Early moves towards European integration were a product of the immediate post-war period and were shaped in the shadow of Yalta and Potsdam and the onset of the cold war. The European ruling class needed to stabilise its rule following the popular uprisings and radicalisations at the time of liberation, particularly in France and Italy. For this they needed large sums of money to reconstruct a war-torn Europe. The answer was Marshall aid, which went ahead under the economic and political hegemony of the victorious, post- Yalta USA, and the supremacy of the dollar as an international currency. The military reflection of this was NATO, which was formed in 1947 (with the USA, Britain and France still in occupation of West Germany) as a transatlantic military alliance in response to what was seen as Soviet expansion to the West, and to the Chinese revolution. It was designed both to underpin US influence in Europe, and as the principal Western instrument of the cold war.
The European Coal and Steel Community (ECSC) was established in 1951, out of the organisation which had administered Marshall aid. It had six member states: Belgium, France, Germany, Italy, Holland and Luxembourg. It was both a reorganisation of Western Europe against the East, and an attempt to enmesh a weakened and divided West Germany into a European political and economic framework, which would hopefully avoid further European wars. Its stated aim was the reconstruction of the strategically important European coal and steel industries, which were crucial to any new war effort. It was also the first move towards European integration as it developed in the post-war period. A Court of Justice was set up in 1953. France strongly backed the ECSC, but was opposed to NATO. It wanted to build a Europe independent of the USA, not one increasingly dominated by it. De Gaulle, therefore, refused to join NATO and France developed its own independent military capability, including nuclear weapons.
Treaty of Rome and the EEC The Treaty of Rome was signed in March 1957, creating the European Economic Community (EEC), or Common Market as it was known. It was a much more ambitious project than the ECSC. The Treaty extended the writ of the Community to agriculture - still a major industry at that time - and set in train the goal of a common customs union. It laid down that the principle that competition would be the basis of all economic and industrial activity, in the EEC, and that all obstacles to it would eventually be removed. This was the basis for the bosses' Europe.
It also established the European Atomic Energy Community - which was charged with 'the establishment and growth of the nuclear industries'. The European Court of Justice was set up the following year to replace the court which had been established by the ECSC.
As a result of the Treaty the controversial Common Agricultural Policy (CAP) was established in 1962, and the abolition of internal customs duties, and the introduction of a common external tariff, was eventually completed in 1968. The European Court of Justice was given jurisdiction internal to the member states.
The CAP was and continues to be a mechanism for destroying agricultural production in third world countries, through the huge subsidies which it pays out to EU producers. These subsidies outstrip third world producers, even when they are working on starvation wages. Recent figures have shown that the financial impact of the CAP on third world economies is greater than all the aid paid out by Western governments. Britain applied to join the EEC in 1961, along with Denmark and Ireland, without a referendum or democratic mandate. De Gaulle opposed Britain's application. He did not want, as a member state, a country which was potentially an American Trojan Horse. He was also concerned that divisions within the British ruling class, over the EEC, would disrupt the Franco/German alliance which dominated it.
Britain still looked to a world role, nurturing its so-called special relationship with the USA. These divisions were not yet fully developed, but potentially extremely damaging. In 1963 De Gaulle vetoed Britain's membership of the EEC, and Britain was kept out at that stage. It was on the basis of this less-than-unified situation that the first building blocks of European integration were put into place.
The Merger Treaty was signed in April 1965. This brought together the various 'Communities'
', as they were known, and unified the governing bodies of the EEC through the establishment of the Council of Ministers and the European Commission, with executive powers. The merger represented an important strengthening of the bureaucratic apparatus of the EU.
The Council of Ministers became the supreme law making body (though acting on proposals from the Commission) with the power to make laws binding on the member states and to override existing laws of the members states. It met in secret and consisted of a minister from each member state. The democratic deficit was therefore being
institutionalised. This was not just a negative 'downside' of the European project, however, but crucial to the role the EEC was designed to play as a supranational structure strengthening the role of the members states against its domestic working class. In 1970 the EEC adopted the Davignon Report, which would allow the EEC to speak with a single voice on major international issues.
By the early 1970s French thinking on British membership was changing. The attempt to contain West Germany by incorporation was increasingly at odds with the strength of the German economy. By now British membership was seen as a useful counterweight to this growing strength. On the back of this Edward Heath was able to successfully take Britain into the EEC, in 1973, along with Denmark and Ireland - again without a democratic mandate. This was also influenced by the relative decline of the economic dominance of the USA at this time against Japan and the Pacific rim. Heath was defeated by the miners in 1974 and called an election under the slogan "who runs Britain'. The answer he got was "Harold Wilson'. Wilson was faced with a situation where the official policy of the Labour Party was for withdrawal from the EEC. His answer was to call a referendum (in 1975), on Britain's continuing membership - with a recommendation for acceptance.
His ministers could campaign as they wished. He won a Yes vote to stay in against a No campaign supported by the whole of the left, in its broadest sense: the bulk of the Labour left, the Tribunites, the far left, (apart from Workers' Fight, fore-runner of the Alliance for Workers' Liberty (AWL)), and bulk of the trade unions, and led by Tony Benn, Michael Foot and Peter Shore. The Yes victory was a major defeat for the left and trade union movement and was immediately followed by Wilson's imposition of a pay (reduction) policy.
In 1975 a decision was taken for a directly elected European Parliament, with the first elections to take place in 1979. It would make little difference to the democratic deficit of the EEC, however, since executive powers would remain with the Council of Ministers and the European Commission. It was an attempt to give apparent democratic legitimacy to a project which was becoming increasingly political. Regulating European Currencies The Bretton Woods agreement, which had maintained fixed currency exchange rates in the post-war period, became unsustainable and collapsed in 1971, and return to floating currencies took place. This rather momentous event posed a direct threat to European integration, since the currencies of the EEC were now fluctuating dangerously against each other in an increasingly competitive and unstable market. The first attempt to redress this was in April 1972, with the creation of the so-called "snake'. Under this the participating countries agreed to limit the margin of fluctuation between their currencies to 2.25%. The snake, however, was crisis-ridden from the start. Both Britain and Ireland were quickly forced out in the course of uncontrollable currency crises and the relentless rise in the value of the Deutschmark.
Trade unionists protesting at Seville, July 2002 The next attempt to regulate EEC currencies was the European Monetary System (EMS), which replaced the snake. This was agreed in July 1978 after pressure from Germany and France. It came into force in March of the following year and established the Ecu as the nominal EEC currency unit (based on an average of the various currencies weighted against share of GDP). It was regulated by the notorious Exchange Rate Mechanism (ERM). This again set the permitted fluctuation at 2.25%, but this time national governments were obligated to intervene if their currency reached a warning threshold of 75% of the allowed deviation. It was therefore a stricter margin than the snake.
The EMS was in effect the first real step towards a single European currency although not presented as such at the time. It also established the Deutschmark as the anchor currency of the EEC, swinging the balance of influence further towards West Germany.
Almost immediately after the ERM came into force it was hit by the second oil crisis in which the OPEC oil producing countries were successfully able to gain major increases in the price of oil, which caused a major disruption of European economies. Some of the participating countries were forced to devalue their currencies in order to stay in it. The warning signs were obvious.
The Thatcher government initially stayed out of the ERM (the pound was a reserve currency in its own right) but then joined in October 1990 with ultimately disastrous consequences for the Tory party. The pound was spat out of the ERM in September 1992 (Black Wednesday) after the Bank of England spent a £18 billion trying to maintain its value. This debacle did irreparable damage to the reputation of the Tories for financial management, and contributed to new Labour's later electoral success. Italy was thrown out of the ERM soon after Britain, and Spain and Portugal were forced out in 1995.
The problems of locking European currencies together, even within margins of fluctuation, was becoming ever more obvious. Since the stability of the EU is based on the huge assumption that the mechanisms of the EU can bring about a real harmonisation of the capitalist economies of the member states - from the biggest and strongest like Germany and France to the smallest and weakest like Ireland and Greece - the long term prospects did not look good The Single Europe Act The Single European Act (SEA) was signed in February 1986. The SEA was the project of Jacques Delors, by then the President of the Commission. The Act strengthened the Commission, introduced qualified majority voting at the Council of Ministers, and continued with measures designed to remove remaining obstacles to free trade. Politically the SEA was a qualitative leap towards a political rather than an economic Community, which had been evolving since the Treaty of Rome.
This leap forward was driven by the change in economic conditions which had taken place in the mid-1970s, with the end of the post-war boom and the onset of more unstable and competitive economic conditions. This change threw European capital into increasing competition with Japan and the USA. The European project, therefore, increasingly took the shape of a rival power block designed to challenge their economic power. It was clear that the relatively small European states of the EEC required bigger and more secure markets, and a greater freedom for the movement and rationalisation of capital within Europe, if they were going to be able to compete. The EU also needed the ability to act politically in its own interests and to speak with one voice on an expanding range of issues. This implied a centralised political leadership on the lines of that provided by the USA in North America and Japan in the Pacific rim. Ultimately they needed their own state form - and the SEA was a step towards that objective.
Margaret Thatcher signed the SEA because she was attracted to the deregulation on offer. She soon regretted it, however, when the pace of integration accelerated. She has been attacked by the Tory right for this ever since.
Big business interests have been at the forefront of the European agenda from the start and were behind the SEA. This took its most organised form in the establishment of the European Round Table of Industrialists (ERT) in 1983, by the chief executive of Volvo and seventeen other top industrialists. Its stated aim was to improve the global competitiveness of the EEC through further deregulation within Europe. They knew that US corporations were supported by a federal state with far greater power to co-ordinate US capital against the US working class than is the case in Europe, and they wanted to move as fast as possible in that direction. The route they favoured was the introduction of a single European currency, and rapid moves towards political union. The ERT was therefore the driving force behind the next major developments - the Maastricht Treaty.
Today the ERT represent 45 of the biggest European multinational companies, including BP, Shell, Fiat, ICI, Nestle, Phillips, Unilever and Vodaphone. It has a headquarters in Brussels to conduct its huge lobbying exercise, and the companies it represents have a joint turnover of £600 billion.
The EEC was getting bigger. Greece had joined in 1981, Portugal and Spain joined in 1986, and Sweden, Austria and Finland in 1995, building it up to the 15 member state which exist today.
Maastricht: an Instrument of Neoliberalism The Maastricht summit was held in December 1991. It adopted the Treaty of Maastricht which was designed to address not only the needs of European capital in competing with North America and the Pacific rim, but the other huge development in world politics at that time, the collapse of Stalinism.
The Berlin wall had come down, Germany was reunified on a capitalist basis, the East European regimes had collapsed, as had the Soviet Union itself. What was posed for European capitalism was how to integrate the potential markets of the East European ex-Soviet block countries into the EEC, and alongside this how to bring them into NATO.
The ERT was actively advocating these objectives. They required a more politically centralised EEC leadership than had previously existed, if they were to be carried through successfully.
The Maastricht Treaty was also an attempt, by the most powerful sectors of European capital, to shift the balance of power even further in its favour, and against the European working class, in order to recover the rate of profit it had lost during the mid-1970s economic crisis.
For this they needed to be able to deregulate and liberalise European capital, and to carry this through with the minimum of resistance. The EU was therefore now the main instrument, of an increasingly interrelated European ruling class, for the systematic introduction of its neo-liberal agenda.
Under the Maastricht Treaty, the EC metamorphosed into the European Union (EU). The Treaty was the biggest step yet toward a European super-state. The name change reflected this, with the change of emphasis from the economic to the political. Maastricht introduced common European citizenship and a common EU passport. It gave the Commission new powers - for example to decide which third country nationals would need visas to enter the EU, It contained provisions for the development of a common foreign and defence policy and the Social Chapter.
The most important provision of Maastricht, however, was Economic and Monetary Union (EMU), or the Single European Currency. This was a radical move not even contemplated at the time of the SEA, although less ambitious versions of it had been discussed at an earlier stage.
The aim of Maastricht was not only economic integration but the establishment of a monetarist regime across Europe which could reduce the 'burden' of the welfare state. The prerequisite for EMU was the locking together of the exchange rates of the participating countries, an even more ambitious project than even with the snake or the ERM. The new currency would come in as a 'virtual currency' on January Ist 1999 and on the streets as notes and coins on January Ist 2002.
To administer the new currency, the Treaty established the European Central Bank. It alone was empowered to print the notes and mint the coins, and it alone was empowered to set interest rates in the zone covered by the new currency; something which undermined the ability of member states to conduct their own fiscal policy. The ECB was mandated to maintain price stability and its independence guaranteed by the Statute of Autonomy, which made it completely unaccountable - more so than a national bank - since it was more protected from popular political pressures.
The qualification for membership of the new currency was membership of ERM and compliance with the Convergence Criteria. This set a limit of 3% of GDP on government deficit and imposed limits on inflation. The member states remained free to put up taxes, of course. In practice, however, they would cut public spending. The qualification process of the single currency was, therefore, also a mechanism to cut welfare. It was a direct challenge to the post-war consensus on welfare provision and any remaining adherence to the notion of full employment. It was a strategic move. European employers have long regarded welfare as a millstone around their necks, since North America and the Pacific rim generally don't have it. The ERT have described welfare as "a time bomb threatening Europe's competitiveness" After the introduction of the new currency, in January 1999, the Convergence Criteria would change into the Growth and Stability Pact - as the regulator of the currency on an ongoing basis. The 3% of GDP limit on government deficit would remain, and any breach of it would attract fines of up to 5% of GDP.
The social effects of the single currency were also far reaching. Once the currencies of the EU were locked together economic fluctuations between the different members states would be reflected directly in things such as rising unemployment and cuts rather than in changes in the relative value of currencies.
Labour flexibility was seen as fundamental to this, if employers and governments were to have the ability to make the changes they would want. Also fiscal policy controlled by bankers would further institutionalise unemployment, production would tend to move to areas of relatively cheap labour undermining the bargaining power of trade unions in the best organised countries.
In a Europe of the single currency, the free movement of labour is necessary if depressed regions and countries are to be avoided. Economic, social and cultural barriers, not least multiple languages which exist across the EU, however, make it difficult for large numbers of people to move around to the degree which takes place in the USA, for example. The
large scale movement of people is therefore not available as an economic regulator. All this was taking place under conditions where a reunited Germany was poised to increase its economic power still further. It not only had the strongest economy and currency but a combined population after unification of over 80 million, decisively greater than the 60 million populations of the UK, France and Italy.
The Amsterdam Treaty: implementing EMU As soon as the Maastricht treaty came into force the race was on, amongst the member states, to qualify for membership of the Single Currency. Budgets were cut and austerity programmes introduced to get deficits below 3%. These attacks were mostly carries out by social democratic governments which were fully embracing the neo-liberal agenda and were in power in an increasing number of EU countries.
These attacks dramatically increased the level of trade union, and other forms of protest, across Europe, as the workers movement confronted this offensive. Britain was the exception in this since the defeat of the miners still hung over the trade union movement, and many of the required cuts in government welfare spending had already been carried out. In the rest of Europe, however, such defeats had not taken place, and the movement geared up for action.
There were important strikes in Italy in 1994 against austerity measures, but what set the scene for the second half of the 1990s were the tremendous mass strikes and demonstrations which shook France at the end of 1995 - against an austerity package brought in by the Juppé government to meet the convergence criteria. Millions of workers struck and demonstrated in a wave of action which in many ways exceeded the great events of May/June 1968.
The Juppé government was brought down. It was beaten on the streets and in the polls, and EMU suffered its first big defeat. This victory, by the French workers, triggered the biggest wave of struggles across Europe for decades. During the following year, 1996, there were mass strikes in Italy, Portugal, Belgium, Greece, and Spain - whilst France itself continued to produce the highest level of struggle in Europe. The Amsterdam summit, of June 1997, was held with this wave of militancy still continuing. It was, therefore, not all plain sailing, from the point of view of the leaders of the EU. There was a nervousness as to whether EMU would survive the onslaught and whether enough countries would meet the criteria to get it off the ground. Tony Blair and Gordon Brown were there, following their election victory shortly before. Brown claimed that his first budget would enable the British economy to meet the convergence criteria.
The most dramatic reflection of the militant action taking place elsewhere was the 50,000 strong demonstration organised at the summit by the European Marches. Kenault workers at Vilvoorde Belgium - leaders of Europe's first cross-national strike against plant closure - participated in the march.
The demonstration was a culmination of marches which had taken place from most
Renault workers demonstrate at the Amsterdam summit EU countries to converge on Amsterdam at the time of the summit. Some marches were on the road for two months, the march from Britain for five weeks. The demo itself was truly international with the majority of demonstrators coming from outside of the Netherlands. There was also a wide-ranging counter summit.
The demonstration was, in hindsight, the first big European manifestation of the emerging anti-globalisation movement, which exploded on the scene at Seattle. In fact the composition of the Amsterdam demonstration, with large numbers of socially excluded young people, was similar to later anti-globalisation protests. Despite this mobilisation, however, the Amsterdam summit was successful from the point of view of European integration. It failed to get agreement on an approach to enlargement, but a series of very important decisions were taken. Qualified majority voting was introduced into a number of new areas: customs, research, data protection, health policy, unemployment, equal opportunities and social policy. The primacy of EU law over national law was strengthened. The Schengen agreement (the basis of Fortress Europe) became a part of the basis of the EU. The role of Europol (an EU police force) was strengthened and moves were made towards a sort of EU FBI. Further moves were made towards a common foreign and security policy, through the setting up of an embryo Foreign Office called the 'Political Planning and Early Warning Unit There were already 20 million unemployed in the EU and 50 million people living below the official poverty line. The answer to this problem, at the summit, was increased job flexibility! This was Tony Blair's key intervention. He argued that the problem with the rest of Europe is that it lacks British levels of job flexibility, and until this is resolved the problems will not be solved. As a result of the an important decisions was taken to make the issue of job flexibility - and hence the employment con-
ditions which determine job flexibility - a matter for the EU as such and not just the members states. It was a major development if of policy which Blair continues to pursue today, recently and notoriously with Aznar and Berlusconi.
During the course of 1997 millions of workers were again involved in actions across the EU, mostly against the convergence criteria. Two million workers struck in Spain against austerity programmes. In Greece 80,000 small farmers cut the country in half by blocking the roads with their tractors, demanding subsidies and tax concessions. Most of Italy came to a halt when millions struck in support of engineering workers demanding higher wages.
In Germany, 150,000 metal workers struck in the biggest workers demonstration since the second world war. The strike forced the Kohl Government to withdraw proposed cuts in welfare. At the end of November there was a general strike in Greece. France, however, remained the centre of the struggle. 80,000 French lorry drivers paralysed France with road blocks demanding more pay, early retirement and tax concessions. They won a massive victory with most of their demands met. There were more strikes involving transport workers, communications workers, energy supply workers and theatre workers.
EMU, however, was bruised by all this but not beaten. By the middle of 1998 11 of the 15 EU countries had qualified (by a combination of austerity and creative accounting) to join the launch of the single currency on January Ist 1999. Greece qualified later to make the number qualifying twelve.