Keith Middlemas - Orchestrating Europe (Text Only)

Political problems also remained. When the British government argued for its own draft proposals for single market management before the Edinburgh Council in December 1992, several EC ministers contested the UK’s underlying philosophy, on the grounds that it reverted to the inter-governmental style and failed to acknowledge the Commission’s leading role. 60Representing France, Elizabeth Guigou also objected to the UK’s unwillingness to face up to the free movement of people, without imposing passport formalities. Yet on this obstacle to the Act they had already signed, the UK, Denmark and Ireland stood fast against the rest. Single market issues thus ran on, into and beyond Maastricht, to be affected by the recession of the early 1990s and member states’ increasing unease at the consequences of events in eastern and south-eastern Europe.

Taking the process from the early 1980s as a whole, it is clear that the closer the internal market came to fruition, the more it suited both member states and the Commission to cooperate and enjoy the heady mood of harmony after so many debilitating, stagnant years. In this sense, the mid–1980s represented a turning point. Afterwards the Community showed itself better able to face up to extended competition, to direct American and, later, Japanese investment (US investment had decreased during the recession of the early 1980s, as had European companies’ own investments in the EC). The majority of governments, in sharp contrast to their behaviour in the 1970s, also began to turn away from the defensive, non-tariff barriers which they had erected earlier on to delay harmonization.

Four deep modifications occurred in this period. The quality of EC governance improved, thanks very largely to better implementation and enforcement of the law; the financial sector became freely involved; competition policy was made congruent to the assault on intangible barriers to the internal market; and officials began to conceive of policies for industry, trade, social affairs and competition as a whole. In this sense, the internal market cut off both commercial players and their governments from the frustrating recent past.

5

Maastricht and After, 1988–93

The West German Presidency in the first half of 1988, and especially the Hannover Summit in June, appears in retrospect even more significant than it did at the time. Not only did that Presidency oversee the conclusion of many of the EC’s long-running battles, such as that over the abolition of exchange controls by France, Italy and Spain, but it witnessed what Arthur Cockfield called ‘the irreversible acceptance’ by member states of the single market. It also settled the budget saga for the succeeding four years, after one of the most prolonged and divisive crisis in the EC’s history, which had ramified into the CAP, now that France had become a net payer; and this, despite protests by the Länder governments and German farmers that Germany was already paying too much, and would pay more once ‘cohesion’ had been incorporated by the coming Inter-Governmental Conference (IGC). 1

The Hannover Summit confirmed Delors’s second term of office from 1989–93, with British approval (Helmut Kohl having failed to put forward Martin Bangemann’s name, despite its being ‘Germany’s turn’, because of a political trade-off with the Free Democrats in Bonn). Delors would also chair the Central Bankers Committee which was to recommend rules for operating the future European Bank. Coming after a number of minor but irritating disputes over the CAP and the purity of beer, these achievements suggested that the Franco-German understanding had been enhanced. Insofar as there remained arguments, these were internal: the first being between Chancellor Kohl and Foreign Secretary Genscher about how to react to the Gorbachev reforms in Russia, and the second between the Bundesbank and the Bonn government over EMU.

But Hannover also demonstrated how consistently Germany (shortly to be reunited) would react when external events forced it to engage in the international domain. Whatever the different approaches to Ost- and Westpolitik advocated by Kohl and Genscher, Germany’s political elite was still agreed that ‘the coming Germany’ had to be embodied and understood in its European dimension, that is, within a European political union. From the 1985 IGC to the next, at Maastricht in 1991, this basic line did not change.

What did change was firstly that Germany’s advocacy of political union acquired a novel assertiveness, which tended to undermine French certainty of how the dual understanding would operate in future. Secondly the grounds on which the French, led strongly after an initial period of reluctance by Mitterrand, would seek to redefine the partnership also changed. It is perhaps necessary to emphasize the French government’s increasingly urgent search for monetary union, even more than the German desire for political union. The Mitterrand-Kohl agreement to balance the two, in order to retain their informal parity, despite Germany’s increase in size and status as a result of reunification, and to bind this new Germany firmly into a deeper, as well as larger Community, was to be the single most important phenomenon between the two IGCs. Neither that nor Maastricht would have happened without French fears of what a united Germany would otherwise become.

The price, on France’s side, was political union; on Germany’s it was monetary union. After Kohl’s about-turn on EMU to meet French demands in 1988, the German government (though not the Bundesbank) showed itself positive about the common currency even though it would involve losing the deutschmark – that is, so long as the new one was based solely on principles of economic stability and was managed only by the new Central Bank. Fluctuations in their relations continued, of course, at diplomatic levels: however these were repaired by the Kohl-Mitterrand proposal to have a second IGC on political union, made in April 1990 before the Dublin Summit, and strengthened during that IGC where foreign and security policy, and later European defence, were concerned. Much less consensus was obtained about EC institutions’ power, for elite German opinion valued an increase in the European Parliament’s democratic functioning so highly that the government tied it to its consent to EMU, as the only way to defuse domestic hostility to the impact of Monetary Union on the deutschmark.

From the French point of view, these attempts to tie EMU to Bundesbank management criteria, and to strengthen the Parliament, could be made acceptable if Germany were induced to accept a fixed schedule of progress leading from the ERM to complete monetary union on France’s terms. The French government also hoped that the Common Foreign and Security Policy (CFSP) could be extended to cover defence but on French, rather than NATO, terms: Mitterrand wisely gave instructions not to raise this question too early on. A substantial reordering of France’s domestic priorities would be involved in approaching the question of political union, but not of a size to require major or public changes in the machinery of French government.

All this contrasted sharply with the British case. Margaret Thatcher’s last two years were increasingly overshadowed by her belief that a grand conspiracy had come into existence, manoeuvred by Christian Democrats, renegade Socialists and the Commission led by Delors, with the aim of imposing Brussels’ sovereignty on a permanently embattled offshore island. But whatever her forays may have gained tactically in 1988 and 1989–90, they were mostly pyrrhic victories ending in acquiescence, for lack of allies. Meanwhile, on the domestic front, she was gradually manoeuvred towards acceptance that Britain should join the ERM by an entente between her chancellor, Nigel Lawson, and the foreign secretary, Geoffrey Howe, which, for lack of a true cabinet majority, she was unable to rupture.