History and Theory of European Integration

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History and Theory of European Integration

• Marina V. Larionova

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Lecture 5

• A decade of Enlargements
• (1969-1979)

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Contents

• The Hague, relaunch of European Integration
• Accession negotiations with Britain, Denmark,
  Ireland and Norway and accession of the UK,
  Denmark, Ireland
• Werner plan for the Economic and Monetary Union
  (1970), launch of the monetary snake (1972) and
  plan for the European Monetary system and
  European Monetary mechanism (1978)

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Recommended Readings

• Dinan Desmond (1999) Ever Closer Union. An
  Introduction to European Integration. Second
  edition. The European Union Series. Palgrave.
  Chapter 3.
• Robert Skidelsky The Choice for Europe. 1970.
  Pro-European Reader. 2002. Palgrave
• Helmut Schmidt We Need the British.1974.
  Pro-European Reader. 2002. Palgrave

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The Dark ages of the 70s Community in a Time of
Flux

• Community ineffective response to the oil crisis
• Decision - making gridlocks in the Council
• Eurosclerosis
• The Hague spirit
• December 1969 summit of states
• new political dynamics and tensions
• Agreement on the basis of
• Identity of aspirations? Or Convergence of
  interests

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Liberal intergovernmentalism fundamentals

• States are the major actors (unitary actors)
• Foreign policy goals shift in response to
  changing pressures from domestic interest groups
• State preferences are neither fixed nor uniform
• Governments relative bargaining power is the
  result of asymmetric distribution of information
  and benefits of a specific agreement
• International institutions are designed and
  established to overcome first order (achieving
  coordination) and second order problems (control
  over observing rules for distribution of gains)
• Institutions design reflect the functions and
  specific problems of the cooperation
• Institutions reduce the costs for achieving the
  outcomes and controlling the behavior of states.

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Object of study

• Actors
• Actors preferences and sources of their change
• Institutional design

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Actors

• EU can be best understood as a series of
  rational choices made by national leaders. These
  choices responded to constraints and
  opportunities stemming from
• economic interests of powerful domestic
  constituents,
• the relative power of each state in the
  international system, and
• the role of institutions in bolstering the
  credibility of interstate commitments
• (Moravcsik A. (1998) The Choice for Europe
  Social Purpose and State Power from Messina to
  Maastricht. Cornell University press)

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Preferences are issue specific

• Domestic preferences reflecting the
  competitiveness of national economy act as a
  filter between the structural incentives of
  international economy and the national
  preferences (Schimmelfennig F. Liberal
  Intergovernmentalism (2004) in European
  Integration Theory. Wiener A. and Diez Th. (eds).
  Oxford)
• ideological geopolitical preferences can
  influence national preferences
• international interdependence can serve as a
  catalyst of societal demand for integration

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Integration

• Integration - a means to secure commercial
  advantage through intergovernmental bargaining on
  distribution of gains
• Three assumptions about integration process
• First order problems do not exist
• Second order problems dominate
• Supranational entrepreneurship is not necessary

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Institutional design

• driven by governments to overcome high
  transaction costs and information assymetrics
• supranational institutions assigned a role in the
  second order issues
• the degree of pooling of sovereignty or
  delegating to supranational institutions
  dependant on the value placed on the outcome
• delegation to supranational institutions acts as
  a safeguard against short term preferences of the
  governments

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The intergovernmental approach limitations

1. biased case selection (EC, IGC, Treaty
   amendments)
2. problem of separating the substantive bargaining
   and institutional choice
3. neglect of integration dynamics (ECJ)

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France

• Georges Pompidous objectives and challenges
• De Gaulles heritage
• Retaining Frances influence and credibility in
  the EU
• Overcoming persistent economic and monetary
  problems
• Enhancing Frances international standing
• Counterbalancing Germanys growing economic
  power and political assertiveness

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Germany

• Willy Brandt s objectives and challenges
• Asserting Germanys international position
• Normalizing Germanys relations within the East
  Ostpolitik
• Overcoming domestic opposition of Christian
  democrats to the Ostpolitic
• Appeasing the member states fears of Germanys
  resurgence

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Britain

• Harold Wilson challenges
• EU entry

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The Hague spirit - Completion, deepening,
enlargement

• Completion finalizing the regulations for
  funding the CAP
• Deepening extending the EC competencies beyond
  existing policies to include
• A system of foreign policy cooperation (Etienne
  Davignon report)
• Coordination of member states monetary
  policies to secure farm prices from parity
  fluctuations (Pierre Werner report on the EMU)
• Enlargement launch of negotiations conditional
  to the enforcement of the new financing system
  for CAP

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Compromise
The five commitment to resolve the regulations for funding the CAP by the end of the year French consent for enlargement negotiations to begin by June 1970
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Outcomes Completion

• A new funding system for the CAP
• positive EC own resource (amendment to the
  Treaty of Rome agreed by the foreign ministers
  subject to member states ratification)
• Levies on agricultural products
• duties on imported industrial goods
• up to 1 per cent of VAT revenue
• - negative - the mechanism of the agreement
  disadvantages member states importing on a big
  scale from outside of the EU

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Outcomes Deepening

• Davignons report (May 1970 / October 1970)
• European Political Cooperation
• Brandt agenda for EPC
• Europe wide support for his Ostpolitik policy
• Werner s plan for EMU the blueprint for
  achieving the Economic and Monetary Union
• Increased coordination of domestic economic
  policies at European level to promote convergence
  
• Institutional reform
• Fixing of exchange rates and adoption of a single
  currency by 1980

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Outcomes Deepening

• March 1971 Ecofin Council Resolution on attaining
  the EMU
• Member states commitment on the exchange rate
  fluctuation margin within 1,2 percent band
• Snake proved unworkable due to dollar instability
  in 1971
• Relaunch of the snake in the tunnel in 1972
  2,25 band
• The UK, Ireland, Denmark and Italy withdrawal
  from the system in 1973 in the wake of the oil
  crisis and economic recession

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Outcomes Enlargement

• June 1970 accession negotiations with
  Britain, Ireland, Denmark and Norway begin in
  Luxembourg

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Positions The UK

• Edward Heath approach to gain entry, then sort
  out any differences
• Edward Heath conservative party skepticism
• Harold Wilson opposition in the Labor
• Pompidou welcome of the British traditional
  Euroskepticism
• Heaths and Pompidou accord French - British
  axis?
• Labor denunciation of Heaths entry terms despite
  George Thomsons claim that they would have been
  accepted by the Labor governement

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within the UK

• The grass roots of the strength of
  opposition to European commitment which has
  existed, and continues to exist, at all levels of
  British society
• fear of being boxed into the Continental system
• fear of sovereignty cession
• concern on abandonment of its unique position of
  being both independent and universal, committed
  to none and having a hand in the shaping of all

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Causes of ambivalence

• The British response to the growth of European
  movement was schizophrenic
• Welcome of the steps to overcome age-old European
  rivalries
• Reflecting that the divide and rule policy was at
  stake, Britain will not be able to hold the
  balance of power in Western Europe
• Awareness that the new European power can
  undermine the UK influence in the world
• Robert Skidelsky The Choice for Europe

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Hence

• The British policy
• of selective sabotage and finally decision to
  stop the thrust of unity from inside Americas
  Trojan Horse in Europe
• Political argument for
• Britain has always been a European power.
  Today European powers are coming together in
  political union. Britain can no longer stop it.
  To stand outside would be to cut itself off for
  the first time from the Continent of which it has
  always been a part. This would be a betrayal of
  Englands past and the real guarantee that it
  would have no future.
• Robert Skidelsky The Choice for Europe

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A series of referendums

• France - April 1972 to split the Communist
  Socialist opposition 61 vote for
• Ireland May 1972 83 vote for
• Norway September 1972 53,5 vote against
• Denmark September 1972 63 vote in favor

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The UKParliamentary approval in October 1972

• Five days debate in the Parliament culminating in
  the vote taken on October 28
• Labor dissidents performing the divine duty of
  making a judgment and then courageously applying
  the judgment by voting for Europe (69 20
  abstaining)
• Roy Hattersley Voting for Europe

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A Historic Decision Speech to the House of
Commons by Edward Heath

• Economic and political arguments
• Change in the international trade relations
• US increasing economic connections with the new
  powers China, SU, EEC
• Commonwealth developing into a loose association
  of independent countries
• Economic and social benefits of the common market
  
• Resilience of the Community and its effective
  mechanisms of dealing with the problems arising

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Economic and political arguments cont.

• Making a commitment which involves our
  sovereignty, we are also gaining an opportunity.
  We are making a commitment to the Community as it
  exists tonight, if the House so decides, but we
  are gaining the opportunity to influence the
  decisions of the future.
• Being a member of the community would be an
  effective use of our contribution of
  sovereignty.
• Britain, which will be united to Europe
  economically, will be able to influence decisions
  affecting her future and enjoy better standard of
  life.

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The EC of the Nine in 1973

• Britain, Ireland, Denmark join the EC
• The member states of the Community, the driving
  force of European construction, affirm their
  intention before the end of the present decade to
  transform the whole complex of their relations
  into a European Union.
• October 19-20, 1972, Paris summit concluding
  statement

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External and domestic pressures, diversity of
national agendas and Euroslump

• The collapse of the postwar fixed exchange rate
  mechanism
• August 1971 Nixons statement on suspension of
  dollar convertibility and imposition of
  restrictive trade measures
• European economies slipping into recession
• Need for a concerted anti inflationary action and
  coordinated policy for exchange rate stability
  accepted in the Paris summit

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Positions/Preferences

• Brandt
• Opposing the European Regional Development Fund
  (ERDF)
• Advocating float of the currency
• Pompidou
• Concerned with the impact of the currency
  fluctuations on the CAP
• Opposing a joint float
• Support of the ERDF
• Heath
• ERDF financial assistance for depressed regions
  in the UK

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December, 1973, Copenhagen summit

• Continued inflation
• Worsening of oil crises onset of embargo in
  Rotterdam
• Need of a common energy policy and a concerted
  response to the oil crisis
• EC Common position on the Middle East causing
  further transatlantic tensions
• EC US Trade disputes
• Kissingers call for a new Atlantic Charter and a
  coordinated Western response to the oil crisis

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Positions/Preferences

• Pompidou
• Opposing Kissingers initiative
• Advocating bilateral consumer producer bargains
  on concrete supply issues
• UN stage for the multilateral negotiations on the
  general political and economic differences
• Brandt
• Support of the US position
• Continued Ostpolitik
• Treaties with the SU, Wasaw, Prague
• Agreement on Berlin
• Accord between two Germanies
• Opposition to the ERDF
• Heath
• Blocking discussions on energy to get a deal on
  the ERDF

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1974

• France - election of Giscard dEstaing
• Germany Brandts resignation and Helmut Schmidt
  becoming the Chancellor
• The UK Wilsons reelection
• Reestablishment of the French German axis
• Renegotiation of British accession agreement
  terms

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April 1974 Council meeting

• James Callaghan voices the UK demands of the
  Labor Party manifesto
• Recalculation of the UK budgetary contribution
• CAP reform
• Commonwealth interests protection

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November 1974

• Schmidts speech in the Labor party conference
  We need the British
• My party feels that the advantages of the
  EEC so far do have greater weight than the
  stresses and the burdens. After all it is an
  organization, whose pace and direction can only
  be decided by the agreement of all members. We
  feel that it provides us with the necessary means
  of cooperation which we do need to solve the
  problems of the present day crisis of the world
  economic structure.

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April 1975

• The House of Commons approval of the
  governments recommendation that Britain should
  stay in the European Community 396 to 170 votes
  split
• Three pamphlets to each voter referendum campaign
• 1975 referendum 67 vote in favor of staying

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December 1974 Paris summit

• Schmidt brokerage between the British and
  French leaders
• Agreement on the ERDF (UK getting the 28)
• Correcting mechanism decision
• Decision to hold direct elections to the European
  Parliament
• Decision to hold regular summits of the European
  council as a forum for directing EC affairs

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March 1975 Dublin summit

• Agreement on the British rebate negotiated

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Consequences of the corrective mechanism hidden
flaw

• Conditional to overall deficit of the member
  state balance of trade
• November 1979, Dublin summit, Margaret Thatcher
  demanding British money back
• June 1984, Fontainebleau meeting of the European
  Council, abatement agreement
• Abatement
• Calculated on the basis of the difference
  between the British share of community
  expenditure and the proportion of the Community
  VAT-based revenue contributed by the UK
• Paid in the form of a reduced VAT contribution
  in the following year

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The stagflation period

• The large member states failure to provide
  leadership
• Germany strong economically, but not politically
• France, depressed economically and politically
  volatile
• The UK, weak politically and economically
• Privileged partnership impatience with the
  Commission contribution to its dysfunctionalism
• Europe can only be brought forward by the
  will of a few statesmen, and not by thousands of
  regulations and hundreds of ministerial councils
• Inefficiency of the Brussels institutions
• The Council indecisiveness lack of political
  will to revive European integration
• Leo Tindemans reports (1975) on ways to advance
  European integration (two speed Europe)
• The three wise men (Barend Biesheuvel, Edmund
  Dell, Robert Marjolin) Report on European
  Institutions (1979)

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Lecture 6 Transformation of the European
Community (1979-1989)

• 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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• Thank you!