The UK in the EU

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The EU: The First Fifty Years

This paper is written from the perspective of someone who has followed EU affairs closely for more than 40 years and who has been and remains convinced that it is in the interests of Britain that the EU should be successful. So far the EU, despite all the complaints about it, has been a huge and historic success. To begin with, there is peace, prosperity and security in an ever widening area of Europe, with most of the countries remaining outside wanting to join. It is vital, in an uncertain world, that this success should be preserved and built upon and that Britain, which has much to contribute as well as to gain, should play a major part – in our own interest.

After the Coal and Steel Community and an abortive attempt to create a European Defence Community in the early 1950s, the founding of the European Economic Community in 1957 at last set Western Europe on the path leading to the far more comprehensive and extensive European Union we have today. Unlike other members, Britain had not suffered invasion in World War Two and unfortunately retained the illusion that it could play the role of a great power in its own right in partnership with the US, coincidentally up to the moment the EEC was born. Recovering from this error, Britain applied to join in 1961, only to be vetoed by General de Gaulle in January 1963.

Successive British governments persisted, but it was only after President Pompidou had taken over in 1969 that serious discussions could be resumed, leading to British entry on 1st January 1973 under Edward Heath, together with Ireland and Denmark. In the meantime the French Government succeeded in getting principles established for the CAP and for the financing of the Community (the own resources system) which were highly favourable to France and which Britain had to accept. In the entry negotiations the most that could be achieved was a seven year transitional period with gradually increasing financial contributions and an assurance that "if an unacceptable situation should arise, the Institutions would find equitable solutions".

The left wing of the Labour Party opposed UK entry. In an effort to unite the Party, Harold Wilson proposed a "renegotiation" of the terms of entry, to be followed by a referendum to decide whether Britain should remain a member, and narrowly won an election on this basis in February 1974. Jim Callaghan, as Foreign Secretary, conducted the negotiation. In March 1975 Harold Wilson declared it had succeeded, having in effect achieved agreement in principle that the own resources system could be subject to a correcting mechanism and a small increase in butter imports from New Zealand (but little else). In the subsequent referendum campaign (with four Cabinet Ministers campaigning against it) the Government, with support from most of the Opposition, turned the opinion polls from 2 to 1 against to a final vote of 2 to 1 in favour of staying in.

Alas, this did not put the controversy to rest for good. When Mrs Thatcher came to power in 1979, the 7 year transitional period was almost over and the British net contribution was indeed unacceptable. It took nearly five years and innumerable Council meetings to find the equitable solution. In most EU negotiations it is usually possible to find a solution which gives at least something to every one, even if some are not fully content. In the budget negotiation Britain was bound to be isolated because all other member states would either pay more or gain less from the budget if the British net contribution was reduced. It was a true zero sum game. After much aggravation, agreement was reached in 1984 and the British came within two thirds of a percentage point of their opening position. By now they understood better how the EC really worked and insisted that the solution should be enshrined in a revised "own resources" decision, thus ensuring that it can only be changed by ratification in all member states, (the provision originally secured by France to protect its own favourable budget position). That being said, with only a 66% refund of their net contribution, the British remained more important net contributors than France for the next 21 years and have had from time to time to resist demands for the rebate to be scrapped. It has the potential to cause further aggravation in the future.

Despite the British budget problem, the oil price rise of 1973/75, the consequent recession and the sharp rise in inflation, much was agreed in the 1970s and early 1980s. The European Parliament became directly elected. Steps were taken to establish policies for Research and for the Environment and for Regional Development, all favoured by the British. The political cooperation (foreign policy cooperation) machinery was set up, Association Agreements were made with the African, Caribbean and Pacific countries (ACP) and some other important countries, the Common Fisheries Policy took (unsatisfactory) shape and, at the end of the 1970s, the European Monetary System (EMS) was created, with Britain not joining the Exchange Rate Mechanism (ERM) but having the right to join later. Progress with putting into effect the Single Market was very slow, except in the field of tariff reduction.

Margaret Thatcher began her campaign for the completion of the Single Market in Copenhagen in 1982. It was finally rewarded with success in Luxemburg in 1986 with agreement on the Single European Act, for which she has been given little credit elsewhere in Europe. The next six years were spent agreeing nearly 300 directives to create the Single Market with Jacques Delors and Arthur Cockfield (the British Commissioner) keeping Ministers hard at work. The consequences have been wholly beneficial economically, with the elimination of barriers to trade and the scrapping of restrictions on millions of firms. It has, however, had some negative side effects, as the regulations essential to create a real single market provided ammunition to those hostile to the EU, particularly in the UK.

With hindsight, an equally important development of these years was the entry into the EC, first of Greece in 1981 and then in 1986 of Spain and Portugal. As with Ireland in the 1970s, these new members thrived economically and consolidated their democratic political systems. This second enlargement was followed by a third, fourth and fifth, bringing in Austria, Sweden and Finland and then the East and Central European countries liberated from Soviet domination as well as Cyprus and Malta, bringing the membership to 27 in 2007. All these countries feel more prosperous and most more stable in their democracies than they were before the transformational effect of preparing for membership began. Who would have predicted in 1956, just after the Russians brutally suppressed Hungary’s modest bid for freedom that fifty years later the Baltic States, Poland, the Czech and Slovak Republics, Hungary, Bulgaria and Romania would all be prospering as free countries and members of the EU? That is a measure of the real progress we have made.

The other great internal development of the 1990s was the achievement of EMU. This had many things to be said for it. A single market without a single currency would always have been subject to attack. To be able to travel Europe-wide without changing your money is a huge advantage. But the move to EMU was more a political than an economic decision and the jury is still out on the question of whether all Eurozone countries will be able to live with its "one size fits all" single short-term interest rate.

The UK joined the ERM belatedly in 1990, but at a parity which many at the time thought uncompetitive with the mark and the franc, with the disastrous consequence that in 1992 under John Major’s government, the pound came under speculative attack and, when he refused to contemplate devaluation within the ERM, was forced out. This fatally damaged public, especially right wing Conservative, attitudes to EMU and even to the EU itself. These had been worsening ever since Margaret Thatcher’s Bruges speech in 1988 in which she propounded the misleading thesis that people were faced with a choice between a superstate and a free trade area. Neither were practical options then (much less now), since the EU had advanced well beyond a free trade area already and was showing little sign of moving towards a Federation (even less now). But anti-EU opinion persists in claiming that free trade was all that the UK signed up to.

The evolutionary nature of the body we were joining was made clear publicly both before we joined and in the 1975 referendum. Now, after 50 years, the EU is playing an indispensable role in many fields - dealing with the threats to Europe’s environment, cooperation in countering the terrorist threat, working for a liberal world trade system (while protecting members’ interests), providing aid to the Third World, helping with peace-keeping operations in the Balkans and in Africa, negotiating with Iran, trying to promote an agreed solution to the Palestine problem, to name only a few. If there were no EU, the world would need the Europeans to invent one.

Despite all this, pessimism and discontent with the EU is wide-spread and not only in the UK, and there is talk of crisis. The EU has been said to be in crisis many times, but it has always overcome them. Ought people to wonder whether this time it will be different? Should we fear that the EU will fail its citizens and go into a terminal decline? There are indeed many difficult issues facing the Heads of Government and their Ministers. But the important European politicians still seem to have the will to solve them. This European Commission is certainly going to play its part in helping Heads of Government and their Ministers to get things done. As before, dedicated people will find a way through.

Politicians in all our countries need to work together to explain the things the EU has done well, especially enlargement, instead of seeking electoral advantage by wrongly blaming it for their own failings. Many issues can only be dealt with satisfactorily on a European scale. Ministers need to concentrate on doing things the public will find useful, such as agreeing genuine common policies for instance towards global warming and security of energy supply, and towards Russia and the US, as well as institutional change which is primarily of interest to insiders. And, above all, to practise what they preach about ‘subsidiarity" (not asking the EU to do things which are better done at the national level). But in my view the core truth is that the EU has had an amazingly successful half century and there is every reason to believe that the next one will be as successful.

Sir Michael Butler

Commissioned by the European Commission Office in London

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