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European Community; Consolidation and expansion of European Community; European Union- Part I

European Community; Consolidation and expansion of European Community; European Union- Part I

  • At the end of the Second World War in 1945, Europe was in turmoil. Many areas, especially in Germany, Italy, Poland and the western parts of the USSR, had been devastated, and even the victorious powers, Britain and the USSR, were in serious financial difficulties because of the expense of the war.
  • There was a huge job of reconstruction to be done, and many people thought that the best way to go about this was by a joint effort.
    • Some even thought in terms of a united Europe, rather like the United States of America, in which the European states would come together under a federal system of government.
  • However, Europe soon split into two over the American Marshall Plan to promote recovery in Europe.
    • The nations of western Europe gladly made use of American aid, but the USSR refused to allow the countries of eastern Europe to accept it, for fear that their own control over the area would be undermined.
    • From 1947 onwards the two parts of Europe developed separately, kept apart by Joseph Stalin’s ‘iron curtain’.
  • The states of western Europe recovered surprisingly quickly from the effects of the war, thanks to a combination of American aid, an increase in the world demand for European products, rapid technological advances and careful planning by governments.
    • Some moves took place towards unity, including the setting up of NATO and the Council of Europe (both in 1949), and the European Economic Community (EEC) in 1957.
  • In Britain, enthusiasm for this type of unity developed more slowly than in other countries for fear that it would threaten British sovereignty.
    • The British decided not to join the EEC when it was first set up in 1957; when they changed their minds in 1961, the French vetoed their entry, and it was 1972 before it was finally agreed that Britain could become a member.
  • Meanwhile the communist states of eastern Europe had to be content to be satellites of the USSR.
    • They, too, moved towards a sort of economic and political unity with the introduction of
      • Molotov Plan (1947),
      • the formation of the Council for Mutual Economic Assistance (COMECON) in 1949 and
      • the Warsaw Pact (1955).
    • Until his death in 1953 Stalin tried to make all these states as much like the USSR as possible, but after 1953 they began to show more independence.
    • Yugoslavia under Tito had already developed a more decentralized system in which the communes were an important element.
    • Poland and Romania successfully introduced variations, but the Hungarians (1956) and the Czechs (1968) went too far and found themselves invaded by Soviet troops and brought to heel.
    • During the 1970s the states of eastern Europe enjoyed a period of comparative prosperity, but in the 1980s they felt the effects of world depression.
    • Dissatisfaction with the communist system began to grow; in a short period from mid 1988 until the end of 1991, communism collapsed in the USSR and in all the states of eastern Europe except Albania, where it survived until March 1992.
  • Germany, which had been divided into two separate states, one communist and one non-communist, since soon after the war, was reunified (October 1990), becoming once again the most powerful state in Europe.
  • With the end of communism, Yugoslavia disintegrated into a long civil war (1991-5).
  • In the west the European Community, which from 1992 was known as the European Union, continued to function successfully.
  • Many of the former communist states began to apply to join the Union; in 2004 there were 25 members, and now the total reached 28. But the enlargement brought its own problems.

The growth of unity in western Europe

(a) Reasons for wanting more unity

  • In every country in western Europe there were people who wanted more unity.
    • They had different ideas about exactly what sort of unity would be best:
      • some simply wanted the nations to co-operate more closely;
      • others (known as ‘federalists’) wanted to go the whole hog and have a federal system of government like the one in the USA.
  • The reasons behind this thinking were:
    • The best way for Europe to recover from the ravages of war was for all the states to work together and help each other by pooling their resources.
    • The individual states were too small and their economies too weak for them to be economically and militarily viable separately in a world now dominated by the superpowers, the USA and the USSR.
    • The more the countries of western Europe worked together, the less chance there would be of war breaking out between them again. It was the best way for a speedy reconciliation between France and Germany.
    • Joint action would enable western Europe more effectively to resist the spread of communism from the USSR.
    • The Germans were especially keen on the idea because they thought it would help them to gain acceptance as a responsible nation more quickly than after the First World War. Then, Germany had been made to wait eight years before being allowed to join the League of Nations.
    • The French thought that greater unity would enable them to influence German policies and remove long-standing worries about security.
  • Winston Churchill was one of the strongest advocates of a united Europe.
    • In March 1943 he spoke of the need for a Council of Europe.
    • In a speech in Zurich in 1946 he suggested that France and West Germany should take the lead in setting up ‘a kind of United States of Europe’.

(b) First steps in co-operation

  • The first steps in economic, military and political co-operation were soon taken, though the federalists were bitterly disappointed that a United States of Europe had not materialized by 1950.
  • The Organization for European Economic Co-operation (OEEC):
    • This was set up officially in 1948, and was the first initiative towards economic unity.
    • It began as a response to the American offer of Marshall Aid, when Ernest Bevin, the British Foreign Secretary, took the lead in organizing 16 European nations to draw up a plan for the best use of American aid. This was known as the European Recovery Programme (ERP).
    • The committee of 16 nations became the permanent OEEC.
    • Its first function, successfully achieved over the next four years, was to apportion American aid among its members, after which it went on, again with great success, to encourage trade among its members by reducing restrictions.
    • It was helped by the United Nations General Agreement on Tariffs and Trade (GATT), whose function was to reduce tariffs, and by the European Payments Union (EPU), this encouraged trade by improving the system of payments between member states, so that each state could use its own currency.
    • The OEEC was so successful that trade between its members doubled during the first six years.
    • When the USA and Canada joined in 1961 it became the Organization for Economic Co-operation and Development (OECD). Later, Australia and Japan joined.
  • The North Atlantic Treaty Organization (NATO):
    • (Explained in separate chapter)
  • The Council of Europe:
    • Set up in 1949, this was the first attempt at some sort of political unity.
    • Its founder members were Britain, Belgium, the Netherlands, Luxembourg, Denmark, France, Ireland, Italy, Norway and Sweden.
    • By 1971 all the states of western Europe (except Spain and Portugal) had joined, and so had Turkey, Malta and Cyprus, making 18 members in all.
    • Based at Strasbourg, it consisted of the foreign ministers of the member states, and an Assembly of representatives chosen by the parliaments of the states.
    • It had no powers, however, since several states, including Britain, refused to join any organization which threatened their own sovereignty.
    • It could debate pressing issues and make recommendations, and it achieved useful work sponsoring human rights agreements; but it was a grave disappointment to the federalists.

The European Community

  • Known in its early years as the European Economic Community (EEC) or the Common Market, the Community was officially set up under the terms of the Treaty of Rome (1957), signed by the six founder members:
    • France,
    • West Germany,
    • Italy,
    • Netherlands,
    • Belgium,
    • Luxembourg.

(a) Stages in the evolution of the Community

  • Benelux:
    • In 1944 the governments of Belgium, the Netherlands and Luxembourg, meeting in exile in London because their countries were occupied by the Germans, began to plan for when the war was over.
    • They agreed to set up the Benelux Customs Union, in which there would be no tariffs or other customs barders, so that trade could flow freely.
    • The driving force behind it was Paul-Henri Spaak, the Belgian socialist leader who was prime minister of Belgium from 1947 to 1949; it was put into operation in 1947.
  • The Treaty of Brussels (1948):
    • By this treaty, Britain and France joined the three Benelux countries in pledging ‘military, economic, social and cultural collaboration’.
    • While the military collaboration eventually resulted in NATO, the next step in economic co-operation was the ECSC.
  • The European Coal and Steel Community (ECSC):
    • The ECSC was set up in 1951, and was the brainchild of Robert Schuman, who was France’s Foreign Minister from 1948 to 1953.
      • Like Spaak, he was strongly in favour of international co-operation, and he hoped that involving West Germany would improve relations between France and Germany and at the same time make European industry more efficient.
      • He declared his aim was to “make war not only unthinkable but materially impossible” which was to be achieved by regional integration, of which the ECSC was the first step.
    • The Treaty of Paris (formally the Treaty establishing the European Coal and Steel Community) was signed on 18 April 1951 between France, West Germany, Italy and the three Benelux countries (Belgium, Luxembourg, and the Netherlands), establishing the European Coal and Steel Community (ECSC).
    • All duties and restrictions on trade in coal, iron and steel between the six were removed, and a High Authority was created to run the community and to organize a joint programme of expansion.
    • However, the British refused to join because they believed it would mean handing over control of their industries to an outside authority.
    • Achievements and failures of ECSC:
      • Trade between members increased which saved members’ money by not having to import resources from the United States.
      • The High Authority also issued modernization loans to the industry which helped the industry to improve output and reduce costs. Costs were further reduced by the abolition of tariffs at borders.
      • Another ECSC’s achievements are those on welfare issues.
        • Over 15 years it financed 112,500 flats for workers, enabling workers to buy a home they could not have otherwise afforded.
        • The ECSC also paid half the occupational redeployment costs of those workers who have lost their jobs as coal and steel facilities began to close down.
      • Far more important than creating Europe’s first social and regional policy, ECSC introduced European peace.
      • However the ECSC failed to achieve several fundamental aims of the Treaty of Paris.
        • It was hoped the ECSC would prevent a resurgence of large coal and steel groups such as the Konzerne, which helped Adolf Hitler rise to power.
        • In the Cold War trade-offs, the cartels and major companies re-emerged, leading to apparent price fixing (another element that was meant to be tackled).
        • In a time of high inflation and monetary instability ECSC also fell short of ensuring an upward equalisation of pay of workers within the market.
      • But the initial success of ECSC led to the desire to create more, but attempts at creating a European Defence Community and a European Political Community failed leading to a return to economic matters. In 1957, the EAEC and EEC were created by the Treaties of Rome.
    • The ECSC was such an outstanding success, even without Britain (steel production rose by almost 50 per cent during the first five years), that the six decided to extend it to include production of all goods.
  • The EEC:
    • Again it was Spaak, now foreign minister of Belgium, who was one of the main driving forces.
    • The Treaty of Rome, officially the Treaty establishing the European Economic Community, is an international agreement that led to the founding of the European Economic Community (EEC) on 1 January 1958. It was signed on 25 March 1957 by Belgium, France, Italy, Luxembourg, the Netherlands and West Germany.
    • The six countries would gradually remove all customs duties and quotas so that there would be free competition and a common market. Tariffs would be kept against non-members, but even these were reduced.
    • The treaty also provided for a common agricultural policy, which was established in 1962 to protect EEC farmers from agricultural imports.
    • The treaty also mentioned:
      • improving living and working conditions,
      • expanding industry,
      • encouraging the development of the world’s backward areas,
      • safeguarding peace and liberty, and
      • working for a closer union of European peoples.
    • Clearly something much wider than just a common market was in the minds of some of the people involved; for example, Jean Monnet, a French economist who was Chairman of the ECSC High Authority, set up an action committee to work for a United States of Europe.
    • Like the ECSC, the EEC was soon off to a flying start:
      • Between 1958 and 1968 trade among the EEC’s members quadrupled in value.
      • Within five years it was the world’s biggest exporter and biggest buyer of raw materials and was second only to the USA in steel production. Once again, however, Britain had decided not to join.

(b) The machinery of the European Community

  • The European Commission:
    • It was the body which ran the day-to-day work of the Community.
    • Based in Brussels, it was staffed by civil servants and expert economists, who took the important policy decisions.
    • It had strong powers so that it would be able to stand up against possible criticism and opposition from the governments of the six members, though in theory its decisions had to be approved by the Council of Ministers.
  • The Council of Ministers:
    • It consisted of government representatives from each of the member states.
    • Their job was to exchange information about their governments’ economic policies and to try to co-ordinate them and keep them running on similar lines.
    • There was a certain amount of friction between the Council and the Commission:
      • Commission often seemed reluctant to listen to the advice of the Council, and it kept pouring out masses of new rules and regulations.
  • The European Parliament:
    • It met at Strasbourg, consisted of 198 representatives chosen by the parliaments of the member states.
    • They could discuss issues and make recommendations, but had no control over the Commission or the Council.
    • In 1979 a new system of choosing the representatives was introduced. Instead of being nominated by parliaments, they were to be elected directly, by the people of the Community.
  • The European Court of Justice:
    • It was set up to deal with any problems that might arise out of the interpretation and operation of the Treaty of Rome.
    • It soon became regarded as the body to which people could appeal if their government was thought to be infringing the rules of the Community.
  • Also associated with the EEC was EURATOM, an organization in which the six nations pooled their efforts towards the development of atomic energy.
    • The Euratom Treaty, officially the Treaty establishing the European Atomic Energy Community established the international organization European Atomic Energy Community (EURATOM). It was signed on the 25 March 1957 at the same time as the Treaty establishing the European Economic Community (EEC Treaty). (established by one of the Treaties of Rome in 1958)
    • Euratom had main aim was to form a common market for the development of the peaceful uses of atomic energy. The original members were Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands.
    • In 1967 the EEC, ECSC and EURATOM formally merged and, dropping the word ‘economic’, became simply the European Community (EC).

(c) Britain holds back

  • Although Churchill had been one of the strongest supporters of the idea of a unified Europe, when he became prime minister again in 1951, he seemed to have lost any enthusiasm he might have had for Britain’s membership of it. Anthony Eden’s Conservative government (1955-7) decided not to sign the 1957 Treaty of Rome.
  • There were several reasons for the British refusal to join.
    • The main objection was that if they joined the Community they would no longer be in complete control of their economy.
      • The European Commission in Brussels would be able to make vital decisions affecting Britain’s internal economic affairs.
    • Although the governments of the other six states were prepared to make this sacrifice in the interests of greater overall efficiency, the British government was not.
    • There were also fears that British membership would damage their relationship with the British Commonwealth as well as their so-called ‘special relationship’ with the USA, which was not shared by the other states of Europe.
    • Most British politicians were afraid that economic unity would lead to political unity, and the loss of British sovereignty.
  • On the other hand, Britain and some of the other European states outside the EEC were worried about being excluded from selling their goods to EEC members because of the high duties on imports from outside the Community.
    • Consequently, in 1959 Britain took the lead in organizing a rival group, the European Free Trade Association (EFTA).
    • Britain, Denmark, Norway, Sweden, Switzerland, Austria and Portugal agreed gradually to abolish tariffs between themselves.
    • Britain was prepared to join an organization like EFTA because there was no question of common economic policies and no Commission to interfere with the internal affairs of states.

(d) Britain decides to join

  • Within less than four years from the signing of the Treaty of Rome, the British had changed their minds and announced that they wished to join the EEC. Their reasons were the following:
    • By 1961 it was obvious that the EEC was an outstanding success – without Britain. Since 1953 French production had risen by 75 per cent while German production had increased by almost 90 per cent.
    • Britain’s economy was much less successful- over the same period British production had risen by only about 30 per cent.
      • The British economy seemed to be stagnating in comparison with those of the Six, and in 1960 there was a balance of payments deficit of some £270 million.
    • Although EFTA had succeeded in increasing trade among its members, it was nothing like as successful as the EEC.
    • The Commonwealth, in spite of its huge population, had nothing like the same purchasing power as the EEC.
      • The British prime minister, Harold Macmillan, now thought that there need not be a clash of interest between Britain’s membership of the EEC and trade with the Commonwealth.
      • There were signs that the EEC was prepared to make special arrangements to allow Commonwealth countries and some other former European colonies to become associate members.
      • Britain’s EFTA partners might be able to join as well.
    • Another argument in favour of joining was that once Britain was in, competition from other EEC members would stimulate British industry to greater effort and efficiency.
    • Macmillan also made the point that Britain could not afford to be left out if the EEC developed into a political union.
  • The job of negotiating Britain’s entry into the EEC was given to Edward Heath, an enthusiastic supporter of European unity.
  • Talks for Britain’s entry into the EEC opened in October 1961, and although there were some difficulties, it came as a shock when the French president, Charles de Gaulle, broke off negotiations and vetoed Britain’s entry (1963).

(e) Why did the French oppose British entry into the EEC?

    • De Gaulle claimed that Britain had too many economic problems and would only weaken the EEC.
      • He also objected to any concessions being made for the Commonwealth, arguing that this would be a drain on Europe’s resources. Yet the EEC had just agreed to provide aid to France’s former colonies in Africa.
    • The British believed that de Gaulle’s real motive was his desire to continue dominating the Community. If Britain came in, she would be a serious rival.
    • De Gaulle was not happy about Britain’s ‘American connection’, believing that because of these close ties with the USA, Britain’s membership would allow the USA to dominate European affairs.
      • It would produce, he said, ‘a colossal Atlantic grouping under American dependence and control’.
      • He was annoyed that the USA had promised to supply Britain with Polaris missiles but had not made the same offer to France.
      • He was determined to prove that France was a great power and had no need of American help.
      • It was this friction between France and the USA that eventually led de Gaulle to withdraw France from NATO (1966).
    • Finally there was the problem of French agriculture:
      • EEC protected its farmers with high tariffs so that prices were much higher than in Britain.
      • Britain’s agriculture was highly efficient and subsidized to keep prices relatively low. If this continued after Britain’s entry, French farmers, with their smaller and less efficient farms, would be exposed to competition from Britain and perhaps from the Commonwealth.
  • Meanwhile the EEC success story continued, without Britain. The Community’s exports grew steadily, and the value of its exports was consistently higher than its imports.
    • Britain, on the other hand, usually had a balance of trade deficit, and in 1964 was forced to borrow heavily from the IMF to replenish rapidly dwindling gold reserves.
    • Once again, in 1967, de Gaulle vetoed Britain’s application for membership.

(f) Expansion in 1973

  • Eventually, on 1 January 1973, Britain, Ireland and Denmark was able to enter the EEC and the Six became the Nine.
  • Britain’s entry was made possible because of two main factors:
    • President de Gaulle had resigned in 1969 and his successor, Georges Pompidou, was more friendly towards Britain.
    • Britain’s Conservative prime minister, Edward Heath, negotiated with great skill and tenacity, and it was fitting that, having been a committed European for so long, he was the leader who finally took Britain into Europe.

The European Community from 1973 to Maastricht (1991)

  • The main developments and problems after the Six became the Nine in 1973 were the following.

(a) The Lome Convention (1975):

  • From the beginning the EC was criticized for being too inward-looking and self-centred, and for apparently showing no interest in using any of its wealth to help the world’s poorer nations.
  • This agreement, worked out in Lome, the capital of Togo in West Africa, did something to offset criticism.
  • It allowed goods produced in over 40 countries in Africa and the Caribbean, mostly former European colonies, to be brought into the EEC free of duties; it also promised economic aid. Other poor Third World countries were added to the list later.

(b) Direct elections to the European parliament (1979)

  • Although it had been in existence for over 20 years by this time, the EC was still remote from ordinary people.
  • One reason for introducing elections was to try to arouse more interest and bring ordinary people into closer contact with the affairs of the Community.
  • The first elections took place in June 1979, when 410 Euro-MPs were chosen. France, Italy, West Germany and Britain were allowed 81 each, the Netherlands 25, Belgium 24, Denmark 16, Eire 15 and Luxembourg 6.
    • The turnout varied widely from state to state.
      • In Britain it was disappointing – less than a third of the British electorate were interested enough to bother going along to vote.
      • In some other countries, however, notably Italy and Belgium, the turnout was over 80 per cent.
    • Overall, in the new European parliament, the right-wing and centre parties had a comfortable majority over the left.
  • Elections were to be held every five years; by the time the next elections came along in 1984, Greece had joined the Community. Greece was allowed 24 seats, bringing the total to 434.
    • The turnout of voters in Britain was again disappointing at only 32 per cent, whereas in Belgium it was 92 per cent and in Italy and Luxembourg it was over 80 per cent.
    • However, in these three countries it was more or less compulsory to vote.
    • The highest turnout in a country where voting was voluntary was 57 per cent in West Germany.

(c) The introduction of the Exchange Rate Mechanism (ERM) (1979)

  • This was introduced to link the currencies of the member states in order to limit the extent to which individual currencies could change in value against the currencies of other members.
  • A state’s currency could change in value depending on how well its domestic economy was performing: a strong economy usually meant a strong currency.
    • It was hoped that linking the currencies would help to control inflation and lead eventually to a single currency for the whole of the EC.
  • Initially Britain decided not to take the pound sterling into the ERM; she made the mistake of joining in October 1990, when the exchange rate was relatively high.

(d) Community membership grows

  • In 1981 Greece joined, followed by Portugal and Spain in 1986, bringing the total membership to 12. These countries had not been allowed to join earlier because their political systems were undemocratic.
  • Their arrival caused new problems: they were among the poorer countries of Europe and their presence increased the influence within the Community of the less industrialized nations.
  • From now on there would be increasing pressure from these countries for more action to help the less developed states and so improve the economic balance between rich and poor nations.
  • Membership increased again in 1995 when Austria, Finland and Sweden, three relatively wealthy states, joined the Community.

(e) Britain and the EC budget

  • During the early years of their membership, many British people were disappointed that Britain did not seem to be gaining any obvious benefit from the EC.
  • The Irish Republic, which joined at the same time, immediately enjoyed a surge of prosperity as her exports, mainly agricultural produce, found ready new markets in the Community.
    • Britain, on the other hand, seemed to be stagnating in the 1970s, and although her exports to the Community did increase, her imports from the Community increased far more.
    • Britain was not producing enough goods for export at the right prices.
  • A major crisis erupted in 1980 when Britain discovered that her budget contribution for that year was to be £1209 million, whereas West Germany’s was £699 million and France only had to pay £13 million.
    • Britain protested that her contribution was ridiculously high, given the general state of her economy.
    • The difference was so great because of the way the budget contribution was worked out: this took into consideration the amount of import duties received by each government from goods coming into that country from outside the EC; a proportion of those duties received had to be handed over as part of the annual budget contribution.
    • Unfortunately for the British, they imported far more goods from the outside world than any of the other members, and this was why her payment was so high.
    • After some bargaining by Britain’s prime minister, Margaret Thatcher, a compromise was reached: Britain’s contribution was reduced to a total of £1346 million over the next three years.

(f) Schengen Agreement

  • The Schengen Agreement led to the creation of Europe’s borderless Schengen Area.
  • The treaty was signed on 14 June 1985 by five of the ten member states of the then European Economic Community near the town of Schengen in Luxembourg but was not implemented (partially) until 1995.
  • It proposed the gradual abolition of border checks at the signatories’ common borders and the harmonisation of visa policies.

(g) The 1986 changes

  • Encouraging developments occurred in 1986 when all 12 members, working closely together, negotiated some important changes which, it was hoped, would improve the EC.
  • They included:
    • a move to a completely free and common market (no restrictions of any kind on internal trade and movement of goods) by 1992;
    • more EC control over health, safety, protection of the environment and protection for consumers;
    • more encouragement for scientific research and technology;
    • more help for backward regions;
    • the introduction of majority voting on many issues in the Council of Ministers.
      • This would prevent a measure from being vetoed just by one state which felt that its national interests might be threatened by that measure;
    • more powers for the European parliament so that measures could be passed with less delay.
      • This meant that the domestic parliaments of the member states were gradually losing some control over their own internal affairs.
    • In 1986, the European flag began to be used by the Community
  • Those people who favoured a federal United States of Europe were pleased by the last two points, but in some of the member states, especially Britain and Denmark, they stirred up the old controversy about national sovereignty.
  • Mrs Thatcher upset some of the other European leaders when she spoke out against any movement towards a politically united Europe: ‘a centralized federal government in Europe would be a nightmare; co-operation with the other European countries must not be at the expense of individuality, the national customs and traditions which made Europe great in the past’.

(h) The Common Agricultural Policy (CAP)

  • One of the most controversial aspects of the EC was its Common Agricultural Policy (CAP).
  • In order to help farmers and encourage them to stay in business, so that the Community could continue to produce much of its own food, it was decided to pay them subsidies.
    • This would ensure them worthwhile profits and at the same time would keep prices at reasonable levels for the consumers.
  • This was such a good deal for the farmers that they were encouraged to produce far more than could be sold. Yet the policy was continued, until by 1980 about three-quarters of the entire EC budget was being paid out each year in subsidies to farmers.
  • Britain, the Netherlands and West Germany pressed for a limit to be placed on subsidies, but the French government was reluctant to agree to this because it did not want to upset French farmers, who were doing very well out of the subsidies.
  • By 1987 the stockpiling of produce had reached ludicrous proportions.
    • There was a vast wine ‘lake’ and a butter ‘mountain’ of one and a half million tonnes – enough to supply the entire EC for a year.
    • There was enough milk powder to last five years, and storage fees alone were costing £ 1 million a day.
  • Efforts to get rid of the surplus included selling it off cheaply to the USSR, India, Pakistan and Bangladesh, distributing butter free of charge to the poor within the Community, and using it to make animal feed. Some of the oldest butter was burnt in boilers.
  • All this helped to cause a massive budget crisis in 1987: The Community had debts of£ 10 billion.
  • In a determined effort to solve the problem, the EC introduced a harsh programme of production curbs and a price freeze to put a general squeeze on Europe’s farmers.
    • This naturally caused an outcry among farmers, but by the end of 1988 it was having some success and the surpluses were shrinking steadily.
  • Member states were now beginning to concentrate on preparing for 1992 when the introduction of the single European market would bring the removal of all internal trading barriers, and, some people hoped, much greater monetary integration.

(i) Greater integration: the Maastricht Treaty (1991) [formally Treaty on European Union]

  • A summit meeting of all the heads of the member states was held in Maastricht (Netherlands) in December 1991, and an agreement was drawn up for ‘a new stage in the process of creating an even closer union among the peoples of Europe’. Some of the points agreed were:
    • more powers for the European parliament;
    • introduction of a central banking system, greater economic and monetary union, to culminate in the adoption of a common currency (the euro) shared by all the member states, around the end of the century;
    • a common foreign and security policy;
    • greater cooperation on various other issues, including the environment, policing, and social policy;
    • EU citizenship to every person who was a citizen of a member state. EU citizenship enabled people to vote and run for office in local and European Parliament elections in the EU country in which they lived, regardless of their nationality;
    • a timetable to be drawn up of the stages by which all this would be achieved.
  • Britain objected very strongly to the ideas of a federal Europe and monetary union, and to a whole section of the Treaty known as the Social Chapter, which was a list of regulations designed to protect people at work. There were rules about:
      • safe and healthy working conditions;
      • equality at work between men and women;
      • consulting workers and keeping them informed about what was going on;
      • protection of workers made redundant.
    • Britain argued that these measures would increase production costs and therefore cause unemployment.
      • The other members seemed to think that proper treatment of workers was more important.
      • In the end, because of British objections, the Social Chapter was removed from the Treaty and it was left to individual governments to decide whether or not to carry them out.
    • The rest of the Maastricht Treaty, without the Social Chapter, had to be ratified by the national parliaments of the 12 members, and this had been achieved by October 1993.
  • The French, Dutch and Belgian governments supported the Treaty strongly because they thought it was the best way to make sure that the power of the reunified Germany was contained and controlled within the Community.
  • The ordinary people of the Community were not as enthusiastic about the Treaty as their leaders.
    • The people of Denmark at first voted against it, and it took determined campaigning by the government before it was approved by a narrow majority in a second referendum (May 1993).
    • The Swiss people voted not to join the Community (December 1992), and so did the Norwegians.
    • Even in the French referendum the majority in favour of Maastricht was tiny.
    • In Britain, where the government would not allow a referendum, the Conservatives were split over Europe and the Treaty was approved only by the narrowest of majorities in parliament.
  • By the mid-1990s, after almost 40 years of existence, the European Community (known since 1992 as the European Union) had been a great success economically and had fostered good relations between the member states, but there were vital issues to be faced: How much closer could economic and political co-operation become?
  • The collapse of communism in the states of eastern Europe brought with it a whole new scenario. Would these states want to join the European Union, and if so, what should be the attitude of the existing members? In April 1994, Poland and Hungary formally applied for membership.

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