Resurgent euro-left rides integration?

[Seth Ackerman]

THE EUROPEAN, 14 - 20 Dec, 1998
COVER STORY
CHAMPIONS OF THE LEFT TAKE GAMBLE IN THE DARK
Julian Coman
Intergration: Economic union will bring political accountability on the
heads of Euro-11. 
WHERE did all the EMU mathematicians go? Last December the politics of
European economic and monetary union (EMU) resembled a giant arithmetical
puzzle. Finance ministers fiddled with calculators in an attempt to prove
that an extra decimal point on growth was worth a point off the budget
deficit/ GDP ratio. The infamous Maastricht criteria on debt, deficits and
inflation woke many a government economist in the dead of night, haunted by
looming price rises or threatening interest rates. 
Originally a political project, EMU became an economic beauty contest,
judged according to the aesthetic of austerity. Eleven contestants were
busily slimming down. To underline that the euro meant business (not
ideology), Theo Waigel, the former German finance minister, would put on a
mock-stern voice and give the Italians a talking to for their fiscal
profligacy. 
That was last year. Now, as the single currency prepares to be born on time,
the politicians have returned with a vengeance. With EMU in the bag, the
political construction of Europe is back on the fast track. Governments, not
bankers, are setting a new pace. Ask Oskar Lafontaine, the new German
finance minister, who spends his days flying kites for ever deeper economic
and political integration, darkening the skies over London in particular. 
Poor Tony Blair. The British prime minister and his new Labour government
were keen to show willing on matters European and took the pseudo-economic
debate very seriously; so seriously that they felt Britain could not join
EMU until the Britain's own (rather leaner) economy had come into line with
those within the slimmers' club. In the meantime, new Labour reassured the
British public that monetary union, as laid out in the Maastricht Treaty,
meant just that: a single currency joining all those countries which ran a
tight financial ship. Any talk of an economic government for Europe or a
common taxation system was strictly for the Euro-utopians, whose time had
well and truly passed. 
"Maastricht was a high-water mark of integrationism," judged Robin Cook, the
foreign minister, adding that "the concept of Europe as a superstate is one
that is deeply unfashionable". According to one new Labour insider: "Blair
believed that the ideal of further economic and political integration
post-EMU was on the wane, giving him an opportunity to seize the high
ground, particularly on employment and labour market reform." 
Like many a British government since the last war, new Labour had missed the
point by some distance. Dazzled by the economic pyrotechnics of EMU gossip
about growth projections and debt ratios, Blair and his finance minister,
Gordon Brown, believed that the question of monetary union could be sold to
the British public in the spirit of pragmatic empiricism. If EMU works and
its economics are sensible, why not join? Other grander ideas, such as an
economic government to manage the currency, were just so many tall tales. 
But the intellectual architects of the European Union have never thought
much of Anglo-Saxon empiricism. From the days of the European coal and steel
agreement in 1951, the constructors of European unity have have been more
interested in a form of institutional dialectics in which X creates a need
for Y, which in turn generates an expectation of Z. The political
presentation of EMU as a merely technical economic exercise masked its true
role as an intermediate stage in the wider construction of "Europe". 
Having already been surprised last May when all EMU candidates, even Italy,
finished up as shoo-ins despite pan-European rumours of fiddled books, this
month Blair and Brown read Franco-German storm warnings on harmonised
taxation, contemplated plans to create a chairman of the Euro-11 who would
represent EMU countries on the G7 and the International Monetary Fund (IMF),
and learned that the safety net of the national veto may be removed. They
were receiving their next lessons in continental theory. 
The logic is Catholic in its taste for the systematic. Jacques Delors, once
president of the European Commission and still one of the most influential
voices in the cause of European integration, has long maintained that the
notion of a single currency for Europe administrated by an independent
central bank was merely a convenient fiction. According to Delors: As soon
as there is a serious economic crisis, public opinion will treat the
European Central Bank [ECB] in Frankfurt as a scapegoat and rebel against la
construction europeenne." Realising there is no prospect of undoing the
whole EMU enterprise, the same public will then demand that "the European
Council consider the questions of political integration and democratic
accountability." In other words, a pan-European economic government. This,
as the analyst Perry Anderson has written, is "the hidden gamble" of the
project. The Euro-X committee, now transmuted into the Euro-11 and made up
of EMU finance ministers, is this government-in-waiting. By the same token,
a single market, together with a single currency, will naturally call forth
a common system of taxation and a concomitant reorganisation and relocation
of economic and political power. The logic of harmonisation will eventually
see to that. 
The movement from the economic base to the political superstructure is not a
new trick (Marx cracked it in the 19th century). It represents the
consistent strategy of European unification. Back in 1956, when the
burgeoning European movement was making little headway in trying to persuade
Spaniards to say 'our Chartres', Englishmen 'our Cracow', Italians our
Copenhagen and Germans 'our Bruges'," the Messina conference came up with a
less airy route to the same goal: the Treaty of Rome, consolidating the coal
and steel agreement and inaugurating the European Economic Community (EEC).
Give me the wallet and I'll give you the man, to paraphrase the Jesuits.
>From the Common Market in 1958 to the Common Agricultural Policy (CAP) in
1962 and culminating in EMU in 1999, the same principle has been followed
ever since. 
But while the tactics have remained consistent, the goalposts are being
moved. In the days of Jean Monnet the European movement embodied an
idealistic testimony to the experience of war. In 1945 Winston Churchill
described Europe as a rubble heap, a charnel house, a breeding ground for
pestilence and hate". Two catastrophic wars had broken the continent's
spirit and crippled its economies. Pro-Europeans, led initially by a mixture
of pacifists and Catholic intellectuals, aimed to restore peace and
prosperity through a new internationalism. This war-scarred generation
structured the horizons of the likes of Helmut Kohl and Franois Mitterrand
and, through Kohl, lasted long enough to see EMU through. 
Times have decisively changed. Kohl, who was defeated in German elections in
the autumn after 16 years in power, was the last statesman to see the
continent's unification in the Tolstoyan terms of "war and peace". A new
generation of leaders, almost all on the left, has taken the reins and, with
them, a new kind of internationalism and a new vision of Europe. 
Earlier this month Lionel Jospin outlined its aims when commenting on the
Franco-German relationship post-Kohl. According to the French prime
minister: A real social agreement in Europe, progress on tax harmonisation,
movement towards controls on international capital markets all this is part
of the new dynamic of the relationship. What goes for France and Gerhard
Schrders Germany also goes for Massimo DAlemas Italy and the EUs
Scandinavian wing. These social democratic governments and their leaders are
scarred not by the experience of war but by the near-total collapse of the
left during the 1980s, a collapse which had its origins in the inability of
the nation-state to cope with a new globalising phase of capitalism. Freed
from exchange controls in the late 1970s and newly mobile thanks to the
late-20th-century technological revolution, multinational capital and its
camp followers in the speculative markets were no longer beholden to the
dictates of Westminster, Bonn or Paris when it came to taxation, labour law
and wages. 
The "commanding heights" of state power had become foothills in the global
economy. Social democratic parties, set up in order to scale them, no longer
had a reason for being. 
The election of centre-left governments in nine of the 11 first-wave EMU
countries has turned Brussels into the platform for a belated counterattack.
"Co-ordinated action" on direct taxation and "harmonised" indirect taxes
will help insulate governments wedded to the politics of tax and spend from
the successes of less statist economic experiments. EMU participants will
sign up to a traditional "closed shop" in which the rulebook will be a
Franco-German composition. 
The refinement of the Euro-11 committee and the likely creation of a single
representative to the G7 and the IMF will dramatically increase the clout of
coming European calls for a clampdown on the freedoms of international
capital. As the recent European socialist paper, A strategy for solidarity,
puts it: A more incisive and efficient taxation of capital is no longer an
ideological position but an economic necessity. Now, it might have added, it
is also a strategic possibility. Euroland is about to put social democracy
back on the world map, using the postwar bandwagon of European unification
as its vehicle. 
It is in the context of this left turn that the British prime minister has
been forced to turn to the only right-wing governments in Europe as his
allies, recruiting both Spain and Ireland to the public cause of
"flexibility" in employment policy, the coded term for resistance to
harmonisation upwards in taxes and wages. But that alliance only underlines
his isolation from the mainstream, a loneliness which will not help persuade
the British public to vote for EMU in the forthcoming referendum on entry. 
Ironically, Blair's crumb of comfort may come from the same source as much
of his angst. The new Germany of Schroder and Lafontaine is in the vanguard
of European integrationism but it is also in the grip of a paradoxically
resurgent nationalism. When a German prime minister announces that the
Bundesbank stands firm but "we can't and won't solve Europe's problems with
a German chequebook", it is clear that Bonns postwar cult of the politics of
accommodation is over. Berlin, from 1999, will be a different proposition.
Should budgetary negotiations become entwined with enlargement negotiations
and CAP reform, national interest may yet impede ideological cohesion. 
Euroland's further development could be put on hold. But as the continents
centre-left politicians take a grip of European integration in the year of
EMUs birth, it would be unwise for remaining Eurosceptics and agnostics to
let go of their hats.