In 1993, the twelve nations of the European Community (EC) began calling themselves the European Union (EU). The new name, like the replacement of “European Economic Community” (EEC) with the simpler “EC” six years before, symbolized a major step forward in their project of international integration. The document sanctifying this step, the Maastricht Treaty on European Union, announced “a new stage in the process of creating an ever closer union among the peoples of Europe.” In particular, the treaty proclaimed that Europe’s national currencies would fuse into a single European money—the “euro”—in 1999. “Economic and Monetary Union” (EMU) would radically revise the political framework for Europe’s economies.
The replacement of most of Europe’s national currencies with the euro was the largest peacetime logistical operation of all time, but it was successfully pulled off from 1999 to 2002. This brought Europe to a remarkable point: “EMU” marked the realization of almost all of the fifty-year-old dreams of the founders of the EEC. But if in some ways the euro represented the culmination of a immense political project, in other ways it also underscored how fuzzy that project had been all along. Only twelve of the fifteen members initially joined the euro. (Today, sixteen of the expanded membership of twenty-seven countries participate in the euro). It also immediately provoked debate over whether the euro should be complemented by new steps to a more complete “economic government,” which were then largely cut short by the complications surrounding expansion of the EU into Eastern Europe. Thus if fifty years of integration have truly transformed the economic and political landscape of the continent in concrete ways—with unprecedented powers delegated to a complex new set of “supranational” institutions—the Union remains shrouded in ambiguities. The EU’s members are still unclear on the basic institutional goals of their integration, and on who will ultimately belong to those institutions. The stakes of these disagreements are high: having come very far in integration, European leaders now regularly face questions of EU powers and legislation that were only abstract debates several decades ago. The EU has entered the new millennium both as a tremendous success, and as a group gripped by an identity crisis.
This essay spells out the origins and development of the major questions in European integration today. Two themes dominate the story: one of continuity and one of change. The continuity lies in the ambiguity built into European institutions. From its very beginnings, European integration has been a battleground for competing visions of what Europe is to become. In this sense, today’s identity crisis continues the normal state of affairs. The change lies most importantly in Europe’s geopolitical setting. The end of the Cold War widened these old debates into a more far-reaching set of questions. The revolutions of 1989 erased the geopolitical basis for the national bargains—above all between France and Germany—upon which earlier European integration had been constructed. The Maastricht Treaty of 1991 gave only a partial blueprint for new foundations, modifications in the Amsterdam Treaty of 1997 and the Nice Treaty of 2000 only partly clarified the situation, and the proposal and failure of the European Constitution from 2001-2005 left European wondering what comes next. Long-standing institutional ambiguities and geopolitical change thus combine to pose one of the most important questions in world politics: what Europe for the 21st century?
The essay’s first section covers integration during the Cold War period, from 1945 to 1989. The second recalls the central geopolitical bargains behind that evolution, and shows how the revolutions of 1989 threw those bargains into question. The third addresses how the European project has navigated the “new Europe” since 1989. Section four looks at the EU’s current challenges and future.
Institutions: Ambiguity and Competing Visions
Origins European integration began as a response to the continent’s devastation after World War II. Ideas about establishing peace and promoting trade by integrating Europe’s nation-states had existed for centuries, but had been dismissed as idealistic. Yet from the destruction of 1945 emerged a remarkable conjuncture of political and economic motivations to take this path.
Political motivations existed on three levels. First, most broadly, the rise of the United States and the Soviet Union to superpower status made Europeans very conscious of their common place in the world. The major lines of the global distribution of power were now drawn around western European states rather than between them. Second, many saw nationalism as the basic cause of both World Wars, and integration as a way to decrease nationalism and so avoid future war. Third, and less altruistically, German nationalism in particular was blamed for the wars, and European leaders were intent on ruling out the possibility of another German resurgence. The creation of European institutions over German ones was one way of doing so.
In economic terms, motivations to integration emphasized two ideas. One was a fascination with the scale and efficiency of American production. Europeans were painfully conscious of their relatively small and antiquated economies. This went hand in hand with an American-inspired enthusiasm for free trade and competition; in addition to bigger firms and modernized industry, European economic growth required markets larger than its small countries. These related ideas were not simply abstractions: postwar Europeans confronted powerful competitive pressures from huge US firms, and felt that they had to do something to meet that challenge. Integration of the continent into a “Common Market” became an attractive solution.
These political and economic themes were taken up by a wide array of politicians, clubs and interest groups after 1945. With the development of the Cold War around 1947 they took on new urgency. In the face of a growing Soviet threat, they argued, western Europe needed the economic and political strength that only integration could bring. By 1948, European integration of some sort was on everyone’s agenda.
Agreeing on what “integration” meant, however, was not easy. The most enthusiastic “Europeanists,” led idealistically by figures like the Italian politician Altiero Spinelli and much more pragmatically by French bureaucrat Jean Monnet, preached a vision of a federal Europe that would be no less than a full-fledged supranational state. European institutions like those of the United States would supersede national governance, making nations similar to American states. Less radical were those who saw Europe not as a replacement for nation-states, but as a way to strengthen them through cooperation. In this vision—later championed by French leader Charles de Gaulle—economic cooperation and foreign policy coordination between nations would allow Europe to challenge superpower dominance of world affairs. European institutions would form an intergovernmental confederation, with national governments retaining their authority but engaging voluntarily in extensive cooperation. Finally, the least ambitious version of Europeanist thinking limited integration to the economic sphere. Europe would become a free-trade area, helping competition and modernization but constraining governments as little as possible.
These positions were so different that their proponents could hardly be expected to find a compromise. Yet agreement on one point allowed Europeans to move past their differences: all eventually agreed that integration should begin with economics. For the “free-traders”— most notably Britain, but also business interests in Germany and elsewhere—integration would end with the first major step: a free trade area, and possibly a customs union.1 Those with some political ambitions for Europe, on the other hand, saw political cooperation developing from economic cooperation. Confederalists hoped that economic cooperation would strengthen national economies, and that new economic might could be wielded in political cooperation to reestablish European influence in world affairs. Federalists initially wanted an immediate jump to a “United States of Europe.” When most Europeans quickly rejected such plans in the 1940s, however, federalists accepted that their hopes lay in the possibility that economic integration would “spill over” to create strong political bonds and a European identity in the longer term. Thus a beginning in economics provided a way to rally the competing visions of Europe together. The trick was to do this while allowing the different groups to believe that the initial economic framework could evolve in the political direction they preferred.
It was the inventive, well-connected bureaucrat Monnet (the cosmopolitan scion of a cognac fortune, with strong personal contacts with leaders around Europe and in the United States) who found such a formula. In May 1950, at Monnet’s suggestion, French Foreign Minister Robert Schuman proposed the creation of a European Coal and Steel Community (ECSC). A common market for these basic commodities would be administered by an independent “High Authority,” which alone had the right to propose ECSC directives and legislation. A Council of Ministers, representing the national governments, would oversee the Authority. The Council would vote by majority on minor decisions, but by unanimity on major issues. An elected consultative Assembly would provide democratic input, and a European Court of Justice (ECJ) would arbitrate. Thus national governments retained formal power—symbolized by the ability of any one nation to veto most decisions—but truly supranational institutions were also created. While no coherent vision of Europe was realized, proponents of each vision could hope theirs would be in the future.
Only the British, who still fancied themselves a global power, were not won over by this ingenious mélange. In 1951 France, the Federal Republic of Germany (FRG), Italy, Belgium, Luxembourg, and the Netherlands signed the treaty creating the ECSC. It began operation in 1952 with Monnet as first President of the Authority. By 1955 “the Six” were showing hugely expanded trade and production in coal and steel. In June 1955 they met to discuss proposals to extend ECSC to all economic activity. The results were the two “Treaties of Rome” in 1957, creating the European Economic Community (EEC) and the European Atomic Energy Community (Euratom).2
The EEC’s institutions imitated those of the ECSC. An independent Authority (renamed the “Commission”) would propose legislation and set the agenda. Decision-making power resided in the Council of Ministers. The Assembly was renamed the European Parliament. The ECJ’s jurisdiction was expanded to all EEC-related issues. Power was still largely held by the governments, but the independent Commission had important powers of initiative. Federalists could still hope that the balance between governments and the Brussels-based Commission would shift in the future.
Thus the identity crisis of today’s EU can be traced back to its earliest origins. In order to attract all possible supporters, the ECSC and the EEC were designed with as much ambiguity as their immediate tasks allowed. Europe’s founding fathers agreed to disagree. Such ambiguity at the outset set the stage for competition between alternative visions of Europe, which dominated the four decades between ECSC and EU—and continues today.
Development: EEC to EC The EEC’s first years were a giddy period of Euro-optimism. Surprised by its immediate economic success, the British created a competing free-trade area in 1960, the European Free Trade Association (EFTA).3 In response, the Six accelerated their own internal tariff reductions. In 1961, the British recognized the EEC’s greater economic dynamism by applying for membership. The early 1960s also saw the Six create the Common Agricultural Policy (CAP) to replace national agriculture programs. This common structure of price supports essentially represented a Franco-German bargain. The French saw trade liberalization in industrial goods as favoring strong German industries over their French counterparts. The CAP balanced this by subsidizing French agriculture. Despite the bald-faced national payoff behind it, however, the CAP represented a large step forward for the EEC’s supranational institutions. The Commission administered the CAP, acquiring direct responsibility for agriculture throughout the Community.
But optimism was not to last. Rather than bringing “widening” to new members and “deepening” along the federal path, the 1960s were dominated by French President Charles de Gaulle’s attack on both ideas. De Gaulle had long opposed surrendering French sovereignty, championing a confederal Europe of intergovernmental cooperation. The supranational EEC had been negotiated before his return to power in France in 19584—and like the British, de Gaulle was not quite won over by Monnet’s formula. Once in office, he decided not to tear up the EEC treaty for fear of upsetting intra-European relations, and accepted a supranationally-guided CAP because it subsidized French farmers. But that was all. In 1965, de Gaulle took the pretext of an overly ambitious Commission proposal (giving itself new budgetary autonomy) to challenge the EEC institutions. Denouncing the “illegitimate” Commission, he withdrew French representatives from Brussels, and insisted that they would only return given recognition of a permanent national veto on EEC decisions. The “crisis of the open chair” lasted six months, until the other members essentially agreed to de Gaulle’s demand. This “Luxembourg Compromise” got the EEC moving again, but the confederal vision had scored a major victory.
De Gaulle also vetoed the British application to join in 1963, and again when they reapplied in 1967. For the French leader, the British represented a “Trojan horse” for American influence in Europe; the “Anglo-Saxons” (meaning the US and the British) could not be trusted. He saw the major goal of European integration as the re-establishment of European influence independent from (if still allied with) the US superpower, and Britain could not be expected to side with Europe against America in trans-Atlantic disputes.
When de Gaulle left office in 1969, the major obstacle to further EEC development seemed to be lifted. Yet world events undercut Europeanist ambitions before they could regroup. First came the dissolution of the international monetary regime (the Bretton Woods system) from 1971 to 1973. This forced European currencies to float freely, meaning intra-EEC trade could fluctuate enormously with changes in the relative values of European currencies. Then, as Europeans tried to grapple with this problem by somehow linking their currencies, the first oil crisis hit in 1973. Given rising unemployment and inflation, politicians were little inclined to pursue ambitious European plans. Furthermore, the accession of Britain, Ireland, and Denmark in 1973 (made possible by de Gaulle’s resignation) introduced three adherents of the “free-trade” view of Europe. Federal ambitions moved still further from the agenda. The era of “Euro-pessimism” had begun.5
Only when pessimism became a profound sense of crisis did integration move forward again. Two developments in the early 1980s persuaded many that the EEC needed reform. First was another enlargement. Greece joined in 1981. Negotiations also began with Spain and Portugal, bringing accession in 1986. Unanimity among twelve governments would be much harder to obtain than among the current nine, especially since the poorer, Southern inductees made the group less homogeneous. The second impetus was economic. Poor European gains in productivity relative to America, and especially relative to Japan, seemed to promise the virtual disappearance of European firms from key markets like electronics and computers. The early versions of the phenomenon later called “globalization” was also putting competitive pressure on the whole range of European manufactures, as low-cost Third World producers entered many markets. Together with the Commission (under new President Jacques Delors), business leaders called for reenergizing industry by “relaunching” the EEC. Removing the remaining “non-tariff barriers” within the EEC would complete a true “Single Market.”6 Thus the Single Market plan confronted high-tech and Third-World competition in the same way that the early EEC sought to meet the challenge of postwar American competition: by reducing barriers within Europe in order to spur European firms to greater efficiency and scale. European firms would become larger and more competitive than ever.
Both enlargement and the complex Single Market project underscored a need to streamline EEC’s decision-making process. Crucially, the Luxembourg Compromise’s unanimity rule would have to give way to majority voting in the Council of Ministers, so that no one country could hold up progress. This was the major development of the Single European Act (SEA) of 1986, which set 1992 as the target date for completing the Single Market, passing hundreds of directives to decrease regulatory barriers to trade. Overall, the SEA took important steps in the supranational direction. In addition to extending majority voting in the Council (implicitly abrogating the Luxembourg Compromise), it awarded limited budgetary powers to the European Parliament. It also formalized a loose framework for intergovernmental cooperation in foreign policy, and proclaimed the symbolic change from “EEC” to “EC.” While its future remained ambiguous, the European Community was no longer merely “Economic.” Whatever else happened, majority voting and the growing power of Commission and Parliament meant the pure free-trade vision of European integration had been ruled out.
Yet if Europe’s institutional questions were narrower in 1988 than in 1958, they were more complex and pressing. The progress that ruled out the free-trade vision raised new questions. Would the EC’s European Monetary System, which linked member currencies to prevent large fluctuations, move toward a single currency? Would foreign policy— mentioned in the Single European Act, but only as intergovernmental cooperation with no Commission role—be subjected to majority voting? How much would social policies be harmonized? Overall, how federal would the EC become?
These questions alone set the stage for an EC identity crisis. Integration had come to the point that leaders had to start making choices between the visions of Europe—choices which their predecessors found easier to defer. But Europe’s identity crisis became still more serious after 1989, when the Cold War suddenly ended and Germany was reunified.
Geopolitics: National Bargains and the Revolutions of 1989 All the questions and debates about European integration from 1950 to 1989 were premised on certain assumptions about European geopolitics. East-West conflict would continue to divide the continent in half, and Germany into two countries.
Germany’s division was a constant reminder of its defeat in 1945. The Federal Republic (West Germany) was a creation of the Western powers, and depended on them for its defense. In the international arena, the truncated West German state was profoundly dependent on multilateral action with its allies for respect and legitimacy. West German foreign policy choices were largely limited to how it would act within parameters set by its Western partners.
The division of Germany also tremendously magnified French influence. No European country was willing to follow German leadership after World War II. The British, meanwhile, continually sought to emphasize their separation from the continent. This left France as the only real candidate for European leadership. Only the French could aspire to speak legitimately for Europe, and they used this leverage with skill to claim an international position disproportionate to their real power.
These Franco-German positions underlay the core bargain behind the EC. West Germany would be reintegrated into the international community through participation in European institutions, and France would gain a powerful and loyal follower for its ambitions of leadership. For the French, this also ensured that West Germany would not establish a separate, threatening role in world affairs, and that France would have the dominant voice in EC policy making. Germany and the smaller countries would make concessions at every stage of EC development, while the French bottom line on most issues would be respected. This bargain set the tone of European integration for forty years.
But when the revolutions of 1989 suddenly ended the East-West divide, the geopolitical framework for this deal evaporated. The end of the Soviet threat decreased the “circle-the-wagons” mentality which had held western Europe together. The reunification of West and East Germany in 1990 restored full German sovereignty, making Europe’s most powerful state still more powerful. Could the Franco-German bargain be recast to drive integration forward in the new Europe? One geopolitical continuity remained: if France and Germany disagreed, Europe would go nowhere.
At the beginning of the 1990s, then, Europe’s institutional ambiguities were aggravated by new geopolitical questions. Now we bring the internal story of institutions together with the external story of geopolitics, and survey integration since 1989.
Integration in the New Europe
The Triumph and Problems of Maastricht The EC’s most pressing problems after 1989 concerned German reunification. With astonishing rapidity, Europe found itself dealing with a confident power with 80 million people and 30% of the EC’s GDP. Pundits speculated that the new Germany would turn its back on the EC. Germany, they said, no longer depended on European institutions for legitimacy and influence.
Such fears proved unfounded. Indeed, the exact opposite took place. Rather than detaching Germany from Europe, reunification imparted a major boost to integration. Many German leaders were anxious to reaffirm their commitment to the EC, and Germany’s partners were eager to cement its anchorage as well. In March 1990, German Chancellor Helmut Kohl and French President François Mitterrand called for the opening of two intergovernmental conferences. One would negotiate a treaty on Economic and Monetary Union (EMU), with the ultimate goal of creating a single European central bank and currency. The other would discuss Political Union, attempting to reform EC institutions, introduce common social policies, and lay the groundwork for a common foreign and security policy.
The result was the Maastricht Treaty in December 1991. At British insistence, the word “federal” was dropped from the treaty’s preamble, but as The Economist noted, “Call it what you will: by any other name it is federal government.”7 On EMU, all of the members except Britain agreed to create a single currency and a European central bank by 1999. (Britain “opted out” of this goal, and from the treaty’s “social chapter”). The European Parliament gained important powers, including a veto on legislation in many areas. The Commission’s responsibilities were expanded to include consumer protection, education, health, trans-European energy and transport networks, and some aspects of social policy. European aid to its poorer members (Spain, Portugal, Greece, and Ireland) was doubled to decrease income disparities. Foreign policy cooperation was slightly strengthened.
Maastricht clearly pushed Europe further down the federal path. “EC” had become “EU.” But two developments disrupted this picture by complicating Europe’s structure. First, new agreements in foreign policy and justice (crime, immigration) were set up as “intergovernmental pillars” outside the existing institutions. Economically-focused integration in the existing EC was labeled the “first pillar” of the EU; foreign policy/security and justice became the second and third “pillars,” with different (and less supranational) institutional rules. Since foreign policy and justice raise such sensitive issues of sovereignty, the supranational institutional actors (the Commission, Parliament, and ECJ) were given a diminished role in the newer pillars. This meant certain issue-areas might remain outside the federal project. Second, the “opting out” clauses for Britain on EMU and social policy set a precedent for “Europe à la carte,” or a “multi-speed Europe.” This meant different areas of integration could have different memberships. Instead of being a coherent federation, Europe might comprise many overlapping, issue-specific institutions. As an open admission of these loose ends, the Maastricht treaty provided for another conference on institutional issues in 1996.
A multi-speed future also seemed to be foreshadowed by problems with EMU. When Maastricht was signed, only two members (France and Luxembourg) met the five criteria for national economies it set as preconditions for EMU.8 Global recession and the costs of German reunification were partly to blame, but some members seemed unlikely ever to meet the criteria. Greece and Portugal met none in 1991, Italy and Spain only one. Even the “core” countries of Italy and Belgium could clearly not lower their public debt in 20 years—much less by 1999—to meet the conditions.
Not only did the treaty leave unanswered questions, but other events soon complicated the picture. In June 1992, Denmark stunned Europe by narrowly rejecting its national referendum to ratify the treaty. One major complaint behind the Danish “no” was the EU’s so-called “democratic deficit.” Except for the modestly-empowered European Parliament, European institutions have little direct democratic input or control. Commission personnel do not answer directly to any elected body. Even national-government actors in Brussels tend to be unelected representatives of elected national representatives. To many Europeans, the “Brussels technocracy” shows little consideration for public opinion. Maastricht, like all the proceeding steps of integration, was negotiated as a deal between governments, without any real popular input. The Danish populace refused to sanction this elite deal.
While the Danes later voted to ratify (once they were given an EMU “opt out” clause like the British), their challenge knocked Europe off its fast track. It influenced the French referendum on ratification in September 1992, whose razor-thin approval (51% to 49%) further sapped European confidence. More importantly, the combination of this political challenge with economic recession undermined the credibility of national commitments to keep their currencies from fluctuating in the European Monetary System (EMS). In September 1992, speculators drove the British pound and the Italian lira out of the system. Then the entire EMS collapsed in a wave of speculation in June 1993. While the system was patched back together, progress to a single currency seemed further away than ever.
In sum, the Maastricht Treaty resulted from two impulses, and had two major consequences. The first impulse came from Europe’s own internal development, and the gradual success of federalism. Equally important was the external push from German reunification. The first major consequence was that Europe took its largest step yet to federalism, with EMU. But the second was to raise questions about the EU’s overall coherence, its popular support, and its economic viability.
Furthermore, Maastricht did almost nothing to deal with another huge consequence of the end of the Cold War: Eastern enlargement. In addition to ending the division of Germany, the revolutions of 1989 produced new capitalist democracies in Eastern Europe. They all immediately aspired to join the club of rich democracies to the west. The EU was besieged by requests for trade agreements, which signaled that all Eastern countries would apply for full EU membership as soon as they had any hope of success. A whole new set of questions confronted integration. Could the EU possibly unite Western and Eastern Europe? How would it have to change to do so?
EU leaders gave no clear answers in the early 1990s. Nonetheless, in December 1994 they formally accepted that enlargement was inevitable. In order to stabilize Eastern democracies and markets, Western Europeans would admit their poorer neighbors into their club. Twelve countries quickly applied.9 But how would the club change with these new members? And could its ambitious EMU project come to fruition?
Muddling Through the 1990s These two issues—EMU internally, and Eastern enlargement externally—dominated the EU agenda through the 1990s. While both projects reached fruition, this does not mean the questions they raised were clearly answered.
To everyone’s surprise, the immediate uncertainties surrounding EMU steadily decreased after the post-Maastricht scare. Not only did Europe’s leaders resolutely maintain their commitment to EMU despite much domestic criticism and through the EMS crises of 1992-3, they successfully led their nations through remarkable economic sacrifices in order to meet the EMU criteria.10 France, Germany, and the Benelux11 all implemented painful and politically unpopular budget cuts. Spain and Italy quickly decreased their immense budget deficits by more than half. Fudging of the EMU criteria was necessary to allow certain countries to participate, but ambiguous wording in the treaty allowed for this.12 By 1997, it was clear that 11 of the EU’s members (numbering 15 since Austria, Finland, and Sweden joined in 1995) would move to a single currency in 1999. In January 1999 this took place with little trouble: the participating countries’ exchange rates were frozen irrevocably, effectively creating one pool of money. Euro bills and coins replaced francs, marks, lira, and the other currencies in January 2002, making the transition complete.
This still meant that Britain, Denmark, Sweden, and Greece would remain outside the most important step yet in federal-style integration. Greece, the poorest member at the time, was unable to meet the EMU criteria by 1997 (even with fudging). Important domestic economic reform at the end of the 1990s, however, allowed the Greeks to join EMU in 2001. The other three countries could have met the EMU criteria, but chose to stay outside the single currency for the moment. It was no coincidence that all three also remained supporters of the confederal vision of the EU, hoping to minimize the accretion of power in the European institutions. The federal-confederal debate was still alive, preserved by the possibility of a “multi-speed Europe.”
Slow progress towards Eastern enlargement also fed this debate. A survey of previous enlargements helps to see why. “Widening” membership has always made “deepening” integration more complicated. The more countries that join the EU, and the more disparate they are in wealth and culture, the harder it becomes to integrate them into a single framework. When Britain, Denmark, and Ireland joined in 1972, they brought in a distinctly anti-federalist vision of Europe. This helped bring on “Euro-pessimism”: the EC was tied up in institutional and budgetary conflicts for a decade. When Greece, Spain and Portugal joined in the early 1980s, the EC stopped being a small club of very rich nations. This time the problems—the complication of functioning with twelve members, and the need for aid to the poorer countries—were resolved in the push to the SEA. Institutional reform was judged necessary to keep Europe working. As noted above, Austria, Sweden, and Finland joined on January 1, 1995. Despite the fact that these countries are all richer than the EU average and culturally similar to their neighbors, expansion to fifteen members almost undermined previous progress toward “deepening.” Changes in the vote count required to reject most decisions in the Council of Ministers (a “blocking minority”) were only accepted by Britain, Spain, and Italy in 1994 after a long crisis.13
But these problems paled in comparison to the difficulties of incorporating Eastern Europe. The clearest obstacle was poverty: eight of the thirteen candidate countries were less than half as wealthy as the existing EU average. The most direct problem created by this disparity concerned EU subsidies. The EU Structural and Cohesion Funds transferred one-third of the EU budget to its poorer regions (at that time, mainly Greece, Portugal, Spain, and Ireland). Extending similar aid to the much poorer Easterners would be enormously expensive. Any resolution would mean upsetting the deals between current members. Richer members like Germany and Britain hoped to use this opportunity to decrease the costly Structural Fund programs. But the poorer current members were determined fight against any change in their income.
Other thorny problems arose in trade and competition, agriculture, and social and environmental legislation. In order to match EU regulations, Eastern countries had to pass close to 100,000 pages of existing EU rules to eliminate subsidies, create market competition, and adopt all the standards of the Single Market program. Even if Easterners could suppress subsidies and adopt EU-style legislation, a long transition period would be necessary before many of their industries could survive in direct competition with Westerners.
In agriculture, introducing more competition was not the problem. In fact, East European agriculture was often too competitive. Prices were considerably lower than those supported by the Common Agricultural Policy (CAP). The CAP currently functions by paying farmers the difference between the world price for each product and an artificially high target price. As with the Structural Funds, extending the same system to the East would be expensive. Either the EU’s Western members would have to pay more to the CAP budget, Western farmers would have to lose some of their benefits, or the new members would not receive the same generous subsidies.
Finally, extending EU social and environmental regulations to cover the East was problematic. While new members could in principle “opt out” of the new “social chapter” as did the British, they could not avoid a great deal of basic harmonization with the West.14 Throughout the East, struggling firms could ill afford the costly requirements of Western labor legislation. Massive environmental problems could make EU environmental regulations equally difficult to apply. Yet failing to raise Eastern standards could mean a rapid transfer of jobs from the high-cost West (already averaging more than 10% unemployment) to the low-cost East. Indeed, this was already happening by the mid-1990s.
Besides these policy problems, enlargement raised tricky institutional issues that promised to radically alter the EU. An EU of 27 members (if all the Eastern Europeans joined, with Malta and Cyprus) would require rebalancing all the careful weighting of national influence in the European institutions. In a much larger EU, how would voting in the Council of Ministers weight the representation of large versus small states? The latter were already overrepresented relative to their population, and adding more small states under the current system would further undercut the power of the big states (Germany, France, Britain, Italy, Spain).15 Would the Commission and Parliament add new members, even if this made them unworkably large? If not, the balance between current members would have to be revised. Overall, would a wider Union mean more reliance on majority voting, even on those “intergovernmental pillar” issues (crime, immigration, foreign policy) where governments had retained vetoes to that point?
These questions set the agenda for the 1996 intergovernmental conference scheduled at Maastricht. It produced the Treaty of Amsterdam, signed in May 1997. Once again, Europe’s leaders muddled through without clear answers. The most important issue, reweighting Council voting after enlargement, was deferred to another round of negotiations in 2000. Plans for unifying the Maastricht Treaty’s intergovernmental “pillars” into the main structure were diluted. A few clear steps were taken: Commission and Parliament membership were capped, and the Parliament’s powers were extended.16 The former will help keep the institutions manageable, and the latter responded somewhat to “democratic deficit” concerns. Additionally, a single “High Representative” for EU foreign policy was created, to centralize the expression of EU positions. But if this all streamlined the institutions, the Amsterdam Treaty also codified the “multi-speed Europe” informally introduced in Maastricht’s “opt out” clauses. In the future, said the treaty, certain EU countries could pursue closer cooperation on certain issues without all the EU members.
Negotiations began with the enlargement candidates in 1998, and their progress forced the next round of intra-EU discussions to resolve some of these lingering questions. In December 2000 the Treaty of Nice brought agreement on the extension of majority voting to many areas, and most importantly on weighted voting in the Council—but not without arrangements that preserved much of the ambiguity of the past. While the wider application of majority voting and the addition of new qualified-majority votes in the Council will make that body look less like a ministerial club and more like a Senate in the future (with many actors and potentially shifting coalitions), the big countries also altered the basic voting to prevent them from being constantly outvoted by their smaller neighbors. A qualified majority now required approximately 75% of the total of weighted votes (as opposed to about 70% currently), and the support of countries representing 62% of the total EU population. In other words, the Nice Treaty set the foundations for a wider, superficially-more-federal EU, while actually raising some of the obstacles to smooth collective decision-making within it.
The resolution of the enlargement negotiations similarly danced around some of the big questions. Eventually it was agreed that ten countries—all of the applicants except the most problematic Eastern European countries, Bulgaria and Romania, and Turkey—would join on May 1, 2004 in a “big bang” enlargement. To avoid redirecting Structural Fund spending entirely away from earlier beneficiaries, the EU member-states agreed that any state could receive no more than 4% of its GDP from these funds. This matched roughly what Greece, Spain, Portugal, and Ireland had received in the previous decade, but it also meant that the new accession countries, with much lower GDPs, would effectively receive much less money. On agricultural policy, the Western states agreed that Eastern farmers would eventually receive full CAP payments, but only after a lengthy transition period. In the near term their payments would begin at 25% of Western levels and would rise slowly thereafter. Transition periods were also negotiated on many regulatory issues to allow the new members to adapt to EU rules. Overall, the enlargement deal avoided upsetting the main arrangements between the Western states and gave the Eastern members less favorable conditions than they had hoped for—leaving to the future a variety of battles over the principles of equal membership and how much value the EU places on supporting its poorer regions.
Thus integration carried its ambiguities into the new Europe of the 21st century. Its most surprising success—progress towards EMU—definitively installed elements of a federal system. But the “multi-speed” nature of that project, and the simultaneous steps towards enlargement, kept Europe’s future murky.
The constitutional episode After the messy bargaining over the Treaty of Nice at the end of 2000, many EU leaders agreed that a crisis point was approaching. The EU had become steadily more complicated as it became more powerful. Enlargement to ten more countries was about to make it even harder to manage. Old patterns of intergovernmental bargaining over EU policies seemed unable to produce agreements. Perhaps worst of all (for advocates of the EU), it was increasingly clear that the EU had a growing public relations problem. From the rumblings in Denmark and elsewhere in the early 1990s over a “democratic deficit”—the notion that the transfer of power to the EU had not been followed by equal channels of popular representation and accountability—had developed a widespread sense across European publics that the EU was too distant, closed, and confusing. Partly for this reason, partly because they felt that they needed to break out of old bargaining procedures to clean up the Nice treaty, and partly because they did not have any other major ideas about what to do with the EU, they decided to have a novel “constitutional convention” to propose changes to the EU treaties. With luck this would allow EU citizens to express their views of how to make the EU more transparent and appealing, engaging the populace to deal with the “democratic deficit,” and it might lead to innovations in EU structures that were difficult to achieve through standard national-government negotiation.
One hundred and five delegates from the national governments, EU institutions, and elsewhere meet in Brussels in 2001-2002. To the surprise of many, Convention President (and ex-French President) Valéry Giscard d’Estaing eventually managed to bring the delegates into quasi-consensus on a moderately ambitious set of proposals. Some changes were cosmetic: the complicated EU treaties would be given a grand preamble and labeled a “constitution,” though little was done to reduce the complexities of their 300+ pages. More importantly, the voting rules in the Council of Ministers—the most important rules of the EU—would be simplified from their complex “weighted majority” to a “double majority” rule (requiring 50% of member-states and 60% of the population). Majority voting would be extended to everything except taxation and foreign policy. Cooperation in foreign policy would be strengthened by the creation of a European Foreign Minister and staff. An EU Charter of Fundamental Rights that had been drawn up in the late 1990s would be given legal force. Other changes would slightly streamline the growing European Parliament and European Commission.
If the Convention was successful (if not quite revolutionary) at its immediate drafting task, it failed as a public relations effort. EU citizens did not avail themselves much of the elaborate Internet-based opportunities for input and paid little attention in general. Nor did this new process manage to escape the ugly horse-trading and stalemates of national-government bargaining. The governments had not agreed to simply accept the Convention’s proposals; after its work was done, they settled in to negotiate how much of the Convention draft they would accept in a standard “intergovernmental conference” (IGC—the format for all previous changes to the EU treaties). Though the governments agreed to much of the draft constitution, they came to deadlock in December 2003 over the voting changes to the Council of Ministers. Spain and Poland had been oddly advantaged by the voting rules agreed in the Nice Treaty (giving them almost as many votes as the EU’s largest states despite having roughly 2/3 the population of Britain, France, or Italy, and half that of Germany), and they refused to accept the “double majority” system. A deal was eventually brokered in spring 2004. The “double majority” would rise to 55% of states and 65% of population—making Council of Ministers passage of legislation harder than ever. The constitution could move forward, but any hoped-for image of thoughtful constitutional design was dispelled.
Now all of Europe looked toward ratification of the constitutional treaty. In some states national procedures called just for parliamentary votes, but in others ratification required or allowed for a popular referendum. A positive outcome in multiple referendums was far from certain. The constitutional negotiations had done little to restore stronger popular support for the EU. During the process, the EU members had divided sharply over the American-led invasion of Iraq in 2003, weakening the apparent promise of a European Foreign Minister. More importantly, Western European citizens were beginning to react negatively to the consequences of the “big bang” enlargement of 2004. They often perceived the small but increasing western movements of Polish and other post-communist people as a deep social threat—representing low-cost competition that would undercut the generous social regulations and welfare states of the West. In France, the most well-known figure in the long and involved public debate that preceded the May 2005 referendum was the “Polish plumber” whom EU rules would ostensibly allow to immigrate and outcompete better-paid and better-regulated French plumbers.
It did not help that the most pro-EU advocates had difficulty getting excited about the constitution. Even though the treaty contained several important innovations, it was difficult to argue that it would make the EU substantially more democratic, transparent, fair, or effective. Moreover, as specialists of EU law pointed out, it was just a public-relations ploy to portray this agreement as a “constitution” in contrast to the earlier “treaties.” Arguably the EU already had a de facto constitution, if by that word we mean a body of basic law that trumps all other law and that is especially difficult to amend. As early as the 1960s the court of the EEC, the European Court of Justice, had established that the EEC treaties were supreme even to national constitutions (requiring them to be changed if they contradicted EU law). The European treaties were clearly much harder to change than normal law, since amendment required elaborate negotiation and consensus between all the governments. Thus Europe already had a constitution in everything but name, and this new document did not radically alter it.
Perhaps even more important for the result of the referendums in France and the Netherlands in May and June 2005 was that this modest, messy, misleadingly-named constitution came before the voters in a time of economic and social malaise and unpopular national leaders. Even citizens who might have been fairly pro-European under other conditions were tempted to use the referendum as a protest vote about other things. With hindsight, then, the clear French “no” of 54.7% and the even higher Dutch “no” of 61.6% several days later may not seem terribly surprising. But for European elites it was a shock of historic proportions. While France had come close to rejecting a European treaty before, in the narrow vote to ratify the Maastricht Treaty in 1992, the repeated success of treaty after treaty had given the EU project an aura of inevitability. It seemed that Europe would always move forward. Now the advocates of that movement in Brussels and national capitals fell into a deep depression. They had played up a treaty modification as a “constitution” and invited European citizens to participate like never before in EU institution-building—and the citizens had first expressed little interest and then rejected the result. That this rejection occurred in France and the Netherlands, the historic core of the EU, was an especially devastating blow. The EU could work around the Danish rejection of the Maastricht Treaty in 1992, but nothing could be done with clear “no” votes in these two countries. The other countries that had scheduled referenda canceled them. The constitution was dead.
The Constitution’s reprise: fall of the Lisbon Treaty This is effectively where the EU stands today, as an attempt since 2005 to revive the Constitutional Treaty failed in summer 2008. For more than a year after the 2005 referendums, Europe stood in an impasse. In particular everyone was waiting for the French presidential elections of 2007, since the French rejection of the Constitutional Treaty seemed to mean that things could only move forward once France changed its tune. This moment duly arrived with the election of the most self-confident French leader since de Gaulle, Nicolas Sarkozy. Sarkozy, a self-labeled maverick and pragmatic political “fixer,” quickly proposed to strip out the symbolic elements of the Constitutional Treaty and repackage its institutional reforms in a toned-down deal that became known as the Lisbon Treaty (following the EU habit of naming treaties for their place of negotiation). He and other national leaders also agreed to avoid referendums in ratifying the new treaty, if at all possible, instead making use of parliamentary procedures to ratify. But in one country—Ireland—a referendum was constitutionally required. It was difficult not to see that EU elites were attempting to sneak the same Constitution reforms past their citizens, and outrage over this kind of politics was as much a factor as any substantive complaints in the Irish rejection (by 53%) of the Lisbon Treaty in June 2009. Though almost all other member-states had successfully ratified the Treaty through their parliaments, a single rejection is sufficient to block its implementation. At the time of writing, EU leaders are now preparing to ask the Irish people to vote again. They are banking on the argument that the Irish will change their minds when it is clear that the functioning of the EU rides on their vote alone. Even if this logic eventually wins the day and gets the EU out of its immediate impasse, however, the series of rejections in referendum augur poorly for progress in European integration in the future. Overall, the constitutional episode did not only fail to redress perceptions of a European “democratic deficit,” but greatly worsened them.