EU crisis: “a triumph for Britain”?

Submitted by Anon on 27 June, 2005 - 11:38

By Colin Foster

On the evidence of the EU summit of 15-18 June, France’s “no” is leading not to the “social Europe” which many “no” voters wanted, but to a hobbled Europe.

Many aimed their “no” at the neo-liberal consensus visible in the draft European constitution, but it turned out to be an unintended “yes” to those capitalist interests, just as neo-liberal or more so, who want to slow down European integration. Workers in France would have done better to refuse both the “yes” and “no” options which Jacques Chirac offered them, and instead to turn to fighting for a socialist Europe by increasing Europe-wide workers’ unity.

Former Tory Chancellor Norman Lamont claimed in the Financial Times (22 June) that “the EU crisis is a triumph for British foreign policy”, with the aim (which he plainly believes Blair shares, in private) “to ensure Europe does far less and does it much better”. Lamont would like to see the powers of the European Commission cut down. At least social harmonisation like the 48-hour work-week regulation can be stalled.

There was much theatre in the budget crisis. After his referendum defeat, Chirac wanted to be seen to stand up for French interests and for Europe against Britain’s “selfish” demands to keep its rebate. Blair too wanted to play to his national gallery. He had every interest in delaying a deal on the 2007-13 financial framework until he takes over the EU presidency in July, and no interest in conceding to Chirac and Schröder, lame-duck leaders who may soon be replaced by successors more to Blair’s liking, Sarkozy and Merkel.

The 2000-6 financial framework was not agreed until spring 1999, so the EU leaders can continue quarrelling for almost a year longer and still be ahead of the game. Blair has already signalled the shape of a deal — the British rebate is “an anomaly that has to go”, but in return he wants a review of the Common Agricultural Policy’s large subsidy payments, a lot of which go to French farmers. Since the CAP outline for 2007-13 is already agreed, he will probably get the review.

Bigger issues, however, lurk behind the budget crisis and the collapse of the draft EU constitution.

The EU budget has grown slowly from almost nil before 1965 to 0.4% of total EU income in 1970 and over 1% today. It has continued to grow although the CAP has declined slightly, as a percentage of EU income, since 1985.

The logic of greater integration and expansion is that the EU budget should continue to grow relative to EU income. In fact, however, the “gang of six” — Britain, France, Germany, the Netherlands, Sweden, and Austria — have already forced the European Commission to agree to a relative shrinkage of the budget in 2007-13. The tighter total, at a time when the EU needs to spend a lot on integrating its ten new member states, makes quarrels within the total more difficult to resolve.

Most of the new EU spending since 1985 is aid of various sorts to poorer regions and countries, designed to ease their integration into a common economic area with the richer old EU core.

Since 1986, when the Single Market was agreed, Ireland’s output per head has increased from 66% of the EU average to 120% in 2000 (measured by purchasing-power standard) and 120% again of the “old” (15-member) EU average in 2003 (measured in euros). Spain’s has risen from 72% to 91% in 2003, Portugal’s from 58% to 68%, and Greece’s from 62% to 74%.

Despite successes also in the introduction of the euro in 2002 and the entry of ten new member states in 2004, growth remains low in the EU, especially in France and Germany, and unemployment high. The “Lisbon agenda” of 2000, which was supposed to ratchet the EU into high-tech growth, has been a failure.

Thus the richer countries’ new determination to be less “generous” to the EU. As former EU commissioner Peter Sutherland points out, “the budget... has already been significantly undermined... Important policies - proclaimed as recently as the European Council’s spring meeting as essential for EU competitiveness, such as boosting investment in research and innovation - have been jettisoned... Ad hoc solutions are being sought to buy off difficulties” (Financial Times, 15 June).

All this, together with the unwieldiness of decision-making procedures in the bigger EU until the EU chiefs can quietly introduce some cut-down version of the streamlining proposals which were contained in the draft EU constitution, points towards a postponement (perhaps indefinite) of the entry of Rumania, Bulgaria, Turkey, and Croatia; further delay in the full integration of Poland and the other new East European EU member states; less of the slow “levelling-up” which has operated in the EU since the 1980s; and more friction and fractiousness, more national self-assertion, in EU negotiations.

The talk by Italy’s Northern Leagues about Italy leaving the euro is unlikely to come to anything, since such a move by Italy would bring it a damaging inflation of its foreign debt as it was converted from euros into (weaker) lira. But longer term the euro has problems, since the “stability pact” supposed to protect it is now openly flouted by not only Portugal or Greece, but also France and Germany.

Meanwhile, the French and Dutch “no” will not stop the national governments pursuing cuts, privatisation, and the stripping away of protective laws for labour.

Workers’ unity across Europe, of the sort being pioneered by the Europe-wide network of truck drivers’ union representatives, is the only adequate response.

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