History and Theory of European Integration

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History and Theory of European Integration

• Marina V. Larionova

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Lecture 6

• Transformation of the European Community
• (1979-1989)

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Contents

• The second and third Enlargements (Greece, 1979,
  Spain and Portugal, 1986)
• The Budgetary issues
• The crisis in the Community
• The Single European Act (1986)

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Readings for the lecture

• Dinan Desmond (1999) Ever Closer Union. An
  Introduction to European Integration. Second
  edition. The European Union Series. Palgrave.
  Chapter 4 and Chapter 5
• Thatcher M. A Family of Nations (1988). The
  European Union. Readings on the Theory and
  Practice of European Integration, Nelsen B.F. and
  Alexander C G. Stubb (eds.), Palgrave, 1998
• Delors J. A Necessary Union (1989). The European
  Union. Readings on the Theory and Practice of
  European Integration, Nelsen B.F. and Alexander C
  G. Stubb (eds.), Palgrave, 1998

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Readings for the lecture

• Robert O. Keohane and Stanley Hoffmann
  Institutional Change in Europe in the 1980s in
  The New European Community. Decision-making and
  Institutional Change, Robert O. Keohane and
  Stanley Hoffmann (eds), 1991, Westview press.
• Moravcsik A. Negotiating the Single European Act
  National Interest and Conventional Statecraft in
  the European Community (1991). The European
  Union. Readings on the Theory and Practice of
  European Integration, Nelsen B.F. and Alexander C
  G. Stubb (eds.), Palgrave, 1998.

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End of 70s - Beginning of 80s The patient too
ill for a birthday party?

• What are the symptoms?
• EC budgetary problem
• Decision making paralysis
• Week central institutions
• Conflicting agendas of the member-states
• Budget rebate unresolved
• Economic decline in the EC

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The major events leading to the SEA negotiations

• May 1979- Accession Treaty with Greece
• 1961 Treaty of Athens
• 1967-74 - military regime in Greece
• 1975 reapplication for membership
• negative Commission Opinion overturned by the
  Council
• 1977 Portugal and Spain applications
• need for institutional reform
• June 1979 - direct elections to EP

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March 1979 launch of the EMS

• October 1977
• Roy Jenkins call for the EMS as a macroeconomic
  tool for lowering inflation and increasing
  investment
• October 1977 February 1979
• a period of scepticism
• continuous dollar depreciation undercutting
  German industrial competitiveness Schmidt
  change of position

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April 1978 Copenhagen Council

• Schmidt enthusiastic
• Giscard backing
• Callaghan concerned
• Ortolli still cautious

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July 1978 Bremen Council

• critical stage in the development of the EC as
  a whole Helen Wallace
• Franco German proposal for the Exchange rate
  mechanism
• European currency unit
• Divergence indicators
• Fluctuation band from 2, 5 to 6 per cent

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British Budgetary Issue 5 years and 15 summits
story

• The corrective mechanism not effective
• The cost of the UK membership increasing to 1
  billion pound sterling in 1980
• Temporary solutions unsatisfactory

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• June 1979 Strasbourg Council
• Battle lost to Schmidt and Giscard
• November 1979 Dublin Council
• Degenerated into an open combat
• April 1980 Luxembourg Council
• Members departing in despair
• June 1980 Venice Council
• Interim agreement achieved
• June 1983 Stuttgart Council
• Thatchers position bolstered by domestic support
• Thatcher opposing the CAP and connecting budget
  reform with the
• resolution of the BBI and CAP reform
• Mitterrand and Kohl new in the EC game
• No progress achieved

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• June 1984 Fontainebleau Council
• Resolution achieved ! ?
• Abatement refund of the UK contribution to the
  budget calculated annually as a difference
  between the British share of community
  expenditure and the proportion of the of the ECs
  VAT-based revenue of the UK to be paid in a form
  of a reduced VAT contribution in the following
  year
• Decision to cut down CAP spending
• Increase of the EC own resources from 1 to 1.4
  of the VAT generated revenue
• March 1982 the Treaty of Rome twenty fifth
  anniversary
• Need for completion of the Single market and
  institutional reform announced

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Incentives for European Integration metamorphosis
in the 80s External

• Political and economic competitive pressures
• Economic turbulences
• Technological competition / US and Japanese
  technological advancement
• Weakening of the US support
• Need for development of a coherent EU trade
  policy
• Inefficiency of the European Political
  Cooperation
• Tensions in the EC US relations
• US June 1982 sanctions / ESPRIT
• Transatlantic disputes over subsidized steel and
  agriculture products

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Incentives for European Integration metamorphosis
in the 80s Internal

• Poor economic performance in the three large
  member states / need for a steady economic growth
  strategy
• Change of economic policy in France
• Consensus of the governments on the need for
  deregulation
• Convergence of the economic policy prescriptions
  of ruling party coalitions in France, Britain and
  Germany
• Cassis de Dijon case (1979) Court of Justice
  Ruling on the mutual recognition principle
• Resolution of the British budgetary issue

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Iberian enlargement

• October 1978 - Portugal application
• February 1979 - Spanish application

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Consequences and Results

• Reinforcing the need for institutional and
  decision making process reform
• Exacerbating differences between the member
  states foreign policies
• Widening versus weakening dilemma
• Highlighting the CAP mechanisms inefficiency and
  need for reform accumulating surpluses and
  competing for CAP funds
• Paving the way to accession (January 1986)
• new rules to organize fruit, vegetable and olive
  oil markets
• fisheries disputes resolution
• restrictions on wine production
• Integrated Mediterranean Programmes of 6.6
  billion ECU

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• Building Europe from the Roof Down?The early
  80-s

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November 1981 - London Council Genscher-Columbo
Plan towards further European unity

• Adoption of a Draft European Act
• Common foreign policy
• Coordination of security policy
• Transformation of the EC into an organ of
  political guidance
• Wider application of the QMV principle

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Stuttgart June 1983 Council

• Adoption of the Solemn Declaration on European
  Union
• Determination to transform EC into EU
• TEU
• Evolving role of the European Council and
  European Parliament
• Strengthening of the EMS
• Common action in political and economic aspects
  of security
• Deepening and broadening of the scope of European
  activities
• Call for completion of the internal market
• Reinforcement of the monetary system and
  industrial policy
• Perseverance of the Luxembourg compromise right
  to invoke veto
• Link of the four outstanding issues
• increase in the EC funds (raising the ceiling of
  the VAT revenue conditional to resolution of the
  British budgetary problem)
• internal market liberalization
• agricultural reform
• entry of Spain and Portugal

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1984French Presidency in the EC Francois
Mitterrands shuttle diplomacy

• Abandoned building site
• economic decline
• agricultural disputes
• stalemate of the EU budget need for unanimity to
  increase VAT ceiling
• British budgetary issue

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March 1984 Brussels Council Unsatisfactory
solutions

• Agreement of the rebate achieved in principle
• British rebate of 457 million for 83 blocked
• Haggling over the rebate amount for 1984
  continued
• The deal of 1.2 ECU blocked by Kohl

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Mitterrands geometrie variable strategy

• Mitterrands speech to the EP
• two track Europe threat of the UK exclusion
• choice between satisfying specific interests and
  staying in the game

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June 1984 Fontainebleau summit

• Europe the Future liberalization of internal
  market agenda
• Consensus on the rebate achieved
• Abatement refund of the UK contribution to the
  budget calculated annually as a difference
  between the British share of community
  expenditure and the proportion of the of the ECs
  VAT-based revenue of the UK to be paid in a form
  of a reduced VAT contribution in the following
  year
• The need for a package deal on liberalization,
  abolishing customs control, institutional reform
  accepted

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• Adonnino Committee on People Europe mandate
• customs formalities
• diplomas equivalence
• European symbols
• The Dooge Committee for institutional reform
• Single market on the basis of precise time
  table
• Strengthening the EMS
• Improving the European Political Cooperation
• Expansion of the QMV in the EC
• Reduction of the number of Commissioners
• Parliaments right for co-decision with the
  Council
• Calling of an intergovernmental conference on the
  draft EU Treaty

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• Negotiations for the SEA
• the carrot of market liberalization and the
  stick of exclusion

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June 1985 Milan Council

• Dooge Committee report
• Delors priorities
• Fully inified internal market by 1992
• Overhaul of decision making process
• New monetary policies and common macroeconomic
  policy
• Foreign and Defense policies
• Lord Cockfields White paper approved
• Economic integration has to proceed European
  Unity
• Timetabled Action plan with the 1992 deadline
• The British proposal of a right to abstain versus
  the right to invoke a veto accepted
• Unprecedented vote on IGC
• The three recalcitrant member states out voted

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Thatchers vision and principles for the EC
future Shared by the member states?

• Willing and active cooperation between
  independent sovereign states without suppressing
  nationhood and concentrating power at the center
  of a European conglomerate Working more closely
  together does not require power to be centralized
  in Brussels or decisions to be taken by an
  appointed bureaucracy.
• Reform of the ineffective Community practices and
  policies.
• Community policies should encourage enterprise
  through getting rid of barriers and making it
  possible for companies to operate on a Europe
  wide scale. Action to free markets, widen choice,
  reduce government intervention.
• Community should lead the process of removing the
  barriers to trade in GATT.

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The major reform issues
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The major reform issues
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Convergence of domestic policy preferences in the
large member states

• economic integration part of a geopolitical
  grand strategy response to the declining
  industrial competitiveness of Europe
• a way to stimulate investment by removing market
  barriers
• need for high technologies cooperation programmes
  
• need for economies of scale to compete
  effectively
• liberalization of the European market
• role of Centrist coalitions and national
  bureaucracies

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October - December 1985 Intergovernmental
Conference Negotiations Participants

• Member state ministers for Foreign affairs and
  political directors of the FM
• Permanent representatives
• Commission
• European Parliament
• Finance Ministers in September Luxembourg meeting
  on monetary capacity in the SEA

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Contributions and Outputs

• Debate on the EP role and competencies and the
  cooperation procedure agreed
• Single European Act instead of the Treaty of Rome
  revisions coupled with the Treaty on Foreign and
  Security policy
• Endorsement of the Internal market goal by
  December 31, 1992
• Recognition of the need to converge economic and
  monetary policies
• QMV in a limited number of areas
• Article 95 to allow Single market measures to be
  agreed by QMV with the exception of the fiscal
  provisions, the free movement of persons, and the
  rights and interests of employed persons
• Provision for structured cohesion policy agreed

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December 1985 Luxemburg Council

• Failure to resolve the outstanding issues

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• February 1986 SEA signed in Luxembourg by nine of
  the twelve
• The Hague signatories
• Danish Parliamentary negative vote and
  ratification referendum
• Italian Parliament deliberations
• Greek wait and see delay
• Irish Supreme Court ruling and referendum
• SEA effective July, 1, 1987

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Resolutions and Outcomes

• Foundation for completion of the single market
• Potential for advancement of integration in
  related economic and social sections
• Strengthening of the Commission position
• Step towards bridging the democratic deficit
• Means for enhancing EC international standing
  through EPC
• Cohesion policy a tool for closing the gap
  between the ECs rich and poor member states and
  regions

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SEA the triumph of the lowest common denominator
method of bargaining?

• Part of the story of the Single European Act,
  therefore, is that governments decided to strike
  a bargain on deregulation, which seemed to them
  to require, were it to be effective, reform of
  the decision making system.

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Single European Act links the EU market
liberalization with institutional reform

• Provisions for completion of internal market
• Reform package of 279 proposals aiming to create
  an area without internal frontiers in which the
  free movement of goods, persons, services and
  capital is ensured
• Removal of non tariff barriers on the basis of
  mutual recognition
• Provisions for limited foreign policy cooperation
• Provisions for change in decision - making
  procedures
• Thanks to the Single Act, the Council,
  Parliament and the Commission are a more
  efficient institutional troika than they were a
  few years ago. Jacque Delors

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Provisions for change in decision - making
procedures

• QMV in the Council on issues related to
  establishment and functioning of common market
• The old inequality-unanimity-immobility
  triangle has been replaced by a new
  equality-majority-dynamism triangle, the key to
  success. Jacque Delors

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• Restrictions of member states legal freedom of
  action?
• Sacrifice of sovereignty?
• OR
• A process of pooling sovereignty through
  incremental change and thus sharing the
  capability to make decisions among governments
  through a process of QMV?
• Is authority transferred to the supranational
  body?

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NO!

• Decision making intergovernmental
• Decision enforcement national

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The debate on nature of the European institutions
continued

• A network involving the pooling of sovereignty
• Supranationality acquired through the spill over
  process
• A set of intergovernmental bargains

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EC as a network

• Establishes common expectations / provides
  information / facilitates intergovernmental
  negotiations
• Protects members against the consequences of
  uncertainty
• EU as a series of intergovernmental bargains
• Pooling and sharing of sovereignty rather than
  its transfer to the supranational level

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EC as a supranational polity

• More centralized and institutionalized than any
  other international organization
• Possesses full jurisdiction over external trade
  (but not in foreign policy or defense, nor in
  judicial sphere)
• Possesses a legal status
• Supremacy of the EC laws over the laws of the
  member states / Court of Justice
• Possesses Own Resources
• Trade policy making / authority to negotiate with
  the rest of the world
• The authority is derived from the member - states
  as a result of a process of decision making
  cumulative pattern of accommodation in which the
  participants refrain from unconditionally vetoing
  proposals and instead seek to attain agreement by
  means of compromises upgrading common interests.

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The three hypothesis concurrence

• Intergovernmental bargains necessary
  condition of European integration process

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Three contending (?) hypotheses

• Spillover hypotheses
• political institutions and the Community
  processes
• World political economy hypotheses
• affecting the member states positions and
  intergovernmental bargaining processes resulting
  in legitimate task expansion of the Community
• Preference convergence hypotheses
• endogenous changes in the incentives and
  convergence of governments policy preferences

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Spillover

• in a dialectical manner, the enlargement from
  the six to the twelve, first appearing as an
  antithesis to effective decision making, became a
  decisive element in decision making reform.
• Spillover took place not as a functional
  expansion of tasks, but rather in the form of
  creation, as a result of enlargement, of
  incentives for institutional change.

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World political economy Rational Adaptive
hypothesis

• Concern for EC waning competitiveness
• The national champion strategy failure
• Turbulence in the oil market

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Convergence of preferences of the major European
governments

• Shift of the French economic policy towards
  deregulatory preferences
• Resolution of the British budgetary problem
• Delors programme on creation of the Single
  market
• The EC as the practical means for economic
  success, improved quality of life, prosperity and
  security of its peoples

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• Explaining the SEA
• Thrust for institutional reform

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Supranational institutions

• Two trends in the European parliament
• reform and revival of the EC on the basis of a
  new Treaty/ Federalism as the basis / a broad
  expansion of the EC activities scope /
  Institutional Affairs Committee / Draft Treaty
  Establishing the European Union (Altiero
  Spinelli)
• Liberalization of the internal market through
  abolishing administrative, technical and fiscal
  barriers
• Parliament Resolution on the SEA in no way
  represents the real reform of the Community that
  our people need.

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Transnational business groups

• The Thorn- Davignon Commission (1981) Big 12
• Round table of European industrialists (1983)
  geared by Guy Gyllenhammer
• The Union des Confederations de lIndustrie et
  des Employeurs dEurope (1984)
• Wisse Dekker Europa 1990 plan for market
  liberalization (1984)

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International Political Leaders

• January 1984 Frances Presidency, Mitterrand
  commitment to BBI resolution
• Delors Commission Presidency a symptom of
  mounting pressure for reform
• Delors December 1985 tour to secure approval of
  the European Heads of state
• Delors policy to identify the reform goal with a
  date / to be achieved in a two terms period by
  1992

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• The intergovernmentalist and neofunctionlist
  analysis foci

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Neofunctionalism

• Underlying propositions
• An elite alliance between transnationally
  organized interest groups
• Ability of the central institutions to generate
  strong positive expectations
• Demonstration that further actions are necessary
  to attain the goals already agreed
• Upgrading the common interest nature of
  bargaining

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Intergovernmentalism

• Underlying propositions
• EC politics is the continuation of domestic
  policies and result of national initiatives
• Bargains reflect the relative power positions of
  the member-states
• Bargaining converges toward the minimum common
  denominator principle
• Threat of exclusion as a tool coercing a state to
  accept the outcome it does not prefer to the
  status quo
• Unanimity as the key tool of sovereignty
  protection
• No granting of open ended authority to central
  institutions
• International regime contributes to shaping
  interstate politics by providing a common
  framework that reduces uncertainty and
  transaction costs of interstate interactions
• Changing interests are the sources of the regime
  reform

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Dynamics of QMV The Six12 votes cast by 4
member states
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Dynamics of QMV The Nine41 votes cast by 6
member states
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Dynamics of QMV The Ten45 votes with the
blocking minority of 30.2
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Dynamics of QMV The Twelve54 votes /with the
blocking minority of 30.3
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Dynamics of QMV The Fifteen62 votes with the
blocking minority of 29.9
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• Dynamics of QMV The Twenty Five
• 232 (72.3) votes with the demographic clause
  providing for population per cent check (at least
  62 of the Union population)
• based on the new weightings introduced by the
  Treaty of Nice

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New weighting of votes As from 1 January 2007

• Qualified majority for votes in the Council is
  set at 255 votes out of a total of 345, cast byat
  least 14 Member States out of 27. a Member State
  may request verification that the QM represents
  at least 62 of the population of the EU (for
  2007 the threshold is established as 305.5
  million people out of a total of 492.8 million).
  The distribution of votes is the following
• Germany, France, Italy, United Kingdom - 29
  votes
• Spain, Poland - 27 votes
• Romania - 14 votes
• Netherlands - 13 votes
• Belgium, Czech Republic, Greece, Hungary,
  Portugal - 12 votes
• Austria, Sweden, Bulgaria - 10 votes
• Denmark, Ireland, Lithuania, Slovakia, Finland -
  7 votes
• Cyprus, Estonia, Latvia, Luxembourg, Slovenia - 4
  votes
• Malta - 3 votes

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After (if) the Constitutional Treaty amendments
become effective

• Article 24 Qualified majority
• When the European Council or the Council of
  Ministers takes decisions by qualified majority,
  such a majority shall consist of the majority of
  Member States, representing at least three fifths
  of the population of the Union.
• When the Constitution does not require the
  European Council or the Council of Ministers to
  act on the basis of a proposal of the Commission,
  or when the European Council or the Council of
  Ministers is not acting on the initiative of the
  Union Minister for Foreign Affairs, the required
  qualified majority shall consist of two thirds of
  the Member States, representing at least three
  fifths of the population of the Union.
• The provisions of paragraphs 1 and 2 shall take
  effect on 1 November 2009, after the European
  Parliament elections have taken place, according
  to the provisions of Article 19.

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• Where the Constitution provides in Part III for
  European laws and framework laws to be adopted by
  the Council of Ministers according to a special
  legislative procedure, the European Council can
  adopt, on its own initiative and by unanimity,
  after a period of consideration of at least six
  months, a decision allowing for the adoption of
  such European laws or framework laws according to
  the ordinary legislative procedure. The European
  Council shall act after consulting the European
  Parliament and informing the national
  Parliaments.
• Where the Constitution provides in Part III for
  the Council of Ministers to act unanimously in a
  given area, the European Council can adopt, on
  its own initiative and by unanimity, a European
  decision allowing the Council of Ministers to act
  by qualified majority in that area.
• Any initiative taken by the European Council
  under this subparagraph shall be sent to national
  Parliaments no less than four months before any
  decision is taken on it.

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Lecture 7 From the European Community to the
European Union (1989-1993)

• The relation between the disintegration of the
  USSR, German unification and the acceleration
  processes in integration
• The Treaty on the European Union (the IGCs and
  the Maastricht summit, 1992)
• Structure and the three pillars of the EU
• Ratification hurdles

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Readings for the lecture

• Dinan Desmond (1999) Ever Closer Union. An
  Introduction to European Integration. Second
  edition. The European Union Series. Palgrave.
  Chapter 6.
• L.Tsoukalis. The Economic and Monetary Union
  The Primacy of High Politics (1996). The European
  Union. Readings on the Theory and Practice of
  European Integration, Nelsen B.F. and Alexander C
  G. Stubb (eds.), Palgrave, 1998.

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Seminar 3 Institutional Change in Europe in the
1980s

• Discussion of the European Community as a
  network supranationality and intergovernmental
  bargains.
• Spill over, political economy and the preference
  convergence hypotheses for the EC institutional
  change.
• Hoffman and Keohane projections for the 90s
  (Discussion is based on the paper by Robert O.
  Keohane and Stanley Hoffmann Institutional
  Change in Europe in the 1980s in The new
  European Community. Decision-making and
  Institutional Change, Robert O. Keohane and
  Stanley Hoffmann (eds), 1991, Westview press.)

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• Thank you!