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The Development of the European UnionThe Development of the European Union (Full Text, PDF, 41 pages, 58 KB)
IV. Towards a Real European Union (1981-2000)
A. From Veto Prerogative to Qualified Majority Voting
With the Luxembourg compromise, the European integration effort had suffered a serious setback. Despite horizontal extension of membership, and the expansion of the European Court's domain in the 1970s, true integration required further vertical integration, and a move toward supranational decision making. As long as individual countries could unilaterally veto policies that they deemed "important," national governments could halt costly domestic adjustments. Some solution to the veto prerogative had to be found. By the 1980s the move towards greater integration and supranationality started to pick up steam.
A coincidence of several factors made this possible. In France, Mitterrand's socialist government faced considerable opposition to its attempts to implement traditional dirigiste policies. As a consequence of capital flight and business opposition, Mitterrand came around to less interventionist, liberal policies. In Germany the Christian Democrats had taken over the reigns from their Social Democrat predecessors. And in England Margaret Thatcher made no secret of her penchant for scaling back government's role in the economy. In other words like-minded political orientations started to emerge among the big three.
Additionally, increased international competition, particularly by Japanese products, and the poor performance of the European economy in the 1970s required a creative response. Closer cooperation between the European states and the intensified search for efficiencies of scale meant that integration had to be taken one step further. The business community, such as Wisse Dekker of Philips, Ford Europe, and Fiat started to urge their European governments for action. External pressure by foreign competitors thus complemented political convergence.
This move to closer union initially ran into problems. Britain objected to the erosion of sovereign prerogative and voiced its displeasure with the distribution of funds. It had, so argued the Thatcher government, paid in more than it had received—as it indeed had. In order to circumvent these problems the proponents of further integration cut a deal with Thatcher which remunerated Britain and provided it with a more equitable "juste retour." At the same time, France and Germany threatened with a two-track Europe. If England did not want in, it would be left on the sidelines and France and Germany would proceed regardless. The prospect of exclusion and the sidepayments that Britain received were sufficient to bring the Thatcher government around.
With these vestiges of resistance out of the way, the European member states signed the Single European Act (SEA) in 1986 and the Maastricht Treaty in 1992. Increased qualified majority voting limited individual veto power. (The later Amsterdam Treaty of 1997 limited such veto opportunities even further.) The agreements aimed at further deepening the internal market and promised free movement of goods, services, persons, and capital (Article 13). The European Parliament, which till then had led a shadowy existence beneath the more powerful Commission and Council of Ministers was given expanded powers. This would address the "democratic deficit" and the Parliament would gain greater leverage against the intergovernmental Council. To demonstrate the depth of reform, the European Community was to be renamed the European Union (EU).
It was not easy to proceed with the integration of capital markets and a common currency, but economic and monetary union, undoubtedly would have benefits. According to the "optimal currency areas" argument, a uniform currency would lower transaction costs, increase cross border investment, and enhance competition. However, the optimal currency argument holds only when one has economic uniformity throughout the region and mobility of labor. Neither condition holds true in the EU. In order to make the monetary union a reality the member countries would thus have to rescind their national autonomy in the areas of exchange rate management and monetary policy, and facilitate the cross border movement of labor, both politically touchy subjects. Nevertheless, a timetable was set for integration with a common reserve bank and shared currency. The Economic and Monetary Union was created in 1999, with the establishment of a European Central Bank in Frankfurt (the ECB). A common currency, the Euro, will be introduced by 2002 after several years of operating as a unit of account. However, given the economic and political costs associated with a move to a common currency zone with an independent ECB, only 11 of the current 15 members have signed on so far. 2
Free movement of people has proven no less controversial. The Schengen Agreement of 1985, and the Schengen Implementation Convention (which came into force in 1995) gradually diminish the border controls between the member states. Satisfaction of entry requirements in one state thus automatically gives a person access to any of the other member states. Again, not all countries signed on. England and Ireland have "opted in" for only certain parts of the Schengen laws.
B. Accession of New Members.
Horizontal expansion is also still an ongoing process. As mentioned earlier, Greece had gained entry in 1981. Portugal and Spain, who also had seen democratic revivals, gained access in 1986. The European Community thus came to 12 members. But as more and more states joined the EC organization the attraction for other states to gain access increased as well. Or, conversely, the costs for remaining outside of this regional organization went up as the club of free traders expanded. Countries that had originally been members of the European Free Trade Association (EFTA), which was the looser counterpart to the EEC, now wished to join as well 3 . In 1995, former EFTA members, Sweden, Austria, and Finland joined the European Union.
The most recent requests for admission, by East European states as well as by states that were formally part of the Soviet Union itself, have followed the collapse of the Soviet Bloc. 4 Several of the East European states and the Baltics are considered front runners to become members of the EU. A Union consisting of 20 or even 25 states may not lie too far in the future. And while not all these economies are as advanced as some of the West European ones, the logic of rewarding democratizing countries is not without historical precedent.
The Amsterdam Treaty (1997) meant to address this potential expansion but largely failed to do so. The key stumbling blocks remain the weak economic backgrounds of the requesting countries and the institutional reforms required to accommodate these new members. The large states are particularly concerned that in a new voting scheme they might potentially be unable to block a coalition of smaller countries. As a French politician put it: the large five with 4/5 of the EU population and economic production might be outvoted by the other states. These new states also lack well-established capitalist institutions to mesh with the current members. The demands for horizontal expansion and institutional reform are likely to pose the toughest challenges for the EU in the coming years.
C. Current Institutions.
The European Union consists of a variety of institutions, of which the Parliament, the Commission, the Council of Ministers, and the ECJ are the most important for policy making. The European Commission consists of 20 representatives, which are appointed for five years by their member states. The big five (France, Germany, Italy, England, Spain) are each entitled to designate two representatives, while the other countries send one delegate. The Commission has a supranational character. Commissioners do not sit as representatives of their countries but are supposed to have the interests of the entire Union at heart. The Commission is the primary initiator of EU legislation.
The European Parliament (EP) also has a supranational character. The representatives of the various member states sit as parties based on political position rather than as representatives of their member states. Thus socialists are grouped together with their fellow European counterparts, as are liberals, and Christian Democrats, and half a dozen other political parties. The number of parliamentary representatives that each country sends is weighted. Germany, France, the UK, and Italy each send 81 representatives, while Spain gets 60. The other states send significantly smaller numbers: the Netherlands 25 and Belgium, Greece, Portugal, 24. Sweden is entitled to 22 representatives, Austria 21, Denmark and Finland 16, Ireland 15, and Luxembourg sends 6 members.
The Council of Ministers, by contrast, is unambiguously an intergovernmental body. The ministers sit as representatives of their countries, with each country sending the minister that is competent on the issue at hand. The Presidency of the Council rotates every 6 months. The Council convenes only periodically (monthly or bi-weekly), when decisions on specific policy matters require their presence. Together with the EP the Council reviews and decides on the legislative proposals from the Commission. The Council's permanent representatives (COREPER) do the day to day work. They reside full time at the EU institutions in Brussels and lack ministerial status.
The weighted voting procedures reflect the intergovernmental nature of the Council. France, Germany, Italy, and the UK, each have10 votes. Spain has 8. Smaller states, Belgium, Greece, Netherlands, and Portugal receive 5 votes; Sweden and Austria each get 4, while Denmark, Ireland, and Finland count for 3. Tiny Luxembourg must make do with 2. The total number of votes thus comes to 87. Since a qualified majority requires 62 votes, 26 votes suffice for a group of states to veto legislation that is not to their liking. Intergovernmental bargains and logrolling may thus forestall policies in a manner not dissimilar to the veto-possibilities under the old Luxembourg compromise. Even though simple unilateral obstruction is more complicated, voting alliances, when carefully crafted, can still serve to protect national interests. For example, two large states who share interests with an intermediate state, or with two small allies, will suffice to block much legislation that is not to their liking. The problem is more than theoretical. Germany and France have often cooperated on their European agenda. The Netherlands, given its economic interdependence with the German economy, has often moved with Germany on monetary issues. These three, plus one extra country (e.g., Belgium), might thus prevent policies from moving forward. Other coalitions, such as a Mediterranean one, say, oriented to protecting agricultural interests on subtropical products, are also conceivable.
The intergovernmental character of European integration is underscored by the meeting of Heads of States or Government, who meet twice a year in the European Council. This Council is not part of the formal institutional framework of the EU. Yet its presence has been critical in solving impediments to European progress. At decisive moments, such as during Thatcher's holdout on the Single European Act, or during the Maastricht negotiations, the intervention by the highest levels of government has been necessary to move the process along. This has lead some analysts to argue that the primary dynamic for European integration still resides with the respective national governments rather than the supranational bodies in Brussels. Summits have been key ingredients of the EU's progression.
The European Court of Justice has one judge from each of the member states. The Court votes as a body without separate opinions. Judges are elected for 6 years by their respective countries and are supposed to act independently. To ensure this, some have argued for extending the judges' terms to 12 years. To lighten the burden of the Court, the EU has also established a Court of First Instance. This court deals primarily with complicated technical issues, whilst the Court of Justice orients itself to questions of legal principles. The judicial activism of the 1960s and on, that kept the integration process from stalling during moments of intergovernmental disagreement, has recently come under scrutiny and there are signs that the Court is receding from its previous activist position.
Endnotes
Note 2: See for a theoretical discussion of the move towards monetary union, McNamara 1998.Back.
Note 3: A free trade association aims to limit tariffs between member states. A customs union does so as well, but also has a common external tariff. A common market goes yet one step further by adding the free movement of labor and capital. Economic union has the same features as a common market but also harmonizes economic, social, and monetary affairs.Back.
Note 4: Cyprus is also on the waiting list. Turkey has had a long-standing desire to join as well, but given the nature of its authoritarian political regime in the past, and the condition of its economy, it has been refused entry so far.Back.
Note *: Lucy E. Lyons is Coordinator for Social Sciences in the Collection Development Division of the University Libraries of Arizona State University. She is authoress of several articles, including bibliographical works in military and political sciences. Prior to her present position, she was a bibliographer and reference librarian at the Central Research Library of the New York Public Library. Back.
Note **: Hendrik Spruyt is Associate Professor in the Department of Political Science, Arizona State University. His book The Sovereign State and Its Competitors won the J.David Greenstone Prize for best book in history and politics, 1996. He has published more than a dozen chapters and articles in, a.o., International Organization, The Review of International Political Economy, The International Studies Review, and The Review of International Studies. He was formerly Associate Professor at Columbia University and a Member of the Institute for Advanced Study in Princeton. He is currently working on a book explaining the various modes of territorial dissolution in the post-war period. Back.
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