Lessons of European Integration / Werner Kamppeter.

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If there is a constant in European history, it is war. Our political systems and the people at the top of them were somehow prone to generate ever new situations of conflict and to solve them by violent means. European history is an almost incessant stream of blood, misery and destruction – within Europe itself and elsewhere in the world. Furthermore, the width and depth of this stream increased with the size and the strength of centrally organised states and with the development of military technology.

Against this historical background Western Europe and, to a lesser extent, Eastern Europe have enjoyed half a century of unprecedented peace and prosperity. Almost two generations have not been involved in a war nor have they experienced the misery it causes. The absence of war is in itself an amazing and precious achievement. Yet, an even greater achievement is, what might be called, a new culture of conflict management: Of course there are still conflicts and plenty of conflicting interests, but we follow accepted procedures that lead to negotiated solutions.

We can be certain that all conflicts are resolved peacefully, that is without recourse to military force and to the menace of military force. Military force has simply ceased to be part of the tactical and strategic games that are played within the European Union (EU). In this sense we can say that the EU has become a peace community: It is characterised not only by the absence of war, but by the absence of the possibility of war among its members.[1] Small wonder that the neighbouring countries of the EU have, apart from the economic benefits they expect, such a strong interest in joining the club.

If you ask people in the EU, a vast majority will agree that a war among the member states has ceased to be a possibility. If you ask them how this was achieved, most of them will cite European integration as being the most important factor. Even if you ask those who are highly critical of the ways and means of European integration, most of them would probably agree that the danger of an intra-EU war has practically vanished – and still many of them might give credit to the European integration process for it.

Yet Europe has not only stopped to cause havoc within itself, but also to other countries. After centuries of conquest and subjugation of the world, Europe seems to have lost its imperialist drives. With very few exceptions the European colonies were relinquished. Neither the European Community nor its member countries initiated any military conflicts outside Europe. Of course some countries gave military support to the US during the Vietnam War, yet the price they paid in terms of the legitimacy of their political regimes was a high one.

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From the perspective of past European behaviour this is quite astonishing, because the havoc caused inside and outside Europe increased with the size of its centrally organised states and with the development of military technology. For both reasons one could have expected an aggressive and destructive Europe on an unprecedented scale. That it was not the case can be explained by the Cold War and the difficulties that the EC member governments had in agreeing to common foreign policies. As the Cold War came to an end and as the EU is trying to establish a unitary policy framework for a Common Foreign and Security Policy (CFSP) there are some fears that Europe might return to its former behaviour and impose its will on others by military intervention and threats.

If the process of European integration can be credited with converting the belligerent Europe of the past into a non-aggressive and stable peace community, then many of the institutional, democratic and economic deficiencies of the EU necessarily appear in a much milder light. On the other hand, it would be very worth while to find out whether other regions in the world could learn any lessons from this process of integration.

"To learn from history" is an old and controversial issue. Historic circumstances are never interpreted in the same way. If one wants to draw any lessons from them, one has to abstract from the concrete events as such or to generalise. Depending on one’s preferences and cognitive biases, which can never be entirely subdued or avoided, one mentally derives these abstractions and generalisations. There is always the danger of teleological constructions: Because Europe after half a decade of integration has become a peace community (itself a mental construction), one looks for all the elements in history which contributed to this end, that is, reinterpreting them in the light of the final outcome – and excluding or overlooking many other elements which in their time were of much greater importance than is admitted within such a perspective.

It is, for instance, commonly assumed that the basis of European integration was economic integration (as will be shown a largely exaggerated and even false claim). As European integration was a success in pacifying formerly belligerent nations, it is then argued that other regions should integrate economically too.

Such inferences about European integration are not warranted and even false: European integration was from the very beginning an essentially political integration. Economic integration was at times instrumentalised to that end, but its overall contribution to the pacification of the European continent was and remains limited.

In order to avoid easy generalisations and possibly unfounded lessons derived from them, we will look first with some detail at the historic events and constellations that surrounded the initial efforts of European integration during the early post-World-War-II years and the 1950s –and try to draw some lessons from this experience. Then we will change the focus and ask what benefits can be expected from integration. In the final section, at a primarily conceptual level, different routes to integration will be briefly discussed.

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1. European integration
Why it happened and how it happened

The First Europe: The Cold War, the German Problem and Supra-nationalism

The most central historical condition that set the stage for all the efforts to integrate Western Europe militarily, institutionally and politically was of course the Cold War. The anti-Hitler coalition of the USA and the USSR fell apart soon after the War was over. The ideologies and the economic and strategic interests of the two superpowers proved to be too conflicting.^[2] The economic and political collapse in western Europe could have made it easy prey for Stalin.^[3] The situation in 1946-47 seemed so tense that Washington felt that "the development of a strong European economy was the most urgent priority" and the Marshall Plan, "a massive design for European recovery, was launched accordingly, in June 1947. ... fortunately for them (the Europeans, WK), the original American plan for a post-war world economy of free trade, free convertibility and free markets, dominated by the US proved unrealistic".^[4]^,[5]

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This economic and military reconfiguration of Western Europe as a part of the anti-Soviet alliance required some sort of a union of those countries.^[6] But it also had realistically to rest on German economic strength and on the re-armament of Germany within Nato. As a result "from Marshall aid onwards, the United States began to see the economic recovery of Germany and later its military contribution to Western defence as vital to the European, and by extension, world balance."^[7]

Such a policy had not only to reckon with the opposition of the Soviet Union but also of both Britain and France. The British still saw themselves as a world power, while the French saw themselves as the prime victims of German aggression and dreamed of a strong France and a weak and partitioned Germany. With them, as well as with most other Europeans, the idea of a rearmed and economically strong Germany naturally aroused feelings of fear and even horror. How could it be guaranteed that German economic and military prowess would not in the future become a menace again for France and the other European countries? Such fears were not calmed when in Germany hopes to reverse the division of the country and to regain territories lost to Poland, the Soviet Union and Czechoslovakia were repeatedly voiced.^[8]

The perceived strategic needs of the Cold War and the "German problem" became a major American dilemma. How could it be solved? Basically three options existed: a. imposition of a solution through American hegemonic power; b. alliances against Germany; c. reconciliation and co-operation among the Western European countries.

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The Limits of Hegemonic Power

The United States was of course the hegemonic power in Western Europe. However the exercise of this power involved serious limits. If it was not handled with great care, it could easily lead to the escalation of conflicts among the European countries and therefore weaken the alliance. Besides the long-term consequences of American involvement and its duration were difficult to predict.^[9] The political, military and economic dependency on the US and the imposition of American policy aims by sheer power were bound to breed resentment against the US hegemon.^[10] What about the possibility of a unified and neutral Germany – that eventually might remerge as a continental power?^[11] Or what about a German-Soviet alignment – which even the US policy makers considered to be a serious possibility up to the early 1950s.^[12]

Naturally, France's sense of vulnerability was shared by other countries in Europe, especially the smaller ones. As a result France wanted "guarantees to insure German demilitarization" and "extensive powers to control the production and distribution of Ruhr coal, coke, and steel in order to promote its economic self-interest and insure its security."^[13] Precisely these guarantees the US hegemon would not or could not offer without endangering its own objectives.^[14]

Clearly, European complexities and animosities could not be easily domesticated by hegemonic power, even under Cold War conditions.

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Alliances Against Germany: Counterproductive

European alliances against Germany were also tried. The first one was established by the Treaty of Dunkirk.^[15] It served as a model for the Brussels Treaty, which was to become in 1954 the Western European Union (WEU). The five signatories (France, GB, Benelux) "pledged themselves to mutual armed assistance against the Soviet Union and Germany."^[16] On the one hand US officials were delighted by Bevin's – the British foreign secretary – initiative to organise Western Europe into a viable block.^[17] Yet, on the other hand, it was quite clear that such a treaty could not be in the American strategic interest. As George Kennan put it in a letter to George Marshall: "The general adoption of a mutual assistance pact based squarely on defense against Germany is a poor way to prepare the ground for the eventual entry of the Germans into the concept."^[18] Both thought that it was far more important to design a security system that would co-opt German power against the Soviet Union, instead of one that ostracised Germany and made a rapprochement with the Soviet Union even more likely.

Jean Monnet: Supra-national Integration of Equal Partners

The third approach to the German problem, that of reconciliation and co-operation among the western European countries, had been proposed early on by Churchill in his famous speech at the University of Zürich. A peaceful Europe could not be based on feelings of hate and vengeance. Instead it required trust among the European peoples and a sort of United States of Europe. As a first step, a partnership between Germany and France ought to be formed.^[19] The reconciliation of these two countries was a necessary condition for a united and internally peaceful Western Europe. But how could both be achieved?

This approach was tried with varying success in various cases, among them the Organisation for European Economic Co-operation (OEEC), the Council of Europe, the European Coal and Steel Community (ECSC), the European Defence Community and its political twin the European Political Community, Euratom, the European Economic Community (EEC) and the

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European Community. The spiritus rector behind the creation of these institutions was Jean Monnet, 'Mr Europe', as he came to be called in the 1950s.^[20]

The first case was that of the OEEC, that is the Organisation for European Economic Co-operation.^[21] Its main task was to distribute the funds of the Marshall Plan. The Americans insisted that the West Europeans should agree among themselves on the amount of their collective request for aid and present a long-term plan to the US Congress. This raised for the first time the question of integration versus sovereignty. France assumed the initiative. Jean Monnet, who enjoyed ample confidence among the American leadership and officials^[22], heavily influenced the French proposal for the OEEC. It contained the "functionalist" institutions typical of Monnet's projects: a small and independent executive committee with real decision-making power composed of distinguished Europeans with no official governmental connections; an executive body headed by a Director General; and an assembly of government representatives deciding, in this case, under the unanimity rule. The Americans wanted to go further limiting national vetoes in the assembly.

Yet, most of the European countries, led by Britain, wanted neither planning nor limits on sovereignty nor middlemen meddling in their relations with the United States. The OEEC that emerged was predictably inter-governmental. And because of its inter-governmental character Monnet lost all interest in it: In his thinking it was not an institution at the service of European integration. "The co-operation among nations, as important as it may be, does not solve anything."^[23] National sovereignties remained unaffected, decisions which one did not like could be ignored, discipline was too lax, while the common interest was too imprecise.^[24] The failure to build a strong system led to unrestrained competition for as large a part of the share as possible.^[25] For him strong system was one which sought the fusion of the interests of the European peoples and not simply the racking up of some balance of these interests.^[26]

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A second, somewhat more successful case was the Schuman Plan. Jean Monnet was its architect. It led to the establishment of the European Coal and Steel Community (ECSC).

1. The strategic situation at the time was the following: The US had decided that German coal, steel and its industrial capacity were needed in the defences of Western Europe. The three Western occupational powers were united and the Federal Republic was formed. Germany was clearly on the way to become a sovereign nation again. French policy toward Germany was in a shambles and the anxieties were correspondingly large. Even though the US did not talk openly yet of German rearmament, the issue was on everybody's mind. Acheson had asked Schuman, the French foreign minister, to propose a new German policy for the three allies (for the Foreign Minister's meeting in London in May 1950).

Another big problem was the Saar. France had annexed it to shift the balance of power in coal and steel in its favour. To the German government the Saar was German. If the French succeeded, the case for reunification with East Germany would be undermined. Because of the Saar the first official visit of Schuman to Bonn in January 1950 "was a disaster". "The reciprocating engine of hostility could spring to life again any time."^[27]

2. Against this background it was necessary to develop a strategy based on sound concepts. Schuman had no idea what to propose to Acheson and Bevin in London, although he had pondered deeply and consulted many people."^[28] How to deal with the contradictory need, on the one hand, to integrate Germany as an equal partner within the logic of the Cold War and, on the other hand, to control the resurgent heavy industry of the Ruhr, the potential base for a new German military might? The Ruhr Authority, which had been created for the second purpose, was humiliating for Germany and therefore an unstable arrangement. Germany could be expected to get rid of it sooner or later. The Saar problem was even more delicate.

Monnet had pondered these problems for about a decade.^[29] The discrimination of Germany had to end.^[30] "Peace can only be based on equality." ^[31] Under this assumption he proposed to place the coal and steel industries of France and Germany under a supra-national autho

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rity. The rule of law of the common authority would reign. France and Germany would limit sovereignty in favour of that authority. ^[32] Other countries could join if they so desired. Coal and steel would stop being German and French coal and steel, there would be only European coal and steel, and both would be enmeshed like cogwheels ('engrenage' was the vogue word for this process, much favoured by Monnet). One could expect that the High Authority, as it was to be called, would not tolerate unilateral rearmament efforts of Germany. If the French and German coal and metallurgical industries were fully integrated, Germany would not be able to wage a war against France or other countries.^[33] A French take-over of the Saar's economic resources would stop making sense under such an arrangement. A harmonious settlement would become possible (as it did).

3. The setting out of sound concepts and principles in the Schuman Plan, which were greeted with enthusiasm by Adenauer^[34], was an important political first step.^[35] As a next step the institutional framework and the tasks to be assigned to it had to be laid down. The tasks had to be more or less 'technical', such as the promotion of a common market in coal and steel, the encouragement of competition, joint modernisation and export programs, the standardisation of freight rates and the harmonisation of working and living conditions etc.

In contrast the institutions were eminently political. The High Authority was given extensive powers including the right to levy taxes, to influence investment decisions, and also to impose minimum prices and production quotas in times of 'crisis'. For Monnet, who became its first president, the High Authority was endowed with real authority and he wanted to exercise it without reference to national governments. This was of course not easy, and relations with the inter-governmental Council of Ministers were complex and not always smooth. Relations with the Consultative Committee, which had only advisory capacity and was dominated by industry, were awkward too. In contrast, the High Authority and the Common Assembly became natural allies, as the latter viewed itself as a supra-national European institution. Finally there was the Court of Justice whose decisions were generally respected.^[36] Clearly the ECSC was an institution with strong supra-national traits.^[37]^,[38]

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4. The tasks and the institutional framework, that is 'function' and 'form' in functionalist theories, were only loosely related.^[39] That was no accident, since the integration of the two sectors was only partially an end in itself.^[40] Unsurprisingly, in strictly economic terms the ECSC could only be a partial success too, and it was a partial success only during the very early years.^[41] It soon outlived its economic purposes.^[42] The main purposes of the ECSC was eminently political. Economic integration was instrumentalised for political reasons – and not the other way around.

5. In terms of the underlying political purposes the ECSC was rather successful, especially during the initial years. Firstly, the political emphasis on European integration made compromises possible that would not otherwise have been reached. Secondly, the new system for

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ced the member states into constant negotiations with one another. Therefore, interestingly, economic union in fact increased rather than reduced the need for inter-governmental negotiation and agreement!^[43] Thirdly, the rule of law was firmly established. Rulings of the Court were never challenged or ignored. Fourthly, the problem of the Saar fell into place almost without effort because steel balances had stopped to be a yardstick of relations between France and Germany.

"(O)n balance, the new Community represented a major shift in relations between the member states towards a confederal norm. It gradually lowered tension all round, raised trust and in this sense laid the foundation of a new Europe."^[44] In this sense the Schuman Plan was more than an answer to an impasse of French foreign policy and more than a deal between France and Germany. On the other hand, even though it was the only truly supra-national institution, it was never as supra-national as it was intended to be or liked to present itself. With its own loss of effectiveness in the economic field, it was overshadowed more and more by the EEC, which had much less executive power^[45] and was much more subject to agreements between governments, particularly after de Gaulle's return to power. Finally, in 1967, the institutions of the ECSC were integrated with those of the EEC.

The Decline of Supra-nationalism

Another, less successful case of supra-national integration was the European Defence Community (EDC). The pattern of the creation of the ECSC was repeated. A perceived threat to French security - after the Korean war had broken out, the US considered it indispensable to rearm Germany - led to a French proposal of a supra-national European army along the lines of the Schuman Plan. Again Monnet worked in the background, although less than with the Schuman Plan. Again Britain stayed apart. The Pleven Plan, as it was called, proposed a European Army under the Atlantic umbrella run by a European Minister of Defence and a Council of Ministers, with a joint commander, common budget and common arms procurement. Yet, this Plan was clearly discriminatory against Germany: for Germany it was to be the army, for all the others an army; a German Defence Minister, a German General Staff and German full divisions were not foreseen. After difficult negotiations, in the course of which some of the more glaring discriminations were diluted, the EDC treaty was signed in May 1952.^[46]

Once it was signed, the European Political Community came on the agenda.^[47] A constitutional commission was formed in order to draft a constitution for a European Union. The blue

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print contained a directly elected European Parliament, a Senate elected by parliaments of member states, an Executive Council of five members with a President to be elected by the Senate, who was to be responsible to the two chambers; a Council of Ministers from member states to serve as a liaison between the European executive and member governments; and a European Court of Justice. The EPC was to be the roof for the ECSC and the EDC. The three would have formed the core^[48] of a European state with a federal constitution. It would have been the triumph of supra-national aspirations.

Yet these aspirations received a deadly blow when the French parliament in August 1954 did not ratify the EDC.^[49] De Gaulle's influence had made itself felt.^[50] The underlying reason was national sovereignty.^[51] For de Gaulle the proposal to integrate the French and German armed forces was "plain idiocy".^[52] The British government, characteristically, was all in favour of European integration and a European army, yet only as long as it did not include the British.^[53] US officials, although not publicly, had "found the Pleven Plan totally unacceptable", because it made German rearmament contingent on the creation of a new set of European institutions. This made NATO totally inoperable, precluded US participation in a European defence force and delayed German rearmament for the indefinite future.^[54]

Unsurprisingly, the US had stayed on their track of strengthening NATO. Once the EDC had failed, France found that it "had to swallow the very German national army inside NATO, which the EDC had been intended to avoid."^[55] Germany, as a full Atlantic ally, was placed under a NATO integrated command headed by an American and it was placed under similar restrictions as the ones foreseen in the Pleven Plan.^[56] This 'double containment'^[57] strategy was

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bound to mollify French (and American) anxieties. Even though, it "was a curious paradox, that to create a credible NATO to defend Europe against the Russians to the East, both Britain and the US had to commit their forces to the north German plain to reassure the French that a rearmed Germany would not turn its guns once more against its neighbour to the West."^[58]

Whatever the small print, after the failure of the EDC military defence and security were again under the firm control of the American hegemon. Bipolarity and the position of the hegemon became even more firmly established when the Warsaw Pact was created shortly after the accession of Germany to NATO.

This left the European integration in an uncomfortable situation, because this "first Europe" of an already declining ECSC and a failed EDC

"was in many ways a security Europe, not an economic one. ... The shared characteristic both of the ECSC and the European Army was that they were primarily addressed to German power. Each had economic aspects, but neither was economic in essence. ... the EDC proved that it was dangerous, even impossible, to pursue further European union by direct security or political means."^[59]

Monnet had come precisely to this conclusion: the EDC crisis had proved that the sources of power lay in the nations, channelled through the governments, not the Community in Luxembourg.^[60]

The demise of 'security Europe' not only meant that the US and NATO assumed full leadership in matters of military security, but also that supra-national concepts became less attractive. In fact, the watering down of the supra-national concepts of the Schuman Plan had already begun during the negotiation of the EDC treaty and been accentuated during the EPC talks.^[61] The departure of Jean Monnet from the presidency of the High Authority - he was the High Authority - in 1955 further undermined its supra-national character.^[62] Besides, the political climate in France, and, partly as a reaction, elsewhere changed. Monnet did not escape unscathed from the wreck of the EDC and became for the first time a publicly controversial figure. The idea of a Europe in some sense above the nations was no longer stated in the open. "The governments rejected anything or anyone that threatened, like Monnet, openly to compete with their monopoly."^[63] National sovereignty had won a decisive battle against supra-nationality.

The future masters of Europe were the governments of the member states. Nevertheless the supra-national institutions created under the leadership of Jean Monnet - the High Authority, the Consultative Committee, the Common Assembly and the Court of Justice - did not disap

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pear. They became under new names the core institutions of the European Economic Community (EEC) and its successors, that is the European Community and the European Union.

NATO, the Anglo-Saxon ‘special relationship’ and the German-French Axis

With the demise of 'security Europe' and the reaffirmation of NATO American leadership in matters of military security was clearly established. NATO became a necessary condition for stable and peaceful relations among the European nations. Yet it could not be a sufficient one because the demise of supra-nationality left the doors open again for rivalry and conflict among the European nation-states; doors which could not be closed easily by the American hegemon. Instead, unwillingly or not, the United States contributed to the conflicts which came to afflict the alliance and the relations between France and Great Britain in particular.

In the first place the United States continued to cultivate a special relationship with Great Britain in nuclear and strategic matters.^[64] This intensified de Gaulle's suspicion of the Anglo-Saxons. As a result, "(t)he closer Britain cleaved to America, the more de Gaulle leaned to Adenauer."^[65]

Second, America's behaviour towards its NATO partner France was at times humiliating and hard to bear. General Norstad refused to inform President de Gaulle, for instance, about the deployment of nuclear weapons in France! This difficult relationship culminated in France's withdrawal from the North Atlantic Alliance and the request for all troops to leave French soil, in 1966.^[66]

Third, the US humiliated both France and Great Britain at Suez, a plot they had prepared secretly with Israel, yet without American knowledge. In the aftermath of this crisis Western European leaders asked themselves "whether America would stick by them through thick and thin - particularly in the days before an American election" one of which was due then.^[67]

Fourth, Kennan, Dulles and others had suggested, even in public, to unify, demilitarise and neutralise Germany. This American fashion for theories of German neutralisation was a stunning shock, not only for Adenauer, and, unsurprisingly, inclined him towards France.^[68]

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In other words: In the back of the NATO alliance an Anglo-Saxon special relationship and a German-French axis were nurtured. Franco-German unity was to become the core of further European integration and of the domestication of the 'German problem', which, in the perception especially of France, had become more acute.^[69] Britain was consistently excluded^[70], even though it had always had affinities with the idea of liberalising trade. Finally, the evolving strategic position of Europe also contained the seeds of European opposition against the American hegemon, i.e. of the notion of a European world power, which was to get stronger with "a growing gap between the overwhelming military, and therefore political domination of the alliance by Washington, and the USA's gradually weakening economic predominance.^[71]

The Second Europe: The Common Market

This was the background against which the second 'economic' Europe evolved. Its central pieces were the European Economic Community (EEC) and Euratom. Again Monnet worked busily, yet even more hidden, behind the scenes as with the earlier projects of European integration. Unlike other leaders, Adenauer for example felt embittered and depressed, Monnet could not be disheartened by the failure of EDC/EPC.^[72]

Monnet, of course, would not abandon his overriding aim of supra-national institution building. His intentions leaned more and more towards a new Community in a new sector, civil nuclear power. Such a proposal had several advantages: First, nuclear power was believed to be the basis of a new industrial revolution, yet its development required amounts of investment beyond the means even of the larger western European nations. Second, just like the integration of coal and steel had provided the material for the great symbolic burial of old feuds in Europe, nuclear power could provide the basis for Europe's great symbolic entry into the modern world. Third, the French inferiority complex which had played havoc with the EDC ought to be irrelevant, because France's nuclear effort was larger than those of all its Community partners put together. Fourth, joint regulation could also ensure that Germany's nuclear development would remain strictly civilian.^[73] Finally, no limits would be put by the new organisation

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on the efforts of French to develop nuclear weapons. Hence, it seemed that the new Community would be based on a set of sound economic, symbolic, tactical and strategic reasons. In terms of the institutions to be formed the approach was similar to the Schuman Plan.

Eventually Spaak proposed Monnet's programme for the new Community for civil nuclear power (and for an extension of the ECSC to all of energy and transport, including airlines). To Monnet's great surprise the German government was not interested in the new Community, while Erhard, already credited with the German Wirtschaftswunder, was openly opposed to it. A meeting with German officials established the basic fact of the coming negotiations, namely that Germany would not swallow Euratom without a general common market.

Monnet in fact had pondered about the creation of a common market and came to the conclusion that time was not ripe for it.^[74] He had a substantial reason that is still put forward nowadays: In his opinion it was not possible to dissociate a common market from federal social, monetary and conjuncture policies. If a common market was formed without this common framework, it "would be so near free trade, lacking institutions as to undermine his political purposes." (emphasis added).

In fact, right after the failure of the EDC pressure for a Free Trade Area in the OEEC was put forward by Britain, the Benelux countries and Scandinavia. Erhard too favoured such a solution. Monnet and Spaak however ignored these pressures. Instead, they agreed that the priority was to integrate Germany and that only supra-national Communities could achieve this. A Free Trade Area with Britain clearly would have been an inter-governmental affair (or even less), while France would have been a hyper-reluctant member of such a scheme. Hence it would have weakened integration.^[75] Adenauer largely sided with Monnet and Spaak.

Because of the prevailing contradictory attitudes - Adenauer against Erhard - Bonn offered an "amazing spectacle" in 1955-56. But in France the situation was even more complicated: to champion a common market in public would have been political suicide; a Free Trade Area was unthinkable; supra-nationality was too controversial to be discussed; and the Atomic Energy Commissariat feared that Euratom could block France's road to nuclear weapons. On top of that, Monnet had become practically a persona non grata in Paris. Only the Benelux countries presented a more coherent picture. They tried to force the issue by presenting a memorandum in which they combined the 'sectoral' with the 'general', i.e. the common market approach.

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Expectations were extremely low when the foreign ministers' conference began in Messina in June 1955. Monnet did not attend because of a French veto^[76], neither did Adenauer, for fear of failure. Nevertheless, after cumbersome negotiations^[77] a compromise was struck that was to lead directly to the Rome treaties of 1957: Germany agreed to something less than free trade, i.e. a common market with an institutional core shaped along the lines of the ECSC; Belgium swallowed certain supra-national traits and sacrificed its preferences for British-style inter-governmentalism; the nuclear-power community gave France a chance to stay in the process, while it was stripped of most aspects that could have interfered with French sovereignty in nuclear matters. Monnet, the personification of the supra-national principle was partially eclipsed. The institutional core of his approach was confirmed at Messina, although it was to be much more inter-governmental in character.

At Messina the Community of the six was reasserted. Other groupings might have seemed, in nuclear power especially, to make more sense. Yet the main purpose was not to create 'functionalist' institutions which could solve in a pragmatic and efficient manner specific problems, but to navigate the endangered European ship through hazardous straights and into more promising waters. In fact, Messina became a classic case of "European packaging": Propositions, which are not viable, because there are contradicting national positions attached to them, can become viable once two or more propositions are negotiated simultaneously.^[78] A larger and more diverse negotiable mass makes it easier to compromise in a process of give and take. Such packages from now on became a common feature of the processes of European integration. Yet packaging, even though it helped to further integration, also reaffirmed the role of the nation-state as the interests that entered these packages were always "national" (whatever that meant in reality) interests.

Lessons to be learnt?

In order not to step into the trap of deriving lessons from superficial generalisation, the process of integration of Western Europe until the foundation of the EEC has been looked at in detail. Looking back, what were the most salient features of the period studied?

1. European integration began under very specific and rather complex geo-strategical, political and economic conditions after World War II. The Cold War created a favourable setting for integration. It may have been a necessary condition, but it was by no means a sufficient one.

2. The "German problem" was especially delicate: The economic and military potential of Germany had to be developed again, yet this potential also had to be restrained.

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3. Integration was favoured by the US hegemon. Yet the hegemon was not always clear and coherent, and could do rather little when the Europeans either did not agree with it or did not agree among themselves.

4. After two world wars, everybody dreamt of a peaceful and prosperous Europe. There was probably only one person – Jean Monnet – who had a clear vision (yet no grand design) of the future of Europe and, more importantly, a recipe of how to go about it. Furthermore, he was fortunate to have gained the trust of the political establishment in the US, Britain and France during the war years.

5. A close look at the events reveals that there was much muddling-through. Outcomes depended as much on contingencies as on open or hidden political games. There were advances and setbacks. The process itself was path dependent. Outcomes therefore could not be predicted. In the end it was often just luck, when in spite of all difficulties some compromise was struck that took integration one step further ahead (at Messina for instance).

6. At the time of the signing of the Treaties of Rome (1957) the signatory countries (not to speak of Western Europe as a whole) still had a long way to go to become a peace community – it was not even clear that it could become one.

It is obvious then that very specific historical conditions and contingencies reigned at that time. No grand design and no grand, rational strategy towards integration existed, nor would it probably have had a chance to succeed. Jean Monnet, certainly a gift from heaven for European integration, did not have a grand design but a method that well fit the path dependency of integration – and he had the right connections. Without him European integration would not be where it is today, but even with him it could have taken a different route. Things cannot be otherwise – unless one believes that history is some sort of a teleological construction.

Hence, what could be learnt then from the early years of integration in Europe? Historical conditions across time and place do not tend to appear twice. Hence there is little to be learned from historic experience as such. What could be of interest however is, apart from his and other peoples’ perseverance, Monnet’s method of integration. Using his own words, it can be summarised as follows:

All countries must be equal partners: "Peace can only be based on equality."

1. "The fundamental principle is the delegation of sovereignty in a limited, but decisive area. ... The co-operation among nations, as important as it may be, does not solve anything. What ought to be sought is a fusion of the interests ... and not simply the maintenance of the balance of these interests."^[79]

"This proposition has an essential political message: to drive a wedge into the bastions of national sovereignty that is small enough to be acceptable and deep enough to move the States towards the necessary unity for peace."^[80]

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2. Creation of institutions: A small and independent executive committee with real decision-making power composed of distinguished personalities with no official governmental connections; an executive body headed by a Director General; and an assembly of government representatives.

3. Such an institutional set, a. creates transparency among member countries, b. is based on the principle of 'everybody controls everybody', c. forces the member states into constant negotiations with one another, and d. allows for compromises, which could otherwise not be reached. Such institutions fulfil the criteria of a peace community.^[81]

Under Monnet’s leadership there was a strong emphasis on supra-nationalism. It had to be scaled down. The member states regained some sovereignty. The balance between supra-nationalism and inter-governmentalism has been shifting since then in one or the other direction.

Nowadays we have for the whole of the EU only one set of Monnet-type institutions (European Commission, Council of Ministers, European Parliament, European Court of Justice, ...) and not several sets as he had had in mind (ECSC, EDC, Euratom). Over the years the need for negotiation and agreement became ever larger. The Council of Ministers, the most powerful organ of the EU, has become a very complex "consensus seeking machine"^[82]. The European Commission and the European Parliament are closely integrated into this machine. Initiatives, consultations and decisions involve frequent and time-consuming to-ing and fro-ing among the Commission, the Parliament and its Committees, the Council and its working groups, the Coreper (Permanent Representatives Committee), the conciliation committees of the Parliament and the Council. Outside the EU there are a number of other institutions too, where the respective member governments are in permanent contact and dialogue (NATO, OSCE, OECD, ...), and there are many bilateral fora as well. Thus, every week hundreds of institutionalised dialogues are taking place in Brussels and elsewhere in Europe.

The secret of the success, in terms of the formation of a peace community, of this sort of institutionalised, permanent, multi-level dialogue is that civilised forms of social intercourse have become deeply ingrained. Over many years government officials have been spending a lot of time in meetings, committees, negotiations, luncheons etc. with officials from other European countries and of European institutions. This intensive social intercourse together with the institutional and political need to permanently negotiate has given rise to a new culture of conflict management in Europe, spoken of at the beginning. Here is the essence of our peace community.

The ever increasing need for negotiations has been due to several factors:

1. The Treaties of the EC and the EU are vague and often lend themselves to extensive interpretations.

2. Even though the EU possesses strong and exclusive competencies only in a few policy

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areas, almost any political and governmental issue has a European dimension and therefore needs to be discussed at the European level.

3. ‘National interests’ are usually at variance.

4. Negotiations lead to compromises. Compromises always leave some degree of dissatisfaction and therefore bear the seed of new negotiations. In case of packaging, dissatisfaction is particularly likely to remain high: several issues, which do not lend themselves to a solution separately, are linked and an overall compromise is found in a complex process of give and take.

5. Stepwise solutions and path dependency easily lead to incoherences with respect to solutions found in the past and in other policy fields.

6. Circumstances change and make past compromises inadequate or obsolete.

Naturally, one can have doubts as to the efficiency and the democratic legitimacy of such all-pervading institutionalised dialogues. In a sense they are the perfect means to produce second-best and third-best solutions. On the other hand this kind of give and take occurs at the national and sub-national level too. Our political systems have long been transformed into systems where most outcomes are the result of complex negotiations which involve, just like in Brussels, not only government institutions, but all sorts of organised interests as well.^[83] That is of course no excuse, because interest-group politics and dealings of governments’ elites behind closed doors^[84]^,^[85] do not accord well with democratic principles. Here, not only the EU, but also its member states suffer from a democratic deficit.

There could well be a dilemma here. Immanuel Kant argued long ago that democracies do not fight wars against each other.^[86] The reason he gave is that the citizenry abhors the costs and miseries of war.^[87] The ‘functionalist’ integration of government elites makes war structurally impossible. Therefore it is an even better way to secure peace. Yet, the democratic controls of these government elites are weak. If they were stronger, the mass media’s peculiar perception of ‘national interests’, for example, would be propelled to the negotiating tables. Tendencies of a re-nationalisation of European politics (which are becoming stronger in any case) would be reinforced and the integrationist force of institutionalised dialogues would be weakened. A proper relationship between Monnet’s engrenage – the enmeshing of govern

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ments in Community institutions and the transfer of national sovereignty to them – and democracy can not be established easily.

This difficulty is illustrated by Ralf Dahrendorf's lack of faith in Monnet: Political decisions ought not to be taken through functionalist tricks, but in principle politically, that is by elected governments and parliaments.^[88] He would start, as he has repeatedly expressed, with a European Constitution, that clearly delineates the competencies of a European government and of national governments and defines citizens’ rights etc. It would be discussed extensively by the European publics and parliaments and thus would gain legitimacy and acceptance. It is clear, unfortunately, that this route would not have led anywhere in the early years of European integration. This, of course, does not mean that it could not be implemented elsewhere. One wonders however, under which historical circumstances the desire for such a grand scheme of integration could be strong enough in the potential member countries of a union to initiate such a dialogue and to take it to a happy conclusion. Furthermore, one wonders to what extent the dangers of an institutionalised and hermetic dialogue could really be avoided in such an undertaking.

2. Benefits of Integration

Economic growth and social justice are the two most important positive sources of legitimacy^[89] – in contrast to the negative sources of nationalism and of external or internal enemies. There is no doubt that during the "Golden Age" (1950-73) high rates of economic growth, reductions in income inequalities and the expansion of social security systems all were important sources of legitimacy for the governments of the EEC countries. During the Golden Age it was easy to find satisfaction in the idea that those economic benefits had something to do with European integration. Yet, when growth slowed, and unemployment and inflation accelerated after 1973 this sort of satisfaction, unfortunately, has become much more difficult to achieve. The European publics became less optimistic and more critical. Thus the costs to consumers and taxpayers of the Common Agricultural Policy has become a recurring topic in public debate. Equally, the deregulative measures carried out in the course of Delors’ Internal-Market-1992 project were widely perceived as undercutting social and environmental standards and even as a contributive factor to unemployment. Therefore, the hitherto perceived basis of legitimacy of the EC – economic and social benefits for all – has been suffering.^[90]

The political record of the EEC/EC in terms of creating a peace community is amazing. Its economic record is therefore open to some doubt at least. What is the relationship between political and economic integration? Does political integration increase economic welfare in the

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integrating countries? Or to be more precise: What economic or other benefits can one expect from regional integration? Can such benefits be observed in the case of European integration?

Political Objectives and Market Efficiency

The economic benefits of integration have, especially after the creation of the EEC, whose centrepiece is the Common Market, always played an important role in public discourse and in the official presentations of the EEC/EC and their member governments.

It is worthwhile to remember however that, in fact, the real purpose of the ECSC, Euratom and the integration of the Common Market was not the improvement of economic conditions, but always political integration. After the failure of EDC and EPC it became clear that direct political integration was not possible. As a consequence, the development of common economic institutions and economic integration were deemed to be easier as intermediate steps toward political integration.^[91]

Therefore, even if the EEC economic policies did not produce the expected economic benefits, they could still make sense, if they led in the end to higher levels of integration and co-operation among the member countries. In other words, even if higher levels of integration and co-operation led to losses in economic performance and incomes, these losses could simply be the price that had to be paid for the creation of a more peaceful Europe. To put it more bluntly: Why should one expect at all that economic-political integration leads to peace and economic prosperity? Should we not undertake measures intended to improve peaceful co-operation because they are unlikely to produce economic benefits?

· The formation of the ECSC is a case in point. Soon after it was established its steel and coal industries were turned into protective cartels.^[92] They received ever more subsidies – to the detriment of consumers and taxpayers.^[93] Nevertheless, without the ECSC the relations between France and Germany, and the EU as such, would not be what they are today.

· The same can be said of the infamous Common Agricultural Policy (CAP): Its blunders in terms of the principles of economic liberalism are well known. Yet, in terms of political integration, it was a central part of the development of the EEC and a cornerstone of European integration. In spite of its hideous costs (it still absorbs half of the EC budget and puts a heavy burden on taxpayers and consumers^[94]), it continues to be an integrationist success: A

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European cartel which has served the interests of its members more or less well (especially the larger farmers and agro-industry), while generating a permanent need for negotiations and reforms – precisely because of its structural defects and its enormous costs.

· During the "Golden Age" (1950-73) it was popular to associate the then prevailing high growth rates and the rising standard of living with European integration. This, of course, gave legitimacy to European integration. In fact, the economic performance of the EEC, even though it was quite remarkable in absolute terms, was not superior to that of other OECD countries. During the "crisis decades" (Hobsbawm) that followed, the relative performance of the Community declined notably.

It is safe to conclude that European integration involved costs to taxpayers and consumers and that it did not improve the economic performance of the member countries. To repeat, that is no argument against integration, because the purposes of integration were political. In the case of the ECSC and CAP, economic efficiency and political integration could not go hand in hand. Equally, the below-average economic performance of the EU can probably be attributed to the logic of political integration and the size of the EC/EU.

By contrast, economic integration that aims to improve economic efficiency can have negative effects on political integration. CAP is a fully regulated policy area, which stabilises agricultural markets, gives preference to EC producers (truly a "fortress Europe") and requires EU-wide solidarity. By comparison the Internal Market 1992 project is a "gigantic operation of deregulation", which tends to eliminate national regulatory power but does not establish a comparable regulatory power at the EU-level.^[95] This has led to, in the opinion of many observers and interest groups, a race to the bottom for social and environmental standards, consumer protection etc. Such claims may be exaggerated. But one wonders all the same how deregulation should be able to make a contribution to political integration. The main advantage of the market mechanism is precisely the independence and autonomy it gives to economic actors. The market does not create political or other kinds of communities.

Hence, to perceive European integration only in terms of market efficiency and the benefits derived therefrom, is short-sighted and even wrong. Pure and simple economic integration can undermine political integration and its legitimacy.

Economic Benefits: Economies of Scale?

At a council meeting on 31 October 1949 of the Organisation for European Economic Development (OEEC), the body which implemented the Marshall Plan, Paul Hoffman, the OEEC administrator, delivered a plan for "the integration of the European economy", which circumscribed very clearly the purposes of the Common Market. He said:

"The substance of such integration would be the formation of a single large market within which quantitative restrictions on the movement of goods, monetary barriers to the flow of payments,

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and eventually all tariffs are permanently swept away. The fact that we have in the US a single market of 150 million consumers has been indispensable to the strength and efficiency of our economy. The creation of a permanent, freely trading area comprising 270 million consumers in Western Europe, would have a multitude of helpful consequences. It would accelerate the development of large-scale, low-cost production industries. It would make the effective use of all resources easier, the stifling of healthy competition more difficult."^[96]

In view of American mass production technologies and of the trade conditions at that time, the vision of Paul Hoffman made a lot of sense. After all, as Adam Smith had recognised, the division of labour is limited by the size of the market. And after the war the national markets were very small and trade protection was high. Therefore the benefits of the division of labour and of economies of scale could not be fully taken advantage of, and that hampered improvements in productivity and incomes. The formation of a customs’ union – elimination of all internal obstacles to trade, yet maintenance of common tariffs and other trade regulations – could make much sense under these conditions. In fact, trade among the EEC-countries during that period increased somewhat faster than production.^[97]

Nevertheless, the Common Market for many years was a far cry from being truly liberalised. Roughly 30 years (!) after the Treaties of Rome Jacques Delors launched the program "Europe 1992" which aimed at the "completion of the internal market". It did not have too much effect on intra-EC trade, yet it helped to create, at least transitorily, expectations of optimism and growth (after a prolonged period of Euro-scepticism). Investment, especially intra-EU foreign direct investment, increased - and made national oligopolies somewhat more European.^[98] Foreign direct investment from outside the EU increased too, mainly driven by the (largely unjustified) fear of investors not to be admitted later into the "fortress Europe".

Yet, one wonders if the vision of Paul Hoffman has still much relevance nowadays – because world trade is largely liberalised: In a world of GATT and WTO where free trade prevails, the size of the market cannot be really improved by regional integration – the biggest market simply is the world market. With it no regional formation could possibly compete in terms of the potentials of the division of labour and of large-scale production.

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This is corroborated by the fact that some of the smallest countries are among the ten most prosperous ones: Singapore, the US, Switzerland, Hongkong, Norway, Japan, Denmark, Belgium, Austria and Canada. Seven of the first ten have less than 10 million inhabitants. They all are internationally open, market economies: The size of a country or of a union of countries does not seem to be a necessary condition for prosperity.^[99] Therefore we conclude that arguments about economies of scale and customs’ unions have ceased to be relevant (if they ever were).

Better Chances for Economic Development?

After the war Europe did not develop in an environment of a free-market economy. As has been mentioned in the first section (see especially footnote 4), initially the US wanted, in order to help her own industry, to create a free-trade regime in Europe (but not in the US!). Only under the pressures of the Cold War did the hegemon changed its plans. Instead, a systematic effort was made to rebuilt and modernise the European economies – and to make them, against the promises of socialism in Eastern Europe, socially a success too. All that involved huge efforts by the European governments to create the necessary infrastructural and institutional conditions for a modern economy. Naturally, the European economies were allowed to protect themselves against superior competitors from America in the areas where they deemed that necessary and desirable. Otherwise, how could they develop?

Hence, one can say that in Western Europe comprehensive, national development strategies were developed, which allowed for the protection of industries against superior North American competitors, while the EEC provided a larger market in a world that was still segmented by high tariff barriers.

In this there could well be a lesson for other countries and regions. In fact, such strategies have been tried, particularly in Latin America (Andean Pact, Central American Economic Union, Mercosur, NAFTA). Unfortunately these efforts were not as successful as in the European case. Possibly there was too much emphasis on economic integration and free trade, and too little on political integration and on national and regional development strategies and institution building. However, easy generalisations and critique should be avoided. They should be based on in-depth analyses of these experiences.

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Comparative Economic Performance of the EEC/EC

Let us turn now to the economic "fundamentals" and see whether the historical evidence supports claims of a superior economic performance of the EEC/EC.

Take first the "Golden Age" of post-war economic growth (1950-73). During that period the performance of the EEC in terms of growth, inflation, investment and employment (Tables 1-6; see below) was not superior to the other OECD countries – to the contrary it was usually inferior. As Maddison and others have shown, the Golden Age corresponded to a secular trend, which was largely shaped by institutions, technology, human capital formation and by the adoption of American Fordist, i.e. mass-production methods. The OECD countries were involved in a process of catching up with the more advanced United States and Canada, where, correspondingly, growth and capital formation advanced at a somewhat slower pace.

The tables 1-6 clearly indicate that the performance of the EEC countries during the Golden Age was not as brilliant as that of the other catching-up countries of the OECD.^[100]

· During the "crisis decades" (Hobsbawm) that followed the Golden Age, the relative performance of the EEC/EC did not improve at all. Instead it declined notably: Its GDP growth was consistently lower and its rate of inflation higher than in most reference countries and country groupings (Tables 1-2).

· The investment and employment creation gap became notorious, while unemployment rose to record levels (Tables 3-4). Over the whole period from 1960 to 1994 employment growth was scandalously low. Over two decades jobs were created almost exclusively in the public sector, very few in the private economy.[101] In recent years job growth is somewhat higher, but still far below that in reference countries, while unemployment reached new record levels. The situation is particularly severe for the young and for persons above 45 as well as for certain regions in the EU-member countries. [102]

· Finally, EC governments accumulated public debt at a much faster pace than most other OECD countries. As a result the interest payments on public debt have become an ever larger burden (Tables 5-6).

Hence, judging by the empirical evidence, it is probably safe to conclude that the integration and the economic policies of the EEC/EC did not generate additional economic benefits of any

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significance that went beyond the ones of the Golden-Age period. It is therefore no accident that the EEC is entirely ignored in Maddison's discussion of the causes of growth (1991) as well as in other research on the Golden Age.^[103]

On the other hand, in the struggle against the problems of the Crisis Decades that followed, the EEC/EC hardly proved more resourceful than the other non-integrated OECD countries. To the contrary, it is difficult not to conclude that the EEC/EC’s performance was deplorable.

It may be disheartening to hear that the performance of the EEC/EU has been relatively poor. In absolute terms, especially during the Golden Age, it was of course quite good and there was a considerable improvement in living standards in almost all parts of the community. That the performance was relatively poor is no argument against integration. To repeat: If the purpose of integration is political, it can be perfectly acceptable that a price in terms of (relative) economic performance and benefits is being paid.

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Tables on the Economic Performance of the EEC/EC

(12 member countries; 1960-1994)

Please note: Shaded areas indicate better performance than EEC/EC

1. Growth of Real GDP

	1960-73	1974-79	1980-87	1987-94^a	1995-98^a
EEC/EC	4,7	2,5	1,7	2,2	2,4
United States	4,0	2,4	2,6	2,4	3,4
Canada	4,8	2,7	2,6	1,9	2,7
Japan	9,6	3,6	3,8	3,1	1,3
Australia	5,2	2,7	2,9	2,7	4,2
Switzerland	4,4	-0,4	2,1	1,3	1,1
Austria	5,0	2,9	1,6	2,8	2,4
Finland	5,0	2,3	3,3	0,4	4,6
Norway	4,3	4,9	3,3	2,2	3,8
Sweden	4,1	1,8	1,8	0,5	2,5
Iceland	5,2	5,6	3,8	0,5	4,3
Total smaller OECD^b	5,2	2,4	2,2	2,4	3,5
Total OECD	4,8	2,7	2,5	2,4	2,7

a EU-15

b Number of countries varies

2. Inflation (GDP)

(yearly averages in per cent)

	1960-73	1974-79	1980-87	1987-94^a	1995-98^a
EEC/EC	4,8	9,7	7,2	4,4	2,3
United States	3,6	8,0	5,0	3,4	1,8
Canada	3,8	9,2	5,9	2,6	1,3
Japan	6,0	8,1	1,7	1,3	-0,4
Australia	4,2	8,9	8,3	3,8	1,6
Switzerland	5,4	3,7	4,0	3,4	0,6
Austria	4,6	6,0	4,5	3,3	1,7
Finland	6,8	12,6	7,8	3,7	1,8
Norway	5,5	8,2	7,7	2,8	2,4
Sweden	4,8	10,6	8,3	5,4	1,7
Iceland	14,7	38,7	41,4	10,7	3,3
Total smaller OECD^c	5,0	9,4	8,4	14,9^b	12,8
Total OECD	4,3	8,6	5,4	5,4	4,0

a EU-15

b Includes high inflation countries Mexico (average 29.8%) and Turkey (average 70.8%)

c Number of countries varies

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3. Employment growth

(yearly averages)

	1960-73	1974-79	1980-87	1987-94^a	1995-98^a
EEC/EC	0,25	0,1	0,1	0,17	0,7
United States	2,0	2,5	1,6	1,3	1,7
Canada	2,8	2,9	1,8	1,0	1,9
Japan	1,3	0,7	1,0	1,3	0,25
Australia	2,7	0,8	1,9	1,5	2,0
Switzerland	1,4	-0,9	0,7	1,0	0,4
Austria	-0,06	0,5	-0,1	1,2	-0,03
Finland	0,25	0,7	0,9	-2,5	2,0
Norway	0,6^b	2,1	1,4	-0,6	2,5
Sweden	0,8	-1,0	-0,6	-1,4	0,33
Iceland	2,2	2,2	2,9	-0,6	2,2
Total smaller OECD^c	0,9	0,6	0,7	1,2	1,8
Total OECD	1,1	1,1	0,9	0,9	1,2

a EU-15

b 1960-68

c Number of countries varies

4. Standardized Unemployment Rates

(yearly averages)

	1960-73	1974-79	1980-87	1987-94^a	1995-98^a
EEC/EC	2,5	4,8	9,7	9,7	10,5
United States	4,4	6,7	7,6	6,1	5,1
Canada	4,5	7,2	9,7	9,5	9,2
Japan	1,2	1,9	2,5	2,4	3,5
Australia	1,8	5,0	7,7	8,7	8,4
Switzerland^c	..	..	0,6	2,1	3,9^e
Austria^c	1,8	1,6	3,5	3,7	4,4
Finland	2,1	4,4	5,1	9,7	13,5
Norway	1,7	1,8	2,4	5,2	4,3
Sweden	1,8	1,9	2,7	4,8	9,2
Total smaller OECD^cd	4,1	6,3	11,0	8,7	8,4
Total OECD	2,9	4,9	7,5	7,0	7,1

a Germany, France, Italy, U.K., Belgium, Ireland, Netherlands, Portugal, Spain. Value for 1994 includes Finland and Sweden

b EU-15

c "Commonly used definitions" of unemployment in some cases;

d number of countries varies

e 1995-97

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5. Net Lending of Government

(surplus (+) or deficit (-) as a percentage of GDP; yearly averages)

	1960-73	1974-79	1980-87	1988-94^a	1995-98^a
EEC/EC	-0,35	-3,3	-4,5	-4,5	-3,4
United States	-0,6	-1,4	-3,4	-2,7	-0,2
Canada	-0,2	-1,7	-5,1	-5,6	-1,1
Japan	+1,0	-3,4	-2,3	+1,1	-4,3
Australia	+1,4	-2,0	-2,0	-1,7	-1,4
Austria	+0,7	-2,1	-3,0	-3,7	-3,1
Finland	+3,0	+2,8	-0,1	-0,6	-1,9
Norway	+4,1	+2,1	+5,7	+0,6	+5,5
Sweden	+3,7	+1,3	-2,9	-2,6	-2,3
Iceland	+1,9	-0,5	0,0	-3,3	-1,1
Total smaller OECD^b	1,5	-0,9	-2,9	-4,0	-1,7
Total OECD^c	-0,2	-2,3	-3,5	-2,9	-2,0

a EC-15, excluding Luxemburg, including Norway

b Number of countries varies

c 19 OECD countries

6. General Government Net Debt Interest Payments

(as a percentage of nominal GDP)

	1979	1985	1990	1995	1998
EEC/EC^a	1,9	3,8	4,0	5,1	4,1
United States	1,1	2,1	2,2	2,2	1,7
Canada	1,7	4,0	5,3	5,6	5,0
Japan	0,8	1,9	0,8	0,6	1,2
Australia	0,8	3,2	2,7	3,5	1,9
Austria	1,8	2,8	3,2	3,6	3,7
Finland	-1,0	-0,9	-1,7	0,9	2,0
Norway	0,1	-1,2	-2,1	-0,6	-0,7
Sweden	-1,1	3,0	0,1	2,7	2,8
Total smaller OECD	1,2	3,0	3,3	4,0	3,0
Total OECD^b	1,4	2,7	2,7	3,1	2,6

A negative sign means higher interest receipts than payments

a EC-15, excluding Luxemburg, including Norway

b 22 countries

Sources of Tables 1-6: OECD, Economic Outlook (various issues), OECD 1989, 1995

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The EU as a Policy Maker

The EC and EU-Treaties name many policy areas, yet in only very few of them does the EU have exclusive or strong competencies. This does not really matter much, if one looks at it from the point of view of facilitating institutionalised dialogues across the EU and beyond it. In each of the many policy areas the member countries are involved in continuous dialogue. As the treaties lend themselves to extensive interpretations, practically any issue in the fields of government and politics can be taken up at the level of the EU.

In a sense the ineffectiveness of these dialogues and their curious dynamics – you solve one problem and you find seven new ones – are a guarantee of their permanence. Effective negotiations with good results in little time, even though they are of course desirable as such, therefore are not necessarily a sign of progress of integration. Negotiations are cumbersome – and that is precisely the point.

In spite of that queer logic, in some areas the EC has proved to be a relatively good policy maker. The aim to create a monetary union helped a great deal to bring down inflation rates and new government debt in most member countries (unfortunately at the price of lower growth rates and higher unemployment). For the member governments it was convenient to have the EU, because they could put the blame for their unpopular policies onto the EU – or the Bundesbank.^[104]

In recent years, the European Commission has shown its teeth in competition policy and has been able to make points against member governments, which often want to protect their turf. It has taken some spectacular decisions by imposing record fines on several firms and by blocking or conditioning some mergers. Equally, in some cases it forcefully intervened against subsidies by member governments for private enterprises. These accomplishments have been made possible by European integration. They also led to some functional spill-over, as most member countries did not even have legislation on competition in the past.

The strengthening and the centralisation of competition policy at the EC level, in spite of many limitations, produced results which would not have been achieved by most member countries by themselves. It made it more difficult for national governments and for the EC itself to pursue active industrial policies. "Even if the economic fashion were to change in the foreseeable future, an interventionist policy would be extremely difficult to pursue for political and institutional reasons."^[105]

Therefore, EC competition policy, as is its task, has pushed us toward more market efficiency and more effective decision taking: the rule of law tends to prevail. That has strengthened the EU as a formal institution, i.e. its character as a state. However, there are some downsides

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too: more, and particularly stronger rules, leave less room for compromising and negotiating, and therefore reduce the need for institutionalised dialogue. On the other hand, the application of stronger rules can lead to fierce opposition by the affected interest groups and member countries, and therefore arouse anti-EU feelings and weaken the cohesion of the Union. The basic problem, here as elsewhere, is that it is unclear to what extent the EU has the legitimacy to assume state functions.

In regional development policy, which after agriculture receives the second highest share in the EU-budget^[106], the EU has played an important role, and has made efforts to orient its policies along objective criteria and follow less the desires of governments and politicians. There are enormous differences in income among countries and regions of the EU. The difference in per capita income between Hamburg and the Portuguese Norte, the poorest region of the EU, is in the order of 10 to 1. Unemployment in the poorer regions is often well above the EU average. The basic purpose of the regional funds is to support the development of backward regions and the transformation of regions in industrial decline (among them, for example, east Germany). Other purposes are to fight long-term and youth unemployment and to develop rural areas. Even though all governments try to get as much money back as possible, there still is a considerable transfer of resources from the richer to the poorer members of the EU.

Without the EU, transfers of such magnitude would obviously not exist.^[107] Nevertheless, when compared with the magnitude of interregional transfers within nations^[108], these transfers are quite small and amount only to a small fraction of the GDP of the EU-15.^[109] In fact, the scarcity of these funds, for many observers, is a matter of concern with respect to the stability of the monetary union. Cumulative differences in economic growth and asymmetric regional shocks could turn out to be the Achilles’ heel of monetary union and cause problems for the cohesion of the EU.^[110]

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To these limitations one might add that the results of EU regional policy generally have not been very satisfactory.^[111] Nevertheless, it reflects a veritable effort of a common EU-economic policy. Unfortunately, the magnitude of the transfers depends on the willingness of the richer member countries to sacrifice some of their resources. Their insufficiency with respect to EMU may soon become apparent. Eastern enlargement of the EU and the programs for the Mediterranean countries also will seriously test the willingness of member countries to put forward the necessary means.

On the other hand, there are a number of areas too where the EU should be active but isn’t. There are tax havens within the EU from which companies and private investors obtain immense benefits at the expense of the treasuries of the member countries – and therefore of the ones who in fact pay their taxes. Incredible as it may seem, the EU through its regional policies has actually supported the creation of such tax havens.^[112]

Hence, with the exception of a few policy fields the EU is not a very effective policy maker. Yet, in terms of integration this need not be a serious defect.

Advantages and Disadvantages of Size

We have already seen that large countries or economically integrated regions do not necessarily do better economically than small countries. Within a large economic area cumulative differential processes of economic growth are more likely than in smaller ones. To maintain minima of social coherence and political legitimacy, it is necessary to ameliorate differences in development potentials and to provide income support to needy people and deficit-ridden public institutions. For these purposes all developed countries operate complex transfer systems. Depending on its level, the political integration of countries requires solidarity of the richer toward the poorer countries. This can be considered a disadvantage of size

On the other hand, there are some economic advantages of size too. The main one is the sturdiness it confers to the economy: A large country is not much affected by changes in the value of its currency as most economic activities are related to the home market. A large country like the US can get away, even for extended periods of time, with seriously distorted economic fundamentals and questionable economic policies (for example, the huge and still growing US current account deficit and her bubble economy). Equally, a large country is barely affected by economic and political crises in other countries, so long as they are considerably smaller.^[113]

One can expect then that the EU with the full implementation of the European Monetary Union will be able to reap the benefits of economic sturdiness. Furthermore, to the extent that the Euro will be held a reserve currency, the benefits of seignorage will accrue to Eurolandia.

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The sturdiness of a large economy, of course, means that even minor changes in its economic performance or policies can have serious repercussions in smaller economies. The latter’s autonomy is smaller, they have to be more flexible, must avoid structural rigidities, and can not easily afford policy mistakes.^[114] Benign neglect is not an option for them.

Benign neglect of the smaller countries is but one option for a large country. For example, the US has actively meddled in the economic and general affairs of both Mexico and Nicaragua. Economic dependency makes small countries vulnerable and politically dependent too. The dominant power has many means and ways to put on the pressure and even to inflict punishments. It can allow itself to be arrogant. It can use the small neighbouring countries as a valve to diffuse political pressure at home.^[115] And it can defend its so-called national interests (usually large companies and organised interest groups) abroad.

One can consider the possibility of such behaviour an advantage of size. Whatever view one prefers, the EU is well experienced in this field. A harmless example is when it persuaded , in the course of the project "Europe 1992", non-EC capital to be invested within its frontiers. Yet there are less harmless cases too: In negotiations over fishing rights with Morocco and other countries in North and West Africa the EU repeatedly and shamelessly imposed unequal treaties upon them. Another case is the dumping of its heavily subsidised agricultural surpluses into Africa and Eastern Europe resulting in large damages to the local production.

In fact, in most cases such ruthless external behaviour of the EU was the result of internal compromising among member countries and their interests, and the inability of the EU to find rational and sustainable solutions to some of its problems. That is one of the downsides of the institutionalised dialogue of the EU. In other words, in a number of cases we have integrated further by inflicting considerable damage on small or politically weak countries.

If the EU had a unitary, single EU foreign and security policy^[116], such an export of internal problems might be amended in the name of coherence. But to what purpose would we want to have a coherent foreign and security policy? Would we want to be fair to the small and weak countries in our periphery? Would we be ready to support their development efforts financially, through technical assistance etc.? Would we throw open our doors for their exports and for training their people –even though some will find ways to stay? Or, would our main interest lie in the stabilisation of an hegemonic order in our backyard, preventing emigration to the EU and maintaining political regimes to our liking.

Currently, the signs are ominous: After the Kosovo war many voices are demanding, for instance, a Rapid Deployment Force for the EU – in order "to provide ourselves for stability

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on our continent".^[117] Where exactly on our continent?, one naturally asks. Where does it end? Don’t we really mean our ‘sphere of influence’? Or even the world? "Where there is European capital , there are European interests" could well become one of our measuring rods. For an economic giant that feels like a political dwarf, it would not be without logic to move in that direction.

The EU as a regional power is not the only issue affecting the process toward a Common Foreign and Security Policy. The other issues are its relations with the dominant power – the US and its role in the power games of the 21^st century given the emergence of China and the possible re-emergence of Russia.

There the danger is that we could relapse into the old European balance-of-power games^[118], yet on a world scale. We know that size "not only leads to power, it is power".^[119] The primary causes of war during the 19th and the 20th century in Europe were the size and the economic and military capabilities of some countries. EU aspirations to rise to superpower status could give way to a new Cold War. They could also challenge other countries to rise to similar status. Systems with four or five great powers are even more unstable and dangerous than systems with only two powers .

Hence, the EU faces a dilemma: If it aspires to become a world power, it accelerates or even sets in motion a spiral of mutual distrust, conflict and re-armament. If it resigns itself to the role of a subservient political dwarf, it will be reproached for not harnessing, in spite of its size and economic importance, US unilateralism; for not preventing further humiliations; for not defending its interests effectively; and for not mediating conflicts in other parts of the world.

Clearly, neither option is desirable. Could this unpromising dilemma situation be avoided?

· First, one might note, of course not in the spirit of justifying existing unipolarity, that such an arrangement is less unstable, less dangerous and potentially less destructive than multipolarity.^[120]

· Second, one might remember Jean Monnet’s method of engrenage and institution building: Are we not already involved in the process of developing international rules and laws and of transferring sovereignty to international bodies? Will this in the end not be more effective to limit inter alia hegemonic power?

Such an approach makes things easier for the smaller countries too. They can, more than large countries, benefit from international rules and institutions – at least as long as these are

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not made or controlled by superpower interests. The EU itself offers an excellent example: The smaller member countries enjoy the same rights as the larger ones and possess much recourse against the infringements of their interests by the latter (which still try, of course).

To conclude, there are some economic advantages of size but there are disadvantages too. It is cumbersome and it costs money to maintain a sufficient degree of social and political coherence in a large economic area. Some of the most prosperous countries are small.

The political advantages of size are, to put it mildly, ambivalent. There can be much scope for unscrupulous behaviour against politically weak countries. The desire to become a countervailing hegemonic power evokes the dangers of a new Cold War and of balance-of-power games, an old, and as we (still) believe, eradicated European disease. Monnet’s approach could help to restrain the power of states, even of hegemonic ones.

Lessons to be learnt?

Summarising the results, of this section, we find

1. In the case of the EEC/EC, economic integration was a means to the end of political integration. Political integration did not depend on economic or other benefits of integration. In terms of the political priorities even welfare losses can be justified as the price to be paid for political integration.

2. Economic integration was always a matter of negotiations and packaging: it can hardly be expected that such procedures lead to an optimisation of economic welfare.

3. As long as world trade was not liberalised, a case could be made in favour of a customs’ union on the basis of economies of scale. Now it is difficult to make such a case. The economic benefits derived from the liberalisation of the internal market of the EC have not been large. Further benefits on this ground cannot be expected in the future, because by now there are only a few intra-EU restrictions left.

4. European integration was in any case not an exercise in free-market economics, but, especially during the early post-war years and much of the Golden Age, a comprehensive development effort. At that it was quite successful. This could be a lesson for other countries and regions. Russia and other Eastern European countries have learned the hard way that free markets without such a comprehensive development effort destroy rather than create the conditions for economic growth and prosperity.

5. The specific contribution of EEC economic integration to the high growth rates and the high levels of welfare achieved during the Golden Age (1950-73) was probably negligible. Nevertheless growing prosperity during this period conferred legitimacy on European integration.

6. During the crisis decades that followed the Golden Age, the EC did not offer much resilience. To the contrary, its economic performance was remarkably inferior to most other OECD countries.

7. Policy making remains a matter of the member countries in most policy areas. In a few areas

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the EC has shown a certain effectiveness and it has induced improvements in policies of member countries. Ineffectiveness does not have to be a disadvantage in terms of the more fundamental, political purposes of integration.

8. The size of an integrated economic area makes it more robust against developments in other countries and regions of the world. If an economic union has a single currency, this currency is likely to become a reserve currency and to confer seignorage gains to the union.

9. Size also confers power that can be exercised on the international stage. Spill-over effects of internal compromising of the EU have already caused considerable damage to small and weak countries. A coherent and common EU security and foreign policy (which remains in the realm of dreams[121]) could concentrate, for example, on the stabilisation of political regimes in the periphery of the EU (of course, in the name of democracy and free market access for our companies!) and on controlling immigration from there.

10. The power conferred by size can also be used to countervail hegemonic power. Such an exercise of power evokes the dangers of a new Cold War and of balance-of-power games, an old European disease, which we (still) believe to have defeated for good. The alternative is international institution building in the spirit of Jean Monnet. Engrenage could well be more effective in containing US hegemonic unilateralism.

3. Institutionalised Dialogue and other Roads to Peace

As a result of the process of European integration, Europe has been enjoying a long period of stable peace. Military might and menace play no role in the relations within the European Union. That is an enormous achievement in view of the bloody history of our continent.

There had not been a grand design for this. Instead the process took place under rather difficult historical and political conditions. It was path dependent to a very high degree, i.e. it could not be planned in advance and its progress often enough depended simply on good luck. With hindsight, probably the most important element in this process was the creation of institutionalised dialogues in an ever larger number of policy fields both within and outside the framework of the EEC/EC/EU. This led to what has been called at the beginning of this paper a "new culture of conflict management" in Europe.

Negotiations within the EU are a rather cumbersome and slow affair – and that is precisely the point: a permanent need to meet, consult, negotiate, travel, plus the pleasures of the excellent cuisine in Brussels and of friendships developed over the years. The persons directly involved in these processes of institutionalised dialogue probably were not even aware that they were part and parcel of a new architecture of peace for Europe – in their own mind they were struggling to define or to defend their country’s positions.

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Neither effective negotiating nor economic efficiency were essential for integration. To the contrary: the logic of political integration – the permanent need to negotiate – often runs counter to effective decision taking and economic efficiency. Nevertheless, one is always waging a battle to improve both ... Therefore it would be certainly misplaced to judge the process of integration in terms of the effectiveness of political decision-taking or of the economic benefits it generates (or does not generate). Pure logic and historical experience indicate that peace can hardly be gained without political compromising and economic sacrifices.

The European way toward a peace community was unique, as all historical processes are. Generalisations are inherently very difficult and are always cognitively biased. Therefore one should tread this territory with the greatest of caution. Personally, I found that something can be learnt from Monnet’s approach, that is supra-national integration and the creation of a multiplicity of institutionalised dialogues. In spite of many defects, this is where the EU has excelled. An integral part of Monnet's approach was to get the priorities right. This is where the EU does not excel and looking at the present and future challenges it faces these fears are not easily dispelled.

If the ulterior aim is to create a stable order of peace, one can ask, besides the peculiar way taken by Western Europe, what other means could be used for that end. I can see nine alternatives, the advantages and disadvantages of which are briefly discussed. They are arranged in order of their potential contribution to the formation of a stable peace community.

1. Treaties of non-aggression: Their purpose is to prevent wars, but they are treaties of convenience for the signatories. They are not really based on trust and they are not intended to build trustful relationships among them. Whether and how they are observed, will depend on all sorts of circumstances. They cannot eliminate the possibility of war.

2. Power balance politics: As we know from European history in particular, this is a dangerous game and one that gets easily out of hand. The Cold War was a special case with only two powers: Without nuclear deterrence on both sides, it might not have been stable for such a long time. Historically, the succession of one dominant power by another was usually achieved through war.

3. Hegemonic power: The main purpose of a hegemonic power is not peace as such, but other interests. These however might suffer from military conflicts within the hegemonic sphere.

During the Cold War there were hot wars which reflected either the inherent logic of the Cold War or the idiosyncrasies of the hegemon.

If there are several hegemons or would-be hegemons, a durable peace cannot be expected. The ability of the hegemon to prevent wars by its military prowess depends on internal power coalitions and on what public opinion is ready to bear. Hence, it cannot be relied upon.

Hegemonic peace always depends to a certain extent on force, coercion and submission. Its inherent asymmetry contains the seeds of opposition and rebellion, and therefore potential instability. Once the hegemon’s clout becomes less impressive, opposition to the harsh dis

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cipline it imposes is almost unavoidable.

When the period of 'peaceful co-existence' began in the early 1960s, demands for political reform started to flourish, the European integration progress almost came to a halt and France began to reassert herself vis-à-vis the United States.

4. External federator: In order to induce countries to form a 'Union' the common enemy must be perceived to be very strong and menacing. The 'Union' would then make the greatest effort to build up its military potential. As long as there is no fear of 'guaranteed mutual destruction' these efforts might even increase the likelihood of war.[122]

5. Economic interdependence: There are good arguments as to why trade should foster peace; yet there are arguments too against this proposition.[123] There is strong historical evidence against it: Just before World War I foreign trade as a share of GDP in the European countries had already reached levels comparable to the ones of the 1990s. The world economy was highly integrated then, yet this still could not prevent the war. The causes of the war were not economic. Yet, as has been stressed by Carr (1968) the process of the socialisation of the nation-state, i.e. the domestication of capital and its political subordination, was already far advanced. The laissez-faire, single-world economy was replaced by a multiplicity of national economies. Capital and government came to live in a symbiotic relationship and national enterprises were an integral part of the war efforts.

Economic nationalism has not disappeared. Even nowadays we tend to perceive, for instance, Japan and other East Asian countries as competitors. And much of the talks on globalisation are driven by fears that capital dissociates itself again from the nation-state. Under these circumstances, it is hard to believe that economic interdependence is a promoter of peace.

6. International treaties: Such treaties deal with conflicts of interest between nations and therefore define the rights and responsibilities of the parties involved. They do not deal with common interests, but with the separation of interests. If circumstances change, the conflicts can remerge.

7. International co-operation: It involves at least some elements, which the parties have in common. Hence, it can strengthen bonds among them and can even expand into areas other than the ones originally signed for.

8. Political integration: Some common interests and even some common good ought to be present in cases of political integration. The more areas of policy making are incorporated into the politics of the Union, the stronger the inner bonds become.

The question of the legitimacy of political integration cannot be neglected. If it remains a matter of the political and governmental elites, and if the results of integration as perceived

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by the citizenries are not satisfactory, it can breed opposition. Hence even political integration can be reversible. In any case, it requires continuous management of potential conflicts.

9. Social integration: European integration has been an affair of the European elites. Because of the prominence of supra-national integration and institutionalised dialogue, it could not be otherwise. Nevertheless, it would be wrong to identify European integration only with the political and governmental elites.

In fact everyday life of the European tribes has become quite Europeanised and internationalised. Quite a number of Europeans do not live in their country of origin but in some other country of the EU or elsewhere in the world. A vast majority of the people have spent time in other countries of Europe for holiday, business or study. Tens of millions are on the move every summer. There are no more border controls. Trains and motorways form integrated European networks. Young people spend a school or college year in other countries. You can watch at least some television programs from other EU countries everywhere and so on. Social intercourse across countries has become quite intensive and we take pleasure in it. We still might make jokes about the others (just as we do about the people from the neighbouring town or village), but basically we perceive each other as equals. The times when the European tribes hated each other seem very remote and almost incomprehensible.

That means, social integration, through unfettered travel, tourism, exchange programs, city partnerships, sports leagues, language learning, curricula with information on other countries and peoples etc. is of primary importance for the development of a peace community, as well as for its permanence and acceptance by the citizenries. Once one has found out that the "others" are just human beings like oneself, the mental constructions of "strangers" lose their vilifying basis and cannot easily be manipulated anymore by nationalist demagogues.^[124]

Alas, this may be too optimistic a view. Certainly, wars among the members of the EU have become impossible. Social integration was both a result and a cause of this elimination of the possibility of war. Unfortunately that does not mean that social and ethnic conflicts have disappeared. To the contrary such conflicts are becoming more frequent and widespread, particularly within cities and regions. The ethnification of politics can, as in former Yugoslavia, even lead to military conflict. The biggest future challenge for Europe could well be internal peace – especially in times of rising economic and social inequalities.

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[1] Zielinsky, 1995, p.18. Boulding defines as stable peace a situation "in which the probability of war is so small that it does not really enter into the calculations of any of the people involved." (1989, p.13).

[2] The Cold war "was about the balance of power, a war of the German succession, and at the same time it was an ideological confrontation." (Walker, 1994, p. 5).

[3] "The CIA estimated that a swift economic collapse might catapult the French or Italian Communists to power. ... If the United States did not act vigorously, the French, Italian, or Greek Communists might win power legally or seize it violently." The same report of Sept. 1947 emphasised that the "greatest potential danger to U.S. security lies ... in the possibility of the economic collapse of Western Europe and of the consequent accession to power of elements subservient to the Kremlin." (Leffler, 1992, pp.189f.).

[4] Hobsbawm, 1994, p. 240. To expect another Great Slump after the end of World War II was not at all far-fetched. Paul Samuelson (1943, p. 51) spoke of the possibility, in the US, of "the greatest period of unemployment and industrial dislocation which any economy has ever faced". The main concern of American policy-makers right after the war was the prevention of such a slump. They wanted to achieve this by the combination of traditionally high US tariffs and of a drive for the vast expansion of American exports. For the latter reason they wanted to impose a free-trade regime – yet only on others (Kolko, 1969). "Aggressive expansion was plainly in the minds of American policy-makers as soon as the war was over. It was the Cold War which encouraged them to take a longer view, by persuading them that helping their future competitors to grow as rapidly as possible was politically urgent." (Hobsbawm, 1994, p. 275). Walker (1994, p. 2 passim) argues that the Cold War was the major engine of the Golden Age of high growth and rising prosperity (1950-73). And Hobsbawm asks (1994, p. 276) what would have happened to the German economy, if its recovery had depended on the Europeans, who feared its revival. How fast would the Japanese economy have recovered, if the USA had not found itself building up Japan as the industrial base for the Korean and the Vietnam War? 1949-53 and 1966-70 were the years of peak Japanese growth.

[5] The original American plans for the world economy were attacked by Molotov during his speech at the Paris peace conference in October 1946: "It is surely not so difficult to understand that if American capital were given a free hand in the small states ruined and enfeebled by the war, as the advocates of the principle of 'equal opportunity' desire, American capital would buy up the local industries, appropriate the more attractive Rumanian, Yugoslav and all other enterprises, and would become the master in these small states. Given such a situation, we would probably live to see the day when in your own country, on switching on the radio, you would be hearing not so much your own language as one American gramophone record after another or some piece or other of British propaganda. The time might come when in your own country, on going to the cinema, you would be seeing American films sold for foreign consumption. It is not clear that such unrestricted applications of the principles of 'equal opportunity' would in practice mean the veritable economic enslavement of the small states and their subjugation to the rule and arbitrary will of strong an enriched foreign firms, banks and industrial corporations? Was this what we fought for when we battled the fascist invaders?" (Walker, 1994, p. 46).No doubt that these words "have an oddly prophetic ring today" (ibid., p. 45). In a sense it demonstrates how difficult it is to foresee historical developments and to construct causalities.

[6] The Americans henceforth (since autumn 1946) "envisaged a Western economic and a Western geopolitical entity as their pre-eminent concern". (Charles Maier, according to Leffler, 1992, p. 120). "U.S. goals were to promote the recovery of Western Europe, check Soviet influence, thwart Communist gains, and lower occupation costs." They would have preferred "a single Europe modelled on the USA in its political structure as well as its flourishing free enterprise economy."

[7] Duchêne, 1994, p. 182. See also Hobsbawm, 1994, p. 241.

[8] Adenauer's first objective was the restoration of national sovereignty for Germany. The integration into Western Europe and the Western hemisphere to an important extent was a means to that end. The opposition leader, Kurt Schumacher, wanted a united and, if necessary, neutral Germany. He spoke in "disturbing tones of traditional German nationalism" and denounced Adenauer as the "Chancellor of the Occupation, of the Allies" (Walker, 1994, p. 91) and as showing "indifference to the fate of 18 million East Germans."(Leffler, 1992, p. 320).

Adenauer's position in turn was equally clear, at least rhetorically: Germany's defeat should not mean "that it must renounce forever the right to regain lost territories beyond the Oder-Neisse. If we were to opt for the West, as he preferred to do, he had to be able to convince his domestic opponents that he was neither compromising long-term German sovereignty nor relinquishing hope for unification nor territorial rectification." (ibid., p. 454). "In France, German rhetoric could easily be interpreted as ingratitude and illustrative of German aspirations to regain a position of preponderance in Europe." (ibid., p. 320).

[10] France was forced to accept the tri-zonal fusion of Germany in the summer of 1948. As a result Georges Bidault lost the French Foreign Ministry. He was felt to have given too much away. (Duchêne, 1994, 398, p. 185).

[11] A neutral Germany "was not an outlandish proposition; in 1954, just such an agreement was reached over Austria" (Walker, 1994, p. 91). "Many Germans still felt that they had much to gain from remaining neutral in the East-West struggle" and "that formal association with NATO would kill prospects for the eventual unification of their country." (Leffler, 1992, p. 409). George F. Kennan advocated in 1952 a unified, neutralised Germany (ibid., 461). In 1958 he repeated this proposition. Adenauer received a stunning shock when Dulles in a letter to him implicitly proposed a unified, neutral and demilitarised Germany in July 1958. Adenauer's reaction was to turn to France and accept de Gaulle's concept of Western Europe (Walker, 1994, 121f.).

[12] At that time the "greatest worries (of US officials) related to the poor state of Europe's defenses and the uncertainty over Germany's loyalty to the West." (Leffler, 1992, p. 383). A few months earlier Charles Bohlen, then serving as the US minister in Paris, explained: "as soon as Germany recaptures her freedom of manoeuvre she will inevitably begin to play the West off against the East with the very real danger of coming to rest on the side of the Soviet Union. This is the nightmare of the West European nations ... and it should be ours as well."(ibid., p. 345). President Truman time and again expressed his reservations about German rearmament (ibid., p. 389). French fears were more concrete: "if Germany is resuscitated, her resources and technical proficiency would be used by the USSR against France." (ibid., p. 202). More precisely France had "apprehensions about the long-term ramifications of a powerful Germany that could act independently or in concert with Moscow." (ibid., p. 207). Earlier, Stalin too had expressed fears of a revived and powerful Germany. Yet he had opposed dismemberment because he worried about German irredentism (ibid., p. 154).

[13] Leffler, 1992, pp. 202 and 207. These demands were contained in documents of early 1948.

[14] Because such extensive controls of Germany would have weakened the cohesion of Western Europe and, as was mentioned, because the US needed the Germany’s economic strength and her rearmament.

[15] From the British point of view the Treaty of Dunkirk had more than a German dimension. It also reflected the fear of the foreign secretary Ernest Bevin "that French unhappiness with Anglo-American policy in Germany might drive the French into the arms of the Kremlin." (Leffler, 1992, p. 153). That shows too how complicated and open to all possibilities European politics were at that time.

[16] Duchêne, 1994, p. 186. Later, in 1954 Germany became a member of the WEU. The Treaty of Brussels, modified the same year, still contained an implicit security guarantee against Germany. Cf. Zielinski, 1995, p. 103.

[17] It "was the greatest British commitment in Europe at the time and encouraged hopes of further integration." (Duchêne, 1994, p. 186).

^[18] Leffler, 1992, p. 203. "Without German rearmament ... the WEU did not pose credible military deterrent to the Soviet Union." (Frankel, 1993, p. 60).

[19] Delivered on Sept. 19, 1946, reprinted in Gasteyger, 1994, pp. 39-40. Churchill wrote in a newspaper article in 1946 that European integration was "(t)he only way to prevent war" (according to Edwina Currie in her address to the Deutsch-Englische Gesellschaft, Bonn, 9.9.93). On the other hand, Churchill did of course play a role in the initial escalation of the Cold War. Cf. Leffler, 1992, pp. 107-110.

[20] For a comprehensive presentation and analysis of Jean Monnet’s very impressive life, the multiplicity of his initiatives and his "method" to develop and push them through, see Duchêne, 1994.

[21] The following analysis is based on Duchêne, 1994, p. 168-9.

[22] Monnet acquired the confidence of British and American leaders and officials when, under his initiative, the Allied Maritime Transport Council was formed, which co-ordinated military and civil supplies of the Allies during 1917-18. Even more important was the period 1939-43 when he actually lived in the US and played a leading role in the British Purchasing Commission (as a British Citizen provided with a passport signed by Churchill!) and in gearing the US economy into war production. Keynes believed that Monnet "had shortened the war by one year"; for others he was an "Unsung Hero of World War II" (title of an essay by Robert Nathan) and "one of the real architects of our victory" (Lord Halifax). (Duchêne, 1994, chapters 1 and 2, passim).

[23] Monnet, 1976, p. 456 (emphasis added, WK).

[25] In later years, whenever Monnet said of something that it was "an OEEC affair", he meant nothing would come of it. Duchêne, 1994, p. 169). On the other hand, it must be noted that Monnet successfully linked the Marshall aid to the Monnet Plan, and played a crucial role in it. Monnet's position was so strong that the "Americans would not give their approval to any proposal which Monnet didn't feel fitted in with his plans." (According to A. Hartman, who worked at the time with the Economic Co-operation Administration mission in France; ibid., p. 173).

[26] Cf. Monnet, 1976, p. 456. (emphasis added, WK).

[28] Monnet, 1976, p. 422 (Duchêne's translation, 1994, p. 199).

[29] In 1941 Monnet expounded something like the Schuman Plan for coal and steel to Paul-Henri Spaak (Duchêne, 1994, p. 182). Monnet developed a scheme rather similar to the Schuman Plan in 1943 (ibid. p. 126-8). In the summer of 1947 Monnet held numerous discussions with the senior American in Europe, Under-secretary William Clayton. "Their intensive review of the German policy led in the end to the Schuman Plan" (ibid. p. 168), even though, more immediately, it was an initial sketch of the International Ruhr Authority. All this happened less than two months after the announcement of the Marshall Plan in whose preparation Clayton had played an important role. (Leffler, 1992, pp. 158-62).

[30] In the memorandum Monnet wrote for Schuman, he qualified his solution as one "which would remove for the Germans the humiliation of endless controls, and for the French the fear of a Germany without controls." (According to Friend, 1991, p. 17; Zielinski, 1995, p. 107).

[31] Monnet in conversation with Schuman (emphasis added, WK). He continued: "We lost peace in 1919 because we there (in Versailles, WK) introduced discrimination and the spirit of superiority. We are on the way to commit the same error again." (Monnet, 1976, p. 410; translation WK).

[32] "This proposition has an essential political message: to drive a wedge into the bastions of national sovereignty that is small enough to be acceptable and deep enough to move the States towards the necessary unity for peace." (Monnet, 1976, 429; translation WK). For him nationalism was the demon to be exorcised (Duchêne, 1994, p. 371).

[33] Leffler, 1992, p. 349. "The interdependence of production thus established will make all war between France and Germany not only unthinkable, but physically impossible." (Schuman, acc. to Wise, in: Zielinski, p. 108).

[34] After Monnet had explained the Schuman Plan to Adenauer the latter said: "Monsieur Monnet, I consider the realisation of this French position as the most important task that awaits me." (Monnet, 1976, p. 450; translation WK).

[35] The Schuman Plan was thought to be "so vague on essential details" by the Belgian Foreign Minister that "it was impossible to speak definitely about it". Macmillan called it "a plan to have a plan". (Duchêne, 1994, p. 209).

[36] Based on Duchêne, 1994, p. 240 passim.

[37] Britain did not participate in the negotiations of the Schuman Plan nor join the ECSC. They did not want to commit themselves to a supra-national High Authority. On this point Monnet was inflexible. Later Britain launched the Eden Plan which was a "bizarre attempt" to subordinate the new community to the inter-governmental Council of Europe (Duchêne, 1994, pp. 209, 237). After protracted negotiations Britain became an associate member of the ECSC in a sort of inter-governmental extension. (Duchêne, 1994, p. 261 passim.).

[38] The reason why Britain, in the perception of Jean Monnet, did not join the ECSC is remarkable: "Britain has no confidence that France and the other countries of Europe have the ability or even the will effectively to resist a possible Russian invasion. Britain believes that in this conflict continental Europe will be occupied but that she herself, with America, will be able to resist and finally conquer. She therefore does not wish to let her domestic life or the development of her resources be influenced by any views other than her own, and certainly not by continental views." (after his London talks in 1950; Monnet, 1976, p. 400; translation Walker, 1994, p. 93). For Tsoukalis (1993, p. 16) this was one of several "complete misjudgements by the government in London."

[39] Alan Milward (Tsoukalis, 1993, p. 17) has referred to the ECSC "as a protoplasmic organization which could take virtually any shape the High Authority and the member countries would eventually wish to give it." Monnet insisted repeatedly, that the purpose of the ECSC was political and moral, not economic. Adenauer agreed on this and said to him: "J'envisage comme vous cette entreprise sous son aspect le plus élevé - elle appartient à l'ordre de la morale. C'est la responsabilité morale que nous avons à l'égard de nos peuples, et non la responsabilité technique que nous devons mettre en œuvre pour réaliser un si vaste espoir. L'accueil en Allemagne a été enthousiaste, aussi nous ne nous accrocherons pas à des détails. Cette initiative, voici vingt-cinq ans que j l'attends." (Monnet, 1976, p. 449).

[40] Hence it is difficult to agree with Mitrany (1975, p. 69) when he writes: "The ESCS and Euratom were straight functional bodies and could get on with their allotted task without offending the position of other countries, while remaining open to possible links with them." He argues that "functional arrangements have the patent virtue of technical self-determination: the range of their task can be clearly defined, and that in turn determines the powers and resources needed for their performance (p. 68). This hardly corresponds to the realities of the ECSC.

[41] Cf. Duchêne, 1994, Ch. 7, for the convoluted evolution of the new institutions within a difficult setting. Trade across frontiers in the common market for steel doubled as a proportion of steel consumption. That was certainly an important success. On the other hand, the steelmasters were colluding within the common market, "where the treaty powers of the High Authority were in no doubt whatsoever." (p. 248). "The High Authority failed to take firm hold of its field. The managers of the twenty major steel firms were left largely undisturbed." The governments continued to condition coal and steel. (p. 252).

[42] The ECSC was unable to face the coal crisis of 1958/59. The member states were too divided between coal-producing and coal-consuming countries to agree. Gaullism was matched in Germany by ill will towards sectoral integration. The basic industries, used to cartel planning under government patronage, wanted to break the High Authority. Erhard prophesied its end within 3 years. Cf. Duchêne, 1994, pp. 393, 317.

[43] Louis Lister, according to Duchêne, 1994, p. 252 (emphasis added, WK).

[45] Significantly, instead of the High Authority the EEC just had a 'Commission'.

[46] In Germany the SPD voted against the EDC as it had voted against the ECSC on grounds that both treaties hindered German reunification (Duchêne, 1994, p. 285).

[47] The Pleven Plan proposed to rivet (rattaché) the European Army to the political institutions of the European Union (Monnet, 1976, p. 505). According to Duchêne (1994, p. 234) Monnet and others saw the EPC more of a way of reasserting civilian control over the military than as a step to a federal union. The emphasis in Monnet's Mémoires (pp. 579f) is much more on the latter aspect, however.

[48] For a complete 'European state' essential elements like common legal and social systems were lacking. The EDC/EPC had a common military command, yet, paradoxically, no common foreign policy. See Woyke, 1984, p. 227.

[49] In fact, the French government had signed the EDC treaty only under the condition that no immediate attempt should be made to ratify it. "The EDC was rotting before the ink was dry." (Duchêne, 1994,
p. 233).

[50] In Nov. 1953 de Gaulle launched a personal attack against "the inspirer". "The 'Europe of Jean Monnet' now became the ritual red rag to the more militant opponents of the EDC." Duchêne, 1994, p. 254.

[51] When the EDC was touched off the agenda of the French National Assembly the triumphant majority burst into the Marseillaise (Duchêne, 1994, p. 254). Cf. also Zielinski, 1995, p. 101.

[52] In the same interview with the New York Times he said: "I will do everything against it. I will work with the Communists to block it. I will make a revolution against it. I would rather go with the Russians to stop it." (Walker, 1994, p. 97).

[53] As Churchill (ibid.) put it, "I meant it for them, not for us". He also spoke of "EDC tomfoolery" (Duchêne, 1994, 245) and of a "sludgy amalgam".

[56] By the simultaneous accession of Germany to NATO and WEU a system of arms controls was devised, in fact if not in form, for Germany. Nevertheless membership of both organisations was perceived in Germany as an enhancement of its national sovereignty. (Zielinski, 1995, p. 104).

[57] In the words of the famous saying of Lord Ismay, the purpose of NATO was "to keep the Soviets out, the US in, and the Germans down".

[62] Monnet announced his resignation in November 1954, apparently because he had fears about the fate of the ECSC - and because he felt that he needed all his time in order to mobilise support for the Community in the member states. Already in October 1952 Spaak had confided to MacMillan that if the EDC failed, the ECSC would collapse too. (Duchêne, 1994, p. 259).

[64] Their special relationship also had to do with British bases in the Middle East and Asia and Britain's "role as a surrogate of American interests" (Walker, 1994, p. 191).

[65] Walker, 1994, p. 123. Britain, for instance, received Thor missiles from the US, which were the only nuclear missiles that could reach the Soviet Union at that time. They were to be manned by British troops, and a dual key would be required to fire them, one held by the Americans, the other by the British (ibid., p. 119).

[66] One should not overestimate this move however, as Hobsbawm (1994, p. 241) has pointed out: "The most that an allied or client state could allow itself to do was to refuse complete integration into the military alliance without actually leaving it."

[68] Walker, 1994, pp. 121f, 124. As an immediate result of the Suez crisis the British air force in Germany was halved and the army reduced by 20%. Adenauer was shocked when MacMillan explained this to him.

[69] Because of the new anxieties generated by German national rearmament, integration seemed more than ever the way to harness Germany to safe purposes. Adenauer himself expressed the gravest misgivings that no one could guarantee that the lethal combination of Ruhr magnates and German military would not reappear (in a famous midnight chat with Spaak and Joseph Bech which was overheard by Lothar Ruehl, the correspondent of Der Spiegel; Duchêne, 1994, p. 267).

[70] A month after Kennedy offered Britain, in order to accommodate its nuclear pretensions, the Polaris submarine missile system (which had not been offered to France and infuriated her), de Gaulle talked of Britain as the "American Trojan Horse inside Europe" and cast his veto against British entry into the Common Market. Logically enough he continued: "The end would be a colossal Atlantic Community dependent on America and directed by America, which would soon swallow up the European Community. A week later he signed the Franco-German Friendship Treaty. (Walker, 1994, 181, p. 202).

[73] Cf. Duchêne, 1994, p. 265. In bringing Germany into NATO, Adenauer unilaterally renounced the manufacture of nuclear weapons. French and American politicians wondered how long this self-denying ordinance would last. At times, in private, Adenauer himself talked as if the renunciation might be temporary (ibid.). In fact, in November 1957 France, Germany and Italy had agreed to produce atomic weapons and their delivery systems. The United States were kept in the dark. In extreme secrecy these three countries signed another agreement in April 1958 on the common construction of a gas diffusion plant in Pierrelatte. After his return to power de Gaulle stopped this co-operation in June 1958. He wanted force de frappe to be an entirely national project in order to be able to use the bomb as an exclusively French diplomatic tool. (Schmitt, 1995).

[74] Cf. Duchêne, 1994, p. 269 passim. on this paragraph.

[75] Spaak "preferred collusion by France and Germany to conflicts between them." (ibid., p. 271).

[76] Monnet was under a double French veto: to continue as president of the High Authority and as a chairman of any inter-governmental conference on new initiatives of European integration (Duchêne, 1994, p. 280).

[77] For details, see Duchêne, 1994, pp. 279-83.

[79] Monnet, 1976, p. 456 (translation, WK).

[80] Monnet, 1976, p. 429. Nationalism was for him the demon to be exorcised (Duchêne, 1994, p. 371).

[81] As is argued by Zielinski, 1995, p. 109, specifically for the ECSC (applying his criteria of symmetry, symbiosis, homology, transcendency).

[84] Most negotiations take place in the Council of Ministers, that is in committees and working groups composed exclusively of public servants. Once a compromise has been reached, often after long periods of negotiations, national parliaments or the European Parliament, to all intents and purposes, cannot challenge these compromises. See Working Group ..., 1997.

[85] Which has grown far beyond what the Treaties of Maastricht and Amsterdam allow for. For instance, the Council of Ministers ought to consist of only two councils; in fact, there are around 20.

[86] For a careful analysis of this topic, see Zielinski, 1995, pp. 30-43. Kant spoke of the constitutional republic ("republikanische Staatsverfassung"), which comes close to what we call democracy nowadays (ibid. p. 35).

[87] Kant (1947, p. 13) argues that the citizens would have to decide to bring the distress of war upon themselves: to fight themselves, to bear direct costs of war as well as the costs of mending the war damages, the payment of war debts.

[89] One might add political participation, an area where the EU certainly does not excel.

[90] Cramon Daiber, 1994, p. 67.

[91] Cf. Arnold, 1993, pp. 55-56: The EEC was not established in order to overcome economic difficulties. Very much to the contrary, the prosperous economic development of those years was to be made fruitful for the politically motivated integration process of Western Europe.

[92] Ironically, "one of the main objectives of the Treaty of Paris had been precisely to avoid the reappearance of such a cartel." (Tsoukalis, 1993, p. 42). Cartels had existed before the war.

[93] Subsidies for coal mining in Germany, for example, were in the order of 80000 DM per person employed in 1994 (15th Report on Subsidies of the Federal Government; German economic research institutes; according to Nahrendorf, 1996).

[94] These costs amounted to 142.2 billion dollars for the EU (OECD data, Economist, June 5^th, 1999, p. 123), i.e. 380 dollars per capita. Quite a sacrifice for a family of, say five members.

[95] Arnold (1993, p. 63) goes as far as to say: "The economy of the EC becomes largely stateless".

[97] This need not mean much, however, in terms of consumer welfare and development (Olson, 1987, p. 243): 1. In separate studies Kreinin and Truman found that the formation of the European Community added 2 per cent or less to its members manufacturing consumption. 2. Bela Balassa found that the creation of the Common Market led to only 0.3 per cent increase in the ratio of the annual increment of trade to that of GNP. 3. "Many economists have estimated or concluded that the degree of protection is not of overwhelming importance for the level of development or the rate of growth of a country. ... (They) also regard changes in the degree of protection as relatively unimportant in comparison with the size of the welfare state, or the quality of monetary and fiscal policy, in explaining economic performance."

[98] The EC was not unsympathetic to such processes of concentration. Viscount Davignon, the EC Commissioner for industrial affairs, promoted the "corporate search for extensive networks" and the creation of the Round Table of European Industrialists, "which has acted both as a powerful lobby behind the scenes and a means of promoting closer ties and co-operation among the heads of some of the largest firms. Such moves were arguably not unrelated to the wave of mergers, acquisitions, and co-operation agreements across national borders ..." (Tsoukalis, 1993, pp. 50, 51)

[99] Martin Wolf, Financial Times, Sept. 1, 1999, p. 12; based on the latest edition of the Human Development Report (UNDP). The fact that some of these countries are members of the EU does not invalidate the argument. It would, if the larger EU-members were at least as well off as the smaller ones (which they are not). The question remains: Why are smaller countries generally able to generate higher incomes than the larger ones?

[100] The data for the period 1960-73 include the 6 countries, which joined the EEC/EC during the 1970s and 1980s. The underperformance of the EEC is not due to inclusion of these countries. With the exception of the U.K. their performance in terms of GDP, investment and employment growth was normally better (in some cases considerably better) than that of the original 6 countries.

[101] Southey, 1995. In 1994 almost 50 per cent of the unemployed of the EC-12 had been without work for more than one year. About 22 per cent of the 15-24 year-olds were unemployed. (ibid.).

[102] According to Eurostat in September 1999 there were 12,8 million unemployed in the EU. This represents 10 per cent of the workforce. These figures disguise enormous differences between regions and age groups. Unemployment runs between 25 and 30 per cent in some southern regions in Spain in Italy. In Eastern Germany it now stands at more than 18 per cent. Youth unemployment is 24 and 33 per cent in France, Spain and Italy. (Barber, 1999).

[103] Marglin/Schor, 1991. The relative stability of Cold-War international order (and of the EEC/EC, as it was an outgrowth and an integral part of that order) can be considered a necessary condition for the successful economic development of Western Europe and elsewhere (see the section "The First Europe" above). The post-war boom no doubt contributed its share to the stability of that order. What has been analysed in this section is whether European integration as such improved economic performance, so to speak, above the trend of the times. And there the answer tends to be in the negative.

[104] "Even if anyhow France has to adjust its economy to international competition, Europe is an easy scapegoat." (Moreau Defarges, 1995, p. 3).

[105] Quotations in this section are taken from Tsoukalis, 1993, p. 115 passim. The final point coincides with a central argument of Arnold, 1993.

[106] For the period 2000-06 the so-called Structural Fund will amount to Euro 195 billion (152 billion for 1994-99). To this Euro 18 billion of the Cohesion Fund should be added. The member countries are required to co-finance the projects (normally 50%).

[107] After the Portuguese revolution, the death of Franco and political turmoil in Greece, the unity of the Western Alliance was menaced. To retain these countries firmly integrated into the West was the political payoff of their admission to the European Union and of the costs of their integration.

[108] In the US 30-40 percent of the cyclical variations of regional incomes are compensated for by the federal government (Sachs/Salas-i-Martin, 1992; see also: Bayoumi/Masson, 1996). In Canada, 8 percent of the federal budget goes to needy provinces (MacCullum, 1997). In Germany (Geske, 1999, p. 488) the financial transfer system (Finanzausgleich) alone moved DM 56,8 billion in 1998 (3% of GDP); to this the amounts transferred by other systems would have to be added.

[109] The total EU-budget is limited to 1,28% of the GDP of the member countries. The share of the Structural and the Cohesion Fund in the EU-budget is approx. 31%, or 0,4% of the EU-GDP. Only part of these funds are actually net transfers to certain member countries. Most of the money takes a round trip through Brussels.

[110] See, for example, Belke/Gros, 1998; Eatwell, 1994.

[111] EC regional policy has reduced notably the ability of member governments to pursue their own regional policies and obliged them to modify and to discontinue existing programs. (Engel, 1995, p. 16.).

[112] Working Group ..., 1997b; Kamppeter, 1997.

[114] Possibly, together with the smaller costs of maintain social and political cohesion, that explains the on average better performance of smaller economies.

[115] Such pressure can even be based on paranoid fears; see DeMause, 1987.

[116] It still remains in the realm of dreams: It is subject to unanimity. The member countries have the greatest difficulties to agree on common positions and are extremely reluctant to give real competencies to Mr Solana.

[117] See for instance, Weizsäcker, 1999.

[118] Justi, 1758, is an early book on balance of power theory – with some very decisive, even modern criticisms of it. "The teaching of the balance of power among the free powers has caused enough bloodshed, misery and misfortune in Europe. Too often it has been used as a pretext for unnecessary wars. It has rendered millions of human beings to the slaughterhouse, and many more millions driven into extreme poverty and wantonness" (Vorbericht, p. 3; translation WK).

[119] Kohr,1957, p. 27; see particularly, chapter 2.

[120] Furthermore, the internal basis of the hegemonic power erodes in time. See Huntington, 1997.

[121] Because the member countries of the EU find it very difficult to agree on common positions. Furthermore they are extremely reluctant to delegate real competencies for foreign policy and security matters to the EU, and to concentrate these competencies in one pair of hands.

[122] On the other hand, a society can be stabilised internally, either because internal conflicts are projected onto the external enemy or because the conflicting parties dampen their demands and behaviour in order not to weaken their country – or are forced to do so by the government.

[123] Cf. Hirschman, 1982. See also the last sentence of the quotation of Justi in the final footnote.

[124] Justi (1758, pp. 90/91) explains this wonderfully: Some members of a people cross the mountains or a large stream. They meet people unknown to them. "If they find that these unknown people do not cause them any harm, their fears will disappear and they will socialise among themselves. It is therefore fear and the drive to socialise what the peoples are inclined to in their natural state; by no means it is their enmity. ... As long as two peoples do not offend each other in the basic principle of their own interest and their own happiness, the drive to socialise will not be hindered. ... However, when one nation becomes an obstacle or causes damage to the other's proper interest, then a fountain of enmity and war is struck. Such an occasion will present itself all too often in the interchange and in the deeds of the peoples, particularly with respect to commerce." Which is also a belated comment on the peace-generating qualities of economic interdependence.

1. European integration Why it happened and how it happened

The First Europe: The Cold War, the German Problem and Supra-nationalism

The Limits of Hegemonic Power

Alliances Against Germany: Counterproductive

Jean Monnet: Supra-national Integration of Equal Partners

The Decline of Supra-nationalism

NATO, the Anglo-Saxon ‘special relationship’ and the German-French Axis

The Second Europe: The Common Market

Lessons to be learnt?

2. Benefits of Integration

Political Objectives and Market Efficiency

Economic Benefits: Economies of Scale?

Better Chances for Economic Development?

Comparative Economic Performance of the EEC/EC

The EU as a Policy Maker

Advantages and Disadvantages of Size

Lessons to be learnt?

3. Institutionalised Dialogue and other Roads to Peace

References

1. European integration
Why it happened and how it happened