in December 1985 and entered into force in July 1987.
The SEA was the first significant revision of the original Rome Treaty. Article One stated clearly enough that ‘The European Communities and European political cooperation shall have as their objective to contribute together to making concrete progress towards European unity’. And merely by replacing ‘Community’ with ‘Union’ the leaders of the twelve member nations took a decisive step forward in principle. But the signatories avoided or postponed all truly controversial business, notably the growing burden of the Union’s agricultural budget. They also stepped cautiously around the embarrassing absence of any common European policy on defense and foreign affairs. At the height of the ‘new Cold War’ of the 1980s, and on the verge of momentous developments unfolding a few dozen miles to their East, the member states of the European Union kept their eyes resolutely fixed upon the internal business of what was still primarily a common market, albeit one encompassing well over 300 million people.
What they did agree on, however, was to move purposefully towards a genuine single internal market in goods and labour (to be implemented by 1992), and to adopt a system of ‘qualified majority voting’ in the Union’s decision-making process—‘qualified’, that is, by the insistence of the bigger members (notably Britain and France) that they retain the power to block proposals deemed harmful to their national interest. These were real changes, and they could be agreed to because a single market was favored in principle by everyone from Margaret Thatcher to the Greens, albeit for rather different reasons. They facilitated and anticipated the genuine economic integration of the next decade.
A retreat from the system of national vetoes in the European Council was unavoidable if any decisions were to be taken by an increasingly cumbersome community of states that had doubled its size in just thirteen years and was already anticipating applications for membership from Sweden, Austria and elsewhere. The larger it grew, the more attractive—and somehow ‘inevitable’—the future European Union would become to those not yet inside it. To citizens of its member-states, however, the most significant feature of the European Union in these years was not the way in which it was governed (about which most of its people remained entirely ignorant), nor its leaders’ projects for closer integration, but the amount of money flowing through its coffers and the way that money was disbursed.
The original Treaty of Rome contained only one agency with a specific remit to identify regions within its member states that needed assistance and then dispense Community cash to them: the European Investment Bank, initiated at Italy’s insistence. But a generation later regional expenditures, in the form of cash subsidies, direct aid, start-up funds and other investment incentives were the leading source of budgetary expansion in Brussels and by far the most influential lever at the Community’s disposal.
The reason for this was the confluence of regionalist politics within the separate member states and growing economic disparities between the states themselves. In the initial post-WWII years, European states were still unitary, governed from the center with little regard for local variety or tradition. Only the new Italian constitution of 1948 even acknowledged the case for regional authorities; and even so, the limited local governments that it stipulated remained a dead letter for a quarter of a century. But just when local demands for autonomy became a serious factor in domestic political calculations all over Europe, the EC for its own reasons inaugurated a system of regional funds, beginning in 1975 with the European Regional Development Fund (ERDF).
From the point of view of Brussels-based officials, the ERDF and other so-called ‘structural funds’ had two purposes. The first was to address the problem of economic backwardness and unevenness within a Community that was still very much guided by a post-war culture of ‘growth’, as the Single European Act made quite explicit. With each new group of members came new inequalities that required attention and compensation if economic integration was to succeed. Italy’s Mezzogiorno was no longer the only impoverished zone, as it had once been: most of Ireland; parts of Great Britain (Ulster, Wales, Scotland and the north and west of England); most of Greece and Portugal; southern, central and north-western Spain: all were poor and would need significant subsidies and reallocations of central aid if they were ever to catch up.
In 1982, taking the European Community’s average income as 100, Denmark—the wealthiest member—stood at 126, Greece at just 44. By 1989 per capita GDP in Denmark was still more than twice that of Portugal (in the US, the gap between wealthy and poor states was only two-thirds as wide). And these were national averages—regional disparities were greater still. Even wealthy countries had deserving zones: when Sweden and Finland joined the Union in the mid 1990s, their Arctic regions, under-populated and totally dependent on maintenance grants and other subsidies from Stockholm and Helsinki, now qualified for assistance from Brussels too. To correct geographical and market deformations that locked Spain’s Galicia or Sweden’s Vasterbotten into dependency, agencies in Brussels would devote large amounts of cash—bringing undoubted local benefits but also setting up expensive, cumbersome and occasionally corrupt local bureaucracies in the process.239
The second motive behind Europe’s enormously costly regional funding projects—between them the various ‘Structural’ and ‘Cohesion�
�� Funds would consume 35 percent of all EU expenditure by the end of the century—was to enable the European Commission in Brussels to bypass uncooperative central governments and collaborate directly with regional interests within the member-states. This strategy proved very successful. Ever since the late 1960s, regionalist sentiment had been growing (in some cases reviving) everywhere. Quondam 1968 activists, substituting regional affinity for political dogma, now sought to revive and use the old Occitan language in south-western France. Like their fellow activists in Brittany they found common cause with Catalan and Basque separatists, Scottish and Flemish nationalists, northern Italian separatists and many others, all expressing a common resentment at ‘misrule’ from Madrid, or Paris, or London or Rome.
The new regionalist politics fell into many over-lapping sub-categories—historical, linguistic, religious; seeking autonomy, self-government or even full national independence—but generally divided into wealthy provinces, resentful at being obliged to subsidize penurious regions of their own country; and historically disadvantaged or newly de-industrialized zones, angry at being neglected by unresponsive national politicians. In the first category were to be found Catalonia, Lombardy, Belgian Flanders, West Germany’s Baden-Württemburg or Bavaria, and the Rhône-Alpes region of south-east France (which together with the Île-de-France comprised nearly 40 percent of French GDP by 1990). In the second category were Andalusia, much of Scotland, French-speaking Wallonia and many others.
Both categories stood to gain from European regional policies. Wealthy regions like Catalonia or Baden-Württemburg set up offices in Brussels and learned how to lobby on their own behalf, for investment or for Community policies favoring local over national institutions. Political representatives from disadvantaged regions were just as quick to manipulate grants and aid from Brussels to increase their local popularity—and thereby pressure compliant authorities in Dublin or London into encouraging and even supplementing Brussels’ largesse. These arrangements suited everyone: European coffers might hemorrhage millions to subsidize tourism in the depopulated West of Ireland or to underwrite tax-incentives to attract investors to areas of chronic unemployment in Lorraine or Glasgow; but even if only from enlightened self-interest, the beneficiaries were becoming loyal ‘Europeans’. Ireland successfully replaced or updated much of its dilapidated transport and sewerage infrastructure in this way, and among poorer, peripheral member states it was not alone.240