On New Year’s Day 1994, Europe – the metonym – changed names. The dozen nations of the Community took on the title of Union, though as in a Spanish wedding, the new did not replace but encompassed the old. Was anything of substance altered? So far, very little. The member states have risen to 15, with the entry of three former neutrals. Otherwise things are much as they were before. What is new, however, is that everyone knows this is not going to last. For the first time since the war, Europe is living in anticipation of vast but still imponderable changes to the part that has stood for the whole. Three dominate the horizon.
The first is, of course, the Treaty of Maastricht. We can set aside its various rhetorical provisions, for vague consultation on foreign policy and defence, or ineffectual protection of social rights, and even ignore its mild emendations of the institutional relations within the Community. The core of the Treaty is the commitment on the part of all the member states save Britain and Denmark to introduce a single currency, under the authority of a single central bank, by 1999. This step means an irreversible move of the EU towards real federation. With it, national governments will lose the right both to issue money and to alter exchange rates, and will only be able to vary rates of interest and public borrowing within very narrow limits, on pain of heavy fines from the Commission if they break central bank directives. They may still tax at their discretion, but capital mobility in the single market can be expected to ensure more or less common fiscal denominators. European monetary union spells the end of the most important attributes of national economic sovereignty.
Secondly, Germany is now reunited. The original Common Market was built on a balance between the two largest countries of the Six, France and Germany – the latter with greater economic weight and slightly larger population, the former with superior military and diplomatic weight. Later, Italy and Britain provided flanking states of roughly equivalent demographic and economic size. This balance started to break down in the Eighties, when the European Monetary System proved to be a zone pivoting on the Deutschmark, as the only currency never to be devalued within it. A decade later, Germany’s position has been qualitatively transformed. With a population of over eighty million, it is now much the largest state in the Union, enjoying not only monetary but increasingly institutional and diplomatic ascendancy. For the first time in its history, the process of European integration is now confronted with the potential emergence of a hegemonic power, with a widely asymmetrical capacity to affect all other member states.
The third great change has followed from the end of Communism in the countries of the former Warsaw Pact. The restoration of capitalism east of the Elbe has further transformed the position of Germany, both by reinstating it as the continental Land der Mitte which its conservative theorists always, with reason, insisted it would once again become, and – a less noticed development – by reducing the significance of the nuclear weapons that France or Britain possessed and it lacked. Yet more significant, however, is the currently expressed desire of virtually all the East European countries, and some of the former Soviet lands, to join the EU. As things stand, the total population of these candidates is about 130 million. Their inclusion would make a community of half a billion people, nearly twice the size of the United States. More pointedly still, it would approximately double the membership of the European Union, from 15 to some thirty states. A completely new configuration would be at stake.
Historically, these three great changes have been interconnected. In reverse order, it was the collapse of Communism that allowed the reunification of Germany that precipitated the Treaty of Maastricht. The shock-wave moved from the east to the centre to the west of Europe. But causes and consequences remain distinct. The outcomes of these processes obey no single logic. More than this: to a greater extent than in any previous phase of European integration, the impact of each is quite uncertain. We confront a set of fundamental indeterminacies that, adopting a Kantian turn of phrase, might be called the three amphibologies of post-Maastricht politics. They pose much more dramatic dilemmas than is generally imagined.
The Treaty itself offers the first. Its origins lie in the dynamism of Delors’s leadership of the Commission. After securing passage of the Single Market Act in 1986, Delors persuaded the European Council two years later to set up a committee largely composed of central bankers, but chaired by himself, to report on a single currency. Its recommendations were formally accepted by the Council in the spring of 1989. But it was the sudden tottering of East Germany that spurred Mitterrand to conclude an agreement with Kohl at the Strasbourg summit in the autumn, which put the decisive weight of the Franco-German axis behind the project. Thatcher, of course, was implacably opposed.
She was comprehensively outmanoeuvred, however, not least by the Continental regime she most disliked, which sat in Rome. The otherwise impregnable self-confidence of The Downing Street Years falters disarmingly whenever its heroine comes to Europe. The titles of the chapters speak for themselves. The ordinary triumphal run – ‘Falklands: The Victory’, ‘Disarming the Left’, ‘Hat Trick’, ‘Not So Much a Programme, More a Way of Life’, ‘The World Turned Right Side Up’, is interrupted by a faintly woeful note. We enter the world of ‘Babel Express’, with its ‘un-British combination of high-flown rhetoric and pork-barrel polities’, where ‘heads of government would be left discussing matters that would boggle the mind of the City’s top accountants,’ and ‘the intricacies of European Community policy really test one’s intellectual ability and capacity for clear thinking.’
The uncharacteristic hint of humility is well-founded. Thatcher appears to have been somewhat out of her depth, as a persistent tone of rueful bewilderment suggests. The leitmotif is: ‘Looking back, it is now possible to see’. Or: ‘I can only say it did not seem like that at the time.’ Many are the occasions that inspire such mortified hindsight. Exemplary in its comedy is the Milan summit of the European Council in 1984, which ensured the inclusion of qualified majority voting in the Single European Act. ‘Signor Craxi could not have been more sweetly reasonable’: ‘I came away thinking how easy it had been to get my points across.’ But on the following day, lo and behold: ‘To my astonishment and anger, Signor Craxi suddenly called a vote and by a majority the council resolved to establish an Inter-Governmental Conference.’ Six years later, the precedent set at Milan proved fatal at Rome. This time it was Andreotti who set the trap into which Thatcher fell headlong, at the European summit of October 1990. ‘As always with the Italians, it was difficult throughout to distinguish confusion from guile,’ she haplessly writes. ‘But even I was unprepared for the way things went.’ Once more, a vote to convene an IGC was sprung on her at the last minute, this time on the even more provocative topic of Political Union. Her explosion at Andreotti’s ambush finished her. In London, Geoffrey Howe took a dim view of her reaction, and within a month she was ejected from office. No wonder she hated her Italian colleagues, to the point of saying: ‘To put it bluntly, if I were an Italian I might prefer rule from Brussels too.’ Thatcher respected Delors (‘manifest intelligence, ability and integrity’), liked Mitterrand (‘I always have a soft spot for French charm’) and could put up with Kohl (‘style of diplomacy even more direct than mine’). But Andreotti she feared and detested from the start. At her very first G-7 summit, within a few months of coming to power, she found that
he seemed to have a positive aversion to principle, even a conviction that a man of principle was doomed to be a figure of fun. He saw politics as an 18th-century general saw war: a vast and elaborate set of parade-ground manoeuvres by armies that would never actually engage in conflict but instead declare victory, surrender or compromise as their apparent strength dictated in order to collaborate on the real business of sharing the spoils. A talent for striking political deals rather than a conviction of political truths might be required by Italy’s political system and it was certainly regarded as de rigueur in the Community, but I could not help but find something distateful about those who practised it.
Andreotti’s judgment of Thatcher was crisper. Emerging from one of the interminable European Councils sessions devoted to the British rebate, he remarked that she reminded him of a landlady berating a tenant for her rent.
The increasing role of Italy as a critical third in the affairs of the Community was a significant feature of these years. The Report on Economic and Monetary Union that laid the basis for Maastricht was drafted by an Italian, Tommaso Padoa-Schioppa, the most trenchant advocate of a single currency, and it was also an Italian initiative – Andreotti again – which at the last minute wrote an automatic deadline of 1999 into the Treaty, to the consternation of the British and of the Bundesbank. Nevertheless, the final shape of the bargain reached at Maastricht was of essentially French and German design. The central aim for Paris was a financial edifice capable of replacing the unilateral power of the Bundesbank as the de facto regulator of the fortunes of its neighbours, with a de jure central authority over the European monetary space in which German interests would no longer be privileged. In exchange Bonn received the security system of ‘convergence criteria’ – in effect draconian conditions for abandonment of the Deutschmark, which Italian theorists of a single currency had always rejected – and the fixtures and fittings of ‘political union’.
The diplomatic origins of the Treaty are one thing. Its economic effects, if implemented, are another. What is the social logic of the monetary union scheduled to come into force by the end of the decade? In a system of the kind envisaged at Maastricht, national macro-economic policy becomes a thing of the past: all that remains to member states are distributive options on – necessarily reduced – expenditures within balanced budgets, at competitive levels of taxation. The historic commitments of both social and Christian democracy to full employment and traditional welfare services, already scaled down or cut back, would cease to have any further institutional purchase. This is a revolutionary prospect. The single obligation of the projected European Central Bank, more restrictive even than the charter of the Federal Reserve, is the maintenance of price stability. The protective and regulative functions of existing national states will be dismantled, leaving sound money as the sole regulator, as in the classical liberal model of the epoch before Keynes.
The new element – namely, the supranational character of the future monetary authority – would serve to reinforce such a historical reversion: elevated higher above national electorates than its predecessors, it will be more immune from popular pressures. Put simply, a federal Europe in this sense would not mean – as Conservatives in this country fear – a superstate, but less state. Hayek was the lucid prophet of this vision. In his 1939 essay on ‘Economic Conditions of Interstate Federalism’ he set out the current logic of European monetary union with inspired force and clarity. After arguing that states within such a union could not pursue an independent monetary policy, he noted that macro-economic interventions always require some agreement about values and objectives:
It is clear that such agreement will be limited in inverse proportion to the homogeneity and the similarity of outlook possessed by the inhabitants of an area. Although, in the national state, submission to the will of a majority will be facilitated by the myth of nationality, it must be clear that people will be reluctant to submit to any interference in their daily affairs when the majority which directs the government is composed of people of different nationalities and different traditions. It is, after all, only common sense that the central government in a federation composed of many different people will have to be restricted in scope if it is to avoid meeting an increasing resistance on the part of the various groups it includes. But what could interfere more thoroughly with the intimate life of the people than the central direction of economic life, with its inevitable discrimination between groups? There seems to be little possible doubt that the scope for regulation of economic life will be much narrower for the central government than for national states; and since, as we have seen, the power of the states which comprise the federation will be yet more limited, much of the interference with economic life to which we have become accustomed will be altogether impracticable under a federal organisation.
On this reading, Maastricht leads to an obliteration of what is left of the Keynesian legacy that Hayek deplored, and most of the distinctive gains of the West European labour movement associated with it. Precisely the extremity of this prospect, however, poses the question of whether in practice it might not unleash the contrary logic. Confronted with the drastic consequences of dismantling previous social controls on economic transactions at the national level, would there not soon – or even beforehand – be overwhelming pressure to reinstitute them at supranational level? That is, to create a European political authority capable of re-regulating what the single currency and single-minded bank have deregulated, to avoid an otherwise seemingly inevitable polarisation of regions and classes within the Union? Could this have been the hidden gamble of Jacques Delors, author of the plan for monetary union, yet a politician whose whole previous career suggests commitment to a Catholic version of social-democratic values, and suspicion of economic liberalism?
On this alternative reading, Hayek’s scenario could well reverse out into its opposite – let us say, the prospect drawn by Wynne Godley in these pages. As the Treaty neared ratification, he observed (LRB, 8 October 1992):
The incredible lacuna in the Maastricht programme is that while it contains a blueprint for the establishment and modus operandi of an independent central bank, there is no blueprint whatever of the analogue, in Community terms, of a central government. Yet there would simply have to be a system of institutions which fulfils all those functions at a Community level which are at present exercised by the central governments of the individual member countries.
Perhaps because he feared just such arguments, Hayek himself had changed his mind by the Seventies. Influenced by German fears of inflation if the Deutschmark was absorbed in a monetary union, he decided that a single European currency was not only a utopian but a dangerous prescription. Certainly, it was more than ever necessary to take the control of money out of the hands of national governments subject to electoral pressure. But the remedy, he now saw, was not to move it upwards to a supranational public authority, it was to displace it downwards to competing private banks, issuing rival currencies in the marketplace.
Even on the principled right there have been few takers for this solution, which Tommaso Padoa-Schioppa, perhaps with a grain of malice, commends in L’Europa verso l’Unione Monetaria as the only coherent alternative to his own. But misgivings about what the kind of single currency envisaged by the Treaty of Maastricht might mean for socio-economic stability are widely shared, even among central bankers. With nearly twenty million people currently out of work in the Union, what is to prevent huge permanent pools of unemployment in depressed regions? It is the Governor of the Bank of England who now warns that, once devaluations are ruled out, the only mechanisms of adjustment are sharp wage reductions or mass out-migration; while the head of the European Monetary Institute itself, the Belgian-Hungarian banker (and distinguished economist) Alexandre Lamfalussy, in charge of technical preparations for the single currency, pointedly noted – in an appendix to the Report of the Delors Committee, of which he was a member – that if ‘the only global macroeconomic tool available within the EMU would be the common monetary policy implemented by the European central banking system’, the outcome ‘would be an unappealing prospect’. If monetary union was to work, he explained, a common fiscal policy was essential.
Given, however, that budgets remain the central battleground of domestic politics, how can there be fiscal co-ordination without electoral determination? The ‘system of institutions’ on whose necessity Godley insists is only conceivable on one foundation: a genuine supranational democracy, embodying for the first time a real popular sovereignty in a truly effective and accountable European Parliament. It is enough to spell out this condition to see how unprepared either official discourse or public opinion in the member states is for the scale of the choices before them.
What, secondly, will be the position of Germany in the Europe envisaged at Maastricht? It wasn’t merely the hopes or fears of bankers and economists that accelerated monetary union. Ultimately more important was the political desire of the French Government to fold the newly enlarged German state into a tighter European structure in which interest rates would no longer be regulated solely by the Bundesbank. In Paris the creation of a single currency under supranational control was conceived as a critical safeguard against the reemergence of German national hegemony in Europe. At the same time, even sections of the German political class and public opinion, somewhat in the spirit of Odysseus tying himself to the mast to protect himself from temptation, inclined – at any rate declaratively – to share this view. On both sides, the assumption was that a European monetary authority would mean a reduction in the power of the nation-state that was economically strongest – namely, the Federal Republic.
No sooner was the Treaty signed, however, than exactly the opposite prognosis started to be heard, as German interest rates at levels not seen since the Twenties inflicted a deep recession on neighbouring countries, and German diplomatic initiatives in the Balkans – once again, as in the early years of this century, shadowing Austrian manoeuvres – stirred uneasy memories. Conor Cruise O’Brien has expressed the alternative view most trenchantly. Commenting on the Yugoslav crisis, in which Bonn claimed to be moved only by the principle of national self-determination, O’Brien wrote:
Germany was in favour of the recognition of Croatia and Slovenia. The rest of the Community was against, and the United States strongly so. Faced with such an apparently powerful ‘Western consensus’, on any such matter, the old pre-1990 Bundesrepublik would have respectfully backed away. The united Germany simply ignored the United States and turned the Community around. Germany recognised the independence of Croatia and Slovenia, and the rest of the Community followed within a few days. The reversal of the Community position was particularly humbling for the French ... The new republics are now part of a vast German sphere of influence to the east. German economic hegemony in Europe is now a fact of life, to which the rest of us Europeans must adjust as best we can. To press ahead with federal union in these conditions would not ‘rein in’ the mighty power of united Germany. It would subject the rest of us to German hegemony in its plenitude.
Just this fear, of course, was the mobilising theme of the campaign against ratification of Maastricht in the French referendum a few months later. The French electorate split down the middle on the issue of whether a single currency would reduce or enhance the power of the strongest nation-state in the continent. The majority of the political élite, led by Mitterrand and Giscard, in effect argued that the only way to neutralise German predominance was monetary union. Their opponents, led by Séguin and de Villiers, retorted that this was the surest way to bring it about. The dispute was fought out against the background of the first monetary tempest set off by the raising of the German discount rate in June, which ejected the lira and the pound from the ERM in the final week of the campaign. A year later it was the turn of the franc to capsize in waves of speculation whipped to storm-height by the line of the Bundesbank.
We now have a vivid inside account of these events in Bernard Connolly’s book The Rotten Heart of Europe. The coarseness of its title and cover are misleading: signs more of self-conscious encanaillement on the part of smart publishing than of authorial quality. The book suffers from an occasional lapse of taste, and a liking for melodrama. But for the most part it is a highly literate and professional study. Indeed, piquantly so. A crypto-Thatcherite at the highest levels of the Community’s financial apparatus in Brussels, Connolly is at the antipodes of Thatcher’s bemusement in the field of European politics. His book displays an unrivalled mastery of the nexus between banking and balloting in virtually every member state of the EC: not just France, Germany, Italy or the UK, but also Belgium, Denmark, Portugal, Ireland are covered with dash and detail. (The only significant exception is the Netherlands, whose ambivalence between liberal economics and federal politics is consigned to an exasperated footnote.) Chauvinist convictions have produced a cosmopolitan tour de force.
Connolly’s standpoint is based on a principled hostility, not merely to a single currency, but to fixed exchange rates between different currencies: in his eyes, a dangerous and futile attempt to bridle the operation of financial markets, which can only stifle the economic freedom on which the vitality of a disorderly economic system depends. ‘Western capitalism contained is Western capitalism destroyed,’ as he puts it. When he describes the dogfights of 1992-3 inside the ERM, his sympathies are with the most adamant German opponents of concessions to their neighbours’ concerns over interest rates, above all the crusty figure of Helmut Schlesinger, then Chairman of the Bundesbank. But the sympathy is strictly tactical: Schlesinger is applauded for an intransigence whose effect was to undermine any prospect of stability in the ERM, so exposing in advance the unviability of EMU. It involves no idealisation of the Bundesbank, the myth of whose ‘independence’ of political influence Connolly punctures effectively; its policies have corresponded with remarkable regularity to the needs of the CDU/CSU in the electoral arena.
Today the German political class, in which nationalist reflexes are no longer dormant, is having second thoughts about monetary union, as the prospect of a single currency has come to look ambiguous on their side of the Rhine too. Could it be that Germany received shadow rather than substance in the bargain at Maastricht? In chorus, Waigel for the ruling coalition and Tietmeyer for the Central Bank have been upping the ante for monetary union, with stentorian demands for ‘strict compliance’ with the convergence criteria appended to the Treaty (public debt no higher than 60 per cent and public deficit 3 per cent of GDP, inflation within 1½ and interest rates within 2 per cent of the three best performers in the Union) and a ‘stability pact’ beyond them. This orchestrated clamour has no legal basis, since in the text signed at Maastricht the convergence criteria are not unconditional targets to be met, but ‘reference values’ to be moved towards; and whether or not sufficient movement has been achieved is for the Commission alone to decide. These provisions were the work of Philippe Maystadt, Foreign Minister of Belgium, a country with good reason to insist on flexibility, and certain memories. In its disregard for legal niceties, or small neighbours, the tone of current German diplomacy has become increasingly Wilhelmine.
Nevertheless it is a striking fact that so far this ‘Teutonic tirading’, as Adorno once called it, has met no rebuff. Paris, far from reacting, has been eager to accommodate. For Connolly, this is only to be expected. Since Mitterrand’s capitulation in 1983, the attitude of the French élite has been a Vichy-like subservience to German economic power. In its pursuit of a franc fort requiring punitive interest rates to maintain alignment with the D-mark at the cost of massive unemployment, it has committed treachery against the French people. Noting the widespread alienation from the political class evident in every recent poll, and recalling with relish the country’s long traditions of popular unrest. Connolly – who describes himself as a Tory radical – looks forward with grim satisfaction to another revolutionary explosion in France, when the population realises the price it is paying for monetary union, and rises up to destroy the oligarchy that sought to impose it.
Premonitions of this kind are no longer regarded as entirely far-fetched in France itself. For the moment the prospect is less dramatic, but still fraught enough. The Maastricht referendum revealed the depth of the division in French opinion over the likely consequences of a single currency: would it lead, in the stock question, to a Europeanised Germany or to a German Europe? The victory of Jacques Chirac in the subsequent Presidential elections guarantees that the tension between antithetical calculations will continue to haunt the Elysée. For no French politician has so constantly oscillated from one position to the other, or opportunely reflected the divided mind of the electorate itself. Clambering to power on a platform challenging the bipartisan consensus of the Rocard-Balladur years – la pensée unique – that gave higher priority to a strong franc than to job creation, Chirac in office – after a few mis-starts – has frantically reverted to financial orthodoxy. The Juppé Government is now administering even tougher doses of retrenchment to force the deficit down to Maastricht levels.
Yet even the tightest budgetary rectitude is no guarantee of a franc fort. The ‘convergence criteria’, as Connolly rightly insists, are completely unrealistic in their exclusion of growth and employment from the indices of a sound economy. Designed to reassure financial markets, they satisfy only central bankers. The markets themselves are not mocked, and will sooner or later mark down any currency where there is widespread unemployment and social tension, no matter how stable the prices or balanced the public accounts – as the French Treasury discovered in the summer of 1993. The current domestic course of the Chirac regime can only tighten already explosive pressures in the big cities at the cost of its electoral credibility, on which that of its exchange rate also depends. The massive street protests of this winter could be a harbinger of worse double to come. The regime’s slump in the opinion polls is without precedent in the Fifth Republic. An image of zealous compliance with directives from the Bundesbank involves high political risks.
Chirac’s resumption of nuclear tests can be seen as a clumsy attempt to compensate for economic weakness by military display – demonstratively flexing the one strategic asset the French still possess and the Germans do not. The result has been merely to focus opprobrium on France. Partial or hypocritical though much of this reaction has been (how many pasquinades have been written against the Israeli bomb?), Chirac’s experiments remain pointless. Forcible-feeble in the style of the man, they can scarcely affect the political balance of Europe, where nuclear weapons are no longer of the same importance. At a moment when French diplomacy ought to have been engaged in winning allies to resist German attempts to harden the Treaty of Maastricht, for which its immediate neighbours Italy, Belgium and Spain were more than ready, it was gratuitously incurring a hostile isolation. On present performance, Chirac could prove the most erratic and futile French politician since Boulanger.
Nevertheless, contrary to received opinion, in the end it will be France rather than Germany that decides the fate of monetary union. The self-confidence of the political class in the Federal Republic, although swelling, is still quite brittle. A cooler and tougher French regime, capable of public historical reminders, could prick its bluster without difficulty. Germany cannot back out of Maastricht, only try to bend it. France can. There will be no EMU if Paris does not exert itself to cut its deficit. The commitment to monetary union comes from the political calculations of the rulers, and the world of classical statecraft – where a foreign policy designed to uphold French and check German national power goes without saying. The socioeconomic costs of the franc fort have been borne by the population at large. Here there is an absolutely clear-cut conflict between external objectives and domestic aspirations of the kind that the principal historian of the Community, Alan Milward, would banish from the record of earlier integration. How much does it matter to ordinary French voters whether or not Germany is diplomatically master of the continent again? Are not the creation of jobs and growth of incomes issues closer to home? In France the next years are likely to offer an interesting test of the relative weights of consumption and strategy in the process of European integration.
Meanwhile the pressures from below, already welling up in strikes and demonstrations, can only increase the quandaries above. On the surface, the French political class is now less divided over Maastricht than at the time of the referendum. But it is no surer that the single currency will deliver what it was intended to. Germany bound – or unbound? In the space of the new Europe, the equivocation of monetary union as an economic project is matched by the ambiguity of its political logic for the latent national rivalries within it.
Finally, what of the prospects for extending the European Union to the east? On the principle itself – it is a striking fact – there has been no dissent among the member states. It might be added that there has also been no forethought. For the first time in the history of European integration, a crucial direction has been set, not by politicians or technocrats, but by public opinion. Voters, of course, were not involved. But editorialists and column-writers across the political spectrum – before the consequences were given much consideration – pronounced with rare unanimity any other course unthinkable. Enlargement to the east was approved in something of the same spirit as the independence of the former republics of Yugoslavia. This was not the hard-headed reckoning of costs and benefits on which historians of the early decades of European integration dwell: ideological goodwill – essentially, the need to recompense those who suffered under Communism – was all. Governments have essentially been towed in the wake of a media consensus. The principle was set by the press; politicians have been left to figure out its applications.
Here the three leading states of Western Europe have divided. From the outset Germany has given priority to the rapid inclusion of Poland, Hungary, the former Czechoslovakia and, more recently, Slovenia. Within this group, Poland remains the most important in German eyes. Bonn’s conception is straightforward. These countries, already the privileged catchment for German investment, would form a security glacis of Catholic lands around Germany and Austria, with social and political regimes that could – with judicious backing for sympathetic parties – sit comfortably beside the CDU. France, more cautious about the tempo of widening and mindful of former ties to the countries of the Little Entente – Romania, Serbia – has been less inclined to pick regional favourites in this way. Its initial preference, articulated by Mitterrand in Prague, was for a generic association between Western and Eastern Europe as a whole, outside the framework of the Union.
Britain, on the other hand, has pressed not only for rapid integration of the Visegrad countries into the EU, but for the most extensive embrace beyond it. Alone of Western leaders, Major has envisaged the ultimate inclusion of Russia. The rationale for the British position is unconcealed: the wider the Union becomes the shallower it must be, for the more national states it contains, the less viable becomes any real supranational authority over them. Once stretched to the Bug and beyond, European union will evolve in practice into the vast free-trade area it should – in the eyes of London – always have been. Widening here means both institutional dilution and social deregulation: the prospect of including vast reserve armies of cheap labour in the East, exerting downward pressure on wage costs in the West, is a further bonus in this British scenario.
Which outcome is most likely? At the moment the German design has the most wind in its sails. In so far as the EU has sketched a policy at all, it goes in the CDU’s direction. One of the reasons, of course, is the current convergence between German calculations and Polish, Czech and Hungarian aspirations. There is some historical irony here. Since the late Eighties publicists and politicians in Hungary, the Czech lands, Poland and more recently Slovenia and even Croatia have set out to persuade the world that these countries belong to a Central Europe that has a natural affinity to Western Europe, and is fundamentally distinct from Eastern Europe. The geographical stretching involved in these definitions can be extreme. Vilnius is described by Czeslaw Milosz, for example, as a Central European city. But if Poland – let alone Lithuania – is really in the centre of Europe, what is the east? Logically, one would imagine, the answer must be Russia. But since many of the same writers – Milan Kundera is another example – deny that Russia has ever belonged to European civilisation at all, we are left with the conundrum of a space proclaiming itself centre and border at the same time.
Perhaps sensing such difficulties, an American sympathiser, the Spectator’s former deputy editor Anne Applebaum, now of the Standard, has tacitly upgraded Poland to full Occidental status, entitling her – unfailingly disobliging – inspection of Lithuania, Belarus and Ukraine in Between East and West.Another way out of them is offered by Miklos Haraszti, who argues that while current usage of the idea of Central Europe may make little geographical sense, it does convey the political unity of those – Poles, Czechs, Magyars – who fought against Communism, as distinct from their neighbours who did not. More Romanians, of course, died resisting in 1989 than in all three countries combined over many years. Today, however, the point of the construct is not so much retrospective as stipulative: originally fashioned to repudiate any connection with Russian experience during the Cold War, it now serves to demarcate superior from inferior – i.e. Romanian, Bulgarian, Albanian etc – candidates for entry into the EU.
It is, however, rare for geopolitical concepts to escape their origins altogether. Mitteleuropa was a German invention, famously theorised by Max Weber’s friend Friedrich Naumann during the first World War. Naumann’s conception remains arrestingly topical. The Central Europe he envisaged was to be organised around a Germanic nucleus, combining Prussian industrial efficiency and Austrian cultural glamour, capable of attracting satellite nations to it in a vast customs community – Zollgemeinschaft – and military compact, extending from ‘the Vistula to the Vosges’. Such a unified Mitteleuropa would be what he called an Oberstaat, a ‘super-state’ able to rival the Anglo-American and Russian empires. A Lutheran pastor himself, he noted regretfully that it would be predominantly Catholic – a necessary price to pay – but a tolerant order, making room for Jews and minority nationalities. The union it created would not be federal – Naumann was an early prophet of today’s doctrine of subsidiarity, too. All forms of sovereignty other than economic and military would be retained by member states preserving their separate political identities, and there would be no one all-purpose capital: different cities – Hamburg, Prague, Vienna – would be the seat of particular executive functions, rather like Strasbourg, Brussels and Frankfurt today. Against the background of a blueprint like this, it is not difficult to see how the ideological demand for a vision of Central Europe in the Visegrad countries could find political supply in the Federal Republic.
Given, however, that a widening of some kind to the east is now enshrined as official – if still nebulous – policy in the Union, is it probable that the process could be limited to a select handful of former Communist states? Applications for admission are multiplying, and there is no obvious boundary at which they can be halted. Europe, as J.G.A. Pocock once forcibly observed in these pages, is not a continent but an unenclosed sub-continent on a continuous land-mass stretching to the Bering Straits (LRB, 19 December 1991). Its only natural frontier with Asia is the strip of water once swum by Leander and Lord Byron. To the north, plain and steppe unroll without break into Turkestan. Cultural borders are no more clearly marked than geographical: Muslim Albania or Bosnia lie a thousand miles west of Christian Georgia or Armenia, where the Ancients set the dividing-line between Europe and Asia. No wonder Herodotus himself, the first historian to discuss the question, remarked that ‘the boundaries of Europe are quite unknown, and no man can say where they end – but it is certain that Europa’ – he is referring to the beauty borne away by Zeus – ‘was an Asiatic, and never even set foot on the land the Greeks now call Europe, only sailing’, on her bull, ‘from Phoenicia to Crete’. The irony of Herodotus perhaps still retains a lesson for us. If Slovakia is a candidate for entry into today’s Union, why not Romania? If Romania, why not Moldova? If Moldova, why not the Ukraine? If the Ukraine, why not Turkey? In a couple of years, Istanbul will overtake Paris to become the largest city in what – however you define it – no one will contest is Europe. As for Moscow, it is over two centuries since Catherine the Great declared in a famous ukaz that ‘Russia is a European nation,’ and the history of European culture and politics has enforced her claim ever since. De Gaulle’s vision of a Europe ‘from the Atlantic to the Urals’ will not lightly go away. All the stopping-places in current discussion of the widening of the EU are mere conveniences of the ring of states closest to what was once the Iron Curtain, or of the limits of bureaucratic imagination in Brussels. They will not resist the logic of expansion.
Writing here four years ago, Pocock remarked that ‘“Europe” is once again an empire in the sense of a civilised and stabilised zone which must decide whether to extend or refuse its political power over violent cultures along its borders but not yet within its system: Serbs and Croats if one chances to be Austrian, Kurds and Iraqis if Turkey is admitted to be part of “Europe”, These are not decisions to be taken by the market, but decisions of the state.’ But as Europe is not an empire in the more familar sense of the term – a centralised imperial authority – but merely (as he put it) ‘a composite of states’, with no common view of their borderlands, it is not surprising that the limites have yet to be drawn by the various chancelleries. Since he wrote, however, there has been no shortage of expert opinion to fill the gap.
For example, Timothy Garton Ash, one of the first and keenest advocates of a fast-track for Poland, the Czech Republic and Hungary, has recently adjusted his sights. ‘Having spent much of the past fifteen years trying to explain to Western readers that Prague, Budapest and Warsaw belong to Central not Eastern Europe, I am the last person to need reminding of the immense differences between Poland and Albania,’ he writes in the Times Literary Supplement, ‘but to suggest that there is some absolutely clear historical dividing line between the so-called Visegrad group and, say, the Baltic states or Slovenia, would be to service a new myth.’ Instead, the dividing-line must be drawn between a Second Europe numbering some twenty states whom he describes as ‘set on a course’ towards the EU; and a Third Europe that does not share this prospect, comprising Russia, Belarus, Ukraine and – a cartographical nicety – Serbia.
A dichotomy so evidently instrumental is unlikely to be more durable than the mythical distinction it has replaced. At the end of his Orchestrating Europe, a capacious and strangely zestful guide through the institutional maze and informal log-rolling of the Union, Keith Middlemas looks out on a somewhat broader scene. Europe, he suggests, is surrounded by an arc of potential threat curving from Murmansk to Casablanca. To hold it at a distance, the Union needs a belt of insulation, comprising a ‘second circle’ of lands capable of integration into the Community, shielding it from the dangers of the ‘third circle’ beyond – Russia, the Middle East and Black Africa. In this conception the respective buffer zones logically become Eastern Europe, Cyprus and Turkey in the Eastern Mediterranean, and the Maghreb. Middlemas, however, explains that while the first two are ultimately acceptable into the Union, the third is not. ‘The countries of the Maghreb,’ he writes, ‘are irrelevant as a barrier to sub-Saharan Africa, which presents no threat except via small numbers of illegal immigrants.’ On the contrary, ‘the threat comes from North Africa itself.’ If this is a more ecumenical approach than that of Garton Ash, who pointedly excludes Turkey from Europe, it traces the same movement, common to all these tropes – a slide to aporia. Every attempt so far to delimit the future boundaries of the Union deconstructs itself.
For the moment, it is enough to register that ‘Europe Agreements’, formally designated as antechambers to entry, have been signed by six countries: Poland, the Czech Republic, Hungary, Slovakia, Romania and Bulgaria; and that four more are impending (Slovenia and the Baltic states). It is only a matter of time before Croatia, Serbia, Macedonia, Albania and what is left of Bosnia, join the queue. Does this prospect – we might call it an inverted domino effect, in which the pieces fall inwards rather than outwards – mean that the British scenario will come to pass? Harold Macmillan once spoke, with a homely national touch, of his hope that the Community, when exposed to the beneficent pressure of a vast free-trade area, would ‘melt like a lump of sugar in a cup of tea’. Such remains the preferred vision of his successors. Their calculation is that the more member states there are, the less sovereignty can practically be pooled, and the greater is the chance that federal dreams will fold. How realistic is this?
There is no doubt at all that enlargement of the Union to some two dozen states would fundamentally alter its nature. The most immediate effect of any extension to the east, even of modest scope, would be a financial crisis of heroic proportions. The cost of integrating the Visegrad quartet alone would mean an increase of 60 per cent in the current Union budget – rising to nearly 75 per cent by the end of the century. There is no chance of the existing member states accepting such a burden, at a time when every domestic pressure is towards tax reduction. That leaves only two other possible ways out: either decimating current support to farming communities and poorer regions within these countries, composed of voters with the power to resist, or abandoning the acquis communautaire altogether to create a second-class membership for new entrants, without benefit of the transfers accorded to first-class members.
These are just the fiscal headaches attending rapid expansion. There are also the material consequences for the former Communist economies. If the effort of adhering to the convergence criteria for monetary union is already straining prosperous Western societies to breaking-point, how can impoverished Eastern ones be expected to sustain them? No previous candidates, however initially disadvantaged, had to scale such a macro-economic cliff. It is not surprising that enthusiasts for expansion, contemplating the requirements of EMU, are starting to call for the whole idea of a single currency to be dropped. For Garton Ash, the needs of Warsaw and Prague dovetail with what is anyway the wisdom of London. ‘Europe could perhaps use a little British thinking at the moment,’ he writes of monetary union, ‘with “British” meant in the deeper sense of our particular intellectual tradition: sceptical, empirical, pragmatic.’
Perhaps predictably, the result is a loftier castle in the air than any folly of the Commission: in place of economic integration through monetary union in Western Europe, political embrace of the whole of Eastern Europe under the guidance of Nato, with power-sharing from Albania to Ireland, and ‘qualified minority acting’ for the UK and its peers. This, as Garton Ash puts it in another native image, would be to jump off ‘the wrong bus’ and catch the right one. If the leap is not made in time, he adds, Europe will be engulfed in another world war. The euphoric construction needs an apocalyptic conclusion – why otherwise take it seriously? The conviction that EMU and Eastern enlargement are incompatible, on the other hand, is entirely reasonable. It is shared from the opposite standpoint by the unlikely figure of Jacques Attali, who regards the single currency as a valid but now lost cause, and enlargement as a German project that will lead away from a federal Europe, for which most of the national élites, mesmerised by American culture, anyway have no appetite. ‘L’Europene s’aime pas,’ he glumly observed at the end of the Mitterrand Presidency.
Maastricht is unlikely to evaporate so easily. But the hazards of enlargement do not just lie in the economic pitfalls it poses for new or old members. Even if derogations of various kinds – from the common agricultural policy, from the structural funds, from the single currency – were to be made for what were once the ‘captive nations’, a still more fundamental difficulty would remain, of a purely political nature. To double its membership would cripple the existing institutions of the Union. Already the original balance of the Six or the Nine has been thrown out of kilter in the Council of Ministers. Today the five largest states – Germany, France, Italy, Britain and Spain – contain 80 per cent of the population of the Union, but command only just over half the votes in the Council. If the ten current ex-Communist applicants were members, the share of these states would fall even further, while the proportion of poor countries in the Union – those now entitled to substantial transfers – would rise from four out of 15 to a majority of 14 out of 25.
Adjustment of voting weights could bring the pays légal some way back towards the pays réel. But it would not resolve the most intractable problem posed by enlargement to the east, which lies in the logic of numbers. Ex-satellite Europe contains almost exactly as many states as continuously capitalist Europe (at the latest count, 16 in the ‘East’ to 17 in the ‘West’, if we include Switzerland), with a third of the population. Proliferation of partners on this scale, no matter how the inequalities between them were finessed, threatens institutional gridlock. Rebus sic stantibus, the size of the European Parliament would swell towards eight hundred deputies; the number of Commissioners rise to 40; a ten-minute introductory speech by each minister attending a Council yield a meeting of five hours, before business even started. The legendary complexity of the existing system, with its meticulous rotations of commissarial office, laborious inter-governmental bargains and assorted ministerial and parliamentary vetoes, would be overloaded to the point of paralysis.
In such conditions, would not widening inevitably mean loosening? This is the wager in London, expressed more or less openly according to venue, from the FO to the TLS. In the long term, the official line of thinking goes, expansion must mean defederalisation. Yet is this the only logical deduction? Here we encounter the final amphibology. For might not precisely the prospect of institutional deadlock impose as an absolute functional necessity a much more centralised supranational authority than exists today? Co-ordination of 12 to 15 member states can just about operate on a basis of consensus. Multiplication to 30 practically rules this out. The more states enter the Union, the greater the discrepancy between population and representation in the Council of Ministers will tend to be, as large countries are increasingly outnumbered by smaller ones, and the weaker overall decisional capacity will become. The result could paradoxically be the opposite of the British expectation: not a dilution, but a concentration of federal power in a new constitutional settlement, in which national voting weights are redistributed and majority decisions become normal. The problem of scale, in other words, might force just the cutting of the institutional knot the proponents of a loose free-trade area seek to avoid. Widening could check or reverse deepening. It might also precipitate it.
Each of the three critical issues now facing the European Union – the single currency, the role of Germany and the multiplication of member states – thus presents a radical indeterminacy. In every case, the distinctive form of the amphibology is the same. One set of meanings is so drastic it appears subject to capsizal into its contrary, giving rise to a peculiar uncertainty. These are the political quicksands on which the Europe to come will be built.