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Background Information > Future of Europe Debate :

The Path to the European Constitution - Re-launching European integration through the Single Market

(This article on the history of constitutional development in the European Union first appeared in Info Relays Newsletter number 24 and is republished here by permission)

At the end of the Seventies, the effects of the second oil crisis (1979-80) hit the European economy with inflation and rising unemployment. Inside the Community, Euroscepticism was in the air and disputes over agricultural spending and budgetary issues, the accession of the candidate countries and institutional reform flourished. But nevertheless, during the Eighties, the European Commission engaged in overcoming the crisis and recuperating the initiative and the lost momentum. The European Commission led the way by means of economic integration resulting in the creation of a Single Market whilst the European Parliament (EP) focused on pushing for institutional reform to get more power for the EP and the Commission. On the Member States side, the failure of national economic policies, might be seen in part as an explanation for the re-launch of European integration, in the sense that it seemed necessary to try new ideas that would allow Europe to recuperate from its declining industrial competitiveness and create the economies of scale required to compete effectively with the more successful American and Japanese models of development. The creation of the biggest internal market in the world was considered an idea worth trying, even more if linked to the development of high-technology cooperation. By removing market barriers, a single market could also generate business confidence and stimulate investment, implying economic growth. An intense interstate bargaining activity among the three leading countries: France, Germany and the United Kingdom, was also a main characteristic of the decade. But after all, it might be said that bargaining between France (for the CAP) and Germany (for market liberalisation for industrial goods) is one of the bases of the EC.

Mediterranean Enlargement

Parallel to the deepening process, the Mediterranean enlargement would also take place during this decade. The military dictatorships in Greece, Portugal and Spain ended in the mid-Seventies and, subsequently, these countries asked to join the European Communities as a means to strengthen their emerging democracies. Greece would join in 1981 and Portugal and Spain in 1986. This southern enlargement was essentially motivated by political considerations, the wish to consolidate democracy, and involved the accession of countries economically much less developed than the nine existing Member States and with important agricultural sectors. The Mediterranean enlargement prompted therefore the need for common regional and structural policies aimed at balancing the regional differences among the Twelve. On the other hand, Greenland withdrew from the Community in 1982, as the result of a referendum and left formally on February 1, 1985, remaining associated as an overseas territory. This made Greenland technically the only country ever to leave the European Union, although there is no exit clause in any of the current or previous Treaty bases. However, Greenland had become part of the EEC not as an independent member in its own right, but as a result of the Danish accession in 1973. Its changing relationship with Denmark resulted in its withdrawal from the EEC and is therefore substantially different from any possible provisions for states wishing to leave the Union that may be included in the new Constitutional Treaty.

Two major international crises occurred in 1979. The revolution in Iran and the Soviet invasion of Afghanistan were the catalysts for advancement on the EPC (European Political Cooperation), as they pointed to the need for a coherent approach to international politics to support a Community position on the global scene. The answer of the ten Member States was the adoption, in October 1981, of a report on European Political Cooperation (London report[1]) requiring prior consultation among Member States and with the European Commission on all foreign affair matters affecting the whole Community and establishing the "Troika” principle.

The Draft European Act

The same concern, together with the search for solutions for economic recession and institutional stalemate in the European Community, prompted the German and Italian governments to submit in November 1981, a Draft European Act, an institutional reform proposal developed by Italian Foreign Minister Emilio Colombo and German Foreign Minister Hans-Dietrich Genscher and backed by the Commission, calling for greater advancement toward European unity. The Genscher-Colombo Plan[2] proposed an extension of the EC's powers into new areas, including foreign policy, defence, justice, culture, fundamental rights and the revival of the rule of majority voting, buried since the Luxembourg Compromise; the development of concrete proposals, however failed due to disagreements between the Member States. On the procedural reform, the only advancement was the suggestion that Member States voluntarily abstain rather than invoke the veto, but even that suggestion would be reversed afterwards and the Luxembourg Compromise confirmed. The ad hoc working group Council established by the Council to look into the initiative, reported to the Stuttgart Council in June 1983. However, its recommendations did not mean tangible further advancement. It served as the basis for the “Solemn Declaration on European Union”[3] issued by the Council reaffirming the Member States' desire to reinforce and develop both economic and security cooperation.

Draft Treaty establishing the European Union

The first half of the Eighties also saw a growing pressure for institutional reform led by the European Parliament divided into two main tendencies. The “Crocodile Group”, formed in 1980 and coordinated by Altiero Spinelli, a former European Commissioner and founder of the European Federalist Movement, drew on the federalist approach, focusing on the expansion of the scope of Community activities with an increasing procedural involvement of the European Parliament. An Institutional Affairs committee was set up and drafted a plan for amendment of the existing Treaties, presenting in 1984 a “Draft Treaty establishing the European Union”[4] (DTEU), aimed at replacing the Treaty of Rome. The treaty dealt with new economic, monetary, social, and foreign policies for the union whose democratic legitimacy would be given by a two-chamber parliament with democratically elected members and a union council for representatives of the national governments. Even if the draft Treaty was adopted by a large majority of the Parliament, it was never ratified by the Member States. However, the unexpected support of the French President, Francois Mitterrand, whose speech before the Strasbourg Assembly, in May 1984, called for institutional reform in the EC and restricted use of the veto in the Council, saved the DTEU from becoming another failed attempt at institutional reform. Instead, by guaranteeing that this DTEU would not be ignored by the Ten, this served as a basis for the Single European Act (SEA) and became, for years, the reference for debating institutional reform, as it anticipated to a large extent what would became reality in the Nineties. The other main pole of opinion in the EP, the “Kangaroo Group”, founded in 1981 by less federalist MEPs and supported by business groups, focused on European integration through liberalisation of the internal market.

An Unexpected U-turn: Mitterrand Takes The Lead

But then, in 1984, a lack of compromise was surprisingly reversed during the semester of the French Presidency, which turned into a “solo concert” played by the French President, Francois Mitterand. Mitterrand personally toured Europe seeking support for the re-launching of the EC. His vision underlined the economic nature of the current crisis and focused on the future of the EC to overcome it. Miterrrand insisted on the need for political cooperation, technological development programmes, and the reform of the CAP. Internal market reform and changes in the decision-making procedures were imperative. The Federal Republic of Germany's Federal Chancellor, Helmut Kohl, would join Mitterrand's efforts and the French-German alliance would become the leading engine for change. The British Prime Minister, Margaret Thatcher would be the Eurosceptic counterweight to this alliance.

Lobbying between Paris-Bonn-London started to work incessantly and the interstate bargaining stakes became progressively clear. On the side of the alliances, Britain and Germany agreed on market liberalisation whereas France and Germany saw the need for procedural reform. The obstacles to compromise and weapons used for bargaining were the CAP reform, sought by the British and feared by the French, the budget rebate demands of the British, the accession of Spain and Portugal, supported by Germany but feared by the French agricultural sector and the increasing need for more community financial resources. This last point caused the Council in 1983 to delay payments under the CAP for lack of funds, blocked by Germany as a tool to support Spain's and Portugal's accession and by Britain until the budget rebate was solved. The intricate net of opposed interests among the Ten, required a willingness to compromise. The French got the ball rolling, announcing to the French farmers that the defence of their interests in Brussels would be no longer undisputedly supported by the government. Soon after, the first initiatives to control agriculture spending would be agreed. The same goes for the French reluctance to accept Spain and Portugal. On the British vindications: the UK supported, at the same time, the burden of being a net importer of food (mainly from the Commonwealth and therefore contributing with the customs duties to the EC budget) and a relatively small agricultural sector to benefit from the CAP. The British VAT contribution was also important due to high consumption levels. The problem was acknowledged from the accession but, at the time, Britain had to opt for the assumption of the “acquis communautaire” as the only solution to avoid exclusion.

From the end of the Seventies, the UK's new Prime Minister, Margaret Thatcher entered the bargaining game claiming for a rebate on the UK contribution to the EC budget. Her demands met with strong resistance both of principle (rules agreed by all should not be changed for one Member State's benefit), and also related to different national interests. In March 1984, at the Brussels Council, France agreed for the first time to a series of concessions, acknowledging the possibility of a rebate on the British net contribution, although not for 1983. Thatcher had to be dissuaded by some of her own Cabinet colleagues from the possibility of withholding the British contribution for 1984 (the Cabinet was split on the issue). The offer was a system for limiting the agricultural budget that would keep any growth in the UK's contribution roughly in line with its percentage of the EC gross domestic product. Then, the issue became a question of an agreement on the amount of the rebate for 1984. Thatcher demanded 1.5 billion ECU against the offer of 1 billion. A deal seemed to be reached at ECU 1.2 billion, when the Federal Republic of Germany's Federal Chancellor, Helmut Kohl refused to pay his country's share of any higher amount. The deal was broken.

Mitterrand gave a twist to his strategy calling for a conference on the future of the EC among the Member States ready to “stand up and be counted". The possibility of a Europe “à géométrie variable” was announced for the first time. The strategy got again support from Helmut Kohl who announced that it was the right time to move forward the completion of the internal market and the adoption of majority voting at the Council and invited the interested Member States to work in that direction, with or without consensus. The threat of a two-tier Europe ("Europe à deux vitesses”), that would isolate again Britain and leave her without a say was clear and the long-term effects of not participating in the development of the new agreements only too well known, as illustrates the fight for the budget rebate.

The position that Mitterrand and Kohl enjoyed of great credibility and their determination to advance on European integration was so evident that the British press took it seriously and prompted reactions from the Torys in the UK, calling for a softening of the positions to reach a deal avoiding exclusion. A European Council summit at Fontainebleau was called, on June 25-26, 1984, to settle down positions and although Margaret Thatcher insisted on getting “her money back”, she turned more conciliatory in the run up to the Council, focusing on the liberalisation of the internal market, in which she firmly believed.

Nevertheless, during the Council meeting[5], the Franco-German axis would remind participants, if necessary, of the possibility of a two-track Europe. The decisive issue in the meeting, which opened the way to the other points in the agenda was the settlement of the budgetary imbalances. The final deal was roughly the one previously rejected in Brussels. The Council decided to agree on a general principle of juste-retour of payments according to which Member States would never be required to sustain a budgetary burden considered excessive in relation to their relative prosperity. To date, only the UK has made use of it - the 1999 Berlin Summit, confirmed Britain's budget rebate until 2006.

The Council also gave a green light to the completion of negotiations for the accession of Spain and Portugal before the end of the year. Fontainebleau marks the departure point for the future developments summarised in a deal including decision-making reform and interna1 market liberalisation. Mitterrand wanted to ensure an agreement on the issue of the majority vote but instead he had to conform to the creation of two Committees: the ad hoc Committee for a People's Europe and the Ad hoc Committee on Institutional Affairs to agree on the scope of the reforms. The ad hoc Committee for a People's Europe[6], chaired by Pietro Adonnino, received a mandate to explore the advancement on aspects of the EC visible to the citizen: European symbols, European Citizenship, the creation of a European Ombudsman, the European passport, equivalence of university diplomas and European volunteer programs. Some of the proposals of the Committee for a People's Europe would later be enacted in the Treaty on European Union.

The second committee, the Ad hoc Committee on Institutional Affairs was deliberately modelled on the ‘Spaak Committee', which drafted the 1957 Rome Treaties. The Committee on Institutional Affairs chaired by James Dooge, was mandated to elaborate proposals for the improvement of cooperation in the Community and European political cooperation. The working method adopted by the Committee gave each national representative the opportunity to disagree with the proposed solution and to include such disagreement in the finished document. The work of the Committee showed that although the Member States disagreed widely over political cooperation, defence, monetary policy and decision-making procedures reform, they agreed much (maybe with the exception of Greece, but with active participation and support from the British) on the need for internal market liberalisation. The final version of the Dooge Committee Report[7], submitted in March 1985 to the Brussels Council, recommended the transformation of the European Communities into a European Union, the attainment of a single economic area and the promotion of a European external identity. The report equally contained a number of proposals concerning foreign policy, closer cooperation on security matters and in the armaments sector and common representation of the EC in international bodies. Even if the provisions finally enshrined by the Single European Act did not go as far as the proposals, they served to establish a Treaty basis for EPC. Also, the scope of EPC was extended to all foreign policy issues of general interest: for the first time, traditional foreign policy was given a legal basis within the Community.

Concerning the reform of the institutions, the proposal advocated the adoption of the new general principle of decision-making through qualified or simple majority voting in the Council, reduction of the number of Commissioners, the strengthening of the Commission's executive powers whose President would be appointed by the European Council and a genuine codecision right for the European Parliament. Despite British, Danish and Greek opposition, the Dooge Report called for the convening of an Intergovernmental Conference (IGC) to negotiate a draft European Union Treaty.

Delors Gives An Impetus to the Internal Market

During the deliberations of the Committee on Institutional Affairs, the last leading character of this decade would appear on the European scene. Supported by France and Germany, who wanted an inspirational leader for the re-launch of Europe, the former socialist French Minister of Finance and for years member of the EESC, Jacques Delors, took office as President of the European Commission in January 1985. The UK did not object to this nomination, taking however the precaution of nominating Lord Cockfield as a liberal counterweight who would become Internal Market Commissioner. Before taking office, Jacques Delors, toured all the Member States to identify at least one major policy field which would enjoy support from them all. Meanwhile, the European economy started a slow recovery, partly thanks to the OPEC States generous spending of petro-dollars on investments and consumer products of European origin.

In his first speech to the European Parliament, on 14 January 1985, Delors announced the strategic goal of completing the Internal Market by 1992. In March 1985, the Council endorsed the goal of a single market by 1992 at the Brussels Council [8]and gave a mandate to the Commission to draw up a detailed programme with a specific timetable. EC leaders equally agreed on an integrated Mediterranean programme, which removed the last obstacle to Spanish and Portuguese accession to the EC. Delors and Lord Cockfield worked together on the White Paper on the completion of the single market[9] that was presented to the Council on 14 June 1985. Instead of defining a “completed internal market,” the White Paper gathered nearly three hundred specific proposals aimed at removing all physical, technical, and fiscal barriers, accompanied by a brief philosophical defence of free market liberalism. The same day, the Schengen Agreement on the elimination of border controls was signed by Belgium, Germany, France, Luxembourg and the Netherlands in Schengen (Luxembourg) – although the implementation of its provisions would be delayed for another ten years. In the run up to the Milan Summit[10], in which the heads of government unanimously approved the White Paper, the link between internal market liberalisation and qualified majority voting gained ground. Delors stated that the first was unattainable without the second and neither was possible without an intergovernmental conference aimed at amending the Treaty of Rome. At the Summit, the British proposal on informal improvements to decision-making was accepted. However, most countries wanted more. Germany proposed to reverse the Luxembourg Compromise, including majority voting in internal market affairs and some kind of informal agreement to abstain from invoking the veto but the text was rejected. The Italian Presidency searching for a firmer commitment than declarations of intentions, referred to Article 236 of the Treaty to decide, on majority vote, the call for an IGC. And the Conference was convened, although Britain, Denmark and Greece did not support the measure. The UK refused at first to even participate in the Conference, but whether it was after second thoughts following a reminder from Delors that internal market completion (Britain's favourite European policy) was inevitably linked to majority voting or Mitterrand's continuous references to the two-tier Europe, the British attended the IGC. Both points may have played a role.

Further developments in European integration will be discussed in Part Five of the articles in this series in a future issue of the Info Relays newsletter.

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[1] "Report on European Political Cooperation (London, 13 October 1981)", in Bulletin of the European Communities. 1981, No Supplement 3, pp. 14-17. http://www.ena.lu/en/docs/d08200/08106/doc.htm

[2] The Genscher-Colombo Plan, presented by Italy and the Federal Republic of Germany, 7 November 1981.

Statement by Hans-Dietrich Genscher to the European Parliament (19 November 1981)

http://www.ena.lu/en/docs/d07600/07562/doc.htm

Statement by Emilio Colombo to the European Parliament (19 November 1981) http://www.ena.lu/en/docs/d07900/07878/doc.htm

[3] "Solemn Declaration on European Union (Stuttgart, 19 June 1983)", in Bulletin of the European Communities. June 1983, No 6, pp. 24-29. http://www.ena.lu/en/docs/d07600/07560/doc.htm

[4] DRAFT TREATY ESTABLISHING THE EUROPEAN UNION Official Journal of the European

Communities No C 77/33 Tuesday, 14 February 1984 - http://www.tecis-online.info/intra/doc/Projet_S.pdf (Link to Relays' Intranet)

[5] "Conclusions of the Fontainebleau European Council" http://www.ena.lu/en/docs/d07700/07658/doc.htm

[6] Report by the Ad Hoc Committee on "A People's Europe" - Bulletin of the EC, Supplement 7/85

http://www.ena.lu/en/docs/d06400/06355/doc.htm

Report submitted to the Milan European Council (Milan, 28-29 June 1985)

At the Milan European Council on 28 and 29 June 1985, the Adonnino Committee presents a second report on a citizens' Europe. http://www.ena.lu/en/docs/d07700/07674/doc.htm

[7] Report from the ad hoc Committee on Institutional Affairs (Brussels, 29-30 March 1985):

http://www.ena.lu/en/docs/d07700/07639/doc.htm

[8] European Council in Brussels, 29 - 30 March 1985, Conclusions of the Presidency: http://www.europarl.eu.int/summits/brussels5/mar_en.pdf

[9] Completing the Internal Market: White Paper from the Commission to the European Council (Brussels, June 1985) COM (85)310, June 1985 Main text http://europa.eu.int/comm/off/pdf/1985_0310_f_en.pdf

Annex http://europa.eu.int/comm/off/pdf/1985_0310_f_en_annexe.pdf

[10] European Council in Milan, 28 -29 June 1985, Conclusions of the Presidency: http://www.europarl.eu.int/summits/milan/mil_en.pdf