ANDREW PHILLIPS October 5 1992



ANDREW PHILLIPS October 5 1992




Outside the aptly named Café de l’Europe in central Paris, the banner headlines glaring from the local news kiosk told the story. “The tiny Yes,” proclaimed Le Quotidien de Paris, while France-Soir declared “It’s Yes, by a whisker.” Inside, a 42-year-old civil servant named François Crosnier dunked his morning croissant into his café au lait and explained that he had voted Yes to the Maastricht treaty on closer European union “to make sure France keeps a strong voice in Europe.” But at the same time, Crosnier noted with a satisfied smile that his countrymen’s verdict in their referendum could hardly have been closer—just 51.05 per cent approved the deal, with 48.95 per cent opposed. “Let’s see how they deal with that,” he concluded.

“They” are Europe’s political leaders, and they were scrambling last week to deal with

the fallout from the French voters’ grudging approval of their master plan for the continent’s future. Coming on the heels of the massive monetary meltdown of the previous week, when speculators forced Britain, Italy

and Spain to devalue their currencies, France’s “tiny Yes” effectively stopped the unity project in its tracks. The new task for Europe’s humbled leaders was to salvage what they could from the wreckage. And as they groped for a way out of the European Community’s gravest crisis in its 35-year history, the outlines of a new, humbler vision of Europe could be seen: less grandiose, more pragmatic and more democratic.

Certainly, leaders of all political stripes rushed to proclaim their adherence to the new orthodoxy of cautious, step-by-step policymaking. The near-defeat of the Maastricht treaty in France, which has traditionally been the heartland of pro-EC thinking, amounted to a stinging blow to members of the country’s political elite, who had massively endorsed the treaty. Chastened politicians acknowledged that the era of building European institutions

by bureaucratic fiat was over. Even Jacques Delors, who as president of the European Commission became the continent’s leading symbol of bureaucratic insensitivity, admitted that “we will have to work to be more transparent, more sensitive to our citizens.”

There were more immediate effects, as well. Following the vote, currency speculators who a week earlier had humbled the British pound, Italian lira and Spanish peseta, turned their assault on the French franc. France was forced to raise interest rates and dig deeply into its $22-billion foreign-exchange reserves to support its currency. Germany’s powerful Bundesbank pledged support for the French currency—a clear signal of Germany’s determination to maintain the close link between the deutschmark and the franc. A break in that link would shatter what remains of Europe’s currency system. Worse, it would deeply undermine the close alliance between Germany and France, the bedrock upon which the European g Community was founded in 1957. i France’s backlash against Brus§ sels nearly killed the treaty outright 5 and, in the end, left it mortally Ü wounded. Charles Pasqua, a former u interior minister who was one of the most prominent campaigners for the No side, came close to declaring victory as he clutched a plastic cup of champagne in his packed Paris headquarters on the night of the vote and received the congratulations of supporters. “Maastricht is finished tonight,” he shouted above the din. “Whether it’s 50 per cent for, or 50 per cent against, no one can take France along the road of such a supemational adventure with that kind of mandate.”

There was some attempt to try to limit the damage. British Prime Minister John Major, whose country currently holds the rotating presidency of the EC, called an emergency summit of the 12 leaders for Oct. 16 to sort out the mess. And Germany’s Chancellor Helmut Kohl rushed to Paris two days after the vote, and emerged from talks with French President François Mitterrand to declare that “for me and the president, one thing is clear. We want ratification. The process must not be stopped.”

But clearly, recent events have stripped away the veneer of European unity. As domestic political and economic pressures grow, governments have shown a willingness to sacrifice co-operation at the altar of their own national interest. Maastricht was supposed to create a single European currency by the end of the decade, and aimed for co-ordination of security and defense policies among the 12 EC member states.

But Germany’s Bundesbank is so concerned with keeping inflation under control that it has kept its interest rates high, strengthening the

mark in the process. At the same time, Germany has turned a largely deaf ear to pleas from its European neighbors for lower interest rates, which they believe are necessary to stimulate their sluggish economies.

Germany also acted alone when it moved earlier this year to recognize the independence of the breakaway Yugoslavian republics of Slovenia and Croatia, against the wishes of Britain and France. In turn, the Bonn government believes that Britain and France have all but abandoned Germany to cope with the huge number of refugees who are fleeing the Balkan war. And the recent right-wing riots in several German cities, with vicious attacks on immigrants, have aroused a wariness among many Europeans about Germany, just as it is starting to flex its economic and diplomatic muscle. Signs of anti-Germanism were evident during the currency crisis, when Major publicly blaming German policy for the debacle.

Despite their vows to press on with the treaty, it became increasingly unlikely that the deal will ever go into effect—at least in its present form. Under its terms, the Maastricht treaty must be ratified by all 12 EC states before it becomes law, and the leaders originally agreed that should take place by the end of 1992. Denmark’s No vote on June 2 had already made meeting that deadline impossible, and France’s hesitant Yes quickly fuelled opposition elsewhere.

In Germany itself, parliament is scheduled to start debating the treaty in early October. Both Kohl’s ruling Christian Democrats and the opposition Social Democrats back the deal, but public opinion there is also swinging away from rapid European union. According to a poll published last week in the German weekly newsmagazine Stern, only one voter in three would support the Maastricht treaty, and almost three-quarters object to giving up the rock-hard deutschmark in favor of a new and untested Euro-currency. Even pro-government newspapers have started to temper their support for the treaty, calling for new negotiations or for a German referendum. Kohl has so far ruled out such a vote.

But it is from Britain that the earliest and sharpest new challenge to the treaty will come. The British have long been known as the “reluctant Europeans,” voicing open skepticism over the more visionary plans emerging from France, Germany and the Brussels bureaucracy to construct some sort of “United States of Europe.” While Margaret Thatcher was prime minister in the 1980s, she railed against plans for a “European superstate,” although in 1987 her government did commit Britain to the ambitious program to create a single European market by the end of 1992. Thatcher’s opposition to further European integration largely contributed to her political downfall in 1990, when pro-Europeans in her own Conservative party engineered her resignation and her replacement as party leader by John Major. Major took a more positive attitude towards Europe and eventually signed the Maastricht deal last December, although he was careful to negotiate opt-out clauses for

Britain on some of its most contentious chapters, including the proposed single currency.

But as the Maastricht treaty unravelled, socalled “Euro-skeptics” in Major’s own ranks were emboldened. And the prime minister himself had lost strength with his decision on Sept. 16 to reverse course on the pound, abandoning its link to the German mark in the European Monetary System as speculators drove down the value of the British currency. Major, as Thatcher’s finance minister in 1990, took Britain into that monetary system. Being forced to withdraw and let the pound devalue by 11 per cent against the mark amounted to a huge blow both to Major’s economic policies and to his personal credibility. “His own self-confidence has taken a battering,” said John Barnes, a political scientist at the London School of Economics.

Thatcher herself, who since June has held a seat in the House of Lords as Baroness Thatcher, quickly issued her own I-told-you-so verdict in a speech in Washington. “If you try to buck the market,” she declared, “the market will buck you.” In Britain, her co-thinkers in the Tory party also sounded gleeful. Norman Tebbit, a onetime Thatcherite minister who also now sits in the Lords, compared the Maastricht treaty to the famous “dead parrot” skit by the Monty Python comedy troupe. “They may try to nail it to the perch again,” crowed Tebbit, “but nobody will believe that it is still alive.”

Other Tory dissidents, led by MPs Michael Spicer and William Cash, organized new opposition to the treaty and claimed to have the backing of as many as 100 of the 334 Conservative MPs. Outside Parliament, even the normally loyal Tory tabloid papers pressed Major to give British voters a chance to pass their own verdict on European unity. Under the banner headline “Let our people vote,” The Sun declared: “The Danes had a vote. The Irish had a vote. The French had a vote. It’s a disgrace that our people are denied that right.”

Major fought back against his critics last week during a Commons special session on the crisis. Cutting the pound’s link to the mark made it possible for Britain to drop its interest rates by one point to 9 per cent, he noted, and to try to lift the economy out of recession. But Major will face renewed criticism from within his own ranks when his Tory party holds its

annual conference next week, where Thatcher is expected to address a meeting of like-minded Conservatives.

In the meantime, Major hedged his bets. While continuing to proclaim support for the Maastricht deal, his aides made it clear that he was in no hurry to bring the treaty back to the Commons for final approval. Among other things, Britain will wait for Denmark to explain

how it will overcome its voters’ No verdict.

Other countries indicated that they might seek changes or additions to the treaty. Given the widespread anger at the power of the remote EC bureaucracy, there may be an attempt to better define the areas where Brussels should get involved and those that should remain the exclusive domain of national governments.

British officials made it clear that they intend to use the Danish and French referendum results as ammunition to press other governments to rein in the power of the Brussels commission. “Forty-nine per cent of the

French people gave Mitterrand a very clear message, and the opinion polls are giving Kohl a very clear message,” said a close aide to Major. “The message is getting through to these people, so I think we’re pushing on an open door.”

Most analysts now believe that parts of the Maastricht deal will be adopted by all members, while only a few states proceed with the most contentious measures—such as a single currency. One widely discussed scenario would involve the EC’s core countries—Germany, France, Belgium, Holland and Luxembourg—moving quickly towards common money, while Britain, Italy and the rest retained their own currencies. Such a “twotier” structure, as it is known in Europe, has long been resisted by EC leaders. But analysts such as Albert Bressand, director of the Paris think tank PROMETHEE, say that it may now be inevitable. “It doesn’t need to be a negative thing,” Bressand said last week. “All the countries move at different speeds on different matters.”

And despite the EC’s woes, almost no one in Europe questions the community’s foundations in the six-nation 1957 Treaty of Rome, or the 1987 amendments to it which opened the way for sweeping away remaining obstacles to the free movement of goods, services and people throughout the EC’s market of 320 million consumers. The single-market program, which amounts to the greatest deregulation drive ever attempted, is more than 90-per-cent com-

pleted and is still due to come

fully into effect on Jan. l.The I irony, notes Paul Taylor, a g specialist in international re“■ lations at the London School

of Economics, is that the single market is already bringing more change to western Europe than envisaged by the Maastricht treaty—but with nothing like the acrimony. “The really radical changes were introduced by the single market,” he said last week. And the EC retains its attraction for those on the outside; almost every other country in Europe has applied for membership. The latest crisis means that the community they eventually join will almost certainly be looser and more flexible than some of its more visionary architects once hoped.