UNIVERSITY OF CALIFORNIA Los Angeles Agents of Integration: Multinational Firms and the European Union A dissertation submitted in partial satisfaction of the requirements for the degree Doctor of Philosophy in History by Grace Ballor 2018 © Copyright by Grace Ballor 2018 ABSTRACT OF THE DISSERTATION Agents of Integration: Multinational Firms and the European Union by Grace Ballor Doctor of Philosophy in History University of California, Los Angeles, 2018 Professor Ivan T. Berend, Chair Much of the existing scholarship on the history of the European Union presents twentieth century European integration as a political process. While this narrative rightly acknowledges the immeasurable impact of nation states, European Union institutions and visionary federalists, it is not complete. In response to globalization in the 1970s and 1980s, large European corporations sought to compete with their American and Asian rivals by establishing a pan-European single market without barriers to cross-border business. At times responding to policy changes and at times driving them, these firms adopted a regional strategy and invested broadly across Europe, particularly in the markets of the European peripheries, which offered both cheap, skilled labor and a huge consumer market with pent-up demand, all at close proximity to firm headquarters. By establishing value chain and subsidiary networks across the region, firms from every sector of the economy – including the French investment bank Paribas, German auto manufacturers Volkswagen and BMW, British retailer Tesco and Belgian retailer Delhaize – contributed to the integration ii of economies and facilitated the practical achievement of a common European market. Thus, motivated by their own profit interests, multinational firms facilitated the achievement of the four freedoms integral to an economically-united Europe: the free movement of goods, services, capital, and labor across a single, common market. This dissertation analyzes the role of multinational firms as agents of European integration from the 1970s to the early 2000s. Methodologically, it engages with the practices of both economic and business history and draws evidence from archives, including those from both firms and EU institutions. It equally makes use of oral history interviews with EU commissioners and members of parliament, lobby groups, and executives from leading European multinational corporations. Its aim is to intervene in the current body of European Union scholarship and contribute to a nuanced understanding of the history of European integration by including the role of the private sector. iii The dissertation of Grace A. Ballor is approved. Mary A Yeager Naomi R Lamoreaux John A Agnew Ivan T. Berend, Committee Chair University of California, Los Angeles 2018 iv This dissertation is dedicated to all those who supported me in this work, most especially Dan, without whose love and sacrifices this would never have been possible; Maximilian, who helped me find the courage and resilience required and inspired joy along the way; and Ivan, whose mentorship and example have deeply changed me and will continue to inspire me for a lifetime. v Table of Contents I. Introduction 1 Part I: The Theory II. Regionalization in Response to Globalization 35 III. Networks of Power: Les Personnalités of Big Business and the EU 63 Part II: The Practice IV. Manufacturing the Common Market: Die Deutschen Autos 108 V. Investment Banking during Decolonization, Integration, and Globalization: The Case of the Banque de Paris et des Pays-Bas in Twentieth Century Europe 141 VI. Regionalizing Retail from Neighborhood Markets to Super-grocery Stores: The Vertical and Horizontal Expansions of Belgian Delhaize and British Tesco 176 VII. The ‘Single’ Market: The Limitations and Paradoxes of Firm-Driven Integration 221 Bibliography 229 vi Dissertation Preface As historians, our work – even our intellectual curiosity – is necessarily influenced by our contemporary human contexts. Some disciplinary theorists, like E. H. Carr, have argued that we must strive to fight against succumbing to such influences, while others, like Keith Jenkins, advocate for an acceptance and even pursuit of this kind of positionality in historical writing. This dissertation was certainly written in the shadows of contemporary events. Its subject matter, too, is quite recent in historical terms, and, at times, the lines between ‘past event as fully past’ and ‘past event as continuous process’ are rather blurry, making it simultaneously challenging to address issues of temporality and finiteness, and also – like any other event in the eye of the historian – appear as a mere thread in an Indra’s net of endless interconnectivity. That my academic career began in the moment of the global financial crisis is, I hope, revealing of the intellectual impetus behind this project. In the same month I started college, Fannie Mae and Freddie Mac, the institutions underwriting my own student loans, both failed. Within days, Lehman Brothers collapsed, and first the US and then the global economy entered into the worst recession in nearly a century. My home town of Phoenix was among the cities hardest hit by the subprime mortgage schemes of the 2000s. Many friends and family members lost their homes, their businesses, their livelihoods. My father’s family in Detroit watched deindustrialization happen virtually overnight as major American automakers collapsed shortly after the banks. Unemployment across the United States reached 10 percent; for people of my generation, this figure skyrocketed to a devastating 25 percent. Having been a student of liberal arts curricula throughout my youth, I initially filled my early college course schedules with more Greek, Latin, and Philosophy. But a semester abroad in Rome, Italy, which was intended to cement my training in antique history and the art and architecture of the ancients actually served as the inspiration that shifted my interests roughly 2,000 years forward on vii the historical continuum. I watched Italian family businesses struggle and, in many cases, die, having staved off the competitive threat of globalization posed by larger foreign firms only to ‘go down with the ship’ in the deepening recession. For the whole Mediterranean economy, even long-term prospects for recovery seemed bleak, in large part because many of the currency tools once at the disposal of export- and tourism-oriented countries like Spain and Italy and Greece were no longer available once they joined the European Monetary Union. Perhaps it was the influence of all of the Roman law I was reading, or maybe a product of the long contemplative walks I took in the Lazian vineyard where I lived, but from where I sat in rural Italy in 2009, integration seemed to have rendered Europe unable to survive such a crisis. My front row seat to the effects financial crisis and Great Recession on both sides of the Atlantic rekindled my latent interest in business and European integration, which had begun a decade before when my grandparents spent their retirement savings to take me cycling around Western Europe during the implementation of the euro currency. With questions about exactly who were the architects and primary beneficiaries of the integration process, I was compelled to dig deeper. On methodological grounds, I resolved to analyze European integration from the discipline of history, although my training in political theory and international economics certainly inclined me toward interdisciplinary work, as it continues to do so today. More fortunately for me than I could ever express, one of the few historians to have examined European integration from a similar methodological approach was willing to mentor my PhD at UCLA. As a result, this project owes its very existence to my advisor and dear friend, Ivan Berend. Under his direction, I began reading work on the European Union and quickly noticed how prominently nation states and political elites featured in scholarship, but that another set of actors, looming ever-larger and more influential in the present, was almost absent from the literature on European integration: big business. A second major crisis – or series of crises – served as a backdrop for this project. I began viii this project in 2012 at the zenith of EU expansion, amid the accession of Croatia as the 28th member state and during the continued debates about accessing Turkey, perhaps even Morocco, despite the recent destabilization of North Africa in the wake of the Arab Spring. Protracted financial and Eurozone crises became compounded by the Greek debt crisis. Meanwhile, regime responses to popular uprisings in North Africa and the Middle East, coupled with the tragedies of genocide, famine, and poverty, motivated millions to seek refuge in Europe, made possible by Angela Merkel’s ‘open door policy.’ A concurrent – some would argue consequent – surge in terror across the globe strained the commitment of European nations to one another and precipitated a populist backlash against the EU, and, perhaps for the first time in postwar history, a swell in the forces of disintegration. While conducting research for this project in the UK in the summer of 2016, I witnessed the debates leading up to and then the results of the Brexit referendum and the first major, formal step toward a dismantling of 60 years of progress toward the European Union. Since then, as I worked to draft, write, and edit this dissertation, questions about the viability of the European federalist project have made daily news headlines, further blurring the lines between – to put it in linguistic terms – the pluperfect- and imperfect- past. The seismic geopolitical shifts that began in the early 2010s have only continued in recent years, rendering the climate in which I have completed this work dramatic and uncertain, and my topic a moving target. Revolts against globalization and internationalism, general mistrust of elites, a resurgence of economic, political, and even ethnic nationalism, and the demise of democracy featured prominently in political elections in the European Parliament, Hungary, Poland, Austria, the United States, France, Germany, and Italy.