EUROPE

Tentative steps toward unification

MICHAEL POSNER December 16 1985
EUROPE

Tentative steps toward unification

MICHAEL POSNER December 16 1985

Tentative steps toward unification

EUROPE

Its founding fathers envisaged a united continent, rising from the ashes of the Second World War. Konrad Adenauer, the late chancellor of West Germany, dreamed of a vast common market. Jean Monnet, a French statesman, talked of Eurocitizens, ruled by a

transnational government. But almost three decades after its six original members initialled their constitution, the Treaty of Rome, the European Economic Community remains a ghostly shadow of the grand conception. “The European revolution never took place,” says Lindsay Armstrong, editor of 30 Days of Europe, a magazine that monitors Community affairs. “Thirty years later we are trying to start all over again.” But in Luxembourg last week 12 EEC leaders—including the prime ministers of Spain and Portugal, full members as of Jan. 1—took several steps toward reform.

After a gruelling 20 hours of debate the leaders attending the Eurosummit agreed to amend the Treaty of Rome, reaching “provisional agreement” on a package of reforms designed to revive the ideal of a united Europe. The impetus for change was necessity. In reality, the Common Market is scarcely more

than an elaborate and rigid customs union. It took more than 17 years for its members to allow European architects to set up their practices in whatever country they choose and another five years to let mutual funds operate across national frontiers.

At the same time, standards for most manufactured goods differ from country to country. Government buyers routinely discriminate in favor of homegrown sellers. And lavish agricultural subsidies are regularly paid to all Community farmers. The results: vast surpluses of unsold produce. As well, high unemployment—11 per cent across

Europe—is a political time bomb.

Without integrating its stagnant economies, most experts say, the Community will not be able to meet the mounting competitive threats from the United States and Japan. Technologically, Europe is trapped in what Brussels economist Peter Ludlow calls “pet-

ty-minded and smug lethargy.” Its three mainframe computer manufacturers control just two per cent of the global market. One American company, IBM, controls 70 per cent. Explains Carlos de Benedetti, chairman of Olivetti: “Too many Europeans just want additional guarantees that they’ll keep what they already have.”

The Luxembourg summit, the second gathering of EEC leaders this year, tried to change that psychology. But the steps taken were, as Ludlow put it, “a very late and timid attempt to breath new life into bones that may not be able to respond.” The key points of the accord:

expanding powers for the 434-member European Parliament, which now simply ratifies decisions taken by the EEC’s central authority, the Council of Ministers; endorsing the goal of full monetary union, with a common European currency; and a requirement for majority voting, instead of unanimity, on questions affecting the free flow of goods and services.

In the past the search for total consensus has virtually paralysed decision-making. By surrendering a national veto, the Community may come closer to reaching its 1992 target of dismantling 300-odd trade barriers and creating a genuine common market. Said Jacques Delors, president of the European Commission, the EEC’s executive body: “We wished for more, but it is forward-looking compromise. Everyone who belongs to Europe has reason to be satisfied.”

The glow of satisfaction, however, did not last long. The leaders of Europe had barely emerged from Luxembourg’s Kirchberg Centre, before a chorus of Europessimists had assembled. “Infinitesimal progress,” said Denis Healey, the British Labour Party’s foreign affairs critic. Declared Lord Gladwyn, president of the European Movement, which seeks a federation of European states: “It’s as if the mountains had labored and produced a ridiculous mouse. I don’t think the Community is going to dissolve. It’s going to go on, but much more slowly than is desirable.”

In fact, even the halting steps taken

last week may yet be reversed. Unless all member parliaments approve the amendments, the treaty cannot be changed. And two Community members voiced strong reservations about the proposed reforms: Italy, which says they do not go far enough toward meeting Rome’s vision of an integrated —and resurrected—Europe; and Denmark, which fears they go too far, threatening Danish national interests. Said Sir Fred Catherwood, a British member of the European Parliament: “To put together a community of 320 million people takes a bit of doing. Trying to bring along countries that have been independent for 1,000 years or more is a tremendous political job.”

For many students of the Community’s 28year history, it is a job that may simply be beyond the EEC’s ability—or political ambition. Some member nations, notably Italy and Luxembourg, campaign enthusiastically for political union. Others, notably Britain and Denmark, remain ambivalent about—or opposed outright to—changes that would erode their sovereignty. Greece is resentful, because it thinks that the richer nations of the north should divert funds to the impoverished south. Germany is annoyed because, as the “rich man of

Europe,” its five-billion-deutsche-mark ($2.78 billion Canadian) annual EC contribution is more than twice what its closest competitor, Britain, gives. Says Simone Veil, a former European Parliament president: “The Community no longer knows where it is or what it wants. Or perhaps the members no longer know what it is they want from the Community.”

Suspicion of each other’s motives and alliances was apparent last week in Luxembourg. British Prime Minister Margaret Thatcher and West German Chancellor Helmut Kohl had come to the conference table with a private understanding: not to write the goal of monetary union into the Treaty of Rome. Thatcher feared that concession might force Britain to join the European Monetary System; Kohl feared it might weaken the power of West Germany’s Central Bank. But succumbing to pressure, Kohl quietly shifted ground and embraced the monetary proposal. Said Thatcher: “I

thought we had agreed that now was an inopportune time to introduce this type of measure.” Later, she relented, noting that the clause would have “no immediate effect.”

The entry of Spain and Portugal next month may complicate Europe’s problems, offering additional competition to French fruit growers, Italian vintners and Greek olive oil orchard farmers. And while both Spain and Portugal expect to draw political benefits from their new partnership, both will end up paying higher prices and probably suffer higher levels of unemployment. A study by the European Commission predicts that Spain’s gross national product will decline by three per cent annually during the first three years of its EC membership. Portugal can expect the same.

While the commodity surpluses mount, the Community is engaged in an extended debate about what Europe is—political entity or

0 economic zone. Said * commission president

1 Delors: “The idea of a European space, without

frontiers, is the cornerstone of the relaunch of Europe.” Whatever the agreements reached in Luxembourg, most Eurowatchers concede that the EEC crisis will only be solved when—and if—its leaders finally embrace that ideal.

-MICHAEL POSNER with PAUL ELLMAN in Madrid, BRIGID JANSSEN in PARIS, SUSANNE JEFFRIES in Bonn, PETER LEWIS in Brussels and DAVID NORTH in London

MICHAEL POSNER

PAUL ELLMAN

BRIGID JANSSEN

SUSANNE JEFFRIES

PETER LEWIS

DAVID NORTH