Keith Middlemas - Orchestrating Europe (Text Only)

Nigel Lawson, chancellor of the exchequer 1983–8, realized that Britain’s ERM entry would add the exchange rate weapon to his very limited armoury, once the strict monetary policy based on £M3 had been abandoned in 1983. 14But the Bank of England’s support for entry, which had been strong up to July 1983 under the Governor, Gordon Richardson, evaporated under his successor, Robin Leigh Pemberton. Lawson’s failure on his own to convince the prime minister that sterling should join the ERM led, after the 1984–5 sterling crisis, to sterling’s ‘shadowing’ of the DM, an irregular and informal policy about which Thatcher later claimed not to have known. 15

The Conservative party had failed to evolve a coherent EC strategy when in opposition in the late 1970s and its leadership remained obsessed with Britain’s contentious budget contribution until mid–1984. Nothing of note therefore appeared in the 1983 election manifesto. Geoffrey Howe’s growing interest, which led to what in Conservative party terms was a surprisingly open paper, Europe and the Future (July 1984, defended by Howe at the party’s autumn conference) dated only from Stuttgart. Meanwhile, beyond Whitehall and Westminister, layers of antipathy remained in both political parties. The popular press reflected the adversarial mood and helped to shape perceptions in a very different way from 1972–5, so that the level of public ignorance actually increased.

Industry, which had strong interests in the internal market, could make no impact on this political combination. The CBI monitored EC developments closely but had lost much of its earlier influence with the prime minister in the early 1980s; City markets showed little interest at that stage (though the Bank of England soon picked up its significance for financial services and insurance). Even in Parliament it was the House of Lords Select Committee that investigated rather more than committees in the Commons. Meanwhile, whatever civil servants and diplomats thought, ministers’ policies were effectively defended during the British Presidency in 1981, so that Labour’s poor handling of the office in 1977 was forgotten. But Britain’s partisan nationalism nevertheless antagonized other member states.

Up to 1985, the Conservative political animus lay not primarily against the Commission (indeed Thatcher supported Delors for the Presidency) so much as the EC’s integrationist ethos, so that the second Thatcher government saw no merit in moving beyond free trade and the internal market. Stronger supporters of the latter, such as Geoffrey Howe, Leon Brittan, and Michael Heseltine, thought in terms of detailed legislation and constitutional conventions, rather than the prevalent EC way of operational texts to be interpreted later. Yet there was evidence of change at the top of the Conservative party in 1983, and again at the Dublin Summit in December 1984, even on the subject of QMV. Probably as a result of the Athens debacle, Thatcher herself prepared to concede some extension, though preferably only after prior inter-governmental agreement. 16

As French and West German politicians saw the future in terms of their own recent history, so did British leaders, who envisaged a market-led project in which they, like the Americans, could hold on to their early deregulatory lead. They opposed not only the idea of a two tier EC but what was later styled ‘variable geometry’; and they construed the single market itself as the only important aim, unconnected to EMU or political union. But they were realistic and prepared to concede trade-offs such as QMV to attain that primary aim.

ITALY

Since 1957, Italy’s relationship with the EC had reflected an underlying formalism, a largely juridical approach, so that by the 1980s several distinct government institutions existed, each with a separate function, joined neither by political coordination nor synoptic thinking, apart from what was provided by a governing majority led usually by successive factions in the Christian Democratic party (DC). Despite political society’s apparently widespread enthusiasm for the EC idea, there had been little continuous involvement over the years – hence the importance of a few individuals and interest groups, together with giant firms which, for lack of government support, maintained direct links in Brussels. Except in the industrial north, and on the left (mainly in the unusually open Communist party), political and civil society rarely engaged with each other. In default of a coherent, incorrupt and efficient policy-mongering bureaucracy (as existed more obviously in northern Europe), sustained policy depended on the vagaries of political brokerage which sustained the pentapartito, the long-running coalition.

Thus what appeared to be Italy’s prompt responsiveness to EC thinking compared badly with the Rome government’s actual implementation of legislation (highlighted by the high number of ECJ judgments against Italy). This indicated that Italian institutions had not been permeated by EC values, even when the Commission or Council tried specifically to do so, as they did in reclaiming the endlessly backward Mezzogiorno administration. Because the Italian parliament had in effect been excluded from the EU coordination process as a result of party bargains, a substantial democratic deficit existed. An uninterested public and an inward-looking bureaucracy confronted a tiny elite of insiders in the Foreign Ministry and the Italian Permanent Representation in Brussels. But the most effective of these were usually not party men. Those with a career in Rome in mind tended to stay apart from Commission colleagues who in turn found them deficient in European ideals.

Italy’s initiatives therefore tended to come from a few leading politicians in the Foreign Ministry such as Emilio Colombo. If the activists were outside government, like the Independent MEP Altiero Spinelli, their work had little resonance in political life. Even if the evolution of increasingly powerful regional administrations (often run by the PCI in a relatively incorrupt and efficient way after the 1976 elections) produced regional linkages to Brussels (see below, chapter 9), this led to significant conflicts over competence with the Italian Constitutional Court and, in the 1980s, a renewed bout of government centralization. Any hopes that EC membership might be a means to reform Rome itself could not yet be fulfilled.

Italian reformers however welcomed the Parliament’s attempt to relaunch political union. The undoubted effect of the EMS in curbing Italian inflation, together with the firm support of the Banca d’Italia and the heads of the largest industrial firms, ensured enthusiasm for the internal market project. Socialists as well as Christian Democrats concurred. Italian industrialists, members of the ERT, or Confindustria (which used the newspaper it owned, 24 Ore, selling 300,000 copies a day, as its advocate) took an active part. The only real opposition came from the banks and the insurance sector, both of which were deeply uneasy about the price of adjustment; and, in an ill-focused way, from Parliament whose MPs resented their exclusion from the process.

Foreign and Economic Ministries, Banca d’Italia (one of the few wholly untainted institutions), giant firms such as Fiat, Ferruzzi and Olivetti, and even small firms in the North eager to escape the state’s tainted bureaucracy, could agree that the internal market would bring opportunities, long overdue restructuring, and administrative reform. But there was no detailed plan, no prior decision as to whether to follow the Davignon or the ‘Anglo-Saxon’ interpretation, so that in no other member state were the practical details of the 1985 White Paper so far reaching in their effect on how the discussion would evolve. Meanwhile, on the way to the Single European Act, the byzantine games played out on the EC stage and under the Italian Presidency (including the crucial Milan Summit 1985), reflected both the sum of domestic political strategies and Italy’s bilateral bargaining with France and Germany. In short, Italy presented a genially positive face to the EC, excusing its shortcomings in implementing legislation or coordinating policy on the grounds of overload, while the political parties milked EC resources – not always for local advantage. This state of affairs was almost the exact antithesis of that in Britain.