respectability that NATO and the Community could give. And American presence in, and leadership of, Europe reduced the fears of Germany’s neighbours.
With the collapse of the Soviet Union and reunification of Germany, the entire position has changed. A new Europe of some thirty states has come into being, the problem of German power has again surfaced and statesmen have been scrambling to produce a solution to it. At first France hoped that the post-war Franco- German partnership, with France as the senior partner, would continue. Chancellor Kohl’s separate and successful negotiations with Mr Gorbachev quickly showed this to be an illusion.
The next response of France and other European countries was to seek to tie down the German Gulliver within the joint decision-making of the European Community. Again, however, this quickly proved to be an illusion. Germany’s preponderance within the Community is such that no major decision can really be taken against German wishes. In these circumstances, the Community augments German power rather than containing it.
Let me illustrate this point with two examples where I agree with the German position. The first, as I have mentioned, was the German decision to recognize Croatia and Slovenia which compelled the rest of Europe to follow suit. The second is the refusal of the Bundesbank to pursue imprudent financial policies at the urging of some of the countries of the G7. However much I may sympathize with these policies, the blunt fact is that Germany has followed its own interests rather than the advice of its neighbours, who have then been compelled to adjust their own stance.
What follows from this is that German power will be best accommodated in a looser Europe in which individual nation states retain their freedom of action. If Germany or any other power then pursues a policy to which other countries object, it will automatically invite a coalition against itself. And the resulting solution will reflect the relative weight of the adversaries. A common foreign policy, however, is liable to express the interests of the largest single actor. And a serious dispute between EC member states locked into a common foreign policy would precipitate a crisis affecting everything covered by the Community.
The general paradox here is that attempts at cooperation that are too ambitious are likely to create conflict. We will have more harmonious relationships between the states of Europe if they continue to have room to make their own decisions and to follow their own interests — as happened in the Gulf War.
But it would be idle to deny that such a balance of power — for that is what I have been describing — has sometimes broken down and led to war. And Europe on its own, however organized, will still find the question of German power insoluble. Europe has really enjoyed stability only since America became a European power.
The third response therefore is to keep an American presence in Europe. American power is so substantial that it dwarfs the power of any other single European country. It reassured the rest of Europe in the face of Soviet power until yesterday; and it provides similar comfort against the rise of Germany today — as the Germans themselves appreciate.
Why aren’t we worried about the abuse of American power? It is difficult to be anxious about a power so little inclined to throw its weight around that our principal worry is that American troops will go home.
And there’s the rub. There is pressure from isolationist opinion in the USA to withdraw from Europe. It is both provoked and encouraged by similar thinking in the Community which is protectionist in economics and ‘little European’ in strategy. In trade, in the GATT negotiations, in NATO’s restructuring, we need to pursue policies that will persuade America to remain a European power.
If America is required to keep Europe secure, what is required to keep Europe free and democratic?
When the founders of the European Community drew up the Treaty of Rome, they incorporated features from two quite different economic traditions. From liberalism they took free trade, free markets and competition. From socialism (in guises as various as social Catholicism and corporatism) they took regulation and intervention. And for thirty years — up to the signing of the Single European Act — these two traditions were in a state of perpetual but unacknowledged tension.
Now — with the Commission exploiting the Single European Act to accumulate powers of greater direction and regulation — Europe is reaching the point at which it must choose between these two approaches. Is it to be a tightly regulated, centralized bureaucratic federal state, imposing uniform standards throughout the Continent? Or is it to be a loose-knit, decentralized free-market Europe of sovereign states, based upon competition between different national systems of tax and regulation within a free-trade area?
The federalists at least seem to be clear. The Maastricht Treaty met the Commission’s requirement for a ‘single institutional framework’ for the Community. Yet, before the ink was even dry on the Treaty, it was reported that the President of the European Commission was seeking more money and more powers for the Commission which would become the Executive of the Community — in other words a European Government. There would seem to be no doubt about the direction in which the European federalists are now anxious to proceed — towards a federal Europe.
Nor is there any mystery about the urgency with which they press the federalist cause. Even though they may wish to defer the ‘enlargement’ of the Community with the accession of Eastern Europe, they realize it is impossible. A half-Europe imposed by Soviet tyranny was one thing; a half-Europe imposed by Brussels would be a moral catastrophe, depriving the Community of its European legitimacy.
The Commission knows it will have to admit many new members in the next few decades. But it hopes to construct a centralized superstate in advance — and irrevocably — so that the new members will have to apply for entry on federalist terms.
And it’s just not on.
Imagine a European Community of thirty nations, ranging in their economic productivity from Germany to Ukraine, and in their political stability from Britain to Poland
- all governed from Brussels;
- all enforcing the same conditions at work;
- all having the same worker rights as the German unions;
- all subject to the same interest rates, monetary, fiscal and economic policies;
- all agreeing on a common foreign and defence policy;
- and all accepting the authority of an Executive and a remote foreign parliament over ‘80 per cent of economic and social legislation’.
Mr Chairman, such a body is an even more Utopian enterprise than the Tower of Babel. For at least the builders of Babel all spoke the same language when they
Mr Chairman, the thinking behind the Commission’s proposals is essentially the thinking of ‘yesterday’s tomorrow’. It was how the best minds of Europe saw the future in the ruins after the Second World War.
But they made a central intellectual mistake. They assumed that the model for future government was that of a centralized bureaucracy that would collect information upwards, make decisions at the top, and then issue orders downwards. And what seemed the wisdom of the ages in 1945 was in fact a primitive fallacy. Hierarchical bureaucracy may be a suitable method of organizing a small business that is exposed to fierce external competition — but it is a recipe for stagnation and inefficiency in almost every other context.
Yet it is precisely this model of remote, centralized, bureaucratic organization that the European Commission and its federalist supporters seek to impose on a Community which they acknowledge may soon contain many more countries of widely differing levels of political and economic development, and speaking more than fifteen languages.
The larger Europe grows, the more diverse must be the forms of cooperation it requires. Instead of a centralized bureaucracy, the model should be a market — not only a market of individuals and companies, but also a market in which the players are governments.
Thus governments would compete with each other for foreign investments, top management and high earners through lower taxes and less regulation. Such a market would impose a fiscal discipline on governments because they would not want to drive away expertise and business. It would also help to establish which fiscal and regulatory policies produced the best overall economic results. No wonder socialists don’t like it.
To make such a market work, of course, national governments must retain most of their existing powers in social and economic affairs. Since these governments are closer and accountable to their voters, it is doubly desirable that we should keep power at the national level.
