Читать книгу Orchestrating Europe (Text Only) - Keith Middlemas - Страница 11

1

1945–58 ¹

In 1945 western Europe counted the cost of yet another continental conflict, the third in the space of seventy years involving France and Germany. Yet by 1958, these two countries had formed the core of a new supranational ‘community’, transforming intra-state relations in the space of thirteen years. It represented a development to which many in 1945 would have aspired but which few would have dared to hope would be realised so quickly. This evolution marked the beginning of what is commonly referred to as ‘the process of European integration’.

It is worth pausing to consider the double connotation of the word ‘integration’, since the expression is used to imply both a sequence of institutional changes (all involving the surrender of national sovereignty) and the enmeshing of economies and societies that it is intended should flow from these measures. To be more precise, ‘integration’ was one of the goals of the European Coal and Steel Community (ECSC), founded by France, Germany, Italy and the Benelux countries in 1952, and of the European Economic Community (EEC) and EURATOM, both founded by the same six states in 1958. Nonetheless, we should realize that this term intentionally excepts many other types of institutional change on the grounds that they are ‘inter-governmental’, and do not involve the surrender of sovereignty. It also marginalizes other sources, institutional or otherwise, of Europe’s growing ‘interdependence’.

The ‘process of integration’ is given pride of place in the memoirs of those most closely identified with it. This is because they were convinced of the historical importance of their achievements, but also because they were eager to win the propaganda war against the existing inter-governmental alternatives, which they perceived as weak and incapable of sustaining further development.² The institutions and workings of the new supranational communities were pushed further into the limelight by the writings of a generation of political scientists, attracted by the novelty of provisions in the Community and the dynamic inherent in their operations. Their attitudes have subsequently been projected backwards onto the past in a series of histories which concentrate on the struggle for supranational, even federal, institutions, but which mostly exclude developments elsewhere. Yet the EEC came onto the scene relatively late in the day and although the ECSC had been created six years earlier, it was limited in its economic impact. Insofar as the economic boom of the 1950s and the trade expansion that accompanied it had been caused by institutional changes, its origins lay elsewhere. The EEC’s creation witnessed the end of western Europe’s financial and commercial rehabilitation and not the beginning.

Since the late 1970s, a new generation of historians, trudging in the wake of the so-called ‘thirty year rule’ – the period before which some national governments grant access to their archives – have been rewriting the history of this period. Much of this work has still to be assimilated into mainstream accounts but, once it has been, its main achievement will have been to widen the perspective and context of analysis and to rediscover the complexity of the past. This, in itself, has often constituted an antidote to the simplistic ‘high politics’ analysis (and sometimes straight federalist propaganda) of existing accounts. However, thus far historians have been less than successful in agreeing on a coherent ‘alternative’ explanation to federalist accounts.

One casualty of the new history has been ‘American hegemony theory’, at least in its early chronology. The ‘hegemonic leadership’ theory argues that the existence of an American political hegemony allowed for the reconciliation of lesser, more localized national differences. Thus, at the height of its relative economic, political, military and moral power, the United States is supposed to have used its good offices to establish a liberal world order and, more particularly, to have supported ‘integrative’ solutions to world problems that mirrored its own history and that seemed to underpin its own success and prosperity. The new, revisionist literature has demonstrated the limits of hegemonic power and has raised awareness of the degree to which Europe has been able to resist American influence. Equally, it has underscored the ‘European’ as opposed to the American motives in seeking to ‘change the rules’ of European inter-state relations through institutional innovation and reform.

Secondly, historians have stumbled into the ‘actor-agency’ dilemma already familiar to political scientists. Initially, much of the literature focused on the actors: the ideas that drove them, the positions of political power they occupied and their role in the nexus of key players, together with the political processes which they adapted or invented to accomplish their ends. The need to find peace in western Europe and to build a bulwark against totalitarianism formed the ‘real world’ components in this analysis. Subsequently, historians working usually in governmental archives have found a more prosaic subtext to these events. Far from an heroic, visionary quest for a better future, they recount the story of an entrenched defence of perceived national interest. This version of history is often juxtaposed against the earlier approaches but the two are not necessarily irreconcilable. The international agreements that underpin the integration ‘process’ were usually submitted to parliamentary scrutiny and the threat of rejection placed constraints on too cavalier a surrender of sovereignty on issues of real public concern. Moreover, the whole idea of ‘supranationality’ is to adapt the rules of future political behaviour, to determine a new ‘how’ for the political process. It may remain a primary goal even if it requires a surrender of consistency or elegance in the short-term.

This version of ‘perceived national interest’ is itself the outcome of domestic political processes and is susceptible to changes in the balance both within governments and between governments. It is some way removed from the concept of national interest as formulated by ‘realist’ or ‘neo-realist’ scholars, who argue that the state is a unitary actor, intent on maximizing its interests, whose foreign policy behaviour can be understood from an objective reading of its relative geo-political position. Within the literature of integration this type of analysis made its appearance in the early 1960s³ and has recently been revived. In its current version, the viability or survival of post-War, democratic states lay in their ability to satisfy a ‘consensus’ built around comprehensive welfare provision, economic growth and agricultural protection. According to this critique, only when these goals can not be met in any other way do governments agree to surrender sovereignty, usually emerging stronger as a result.⁴ Aside from postulating an implausible degree of coherence in collective decision-making, this version of events both exaggerates the dangers confronting European states in what was, after all, the middle of the greatest economic boom in modem history, and the importance of supranational mechanisms in resolving residual commercial challenges.

Despite the awesome destructive power of the weaponry deployed during the Second World War, Europe’s post-War productive capacity was not as damaged as has often been claimed. Although the image of utter devastation still persists, the material damage was concentrated on areas of infrastructural investment (mainly transport and housing) and much less on productive capital. Most historians now accept that Europe’s industrial capacity was larger in the late 1940s than it had been in 1938 and, in some respects, better adapted to the needs of the post-War era. Without taking this into account, it is impossible to understand Europe’s rapid industrial recovery. Already by 1947, most western European countries had surpassed their pre-War levels of industrial output. Germany, the main exception, was not to do so until 1950, by which time western Europe as a whole was producing almost 25 per cent more than in the pre-War years. Although the expansion of manufacturing was remarkable, serious problems still remained. Basic industries, such as coal and steel, struggled to recapture pre-War levels and the neglect and destruction of transportation systems also caused major bottle-necks. Agricultural production was not as severely weakened within western Europe, but recovery was much slower than it had been for industry. Although a poor harvest in 1947 reinforced the negative image of the condition of European agriculture after the War, this was a serious but isolated incident and output rebounded quickly. Even so, it was not until 1950 that production recovered to its pre-War levels.⁵

The impact of all these changes was to widen the productivity gap between Europe and the USA. In industry alone, the USA had emerged from the War with double the output of 1938 and, despite the dislocation of adjusting to peacetime conditions (and a short-lived recession), had added further to this position by 1950. Without closing the gap, it was felt that Europe would be unable to repair the trade imbalance with the US and would be unable to sustain acceptable standards of welfare for its peoples. This problem was aggravated by the impact of the War on Europe’s trading relationships, both with each other and with the rest of the world.

American wartime planning had aspired to a world multilateral trade and payments system. The Bretton Woods conference, held in July 1944, decided in favour of the restoration of the gold-exchange standard (based on gold and convertible reserve currencies) but with two important safeguards. Firstly, it created the International Monetary Fund (IMF) to aid countries against speculative attack. Secondly, it agreed a set of ‘rules’ to govern international monetary behaviour. In December 1945, the US proposed complementing the arrangements for world monetary order by the creation of the International Trade Organisation (ITO) to ease trade conditions and to co-ordinate national countercyclical policies. Its constitution, in a much watered-down form, was agreed in Havana in 1948. However, the ITO never came into existence because the US Congress, unwilling to surrender so much control over its protectionist arsenal, refused its ratification. This left the temporary and far less comprehensive General Agreement on Tariffs and Trade (GATT), agreed in 1947, as the main regulatory body for commodity trade. It is important to note that in both areas, the agenda for action was a global one. There was little place for new regional discrimination and every intention to eradicate existing trade preference areas, usually between colonial and metropolitan powers.⁶

Instead of a multilateral trading system, Europe’s trade and payments had returned to the pattern of bilateralism and autarky that had characterized the 1930s. Indeed the pervasiveness of frontier controls between countries and across products surpassed anything that had been seen in peacetime since the start of the free trade movement a century earlier. Europe’s commercial problems stemmed from several different sources. The effect of the dislocation of the War on many economies made it difficult to divert production to exports at the expense of investment or already low levels of consumption. Moreover, the liquidation or destruction of foreign investments which, even by 1950, were still earning 75% less in real terms than they had been in 1938, removed an important source for covering import requirements. These two developments aggravated trade imbalances but the problem was further complicated by shifts in the direction of trade. Germany had provided many countries with imports of fuel and raw materials, semi-manufactured and investment goods upon which their own industries had depended. Because German recovery was inhibited by the occupying Allies, this source of supply was much diminished. Moreover, agricultural goods, and particularly grain, were no longer available in the same quantities from eastern Europe. Indeed the only area capable of compensating for this shortfall in supply was North America. Thus the trade deficit with the dollar area increased enormously compared with before the War, at a time when the disruption of colonial economies also meant that Europe was no longer able to earn dollars from triangular trade. The scarcity of hard currencies forced countries to restrict imports and control trade through bilateral agreements, augmented with quantitative restrictions and exchange controls. The effects of these problems, and the measures chosen to cope with them, reduced the relative levels of internal trade in peacetime in western Europe to possibly their lowest point in the twentieth century. The share of internal trade as a proportion of Europe’s total imports and exports fell from almost 48% in 1938 to under 35% ten years later.⁷

It was against this background that, early in 1947, there occurred a sharp deterioration in western Europe’s balance of payments. It was probably occasioned primarily by the ambitious inflationary investment plans initiated in pursuit of domestic reconstruction but was aggravated by the impact of poor harvests on Europe’s terms of trade. Yet it was this second factor, with its associated images of hunger, high prices and social discontent, that formed the prime means publicly to legitimize the massive dollar investment programme announced by the American secretary of state, General George Marshall, at a speech at Harvard University in June 1947. The announcement of the Marshall Plan has often been associated with the ‘Truman Doctrine’ of March 1947, which pledged American help to the Greek government in their struggle against the Communists in the civil war. Together, they have come to symbolize the start of the Cold War. Yet Marshall Aid marked another fundamental shift in American policy. It represented a recognition that Europe’s reconstruction could not be managed within a global, multilateral framework, but rather that the continent’s rehabilitation was a prerequisite for the functioning of wider arrangements.⁸

The failure of a global strategy was underlined within months of the announcement of Marshall Aid. When, in 1945, the Anglo-American loan agreement had been signed, one of its clauses had stipulated that the United Kingdom would reintroduce sterling convertibility by mid–1947. This would allow countries to use their sterling reserves for multilateral settlements and thus reduce the pressures on the dollar. On the appointed day, supported by new loans, the British government duly announced the return to convertibility and found itself immediately confronted with a run on reserves. Within seven weeks, the experiment was abruptly curtailed. Nothing else could have demonstrated so eloquently that it was not currency or liquidity that the system needed, but one currency in particular (the US dollar) and in one area (western Europe).

Of course there was a realization that special transient arrangements would be needed to assist recovery from wartime destruction. In November 1943, for example, forty-four governments created the United Nations Relief and Rehabilitation Administration (UNRRA) for the provision of immediate relief in the form of food, clothing and shelter, as well as the raw materials and machinery necessary to restart agricultural and industrial production. In mid–1946, the UNRRA decided to wind up its operations by the spring of 1947. Before then, in June 1946, another Bretton Woods institution, the International Bank for Reconstruction and Development (IBRD or World Bank) had commenced operations, although it was another full year before it made its first loan. Marshall Aid, however, was an implicit acknowledgment that IBRD funds would be no match for the task at hand.

The United States began its active intervention in Europe’s structural problems with the European Recovery Program (ERP). In comparison with the $4 billion that the United States had contributed to European reconstruction in the first two years since the War through the UNRRA and other programmes, over the four years of its operation Marshall aid allocated to Europe nearly $12.5 billion: $10 billion in grants, $1 billion in loans and $1.5 billion in ‘conditional aid’, which was used to lubricate the limited intra-European Payments Agreement of 1948. Not only were the sums contributed far larger than had previously been considered necessary, but ERP was important in enabling countries to adopt longer-term and more secure planning frameworks for their investment strategies, by giving recipient countries a commitment to provide financial aid and other assistance on a four-year, rather than an ad hoc, basis. On the American side, the Economic Cooperation Agency (ECA) administered the scheme. In Europe, sixteen states formed the Committee for European Economic Cooperation (CEEC) to decide on accepting the aid and, in 1948, continued their existence as the Organisation for European Economic Cooperation (OEEC).

The dollars were made available for vital import requirements. Only 17% was spent directly on imports of ‘machinery and vehicles’, the rest went on raw materials and agricultural products. The importers, however, paid the equivalent in domestic currency to their governments who were free to use the money on capital projects. This mechanism freed domestic funds for capital formation and, since ECA approval was required before the funds could be spent, it allowed US planners to influence directly the direction of economic change. In addition, for example by refusing funds to Italian firms that dealt with non-’free’ (i.e., communist) trade unions, it also permitted their intrusion into the politics and societies of European states.

The macroeconomic impact of the ERP on European economies has recently been questioned. Certainly it did not save the continent from ruin and starvation since, by the time its funds came on stream in mid–1948, that moment had long passed. Instead, it contributed to the maintenance of already high investment levels, with the greatest relative impact in the first two years. However, funding was not on a scale sufficient to explain the super-growth of the 1950s. It is true that in 1948 and 1949, the contribution of ERP funds to gross domestic capital formation touched 30% in Germany and Italy, but in both countries the global figures were particularly low. The more usual level was around 10%, as it was also for Italy and Germany in 1950 and 1951; a useful but not decisive contribution. New calculations suggest that aid directly contributed only 0.5% per annum to annual growth in this period. Indirectly, the flow of funds for raw materials itself released resources for investment and the secure planning horizons might also have contributed to raising investment and output targets. The ERP also reduced the tension of the said structural adjustment. At a time when demand exceeded supply by 7.5%, an addition of 2.5% to GNP reduced the potential conflict about how wealth should be distributed between labour and capital.⁹

Not unnaturally, the Americans were reluctant to see their funds siphoned off into competing national schemes, each presumably demanding further measures of national protection. They insisted from the start that the funds be allocated according to pan-European criteria and in the service of a pan-European plan. The European criterion for aid assessment was adopted. It was taken as the size of the dollar gap rather than any estimate of size of income or degree of damage. A European plan also emerged, aimed at the previously prescribed goal of balance of payments equilibrium by 1952. However, a closer reading of the European plan demonstrates that it was little more than the aggregation of separate national plans. The Americans had more success in encouraging measures for the freeing of trade and payments from national constraints and protectionism. Although the causes of the economic growth of the 1950s, and the even more spectacular expansion of trade that accompanied it, are many and complex, at an institutional level it was the ERP, through the OEEC, that laid the foundations.

In October 1949, the ECA administrator, Paul Hoffman, made a major speech to the OEEC in which he called repeatedly for ‘integration’ as the price for a continued, generous level of dollar aid. ‘The substance of such integration’, he went on, ‘would be the formation of a single large market in which quantitative restriction on the movement of goods, monetary barriers to the flow of payments and, eventually, all tariffs are permanently swept away.’ Although the OEEC had experimented in 1948 and 1949 with some limited multilateral payments schemes and was at that moment considering a (modest) start to a programme of quota removal, Hoffman’s speech had the effect of concentrating minds wonderfully.

In case the OEEC was in doubt about the direction of American thinking, another ECA official, Richard Bissel, produced an outline for a European Payments Union (EPU), a discriminatory soft-currency zone, which in its detail went far beyond the usual policy advice. The Americans also pledged themselves to providing a sum of $350 million for the EPU’s working capital. It is interesting to note that the EPU was a recognition that another American creation, the IMF, was incapable of supervising Europe’s transition to convertibility. However, its rules and objectives were oriented towards the attainment of full, non-discriminatory currency convertibility. The sterling crisis of 1947 had demonstrated that any such move would rapidly have drained the IMF of its loanable funds. All the IMF could do was to recognize the serious structural problems facing the continent and sanction the discriminatory currency practices that were already commonplace.

The European Payments Union (EPU) embraced all OEEC members and came into operation in September 1950, its structure being an interesting innovation in the OEEC, which is commonly known as an ‘inter-governmental’ institution. In order to resolve conflicts, the EPU included a Special Restricted Committee of five persons chosen by lot from a list of nominees proposed by the member states, with the proviso that none of the committee members could be citizens of the countries involved in the dispute. The committee reported to the OEEC Council which then pronounced judgement. The Managing Board of the EPU, comprising seven representatives and one American observer, adjudicated using majority voting. This, too, was at odds with standard OEEC procedure, but since the Board was responsible to the OEEC Council, serious disputes were likely to end up before them anyway.

Of the initial $350 million granted to the EPU, some $80 million was immediately allocated to countries with ‘structural’ payments problems, while the remainder provided the working capital of the Union. This money was necessary to bridge the gap in the arrangements for debtors and those for creditors. The system worked thus: for each country, a margin of deficit was calculated (equivalent to 15% of the value of trade) that would receive some automatic credit on its intra-European transactions. This figure was demarcated according to five steps. In the first step, the debtor received 100% credit; in the second, he received 80% credit but had to pay the rest in gold or dollars. The amount of hard currency payable was increased until the fifth step, when only 20% was covered by credit and the rest in hard currency. Beyond that, all transactions took effect in hard currency. Overall, within the EPU allocation, a debtor could rely on a credit covering 60% of any deficit. A similar situation prevailed for creditors within the Union but although the overall position was the same (60:40), the steps were not synchronized, with the effect that creditors received hard currency from the Union earlier than the debtors were paying it in. It was to cover this gap that the dollar funding was intended.¹⁰

No sooner had the EPU been installed than it was put to the test. The German economy already had a huge deficit in autumn 1950 and the situation was rapidly deteriorating. With the exhaustion of its quota in sight, the EPU extended an extra credit line and, in February 1951 acknowledged the need for a reintroduction of quotas and the creation of state monopoly import agencies. By the summer of 1952, the crisis had been weathered and an upturn in exports allowed Germany to reopen its markets. Similar, though less violent, crises hit the United Kingdom and France in these early years and it was the EPU that provided the means whereby countries were not forced to adopt violent deflationary measures. Moreover, although in every case there was some backsliding in the commitment to hold back levels of import quotas, the fact that EPU and the OEEC’s ‘trade liberalization’ scheme (of which more below) were in existence, acted as a control over a more drastic and dislocating return to temporary protection.

From a low point in June 1952, when the combined reserves of the OEEC states stood at $7.8 billion, the position steadily improved until mid–1955 when they reached $13.4 billion. Against this background, the conditions within the EPU gradually ‘hardened’. In place of a ratio 60:40 between credit and gold, in mid–1954 the coverage was changed to 50:50 and in 1955 only 25:75. By this stage much of the EPU’s work had been done and many countries had introduced de facto convertibility on current account transactions (though this step was not formally taken until December 1958). Meanwhile, the EPU’s main customer was France and, although the job could equally have been done by the IMF, the operation held France within the European institutional orbit at a time of political upheaval fuelled by colonial unrest, and when more ‘integrationist’ experiments were being discussed.

The mirror of American concern on payments was its determination to remove quotas on intra-European trade. The obvious multilateral forum for dealing with the issue was the General Agreement on Tariffs and Trade (GATT) agreed in Havana in 1947. Yet GATT was fatally flawed. It was dependent for its existence on regular renewal by its members. Moreover, the rejection of the ITO had signalled that the US Congress was wary about agreeing to anything that might affect levels of protection for US industry. At a time when the major dysfunctional element in the world economy was seen to be the inability to pay for dollar imports through the sale of goods on the American market, it was inconceivable to envisage a reciprocal tariff negotiation that did not require for its success concessions by the United States. Although at Geneva, in 1947, GATT partners negotiated cuts of 19% in their registered tariffs on manufactured goods, at Annecy, only two years later, the meagre harvest was estimated at 2% while at Torquay, in 1950–51, it climbed marginally to reach 3%. In both these latter cases, a major factor was the reluctance of the USA to negotiate reciprocal tariff reductions. With success on tariffs beyond them, the members of GATT refrained, perhaps wisely, from tackling the enforcement of prohibitions on quotas, which were seen as even more harmful to trade than tariffs. It was for this reason that the USA accepted a regional solution to the removal of quantitative restrictions (QRs) or quotas on intra-European trade.¹¹

At the end of 1949, the OEEC adopted the target for removing import quotas directed against each other, on 50% of their ‘private’ trade, by the end of the year. This target also applied separately to each of the three groups: food and food stuffs, raw materials and manufactured goods. Under prompting from ECA officials, who argued that something a little more spectacular was necessary to convince Congress to continue aid at the present high level, the target was raised first to 60% and subsequently to 75%. The ‘trade liberalization scheme’, as it became known, had several drawbacks that made the commitments, and the achievements, less than at first sight. Firstly, the operation referred to ‘private trade’ and exempted, therefore, imports on government account. This had been done so as not to interfere in ‘domestic’ political decisions but the effect was to remove from the operation of the scheme entire swathes of trade, mostly in agriculture but sometimes also in fuel, controlled by monopoly government purchasing agencies. Secondly this bias in the operation was compounded by the fact that the initial obligation to remove QRs evenly over broad product categories was dropped once the targets were further raised. An over-performance in raw materials, for example, could and usually did compensate for an under-achievement in agriculture. Furthermore, the Liberalization Code allowed a country with balance-of-payments difficulties unilaterally to reimpose restrictions if necessary, causing a rebound effect on its trading partners and undermining the EPU’s ‘discipline’ in the process. Finally, the whole operation excluded tariffs, which were considered the preserve of GATT, so that QR removal was often accompanied by the re-imposition of (partially) suspended tariffs. The initial agreement bore all the hall-marks of the compromises necessary to secure its passage through the OEEC Council.

In October 1950, the OEEC Council agreed that by February 1951, members should remove QRs on 75% of imports from other members, but it was there that further progress stalled. The crisis atmosphere engendered by the payments problems in Germany, the UK and France meant that for them even the 75% target had to be temporarily shelved. Such circumstances obviously inhibited the pressure for further advances. Discussions were also constrained by increasing disenchantment by the ‘low tariff’ countries of the Benelux, Scandinavia and Switzerland towards the failure to tackle tariffs, and therefore to deal with all frontier barriers to trade. Finally, as QR removal advanced, it threatened to touch the hard core of protectionism in sectors deemed by governments to be politically, socially or strategically vital to the national interest.

By the mid–1950s, reflecting their less strained balance of payments positions, most OEEC countries had satisfied their 75% targets. Many had also relaxed their quota regimes towards the dollar area, although not to the same extent. Yet when the decision was taken, in January 1955, to progress towards 90 per cent liberalization, the ‘low tariff’ countries made their agreement conditional upon action being taken by the Organisation to deal with high tariffs. Although they did not get their way, the target was nonetheless renewed and when, in December 1958, France finally attained it, private trading within western Europe had, to all intents and purposes, been purged of quantitative restrictions. There remained residual quota discrimination against the USA and, of course, state trading in agriculture was widespread. Nonetheless, for an experiment with such tentative beginnings, the achievement in reducing tariffs was remarkable.

Hoffman’s call for ‘integration’ back in October 1949 acted as a catalyst for a pan-European programme of action on trade and payments. Yet, even at the time, there was an awareness that there existed another path to ‘integration’ and that it might even be preferable. Whereas Hoffman sought to increase Europe’s degree of multilateral cooperation in carefully defined but meaningful areas, secretary of state Dean Acheson preferred a strengthening of political mechanisms that would weaken the ability of national veto-rights to prevent desirable initiatives. In fairness, one should add that he preferred this path because he considered that it would be easier for European countries to comply than it would be for them to accept a more concrete programme. For both men, the ultimate goal was a ‘Europe’ that mirrored more closely the political model of the United States of America. The ‘new’ continent could still show the old how to throw off the last shackles of its ancien régime.

The concept of ‘integration’ in political or institutional terms had also entered the mainstream of debate in western Europe. During the Second World War, Resistance movements had been forced, partly by the pan-European model espoused by the fascists and the Third Reich, to produce a cogent alternative that also transcended national frontiers. Their thinking was shaped by several factors that pointed the way towards international institutional reform. The failure of the Versailles Treaty and the League of Nations to prevent the reassertion of aggressive nationalism suggested that the foreign policies of nation states required stronger constraints. Similarly, the ‘beggar-thy-neighbour’ policies that characterized separate national responses towards the Great Depression suggested that there, too, some higher disciplinary force was necessary. These ideas had inspired the original surge of post-War institution-building, but for many observers the strengthening of inter-governmental organizations was not enough. They argued that national units were too small to guarantee security and prosperity in the modem world and too recalcitrant to guarantee freedom from assault. Solutions lay in the pooling of national sovereignties, thereby effectively proscribing the use of national means for economic or military aggression.

After the War almost every country witnessed the creation of national ‘European’ movements, even though they often disagreed on both aims and tactics. Some dedicated themselves to the task of leading opinion, while others had more populist aspirations. Some saw progress as incremental, like a ripple effect from a core of commitment; others wanted a swift adoption of new political structures; some took a view that it was good for others but not necessarily for themselves. Various national federalist groups, more geared towards mobilizing mass opinion and characterized in their approach by a certain ‘constitutionalism’, formed the European Union of Federalists in 1946. Another organization formed at this time, intent on mobilizing support for a new form of European political organisation, was the Socialist Movement for a United States of Europe. However, the lead in galvanizing public opinion was the United Europe Movement, inspired by Winston Churchill’s Zürich speech in September 1946, calling for a United States of Europe, and founded by his son-in-law, Duncan Sandys. It was this body that, in May 1948, sponsored the Congress of the European Movement, held in the Hague.¹²

The Hague Congress, which created the Council of Europe, was supposed to create a new momentum towards higher federalist goals. Instead, its creation was its own greatest achievement. Whether the British government, or Churchill in opposition, had ever held more than a fleeting interest in actively associating themselves with the construction of a European federation is highly questionable. Embroiled in an organization with a federation as its goal, the government rapidly proceeded to distance itself from other countries’ impulses towards ‘integration’, and in the process became the focus of opposition. The Council of Europe became tom between the ‘federalists’, who wanted to move quickly towards new constitutional arrangements, and the ‘functionalists’, who believed that new arrangements would be workable only if the surrender of sovereignty were a functional necessity. The latter envisaged that progress would take place cautiously, on a step-by-step basis, but since the UK was the leading exponent of the functionalist school, the position boiled down to one of no progress at all.

These developments quickly paralysed developments in the Council of Europe and certainly robbed the European movement, in its various guises, of direct political influence. Only in Italy, under the leadership of Altiero Spinelli, was there an attempt to convert the federalist cause into a mass movement, the Movimento Federalista Europeo. Spinelli soon became disenchanted with the MFE, but his enthusiasm for supranationalism remained undiminished. When the head of the Italian government, Alcide de Gasperi, asked him to draft a federalist plan for controlling European institutions, Spinelli seized the chance. His efforts resulted in the introduction of the ‘federalist’ clause 38 into the European Defence Community treaty (see below). This, however, represented the pinnacle of the MFE’s achievements. As the EDC faded, so the movement’s influence began to ebb.¹³

Whilst popular movements cannot claim credit for initiating ‘the process of integration’, they nonetheless provided a pool of new ideas and a vocabulary that decision makers could draw upon when confronted by immediate political problems. This occurred most dramatically when, in May 1950, the French foreign minister, Robert Schuman, announced his plan to form a coal and steel pool which embraced Germany. When this call was answered by the Benelux countries and Italy as well, the way was cleared for the ‘Six’ to embark upon a series of institutional experiments built around the concepts of supranationality and surrender of sovereignty.

It was by no means preordained that six countries would become irrevocably associated with each other in a series of supranational communities, nor that those six would be France, Germany, Italy, the Netherlands, Belgium and Luxembourg. To appreciate how ‘the Six’ reached that stage, we have to go back to the creation of Benelux, and the reaction of France, especially, to that development.

Benelux was the oldest of the post-War experiments in regional integration in western Europe. It linked Belgium and Luxembourg (whose own economic union, the BLEU, dated back to 1921) to the Netherlands, first through a monetary agreement concluded in 1943, and then by a customs union treaty signed a year later by the three governments-in-exile in London. Before the War the BLEU and the Netherlands had conducted approximately 10% of their trade with each other, although there had increasingly been an imbalance in favour of the former. The greater wartime damage in the Netherlands served to accentuate the Dutch deficit, which doubled between 1947 and 1951. Despite the manifold difficulties, the customs union came into force in January 1948, when all tariffs were abolished to be replaced by a common external tariff. However, trade was still impeded by the widespread imposition of quotas, especially on the side of the Dutch. To remove these, even if only towards the BLEU, threatened to aggravate the deficit. Progress was only made possible by two further measures. Firstly, Belgium granted ever greater credit extensions (which it was willing to do if it meant securing the Dutch market from Germany, while the latter’s industry was still operating at artificially low levels) and eventually the problem was subsumed into the European Payments Union. Secondly, the Dutch were able to secure preferential access to the Belgian agricultural market. They had wanted completely free access, since this would have helped remedy their trade deficit, but they had to make do with a provision which left Belgium’s domestic protectionism intact.¹⁴

From its inception, the Benelux experiment attracted considerable attention from policy-makers in France. This should be no surprise since before the War Belgium had been France’s largest European trading partner. Just as Belgium hoped to supplant Germany in Dutch markets, so France to needed to expand into the German vacuum to fund its own modernization plans. However, whereas the Benelux tariffs lay close to each other at the lower end of the range when they agreed to a common external tariff, it was realized that any union with France would be behind highly protectionist walls. Moreover, the Netherlands required the German market for its agrarian exports and its traditional shipping services. This required a reciprocal ability to purchase German imports; something that would be impossible if the Netherlands agreed to the arrangements proposed by the French.

From 1944 onwards there was continuous French pressure to break open the Benelux. It was headed off by the creation of a joint consultative body, known as the Conseil Tripartite, which arranged swaps of raw materials in the early post-War months, attempted to co-ordinate policy towards Germany (difficult given the different national provisions) and provided a forum for French attempts for a customs union. These efforts to break open the Benelux were countered by a demand that the move could only be considered if West Germany were to be included; a demand that ran counter to the reason for the French wanting the union in the first place. In 1947 the French used the CEEC conference in Paris to bluff the Benelux partners into daring to turn down the option of a customs union. They had hoped to use American leverage, who themselves wanted to use dollar aid as a way of securing their goal of closer regional integration.

Instead the study group for a pan-European customs union was created to deflect some of the pressure. They deliberated until the end of 1948 but ultimately failed because no decision had yet been taken on the German economy and its position in any future schemes. More immediately, the French found their challenge to move to the immediate formation of a customs union accepted only by the Italians. The fact that France’s primary goal remained the Benelux was reflected in two further approaches in 1948 to persuade them to join. Both were refused.¹⁵

By December 1947 the first feasibility study for the Franco-Italian Customs Union was ready. It was surprisingly optimistic and a second commission was established to investigate how it could be implemented. In March 1949, Sforza and Schuman signed a treaty that would effectuate a customs union in a number of stages. A tariff union was already envisaged for 1950 and full economic union about six years later, but through fear of Italian competition, in particular in agriculture, the French Conseil Economique (a tripartite advisory body representing labour, industry and agriculture) thrice rejected the treaty. The government drew the inevitable conclusion and demurred from presenting it to parliament for ratification.¹⁶

It was whilst the issue of the Franco-Italian customs union was still alive that the French economy was confronted by a highly localized but serious problem; a balance-of-payments deficit with Belgium. From such unpromising beginnings was born FRITALUX, the name given to the grouping of France, Italy and the Benelux. The French solution to this trade imbalance had been a devaluation against the Belgian franc, with all the help from the Belgians in managing these ‘broken exchange rates’ that this move implied. From there the idea developed to a ‘mini payments union’ with a flexible exchange rate mechanism. Thinking in this direction was reinforced by the prospect that US dollars would be available to sponsor regional integration initiatives, which served to lubricate the discussions long after the exchange rate realignments of September 1949 had resolved France’s original problems. Given the advanced stage that the talks between France, Italy and Belgium had reached and the implications all of this would have had for Benelux, it is amazing that it was only in September 1949 that the Dutch were actually informed of what had been happening. They immediately declared that they disliked the idea and would only consider it if it were supplemented by a customs union, which would also embrace the newly sovereign West German state. The French, whilst not rejecting the idea out of hand, argued that the union would better be created first and that Germany could join later. The Dutch feared this would never materialize and that entry, if it were ever agreed, would be surrounded by so many exemptions and escape clauses that Germany might not be willing, or even able, to join. There the negotiations stuck until the spring of 1950, when it became clear that the Americans had decided to do something else with their cash – provide the initial capital for the EPU.¹⁷

With the exception of the Benelux itself, the episodes discussed in this section all ended in failure. Yet they reveal several imperatives guiding policy in the immediate post-War period. The first was the motivation in all the modernization programs to utilize the breathing space created by Allied control over the post-War German recovery, to supplant the German position in both domestic and in foreign markets. The second was the fear of unrestricted German competition. Towards the end of 1949, Allied controls were already being relaxed; yet the powers of the new supervisory authorities were ill-defined and as yet untested. With or without the complication of the Dutch insistence on surrendering frontier controls against Germany, which a customs union would imply, the re-emergence of German industry was already a certainty. It was upon meeting that challenge, either politically or economically, that the entire commercial future of Europe depended.

The coal and steel sectors of western Europe took time to recover from the War. These key industries figured prominently in governmental recovery programs, such as the Monnet Plan in France. It was not accidental that the first major broad-based plan to integrate a specific industrial sector was the European Coal and Steel Community (ECSC). Coal and steel were important traded goods and essential industrial resources. Since they were largely similar products, they were easy to control and had a long history of being subjects of international cooperation. However, neither the timing nor the authorship of the first proposals for integration was accidental. The French initiative stemmed from an acceptance that this plan would, realistically, be their only method of establishing any control over German re-industrialization. French plans for the reconstruction of their steel industry had been based on an attempt to secure markets which had previously been German and also upon guaranteed access to German coal supplies. In 1950, the US policy of relaxing controls threatened to release excess German steel capacity upon a market that was already showing signs of becoming glutted. If, at the same time, German coal was redirected towards German mills, and coal supplies to France were priced relatively unfavourably, the adverse effects on France would be compounded. The Benelux countries, and to a lesser extent Italy, were pulled into the arrangements because they could not afford to remain aloof from a powerful producer bloc being created on their borders.

The Schuman Plan, as it was known, had been prepared in the French Planning Commission by Jean Monnet’s staff. It was launched on 9 May 1950, on the eve of talks with the Americans and the British on future controls of the Ruhr’s industry, and was clearly aimed at seizing the policy agenda. The British had been neither consulted nor informed of the proposals beforehand, but quickly ascertained that the organizational form implied too great a surrender of sovereignty, and that they required an entanglement in continental Europe of a nature that was inconsistent with their other foreign obligations. French attempts to persuade them to participate, the sincerity of which has been questioned, were quickly abandoned and, in the summer of 1950, negotiations began. The treaty of Paris, establishing the European Coal and Steel Community, was signed in March 1951 and came into effect in July 1952.¹⁸

The stated goal of the treaty was to rationalize the production and sale of coal and steel. To this end, all import and export duties, subsidies and other discriminatory measures on the trade of coal and steel were immediately abolished. Although rules for pricing were established, in ‘normal’ circumstances the market was supposed to be competitive. The Community also managed funds for subsidizing firms hurt by the creation of the ECSC and for retraining workers. These were aimed particularly at the Belgian coal industry, some sectors of which were penalized by a combination of thin seams and high labour costs. Over a transitional period, efficient producers paid a levy to enable Belgian mines to adjust to the lower prices. Moreover, because of the heavy weight of fixed costs, the industry was extremely vulnerable to fluctuations in demand and therefore many of the remaining provisions were intended to come into effect in ‘abnormal’ circumstances; namely, to mitigate the impact of price falls in times of recession. It is curious that although cartel practices were prohibited within the community, the ECSC’s marketing policy in the rest of the world was identical to those that would have been followed by a private cartel.

The innovation in the treaty, and the reason why it inspired such interest among proponents of deeper ‘integration’, lay not in the settlement of a potential political and commercial problem but in the manner of its resolution. The ECSC was administered by an organizational structure which bore many outward similarities to that of the future EEC. It was controlled by the High Authority (HA), a supranational organization comprised of nine independent members assigned by each of the participating nations, which was free to initiate reaction where it had competence and rights to do so at extremes of the business cycle.

The HA co-operated with a Consultative Committee recruited from producer, labour, consumer and distributive interests. It also worked closely with a Special Council of Ministers, in which each country would have one vote, whose role was designed to increase as decisions on coal and steel impinged on wider economic and security issues. The HA was ultimately responsible to the Common Assembly comprising 78 members drawn from national parliaments. Although the HA was the most powerful governing body, the Council could block certain decisions and the Assembly could force the resignation of HA members.¹⁹

It is hard to judge the immediate economic impact of the ECSC. The overnight removal of trade controls, without the transitional periods common to most European agreements, was certainly a success. However, for coal and steel, traditional barriers were less important as regulators of trade than they had been in the past or than they were for other sectors of the economy. The coal trade was covered by international agreements in which tariffs did not really play a role; Italy, with a rate of 15%, was something of an exception. For steel, both France and Germany had already suspended tariffs before the treaty was signed and the Benelux tariff had long been fairly low. Again, only in Italy, where an ad valorem tariff of 11–23% had been levied (and which was allowed to remain intact over a transition period) did tariffs have a protectionist intent.

More important was the impact of the ECSC on pricing. The ECSC eliminated the practice of dual pricing and created a base-point pricing system. Although price controls and subsidies were not fully abolished, even small progress on this front eased trade. Moreover, the discriminatory transport-pricing policies of ECSC members were eliminated. By volume, coal and steel were among the most important traded goods, so reduction of cross-border rates of about 30% made a major impact in deregulating transportation. The opening of the coal and steel trade also expanded imports of steel products into France and the Saar, which jumped from 27,700 tons in 1952 to 117,600 in 1953 – a period of low demand with trade barriers in effect for the first few months. In fact, throughout the 1950s, total intra-community trade grew much faster than production or trade with non-members; intra-ECSC trade in treaty products increased 171% from 1952–7, while production increased only 43% and extra-ECSC trade only 51%. In addition to these concrete effects, the ECSC defined the pace and structure of the debate over future initiatives undertaken by the Six. The next initiative took place in the area of defence and security policy.

Although they were soon to be overshadowed by the Cold War with the Soviet Union and its satellites, it is important to remember that security and defence policies had initially focused on the need to inhibit future German aggression. The Treaty of Dunkirk, signed in March 1947, was a long-term Franco-British alliance directed against Germany. When the Brussels Pact was signed a year later and the Benelux countries joined the alliance, they modified its exclusive orientation against Germany by a commitment to ward off aggression from whatever source.²⁰ In the intervening twelve months, the announcement of the Truman Doctrine had highlighted a more immediate and dangerous threat to peace and security from the Soviet Union in the east. Yet the fact remained that had the Soviets invaded, the new alliances were ill-placed to stand in their way. Some have even argued that their very frailty was intended to demonstrate the necessity for American troops and equipment, backed by nuclear weapons if necessary, to be committed to Europe’s defence. Indeed, the secret so-called ‘Pentagon Talks’, which embraced the USA and Canada, started soon afterwards. These discussions came into the open in the summer of 1948 and were widened in their scope, culminating in April 1949 with the signature of the Atlantic Pact, forming the North Atlantic Treaty Organisation (NATO).²¹

American strategic planning in this period recognized that it would be impossible, even with US troops already on the ground, to defend Europe from Soviet aggression. In the event of an attack, the best scenario was a withdrawal behind the Pyrenees to Spain and across the Channel to the United Kingdom, from which points the reconquest of Europe could begin. A defence line at the Rhine or the Alps was not considered to be plausible before 1957 at the earliest. The only way to bring that date forward was to increase the European defence effort, and to employ the latent military strength of West Germany. Two events accelerated thinking in this direction: the victory of the Communists in China and, more importantly, the loss of the nuclear monopoly signified by the detection of the first Soviet atomic test in autumn 1949. These plans were made public in the crisis atmosphere surrounding the Communist invasion of South Korea which triggered the start of the Korean War. In September 1950, Acheson demanded the rearming of West Germany within NATO whilst pledging both an increase in the number of US troops stationed in Europe, and assistance for an arms buildup elsewhere.

The European reaction to events in eastern Asia was rather more sanguine than that in the USA, and few really saw any link between the Korean war and an increased threat to security in Europe. Given the fact that the rise in raw material prices which had accompanied the outbreak of war had undermined ECSC members’ balance-of-payments positions and weakened their recoveries, they were reluctant to undermine progress further by increasing defence budgets. Still less did they see any immediate necessity for German rearmament. In France especially, this reaction was acute. If the idea of facing a resurgent German industry had filled French policy-makers with dismay, their alarm at the prospect of a reconstituted German army was even greater. Since much of the French army was involved in Indo-China, Germany would soon have the largest army in western Europe.

Within the French planning ministry, an alternative strategy was hurriedly put together. If supranationality had provided a vehicle for controlling German industry, could it not serve to control its rearmament as well? In October 1950, the prime minister René Pleven announced that France would accept German rearmament only in the context of a European army, under the control of a single minister of defence. Initially, the Americans were horrified at the delay to the formation of German divisions that acceptance of the French proposals would imply. Although talks on the Pleven Plan started in February 1951, parallel efforts continued to find a formula for the integration of the German army into NATO. When these failed, in summer 1951, the US not only tolerated the French scheme but became an enthusiastic advocate. A European Defence Community (EDC) would become the agent for carrying forward the process of integration in Europe.²²

At this point, only five of the six ECSC countries were involved as full participants in the negotiations. After the switch in the American position, the Netherlands finally joined too, its change of heart prompted by a fear of losing American cash and goodwill and the hope of securing a defensive line (the Rhine-Ijssel line) that would not abandon most of the country to advancing Soviet forces. In May 1952, the treaty establishing the EDC was signed in Paris. It was not particularly elegant in design, nor particularly egalitarian in intent. To neutralize the danger of independent German military adventure, the army was to be made up of national units of battalion size only. Having thus fragmented German military capacity, the French then went on to remove their own colonial armed forces from Community control. By defining Germany as a potential war zone, the treaty also proscribed the manufacture of certain war equipment on German soil. Despite the modifications made during the negotiations, the EDC did not make much military sense. Nor did it much appeal to the other members of the Six. But the treaty’s greatest failure lay in its primary task of making German remilitarization acceptable to French public opinion. Successive French governments shrank from presenting the treaty to parliament for ratification and when they eventually did so, in August 1954, it was rejected.

The EDC is an interesting example of the limits of American hegemonic leadership. American pressure was instrumental in securing a higher priority for European defence spending and for obtaining recognition that German troops were necessary. Yet, ultimately, the American administration had to defer to the French political agenda. Moreover, having done so, they failed to secure French acceptance of its own government’s creation, despite the fact that Europe’s defence was impossible without the USA. Certainly, this point was repeatedly made and never more clearly than when secretary of state John Foster Dulles threatened an ‘agonizing reappraisal’ of the American defence commitments to Europe if the issue were not resolved quickly. Moreover, French security objectives in their colonies were utterly dependent on US assistance. From 1950 to the fall of Dien Bien Phu, the United States covered 70% of the costs of France’s colonial war in Indo-China.

Despite all the possibilities for leverage that this dependence implied, the Americans still failed to secure the acceptance of a policy with which it had become increasingly identified.²³

Part of the problem with the EDC was the question of control: to whom would a European minister of defence be responsible, who would decide how and when the European army would be used and who would decide the foreign policy that the existence of the army was supposed to support? The treaty had indeed envisaged an assembly and its first task would be to design a new, democratic model for political control. The existence of these clauses had been introduced on the insistence of Alcide de Gasperi and were a triumph for Altiero Spinelli’s federalist movement. In September 1952, the foreign ministers decided not to wait for the ratification of the EDC treaty but to move ahead immediately with the preparations for a ‘European Political Community’ (EPC). Six months later, right on schedule, the ad hoc assembly produced a draft treaty for the EPC. Meanwhile the increase in Gaullist representation in the French parliament had led to the coalition government dispensing with the services of Schuman as its foreign minister. This, more than anything, symbolized the abandonment of supranationality as the leitmotif of French foreign policy. Within the new environment, however, the EPC merely complicated an already difficult situation. For French socialists, the EDC was acceptable only if the elements of democratic control were strengthened. But any concessions in this direction would antagonize the Gaullists and others for whom the treaty was acceptable (if still unpalatable) only if the elements of national control were reinforced. Thus the French made desperate efforts to add protocols to the EDC treaty in the vain hope of finding the magic combination that would allow their parliament to ratify it.²⁴

Within the Netherlands, the EDC had created problems of a different nature. The European army had been accepted only reluctantly and the government was not interested in increasing its entanglement with premature experiments in political federation. Thus, when the EPC was launched, the Dutch made their acceptance conditional on its being given specific economic tasks. Their foreign minister, Jan Willem Beyen, attempted to get the EPC treaty to include provisions for the automatic creation of a customs union. In the subsequent inter-governmental talks on the EPC, which lasted from the autumn of 1953 until the summer of 1954, the Beyen Plan received only qualified endorsement. In theory, it was acceptable to Belgium and Germany only if it were widened to embrace a complete common market and only if provisions were added for economic policy coordination. The Italians, however, were willing to accept the idea that the creation of a common market was one of the tasks of the EPC (which left open the option that the EPC might do nothing) but were not willing to countenance it as a separate protocol. But the French were unwilling to accept it at all. With an economy lurching into deficit because of colonial wars, while government abandoned many of the ‘liberalization’ measures that had previously been adopted, the time was evidently not ripe for discussing the automatic removal of protectionism.²⁵

The EDC was never a very stable construction. It was also utterly inadequate to carry either the ambitions of the European federalists or Dutch designs for a permanent and fair removal of trade barriers. When the EDC collapsed in August 1954 on the French refusal to move to ratification, it seemed at the same time to dash all hopes that the Six might move towards further integration.

In the wake of the EDC’s collapse, there was an intense surge of diplomatic activity to resolve outstanding sources of Franco-German conflict. One success of this was the decision, based on a British initiative, to create a German army under the umbrella of NATO and under the auspices of the Western European Union (WEU) which was now to embrace all six ECSC countries, as well as the UK itself (ironically, this was a solution that could have been reached almost four years earlier). Another potentially thorny issue in relations between the two countries had been the disputed status of the Saar, pre-War German territory under French administration, later incorporated into a customs union with France. The French government had wanted to give this area ‘European’ status but, under a new agreement, France accepted that it would be bound by a plebiscite to be held in October 1955. In the event, the populace rejected the European option and the territory was transferred back to Germany in January 1957.

Another source of inconvenience, if not tension, had been the French desire to secure markets for its agricultural produce in Germany. This question had become trapped into the so-called ‘green pool’ negotiations for the creation of some form of European agricultural organization but, after their failure and the transfer of the agricultural brief to the OEEC in January 1955, the first bilateral agreement to emerge was the Franco-German wheat agreement. Among the other agreements dating from this period, possibly the next in importance was that to canalize the Moselle river, thereby improving trade between the two countries. France’s partners reacted to this flurry of activity with some ambivalence. Whilst they could see the potential gains in easing relations between the two countries, they could also see the danger that if France no longer needed ‘integration’ to control Germany, their own interests could easily be ignored in the ensuing rounds of bilateral dealing. Under these circumstances, the Benelux governments began to consider ways of relaunching the ‘European agenda’.

At the headquarters of the ECSC in Luxembourg, Jean Monnet was also concerned at the drift in events. Unaware that the French government was indifferent to his fate, he decided to make his continuance as chairman of the High Authority contingent upon progress on the European front. Rather than start afresh, or pick over the wreckage of the EDC disaster to see what could be salvaged, he considered that the best approach would be to build outwards from the existing community. This could be extended into inland transport in general, into other classical energy forms (particularly electricity generation) or, and this was to be the key to its success, into atomic power. Nuclear energy was seen as an exciting new prospect where there had been little time for entrenched interests to emerge; yet the costs of developing it were too heavy for a single country to bear. This last consideration, however, had not prevented most industrial nations from embarking on experimental programmes of their own. The French government, especially, was extremely keen on developing nuclear cooperation and particularly wanted jointly to construct an isotope separation plant, a necessary but expensive component in developing enriched uranium for future reactors and nuclear bombs. Unknown at the time, it was in December 1954 that the French nuclear energy agency began to implement a five-year programme to manufacture a French nuclear bomb.²⁶

The question of a nuclear community, EURATOM, was one of the items on the agenda when the foreign ministers of the Six met in Messina in June 1955 and it was adopted for further study alongside a patchwork of other initiatives (the main one of which was a common market, which we will return to below). The first results of this study envisaged that EURATOM would acquire a monopoly of all nuclear material and its transformation into products for fission. EURATOM would also build and control its own nuclear installations, including an isotope separation plant, financed from a common budget. Finally, it would administer a common market in all these materials and equipment. The one point it did not touch on was the relation of this structure to national military programmes, such as the one already underway in France. At this juncture the French suggested a moratorium on the manufacture and testing of nuclear weapons for five years, which did not affect the French programme because it would not be ready for such tests until after this period. The military problem was part of a wider one that, mid–way through the negotiations, was beginning to sap EURATOM’s rationale. It was never envisaged that EURATOM would be the sole European nuclear programme, merely that it would assist and facilitate (and to some extent control) parallel national programmes.²⁷

EURATOM’s future was further enfeebled by the intervention of the United States. Back in 1946, the McMahon Act had tried to limit the spread of nuclear technology by classifying the fruits of US atomic research as secret. Paradoxically, by prohibiting collaboration of any kind, it had effectively prevented the Americans from exercising any control over developments that were already taking place. In his famous ‘atoms for peace’ speech to the United Nations in December 1953, Eisenhower had signalled a change in US policy which held out the prospect of the United States providing ‘fissionable material’ for projects designed to promote the peaceful use of nuclear energy. In February 1956, it offered 20 tons of enriched uranium to EURATOM at half the cost at which any European venture could hope to supply it. Aside from the noble aim of promoting peace (and deflecting attention from the fact that the ‘new look’ strategy could turn much of central and western Europe into a nuclear battlefield), the offer would displace UK competition and provide an outlet for the surplus of three US separator plants. It would also demonstrate American backing for a new supranational initiative. Finally, it would ensure that EURATOM would not build its own separation plant.

If EURATOM was not to build a separation plant (and right to the bitter end France tried to ensure that it should), then the French were determined to retain a separate national programme, keeping both peaceful and military options open. Moreover, France was only willing to surrender the sovereignty necessary to run a parallel operation, which in reality was not very much. The only limitation on its freedom of action was a four-year moratorium on testing. Parallel to these developments was a move in the OEEC for nuclear cooperation. Thus when EURATOM was formed, robbed already of most its substance and denuded of much supranational responsibility, one of its first acts was to pay the subscription of the six for joining the OEEC’s ‘Dragon’ scheme, to build an experimental reactor, an act which also absorbed much of its operational budget.

EURATOM had carried all the hopes of – and been the target of favourable propaganda by – the Action Committee for a United States of Europe, founded by Monnet in October 1955. It was only a ‘success’ in the sense that a treaty was signed at all. The other treaty signed in Rome in March 1957 was that establishing the European Economic Community (EEC). It was lucky to get onto the Messina agenda in the first place and, ironically, it was EURATOM that helped keep it there.

During the EDC negotiations, the Beyen Plan for the creation of a customs union had received varying degrees of support from five of the six governments. The Beyen Plan had at its core the creation of a customs union according to a rigid timetable over a period of 10–12 years. In order to accommodate countries in economic difficulties, the plan contained provisions for temporary escape clauses whose implementation and execution rested with the institutions of the EPC. There would also be an adjustment fund to assist countries with structural problems. Although the Beyen Plan failed because the French Assembly rejected the EDC treaty, the discussions about its merits had served to test the range of political opinion and to anticipate many of the technical problems. Firstly, the step-by-step approach to tariff cuts was condemned as too inflexible, making it more likely that countries would have difficulties in following the schedules. A less rigid programme, albeit with intermediate and final targets, was preferable. Secondly, the safeguard clauses were thoroughly disliked, by Germany and Belgium in particular. They argued that repeated backsliding followed by justification and appeals procedures would eventually destroy the community. Instead they urged far-reaching measures of policy coordination to prevent economies moving too far out of step, thereby removing the occasions for invoking these clauses. Thirdly, although the Dutch were heavily preoccupied with commodity trade, it became apparent to all that progress would be impossible unless capital and labour mobility were also dealt with. These were valuable insights, and all would eventually find their way into the Treaty of Rome. But there was one more factor in the summer of 1954: French politicians were implacably opposed to the idea of the EEC in whatever shape or form.²⁸

The Dutch government was inclined, rightly or wrongly, to ascribe trenchant French opposition to the complexion of the government then in power. Once the Mendès-France cabinet had fallen, the Dutch considered that the main obstacle to persisting with the initiative (or indeed to expanding it by incorporating agriculture) had been removed. Thus, when the idea of a ‘relaunch’ of European integration gathered momentum, the Dutch government made its support for the Benelux memorandum conditional upon the inclusion of a customs union in the list of demands presented at Messina. However Monnet, especially, was reluctant to risk a prompt rejection of a new European initiative because it introduced an immediate challenge to French protectionism. Curiously, the German government had had similar reservations and its delegation to Messina came armed with negative instructions on the customs union in order not to isolate the French. In the event, after a particularly indecisive meeting, an agreement was reached to establish study groups, under the overall direction of Henri Spaak, to investigate all the components of the Benelux memorandum.²⁹

Once the talks commenced, it became obvious that the French were primarily interested in atomic energy. However, the Germans, having been willing to back the French at a critical moment, entered the common market negotiations with conviction, as did the Belgians. Various pointers to the moment at which France decided to take the common market issue seriously have been offered by historians, but the most credible seems to be January 1956, when a new Socialist coalition led by Guy Mollet came to power. To dispel any tendency towards backsliding, from that moment the German delegation insisted that, whenever it was appropriate, there should be a ‘Junktim’ between the common market treaty and that for atomic energy.

The second revelation during this early phase of negotiations concerned the position of the United Kingdom. Surprised at having been invited at all, the UK had joined the initial talks without a prepared position, other than to express a loose preference for a free trade area over a customs union. Opinion within the cabinet soon afterwards veered towards a rejection of a closer European entanglement and when, in November 1955, Spaak announced that the talks had proceeded sufficiently to start preparing a final report, the UK delegation elected not to take any further part, but to judge the report when it appeared. In reality, the decision had already been taken to reject the common market option and, at the prompting of the Americans (and to avoid being saddled with any blame when the negotiations failed), the announcement was made the following month. But the common market negotiations did not collapse.³⁰

The ‘Spaak Report’ was approved by the ministers of the Six in May 1956 and negotiations proper were then able to start. But the French government’s conversion to the common market did not mean that it did not have to placate significant parliamentary opposition when the treaty came up for ratification. Thus a great deal of time and emotion was expended on what were ultimately peripheral items in the treaty. For example, France demanded that elements of its own expensive social legislation (equal pay for men and women, overtime pay for work beyond forty hours a week) be incorporated into the treaty to equalize competitive conditions. Once these demands had been conceded, the French delegation returned with a proposal for sharing some of its current colonial development costs in return for access to these countries’ markets. Even with such concessions in place, the government negotiated special provisions to allow France to commence lowering its tariff barriers later than the rest whilst still enjoying the benefits of market access elsewhere. None of these provisions added to the elegance of the treaty, but they all helped to condition acceptance by the French Assembly.

A second circumstance also helped to shape the negotiations, although not as decisively as some authors have suggested. In October 1956, together with the British and in collusion with the Israelis, the French launched an attack on Egypt in order to wrest control of the Suez canal from Arab nationalists. The invasion outraged public opinion and attracted the condemnation of both the USSR and the USA. On the brink of achieving their military objectives, the British cancelled operations, leaving both powers tasting the bitter ashes of political defeat. In a gesture loaded with symbolism, Adenauer travelled to Paris for talks with Mollet in the course of which both leaders announced the outlines of the compromise (largely agreed before the Suez crisis) that would set the common market treaty back on its tracks. Suez did not rescue the common market, nor did it finally convince the French government to accept it, but it did convince Spaak that the days of the current French government were numbered. If any treaty were to be certain of ratification, it had to be concluded and presented quickly. As a result, many questions that had not been resolved or that looked unlikely to be resolved quickly were left for the community itself to work out later. This accounts for the odd mixture in the treaty between detailed provisions on some issues and more procedural outlines on others.

At the core of the common market treaty lay the creation of a customs union in three steps, each of four years, with the possibility of a three-year overrun. Spelled out in precise detail, each phase would be marked by the completion of part of the removal of tariffs on intra-area trade and the erection of a common external tariff. With the exception of some troublesome items (list G), the new tariff schedule had also been calculated. By contrast, the details of the agricultural clauses concerned the way in which the steps towards a common policy were to be achieved but said little about the shape of the policy itself. This reflected a realization by the Dutch that if they pressed for more concrete clauses, they would be unlikely to be happy with the outcome. Yet the move was also viewed favourably by federalists, who saw the entrusting of future tasks to community institutions as a positive step towards supranationality. Few at the time paid much attention to the clause at the beginning of the treaty linking progress towards a common agricultural policy at each stage to further progress towards the common market. Yet this link was to form a ‘Junktim’ of its own and to underpin the implementation of both elements in the treaty.

In order to manage the community and steer its future development, the Treaty of Rome modified the supranational structure agreed for the ECSC. A European Commission, headed by independent commissioners chosen by the member states, would have sole rights of initiative across a wide range of policy issues. Only when these had been approved by the European parliament could the Council of Ministers take decisions. Moreover, after the second stage, the Treaty foresaw that the ministers would reach decisions by majority vote rather than by unanimity.

The Treaty of Rome, signed in March 1957, was the product of a society that had already reduced many of the cruder barriers to international trade, that wished to get rid of them altogether and that wanted to ensure they would not re-emerge in the event of a subsequent recession. In addition it reflected an ambition to deal with other competitive distortions (state aid to industry, restrictive practices and other invisible trade barriers) by eliminating them at source. This required a more sophisticated institutional structure than previous inter-governmental organizations. This implication was willingly accepted because the Treaty was seen as more than a simple economic agreement; for some, at least, it carried the hopes for a future federal European state.