Volume 5 Number 7 May 1998 £2.50 The European Journal

The Journal of the European Foundation

Michael St John Parker Stopping Europe’s Progaganda & Austin Mitchell, MP Oliver Letwin, MP Philippe de Villiers, MP

The European Foundation 61 Pall Mall, London SW1Y 5HZ Chairman: William Cash, MP MAY 1998 VOLUME 5 NUMBER 7 THE EUROPEAN JOURNAL The Journal of the European Foundation

Contents For reference, numbers on pages are as in the printed copy Original PDF Articles below are hyperlinked – use the hand icon, point and click Page Page Editorial 23 Bill Cash, MP Cultures, Parties and Pan-European Politics 34 Oliver Letwin, MP Eurosceptic Opportunities 45 Jonathan Collett Educational Entryism – A New Fable of the Bees? 56 Michael St John Parker The ECJ Condemned 78 David Radlett The Commission’s Choice for EMU – breaking all the rules 910 Jeremy Stanford A Necessity for Democracy 11 11 Will Podmore The Emperor’s New Clothes 12 13 James Barr Back to the Euro Doghouse 13 14 Austin Mitchell, MP Germany, the CAP, and the Third World 15 16 Bill Cash, MP Switzerland “nul points” 16 17 James Barr A Closer Look at the ECB 18 19 A.H.J.W. van Schijndel The Potential for Europe and the Limits to Union 20 21 Rt Hon. William Hague, MP The Rejection of Politics 21 22 Philippe de Villiers, MP Common Market, Common Currency, Common Sense? 23 24 Jeremy S. Bradshaw Book Reviews: New Books from France 25 26 Reviewed by John Laughland The Convergence of the Bundesbank 26 27 Professor Roland Vaubel Editor: Tony Lodge Publisher: The European Foundation, 61 Pall Mall, London SW1Y 5HZ Telephone: +44 (0) 20 7930 7319 Facsimile: +44 (0) 20 7930 9706 E-mail: [email protected] ISSN 1351–6620 For subscription and advertising enquiries, please contact the editorial office. A subscription form is printed on the inside back cover. The European Journal is published by The European Foundation. Views expressed in this publication are those of the authors themselves, not those of The European Journal or The European Foundation. Feature articles and letters should be sent to the Editor at the address above, if possible on 3.5" IBM compatible disks which will be returned to the authors. No part of this publication may be reproduced in any form or by any means or stored in a retrieval system without the written permission of the publisher.

Typesetting by Nelson & Pollard, Oxford Facing Up to Facts

illiam Hague’s bold and inspired speech to reply from the Chancellor of the Exchequer in a written WINSEAD at Fontainebleau is as much a benchmark in answer during May. He emphasised that the constitutional test the late 1990s as was the Bruges speech in the late 1980s. does not override the economic test. Indeed, it would be impossible for the author of either speech The differences therefore between the parties and within the to have signed the Maastricht Treaty. No wonder, therefore, Conservative Party are being more clearly defined and the that Fontainebleau has been followed by an outburst from need is growing to get down to the serious business of Messrs Heseltine, Clarke and Brittan. But what was interesting preparing for the Referendum which will cut across all was their failure to address the real sections of society and all political questions and to come clean with parties. There is in fact division and the British public. At no point do Mr William Cash (Stone): Will the Prime William Hague understands this they ever seek to rebut the charge Minister explain why he thinks that there is no very well – hence his speech. There that the continuing process of constitutional barrier in the United Kingdom to are genuine parallels to be made European integration through going ahead with economic and monetary with the situation which prevailed Maastricht to Amsterdam is union… at the time of the repeal of the Corn designed to prevent the nation … Laws in the 1840s, although today states of Europe from being able The Prime Minister: … I say that there is no the issue which is about who gov- to govern themselves. Instead insuperable constitutional barrier because, erns Britain and democratic and they allege, quite wrongly, that although there are constitutional questions of political freedom is even greater Eurorealists are campaigning to sovereignty, the issue in the end is whether that is than the question of commercial come out of Europe and harp on an absolute barrier. If it is an absolute barrier, the freedom which lay behind the about their claim that a single position of the hon. Gentleman’s party – saying issues of the mid-nineteenth market requires a single currency, “We might join after 10 years” – is absurd. I know century. Indeed, we cannot have for which there is no evidence, only that that is not his position: he is leader of the commercial freedom without assertion. other Conservative party. However, it is an absurd political freedom, which is why the The speech was also important position. We must decide first of all whether or Prime Minister is so wrong. because it dealt head on with the not the constitutional question is an insuperable The verdict of the great historian, fundamental differences between barrier. He says yes; I say no. I say that, in the end, G.M. Trevelyan, on Sir Robert Peel the Government and the Oppos- if it is in the interests of British jobs, investments was as follows: ition in the United Kingdom. This and industry, we do it; if it is not, we do not. “Peel’s real defence is this: that was well illustrated in the chaotic © Parliamentary Copyright, 1998 the abolition of the Corn Laws aftermath of the split appointment, mattered more to Britain even if under the British Presidency, of the viewed from a Conservative stand- new Governorship of the European Central Bank. This is point, than the continued cohesion of a party which was in blatantly illegal and is an excellent illustration of the internal fact divided on the first question of the day.” The fatal mistake contradictions of the European Union. On the one hand it by Robert Peel was to recognise that the Party was in fact creates a rule of law across the whole of the Union and, on the divided a year too late. Had he acted sooner, he could have other, it breaks it itself. The Prime Minister in his statement to saved himself and the Party from going into the wilderness for the House on 5th May restated his view that there is no decades. constitutional barrier to the United Kingdom joining In our own day the issue is Europe. It cannot be denied that economic and monetary union and a single currency. In his all the parties are divided on the issue and there is no reply to me on this point, he made it clear that, “We must possibility of the differences in principle being reconciled. It decide first of all whether or not the constitutional question is would be as well to admit this and for the Conservative Party an insuperable barrier. He says yes; I say no. I say that, in the to buckle down behind the Fontainebleau speech. The real end, if it is in the interests of British jobs, investment and question is what is right in the national interest. industry, we do it; if it is not, we do not.” I received a similar Bill Cash

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Cultures, Parties and Pan-European Politics by Oliver Letwin

ill there, in twenty or fifty years’ If this speculation is accepted, it quickly programme or ideology, hold Southern Wtime, be a United States of Europe, becomes evident that little institutional Democrats together with Northern successful enough to stand with the USA, change is required to provide the platform Democrats in the US; religion, rather than China and Japan as one of the world’s great for a successful USE: the Court is in place; programme or ideology, keeps the CSU powers? the President of the Commission becomes separate from the CDs in Germany. The The answer to this question – however the elective President of the Union; the politicians, thinkers, apparatchiks and unpalatable to the Eurosceptic ear – must Commissioners become (as foreshadowed activists who make up a political party do be: maybe. There is little point in trying to in Amsterdam) the appointed members of so because – for a mysterious amalgam of deny that some intelligent and influential his (in the US sense) cabinet; and the TEU is reasons – they feel comfortable with one people are trying to bring about such a slightly revised to remove all unanimity another (or at any rate more comfortable result; and history tells us, if it tells us (and most qualified majority) rules from with one another than elsewhere). nothing else, that intelligent and successful the operation of the Council, and to give the Now, it would be foolhardy to suppose people may, with sufficient luck, move President, Parliament and Council a triple that such a cultural affinity cannot be built mountains. lock on (and equal weight in) legislation, so across Europe, or that it will be impossible It therefore behoves those interested in that ‘deals’ have to be done as on Capitol to create lasting pan-European political the evolution of the European Union to ask: Hill. parties that will each adopt policies relating what are the conditions for such a success? The problem, then, is not institutional. It to the supposed advantage of the whole Manifestly, none of us can know the is, rather, in the deepest sense, political. For USE rather than to the interests of answer to this question. But we can these arrangements to carry democratic particular provinces. But the difficulty of speculate – and I offer the following consent – that is, for the President to obtain, building such affinities should not be speculative assertions in the hope that they with consent, full executive powers in the underestimated. The tendency (so evident will be regarded both by proponents and by domestic and international spheres, and for in the countries of the former CIS and opponents of integration as at least a the central institutions to obtain, with Yugoslavia) for politicians to revert to a plausible set of condition for the successful consent, a general power of legislation over pursuit of particular provincial interests as a emergence of a USE as a superpower: the provinces – both the President himself vote winner is always strong – and the 1.The USE will require some locus of and the MEPs will need to have been elected cultural affinities need to be sufficiently executive authority within the Union, on a truly pan-European basis. That is, they strong continuously to resist that sufficiently magisterial to conductive an will need to be supported by and be the centripetal force. To achieve such cultural effective foreign policy and to administer leaders of pan-European parties with affinity (such commonality of response to the domestic economy (let us call this, for federal agendas that command widespread crisis and change, such mutuality of short, a ‘presidency’); consent within the USE as a whole – just as rhetoric) across the boundaries of language, the President and Congressmen in the USA history and nationhood is a daunting task. 2. This presidency will need to have (in are supported by and are leaders of the That the effort will be made – that contrast to the present Commission) a clear Republican and Democratic parties with intelligent and influential people will seek democratic legitimacy if it is to command federal agendas. The USA would not be a to establish a United States of Europe, that the consent required to make its actions superpower if its President came from an they will slightly adapt the existing effective against other democratic, Arkansas regional party and its Senators constitution of the EU to create a platform representative bodies within the USE; and Congressmen came from 15 separate for effective executive power and for the 3. Both the legislative process and the regional parties. democratic checks and balances which will process of scrutiny of the presidency’s acts We can, in short, re-express the challenge convey legitimacy and consent – we can will need to be conducted in such a way as for the USE as: the need to create and scarcely doubt. But the proponents of such to balance appropriately the new general sustain truly pan-European political parties moves must surely also admit that the effort (USE-wide) and the residual provincial with federal (USE-wide) agendas. Success will succeed only if there is also success in (French, Italian, etc.) interests, with clear, or failure in this is, I maintain, the principal the far more difficult task of forging the democratic legitimacy also attaching to the determinant of success or failure in cultural connections if that alone can institutions that represent those two establishing a USE as a stable superpower. enable pan-European political parties (with interests; This brings us to the question: how easy federal rather than provincial agendas) to 4. The ‘natural’ means of creating this will it be to establish such parties? arise and survive. system of checks and balances in the light of The answer must surely be: not easy at all. Here, the Eurosceptic argument is at its the EU’s history to date is for an elective A political party – a successful political strongest when it is put most weakly: we presidency to legislate through (and be party with the ability to persist and survive need claim only (what seems to me, at any scrutinised by) a Council (or senate) of the various vicissitudes that politics inflicts rate, evidently true) – that there must be at Ministers from the provinces and a upon it and the various changes of direction least a significant chance of failure in this Parliament directly elected and subject to a that politics demands of it – is above all a effort of politico-cultural homogenisation. constitutional court – under a constitution cultural phenomenon. A sense of history And if it does fail? Why, then all hell similar to that of the USA. and sense of place, rather than a breaks loose. A United States of Europe

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governed by an elected President and a are, and are seen as, the levers by which the clerisy and the politicians make political Parliament and a Council, each dominated some provinces lord it over others, we will parties work? by one or more (perhaps different) have, at best, Canada and, at worst, provincial or sub-federal agendas, will leave Yugoslavia. So far from a superpower, we great masses of people – indeed whole (and will have a house tottering and divided. Oliver Letwin is Conservative MP for West once proud) nations – without even the Children can build Legoland. Bureaucrats Dorset. He is a member of the European reason for consent. If the central institutions and lawyers can make constitutions. But can Foundation UK Advisory Board.

Eurosceptic Opportunities by Jonathan Collett

he changes to the electoral eleven members for each region. As the the entire Euro regions. The grass roots of Tsystem for the European elections in Electoral Reform Society have pointed out, the Conservative Party are overwhelmingly June 1999 throw up some concerns for this will be the first election in Great Britain Eurosceptical and the Euro-fanatical MEPs Eurosceptics although they do also provide where voters will be deprived of the right to are in a minority. There could well be a some opportunities that did not previously vote for an individual candidate. purge of federalist Conservative candidates. exist. In common with the Liberal Democrats, Lord Williams of Mostyn (the Parlia- At first sight the introduction of the Conservative Party and Charter 88, mentary Under-Secretary of State at the proportional representation for the most Eurosceptics would have preferred an Home Office) has claimed that Winston European Parliamentary elections of 1999 open list system. Particularly so, as it seems Churchill and Edwina Currie have already and the division of Great Britain into eleven the system will encourage the creation of been excluded from the Conservative electoral regions appeared to be a great MEPs more beholden to their party than to Party’s candidates’ list, whilst notable opportunity for Eurosceptics. Large open the electorate. Questions do arise about the Eurosceptics have been included. lists and transferable votes would have lack of voter choice inherent in party lists Parties will not wish to include given Eurocritical voters the opportunity to and the responsiveness of representatives unpopular candidates on their list, or to give vet candidates and share votes amongst who may owe their office to their position a low ranking to popular candidates. This only those candidates that they considered on the list. The German system has stifled will again help Eurosceptics as the majority to be genuine Eurosceptics. Party activists debate and imposed rigid and iron party of the electorate are also Eurosceptical. could, on the whole, be loyal to their party discipline, which discourages independence Further than this, the independent by expressing their main preferences for its of thought. The Labour Party may well Constitution Unit have argued that, under a candidates. They could, however, make sure favour the system so strongly because it national list, disaffected factions could run that they did not vote for any Euro-fanatics gives them the opportunity to exclude the as splinter parties with some electoral contained on that Party’s list by giving their likes of Ken Coates, Hugh Kerr, Alex success. A breakaway group of Euro- remaining votes to independents or fringe Falconer and Michael Hindley. sceptical old Labourite candidates and Eurosceptic parties. The new system does offer potential MEPs is not beyond the realms of Many Conservatives see the European opportunities to Eurosceptics as well. The possibility. issue as transcending all others akin to d’Hondt formula which will decide the So there are opportunities in propor- appeasement in the 1930s. As such they allocation of seats will offer the opportunity tional representation for Eurosceptics and were presented with a terrible dilemma in of seats to the small Eurosceptic parties ultimately the rewards they reap depend recent British general elections with the first such as the UKIP and the Greens for the first upon the effort and dynamism they put in. past the post system, where their local time. Particularly so as the turnout in The choice of a closed list system is rather Conservative candidate could be a Euro- European elections is so low. galling, however, with its emphasis on fanatic such as Edward Heath. They were The party list system will increase the parties rather than candidates. In the 1992 unable to vote for their traditional party if importance of and focus attention party general election there was perceived to be a the candidate was a Euro-fanatic. As such candidate selection procedures. Which cross-bench conspiracy over the Maastricht they were hoping for PR to present the candidates are chosen and in what order? Treaty. In 1997 many Eurosceptics could not opportunity to vote for both their own This will help Eurosceptic activists who can vote for any candidate who had supported Party and a Eurosceptic. ensure that the right sort of candidates are the passage of the Treaty. Eurosceptics Instead, however, MEPs for each region selected and will be particularly important would not want to see those situations will be elected by a regional list system in the Conservative Party, with its internal repeated in any future European election. without an open ballot. A voter can choose civil war on the European issue. Until now either a party or an independent candidate existing MEPs have exerted undue in common with France, Germany, Greece, influence over the selection of candidates Portugal and Spain. In those countries the through their own positions within the regions used are far larger than the United party’s Euro constituencies. That will now Kingdom, and have at least 25 members. In end and real power will lie with party Jonathan Collett is Campaign Director of the Britain there will be between four and selection committees which will encompass Bruges Group.

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Educational Entryism – A New Fable of the Bees? by Michael St John Parker

spent a large part of last weekend in a dissimilar infestation, at the hands of consistent throughout – it has always been Imelancholy employment, clearing out Europeanists who are attempting to take correct to claim that education was done the remains of a stock of bees from a hive over the structures of learning for a political better elsewhere, whether “elsewhere” meant which had fallen to wax moth infestation. purpose. America, Germany, France, Russia, China or The wax moth is a pernicious pest. Initially Just as my bee colony was in a weakened Japan. The one simple, basic fact of inconspicuous, it penetrates colonies of state when the first wax moths arrived – I education, that all the virtue of teaching is bees that have been weakened in some way must have lost a swarm without noticing it – to be found residing in the quality of the or another, and lays its clusters of eggs on so the English educational system has been teachers themselves, has been almost the precious wax combs. The eggs in due vulnerable to infiltration by harmful entirely neglected throughout. course develop into white larvae, each influences since the Second World War. It So we made ourselves vulnerable, and the almost an inch long, which first eat up and has been part of the general loss of national wax moths were able to slip in. Incon- ruin the wax comb which has hosted them, self-confidence that politicians, teachers spicuous at first, and unobtrusive, their first and then settle down to pupate in a white, and lay people alike have combined to activities seemed to do little harm, and papery cocoon, made from the very wood doubt the effectiveness of our educational might even be understood as contributing of the surrounding beehive which they institutions, and denigrate the value of what to the rich variety of life. If the study of gnaw away and convert for their own has been taught in them. The country is in a modern languages had been brought into purposes. I had neglected, for too long, to mess – so runs the argument – and it must disrepute by the ineptitude of its teachers, look into the hive which was being attacked be the schoolmaster’s fault that this is so. It is then chirpy programmes of exchanges and in this way; a few weeks suffice for the wax a line that has been popular with pessimistic study trips seemed an excellent way of moths to become established, and by the propagandists from Lyon Playfair as early as attracting the pupils’ attention. (Much the time I came along the hive was a repulsive, the 1870s, to Corelli Barnett – and, needless same tactic was being applied at the same ravaged wreck, crammed with the to say, it has become almost the theme song time to local government, where the loathsome cocoons and littered with the of New Labour. number of twinning arrangements for a black deposits of the writing larvae. Fire was The result has been a process, extended given authority tended to increase in direct the only answer. unremittingly over fifty years now, of proportion to the authority’s diminishing Bees have served as emblems of society mauling and pawing and poking, at effectiveness.) If the teaching of British since long before Mandeville wrote his education authorities and schools and the politics and civics was wrapped in numbing Fable of the Bees, and it took no great curriculum and examinations and teaching apathy, what better way of reviving it than to originality for me to draw out a moral from methods. Fads and fashions have come and incorporate it in something called my encounter with the wax moths. English gone like the colours in a kaleidoscope, but “European Studies”, with jolly mock education is currently undergoing a not one point of orthodoxy has remained elections from time to time to vary the fare.

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And so on, and so on, as in this extract from virtually undeniable. So far, therefore, we Books for school use dealing with Euro- Your Passport to Europe, published by the seem bound to teach an indisputable truth. pean institutions and issues related to the Representation of the European Commis- But the next steps in the argument, dealing European Union are available in increasing sion in the United Kingdom: with the European Union as it has evolved, numbers. They are predominantly pro- are so complex, obscure, inaccessible and European in tone, not, one suspects, “There are special programmes often ineffectual that they virtually defy because the sceptics have lost their tongues which help with exchanges, where a description, let alone justification. However, or their pens, but rather because it is girl or boy wants to go to university we have been taught to believe that to both more difficult and somehow less in another country to learn to speak criticise in matters such as this is to show respectable to compose a critical polemic the language really well. Schools can prejudice and bias; so, since we cannot for consumption in schools than it is to also participate in exchanges and adequately explain Europe, and since the produce enthusiastic advocacy. One of the projects with schools in other prior underlying principle seems to be best recent productions is Duncan Watts’ countries. When you get older you impeccable, we are very vulnerable to the Introducing the European Union, published may also want to work in a company political correctness that calls upon us to act by PAVC Publications, Sheffield Hallam in another country for a little as “good Europeans” and enthuse in Blairite University, for the Politics Association. while… If you want to live in fashion. Mr Watts makes a serious attempt to another country when you get older, maintain objectivity and balance in his you can. Your grandparents might treatment, with results that, he would want to retire to Spain because it’s probably be the first to admit, are warmer there. Now they can do that There is a real sometimes a little too cautious to be entirely much more easily… Help is given to readable. In fact, this problem of readability very poor people without a job, who problem about afflicts every aspect of the materials about are old, who are refugees or who Europe which are available for schools at the don’t earn a lot of money.” “teaching Europe” present time; being inherently difficult, the After the eggs, the larvae. Every teaching job subject is likely to be inherently dull, and so must be considered as available, notionally in schools there is a preference, time and again, for at least, to candidates from anywhere in the resources that are light to the point of new Union, and the portability of superficiality – for instance a colouring qualifications creates a level playing field of book for infants, entitled Let’s Draw Europe such an extent that it becomes very difficult There is no shortage of aids for such To g e t h e r , “is intended as a call to to discern distinguishing features of any enthusing. The Office of the European schoolchildren as well as all of us to commit sort. Just as the wax combs of the beehive, Commission in London is active and ourselves to achieving European unity”. the structure within which the bees live and persistent in despatching packets of In the end, though, perhaps the most store their honey, are broken down and propaganda material “for the information potent force impelling the European eaten up by the invading larvae, so the of those teaching European Studies in bandwagon onwards in English schools is identity of a national school system stands schools” – and very sharply intolerant of the traditional English reluctance to allow to be affected, at the very least, by alien any suggestions that their offerings are at all politics into teaching. Paradoxically, this staffing. No one could possibly claim that unwelcome to the recipients. The author means, time and again, a reluctance to this process has gone far in England to date, was castigated as “sadly mistaken and discuss what needs to be discussed. As Duff but the volume of applications from surprisingly misinformed” when he Cooper remarked in his autobiography, mainland Europe for teaching posts in ventured to describe a batch of material Old Men Forget, “John Bull is represented as England is running at a startlingly high from the Commission as insufficiently a blunt, bluff fellow, who is fond of speaking level, and such is the shortage of good impartial for educational use. The Federal his mind. But in point of fact, the ordinary homegrown teachers that a growing Trust likewise promotes a range of Englishman dislikes plain speaking, just as proportion of foreigners are actually being European wares under the banner of he dislikes cold logic or facing hard facts.” appointed. information. Their latest offerings include Hard facts are particularly unpopular in The metaphor grows tedious, and it risks courses on, successively, “The collapse of English schools at the present time, and cold becoming over suggestive as well. But the citizenship in twentieth century Europe”, logic is regarded as positively distasteful: we essential point remains: English education and “Rebuilding citizenship on the basis of prefer the cult of feeling. So the false is not certain where it is going, and in its human rights”, and an item headed “Why historicists of the European Movement are uncertainty it has made itself vulnerable to does European citizenship matter?” which having it very largely their own way, and the influences from other traditions which are explicitly proposes European unification as weaponry of political correctness is there to likely to serve a European rather than an the antidote to social conflict, injustice and penalise those who dare to deviate from the English national agenda. But one must international disorder. Like the Office of the path of received wisdom. recognise that there is a real problem about European Commission, the Federal Trust is “teaching Europe” in schools. The well- capable of making a vicious response to spring of the European idea is a revulsion those who reject its overtures: the writer was Michael St John Parker is headmaster of against armed conflict, so deep and fearful described as “irresponsible” and accused of Abingdon School. He wrote in the European that, like the pacifism of 1918–39 with “bigotry” when he ventured to reject a Journal, April 1994, ‘An Educational which it closely compares, it seems to be packet from the Trust. Agenda.’

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The ECJ Condemned by David Radlett

When George Meredith wrote the lines, legal hurdles for would-be importers, even freedom”] is respected on their “On a starred night Prince Lucifer uprose, (as the ECJ has itself ruled) the promotion territory”. Tired of his dark dominion swung the fiend” of campaigns to “Buy Irish” and so on. The snag is that this conclusion simply does (‘Lucifer in Starlight’), “Quantitative measures” have been defined not follow from the premises. A duty to he might have added – with the appropriate as national measures which restrain: obey the law oneself does not necessarily poetic flourish sadly lacking here, “the volume or amount of imports or imply a duty to ensure that other people “And appointed he the European Court of exports … by placing direct or indirect obey the law. If Article 30 is concerned with Justice”. limits on the physical quantity of direct or indirect “national measures”, it is For, over the past four months the imports or exports that may enter or not concerned with the actions of hobgoblins of the ECJ have outdone even leave a country”, (Maclean, European individuals. This is so, no matter how the most wild dreams of the Prince of Union Law). unhelpful their actions may be to free Darkness. The traditional thought has The Community itself has defined movement of goods – perhaps especially always been that laws serve to protect “measures” in Directive 70/50 EEC as: given how unhelpful their actions are to the governmental aim of free movement of against the predations of the Evil One, and “laws, regulations, administrative only when all the laws are cut down can He goods. provisions, administrative practices Commission–v–France carries a twofold hold sway. The ECJ appears to be reversing and all instruments issuing from a that thought, so that the elaborate spider’s message. It can be seen, once again, how the public authority, including recom- ECJ will manipulate, or endorse the web of laws that they promulgate – without mendations”. accountability and frequently without right manipulation of language to suit its – serve as the framework within which the In the case of Dassonville [1974] ECR 837 purpose, which is neither the enforcement work of the Beast can be done. the ECJ rules that the phrase “measures of law nor the promotion of liberty, but Take as an example the case of having a like effect” included: rather the promotion of a political end – the Commission (supported by Spain and the “all trading rules enacted by Member union of the peoples of Europe. Further, UK)–v–France, ‘The Times’ 11th December States which are capable of hindering, and perhaps of greater short term 1997. Here, the ECJ were asked to rule on directly or indirectly, actually or significance, it shows a further seizure of whether the French government had potentially, intra-Community trade.” power by the central European government policed the protests of French farmers at the expense of the Member States. In this However, with the looking glass reasoning instance, the power seized is of particular properly. It is important, from the lawyer’s of the ECJ, the question becomes whether point of view, to put to one side non- importance, for the policing of a state has the French farmers’ actions created traditionally been seem to involve a communautaire thoughts like “what “obstacles to intra-Community trade” and policing?” or “good to see someone else get complex balance which judges are ill suited then, perhaps rather sinisterly, “whether the to exercise. shafted by the ECJ”, and look to the basis of French government has adopted adequate the Court’s legal authority to act in this In the United Kingdom, the courts have and appropriate measures”. Note the been reluctant to interfere with the way in matter. A search of the Treaty will disclose remarkable change here. Apparently Article no law authorising the ECJ to supervise which a chief constable exercises his or her 30 deals not only with measures promoted discretion. For example, in R–v– policing. The proper, legal answer would be by governments, but also their responses to that policing is, at least until Europol is up Metropolitan Police Commissioner ex parte actions taken by others. Blackburn [1968] 2 WLR 893 C/A, the issue and running, a matter for the Member This was justified by reference to the duty States and not for the Community at all. was whether the Commissioner’s decision on Member States under Article 5 of the not to enforce gaming laws unless there It is, perhaps, no great surprise that the Treaty of Rome which states that: ECJ did not take this course. Like the were special circumstances could be magpie, ever eager to collect unto itself “Member States shall take all challenged. The Court of Appeal noted that power, it assumed power over policing by appropriate measures, whether general decisions on the disposition of the police ruling that the French failings in policing or particular, to ensure fulfilment of force and the concentration of attention on the protests broke the rules of Community the obligations arising out of this any particular crime or area were matters law on the free movement of goods. It took Treaty or resulting from action taken which fell within the chief constable’s as its text the rule in Article 30 of the Treaty by the institutions of the Community. discretion. As Lord Denning MR put it: of Rome which states that: They shall facilitate the achievement of “[T]here are many fields in which they the Community’s tasks.” “Quantitative restrictions on imports have a discretion with which the law and all measures having equivalent According to the ECJ, this requires Member will not interfere”. effect shall, without prejudice to the States: These fields have been held to include the following provisions, by prohibited “to take all necessary and appropriate decision whether to provide assistance between the Member States.” measures to ensure that fundamental when requested by developers of land to Those words deal, on their face, with actions freedom [author’s note: free movement remove protesters (R–v–Chief Constable of of government – banning imports, creating of goods, not abstract “fundamental Devon and Cornwall ex parte Central

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Electricity Generating Board [1988] 3 All striking a balance between the applicants’ adopted by the Council of Europe ER 826 C/A) and maintaining ‘no go’ right to lawful protection for its lawful (representing all of Europe, not just the EC areas in the interests of good community economic activity, the right of the residents states) took priority over an EC Directive. relations (R–v–Chief Constable of Mersey- of Sussex to protection from crime, and the But, of course, Heaven itself forfend that a side ex parte Levy, The Times 18th rights of the protesters to make a peaceful sacred text of the ECJ be interpreted December 1995). protest, and in making the best use of according to an outside source! Eschewing A similar view had been taken regarding available resources, the chief constable had yet again the opportunity to be a proper EC law in R–v–Chief Constable of Sussex acted within the principle of proportion- court of international law as opposed to ex parte International Traders Ferry Ltd ality and was entitled to rely on Article 36 of European Community policy, the ECJ ruled [1997] 2 All ER 65 C/A, where the the Treaty of Rome. that the Directive could not be tested applicants complained of the Chief Now, this sensible approach to policing is against international law standards, nor Constable’s decision to restrict policing threatened. According to the ECJ, it is for the could it be avoided using the public of demonstrations against export of live courts to decide whether a chief constable morality, public policy or protection of animals to two days per week. They claimed has “adopted adequate and appropriate animals ‘defences’ in Article 36 of the Treaty that they had a Community law right to measures”, and presumably his or success in of Rome. engage in the activity, and that the Chief this regard will fall to be measured in the Whatever one may think about the live Constable had a corresponding duty to bodies of those minded to dissent from the animal export debate – though it does only deploy his forces in a manner allowing them ideals of the “great European project”. seem to require a modest amount of to do so – a similar argument to the one put It became clear in R–v–Minister of Agri- humanity to hold that animals should be in Commission–v–France. It was held at culture etc. ex parte Compassion in World killed before being transported many first instance that the decision amounted to Farming Ltd, The Times 2nd April 1998, hundreds of miles in squalid conditions – a violation of Article 34 of the Treaty of that dissenters cannot themselves rely on the biggest surprise in both of these cases is Rome in that it had an effect equivalent to a EC law for protection. The ECJ were asked that the ECJ seems perfectly willing to be quantitative restriction on trade. This could to consider whether the evil trade in seen to side with the forces of Darkness on not be justified under the ‘public security’ exporting live animals could be restricted, the issue. In previous cases they had been defence in Article 36 of the Treaty of Rome, if only where such export contravened anxious to be seen as the protectors of as there appeared to be resources available standards imposes by international law. The freedom – as a Court of Justice. Perhaps to provide the protection needed at a cost ECJ has, in previous cases, demonstrated a now they can be seen in the light of day for which was not disproportionate. The Court penchant for pinching jurisprudence from what they are: a squalid apology for a court commented that the Chief Constable was proper courts of international law – for of law. not in breach of his duty to maintain the example, the notion of ‘proportionality’ peace, nor was his decision irrational. It was mentioned above derives from principles noted that the Court would not normally applied by the European Court of Human interfere with policy decisions reached by Rights. Compassion in World Farming chief constables. Harris–v–Sheffield United might be forgiven for believing that the ECJ David Radlett is a lecturer in law at Mid Kent FC [1988] QB 77 would normally apply. would accept that the standards in the College of Higher and Further Education. He On appeal, this decision was reversed. European Convention on the Protection of specialises in Constitutional and European The Court of Appeal was satisfied that, in Animals Kept for Farming Purposes Law and holds a degree in Law from the LSE.

… news in brief Duisenberg dished out to the Euro parliamentarians, and said that his What a useful institution whoppers proved that he was thoroughly independent. The European Parliament has once again shown itself to be an absurd Villiers attacks Chirac waste of space. When the Duisenberg-Trichet compromise was Philippe de Villiers, the former French presidential candidate and announced, various MEPs got on their high horses to denounce it. member of the European Foundation’s advisory board, has said that he Within hours, however, the long arm of national party political control no longer supports Jacques Chirac, who has disappointed all the hopes was being extended to make them change their minds. Soon, the placed in him. In particular, Villiers accused Chirac of not having lived ridiculous talking shop had fallen into line and the compromise was up to his promise of breaking with political correctness in France (la duly ratified by it. It thereby abandoned any pretence to speak for the pensée unique) and with having broken his undertaking to hold a people of Europe, and showed itself conclusively as the satrap of referendum on the single currency. national governments. Germany has sights on European Bank for For instance, Pauline Green, the British Labour MEP who leads the Reconstruction and Development Socialist faction in the parliament, and who had denounced the Brussels Having been partially defeated by the French in the fight over the deal as an unacceptable trick, suddenly found that it was in conformity presidency of the European Central Bank, the Germans are now set on with the treaty after all. The chairman of the parliament’s economic taking their revenge by claiming the presidency of the EBRD in London, committee, Karl von Wogau, had called for the heads of government to which has hitherto always been held by a Frenchman. The name of Horst nominate an ECB president for the full 8 year term; but when the Köhler, the sherpa who negotiated Maastricht, is being mooted. Brussels deal was examined by the parliament, he described it as a Germany regards the nomination as a way of bolstering her general magnificent solution. Christa Randzio-Plath, a German SPD MP who Ostpolitik – of gaining control over European investment in Central and chairs the parliament’s EMU committee, lapped up the fresh dose of lies Eastern Europe, Germany’s own back yard.

JUMP TO CONTENTS 8 The European Journal May 1998

The Commission’s Choice for EMU – breaking all the rules by Jeremy Stanford

he predictable announcement mechanism for at least the previous two dissemble. Italy only rejoined the ERM in Tof the European Commission on 25 years; November 1996. Finland’s first experience March that eleven EU member states met 4. that inflation should not exceed an of the ERM has, to date, lasted just 17 the Maastricht convergence criteria for average of the three lowest by more than months. Yet Sweden is barred from euro Economic and Monetary Union and would 1½ points; and entry for not being an ERM member. And thus be recommended to adopt the future Greece, which admittedly fails on all counts, European single currency on 1 January 5. that long term interest rates were no more is censured for experiencing exchange rate 1999 has met with predictable alarm and than 2 points above the averaged lowest ‘tensions’ despite remaining within the protest. three. ERM and its margins for the required two Predictability, of course, is the key word It has always been conceivable, however, years. in this whole shameful enterprise. It has that many targets could be met merely for But it is in the Commission’s analysis of been clear for several years that the the period preceding selection by, for governments’ financial positions that its Maastricht criteria, intended to establish example, temporary increases in taxation, own pre-eminent skills of sleight of hand that a degree of convergence in largely deliberate manipulation of exchange rates become most apparent. Article 109j of the monetary terms had occurred between and the aforementioned creative account- Maastricht Treaty requires sustainability of potential single currency nations, have been ing tricks. The Commission’s Maastricht government finances. According to the little more than a joke and regarded as such rules (Article 104c) gave it the ability to Article, this condition is to be determined by political leaders. The tricks and consider broader judgements on long term by whether an applicant country is in distortions of creative accounting that have trends towards the deficit criteria. But, as receipt of a Decision, by the Commission, produced the final statistics have been has also long been predicted, this has simply that an excessive deficit situation exists. The widely reported. Italy’s euro-tax in 1997, to enabled the Commission to ignore failure to margin reference value for an excessive be ‘paid back’ in 1999; Germany’s attempt to meet these targets by stating in many cases budget deficit is the familiar 3% of GDP revalue the book value of the Bank reserves; that it, nevertheless, foresees a satisfactory criterion set out in the Treaty’s Protocol 5. France’s freesale of State enterprises; longer term trend. As it happens, prior to the Commission’s Ireland’s budget supported by massive EU In fact, the Commission stands alone recommendations on 25 March, all eleven contributions, etc., have shown that amongst both official reports and countries were subject to Commission reaching the Maastricht criteria has been commentators in viewing the achievements Decisions that excessive government treated with as much validity as a marathon of the proposed EMU entrants towards deficits did indeed exist. For the purposes of runner taking a car ride to re-enter his race the Maastricht criteria as being both the favourable Report, the Commission has just before the final bend. satisfactory and sustainable. merely needed to update the view and The announcement recommending the According to the Commission, all eleven rescind every one (bar Greece) of these initial members was accompanied by the recommended countries fulfil the necessary Decisions. No Decision, no deficit, it’s as Commission’s own ‘convergence report’, conditions for adoption of the single simple as that. plus another report from the European currency according to Maastricht Article The Commission’s most outrageous feat Monetary Institute (forerunner of the 109j. The only exceptions are distant of prestidigitation, however, has been European Central Bank). Responsibility for Greece, for which even the Commission reserved for government debt. A case of collecting the evidence on which the couldn’t stretch the rules so far that it might ‘now you see it, now you don’t’. Protocol 5 Commission’s decision was based fell to be included, and Sweden, which still has to of the Maastricht Treaty states that the Commissioner Yves-Thibault de Silguy show that it is politically ready for EMU. reference value to be respected for who, predictably, is also the commissioner Britain and Denmark exclude themselves, accumulated government debt is 60% of with responsibility for the single currency view their present opt-outs, from joining gross domestic product. Yet miraculously, launch. And, predictably, it is the EMU’s third stage. throughout the Commission’s Report, it Commission’s opinion that counts. Satisfying the inflation targets has not avoids a single mention of this requirement. The Commission’s task was to establish been difficult for the eleven, given the An ‘escape clause’ written into Maastricht which countries had achieved ‘a high degree sustained deflationary policies and Article 104c enables exceptions to be of sustainable convergence’ by applying the unemployment-bound conditions of the made where ‘the ratio is sufficiently five convergence tests set by Maastricht: continental economies. With the maximum diminishing and approaching the reference 1. that the budget deficit should be no more reference value for long term interest rates value at a satisfactory pace’. But as Britain’s than 3% of GDP; set as high as 7.8%, this criterion has again negotiator at Maastricht, Norman Lamont, been easy to meet. However, the points out – in five selected countries their 2. that accumulated public debt should be requirement that currencies should have excessive debt position has not in fact no more than 60% of GDP; stayed within the margins of the exchange declined, but risen. And in Italy and 3. that exchange rates stayed within the rate mechanism for at least two years is Belgium the ratio remains double the 60% margins set by the exchange rate where the Commission’s analysis begins to target set.

JUMP TO CONTENTS 9 The European Journal May 1998

It is this immense burden of debt that a effect on public spending as a proportion of The EMI has produced its report future single currency will carry, plus what GDP. knowing that failure to launch the currency is seen as the unsustainability of even the But it is not just the obvious targets that in nine months’ time could not only fudged figures for annual budget deficits, feel the sting of the EMI report. France destabilise political credibility but have a that has given rise to such withering supposedly fulfils all the Maastricht criteria, similar effect in financial markets too. criticisms of the entrant countries’ financial but the EMI is less than convinced of Yet the picture painted by the EMI of the positions and of the Commission’s politic- France’s commitment to budget austerity. readiness of EU countries for EMU couldn’t ally partisan ‘convergence’ report. Since 1990 the official debt to GDP ratio has be in sharper contrast to the politically Even the Commission, after blowing increased from 36% to 58%. And according motivated Commission report. If one can’t many trumpets over the ‘outstanding’ to the EMI, the current fiscal position would actually read the words ‘Europe isn’t ready’, achievements towards convergence, warns ‘not appear to be sufficient’ to stabilise the it’s only because of the twisted arm behind of the hard work ahead and need for ratio below the required 60 per cent. To the EMI’s back. But if EU leaders were structural change as a result of the impact of maintain its debt level France needs to principally concerned with the economic EMU. But the European Monetary Institute reduce the annual deficit from 3% to 2.5%. success and stability of Europe, wouldn’t (whose convergence report also forms part But a commitment to welfare spending they heed the findings of a monetary of the Maastricht requirements and, as the means the EMI sees ‘virtually no further institute comprising the heads of all EU future euro Central Bank, has a direct improvement in 1998’. central banks rather than the federalist interest in the feasibility of the EMU And so to Germany, where an ever babblings of Europe’s oleaginous political project) is far less circumspect in issuing increasing debt burden produced a debt to servants? warnings and criticising the way the GDP ratio above the EMU criteria at 61.3%. Unfortunately, like Thomas Cromwell, convergence statistics have been achieved. While the annual deficit ratio would appear the Commission derives a near all-powerful The EMI report repeatedly expresses to be falling – 2.7% of GDP last year – the executive warrant. Some politicians have ‘ongoing concern’ about the sustainability EMI believes this to be insufficient to cut the called for the current British EU presidency of the process of debt reduction. Italy and level of excessive accumulated debt. (The to call a halt to EMU, for so clearly breaking Belgium, both with debt of over 120% of budget figures have been questioned in its own rules. But, predictably, tucked away GDP, need to ‘accelerate the pace of fiscal several quarters in Germany as being the in Protocol 10 of the Maastricht Treaty is the progress considerably’ and demonstrate result of a series of large one-off receipts following carefully drafted Commission ‘sustained efforts’ to continue the process in and delays in payments.) ‘Further text: ‘a significant way’. (The Benelux Dutch substantial progress in consolidation of the “… all Member States shall, whether Central Bank in a separate report has fiscal position’ is needed, says the EMI, they fulfil the necessary conditions for dismissed half of what debt reduction despite Germany facing taxation shortfalls the adoption of a single currency or Belgium has achieved as ‘financial and the constraints of the stability pact. But not, respect the will for the transactions’.) In Italy, the EMI continues, the biggest challenge to its budget it sees Community to enter swiftly into the ‘significant and persistent’ fiscal surpluses Germany facing is the inescapable third stage, and therefore no Member are required ‘rapidly’. The Italian consequence of its ageing population. State shall prevent the entering into the government’s projections rely on running Projected old age spending, including third stage.” continuous budget surpluses, yet the EMI unfunded pensions, is set to place an points out that the marked ageing of the increasing strain on the economy. And Game, set and match to the Commission. population, sustained by unfunded already it describes the burden of levies in And it is on such games of kings as these pensions, could have exactly the reverse Germany as ‘unacceptably high’. that the people of Europe await their fate.

… news in brief She is suspected of having organised fictional jobs, which cost – German economics institutes in favour of tax competition according to a former personnel director of the Hôtel de Ville – between In their common report, 5 out of Germany’s 6 leading economics 80 million and 100 million francs a year. The suspicion is that these jobs institutes have described the EU’s plans to harmonise tax as “a were pay-offs to friends. dangerous path”. They have also attacked plans to introduce a single Harsh words on Russia European wage policy, saying that differences between countries and The Council of Europe has delivered a damning report about the state of regions must be taken into account, and flexibility in the labour market democracy and law in Russia. Its conclusions is that Russia is barely a increased. The introduction of the euro would not help reduce Europe’s “state of law” at all. There is an “absence of juridical codification” and the unemployment rate, they opined. “mapping of legislation which is relatively badly conceived onto The institutes also reported that Germany was unfit for currency structures and mentalities which have been inherited from the Soviet union. The necessary reforms in tax and social policy had not been past”. It found that the conditions in Russian prisons and detention undertaken. The institutes also said that the prospects of a recovery in centres “have deteriorated since Russia joined the Council of Europe”. East Germany had become even more remote than they had been The report also found that the Russian army had been guilty of before. numerous “human rights abuses during the Chechen war”, and it Wife of Mayor of Paris remanded in custody concluded that the 53 executions which had been carried out in Russia The scandals surrounding the Paris city hall – which have been since the country joined the organisation represented “a flagrant rumbling on for years, ever since Jean Tiberi replaced Jacques Chirac as violation of the undertaking given by this country to apply a Mayor – have culminated in Madame Tiberi being remanded in custody. moratorium [to the death penalty]”.

JUMP TO CONTENTS 10 The European Journal May 1998

A Necessity for Democracy A speech delivered at fringe meeting at the National Union of Teachers Conference, in Blackpool on Saturday 11th April 1998, by Will Podmore, a member of Greater London Against Maastricht

hat do we need for education to What would entering Economic and money, high interest rates and high Wflourish? I would suggest that all of Monetary Union mean for us? Under EMU, exchange rates. the following are necessary, though I am eight unelected European Central Bankers We need a new workers’ nationalism, not sure that others could be added: smaller would control our currency and, as Keynes like the old nationalisms, but one built on classes, better wages and conditions for said, “Whoever controls the currency the historic strengths – the record of teachers, better maintained buildings, more controls the Government.” So a single struggles and the development of the skills books, more support for further and higher currency would mean the end of Britain’s – of the British working class. We must education and for lifelong learning, a united sovereignty. As David Blunkett said, “the assert our sovereignty, while of course teaching profession encouraged to take respecting the sovereignty of others. The initiatives and to take responsibility for case against EMU is untainted by improving education, support for the Principally, we must get xenophobia, although it is routinely comprehensive system and an end to our trade unions to make branded as xenophobic; but then, selection. supporters of the British Empire routinely What stops us achieving these good their voices heard in branded all national liberation movements things? Just one thing: Economic and upholding sovereignty as xenophobic. Monetary Union. The preparations for Principally, we must get our trade unions EMU have already restricted the resources and opposing EMU to make their voices heard in upholding available to all our services and, if we were sovereignty and opposing EMU. Some to enter EMU, resources would be unions are already doing this, for instance permanently constrained. power to act alone is no longer an option for Unison and the Fire Brigades Union. We Since the Maastricht Treaty was agreed, the parliaments of the developed demo- must make sure that the matter is discussed all the tax increases, public spending cuts cracies.” The Bundesbank’s President said, in our workplaces, with our families and and wage cuts across the EU are due to the “a European currency will lead to member friends, in our trade union branches, and in preparations for EMU. Europe is no longer a nations transferring their sovereignty over our Trades Councils. We should call for a place which respects social provision financial and wage policy as well as in referendum now, to say ‘No’ to EMU, and through public services: the attacks on monetary affairs. It is an illusion to think then move further along the path towards public services throughout the European that states can hold onto their autonomy leaving the EU. Union show that monetarism has now been over taxation policy.” It is now argued that EMU is inevitable, adopted across the continent. For instance, Single currency members would force us not that it is good or desirable for Europe, or the 1994 and 1995 budgets in Britain cut to join at the pound’s present very for Britain, just that it is inevitable. Nothing public spending by £15 billion over three uncompetitive rate, to suit them, not us, as is inevitable, somebody once said, except years to meet the Maastricht convergence they did when Italy rejoined the ERM. The death and taxes: which one equates with criteria. The Treaty adopts the approach Bank is bound by Treaty not to take EMU? People who assert that ‘There Is No that public spending is bad for price instructions from elected national Alternative’ often find that others can find stability (although private spending is governments: in fact it is illegal for elected one when they try. In Star Trek, it is the evil good!). national governments even to try to Borg who say, “You will be assimilated – Some believed that hostility to the public influence the Bank: we could be fined for resistance is futile!” But the crew of the sector was the result of Tory dogma, and trying. Further, this peculiar Bank is Enterprise fight successfully to maintain that electing a Labour Government would forbidden to lend to national or local their independence! It is argued that only end this destructive approach. But no – the governments: some bank! the EU preserves peace in Europe. I get on Maastricht Treaty is hostile to the public British companies invest nearly two fine with my neighbours in our street, but if sector, and those who defence the Treaty trillion pounds abroad; a determined I gave them control over my income and my must attack the public sector. So Gordon government and people could redirect this spending, I am sure this would lead to bad Brown has said that he will retain until 2001 into modernising plant and machinery, blood! the public spending squeeze that the setting up new industries and firms, Sovereignty is not an issue that belongs to Conservatives imposed. Consequently, rebuilding our transport and energy the ‘left wing’ or to the ‘right wing’: it is a according to the Local Government systems. For this, we need long term, low necessity for all, a necessity for a democracy. Association, local authorities face a shortfall interest funds. We need full employment: Especially, it is vital for us now, when we in their budgets of about one billion pounds the power of millions of people brought need to rebuild our country: EMU blocks for 1998–99. For teachers, as reported in the back into productive work could raise this. The greatest single contribution to Daily Telegraph of 8 April, this means the resources for education and health. We need progress we could make would be to leave threat of hundreds of redundancies, leading to control capital flows. We do not need the EU, in favour of making our own future, to a rise in class sizes. permanent deflation, imposed by tight starting with rejecting a single currency.

JUMP TO CONTENTS 11 The European Journal May 1998

The Emperor’s New Clothes – and some naked truths about Japanese investment by James Barr

mperor Akihito’s visit shows two high tech products make for rich pickings, has offered a welcome opportunity to Ethings: first, how difficult it is to and crucially, jobs for British workers – catalyse the transfer of Far Eastern money apologise once the natural moment has about 65,000 according to Mr Blair. We and industrial know how to the British passed, and second - the issue of this article should therefore be grateful to Japan, the economy. But whether British forelock - how obsessed the UK is by ‘Japanese ‘logic’ goes. tugging is enough to encourage investment investment’. But Japan, as Europe gleefully recognises, is questionable. It would seen more likely As any host should, the British Govern- is in an economic rut at the moment. that Japanese firms, in Britain to make ment was anxious to make its guest Tearful Japanese businessmen announcing money (not a dishonourable goal for welcome. The Prime Minister wrote an bankruptcy have reinforced the impression business) may have more down-to-earth article in the Sun to encourage veterans and that the Japanese take everything to heart. issues on its mind. Labour flexibility, a the British public at large not to mar the Surely potential investors too, would take ravenous market, parts availability and Emperor’s big day. After the pleasantries – insult at the British veterans’ behaviour logistical issues are at bottom more in this case some new clothes, in the shape towards the Emperor, until relatively important. of the Order of the Garter – it was down to recently a quasi-religious figure. Perhaps The same is true of EMU. Pragmatism business: the Irish State Coach which they might, but in truth, Japan is in little dominates investment decisions. Japanese ferried the Emperor down the Mall was position to invest abroad at the moment, business likes low corporation tax, basic, swapped for something more rapid. Next and the Government could apply a little but not stifling social provision for its stop, Cardiff, to see the results of what has more rationale to understanding Japanese workforce, and in consequence a lower wage been a very fruitful UK-Japanese partner- investment decisions. To state the obvious - bill. They will support EMU if monetary ship, helped by generous terms agreed foreign direct investment uses free capital, union provides all these things. The signs between companies, and the regional available during prosperity, as lucratively as are that it will not. At the beginning of this development authorities through which possible. Japanese investment was at its year, the President of UNICE, the pan- much lobbying for investment is now strongest between 1987–90, during the European equivalent of the CBI, described conducted. In a move which has provoked world-wide boom. Since then, it has been a progress towards deregulation as ‘slow, increased speculation, these regional shadow of its former self, as recession, then insufficient or disappointing’. This is hardly development offices have decided to keep currency disaster, and now political a vote of confidence for potential investors. quiet the exact value of these terms. It is collapse wrecked the Far East’s immediate In view of these factors, potential becoming clear that the UK pays recovery. Cumulatively, investment has investors are more likely to be interested substantially in the short-term for long- continued to rise, but the annual by Government moves to implement a term employment, and the positive effects instalments have fallen away, in line with minimum wage and increase trade union this has on the areas where investment is the general tail-off in the developed world’s membership. Demonstrations by the located. economic growth of late. The UK’s popu- workforce are, after all, more worrying than Just how fruitful the relationship is, could larity amongst investors has cushioned it demonstrations by pensioners, regardless of thus be examined further. The UK is against this general trend, which showed the moral issues behind the protest. certainly the most popular destination of some sign of picking up at the end of 1997. foreign direct investment in the EU, and That was before the Asian crisis. Japanese businesses have invested billions Since then, stray foreign direct The European Foundation’s Briefing Paper of yen in Britain, where low social regu- investment from Asia has been harder to on Japanese Investment and EMU is lation and an appetite for Japanese cars and find. As a result, Emperor Akihito’s arrival available: see advert on page 27.

… news in brief go, and that it is wrong for the press to condition public opinion against German businessman launches initiative to protect D-Mark him in advance of the enquiry. A German businessman has placed advertisements in the German press Tietmeyer on political union announcing a “Pro D-Mark initiative”. An opinion poll gave the “Monetary union should lead in time to an additional political initiative 5.7% support, which seems tiny but has encouraged the integration”, said Hans Tietmeyer in an interview with Le Monde. He organisers to think that they might achieve representation in the refused to criticise the Brussels compromise, and insisted that he had Bundestag and thus hold the balance of power in the next parliament. been a convinced European since the 1950s. Dream on … Trial begins of Yann Piat’s accused murderers Dumas refuses to resign The trial has begun in the south of France of 6 people accused of Roland Dumas, the President of the Constitutional Council in France, complicity in the murder of the anti-corruption deputy Yann Piat who has refused to resign as head of the body which guards France’s was shot dead in February 1994. The suspicion is widespread that the constitution even though he has been officially placed under judicial deputy was the victim of a Mafia plot to prevent her from lifting the lid investigation for corruption. He has insisted that no one can force him to on its activities in her area.

JUMP TO CONTENTS 12 The European Journal May 1998

Back to the Euro Doghouse by Austin Mitchell

ew Labour new EU love affair. whether all the hull could take the strain. Yet It was promised to the German electorate NOur naïve infatuation made political it’s difficult to tell electorates who’ve and Bundesbank. It is the expectation of sense given the deadlocked hostility the endured five years of high unemployment, markets who’ve been patient with both the Tories had lumbered into. Yet now new low growth and Maastricht cuts that it had birth pains and with the irresponsibility of niceness isn’t working. We’re back in the all been a terrible mistake. The Titanic had embarking on the huge euro risk when the Brer Britain stuck to Euro Tar Baby routine to sail; whether it floats or not. Far East puts the world financial system and the alienation born of experience in British ministers then shouted “bon under strain. Yet why should the euro be previous governments is now creeping over voyage” and kept quiet about the missing hard? Few promises have been fulfilled. Labour’s leaders. Though not, yet, back- hull plates, the flooding in third class cabins, Inadequate convergence and fudged criteria benchers conditioned to slogan chanting as the absence of pumps and mops, and the imply weakness. A soft euro would allow a system of thought. wrong destination of the voyage: political growth and make the new currency more The deterioration started at Amsterdam. union not economic success. Sulking is not attractive by bringing down unem- Tony Blair made concessions but got a strategy but vacuous enthusiasm can’t be ployment. nothing in return, particularly on the either, for, fail or succeed, the EU’s folly will Already sterling appreciation and flagship issue where he’d promised results. harm us if we leave ourselves exposed, D-Mark depreciation have made the trade Our presidency has been lacklustre, getting whether we try to help it on its way or get deficit horrendous. That heralds deflation the full PR Monty but only half attention. dragged behind like a bum boat. to reduce demand for imports, and higher Now EMU compounds the decline. Tony The first consequence has already interest rates to finance it. Government Blair, committed to stop fudges, waved them emerged in crippling overvaluation which hopes that the pound will come down. all through and added his own dirty deal by will produce rising unemployment and Indeed the slight fall since the summit has forcing Duisenberg to retire early to spend recession. This is due to high interest rates been heralded as the dawn of com- more time with his money. He then got and the flood of speculative money petitiveness. Yet a few pfenigs make abused for it. escaping Europe’s uncertainties by coming no difference. The pound is still within the Mouthing the lies and half truths of Euro- here. With interest rates controlled by the ERM range which did such damage and, PR must strain Tony Blair’s transparent, Bank of England on a tight inflation target once started, manufacturing rundown is shining integrity. He won’t be the first and a monetary committee in which difficult to reverse. There is no reason why British Prime Minister to make the plod- Brown’s appointees have been hawks, a the pound should fall substantially and no ding pilgrimage from support to scepticism system intended to secure stability has indication that the Bank of England will but that process is now pressure cooked by produced instability in the exchange rate. It allow the substantial reduction in interest EMU which will strain the union and our now deprives us of any ability to protect rates to bring it down. So we are left with an relationship with it. EMU is a political ourselves against Europe’s follies so we go indefinite future of Sterling overvaluation. process advancing union by monetary naked into the Euro-chamber. Compounded by a soft euro that would means, which is like jumping from a cliff Our problem has been compounded make the future bleak. It will not be and hoping to invent the parachute on the by the German willingness to manage the profitable to produce in this country. way down. Difficult to participate in that in D-Mark and its associated currencies down I’d defend the right of Euroland to go to our usual way of stumbling behind to offset the deflationary consequences of hell in its own way. Yet that requires us to grumbling. So it faces us with a stark choice. Maastricht by export led growth. This has take advantage of their folly as they have of Protect our interests or be dragged down by already produced benefits in Germany and ours for so long. Exuding goodwill to a this ultimate Euro-folly. France but hits us and means that, if it’s project which can’t work is vacuous. Strong The EU has active supporters among the more than a last fling before marriage to or weak the euro doesn’t help us, therefore leadership, such as Peter Mandelson, the make the disciplines to come bearable, it we have to defend our own interest with European Movement’s Plenipotentiary, and may be a soft euro. We need the euro hard every weapon available. Small boats require Gordon Brown who would rather let because a weak euro threatens our trade more strenuous navigation. Hard or soft, someone else handle macroeconomic with Europe which is less profitable than the only sensible approach for Britain policy while he gets on with his real interest: our trade outside and has always been in outside Euroland is to manage our economy in the micro. Such Euro-enthusiasts are deep deficit, because entry meant a for our purposes, to go for growth and jobs hailing EMU claiming that critics said it rundown of our traditional trade with the and repair the damage done by two decades would never happen but there it is. In fact rest of the world (where we were in surplus of industrial anorexia and the ever rising critics said, rightly, that a single currency up to last year) to open our market to more deficit drain to the EU. That rebuilding was without a single stage to redistribute, cut powerful industries producing much the central to a manifesto which promised to public spending and facilitate labour same range of goods as ourselves and repair Tory damage and ensure “real” mobility will be messy. The proof of that compete with them in their own home convergence. Yet to get it, and to steer pudding remains in the eating but there market. through coming Euro-uncertainties, we were few doubt that the Titanic would sail, The Treasury and Civil Service must take back control of monetary and though many about the passenger list, the Committee, now the economic arm of the fiscal policy, manage interest rates to ensure Captain, whether all could pay the fare and European Movement, expects a hard Euro. a competitive exchange rate, manage

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demand to get jobs and control inflation by central issue and until it’s answered, British by public spending or for those suffering managing credit. government should go for the growth and higher deficits as rising unemployment Labour shows no sign of doing, or even betterment it was elected for. Then it can leads to higher spending and lower tax understanding, any of this. Indeed, we are assess whether EMU has delivered receipts. Such problems will emerge in the proclaiming our intention to eschew economic benefits or done damage in four years before our decision becomes competitive devaluation. Worse, the Europe. This isn’t a test of whether the euro imminent. So will divergences produced by government seems determined to run the falls apart under the strains predicted by the fact that one interest rate can’t cover economy as if we were already an apprentice Martin Feldstein, or the conflict feared by every condition, while cuts in public and member of EMU, lacking influence on its Bernard Connolly. It’s a question of the social spending (the covert part of the decisions, but prepared to suffer its pains strains forced on weaker economies by agenda) must have differential conse- and penalties. Gordon Brown is committed EMU. With lower productivity and living quences (and produce different levels of to Euro-monetarism which means restrict- standards, less investment, fewer big anger) in different economies. Thus the real ing public spending, to reducing deficits, to companies with economies of scale, and a test is the degree of divergence and damage maintaining the debilitating obsession with weaker manufacturing base, we are exactly as EMU strengthens the strong and inflation and to an exchange rate stability the kind of economy likely to be clobbered undermines the weak. The EU can’t which will crucify manufacturing. There is by powerful competitors, if the insulation of respond to this without a massive new talk of a possible entry rate of 2.60 to the our own exchange rate is removed. redistribution role. DM, though this may be a carrot dangled Maastricht took no account of this because Our four year breathing space is also a before manufacturing to keep it plodding it ignored real convergence to concentrate challenge. Either we pursue our own on its downhill road. It certainly shows no on monetarist measures. Even if monetary interest and set out to rebuild and expand understanding of the problem for a 2.60 convergence had prepared the way, which it our own economy, or we sit on the sidelines pound is far too high as well as unattainable. hasn’t, a single currency deprives the weak training for a different game by exercises So we may get the worst of all worlds, of the ability to adjust through the exchange which will damage. Make a success of the even though the enforced delay in entry rate. They must take shocks directly on first choice and we have little need for a puts us in a position to get the best. Watch employment, wage rates and living failed Euroland. Follow the second and we the mess unfold. Learn lessons by standards. have no alternative to slumping into it. observation rather than by bitter and A nation state offsets this by tax equalis- expensive experience as we did in the ERM. ation, as in Germany, or by redistribution Gordon Brown has shifted the onus to entry envisaged in the McDougall report on Austin Mitchell is Labour MP for Great by proposing five tests on whether we’re monetary union. Europe can’t and EMU Grimsby. He is a member of the European worthy (which amazingly do not include does the opposite via a stability pact Foundation UK Advisory Board and Vice manufacturing strength) but none of proposing fines for countries like France or Chairman of the Labour Euro-Safeguards whether it will be worth joining. This is the Italy who will soon look to boost demand Campaign.

… news in brief European elements, and pro- and anti-free trade elements. In fact, it is Jacques Delors proposes reforms almost as difficult as uniting the British Conservative Party… The former president of the European Commission and architect of A bit late now monetary union has submitted plans for reforming the way the The Socialist opposition in Spain has accused the government of European institutions work, on behalf of the ‘Notre Europe’ foundation creative accounting in its figures for the budget deficit. It claimed that which he chairs. The central suggestion is that the political parties the deficit of the country’s social security system was far higher in announce their candidate for the post of president of the Commission as reality than the government claimed, and that some 350 billion pesetas part of their electoral manifesto in the European elections. Delors points (£1.3 billion) had been hidden away. The Socialists claim that without out that appointments for this post are subject to approval by the this and other tricks, the Spanish budget deficit would be 4.3% rather European Parliament, and that the parties thus have the right (and duty) than the 2.6% official figure submitted by the government. to say whom they will support. As Delors rightly realises, such a All good friends really personalisation of the political debate would shift the European Jacques Chirac hosted a lunch at the Elysée Palace for all the former elections from their current excessive concentration on internal politics, prime ministers of France to celebrate the definitive decision to join the and raise them to the European level instead. The change, in other euro. Maurice Couve de Murville, Jacques Chaban-Delmas, Pierre words, while not being a strictly institutional one but instead a matter of Messmer, Raymond Barre, Pierre Mauroy, Laurent Fabius, Michel practice, would be a very strong federal impulse. Rocard, Edith Cresson, Edouard Balladur, Alain Juppé and Lionel Jospin French right tries alliance all came. The former president, Valéry Giscard d’Estaing was also The withering French centre-right opposition parties, the Gaullist RPR invited, but he declined: he evidently has no desire to darken the portals and the liberal UDF, have agreed to form an “Alliance”. For years they of the Elysée, now that his old enemy Chirac is installed there – a scruple have had an informal alliance, which consisted mainly in not putting up he never felt when Mitterrand was president, whom he visited several candidates against each other: this new structure is likely to be an times. After the lunch, Michael Rocard, carried away by conviviality, uneasy compromise, bringing together two (or more) disparate strands admitted that, “It was a lunch for an exclusive club, a very pleasant and of right-wing politics in a last ditch attempt to shore up the collapsing even jolly occasion.” He tut-tutted at “our German friends” (it was just centre-right, and thus to prevent it from ceding all territory to the Front after the Brussels summit) for “sometimes having itches for power National. It is a difficult task, the two parties containing pro- and anti- which they really ought to control”.

JUMP TO CONTENTS 14 The European Journal May 1998

Germany, the CAP, and the Third World by Bill Cash

n May 12th Members of Parliament Not only are the G8 creditor countries nations now denying them adequate debt Orepresenting all the major parties demanding that poor countries, most of relief. yet our approach to these poor debtor gathered in the Jubilee Room of the House them effectively bankrupt, pay their debts. countries is much harsher than was our of Commons for the launch of the All Party They are going further. They are demanding approach to Germany in 1953. Group for the Jubilee 2000 Coalition. As that some of the poorest countries in the There is another aspect to the generous chair of the group, I am delighted to be so world pay far more than we considered debt relief package granted to Germany in closely involved in one of the largest groups acceptable for ourselves and our allies in the 1953 that has a modern day ring. Germany, within parliament. What unites these MPs is past. Both the British and German govern- while negotiating the London Accord, made a firm belief that the only way for the world’s ments are demanding that poor countries it very clear that she could only recover – poorest countries to make a fresh start in pay more than five times in debt service and pay back debts – if her ability to export the next millennium is by a one-off cancel- than we, or the Germans, were expected to into allied markets was secured. Allied lation of their unpayable debt. They are also pay after the war. creditors accepted that German debt service united in their concern that some of the At the negotiations in London in 1953, payments also depended on the liberalis- leading nations in the west, led by Germany, Germany’s creditors had begun negotia- ation of their own trade. are blocking moves to boost the modest tions by suggesting that she should use 10% In contrast today Germany stands at the levels of debt relief currently on offer. of the income earned from exports to pay helm of a Common Agricultural Policy Forty five years ago – February 1953 – the debts to the allies. But Herman Josef Abs, which raises barriers against exporters from Allies met in London to decide whether the central banker in charge of the German developing countries. Poor countries in Germany should get massive debt relief – as delegation, resisted this proposal fiercely, Africa and the Caribbean cannot earn their well as Marshall Plan aid. Britain was one of arguing that it was not affordable. He way out of debt by exporting lemons or her creditors, and was host to the proposed instead that Germany should not wine or finished products into our markets. negotiations. We in Britain had already been devote more than 3.5% of the money These double standards have to be treated generously by our allied partners, in earned from exports to pay back debts. challenged. The Jubilee 2000 Coalition – led particular the US, which had written off a After some days of negotiation, the allies by the churches and campaigning for debt large proportion of the debts we owed. agreed. relief for the poorest countries by the year A ‘London Accord’ was duly signed for Today Germany, Britain and the US sit on 2000 – have laid down a gauntlet for this Germany. It was an extremely generous the Boards of the World Bank and insist that year’s summit. Tens of thousands of package. The allies agreed to write off the Mozambique, the poorest country in the supporters formed a human chain around equivalent of more than two-thirds of what world, recovering from a civil war and from the summit on Saturday 16th May to protest Germany accepted it owed. The Accord was low level conflict with the apartheid regime, at this hypocrisy, and I spoke there. G8 not just generous; it was wise and should use 20% of her exports to repay leaders would be well advised to listen and enlightened. Allied statesmen recognised debts – to Britain, Germany and other to follow the sound and enlightened lead set that the German people needed to make a creditors. by allied creditors in 1953. fresh start. That German children had to be As German campaigners for debt relief offered a future. That the post First World for Mozambique have noted: “by renounc- War settlement had been too draconian and ing their claims against the Federal Republic had helped Hitler’s rise to power. of Germany, the legal ‘heir’ of the National Germany joined Britain and other Socialist regime, the victorious powers of members of the Group of 8 at the annual the second World War helped the country summit of the world’s leaders in Birming- that only a few years before had attacked Bill Cash, MP, is Chairman of the All-Party ham. On their agenda was the unpayable and partly destroyed their own economies.” Parliamentary Group for the Jubilee 2000 debts of some of the poorest countries in Neither Mozambique, nor any of Britain’s Coalition. He spoke at Jubilee 2000’s meeting the world. But their approach is very differ- or Germany’s ex-colonies in Africa, has ever at St Martin’s Parish Church before the ent from that of the 1953 London Accord. attacked and partly destroyed those creditor Human Chain.

… news in brief whereupon a date is appended and the letter is made public. Similarly, Taking a leaf out of the book of the 5th Republic the EU has bent the rules on mandates for the bank by officially The Duisenberg “compromise” recalls a well known ruse used by appointing him for 8 years, but making that appointment conditional on successive presidents of the 5th Republic to get rid of their prime his statement that he will not serve the full term. ministers when it suits them. The constitution of the 5th Republic gives Tobacco advertising banned the president the right to appoint the prime minister, but not to sack The European Parliament has approved a directive, which has been in him. He is theoretically accountable to the National Assembly. In reality gestation for a decade, banning all advertising of tobacco products what happens is this: when a man is appointed to Matignon, he is invited within the European Union. The directive will come into force gradually to the Elysée where he signs an undated letter announcing his from 2002 until 2006. It is not yet clear whether the EU will stop resignation of his own free will. The letter is kept safely until it is needed, subsidising low quality tobacco at the rate of over £600 million a year.

JUMP TO CONTENTS 15 The European Journal May 1998

Switzerland “nul points” by James Barr

t would be easy to oversimplify evidence – nothing more – telling none the includes Russia and Israel. The fragment- Ithe Eurovision Song Contest, which less. ation of the Eastern Bloc has dramatically celebrated its forty-third birthday this year. Eurovision is older than the European increased the number of contestants, so that Many people see the contest as little more Community, if only by a year. Like the EEC, not all countries may compete. Austria, than an outlet for national prejudice. On the it initially involved the Group of Six, as well Denmark and Italy were not represented other hand a few obsessives eagerly await as Switzerland. Since then, enlargement of this year. Nevertheless, an estimated 100 the publication of a book on the subject, Eurovision’s compass has proceeded apace. million viewers watched the live contest – a analysing national voting patterns since the The UK, surely unable to resist the pressures feat of broadcasting organisation arguably first contest in 1956. Surely there is an of isolation, joined in 1957. The end of the unmatched at any other time in television’s analytical middle way; to view the contest as Cold War heralded closer East-West calendar. a fascinating vignette of cultural connect- relations and expanded the horizons of the Understanding the contest requires a ions in Europe in 1998, circumstantial competition, which now periodically brief explanation of how it works. First, in a

Votes in the Eurovision Song Contest 1998

Country Voting –> acedonia

Country Croatia Greece France Spain Switzerland Slovakia Poland Israel Germany Malta Hungary Slovenia Ireland Portugal Romania UK Cyprus NetherlandsSweden Belgium Finland Norway Estonia Turkey FYR M To t a l Singing

Croatia •5815 10 6 10 10 10 0 12 320 27435 363412 131 Greece 0•000 00000 00000 012 000 00000 12 France 00•00 00000 00000 01000 00002 3 Spain 104•6 00300 00000 04003 00000 21 Switzerland 0000• 00000 00000 00000 00000 0 Slovakia 80000 •0000 00000 00000 00000 8 Poland 00200 0•050 200010 00000 00000 19 Israel 0 10 12 10 10 0 10 •712 07612 7510 6510 10 3758 172 Germany 03012 12 000•0 08810 66012 07 10100 86 Malta 76658 12 878• 7312 50 12 5868 512 5 10 0 165 Hungary 00100 00000 •0001 00000 02000 4 Slovenia 32060 00000 0•005 00000 40030 23 Ireland 20002 42026 61•18 80010 04287 64 Portugal 0 1 10 60 20202 000•0 02001 00064 36 Romania 00000 00600 0000• 00000 00000 6 UK 12 7333 1712 18 10 55612 •8776 85812 10 166 Cyprus 4 12 000 50101 10044 3•002 00000 37 Netherlands 10 8547 65807 12 0 10 70 10 0•812 78070 141 Sweden 00000 03004 80200 105•0 610 12 23 56 Belgium 04774 712 543 36780 7610 2• 07616 122 Finland 00000 00000 00000 00010 0•110 01 22 Norway 00081 04435 510 430 43312 42•40079 Estonia 00020 80000 42100 00240 12 0•00 35 Turkey 50000 01012 0 00002 00100 000•5 26 FYR Macedonia 60000 30000 04003 00000 0000• 16

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random order, all contesting countries per- English by any country other than Ireland, folklore, fails to have much resonance any form their songs. This time, Croatia kicked Malta and the UK was banned. Contestants more. The Hungarian song enjoyed little off, eventually finishing a creditable fifth, must sing in one of their country’s official currency at all, attracting just 1 point from which might suggest that early numbers in languages: paradoxically, in a world in its next door neighbour, Romania. This was this marathon two-hour section of the show which widespread knowledge of English unsurprising however, given it is the only enjoy a considerable advantage. Although has facilitated globalisation, Eurovision European language I can think of in which critics portray the contest as tedious, the remains vernacular and local and attracts the word for Police is not instantly facts barely support this. The songs which colossal audiences. recognisable (being Rendorseg). occupied the top six positions, by Israel, the But the competition has been unable to For similar reasons, this year’s results UK, Malta, the Netherlands, Croatia and stop the global trend, and with it the would seem to show, nearby countries tend Belgium, were fairly evenly spread influence of America. Since the mid-sixties, to vote relatively highly for one another, throughout the batting order, suggesting an traditional ballads have fought a rearguard either on language or cultural grounds. The attentive, or already prejudiced audience. action against British and American Nordic competitors, Norway, Sweden, One interesting feature of the programme is musical tastes. But rarely are the English- Finland and Estonia illustrate this. All gave that its viewing figures actually increase singing contestants out of the top ten: this either 10 or 12 points to one of the others: during its time on air, in anticipation of year the UK and Malta came second and Estonia and Sweden gave both 10 and 12 to controversial voting at the end. The third respectively while Ireland bombed to others in this close-knit group. Countries of potential for embarrassment, which ninth. Similarly other countries sharing the former Yugoslavia, and central Europe, accompanies the combination of live TV close linguistic ties benefited: Greece and also tended to support one another, with the and unpredictable telephone polling, is Cyprus both awarded one another the Croatian song receiving maximum points undoubtedly a draw. maximum 12 points, and France awarded from Slovenia and the Former Yugoslav Whether, as folk law would have it, 7 points to the Belgian entry sung in French. Republic of Macedonia. Outside the Eurovision is an outlet for national tensions In this case, a reciprocal arrangement was protection of historical solidarity, or ties of and prejudices is questionable. True, Turkey not guaranteed, however. Belgium voted language, countries such as Romania, and Greece ignored one another again this strongly for Germany and the Netherlands, Greece, and Slovakia attracted a vote from year, as they have done for the last sixteen showing perhaps that the Flemish exercised just one other country. The picture is of a years, but elsewhere it would be wrong to their voice strongly during the vote, the number of Europes clumped around infer too much from silence: each national French song only won 3 Belgian points. common ethnic and linguistic cultures. A panel could only allocate votes to under half Switzerland, predominantly German- cohesive Europe is still some way off. the other competitors. As a result, analysis speaking, gave 12 points to Germany; the Two other scores stand out, in defining of the incredibly subjective process of Germans, like the rest of Europe, gave the this cultural sketch of Europe today. Eurovision can only point out connections, Swiss nothing in return. Which observ- Germany gave Turkey 12 points, and rather than tensions. While it is widely ations lead us, Ladies and Gentlemen, to the Croatia 10. Whereas Croatia scored recognised that the Aegean is a fraught spot, first conclusion, that viewers unsurprisingly generally highly, Turkey scored 15 from all the growing links between states are less vote for a song they understand, lyrically the other countries put together. The fact well observed. These links are not and musically. that Germany has taken large numbers of international, but ethnic. If language has been the main barrier to refugees from both these countries must go After the performances comes an interval success since 1976, the songwriter’s some way to explaining these scores. Ties for voting. People inclined to get involved challenge is to choose words which are strengthened by ethnic minority despite may ring a national number to vote for the international, in a format which makes migration, were revealed in Eurovision this foreign song of their choice. Total votes for musical ‘sense’. This explains the success of year. At the same time we also get a glimpse each song are then added together by each the Israeli entry, which came first, and the of the type of person who will vote after two national panel, and allocated a score of relative success of the Portuguese entry and numbing hours of glitz and singing. 1–8, 10 or 12. So each judging panel gives the failure of the Hungarian offering. Israel’s Eurovision certainly offers a bandwagon, on scores for the ten most popular songs, based song cleverly used the Latinate phrase ‘viva which to make a point. Let us hope that it is on acclaim in its own country. The winner is victoria’ and an upbeat, infectious melody not because these minorities feel the contestant who collects most points. in chorus: the effect had almost universal disenfranchised, that they choose to make This year, only the UK was rated in the top appeal although the words were mostly their point on Eurovision. ten by every participating country. Switzer- unintelligible. land, at the other end of the scale, polled the The Portuguese ballad attracted more infamous ‘nul points’ when no other country select and traditional support. Accompan- rated its offering worth anything at all. ied by bagpipes, and guitarists, Portugal’s So there it is, marvellously simplistic, singer earned 10 points from the French, 7 open to abuse, assuming equal parity for all from Spain and recognition from the Medi- European nations’ votes, regardless of terranean as a whole. Atlantic and inland population, devoid of political correctness, Europe, with the exception of Belgium, but arguably highly telling of Europe’s remained profoundly unimpressed, allocat- nations’ evaluation of one another. In fact ing no support for Portugal. The historic the potential for this assessment has lyrical tradition of southern Europe, once James Barr is Head of Research at the increased over since 1976, when the use of the conveyor of much of Europe’s classical European Fundation

JUMP TO CONTENTS 17 The European Journal May 1998

A Closer Look at the ECB The European Central Bank will be less insulated from political pressures than is usually thought, argues A.H.J.W. van Schijndel. Lacking democratic ligitimacy, it is doubtful whether EMU would survive a real political crisis. conomic and Monetary Union (EMU) central bank is united internally. Its unity of and foremost, tied to their national central Estarts next year, setting in motion a purpose and consistency of policies must be bank. After, even for monetary mandarins, massive “relocation of politics” towards ensured. Without this consistency, the as the saying goes: “All politics is local”. The Europe. The Dutch foreign affairs minister, markets will set a lower exchange rate and same applies to directors of the ECB. At the Mr Hans van Mierlo, argues that we should higher long term interest rates than would end of their term of office (4 to 8 years, look on Europe as a sort of kitchen. He says have been the case otherwise. without eligibility for reappointment) they people do not care about kitchen design, Here lies the problem. The heterogeneous will usually re-enter the national civil they only want tasty food on their plates. It composition of EMU makes it all but service. is the effectiveness of policy that counts – impossible for the ECB to build up its Second, the fact that the ECB has price not which political procedure was followed. reputation. Internal divisions are bound to stability as its primary objective does not Mr Van Mierlo’s pragmatism is a prime arise between countries which have a high offer any guarantee for the soundness of example of the anti-democratic spectre now government debt and those whose public its policies. For the Treaty also stipulates abroad in Europe. That does not augur well. finances are better balanced, thereby that the ECB must support “the general For the very essence of democracy is that it thwarting consistent and credible policy- economic policy in the Community” is a procedure designed to create legitimacy making. (article 105 EC), which means promoting and social acceptance. Especially in the At issue are the most important monetary growth and employment. Although this event of conflicting interests, democracy decisions: the fixing of short term interest objective ranks as secondary, it is still pacifies and binds together. This salutary rates. Short term rates are set by central present. As a result, the ECB has a certain effect is based on the idea of representation: banks; long term rates (e.g. for mortgages room for manoeuvre to balance both in making and amending their own laws and other bank loans) by financial markets. objectives. Divergent appreciations of the citizens bind themselves. There is an inverse relationship between the economic situation in various parts of the EMU breaks with this principle. Once two rates: A consistent policy stance of EMU-zone are then bound to emerge. and for all, the management of the currency monetary strictness, i.e. a willingness to Third, countries with a “soft” budgetary is entrusted to ‘experts’. But this is liable to raise short term interest rates if the and monetary policy tradition are in the cause enmity and destructive power economc situation sor equires, leads to majority in EMU – and therefore also in the struggles between member states. Europe is lower long term rates – and vice versa. ECB. For both political and economic not cloud-cuckoo-land: its real world Decisions on short term rates are to be reasons this group consists of Belgium, countries have many divergent interests. taken by the governing council of the ECB. France, Italy, Luxembourg, Portugal and This all the more so because EMU will Members of this council are the bank Spain. In the other camp are Germany, the begin with eleven countries. Consequently, directors of the ECB as well as the governors Netherlands and Austria. Finland and it will be a very diverse club. In line with Mr of the national central banks. The council Ireland find themselves somewhere in Van Mierlo’s culinary vision, some critics consists of 17 members (6 directors and 11 between. In view of the arithmetic, financial say that the euro amounts to mixing a nice governors). Decisions are taken by simple markets will believe that the ECB will Bordeaux with ordinary table wine. majority. Governors are obliged to explain accommodate growth objectives, which Unfortunately, the analogy is apt. After their role in ECB decision-making to their damages the bank’s credibility as an all, the value of money and, in particular, national parliaments. Opposing interests will inflation fighter. exchange rates and long term interest rates, therefore soon manifest themselves in public. The upshot is that these seemingly depend on the confidence of world The main conflict stems from the fact that technical problems result in a currency that financial markets. The credibility of in certain countries public finances are is less stable than the one we now have. This monetary authorities is therefore of extremely sensitive to changes in short term is so both internally (in terms of purchasing paramount importance. It takes many years interest rates because the national debt power) and externally (in its exchange rate for a central bank to establish a reputation. consists of debt instruments carrying a with other currencies). In all reasonableness In Europe the German mark traditionally short term rate. In consequence, governors it is no longer possible to maintain that the plays the role of base currency. But the from countries with high national debts will euro will be as stable a currency as the reputation built up by the German attempt to delay every short term interest guilder. Bundesbank over half a century cannot rate increase and to hasten every cut. But in In spite of this our civil servants charged simply be bequeathed to the European a smoothly run economy, the timing of the with informing the public do not seem too Central Bank (ECB). The ECB will have to use of the ‘accelerator’ and the ‘brake’ is bothered. In information materials we are establish its reputation in its own right. critical. told that the euro is good for trade, and A central bank’s credibility is at stake Three factors contribute to internal that more trade “translates into more whenever monetary decisions are made. For conflict. First, governors are and will remain employment and more purchasing power. this reason it is absolutely crucial that the national civil servants – their loyalty is, first As a result, in the end everybody will gain.”

JUMP TO CONTENTS 18 The European Journal May 1998

This “trickle down” theory sounds good: nature than generally thought. In essence, net result is that the Netherlands will be less there are only winners in the euro game. Yet, domestic interests are the driving forces able to advance its interests in free trade and the economic effects of the euro for the behind monetary union. In Germany it is, financially sound policies. Perhaps this Netherlands have barely been examined. above all, big business which is interested in aspect was not given due attention in This alone suggests that the trade benefits a stable European market and – in order to Maastricht. will be quite modest. maintain exports outside the euro-zone – in Not every change means improvement. a currency that is not overly strong. And in What can you do? Ordinary citizens will be facing higher real France the political-administrative élite Both from an economic and a political mortgage rates and less purchasing power views EMU as a useful instrument to perspective EMU is of tremendous from their pensions (unless the latter are strengthen France’s position on the world importance. It should therefore be indexed for inflation – which is often not stage. sufficiently robust to survive the heaviest of the case). But why pay attention to such political storms. But it is very doubtful adverse welfare effects when we have a euro whether EMU can do so. What will happen party going on? One quick glance if conflicts of interest really emerge, for example in case of a severe economic crisis Sophistry at the map or a war in the periphery of Europe? Will But even if EMU is an economic liability, such storms scatter the monetary armada? one may still consider whether it makes shows that Europe is not a political union. The lack sense politically. We are told that Germany of democratic legitimacy will put immense should be tied to Europe and that we have this argument is strain on the monetary construction as the choice between a European Germany or soon as political problems arise. Monetary a German Europe. geopolitical Quatsch policy measures have enormous effects on This sounds quite profound, but it matters like interest rates, inflation and remains unclear what it really means. Those employment. This affects citizens in their who advance this view often say it has to do n this context the power-political vital interests. The feeling of being with Germany’s geographical position in Iaspect of monetary union is clear if we disadvantaged or cheated grows only too the centre of Europe. The expressed fear is view the European Union as a permanent quickly when nations seek to administer a that one day Germany may be forced to act bargaining arena. In it member states common matter in different ways. The odds on its own militarily in order to maintain negotiate about (i) the competitive are that some nations will eventually come stability in countries on its Eastern border. conditions applicable to trade and industry, to hate Frankfurt’s monetary dictates. This is the dreaded Alleingang. In this frame and (ii) the financing and spending of the It is a pity that such considerations have of mind monetary union is, on the one European budget. hardly played a role in public debate in the hand, a sovereign remedy to allay the fears All bargaining ultimately relates to the Netherlands. But what can you do? Our of Germany’s Eastern neighbours conditions for economic survival of captains of industry insist on having the (Germany ties itself to the West), and on the member states. Obviously, each member euro because it supposedly promotes trade, other, a means to ensure that Western state seeks to optimise these conditions in and in any event it makes treasury Europe stays involved with Germany (in a ways most favourable to it. In this respect, management a bit easier. Deeper analysis on crisis Europe will come to the aid of our belief in the virtues of free trade and the matter has not been forthcoming from Germany). undistorted competition is not shared by our business leaders. One quick glance at the map shows that all. Other countries insist on restrictions of Of our prominent politicians only the this argument is geopolitical Quatsch imports, subsidies for ailing industries, leader of the VVD-Liberals, Frits (which means ‘nonsense’ in German). additional regional aid funds, and so on. Bolkestein, has been consistently critical. At Those countries with which Germany Interests almost always collide when it a recent meeting of the Netherlands Atlantic shares its Eastern border (Poland, the Czech comes to trade and competition. Also, Commission the finance spokesman of the Republic, and Hungary) are set to join the conflicts abound with respect to the Social Democrats, Rick van der Ploeg, even European Union and NATO within a couple European budget. In fact, people in the went so far as to warn the Liberals not to of years. As a matter of fact, there is no Netherlands increasingly view Europe’s provoke big business! A curious comment stability problem in these countries. finances as making their country tributary for a Member of Parliament. What about The real geopolitical problem is the to Brussels. paying attention to the interests of ordinary survival of Belarus and the Ukraine as This brings us to the key question: what citizens? buffer states between the NATO countries impact has EMU on the Dutch negotiating and Russia. This issue concerns the position in Europe? The plain answer is that relationship with Russia, which means that monetary union weakens our position. This it can only be dealt with in close co- is because the complex monetary A.H.J.W. van Schijndel is a lawyer who operation with the United States. It would construction is susceptible to all manner of practises corporate and EC law in be a mistake if the European Union were to political pressures. Monetary union offers Amsterdam. An earlier version of this article try to hande this matter on its own. countries more opportunities to make their was published in the Dutch newspaper Het This is not to say that there are no co-operation dependent, in designing Parool on the 23rd April, 1998. His article, ‘A political aspects to monetary union, but EMU-consistent monetary and budgetary Dutch Warning’ appeared in the March only that they are of a much more mundane policies, on concessions in other areas. The edition of the Journal.

JUMP TO CONTENTS 19 The European Journal May 1998

The Potential for Europe and the Limits to Union Extracts from a speech given by The Rt Hon. William Hague, MP, at INSEAD Business School, Fontainebleau, Tuesday 19th May 1998 onsieur Borges, staff and students that there should be a common EU criminal I shall argue that true internationalism is Mof INSEAD, thank you for inviting justice and immigration policy. They want about the relationship between states rather me to Fontainebleau. I come here to address tax and spending powers taken out of the than their integration into a single state. I members of my generation – born in peace, hands of national exchequers and given to shall argue that the nation state is not an enjoying unrivalled prosperity, secure in Brussels. And many of them believe our outmoded concept, but is the best vessel for freedom, proud of our inheritance and ultimate objective should be the creation of true democracy. anxious to pass it on to our children. I want a single European state, and that this is an I shall argue that the real pro-Europeans, to talk to you about the potential for Europe inevitable destiny. the people who really want to see a peaceful and about the limits to European Union. I believe they are wrong. There is a limit prosperous co-operating Europe, are the I cannot think of a better place to make to European political integration. We are opponents of further political union and this case. For you are the people with the near that limit now. the supporters of a confident outward youth and ambition and talent to go out and looking Europe of nation states. conquer the new world of opportunities. intend to make three arguments. I shall argue, too, that the favourite obser- INSEAD may be a European institution – IThe first is economic. The European vation of integrationists – that technology is but it has a global outlook. Such places are policies that were a natural response to the shrinking the world and that nation states the future. Such people are the future. problems of post-war reconstruction are cannot operate on their own – is in fact a The last time I was in INSEAD I was an not necessarily appropriate for the future. In strong argument against an exclusive MBA student. Living in France, studying in place of the ideas of intervention and regu- Western European grouping. ‘Little Europe’ Fontainebleau, was one of the most lation we need to create a free and flexible is as unattractive a vision as ‘Little England’. rewarding years of my life. George Doriot, Europe. For my country that means that our the founder of INSEAD, had a vision of a My second argument is strategic. The fall friendship with English speaking nations truly international business school where of the Berlin Wall has completely changed remains vital and should be strengthened students from different cultures and the challenge facing European states. Bring- and our role as a bridge between those different professional backgrounds could ing prosperity and stability to newly free nations and the nations of Europe will be of come together and learn not just from their states is now the most urgent of Europe’s increasing importance. teachers but from each other. When I was a tasks. Our generation should always be grateful student here I was in a class with people And the third argument is political. Push to the generation of Europeans and Amer- from twenty-five different nations. This political integration too far and account- icans who rebuilt Europe, who restored year’s MBA class is made up of students of ability and democracy become impossible freedom, who fought the cold war, who built fifty different nationalities. French, British, to sustain. stable democracy, who ensured prosperity, American, Korean, Japanese, German, On 1st January 1999 eleven Western who replaced enmity between states with Argentinian, Italian and Indian to name just European countries will take a momentous friendship. a few. A truly global community brought step. They will adopt a single currency But now it is our turn. Our turn to unite together here to learn about competing in between them and accept the authority of a Europe after the Cold War. Our turn to global markets. A global community that single central bank. But momentous though defend freedom and stability now that the has an interest in Europe. this step will be, it will create as many prob- familiar landmarks of the post-war era have I believe the nations of Europe have the lems as it solves. And the most important is been removed. Our turn to advance potential to seize the great economic the danger that the single currency will lead prosperity when economic opportunities opportunities of the new century. And the to an increasingly centralised Europe. and challenges are presenting themselves. European Union can be a force for peace, I therefore believe that Europe should not Our turn to defend democracy, community stability and prosperity in an uncertain press on towards an unacceptable degree of and nationhood in a time of uncertainty. world. political union just to make the single cur- And I do not believe that we can succeed But I fear that the European Union is in rency succeed. I fear that the single currency by simply taking the ideas of the post-war danger; in danger of accepting without could push us beyond the limits to Union. generation and applying them to new debate a political destination agreed forty A single thread running through these problems. years ago; in danger of proceeding with three arguments is that it is not the critics of We must not allow Europe’s future to be political integration not because it is right the current direction of the European driven by an obsession with Europe’s past. but because it is said to be inevitable; in Union who are isolationist, out of date of danger of living in the past rather than even anti-European. Rather it is the EU’s facing up to the future. direction which is in danger of becoming There are European politicians who isolationist. It is its post-war assumptions believe that the EU should continue down that are increasingly out of date. And it is the the path to closer integration. They believe danger of integration and the abandonment there should be a common European of our continent’s diversity and pluralism William Hague is Leader of the Conservative foreign and defence policy. They believe that is anti-European. Party and MP for Richmond (Yorks).

JUMP TO CONTENTS 20 The European Journal May 1998

The Rejection of Politics by Philippe de Villiers

he euro is not a political project. commercial protection for the European Maastricht. But Article 88-2 of our TIt is in fact quite the contrary. It is a Union. constitution authorises transfers of sover- project which evacuates politics and tries Politics is about adapting to reality. When eignty only if they are explicitly provided to make Europe into an apolitical entity, politics no longer commands, then it is jobs for by the Maastricht treaty. The Dublin text both un-national and un-territorial. The which go down the tubes. is thus perfectly unconstitutional. But who single currency project feeds off a hollow Exchange rates are overvalued, interest cares? ideology which recommends precisely the rates are kept permanently high in order to • The Treaty of Amsterdam provides, in rejection of everything which constitutes sustain the franc, and the tax burden weighs Article F 1, that if a member state violates properly political action: the instruments heavier and heavier to make the Maastricht certain vaguely defined principles – for political decision making, the principles criteria. All this causes lethargy, depression “freedom, democracy, the respect for the of political life and the very foundation of and durable deflation. rights of man and fundamental liberties” – the idea of politics itself. then the other member states, having voted A rejection of the principles unanimously (minus the state concerned), Rejection of the instruments of political life can decide by qualified majority to suspend of political decision making he introduction of the euro is an some of the state’s rights, including its right olitics has collapsed for having Tattempt, unprecedented in the history to vote, without suspending its obligations. Pfailed to play its role of synthesiser of European peoples, to destroy political This article means that, on all subjects dealt between short term financial and technical life. The idea is to rid society of all with in Brussels – including the most quibbles on the one hand, and the divers- intervention, of all will, of all design, of all important, and including those which are ified needs of different nations on the other. vision, of all political expression, and to try the object of a unanimous vote – the rights The arguments in favour of the euro may and live without politics. of a country can be destroyed at a stroke. be technically impeccable but they are They want to live without government. The Luxembourg compromise has thus unreal and full of contradictions, however The notion of politics has disappeared so been abolished. The transfers of power seductive they may be. much from people’s minds that people have which have been ratified by national With “interior” arguments, we are told started to imagine that an economic and parliaments, or by popular vote in the that the euro will facilitate transactions monetary union can function at the Euro- different countries, have become elastic. within the great internal market. This is a pean level without a federal state, and even This text is not in conformity with the very dubious claim, given that Europe is not without an economic government. In other constitutional principles of European an optimal currency zone. Because the words, we have arrived, in the logic of countries, which generally stipulate that any economic structures of different countries – Maastricht’s ideology, at the degree zero of delegation of power to the European Union especially their structures of production politics, at its total destruction. Then, must be precise and limited. To admit the and trade – are not homogenous, EMU will realising that there is a lack of regulation, of opposite means recognising that Brussels increase the probability of “asymmetric arbitrage and of constraint, people have enjoys superiority over the nations. This too shocks”. tried successively to invent substitutes for overturns all our previous conceptions. With “exterior” arguments, we are told the notion of government. They are as They want to live without democracy. A that the euro will make Europe strong, follows: transfer of sovereignty is taking place which in other words that it will enable us to • A mechanical substitute. The mechanical will place power in the hands of a network rehabilitate the international monetary logic has been taken to its conclusion with of three institutions which are completely system by standing up to the dollar. But here the introduction of the “stability pact” in free from democratic control. Three power again the argument is unreal. The euro will 1997. At the moment when politics has centres, three secret and distant fortresses only be a credible currency if, on the one collapsed as a result of the uniform which is will decree the new law: they will dictate hand, it is based on an optimal currency suffocating it, an iron corset has been their laws and impose their norms. A new zone and backed up by a federal state applied in order to keep it standing up. type of oligarchy is arising which goes capable of administering redistribution • A humanoid substitute. This is the “Euro- beyond all of the classifications established and, on the other, if it is based on a zone of X”, i.e. a sort of informal Council, without by Aristotle: economic growth. In reality, the march powers of expression, wedged in between • the commissioners of Brussels, whose towards the euro imposes restrictions and the ECOFIN Council and the Central Bank powers are considerably reinforced by the rigidities which stifle growth. in Frankfurt. Treaty of Amsterdam, in favour of their It is in the name of these unreal They want to live without a constitution. monopoly on legislative initiative; arguments that France accepts to be Little by little, our constitution has been • the bankers of Frankfurt in the future deprived of all its economic powers. It is a emptied of all substance. Just take two Central Bank, whose absolute inde- real self-mutilation. We are abandoning our examples: pendence is emphasised by Article 107 exchange rate policy, our interest rate policy • The text of the “stability pact”, signed at of the treaty of Maastricht, which forbids and our fiscal and budgetary policy – at the Dublin, is utterly incompatible with our them from accepting or soliciting any very moment when, because of Maastricht, constitution. It sets up mechanisms which instructions from any government of any we are also abandoning all policy of are much stricter than those provided for by member state;

JUMP TO CONTENTS 21 The European Journal May 1998

• finally, the judges of Luxembourg whose currency zone if not the translation into community of European producers and task is to accelerate federalism, and who economic language of the word “people”? consumers. If the idea was to create a new find the confirmation of their superiority in Each people has its own will, its own great powerful European nation, then the the Treaty of Amsterdam in an article which language, its own demographic structure, common external tariff would have been has slipped by unnoticed. The article its reflexes, cycles, educational habits, its reinforced, not dismantled. provides for the subordination of all own manner of making things and of being If there is a coherence between the national law, including constitutional law, to more or less mobile. This presupposes a treaties of Marrakech, Schengen, Maas- Community law, and even to Community definite heterogeneity between different tricht, Amsterdam, the Dublin stability pact jurisprudence. peoples, which can under no circumstances and the Münster agreement, it is that All this imposes a new European be subjected to one single criterion. This is Euroland should be part of Worldland. The landscape, which is characterised by a what the euro ignores: peoples, their history idea is to abolish the national reality and to weakening of any democracy which is close and their differences. eliminate politics altogether. by, in favour of strengthening an omni- • The very idea of nation. All this artificial The euro is thus not only a policy of potent and distant technocracy. construction, this “space without frontiers”, renunciation, it is the renunciation of has chosen for itself a name which is a politics. This is why we must urgently A rejection of the very foundation revealing Freudian slip: “Euroland”. It rediscover politics, i.e. the idea that the of the idea of politics sounds like a theme park. The idea is to solution to a technical problem is not hen one looks at it closely, the abolish all national realities and all history. necessarily technical, that the solution to an Wmonetary Utopia is accompanied by This amalgam of nations which are over a economic, budgetary or social problem is a more profound ideological aim. The idea thousand years old has no political aim, in not necessarily economic, budgetary or is to attack the very bedrock of politics, the sense that it does not attempt to replace social. What is required is a political which is the reality of nationhood. In order the European nations by a more powerful response, which rises above the level at to do this, the project consists in setting up, new great European nation, in which the old which the question is put. We need to rise to within a post-national and post-democratic nations would be called upon to dissolve the nation, to the Europe of nations. perspective, a sort of unpolitical entity with themselves. At least then things would be no territory, and by dissolving the notions clear. Instead, behind this apolitical of territory, of people and of national construct, the idea is to make nations community. disappear altogether. There is no attempt to Philippe de Villiers is Member of the French • The notion of territory. We hear now of a create a new nation to replace them. National Assembly for the Vendée, President “space without frontiers” with the The comparison which is often made of the Regional Council of the Vendée, a for- underlying idea that we have to abandon the between the German Zollverein of the last mer minister, a former presidential candidate principle of territoriality, and thus of clearly century and the European Union thus and a member of the European Foundation’s defined frontiers, even though this principle seems mistaken. In that project there was International Advisory Board. This article is is consubstantial with the very ideas of indeed a common market and a customs adapted from a speech delivered to the Paris sovereignty, of jurisdiction and of social union, but it was the prelude to a complete Conference on the euro on 4th February security. political union. In EMU, there is not this 1998. The speeches and interventions of the • The notion of people. The single same political vision. conference, “L’Euro de tous les risques”, are currency pretends to ignore the theory of The Maastricht treaty creates monetary published by the think tank Liberté Politique optimal currency zones, and this is why it union at the very moment when it abolishes and the publisher François-Xavier de will fail. After all, what is an optimal the customs union, i.e. the idea of a Guibert in Paris at 140 FF.

… news in brief compromise, which, juridically speaking, was “just about” covered by the Brussels compromise elicits widespread criticism treaty. Many analysts, politicians and organisations have attacked the Le Pen accuses Chirac of “collaboration” “compromise” between Trichet and Duisenberg. The Chairman of the At the French National Front’s traditional May day parade, Jean-Marie German CBI, Hans-Olaf Henkel, said it was “a rotten compromise” and Le Pen attacked the agreement to proceed with EMU. He especially said that it would damage the autonomy of the ECB. A leading SPD singled out the transfer of the Bank of France’s gold reserves to the EMI politician claimed that it violated the Maastricht treaty. The Chairman in Frankfurt for which Maastricht provides (although physically the of the FDP liberals said it was “disappointing” that EMU would begin gold will remain in Paris). “Hitler never dreamed of such a thing and with a political compromise. Even the President of the European Marshal Pétain never consented to it. But Chirac has done it like a super Parliament said that the appointment of the President of the ECB was a collaborator”, said Le Pen. “The battle against the euro is a battle for the “miscarriage”. City analysts in London seemed to agree that the French franc, it is a battle for France, for her sovereignty, her independence, her had dealt a severe blow to the independence of the bank and to the life, her people.” He invited all “patriots from all quarters who have been credibility of the currency. Meanwhile a spokesman for the SPD betrayed by unworthy leaders” to “join the Resistance” against the single Chancellor-candidate, Gerhard Schröder, said that confidence in the currency. “We will support all professional and labour organisations euro would be damaged if EMU began with a violation of the treaty. But which refuse to collaborate in the currency of occupation”, he said. “The the law professor Karl Albrecht Schachtschneider, the author of the single currency is not only a betrayal of France, but a betrayal of Europe recent failed appeal against EMU to the German constitutional court, by integration forced by the world market dominated by the United said that there was no chance of a new appeal succeeding against this States. It will be the reign of the ‘World Company’ and of Big Brother.”

JUMP TO CONTENTS 22 The European Journal May 1998

Common Market, Common Currency, Common Sense? Jeremy S. Bradshaw interviews Commission President M. Jacques Santer, as Tony Blair’s EU British Presidency concludes.

here is no disguising the irony even the European Monetary Institute has economic development at the European Tof Britain holding the EU presidency at said that Belgian and Italian debt levels level and so contribute to the process of the a time when major decisions on monetary continue to be a source of “ongoing deepening of the single market.” It was, he union are required. After all, Britain has, concern”. But, despite these and other seemed to suggest, all perfectly logical. After even under Euro-friendly Labour, opted to quibbles, M. Santer feels confident that the all, “a common market with a common sit on the fence while other member states EMU bandwagon will reach its destination currency makes common sense.” press ahead with establishing a single on time. In doing so his presidency of the However, he conceded that enlargement currency. And yet, there is another greater European Commission will go down in could only work if the Union reformed its irony. Britain, by “not being so involved” history as one of the greatest Brussels ever institutions. “Even now with 15 member observes Commission President Jacques saw. His reward will no doubt be to adorn states it is difficult to have an efficient Santer, has helped broker the very deals that future euro notes; though it will be tough to management of our institutions”, sighed participating countries could never have imagine his achievement ranking with that M. Santer. A “wider” Europe would only achieved. By doing so it has probably of the likes of the Duke of Wellington in the be possible if there were first a “deepening” ensured monetary union’s successful eyes of the British. of the Union’s institutions. That was why the launch. Perhaps then it is not surprising to find Commission’s blueprint for enlargement, Even before it assumed the EU’s six M. Santer is positively panglossian these Agenda 2000, had proposed a new month presidency in January 1998, the days: with hardly an ill word for anybody intergovernmental conference take place in British had signalled that Tony Blair’s but perhaps the Turks. The British or after the year 2000. Such an IGC could government would do everything to help presidency, he says, has responded well “focus on those institutional questions the process of monetary union – even if the to the “historic challenges” confronting the overlooked by the Amsterdam Treaty”. UK was too smart or foolish to join the Union. These included not just preparations In the meantime member states would process (at least for the time being). And so for monetary union but the “revolutionary” need to agree what reforms were necessary behind the scenes British officials have challenge of preparing for the Union’s as regards the common agricultural policy, worked ceaselessly to resolved the Franco- expansion eastwards. The London Euro- the Union’s budget and regional assistance – German row over the appointment of a pean Conference in March, he said, had all areas overlooked by the Luxembourg head for the new European Central Bank. It brought together all candidate countries summit. However, in the view of the has, curiously, even overlooked member (with one notable absentee, Turkey) and Commission, there was no political will to states’ creative accounting: in March the demonstrated the Union’s commitment to increase structural funds among member British presidency was able to endorse the enlargement. states, particularly the Germans, who were Commission’s recommendation that eleven But had the British approach to Europe now calling for a rebate on their net states join the single currency despite the really changed? Was this a New Britain the contribution of DM 20 million). The soaring debt of two of those countries. And Commission was witnessing? “No, no. Commission’s preference, said M. Santer, so now, all member states bar the UK, Britain had contributed much to Europe in was to keep the budget ceiling of 1.27% of Denmark, Sweden and Greece are expected the past [before Mr. Blair came to power]”, the Union’s GDP until the year 2006 – even to join the single currency next year. The said M. Santer. Did Brussels then honestly if, as it hopes, six new members arrive in new euro-zone looks set to contain almost miss the Tories? Well, countered M. Santer, 2002. 300 million people and account for 19.4 per was it not Mrs Thatcher who had launched M. Santer rejected the suggestion that cent of world GDP and 18.6 per cent of the single market programme? Now that monetary union would require huge fiscal world trade. It will be a remarkable was “a most Anglo-Saxon contribution”. transfers on the scale found in the United achievement and a tribute, in no small part, As for the European Central Bank, States. Comparisons with the US model to the Commission President, Jacques misgivings that the ECB would become were flawed, he said, not least “because the Santer. a political football were “misplaced”, as US is a federal state and therefore quite In his quiet, unostentatious way – in were concerns that the Bank might – in different from the one we have.” Anyway, he contrast to the other Jacques, M. Santer its eagerness to establish its credibility – added with a laugh, “the US was much has, it appears, won the EMU battle. This pursue too stringent a monetarist policy. slower than we had been to establish a is despite formidable scepticism both in No, there was no risk of the Central Bank Central Bank. It took over 70 years to set up Britain and abroad. inducing a recession across Europe. Such the Federal Reserve. The EU is acting much In Germany, 66 per cent of the population concerns were, said the Commission quicker than the US ever did!” remain opposed to the single currency. President, totally misplaced. The Bank His smile vanished at the mention of In the US, senior figures such as Newt would be “the best guarantee” of Europe’s Turkey. The Turks’ absence at the European Gingrich warn that the single currency will prosperity. It would “enhance the Conference in London in early March had be a disaster for European economies. And competitiveness of our industry, strengthen incensed EU states – the conference had

JUMP TO CONTENTS 23 The European Journal May 1998

only been called in the first place to prove to negotiations over enlargement with the countries’ joining NATO, the establishment the Turks that they were part of the Greek half of the island proceeded. The of a special unit to deal with international European family, even if ranked bottom of European Union would not allow the crises (as agreed in the Amsterdam Treaty) the list of twelve applicant countries. Republic of Cyprus’s application to be held and as the institutions promoting a CFSP Relations with Turkey were now at a very hostage by the Turks or Turkish Cypriots? are strengthened. low ebb. But the Turks had, in M. Santer’s “A veto is out of the question”, said M. If there was a cloud on the horizon, it was view, played their cards wrongly. They had Santer. “It had been agreed in March 1995 to perhaps Europe’s failure to be seen to deliver clearly misunderstood “the real offer put enter negotiations with the Republic of enough tangible benefits to its citizens, said forward by the European Union at the Cyprus – which is recognised by the M. Santer. This though would probably European Council at Luxembourg in international community – and this deal change as a result of the benefits of December.” The Luxembourg summit had had been ratified at several subsequent monetary union. The Union’s citizens, said reaffirmed Turkey’s eligibility to join the EU European Councils. The Cypriot appli- M. Santer, should be more confident about provided it fulfilled the criteria. This Turkey cation would therefore continue to proceed the future. In fifty years time the Union had not done. The Turks had failed to grasp – although the EU would work to see how might count 25 or possible 26 countries that “if you are entering a club you have to we could contribute to the resolution of the which, with a population of half a billion, respect the rules of the club.” Cyprus situation on the basis of the UN would be double the US and a major player It was nonsense of the Turks to call the resolutions.” on the international stage. If such a Union EU a “Christian club”, said M. Santer. “We M. Santer sounded a more optimistic were to have its own currency, it would be have many more mosques here in Europe note when questioned about the prospects reserve currency and a force to be reckoned than there are Christian churches in for a common security and foreign policy with, along with the dollar, the yen and Turkey.” He continued: “The European (CFSP). The European conference, said the perhaps the Chinese currency. But that’s in Union had acted in a fair way.” The Commission President, had shown a “new 50 years time, he added. Commission had itself gone out of its way to convergence” among EU member states and In the meantime some really hard accommodate Turkey – for example by the applicant countries. “Candidate questions remain to be answered. entering into a customs union with Turkey, countries are very close to our [EU] policy” said the Commission President. on a range of foreign policy issues, as Relations with Turkey have not been witnessed by the endorsement of a common Jeremy S. Bradshaw is a solicitor with S.J. helped by Turkey’s threat to annex the policy on Kosovo. This “closeness” will, he Berwin & Co. He was Chairman of the Bow unrecognised northern part of Cyprus if thought, grow as a result of applicant Group 1996–97.

… news in brief No laughing matter More lies At his press conference after the Brussels summit, when Jacques Chirac Here’s a good one. “There were no problems between France and referred in all seriousness to Wim Duisenberg’s decision to serve only a Germany at the Brussels summit”, said President Chirac. His spokesman 4 year term “for personal reasons”, the journalists present just burst out added that the relations with Chancellor Kohl remained good, and that laughing. “Stop laughing”, the frustrated President told them. But the the “axis” was functioning smoothly. only alternative to laughing is presumably to cry. It was all Britain’s fault anyway Completely bonkers Of course, the horsetrading between France, Germany and the Charles Millon, the former French defence minister who was recently Netherlands which ended in such an ugly compromise was … the fault elected President of the Regional Council of Rhône-Alpes with the votes of Britain. This is the opinion of Jacques Delors (speaking on the 9 of National Front councillors, has given the post of Vice-Chairman of o’clock news) and of the Luxembourg prime minister, Jean-Claude the Cultural Committee to a member of the “pagan” tendency of the Juncker, who massively criticised the British prime minister. The National Front. Pierre Vial, 55, a lecturer in history at the University of manner in which the British presidency had managed the negotiations Lyon, is a founder member of the extreme right-wing think tank GRECE was “absolutely blameworthy” said Juncker. Tony Blair, the chairman, (Research Group for the Study of European Civilisation) of which the had totally underestimated the difficulties which lay ahead. Blair had philosopher Alain de Benoit is the leading light. Vial, who is influenced also failed to consult the other member states, confining his preliminary by the French SS officer Marc Augier, alias Saint-Loup, has written that discussions to the French, Germans and Dutch: this had caused the “to be pagan means to be someone who knows that the only real issue other states enormous frustration, said Juncker, and he added that the for the last 1000 years has been to know whether one belongs mentally British had committed an enormous error of appreciation by thinking to the peoples of the forest or to that tribe of goat herds which, from its that European co-operation could be reduced to that between France desert home, proclaimed itself the chosen people of a strange god …” and Germany. Vial also wrote in 1996 that “those Frenchmen who made the “wrong Juncker also defended Kohl against the claim that he had given in to choice” in 1940-44 were simply those who refused to serve the Anglo- French demands. Kohl had successfully resisted the French insistence Saxons or the Soviets”. that Duisenberg announce the date of his resignation in his statement. Kohl holed below the water-line This, said Juncker, would have been very clearly against the treaty, and It is widely believed in Germany that Chancellor Kohl has been holed Kohl and the Dutch premier, as well as Juncker himself, were hostile to below the water-line by his apparent weakness faced with French such a flagrant breach of the law. Finally, Juncker said he was “shocked” intransigence. He now appears weak abroad as well as at home, and by the criticism of the compromise, and argued that it was a good most commentators rule out any chance that he will be re-elected in solution which respected Duisenberg’s free decision. September.

JUMP TO CONTENTS 24 The European Journal May 1998

second volume worth consulting is Athe minutes of a conference held in Paris on 4th February 1998, published by BOOK REVIEWS the political think tank, Liberté Politique, and by the publisher François-Xavier de Guibert at 140FF. The meeting, organised by a cross-party group of French deputies New Books from France and Euro deputies, had to be transferred to a Reviewed by John Laughland new venue because, while 200 people were expected, 1,300 came. It contains articles by rance is becoming one of Europe’s usson’s masterly guide through the late Maurice Schumann, the man who Fmost intellectually fecund centres of Hmillennia of French and German used to introduce de Gaulle’s broadcasts on Euroscepticism, thanks to the valiant efforts history is gripping stuff, and imperative the BBC during the war with the ringing of a number of politicians and publishers. reading for Eurosceptics everywhere. He words, “Honneur et patrie! Voici le général For a magnificent account of the true shows how German history is marked by de Gaulle!”; an interview with Milton historico-psychological background to the the incapacity of that country to distinguish Friedman on “The euro’s inevitable failure”; Franco-German relationship, readers between the national federalism which and contributions from the other stars in should turn to Edouard Husson’s L’ Eu r o p e unites its constituent parts, and the French Eurosceptic firmament, Georges contre l’amitié Franco-allemande, des supranational federalism which seeks to Berthu, MEP, Jacques Myard, MP, Philippe malentendus à la discorde, published by include neighbouring states within the de Villiers, MEP, the free market economists François-Xavier de Guibert in Paris at empire. Pascal Salin, Jean-Jacques Rosa and Florin 100FF. Husson is a young historian who Husson therefore thinks that modern Aftalion, the historians Paul-Marie does research at the Centre d’Etudes pro-European Germany has not entirely Couteaûx and Emmanuel Todd, and the Germaniques in Strasbourg. Directed by a laid old imperialist ghosts to rest. Chan- banker and former president of Société professor at the Sorbonne, Jean-Paul Bled, cellor Kohl may boast of having gaily pulled Générale , Marc Viénot. who is a contributor to the European up border posts on the Franco-German Journal, the Strasbourg Centre is something border when he was a child, but is this an inally, two books by the indefatigable of a Euro-realist haven of good sense in a appropriate response to the cliché of FGeorges Berthu, MEP. A member of the sea of political correctness in France. German soldiers gaily pulling up border Groupe des Nations faction in the European Like many of the best Eurosceptics, posts on the Polish border on 1st September Parliament, Georges Berthu is the author of Husson used to be a believer in the 1939? Indeed, says Husson, Kohl ought to numerous papers on European integration, European cause. As a young Giscardian in be more respectful of borders. He did as well as of numerous appeals against 1989, he watched German reunification and not recognise the Oder-Neisse line as the Maastricht and Amsterdam to various realised that pious Giscardian banalities border between the new Germany and French and European courts. He also simply did not add up. This was the Poland until 17th July 1990 – six months launched, with the organisers of the Euro beginning of a decade of intellectual after reunification had been announced – as conference, an appeal for a referendum on development, which has led him to produce if such details did not matter, and he does Amsterdam which necessitates constitu- this superb book, which analyses the true not hesitate to interfere in internal French tional amendments in France. motives behind the Franco-German axis politics. In both 1992 and 1997, he gave His two latest books Non au traité and explains why it is bound to collapse. French voters the benefit of his advice about d’Amsterdam (No to the Treaty of Amster- Husson insists that both the French and which way they should cast their ballot. dam) and A Chaque Peuple Sa Monnaie (To German élites are wrong to think they can Husson is convinced that with all these Each People its own Currency). The first is throw the concept of nation into the dustbin dishonest ulterior motives – the French are an immensely detailed analysis of the of history. The French, he says, do not terrified of the Germans, but they dare not dangers and inanities of the Treaty of believe in the peaceful capacities of the upset them in public, for fear of losing their Amsterdam (in the latter category lies German nation because they have place as Europe’s brilliant (or not so certainly the elevation of the Declaration on abandoned faith in the French nation brilliant) second country – the Franco- the Protection of Animals to the level of a themselves. This, of course, means that they German relationship will soon collapse. Protocol, tempered however by a commit- have abandoned faith in democracy itself. The longer the necessary crisis is put off, the ment to protecting “religious rites”); the Both the French and the Germans, there- more acrimonious the break-up will be. But, second is a highly professional presentation fore, as Husson magisterially shows, are still he says, there will be a break-up for the of all the arguments against a single in hock to a logic of politics which has been present “friendship” between Europe’s two currency. Both are published by the Groupe inherited (albeit negatively) from the fascist leading states is, in reality, little but a des Nations in the European Parliament. past. Just as the Nazis and Vichy thought relationship between suzerain and vassal. you could have the nation without demo- How could it be otherwise, when the only cracy, so today’s pro-Europeans think they think which can make states equal, whether can have democracy without the nation. In they are weak or strong – national reality, of course, the two are different sides sovereignty – is being contemptuously cast of the same coin, and you cannot dissociate aside as if it were an outdated historical John Laughland is European Director of the them without destroying both. trinket? European Foundation.

JUMP TO CONTENTS 25 The European Journal May 1998

The Convergence of the Bundesbank by Professor Roland Vaubel

n 1992, I published the following may be defensible to proceed all the same. It The Bundesbank vote may have been Iprediction: “Because the individual would – like Pontius Pilate – like to wash its exactly what Edmund Stoiber, the Prime governments in the European Union have hands of the matter. But has it been clever Minister of Bavaria, wanted to hear, an interest in letting EMU start only if their enough to wriggle out of it? although I doubt it. But it is certainly not own country is allowed to participate, one Much attention has already been what the German people hoped, expected cannot count on a minority of states – a concentrated on the striking contradiction or needed from their Bundesbank. Pontius hard currency block – entering into the between the merciless analysis which the Pilate is – and not just in German sermons – third stage. On the contrary, because only a Bundesbank makes of economic converg- more a pathetic than a tragic figure. qualified majority of all member states can ence in Europe and the evasive evaluation In the monetary union, the reputation decide whether any individual state fulfils it gave for stability policy. Even more and the credibility of the Bundesbank will the necessary conditions, either a qualified astonishing is the fact that the evaluation – not matter any longer. (The Bundesbank majority of states, or no state at all, will enter at least in its report – does not depend on council must have been aware of this.) Both the third stage.” The qualified majority is the choice of participating countries. German representatives in the Central Bank just 71%. 71% of 15 states is 11. Would a monetary union with Greece or Council of the European Central Bank Although my prediction seems to be with all four Mediterranean countries still (ECB), with their preference for price level coming true, the reason is slightly wrong. be “arguable in stability policy terms”? stability, will be on the extreme edge of the The new British government will vote for The members of the Bundesbank council spectrum of opinion. The influence of the the beginning of the third stage of EMU, but cannot have been surprised by the fact that Bundesbank on the development of it will not join. Accordingly, a monetary their report was widely misinterpreted – Europe’s monetary policy will thus be union with ten countries – for example intentionally or unintentionally – as an abruptly reduced from 100% to zero. without Italy – would be possible. However, acknowledgement that EMU is harmless, or If the six seats in the ECB directorate are it appears that Italy is prepared to trade even as an approval for it. They have occupied, as is expected, by the three biggest membership of EMU in exchange for aban- themselves – approvingly? – accepted this countries and – at least at the beginning – doning its opposition to Germany having a misunderstanding. by the next three most populous par- permanent seat on the UN security council. Recent politico-economic research has ticipating states (Spain, the Netherlands, I also predicted in 1992 that the European shown that the monetary policy of Belgium), then the “Latin” countries in the Council – against the then wishes of the independent central banks depends on the ECB’s Central Bank Council will even be in Bundesbank – would not feel itself bound partisan composition of the monetary a majority of 9 out of 17 seats. For the plan by the convergence criteria, but that it council. This has been demonstrated for the to keep a seat free for Britain has been would take a political decision. But now the USA and Germany. Between 1949 and abandoned. Things are looking bad for the Bundesbank itself has gone beyond merely 1994, 13 out of 15 observations confirm the Bundesbank. taking note of the infractions against the hypothesis that the rate at which the Jacques Delors once said, “Not all convergence criteria, and has presented an German money supply expands increases Germans believe in God, but all of them evaluation of unusual subtlety. when the party in power in power in the believe in the Bundesbank”. Maybe now all Although the Bundesbank council Federal Government enjoys a majority, as Germans will start believing in God. describes the participation in EMU as now, on the Bundesbank council at the “arguable in stability policy terms”, this beginning of the pre-election period, or does not mean that it approves of it or that it when, within the pre-election period, the considers it unproblematic – not even from partisan majority changes in the govern- the point of view of stability. It simply ment’s favour. This “loyalty hypothesis” Roland Vaubel is professor of economics at the grants that, under the present conditions of may not only apply to monetary policy University of Mannheim and a member of uncertainty, participation is one of several decisions. In the present case, one must add the Academic Advisory Council to the potentially sensible policies. The Bundes- the fact that nearly all representatives of the Federal Ministry of Economics. This article bank council has found much wanting in opposition are in favour of an early start to first appeared in the Handelsblatt on 7th budgetary convergence but it admits that it EMU for ideological reasons. April 1998.

… news in brief the extreme right who traditionally hate de Gaulle more than anyone French National Front tries to recuperate Gaullism else, because it was he who abandoned Algeria. Bruno Mégret, the number two in the Front National, who is the main European Union and Soviet Union strategist for steering the party towards political respectability, has said The European Union is the largest trading partner of the Common- that his party is now the main repository of Gaullist ideas of national wealth of Independent States. 37% of the exports of the 12 CIS states go independence and greatness. He accused Chirac and his circle of to the EU, and 46% of the imports come from it. By comparison, the USA completely abandoning Gaullist ideas, and said that the FN would move stands for 6.7% of exports from the CIS and 9.7% of imports to it. to fill the territory which the Gaullists had vacated. Such sentiments are Among the EU states, Germany is the largest single trading partner, with striking because the National Front contains within it many people on 11.7% of the CIS’s foreign trade.

JUMP TO CONTENTS 26 The European Journal May 1998

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JUMP TO CONTENTS 27 The European Journal May 1998

EURODATA

Focus on democracy Strengthening the powers of the European Parliament formed the basis of the Amsterdam Treaty’s half-hearted attempt to mend the democratic deficit, and the answer offered by many to Europe’s difficulties. Whether any amount of power given to the Parliament will make a Advertisement for difference, is questionable. The Cardiff Congress The European Parliament has 626 members, representing 370.1 million for a Europe of Free Nations people. An average of 591,214 people are thus represented by a single MEP. In the Organised by the Anti-Maastricht Alliance UK, an MP represents 88,923 constituents. Saturday 13th June, 2.30 pm to 4 pm On a numerical basis, British citizens are six times worse represented in the Sunday 14th June, 10 am to 1.15 pm European Parliament than at Westminster. An MEP can effectively give 3 minutes 48 seconds to each constituent once in every five year term – assuming he does nothing else… The reality is that MEPs are in no such position to represent their constituents. The distance of Brussels and Strasbourg from many of the constituencies makes a close relationship between an MEP and the people he/she serves difficult. About one sixth of elected members are missing on any one day at the Parliament. Low attendance in the European Parliament at the beginning and end of the week reflects the problem of workload and long distance travel. Up to 15% of the Parliament’s decisions are theoretically illegal, because the session is not quorate. One recent study (by the MEP Sören Wibe) has shown that the European Parliament’s proceedings often lack legitimacy: the number of MEPs voting varies substantially from minute to minute, because ‘simultaneous’ translation is unable to keep up with the speed at which amendments are voted on. The result is that MEPs have to abstain because they cannot understand what is going on. The enlargement of the EU, which will include an even greater variety of languages, will heighten this problem. Language further inhibits other elements of the European Parliament’s workings: when discussing legislation in committee after the translation services have finished for the day, English and French committee members agree to speak one another’s language, so that no-one has an unfair

JUMP TO CONTENTS 28 The European Foundation

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