THE FEDERALIST

political revue

 

Year XXXIX, 1997, Number 2, Page 53

 

 

The European Council in Amsterdam
 
 
In what was a fully predictable outcome, no substantial results, from an institutional point of view, were produced by the European Council in Amsterdam, whose main task was to conclude the work of the Intergovernmental conference on revising the Maastricht Treaty.
Now it is time for the fifteen members of the EU to tackle the question of enlargement. Although they are unwilling to relinquish their sovereignty definitively, many of the governments of member countries are well aware that the health of their economies, and indeed peace in Europe, depend on the degree of cohesion, irrespective of its shortcomings, which is guaranteed by the current institutional order, and that this order could not withstand the impact of enlargement. It is to be expected, therefore, that the outcome of negotiations between member countries and those applying to join the Union will be uncertain and that the process itself will, indeed, be fraught with difficulties. What we will see will be yet another example of the impotence and lack of generosity of the Union whose attitude is bound to disappoint and anger many citizens of Eastern European countries who associated their liberation from Soviet dominion with the prospect of a rapid entry into a great democratic community embracing all the countries of Europe.
What emerged clearly in Amsterdam was that the question of the reform of the Union, which was meant to be the main issue tackled by the Council, was in actual fact dealt with only superficially and almost incidentally. What was really at stake in Amsterdam was something different altogether.
 
***
 
The real issue at stake in Amsterdam was that of monetary union. Evidently the obstacles in the way of achieving this aim were bound to multiply the closer we drew to the all-important date: January 1st, 1999. This fact has been confirmed clearly by two events that have added a dramatic quality to the work of the European Council: the victory of the left in the French elections and, in Germany, the conflict between the government and the Bundesbank (the latter supported by the Bavarian CSU and by a part of the SPD). In the light of these developments, the results of the European Council merit a more detailed and specific analysis.
The first thing to emerge in Amsterdam was that the process towards the creation of the European currency is now moving at such a rate that it will be difficult to “stop the ball rolling”. Lionel Jospin, forced to adopt a rather hurried stance, having been thrust into government by the unexpected results of an election his party had not even wanted, was ultimately obliged to tow the German line, just as Chirac had previously done. The agreements reached were reiterated and the deadline for the introduction of the single currency was confirmed. A crisis had been averted.
Secondly, it is important to realise that never before has the future of the single currency been so seriously threatened; indeed, as a result of the air of uncertainty that still surrounds it, there is some doubt as to whether it can be launched by the target deadline. The new French government has issued declarations and made undertakings which have given rise to expectations of a relaxing of the budgetary policy in that country, and this development is straining the Franco-German entente which represents the backbone of the Union in both the economic and monetary spheres. The prospect of a policy of budgetary relaxation in France has led to a strengthening in Germany of the hard-line positions of the Bundesbank, of Gerhard Schroder and of Edmund Stoiber, which mask a substantial rejection of the single currency. Indeed, the battle over monetary union is far from over.
 
***
 
The question of European political unity cannot be divorced from that of European monetary union. Like it or not, it is clear, from events which have taken place within the process of European unification over the last ten years, that monetary union must precede political union and that, furthermore, the failure (or postponement) of the first would, in today’s climate, mean failure of the second.
Certainly, if the governments of Europe, or some of them, could be made aware of the urgent need to achieve a democratic and federal organisation of the institutions of the Union, the whole process of creating the European currency would be facilitated enormously. It is to be admitted, however, that no such awareness currently exists. While everyone appreciates that a single currency, on its own, is not enough and that it needs some form of political support, no one is willing to overcome that one great obstacle that is the renunciation of sovereignty. France and Germany have each proposed equally inadequate solutions to this problem: the French suggestion is the so-called economic government of the Union which, according to the French government, would involve closer coordination of economic policies to be carried out within an intergovernmental framework, whereas the suggestion put forward by the German government, and accepted by all the governments represented at Amsterdam, concerned a pact for stability (and development); according to this proposal, governments of the Union would be bound to respect the budget discipline imposed upon them, faced as they would be with the threat of automatic or semi-automatic sanctions imposable on those who without sufficient justification should stray too far outside it.
The truth is that the rigidity resulting from the creation of a single currency in a zone which is completely liberalised (thus taking away from governments several possible means of intervention: on interest rates, exchange rates and money supply) will inevitably lead, sooner or later, to a serious imbalance between the different regions of Europe and will inescapably raise the problems of a European budgetary policy and of a European organisation of consensus. If these problems are not tackled in a radical manner, the contradiction which currently exists between decision-making power (which remains in the hands of national governments) and the attribution of the relative responsibility (to the European institutions) will become untenable. In this situation, two alternatives will emerge: the foundation of a European federation, or the dissolution of EMU.
 
***
 
Currently only federalists (and some declared Eurosceptics) have a real awareness of the de facto link which exists between monetary union and federal union, and it is up to federalists to work towards spreading this awareness among the political forces and the citizens of Europe. On the other hand, current realities explain why monetary union will precede federal union in time and the assertion made by some that the foundation of a European federation is a necessary condition for the creation of a single currency represents nothing other than a smoke screen for those politicians who do not want to see the introduction of either. We must therefore be on our guard against certain high bids for political unity which, implying no political cost, are as rhetorical as they are vague and mask a desire to shirk the frequently difficult decisions involved in the creation of monetary union.
The fact that the governments of Europe now find themselves faced with the problem of the renunciation of national sovereignty (one which they cannot resolve without appealing to the European people), means that the process of European unification is on the brink of a decisive crisis. Everything depends on whether the breaking point is reached before or after the birth of the single currency. If the single currency has already been established and the crisis breaks out over the contradictions resulting from the presence of a single currency in the absence of a European government, the outcome will probably be the creation of the European federation. If, on the other hand, the crisis is due to the inability of governments to achieve monetary union, then the only outcome that can reasonably be expected is the dissolution of the single market and the definitive failure of the process of unification. For this reason, federalists, in their battle to achieve recognition of the constituent power of the European people, should beware of the risk of bringing about a premature explosion of the contradictions inherent in the process, forgetting the importance of mid-term aims. The aim of the battle is to seek to unite a short-and a mid-term perspective and to encourage a maturation of political forces and public opinion so that, when the final battle comes, the pro-European side has sufficient strength and awareness of its position to be able to overcome its opponents.
 
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