Postwar: A History of Europe Since 1945 (106 page)

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 an 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

The SEA expanded Community powers into many policy areas—the environment, employment practices, local research-and-development initiatives—in which the EC had not previously been involved, all of which entailed the dispensing of Brussels funds directly to local agencies. This cumulative ‘regionalization’ of Europe was bureaucratic and costly. To take one tiny example that can stand for hundreds: Italy’s Alto Adige/South Tyrol region, on the country’s northern frontier with Austria, was officially classified by Brussels in 1975 as ‘mountainous’ ( an uncontentious claim); thirteen years later it was officially declared to be over 90 percent ‘rural’ (no less self-evident to any casual traveler), or—in Brussels jargon—an ‘Objective 5-b Area’. In this dual capacity the Alto Adige was now eligible for environmental protection funds; grants to support agriculture; grants to improve vocational training; grants to encourage traditional handicrafts; and grants to ameliorate living conditions in order to retain population.