History and Theory of European
Integration
Marina V. Larionova
JEAN MONNET European Module
Lecture 6
Transformation of the European Community
(1979-1989)
JEAN MONNET European Module
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)
JEAN MONNET European Module
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;
JEAN MONNET European Module
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.
JEAN MONNET European Module
End of 70s - Beginning of 80s
The patient too ill for a birthday party?
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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 Jenkin’s 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
 Thatcher’s 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 EC’s 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
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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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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 budgetary issue
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Iberian enlargement
• October 1978 - Portugal application
• February 1979 - Spanish application
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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 biliion ECU
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Building Europe from the Roof Down?
The early 80s
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November 1981 - London Council
Hans Dietrich Genscher and Emilio Columbo bilateral
initiative
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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 EP
 Strengthening of the EMS (EMF)
 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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1984
French Presidency in the EC
Francois Mitterrand’s shuttle diplomacy
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“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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Mitterrand’s “geometrie variable”
strategy
• Mitterrand’s 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 EC’s 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
 Parliament’s right for co-decision with the Council
 Calling of an intergovernmental conference on the draft EU Treaty
JEAN MONNET European Module
Negotiations for the SEA:
“the carrot of market liberalization and
the stick of exclusion”
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June 1985 Milan Council
• Delor’s priorities
 Fully inified internal market by 1992
 Overhaul of decision making process
 New monetary policies and common macroeconomic policy
 Foreign and Defense policies
• Lord Cockfield’s 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 outvoted
JEAN MONNET European Module
Thatcher’s vision and principles for the EC
future
Shared by the member states?
1.
2.
3.
4.
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.
JEAN MONNET European Module
The major reform issues
The major
reform issues
Germany
Helmut Kohl
France
Francois
Mitterrand
Britain
Margaret
Thatcher
EC
Delor
Monetary
coordination
-
+
-
+
CMP subject to
freedom of capital
markets and
coordinated
economic policy
the UK sovereignty
should not be
surrended
Political and
defense
cooperation
-
+
-
+
Internal
market
liberalization
+
+
+
+
JEAN MONNET European Module
The major reform issues
Majority
voting (revoke
of LC)
+
+
-
+
Institutional
reform (more
power to EP)
+
-
-
+
Two track
Europe
+
+
-
+
Negotiating a
draft treaty of
EU – call for
IGC
+
+
-
+
JEAN MONNET European Module
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
JEAN MONNET European Module
October - December 1985
Intergovernmental Conference Negotiations
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Participants
• Member state ministers for Foreign affairs and political directors
of the FM
• Permanent representatives
• Commission
• EP
• 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 measure 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 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
JEAN MONNET European Module
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 EC’s
rich and poor member states and regions
JEAN MONNET European Module
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.”
JEAN MONNET European Module
Single European Act links
liberalization of the European market 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
more efficient institutional troika than they were a few years ago.” Jacque
Delors
JEAN MONNET European Module
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
JEAN MONNET European Module
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?
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Is authority transferred to
the supranational body?
NO!
 Decision making – intergovernmental
 Decision enforcement – national
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The debate on nature of the European
institutions continued
1.
2.
3.
A network involving the pooling of sovereignty
Supranationality acquired through the spill over process
A set of intergovernmental bargains
JEAN MONNET European Module
EC as a network
• Establishes common expectations / provides information /
facilitates intergovernmental negotiations
• Protects members against the consequences of uncertainty
JEAN MONNET European Module
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.”
JEAN MONNET European Module
EU as a series of intergovernmental
bargains
Pooling and sharing of sovereignty rather than its
transfer to the supranational level
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The three hypothesis concurrence
Intergovernmental bargains – necessary condition
of European integration process
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The sources of European institutional
change in the 80s
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Three contending (?) hypotheses
• Spillover hypotheses
 political institutions and processes of the Community
• 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
JEAN MONNET European Module
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.”
JEAN MONNET European Module
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
JEAN MONNET European Module
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
administrative, technical and fiscal barriers
through
abolishing
Parliament resolution on the SEA: “…in no way represents the real
reform of the Community that our people need.”
JEAN MONNET European Module
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 l’Industrie et des Employeurs
d’Europe (1984)
• Wisse Dekker “Europa 1990” plan for market liberalization
(1984)
JEAN MONNET European Module
International political Leaders
• January 1984 – France’s presidency
• 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
JEAN MONNET European Module
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
JEAN MONNET European Module
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
JEAN MONNET European Module
Dynamics of QMV
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The Six
12 votes cast by 4 member states
France
4
Belgium
2
Italy
4
The Netherlands
2
West Germany
4
Luxembourg
1
Total
19
JEAN MONNET European Module
The Nine
41 votes cast by 6 member states
France
10
Belgium
5
Italy
10
The Netherlands
5
The UK
10
Denmark
3
West Germany
10
Ireland
3
Luxembourg
2
Total
58
JEAN MONNET European Module
The Ten
45 votes with the blocking minority of 30.2
France
10
Belgium
5
Italy
10
The Netherlands
5
The UK
10
Denmark
3
West Germany
10
Ireland
3
Greece
5
Luxembourg
2
Total
63
JEAN MONNET European Module
The Twelve
54 votes /with the blocking minority of 30.3
France
10
Belgium
5
Italy
10
The Netherlands
5
The UK
10
Portugal
5
Germany
10
Denmark
3
Spain
8
Ireland
3
Greece
5
Luxembourg
2
Total
76
JEAN MONNET European Module
The Fifteen
62 votes with the blocking minority of 29.9%
France
Italy
The UK
Germany
Spain
Greece
Belgium
The Netherlands
Portugal
10
10
10
10
8
5
5
5
5
Austria
Sweden
Denmark
Finland
Ireland
Luxembourg
4
4
3
3
3
2
Total
87
JEAN MONNET European Module
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
France
29
Austria
10
Italy
29
Sweden
10
The UK
29
Denmark
7
Germany
29
Finland
7
Spain
27
Ireland
7
Poland
27
Slovakia
7
The Netherlands
13
Lithuania
7
Greece
12
Latvia
4
Czech republic
12
Slovenia
4
Portugal
12
Estonia
4
Cyprus
4
Luxembourg
4
Malta
3
Total
321
After (if) the Constitutional Treaty
amendments become effective
Article 24: Qualified majority
1.
2.
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
3.
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.
JEAN MONNET European Module
4.
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.
JEAN MONNET European Module
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
JEAN MONNET European Module
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.
JEAN MONNET European Module
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.)
JEAN MONNET European Module
Thank you!
JEAN MONNET European Module