European Integration: Sharing of Experiences

1. BASIC PRINCIPLES

Basic Principles 1 1 1 BASIC PRINCIPLES Some basic, very basic principles, determine the success or failure of an economic integration: positive sum game, step by step, clear political objectives, the role of problem grinder, links to the domestic political system, impose discipline/self-discipline on member states, balance between small and large/ powerful member states, political will to compromise and accommodate other member states, demonstrate in practice what the integration is doing and why it cannot be done without integration, avoid blurring the distinction between what the member states are doing and what falls under the competence of the integration, one or more member states as driver for the integration.1 POSITIVE SUM GAME The result on the scoreboard drawn up by each member state must show that it is at ease, better off, more comfortable, inside compared with the alternative of staying outside as a non-member.2 Politically and economically it must feel stronger, more powerful, and more capable of tackling challenges and problems. The integration should enlarge its room for manoeuvre to shape and guarantee domestic political preferences. Living standard, accumulation of wealth, and economic growth must be judged sustainable at a higher level inside rather than outside. 01 Euro Integration Ch 1 4/8/08, 9:19 AM 1 2 European Integration If or when a member state doubts or questions whether this is the case, the political understanding and links holding the integration together start to unravel. Superficially the integration may go on, but it will soon dawn upon the member states that the climate has soured. In 1965 France took the view that the transition from unanimity to qualified majority voting on issues deemed to be crucial for France (aspects of the Common Agricultural Policy and its financing) was detrimental to its interest. France insisted on maintaining unanimity even if the transition to qualified majority voting was written into the Treaty of Rome. The other member states failed to perceive the depth of the French attitude and wanted to proceed. After a six-month French boycott of the institutions of the then European Economic Community, the impasse was broken. A political compromise was reached. If a member state deemed a question to be of vital importance, unanimity should be sought within a reasonable time span, even if the Treaty stipulated qualified majority voting. The text, known as The Luxembourg Compromise, adds that in the opinion of one member state (France), negotiations should continue until unanimity is achieved.Translated into plain language, the other member states pledged that if France invoked a vital interest, it would not be overruled by a vote, regardless of treaty provisions. France for its part let it be understood that before invoking unanimity, a thorough scrutiny would be made to ensure that a vital interest was really vital. Both sides gave way; both sides gave implicit, unwritten, and unsaid — but in diplomatic language — firm assurances of respect for each other’s point of view. This is a spectacular illustration of the political fact that integration cannot survive if one member state fears being overruled on matters it defines as vital. The Luxembourg Compromise influenced decision making in European integration for several decades. A hint from a member state that a vital interest could be at stake almost always led to arduous and sometimes tiresome negotiations to rally all members around a solution. If the other original five members states had tried to steamroll France, it is likely that the integration would have been halted in its tracks or, even worse, fallen apart. In 1979 the then newly elected Conservative government in the United Kingdom raised the issue of payments to and from the EU budget (the socalled net contribution). In the eyes of the British government, Britain’s net contribution could not be sustained and was unacceptable. Most of the other member states pointed out that payments to and from the budget reflected the basic structure of the agreed common policies. 01 Euro Integration Ch 1 4/8/08, 9:19 AM 2 Basic Principles 3 The revenue side was linked to customs duties (the Custom Union) plus agricultural levies (the Common Agricultural Policy)3 and the expenditure side was linked to common policies and common measures agreed in the Council and flows of funds as a consequence thereof. Financing and expenditure were part of a coherent system and did not each lead its own life. They...