IV.2 The European Union: some aspects
The German Constitutional Court has described (the EU) as a ‘Staatenverbund’. In English, we might call it a thing. This thing is less than a federal superstate but more than an alliance: an unprecedented, unique and horribly complex combination of the supranational and the intergovernmental, of economic integration and political cooperation. (Timothy Garton Ash 1997: 120).
The Things were held at regular intervals, in the open and at a set location. All free men were entitled to take part. … Decisions were arrived at once … the ‘lawman’ or chief judge had first given his opinion which was received in silence, or with a faint murmuring if the assembled gathering held a different view, or by the raising of weapons if they agreed with the verdict. It would be anachronistic to speak here of democracy. Firstly, not all the adult population could participate, as women and serfs were excluded. Secondly, power was far from evenly distributed. The balance shifted in favour of well-off farmers and magnates at an early stage. (Olof Petersson 1994: 7)
Petersson’s description of how Scandinavian Things (deliberative assemblies) worked in the beginning of the millennium might not be a faithful description of how Ash’s thing, the EU, works at the end of the millennium, but some part of it seems to apply. For instance, we shall argue in this section that power in the EU is effectively far from evenly distributed, and that it is shifted towards capitalist agencies. It will also be seen, in section IV.5, that democracy in Europe excludes a sizeable part of its population (although not on grounds of gender).
The EU (that we take to refer also to its predecessors, such as ECSC, EEC, EC) has changed and evolved throughout the decades. It was originally a post-WW II institution intended to prevent the occurrence of another major war in Europe, and to restore prosperity in Western Europe. To that extent, it was part and parcel of the US SCA (Arrighi 1994: 307). Since the 1980s, however, the EU has transformed itself. Closer integration between the member states (accompanied by the rise of the regions) has culminated, at least for the moment, in European Monetary Union (EMU). We argue that the EU has restructured itself into one of the most important actors of the EwE SCA in Europe.
We selected for study a few specific aspects relating to the EU. The criterion was the relevance of the EwE concept to the question. This will also mean that no attempt shall be made to put forward all the arguments and differences of opinion relating to the issues studied. Other issues, such as democracy in Europe, the post-Cold War nationalisms, or the new European security challenges will be dealt with in separate sections of this chapter.
IV.2.1 The EU as a regulatory framework
The Union is not and will not become a nation state writ large. Its development cannot be modelled on a continental-sized centralized federal state like the USA. Rather the Union is a new kind of political entity to which the conventional constitutional categories do not readily apply. … [T]he Union has no single and sovereign source of law, nor does it possess a central multi-functional executive that is democratically accountable through a single channel to representatives of the people. (Paul Hirst 1997a: 153)
Instead, the EU can be seen as a “regulatory state” (Majone 1996: 55) or as a “legal and regulatory federation” (Bideleux 1997: 11), in the sense that the majority of national laws, policies and regulations conform to EU-defined norms and standards. However, this apparent ‘Europeification’ of national policy making “is more the result of market forces, convenience, and lobbying by big business and powerful interest groups, than of direct pressure and initiatives from the Brussels bureaucracy” (Bideleux 1997: 18). This process had a qualitative increase in the mid-1980s, when TNCs took on to highly specialised lobbying of EU institutions, reflecting the rise of the regulatory activity of the EU (Middlemas 1995: 438-444).
Traditional regulation forms (public ownership, state-defined regulations) were displaced by statutory regulation by ‘independent’ expert agencies and to the EU level (Majone 1996: 15-19, 63). As there is no democratic EU government to serve as an objective target, reduced redistribution becomes immune from popular pressure (Gowan 1997b: 97, Anderson 1997: 130), while at the same time national governments can introduce unpopular laws through the EU: “The new element – namely, the supranational character of the future monetary authority – would serve to reinforce such a historical conversion: elevated higher above national electorates than its predecessors, it will be more immune – not only by statute – from popular pressures” (Anderson 1997: 130).
Further, as EU officials are few and do not have the necessary technical competence, the EU’s regulatory activity must rely on lobbying and consultation with experts, interest representatives and national governments:
Officials cannot simply dream up policy and offer it to the council to determine. They lack the technical understanding of complex industrial, labour or environmental problems, they are not attuned to what industries, unions or political parties are doing, and they are out of the political loop which would illuminate what member states are likely to accept. Commissioners, especially long-serving ones, are scarcely better off. They must therefore take advice from a great variety of formal and unofficial bodies representing players’ interests in the economic, political and social life of fifteen nations. (Keith Middlemas 1995: 242)
In this “Empire without Emperor” of regulations (Guéhenno 1995: 84-85), there is a “complete absence of significant business factions with an active interest in centralized negotiations with labour. European business quite simply refused to contribute to the transfer of social policy matters from national arenas to Brussels” (Allum 1995: 283), for which they had the collaboration of the Council of Ministers. That is, while capital takes on its ‘natural’ globalised role openly (as opposed to its former strategic identification with national states, e.g. in the 1914-45 world wars), it keeps labour on a weak national basis (Wallerstein 1984: 34-35). The non-business/statal groups that have privileged access to the EU lobbying process, such as women’s or ecological organisations, have “switched … from collective to individual concerns” (Arrighi 1989: 109), obeying the fragmentation logic of interest representation connected to the non‑geographic core‑periphery structure of the EwE SCA described in section III.5.
In short, the rise of the EU as a regulatory framework thus contributes to the transfer of power from national electorates, who can no longer hold their governments and parliaments accountable for the legislation and regulations introduced. This power is officially transferred to a body, the EU, which is under-staffed and does not have the technical competence to use it, and hence it is de facto transferred ‘to society’, that is, to the actors with privileged access to the institutions of the EU – mainly TNCs, who delink from national states (externalising the inherent traditional Keynesian responsibilities), and some single interest groups with a very limited role in defending collective social rights (internalising the core-periphery structure). All these are features of the EwE SCA, described in section III.2.
IV.2.2 European Monetary Union
The key strategic objective of European capital’s reaction to the increased economic transnationalisation described in section II.3.6 was the creation of a European free market, first with the Single European Act (SEA) and in a second step with European Monetary Union (EMU) (Ross 1998: 173). This was intended to emulate the large US internal market (Palmer 1992: 149, Gill 1992: 174). So, in the early 80’s,
exposed to the recession and confronted by the greater spectre of American and Japanese inroads into their markets, industries and businesses, especially the larger and multinational firms, began to campaign more publicly than in the past … for the long-promised internal market. (Keith Middlemas 1995: 102)
Under this pressure, and under the threat of bad economic performance reflecting on electoral results allied to the thriving deregulatory neo-classical liberal economic ideology (best given in original fashion by Friedman 1982), the Member States accepted to pool sovereignty and all supported the SEA, which was then a compromise to keep as much autonomy for the intervening states as possible (Wallace 1997: 35-36, Middlemas 1995: 111-155). It nevertheless led to the transfer of much formerly national legislative power from national capitals to Brussels.
EMU might then be seen as the “golden sunset of a passing era” (Bideleux 1997: 22) – the US SCA. There are however crucial new elements: a decline of provision of welfare and reduction of social rights, to which “access (redefined ‘choice’) is determined by the ability to pay” (Allum 1995: 551), and a steady increase in unemployment (Standing 1997: 205), as studied in section III.5.
EMU is the hub of this process: the European Central Bank becomes “the only supranational institution necessary to run an integrated, supranational Europe” (Godley 1997: 174). There is “no will on the part of any significant government in the Union to press for construction of a democratically accountable European executive leadership” (Gowan 1997b: 97), and the European Central Bank will only be accountable to the Council of Ministers (Meehan 1994: 149, Majone 1996: 3).
Classically, the economic motive for having different currencies is to let the exchange rate between them vary. This is used to absorb asymmetric shocks with different impacts on different national economies (Artis 1997b, Moore 1997, DeGrauwe 1997: 5-19). EMU foregoes this instrument, leading to three main points. Without going into details, firstly, the efficacy of varying exchange rates to absorb asymmetric shocks is increasingly questioned (Artis 1997b: 354-355). Secondly, EMU might reduce the incidence of asymmetric shocks, which is the opinion of the Commission (Buti 1998: 153-164), by no means unanimous, and indeed the consensus amongst economists is that the EU-15 is not an optimum currency area (although Benelux, Germany plus France are) (DeGrauwe 1998: 74). It is argued that EU regional and budgetary policies are not adequate to deal with asymmetric shocks, and that national fiscal policy could only deal with short term ones. More severe asymmetric shock would need real, not demand, adjustment (Artis 1997b: 356-357). Thirdly, the only way left to absorb asymmetric shocks is through flexibility of the labour market, that is, wage flexibility and mobility of labour. That failing (and labour mobility in Europe is much smaller than in the USA, while relatively generous social security systems prevent a large degree of wage flexibility), unemployment will be the result (DeGrauwe 1998: 74, Artis 1997b: 357-358). Finally, one should note that a large part of asymmetric shocks occur at sectoral level and not at the national level, leading to differential effects on the population of a nation-state (DeGrauwe 1998: 75).
At the very least, EMU narrows the scope of choice of member states’ governments, devalues labour rather than money, and reduces redistributive measures within balanced budgets (Luttwak 1997: 220). That is, it is an attack on the welfare state, furthering the internalisation of the core-periphery structure, as described in section III.5, in Europe. All in all, it can be taken to be the last European economic policy of the US SCA, and the first one of the EwE SCA.
IV.2.3 Enlargement of the European Union
Enlargement of the European Union is not a new feature. It occurred in 1973 with the access of Denmark, the Republic of Ireland, and the UK, in 1981 with the inclusion of Greece, followed in 1986 by that of Spain and Portugal, and finally in 1995 with the access of Austria, Finland, and Sweden. All these enlargements were made with basis on hard political and economic calculations of costs and benefits.
Widening to the Central and Eastern European countries (CEECs) is in this respect different, as after the fall of the Berlin wall “editorialists and column-writers across the political spectrum, before the consequences were given much consideration, with rare unanimity pronounced any other course unthinkable” (Anderson 1997: 137).
The British favoured scenario for Eastern widening is rapid integration of the largest possible number of CEECs. The rationale is that the more states the EU has to accommodate, the shallower it will become, turning eventually into a free trade area (Gustavsson 1996: 224). To this institutional dilution one must add the advantages for capital of social deregulation, as including the skilled reserves of Eastern labour would exert downward pressure on wages and social regulation in the West (Anderson 1997: 138). Thus would the CEECs become the hinterland of Western Europe, a semi-periphery in the geographic core-periphery structure, with eventually some inclusion of local non-geographic core (the workers of TNCs with relatively high added value operations in the CEECs), and simultaneously the non-geographic core-periphery structure would be strengthened in the West.
The British scenario could however lead to the opposite outcome. Past widenings have been accompanied by deepening of the EU institutions with for instance the introduction of qualified majority voting in 1986, stipulated in the SEA. Anderson argues that the same can happen again, as the prospect of institutional paralysis could impose the need for a more centralised EU supranational authority, with concentration of (federal) power (Anderson 1997: 143). This would have to be accompanied by further transfers of power from the member states to the EU level, which, as seen in section IV.2.1, is effectively a transfer of power to the market.
Other scenarios include the German one, with inclusion in the EU of its traditional hinterland, that is, Poland, Hungary, and the Czech Republic, plus Estonia (backed by Finland) and Slovenia (the only one of the candidates with a GDP per capita comparable to that of the poorest current member states). This would have similar consequences to the core-periphery structure as the British scenario, albeit on a reduced scale. This is currently the most probable outcome.
Finally, EU enlargement has significant influence in the design of the emerging European security system, which will be discussed in section IV.6.5.
IV.2.4 A Europe of regions, a Europe of nation-states or a European super-state?
We are living in the prehistory of this new age, and the logic of the nation-states will coexist for a long time with the logic of the imperial world. (Jean-Marie Guéhenno 1995: 123)
The future of Europe as a polity has been variably construed as being a Federal Europe, a Europe of the regions, or just the old Europe of nation-states. It is argued that a shift of power from the nation-state level upwards towards the EU and downwards towards the regions is taking place (Cole 1993: 279). In this section some of the relevant elements will be considered.
The EU now has, or is planned to have, within its remit functions touching all the traditional attributes of the nation-state. EU law is superior to domestic law in all areas of Community competence (Wallace 1997: 44). Its borders define the economic space, including the movement of people and the social chapter; the Treaty on European Union made provision for a common foreign and security policy; EU citizenship rights can in some cases override national provisions (Lundberg 1995: 127). Furthermore, the Schengen agreements require tight collaboration between the police forces of participating states; and research, technological development and environmental policy are all covered by the SEA (Archer 1994: 164).
However, “[t]he Community shall take action … only if … the objectives of the proposed action cannot be sufficiently achieved by the Member States” (Art. 3b TEU), the EU budget is inadequate to effectively carry out welfare functions (Majone 1996: 63-64), and furthermore the EU lacks legitimacy to carry out several tasks, which is connected to the lack of a powerful European Parliament and of a united polity (Andersen 1996b: 7).
Linda Weiss (Weiss 1998: 188-212) argues that globalisation (which, as we have seen in section III.4.4, has only truly occurred in finance) does not lead to the withering away of the nation-state, as economic integration does not necessarily lead to weaker states. On one hand, different states have different adaptive capacities in their responses to change and different abilities to manage international and domestic business linkages. On the other hand, “in some key instances globalization is being advanced through the nation-state, and hence depends on the latter for its meaning and existence” (Weiss 1998: 189). State capacity is essential for successful internationalisation, and TNCs need an “insider presence within each Triad region” (Dent 1997: 247). Hence states “may at times be facilitators (even perpetrators) rather than mere victims of so-called globalization” (Weiss 1998: 204), and in so doing can become the local core in the region within which they are inserted, that is, they increase their power vis a vis other states. They can also increase their power vis a vis their citizens, by internalising the core-periphery structure.
It is argued that there are democratic, pragmatic, and economic arguments in favour of decentralised political systems in Europe (Newman 1997: 109-111). There are several kinds of regions in the EU. Economic regions define close economic links, and rarely coincide with national borders. Homeland regions are the territorial basis for local identities and ethnies and also do not necessarily coincide with national borders (see section IV.3.1). Political regions have regional assemblies and some degree of autonomy vis a vis the central government. They may command significant popular support, such as in Scotland or Flanders. Administrative regions are delimited by the central government for more effective management of territorial issues (Powell 1998: 3). The EU has also created a system of regions and sub-regions, which affects the allocation of funds from its budget (Cole 1993: 47). Manuel Castells further mentions megacities such as London or Paris (or Tokyo and New York), that are connected to the global economy, while internally disconnecting “functionally unnecessary or socially disruptive” local populations (Castells 1996: 404). All these different types of region, which have vastly differing competencies, profiles and institutional recognition, coexist and are superimposed to each other.
The main problem facing the European Union is how to deal with an institutional jigsaw puzzle. In the real world, power does not respect conventional borders. Power no longer rests primarily with one body and one only, for example, the national state. On the contrary, it is fragmented. In some areas the national state is still the dominant body, but in other areas regions, or cross-border regions, or transnational enterprises, or some other official or semiofficial body, possibly even a private body, are the real powers. When the average citizen is asked to whom he or she defers, there is no longer a simple answer. The citizen may not even really know. It depends on the issue and the location under consideration. (J. Ørstrøm Møller 1995: 85-86)
A system of multilevel governance is thus emerging in Europe, with overlapping and ill-defined spheres of competence and of allegiance by different actors. Nation-states remain important actors, but they are joined by sub-national, supra-national (e.g. the EU), and non-national (e.g. TNCs) ones, all of them interlinked in complex networks with widely differing connections between each other (and with the rest of the word).
While on one hand this creates a potential for conflict about competencies (Newman 1997: 119), one could argue that a complex polity with these characteristics is well adapted to the requirements of the EwE SCA (see section III.2): it is highly flexible; it is delocalised and diffuse but can also claim tight connections to particular loci; and it sustains and promotes the coexistence of multiple identities.
 Majone opposes this (European) ‘regulatory state’ to the (national) ‘Keynesian welfare state’, where national governments had extended direct competencies in income distribution (Majone 1996: 54-56).
 Up to 60% in 1996 (Bideleux 1997: 17).
 For instance, one such agency is the European Central Bank (ECB), that has the power to make regulations that become European and member-state law without involvement of the governments of the member states or of the European or national parliaments (Majone 1996: 2-3).
 It is in the mid-1980s that ‘Europe’ came to see as a ‘domestic market’, with America and Southeast Asia as the two ‘foreign markets’ (Middlemas 1995: 137).
 This was facilitated by the fact that the measures of the SEA were in an area seen as ‘low politics’ (although nevertheless increasing the supranational competencies of the EU) (Bideleux 1997: 28-29). EMU, on the other hand, has always be seen as ‘high politics’ (Tsoukalis 1997: 23). It should be noted that Arthur Cockfield, who wrote the 1985 White Paper that eventually led to SEA, did not “imagine that the internal market would lead directly to EMU” (Middlemas 1995: 145).
 There are non-classical methods to absorb asymmetric shocks. Suppose Portugal suffers one such within the next 5 to 10 years. It is a coincidence (related to the timing of the expansion of the Portuguese statal bureaucracy in the 1950s, together with demographic factors) that an estimated 200,000 of the 600,000 civil servants, for a 10 million total population, will retire in that period. The government will have the choice to act as employer of last resort and thus absorb unemployment, while reducing the total number of civil servants thus reducing expenses. It might also decide to reduce (corporate) taxation instead.
 For instance, the Iberian enlargement was only possible after the reform of the budget and of the Common Agricultural Policy of 1984 removed the objections of Fench farmers (and with Mitterrand’s) (Middlemas 1995: 107-108).
 Even if it is the member states that define who is a citizen of the EU (Wenden 1997: 29-30).
 One should note that subsidiarity could have as a consequence the breaking up of solidarity between member states, as it could be taken to mean that the problems of one country are best solved by that country with its own resources (Wenden 1997: 86).
 For instance, the New Zealand transition from being one of the world’s most comprehensive social democracies into a neo-liberal free market state was conceived by civil servants and carried through by Labour administrations. The result was the sudden growth of an underclass and of economic inequality (Gray 1998: 39-44).
 It has been argued that popular support for the welfare state endures, and that governments go through retrenchment measures by pleading helplessness in face of ‘globalisation’ (Weiss 1998: 192-193).