The Contemporary Crisis of the European Union

Prospects for the future

Ivan T. Berend

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781351998239
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The European Union widened and deepened integration when it introduced the Single Market and the common currency, increasing the number of member countries from 12 to 28. After a quarter of a century, the 2008 financial and economic crisis opened a new chapter in the history of European integration. Prosperity was replaced by economic crisis and then long stagnation, with ramifications far beyond the economic arena.

For the first time, after more than half a century, some countries were almost forced to step out of the Union. History's most frightening migration crisis shocked Europe and led to the strengthening of several anti-integration parties in various countries. This pioneering book discusses the nine crisis elements that could lead to disintegration of the EU. Beginning with the Greek Debt disaster this book delves into the cause of the recent European crisis and then onto the recent immigration influx and its consequences, as well as Britain's exit from the Union. A concluding chapter, based on the facts of positive development during the crises years, gives a cautiously optimistic forecast for the future and asks the question: further integration or disintegration?

This volume is of great importance to academics, students and policy makers who have an interest in European politics, political economy and migration.

Part I
Inside economic and political factors of the crisis

1 Britain: from outsider to inside-outsider and outsider again

Joining late, stepping out early

Britain and the idea of European addition

A handful of day-dreamers nurtured the vision of a federal United States of Europe already in the nineteenth century – one of them being the famous French writer, Victor Hugo. After the devastating Great War of 1914–18, the Austrian Count Richard von Coudenhove-Kalergi formed the Pan-Europe Movement, and the French Prime Minister Aristide Briand proposed establishing a federal Europe to the League of Nations. These movements and proposals, however, went nowhere.

It was Winston Churchill, the most influential British politician in the twentieth century, who first came up with the idea after World War II, in a speech in Zurich in 1946, of a United States of Europe based on French and German reconciliation. Because of the emerging Cold War confrontation that had motivated Churchill, the Truman administration considered this idea to be the best way to hammer out a strong Western alliance system against the Soviet Union and its allies. America, indeed, had the prestige, the power, the military might, and the economic strength to push the dream towards realization. Assisting as well were a few influential European politicians and governments who had learned the lessons of the “thirty years war of the twentieth century,” as the two world wars are often called.

President Truman wanted Britain, the closest ally of the United States, to be the initiator and leader of European integration. His Secretary of State, Dean Acheson, revealed that he

had made it a personal mission to convince Britain to join the European Coal and Steel Community . . . . Together with President Truman, he was convinced long-term U.S. national interests required that Britain be a founding member of an integrated Europe.¹

Ten years later, in 1960, the British Embassy in Washington reported: “All [US] administration leaders cherished the vision of a Europe with British leadership.”² Later, from Presidents John Kennedy to Barack Obama, American administrations have always urged Britain to join or remain within the European Union.

British refusal to join

Consecutive British governments, however, whether Labour or Tory, have mostly rejected such an idea. Churchill expressed his view regarding Britain’s standing in Europe, which served as the foundation of the UK’s policy for generations, when he remarked in 1946: “we are with Europe, but not of it. We are linked, but not comprised. We are interested and associated, but not absorbed.” Britain, he promised, would assist the United States of Europe from the outside, but not as a member from within.³ “Everyone knows,” he added in 1950, “that . . . in all our thoughts [f]irst, there is the Empire and Commonwealth; secondly, the fraternal association of the English-speaking world; and thirdly . . . the revival of united Europe . . .”⁴

Between 1945 and 1951, the Labour government of Clement Attlee shared this view and, despite strong American pressure, declined to join or participate in European integration. The first clear expression of British resistance to integrating with the continent had already occurred during the preparatory period of the American Marshall Plan in 1947–48. The Truman administration had sought the political and military unification of Western Europe, which, it believed, would follow a preliminary stage of economic integration with the establishment of a customs union. The administration of the Marshall Plan pushed this agenda forward by establishing an institutional system, the Organization for European Economic Cooperation (OEEC), which enhanced cooperation and joint decision-making, and set lower tariffs and other trade restrictions, during the plan’s four-year lifespan. This was not an easy task after decades of economic nationalism and a myriad of quantitative trade restrictions, tariff wars, and quota systems. Is spite of the “carrot” (abundant economic assistance), the Marshall Plan failed to establish the common customs union; but it did pave the way for future integration, with, among other things, the foundation of a Payment Union. One of the primary reasons for the failure was British resistance. Although Britain became the largest recipient of US assistance, it refused to comply. The former Foreign Minister of Holland, Ernst H. van der Beugel, who had worked on creating the OEEC, concluded in a 1966 book about the Marshall Plan: “No single fact has been so harmful to the possibility of the development of OEEC as an instrument for integration as the British refusal to commit itself to full partnership with the continent of Europe.”⁵

British resistance would continue in the years to follow, with its refusal to join the European Coal and Steel Community in 1951 and the European Economic Community in 1957. Not unlike Churchill, the Labour Party would declare in 1950 that Britain is

the nerve center of a world-wide Commonwealth . . . [and] we in Britain are closer to our kinsmen in Australia and New Zealand . . . than we are in Europe . . . . The economies of the Commonwealth countries are complementary to that of Britain to a degree which those of Western Europe could never equal.⁶

When Churchill became Prime Minister again in 1951, his government retained the policy of the previous Labour government and kept Britain outside the integration process.

After World War II, the British political elite continued to consider Britain to be a great power, the winner of the war, the center of the Commonwealth and a vast colonial Empire, and one of the three major Western powers along with the United States and an integrated Europe. This sense of British self-importance was partly a consequence of the country’s “island mentality.” As David Cameron put it in 2013, “it is true that our geography has shaped our psychology. We have the character of an island nation – independent, forthright, passionate in defence of our sovereignty.”⁷

Another motivating factor was the legacy of the past. For centuries, Britain had built up the world’s largest colonial empire. In the first half of the twentieth century, the British Empire comprised more than 458 million inhabitants, a fifth of the world’s population, and its land mass entailed nearly 34,000,000 square kilometers, almost a quarter of the earth’s. Even after the collapse of its colonial system by 1960, Britain remained the center of a Commonwealth containing nearly seventy countries. Following the Industrial Revolution and during the nineteenth century, Britain became the apical industrial nation and the predominant world economic power. The psychology of global preeminence would survive the collapse of the British Empire and the decline of the country’s standing, especially during the second half of the twentieth century.

Changing British attitude

A gradual change began with the loss of the Suez War against Egypt in 1956, the first major failure of Britain’s traditionally successful “Gunship diplomacy,” and culminated with the collapse of Britain’s colonial empire by 1960. The psychology of Empire, however, did not die easily. Generations had been socialized accordingly. As an English friend once explained to me in the 1970s, in every classroom he attended as a child hung a world map, much of which had been colored pink, the color of the British Empire. US Secretary of State Dean Acheson’s oft-quoted remark is thus quite understandable: “Great Britain has lost an empire and has not yet found a role.”

Britain’s ambition was clearly expressed by its attempt to counterbalance the foundation of the European Economic Community with the establishment of a competitive British-led European Free Trade Agreement (EFTA) signed in Stockholm by the “Outer Seven” (Norway, Sweden, Denmark, Austria, Portugal, and Ireland, old trade clients of Britain) in 1960. In contrast to the success of the European integration and skyrocketing European trade and growth, Britain’s efforts failed. Although three more countries would later join it, the EFTA had incomparably fewer achievements than did the EEC. Britain remained frighteningly behind the continent in the 1950s and 1960s. Consequently, subsequent British governments would understandably change the UK’s position and apply for membership in the European Community twice in the 1960s – only to be rejected thanks to the veto of French President Charles de Gaulle. Britain succeeded in joining only after its third application in 1973.

Britain the inside-outsider within the European Community

Inside the European Community, however, Britain always remained an inside-outsider, reluctant to take part in any further moves toward integration. The British political elite were naturally attracted to Europe’s large free market zone, swayed as it was by business interests. But it was not interested in participating in other spheres of cooperation, and it jealously defended its sovereignty by requiring special status within the Community. Margaret Thatcher launched frequent attacks against Brussels during her premiership in the 1980s, demanding and receiving a repayment of part of Britain’s contribution to the Community budget, opposing a joint-European helicopter production project, and flatly refusing the European Commission’s president Jacques Delors’ proposal for a supranational reorganization of the Community. As Thatcher defiantly declared in a famous speech in Bruges in 1988, the British government adamantly opposed a “European superstate exercising a new dominance from Brussels.”⁸

In her address, Thatcher acknowledged Britain’s European roots, “two thousand years of British involvement in Europe, cooperation with Europe and contribution to Europe.” She assured her audience that Britain does not want isolation and affirmed that “our future lies only in Europe.” However, she forcefully rejected the “dictate of some abstract intellectual concept” and of “endless regulations.” European cooperation must be “among independent sovereign states,” she insisted, and not the “power… centralized in Brussels” or “a European superstate exercising a new dominance from Brussels.” Instead, she demanded the formation of “a family of nations” that is not “distracted by utopian goals.”⁹

To preserve Britain’s sovereignty and control of its own borders, the Thatcher government declined to join the Schengen Agreement on the elimination of borders and border control within the member countries. This idea had been floated at the same time that a decision had been made to create a single market in the mid-1980s. In the summer of 1985, on a boat near the Luxembourgian township of Schengen, five member countries (France, Germany, and the three Benelux countries) agreed to a single borderless Community, though they initially did not make it an official EEC law. Quite a few non-members were to join subsequently: Switzerland, Norway, Iceland, and some mini-states such as Liechtenstein. Within ten years, the single-market Schengen Area expanded considerably, and the Amsterdam Treaty of 1997 incorporated the agreement into the Community’s legal structure. Besides eliminating border controls within the Area, the participant countries introduced identical asylum laws, allowed unhindered police movement across borders, and established a shared database on wanted fugitives and stolen goods. Out of 28 member countries of the European Union, 22 signed on to the agreement; adding the above-mentioned four non-member countries, a total of 26 European countries erased the borders dividing them. Four member countries (Cyprus, Bulgaria, Romania, and Croatia) are legally obliged to join, but they are still required to establish safe borders and a strict border control with their non-EU neighbors to be eligible to join. Thatcher’s Britain (along with Ireland) opted out of the treaty.

A decade later in the late 1990s, a new test of British Community membership emerged. In the 1970s and 1980s, the continent’s corporate leaders pushed ahead for further integration, in reaction to Europe’s declining competitiveness and the encroachment of American and Japanese companies in European markets (both in the sales of foreign products and the founding of foreign-owned companies in Europe). In 1985, Europe’s leaders reached a major agreement: the creation of the Single European Market to eliminate borders for the free flow of goods, services, and capital, and to remake the domestic market of member countries as a European market by 1992. This time, the Thatcher government was fully on board. Britain was eager to exploit the potential of an all-European free market that had gradually expanded to include some 500 million people. This had been Britain’s ultimate goal.

Nevertheless, a number of federalist politicians, first among them Jacques Delors, the newly elected president of the European Commission in 1985, wanted to go even further. A single market required a single currency. This idea was alr...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction
• Part I Inside economic and political factors of the crisis
• Part II International factors and outside challenges
• Conclusion: further integration or disintegration?
• Index