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European integration will continue to stall and may even unravel unless a Federalist institutional approach replaces the current Intergovernmental institutional approach.

Frank Gardner remarks in 'Europe, Policies and People' that the customs union which effectively became the basis for the European Union and European integration in general was 'an economic means to a political end' (Gardner, 2002: 12). This paradox defines the structure of this work. We will first look at what political goals European countries are aiming for because the differences in perceptions of federalism and intergovernmentalism depend largely on historical and political experience of a country. In the course of this we will consider what impact the legacy of the Second World War has been extracting on the way the politics of the European Union is perceived by various statesmen and bureaucrats. Drawing on this perspective, we will then be able to move on to a more specific consideration of the problems posed to the European business environment by the political hurdles. By examining European integration from the perspective of its ends and from where these have originated from, we will be able to conceive of an idea as to why today, despite many successes, the EU and the project of European integration are surviving a crisis.

Many scholars have agreed that the model of European integration which they examine is the product of the post-war stabilisation. Indeed, the very idea of integration was introduced as a countermeasure to war. A close economic collaboration between the member-states was directed at prevention of war, as well as at the re-conversion of the post-war economy and the rebuilding of Europe. At the same time, when Churchill spoke of the 'United States of Europe' in the early years of the war he meant not only a political and cultural entity, but also an ideological alliance against the Soviet bloc. With United Europe beginning to develop during the Cold War and the Socialist countries being eliminated from the Euro-American sphere of influence (especially in the years from the Warsaw Treaty of 1954 until its dissolution), it becomes clear that the very idea of Europe which used to dominate political and economic discussions has become outdated in the years following the collapse of the USSR and the end of the Cold War. One may conclude therefore that between the Treaty of Rome in 1957 and the Maastricht Treaty in 1993 Europe existed as an economic alliance with strictly political ambition - to prevent war and to oppose the Soviet bloc, and its own vitality can be described in Toynbeean terms of challenge and response. It can also be interpreted in the terms of a Realist discourse, which devotes its attention to power-struggle; the problem, however, is that today this concept loses its attractiveness, as economic collaboration is more profitable and hence desirable than the search for an obscure 'enemy'. As by now all past goals have been achieved: there is no ideological or political enemy any longer, and the problems Europe is facing are very often of cultural, or even civilisational, quality. Hence the main challenge for the EU today is self-reinvention in the face of the absence of strictly political goals it used to pursue.

At the same time one has to admit that the EU can only vaguely be conceptualised. In fact, it has always existed as rather a philosophical concept than any stable and tangible political body. One only has to read two articles from the Common Provisions of the Treaty of the European Union, as revised by the Amsterdam Treaty. Article 1 states that 'This Treaty marks a new stage in the process of creating an even closer union among the people of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen'; while Article 6 states that 'The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States' (Nugent, 2003: 464-5).

What one notices is that these two articles declare adherence to the democratic values, but they do not provide the reader with an idea of what exactly kind (i.e. form) of political alliance the EU is. Most importantly, however, the vague adherence to democratic values seems to have missed out on the fact that with its enlargement the EU came to consist of member-states whose democratic experiences vary dramatically.

The abovementioned articles also suggest that Europe has always been in transition, that it is an extremely complex system, and the European experience to-date plainly manifests that the EU is unique (Nugent, 2003: 465). As Nugent remarks further, this uniqueness does not mean that there should be no attempts to conceptualise the EU. The problem, however, if we turn out attention to the issues of federalism and intergovernmentalism, is that the EU combines institutions of both federalist and intergovernmental nature, and the evolution of these institutions towards either federalist or intergovernmental will never go smoothly.

The state forms that are characteristic of federalism and intergovernmentalism are federation and a nation-state, respectively. While federation has become the foundation principle for the countries like the USA and Russia, it is clear that to create a 'European' nation-state would be extremely tricky, to say the least. Within the European boundaries, federation sometimes failed to contain ethnic or other difficulties, as we see from the examples of Yugoslavia and Czechoslovakia. At the same time, Belgium shows how federation 'can be adapted to the needs of a previously unitary state in which the component parts are seeking greater approach' (Bainbridge, 2002: 279). And such creation as Benelux shows that sometimes the countries choose to integrate within a political unit.

There are two models of federalism, 'Hamiltonian' that is effected through institutions and 'Proudhonian' which is based on free association motivated by common interests (Bainbridge, 2002: 279). Evidently, 'Hamiltonian' federalism is perhaps more attractive and hence efficient, as it suggests some sort of responsibility and a tenser union for the common goal. It is this kind of federalism that currently underpins some of the EU institutions of essentially supranational character. Bainbridge observes that as yet the European Commission has not emerged as the real European government, with the Council of Ministers and the European Parliament as the Upper and Lower chambers, respectively. Nevertheless, it is these bodies that together with the Court of Justice provide the European Community with its quasi-federal structure (Bainbridge, 2002: 279-80).

The problem, however, is that federation is very often seen as a centralised form of state where decision are made at the top and distributed to the component parts at the bottom. Curiously, in this respect people tend to miss out on the fact that the creation of nation-state the intergovernmentalism unconsciously aims for is a much more centralist move. But intergovernmental approach helps to create the illusion of a free negotiation between the states, which is an important European democratic experience. This is the main reason why federation or federalist discourse in general attracted so much criticism from de Gaulle during Hallstein's presidency and from Thatcher during the presidency of Jacques Delors. It is yet extremely amusing, as Bainbridge notices, that whilst the phrase 'of a federal type' that described the EU as a political unit was removed from the final draft of the Maastricht Treaty, some typically and much more federalist provisions have not only be left intact, but enjoyed a huge support from the British public (Bainbridge, 2002: 280). Among these are the fines imposed by the Court of Justice on the defaulting member-states, and the doctrine of subsidiary, which can only be meaningful, Bainbridge explains, 'in the context of a federal structure in which there is a balance of power between the Union institutions and national, regional or local authorities' (ibid: 280).

Nevertheless, although federalist institutions already underpin the structure of the EU, the threat to sovereignty and democratic rights that it potentially poses inhibits many minds. There are suggestions that the main problem of the EU is the distribution of information, and the main reason people may be against federalism is because they do not have a clear idea of what it is. Leonard successfully challenges this view, but is unlikely to dismiss the fears of 'excessive' European integration altogether. Sovereignty is still at the top of agenda for many politicians, as well as people.

But to preserve sovereignty essentially means to seek to create a nation-state, which as we said, would be rather difficult. One of the important problems that needs to be taken into account is how exactly the term 'Europe' is being understood. The main similarity between how politicians and people perceive the space to which they confine their hopes and fears is that this space is increasingly often seen as a monstrous amoeba, especially after the enlargement. For politicians, this monster demands new approaches and new governmental practice, which they are trying to invent. For people, who are focused on more 'earthy' problems, like employment and earnings, Europe often becomes a hurdle, - despite the almost unlimited migration, - as well as a threat to national and cultural identity. What is therefore clear is that, first; there is a difference between the academic and non-academic view of 'Europe' as an entity and of integration as the modus vivendi for such entity. But, secondly, as Rafael Delgado somewhat whimsically remarked, we are dealing with the crisis of expectations, as 'Europe has been transformed from panacea into all-purpose scape-goat in just 10 years' (Leonard, 1998: 4).

Furthermore, if one directs attention to the results of a research presented by Leonard in his book that illustrates the way people perceive their 'European' identity and the way they link it to their more immediate 'national' identity, it becomes clear that, as we already noticed with the term 'Europe', there is no spectacular accord in opinions. Leonard observes that people tend to feel the part of Europe, rather than the EU. One in ten people felt their 'European' identity to be stronger than their national identity (Eurobarometer, 1997). Two thirds of the UK citizens replied positively, when asked 'In addition to your own sense of nationality, how European do you feel?' (Leonard, 1998: 8). However, as Leonard states, when asked what 'European' means to people, they tend not to mention the EU. Moreover, as the research indicates, it is people from the countries outside the EU who tend to associate themselves with the EU, rather than people from the member-states. 59% of Poles and 42% of Czech claimed that their 'European' identity (as associated with the EU) was as strong as their national identity, which is statistically higher than in any other member state at the time (McKie, 1998). At the same time, as the following chart illustrates, a great deal of people have a rather vague idea of the EU is (Leonard, 1998: 31).


Diagram 1.How much do you know about the EU?

 

However promising or unpromising these figures may look, one unfortunately has to be conscious not to overestimate them, as feeling 'European' is challenged by national cultures, national education, and the prospect of globalization. Even the migration of people between England and Spain or France, for example, does not always signify the adoption of the language of the country. Even European immigrants tend to live in their national communities, thus leaving the door open for cultural alienation. The rare number of bilingual people or those who speak a second language not only helps to explain, why the idea of the EU may be understood differently in different countries across various social groups, but also indicates the problems arising from the expansion of the labour market. The migration of the labour force is hampered by the linguistic unintelligence of this force, which becomes a challenge to employers, employees and the prospects of business. As for globalization, while Europe may be the perfect space to attempt to formulate and to implement the supranational type of the state that so many theoreticians speak about, the view of globalization that connects this process to the global capitalism, imperialism, the power of transnational corporations, does not allow for any positive or at least unbiased estimation of it.

The crisis of expectations that Delgado spoke of is clearly linked to the different views of global society and economy that currently dominate the sphere of discourse in the international relations. As we mentioned it above, the idea of United Europe began to be put into practice during the Cold War period. Realist approach to politics was the dominant one at the time, whereby the success of the idea depended on the power-balance and the preservation of sovereignty. The latter objective may be at odds with the scholastic observation that the idea of a nation-state is currently survives erosion due to migration and cultural and national connections. Nowadays, with globalization being at the top of the discourse, liberalist approach with its focus on economic stimulation and social policy is increasingly popular. The conflict over the future of the EU very eloquently illustrates the conflict between these two approaches to international relations. It also explains why sovereignty is such an issue. United Europe with its liberal economy but realist concept of the state is spreading thinly to create business-favourable conditions and to protect the flow of labour forces, but at the same time it seeks to preserve political values which are already surviving crisis in the face of globalization and the evolving idea of the state.

We are turning now to economic and business integration within the EU. Leonard enlists many traits that manifest amply for the advance of integration, among which are cheaper and faster travel, European restaurants and food, Euronews, not to mention European sporting events and various cultural contests. However, as Gardner stated, from the beginning of the EU, money, agriculture and big businesses were in the main focus of the policy-makers, which have now materialised in the European Monetary Union, the Common Agricultural Policy, and the Single European Market, and the introduction of the euro in 1999 (Gardner, 2002: 13). One also has to add to this an essentially bureaucratic and technocratic nature of early European 'government', to understand the diagram 2 below. Whilst on the one hand these measures create a stronger sense of community and integration, they contribute to the feeling of economic discomfort, on the other. The infamous French vote of the EU constitution in 2005 failed, and one of the reasons was the disappointment from the introduction of the euro, which led to the increase in prices; another reason was the growing unemployment which has provoked many political crises and is currently an issue for the ministers Sarkozy and Villepin. One of the key issues of the economic side of European integration is that the concept of the single market that was endorsed by the Maastricht Treaty in 1993 is profitable for only a tiny portion of businesses and - by consequence - employees and consumers. It also drew a line under the Cold War period in development of the EU, but was not designed to accommodate for the enlargement. Like in the years immediately after the Second World War, it is agriculture and underdeveloped regions that receive the closest attention from the EU. This is unlikely to change because many countries that have entered the EU in the years from 2000 have previously been facing lower economic tempos, in comparison to Western Europe. As Nugent remarked back in 2002, the Common Agricultural Policy would have been exacerbated by the inclusion of the Eastern European countries, like Poland, Bulgaria and Turkey, who's large but not efficient agricultural sectors would demand the increase of support from the CAP. The EU also tend to favour high skills and high income, thus supporting the image of 'club-class' that people have conceived of it over the years. All this in total means that the EU would be having considerable difficulties in providing the employment opportunities for professionals and supporting small businesses and professional sectors, but also in continuing to finance the agricultural sector, fighting unemployment, and battling the critique for 'neglecting' such sectors, as fishery.

We said previously that one of the obstacles on the way to integration is the access to information and its estimation. In spite of these restrictions, surveys show that people have no doubt as to what they expect from the EU to do:

Fighting unemployment - 92 per cent
Fighting poverty and social exclusion - 89 per cent
Maintaining peace and security - 88 per cent
Protecting the environment - 85 per cent (Leonard, 1998: 12).

As one can plainly see, neither money, nor agriculture, nor single market interest people as much as the more immediate goals associated with the basic well-being. At the same time, if one looks at the current situation in France, it becomes clear that a 'centralist' approach to the tackling of unemployment could have helped to reduce country's problems. It also becomes clear that the gulf that used to be between the popular and political understanding of the objectives and the image of the EU is deepening, and as a result the crisis of expectations is deepening, as well. More and more often people begin to believe that politicians disregard their opinion, especially in matters of economy and business.

The percentage of people who think that their countries do not benefit from the European institutions is increasing dramatically, as the diagram shows (Leonard, 1998: 14).


Diagram 2.The gulf between decision-makers and the public.

 

However, the main problem remains that of disproportionate distribution of the funds between the sectors of economy within the EU. Many analysts find startling the fact that forty years on since the EU has begun to come into being, the European 'government' continues to support agriculture and heavy industry in favour to smaller businesses in Europe. As we have just showed, this can now be explained by the inclusion of the countries, whose economy was agriculture-oriented for many decades and even centuries. The employment of Turkish workers on the German building sites, as well as the influx of the Asian produce throughout Europe make the countries and the EU look for the possibilities to regulate the trade with these 'outsiders' or for the ways to use national labour force, instead of causing its migration.

We can see from another diagram how the public supports the prospect of integration by a social class (Leonard, 1998: 16). It is clear that those who benefit the most are the most professional or most mobile groups, like students, higher managerial staff, professional workers, and white-collar employees. But starting from small businesses supports decreases, which is an ample manifestation of all the main problems and criticisms that people veil against the EU.


Diagram 3.Support for integration by social group. Note: Chart's legend reads as follows: professionals, students, employers, white collar employees, small business owners, farmers, social workers, unemployed, manual workers.

 

In France, in particular, there is a tendency now to look for the means to support the small businesses, which are likely to be engulfed by either Asian businessmen or bigger companies. The report prepared for the European Commission, entitled 'Social policy and the European employment: policy for the citizens' (Politique sociale et de l'emploi europeenne: une politique pour les citoyens), looked at the comparative result between the EU and the United States for the year 1997. Whilst figures of those employed in the agricultural and industrial sectors were very similar (agriculture: EU - 3.0%, US - 2.0%, industry: EU - 17.8%, US - 17.7%), the numbers of those employed in the social service sector differed dramatically: EU - 39.7%, US - 54.3%. The number of the unemployed was 39.5% in the EU and 26.0% in the US (Politique…, http://europa.eu.int/comm/publications/booklets/move/24/txt_fr.pdf: 10).

As we already said, the main difference between federalist and intergovernmental approaches is embedded in the international relations theory, and thus effectively is the difference between liberal and realist understanding of politics and its relation to economy. Hence it is understandable that federalist scholars tend to see integration as inevitable and on-going process (Wayne Sandholtz, Alec Stone Sweet), whilst intergovernmental view, most recently expressed in the works by Andrew Moravcsik, takes domestic policy into account to explain, how integration occurs at the higher level. The main problem about intergovernmentalists is that they tend to cling tightly to the domestic policy, thus failing to recognise the role of supranational bodies, like the European Commission and the European Court of Justice, as well as of transnational actors, like European firms and interest groups. They underestimate the fact that potentially any business deal can have far-reaching social and political implications not only for a particular state, but for all countries that are considered as its allies or economic and business partners. Another criticism that is often veiled against intergovernmentalism is that it tends to ignore the 'black box' of the state. Foster argues that intergovernmentalism is inadequate in showing how governments choose their policy options: 'the formation of objectives, the pursuit of strategies and the final positions adopted are every bit as disorderly and unpredictable as domestic policy-making. Politics is not always a rational process: ideology, belief and symbolism can play as important a role as substance' (Foster, 1998: 364).

This means that intergovernmental, or state-centrist, or even consociationalism are not particularly effective models for European integration because in their tangible form they need to rely on a strong sense of national character, which as for now is only slowly emerging. However, they are ineffective if they are preferred to any other form of integration. As we noticed, the EU is a for ever evolving organism, which means that to apply one unmodified model of cooperation and integration would be a mistake because one such model would be inadequate. The success therefore lies, probably, in what McKay suggested in his book, 'Federalism and EU': '…not… to completely remove and replace what is the dominant intergovernmental or realist model of European integration, but rather to supplement it by taking into account federal thought and practice. It is no longer acceptable to subsume federalism within the overall theoretical category of neofunctionalism, where it conveniently disappears from view. Instead, it is necessary to construe the federal idea as a model in its own right… in order to better understand the EU, we need a model which effectively combines IR theory, European-level analyses and national domestic concerns. Federalism as an organising principle would sit comfortably in each of these broad interconnected and overlapping approaches…' (McKay, 2002: 274).


Bibliography

  1. Bainbridge, T. (2002). The Penguin Companion to European Union. 3rd ed. London: Penguin.
  2. Directorate General X (1997). Eurobarometer: Public Opinion in the European Union. Report no. 47. Brussels: European Commission.
  3. Foster, A. (1998). 'Britain and the Negotiation of the Maastricht Treaty: A Critique of Liberal Intergovernmentalism', in Journal of Common Market Studies, 36 (3): 347-68.
  4. Gardner, Frank, Hatt, Sue (eds.) (2002) Europe, Policies, and People: An Economic Perspective. N.Y.: Palgrave.
  5. Leonard, Mark (1998). Rediscovering Europe. London: Demos; Interbrand Newell and Sowell.
  6. McKay, D. H. (2002). Federalism and EU: a Political Economy Perspective.
  7. McKie, A. (1998). 'How European Are We?', in Eurovisions: New Dimensions of European Integration. Demos Collection 13. London: Demos.
  8. Nugent, Neill (2003). The Government and Politics of the European Union. 5th ed. The European Union Series. Basingstoke; N.Y.: Palgrave.
  9. Politique sociale et de l'emploi europeenne: une politique pour les citoyens (1997). http://europa.eu.int/comm/publications/booklets/move/24/txt_fr.pdf
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