Charles Grant (chair) The debate over the constitution is a good moment to take stock of the wider trends and arguments about where the EU is going. There is the question of common foreign and defence policies and transatlantic relations; there is the euro and the slow growth problem; there is the problem of how to make an enlarged, 25-state EU effective without making it even less legitimate in the eyes of European voters. There is also a new "à la carte" reading of events, with a particular resonance in Britain, that runs as follows: the combination of the geopolitical divisions in the EU exposed by Iraq, the decisive Swedish "no" vote to the euro and the undermining of the stability and growth pact, all mean that a new stage in the development of the EU is beginning. Or, rather, these developments represent the culmination of the drift since Maastricht away from a federalist approach to integration. One could almost say that with the important exception of justice and home affairs, the acquis communautaire - the body of EU law that applies to all members - is now more or less closed. The EU 25 - perhaps 28 or 29 in ten years - will no longer integrate as a whole. Instead there will only be à la carte or differential integration, with different groups of states doing things that they want to. Is this true?
Roger Liddle I would like to take issue with that thesis. It is based on a false proposition - beloved by British eurosceptics and given new life by the Swedish referendum - that there will be a "two-tier" Europe, a permanent "out" group of Britain, Denmark, Sweden and some of the new members, and an "in" group dominated by the French and Germans. Why is this wrong? First, there has always been differential integration: both the Schengen passport-free zone and the euro were set up on that basis. Second, as I visit the new member states - which the prime minister is very keen that I do because we see a lot of common interests in views about the EU, national sovereignty and so on - I discover that one thing they are keen on is joining the euro. Third, on defence Britain and the new members would not want to join an inner core that was going to be set up as an alternative to Nato. But I don't believe that at the end of the day this is what the French and Germans will want; I think that they want something that we probably can join. This is all being negotiated now, but I am confident that we can get something that is not antagonistic to the US but that produces a better balance in the transatlantic relationship and enables Europe to act more effectively in military matters by pooling resources. But this should not be an exclusive grouping; it should be open to everyone who can satisfy certain criteria, like Emu.
Gilles Andréani I can subscribe to most of what Roger said. I would add that the driving force which really rules out the idea of à la carte Europe is the single market itself - the budgetary and other disciplines required by the single market place a strict limit on differentiation. On European defence: while France and Britain took the right decision at St Malo in 1998 to take it forward at the level of the whole EU, there will be countries which are reluctant to join in. And in defence, capabilities are, of course, very important. In practice some more restricted grouping of countries able and willing to conduct operations will sort themselves out in an open and transparent fashion vis a vis the others. This talk of an anti-US inner core won't stand the test of time.
Grant Michael Portillo, as defence secretary you laid the ground for European defence at Berlin in 1996 by proposing that the Western European Union be given the power to borrow Nato assets. How do you see things now?
Michael Portillo We were very careful in Berlin not to weaken Nato. But in those days it was assumed that the US was interested in keeping Nato and that it was the Europeans, or some Europeans, who wanted to spoil it all. Now it is not clear that the US is interested in keeping Nato. So, Nato is subject to this dual effect of some European countries pulling away and the US not doing much to prop it up either.
The broader problem for European defence remains what it has always been. First, countries don't spend nearly enough on defence. Second, the money that is spent is done with horrific inefficiency, because each country buys its own national products. And despite all our experience in Nato, we are not capable of producing much punch. Moreover, even if we were successful in creating a common European defence policy, it would not be much use in pursuit of a divided foreign policy. In Iraq, four European countries wanted to participate in the US-led coalition the rest did not - what would we have done if our defence forces had been pooled?
Going back to the opening proposition about ?la carte Europe, I agree with Roger. But he thought the idea was a eurosceptic one, whereas I think of it as a mild euro-enthusiast idea - at least in this country - because it suggests that the British model is winning. I see no evidence of such a victory. I agree that most countries are likely to join the euro. Charles mentioned the important continuing moves within justice and home affairs. And it seems clear that the integrationist model persists in defence too.
As far as the euro is concerned, after several years' experience it is no longer particularly scary. That is to say, it isn't scary for people who might want to enter it, or for those who might want to remain outside. I think it is now quite difficult to frighten the British people into thinking that unless they go into the euro, disaster looms. And I think it is quite difficult to frighten the Czechs or anyone else into thinking that they will go to ruin if they do join it.
I do want to mention the "letter of the eight," the letter sponsored by Spain and Britain and signed by several others last January, ostensibly about support for the US in the war. I think it had a broader significance. This was a group of countries saying that they were weary of the Franco-German locomotive driving Europe, and that they were interested in, to use a shorthand, a more Anglo-Saxon sort of Europe. The letter itself was a tactical error on the part of Blair, because it mightily pissed off the French and the Germans at a time when we were trying to get their votes in the security council. But it did suggest to Blair that there was a substantial coalition within Europe that he could lead and that was going to drive Europe in a different direction. I think he also saw, rightly, that Britain had to be a member of the euro for him to capitalise on that opportunity, which is why, after the war, he raised the subject again - only to be seen off by Gordon Brown.
It has been said that, after the Swedish vote, the euro is off the agenda in Britain for ten years. Not necessarily. I think that depends on whether the German economy performs better than the British one. It is certainly impossible to get the British to go in while the German economy is underperforming the British: you have to be able to point to something the Germans have that we don't. I also think that a new prime minister would change things. Gordon Brown, while he runs the economy and sees the importance of the Bank of England controlling interest rates, is the block to entry. If he were prime minister things might be quite different.
Grant Kirsty, do you go along with this view that ever-closer integration hasn't gone away at all?
Kirsty Hughes One problem is that we don't know whether enlargement will work - at least in the sense of producing new policies in the future for all 25 countries. And if enlargement does not work then we are back to that idea of a Franco-German core. But I am not sure whether that will work either. One of the big questions for the enlarged EU is: where is its strategic direction going to come from? Is it going to be acceptable that France and Germany lead it? What is their agenda? There is not going to be a "New Europe," whatever the British might hope, but that does not mean that "Old Europe" can provide leadership in the old way.
Grant Anatole, will you defend à la carte Europe?
Anatole Kaletsky Yes. I think when Michael says it is wrong to suggest that the British idea of doing things in different groups is winning through, the question is: at what level do you mean winning through? I agree that this idea is not winning through at the level of the bureaucratic and institutional drivers of the EU in Brussels - the only differentiation most of them will acknowledge is multi-speed, the idea of some countries moving ahead faster than others but in the same direction. But it is not at all clear that the European court of justice sees it that way - and it is going to be the ultimate arbiter under the constitution of subsidiarity and so on. Moreover, the reality of the world, both in economic and political terms, may be an obstacle to that old multi-speed vision. Of course most of the east Europeans will join the euro. It is absurd for a country like Estonia, with a population of 1.4m, to have its own currency. It would be like Croydon having its own currency! But I think the crucial point Michael made is that these inner/ outer arguments no longer look scary. The euro is no longer scary, either to the ins or the outs. Being outside Schengen is no longer scary. And I think the same will increasingly apply to everything else.
Grant There are two other divisions we haven't mentioned. One is big countries and small countries. There is now a bloc of small countries that gets together to consider how to stop what it sees as big three domination. This could still destroy the constitution. Small countries are unhappy with a number of things in the constitution, including the idea of a new EU president. And some feel that they have to obey the eurozone's stability pact while the French don't.
The other fissure opening up, which we have all been talking about this year, is the transatlantic relationship. Is the point of the stronger EU defence and foreign policy, as the French tend to think, to be able to say no to the US, to tell it when it is making mistakes? I will leave Gilles to explain French thinking there. Or will the British view prevail: a stronger defence and foreign policy allows Europe to be a useful partner to the US in helping it sort out the world's problems. The Iraq crisis split Europe down the middle on this. Interestingly, I think that few countries outside France went along with the more Gaullist conception until the arrival of George W Bush. Bush's foreign policy, his style, his language, his policies, turned public opinion in Germany and other EU countries more strongly, anti-American, and towards the Gaullist view. This shift may last a long time.
Andréani Yes, the "letter of the eight" was evidence of a new geopolitical divide within Europe - of the core Europe of the founding members, plus or minus Italy or the Dutch, against the former Efta states plus the east European countries more geared towards the US. I think the 29th April Brussels meeting about closer defence co-operation - the so-called "chocolate makers" meeting of France, Germany, Belgium, Luxembourg - was a tit for tat, a reaction of the inner core countries that had felt challenged by the letter. But what is clear a few months later is that both sides see this divide as self-destructive. There is a big effort to stop it becoming permanent. And this notion that the French have only one idea - to promote an inner core set to oppose the US - is simply a fantasy.
On the euro and small versus big: the euro was meant to define the vanguard and has ended up defining the rearguard. It was meant to select a group of countries eager to integrate further than the others, but it failed because so many countries joined up in the first instance. The cleavage between small and big is an abnormal one. It only arises because of our focus on the institutional mechanisms of the EU, which draws attention to the fact that the EU began with a deal between three small countries and three big ones, where the three small countries had a built-in leverage. In a union of four big countries and 21 small ones, the same bargain cannot apply. You have to redress it somehow, and that is emotional. But there is no conjunction of durable interests among the small on the one hand or the big on the other: this debate will go away once we have an agreed constitution.
Kaletsky What Gilles said about the original six was interesting. But what he overlooks is that once a founder member decides it can opt out of some important aspect of the core, as Italy did on Iraq, it becomes less risky to opt out of other things; the whole unity of the core is now challenged. Similarly with the euro: this was meant to drive the EU forward for the next decade. But it has turned out to be something that can operate in a separate compartment. It is possible for a country like Britain to be outside it for at least five to ten years. This means that every future integrationist project will be subject to the same challenge: we don't have to join, and there are many precedents for not joining.
Hughes I want to go back to transatlantic choices. I think the argument in Britain has become a bit caricatured: we have the anti-American French and the nice, reasonable Blairite British. I don't think Chirac's position is anti-American. What he is saying is: if we can build a common foreign policy it should be independent; it should not be predicated on the British special relationship with the US. So let's say you get as far as an independent European foreign policy: what would its content be? Presumably a lot of the time it would emphasise the importance of the transatlantic relationship, but sometimes it would differ from it.
Grant Michael, do you share Kirsty's enthusiasm for Chirac's foreign policy?
Portillo It is arguable that Chirac's policy is not anti-American; it is much more difficult to argue that it is not non-American. It almost defines itself in terms of being non-American, which I think from time to time will be anti-American. But whether it is discussions with Arafat, or attitudes to Iraq or Iran - on one thing after the other it is a non-American foreign policy. And what defines Blair's foreign policy, and before him Major's and Thatcher's? That it is a pro-American policy, or possibly even an American foreign policy. You can take away the word "anti," but you haven't really narrowed the gulf in attitudes.
As for the Franco-German locomotive, it is events that will decide whether this continues to drive Europe forward. If the European economy continues to underperform the US economy, and if the British economy continues to be more successful than the continental economies, and if part of the reason for that is that Britain has interest rates that are a closer match to its economic needs, then other parts of Europe could start to demand a new locomotive.
On foreign policy - and at the risk of special pleading - let me add that I think the position of Spain is very interesting. Spain has suddenly gained a great deal of self-confidence and wants to cut out a role for itself in Europe. It doesn't carry the baggage that Britain carries, and it is inside the euro. It has been pushing out its policy positions, not least by siding with the US during the Iraq conflict. And it might be that, like Britain, even if the socialists were to gain power that this new self-confidence would continue to be a factor. One other point - I think the movement of Germany in the foreign policy debate is highly significant. Germany's decision not to go along with the US during the first six months of this year, to abandon Europe's "Atlanticist" party, was vastly more significant than the entirely predictable French decision. And for as long as the Social Democrats run Germany we will continue to see a very different foreign policy outlook from what we have been used to for 40 years.
Grant Roger, are you working for a government with an American foreign policy? Has Germany made a strategic shift to an anti-US foreign policy? And is the outlook for the eurozone bleak, with the economic gap with the US set to grow?
Liddle The shift in Germany came with the end of the cold war and unification. Those events made a lot of Germans think that they no longer faced a world with serious security challenges. Unlike France and Britain, Germany has not shown much willingness to increase defence spending or radically reconfigure its forces to make them deployable around the world. What made a common European policy on Iraq impossible was Schr?'s position during his election campaign, but that was the result of a public refusing to face up to the reality of the WMD/terrorist threat rather than crude anti-Americanism. What the Germans haven't yet done is to overcome the psychology that says foreign policy is about everything but the use of force. The French don't have that problem. The German left does.
On our foreign policy, no, I don't think that we are pursuing an American policy. What really worries Blair is American isolationism and a Britain cut off from Europe - what we want is a more united Europe working in partnership with an internationalist US to tackle the world's problems.
On the European economy, yes, Britain has done pretty well. But it has done well on employment; much less well on productivity and investment. And one reason why the argument about British membership won't go away is because being part of a single market with a single currency would increase our competitiveness and help overcome the productivity gap with France and Germany. I think the chancellor regards that as a valid argument, which is one reason why it is nonsense to say that the question of Britain's euro membership is ruled out for ten years. I think the problem on the continent is not so much that the region is performing poorly; it is that there is an air of confusion. The stability pact looks a mess, and there is no clear direction on structural reform. But poor performance on the continent is not a knock down argument for Britain to steer clear of the euro, indeed if we are performing so well then presumably British companies have been performing well, and what business stays out of a market because it thinks that its competitors are weaker? That is a strong case for joining the euro, so long as you can also make the national interest case - which is what we hope that Gordon will do, when convergence is achieved, at some stage.
Hughes I agree with that. It does matter if we stay outside a eurozone of half a billion people when almost all the other 24 states are in. We are also outside the passport-free zone, and if there are moves toward a European public prosecutor we may stay outside that. We are reluctant to go forward to majority voting in many areas. In foreign policy we have been marginalised, because more than any other country that supported America we are seen as being unconditionally pro-US, and therefore no longer a transatlantic bridge. If this all remains unchanged I don't see how Britain will be a big player in Europe in ten years.
Liddle Britain was not isolated on Iraq. In an EU of 25, it was 16 to nine in favour of the US action.
Andréani Two sentences in defence of the Germans. I think you have to take into account how they were cornered by the Bush administration, which did nothing to extend a hand to Schr? after the election. I think, deep down, just like we French in a way, they didn't enjoy being pitted against the Americans. Also, it is true that they have not reformed their military as they should have, but they have come a long way towards accepting the need to intervene militarily in the rest of the world and they have done so in Kosovo and now in Afghanistan.
What about Britain? I think there is a realisation that no one has improved their position in Europe after the Iraq crisis... no one will win this argument by prolonging it. France wants to see Britain coming back to play a leading role in defence and foreign policy because the Franco-German position is not going to carry the day in a union of 25 as it used to. More generally, I think in the minds of France and Germany what stands in the way of accepting Britain in a full leadership role is the fear that it has not quite passed the point of no return where it no longer constantly reopens the old debates. For better or worse, we have come to associate this stage, this point of no return, with joining the euro.
Portillo But it is not as simple as that. For there are elements of the British agenda, under any government, which are at variance with elements of the European agenda. It is strange to argue that you should integrate with policies that are essentially unsympathetic to your position in order to gain more influence over them. Conversely, a country that offers a different way of doing things can be a point of influence. Gordon Brown has more influence on European monetary policy by showing an alternative way to do it. And it is a challenge to continental Europe that Britain with its freer markets is doing quite well outside the euro. Depending upon the march of events, this might become a stronger or weaker influence.
Grant What about Europe's legitimacy problem? In any supranational body like the EU there is a tension between effectiveness, which needs a powerful centre, more majority voting and so on, and legitimacy, which requires constant reference back to 25 national electorates with different interests. As time has passed and as the EU has got bigger, both effectiveness and legitimacy seem to have deteriorated. Brussels is increasingly unpopular, increasingly misunderstood, even in the core countries. Nobody has come up with an answer - the constitution was meant to be part of the answer but I'm not sure it is.
Portillo There is a fundamental problem about representation in Europe. Although we have a commonality of general political values - belief in human rights, the rule of law and so on - when we ask ourselves what is the role of the individual, what is the role of the state, a Frenchman and a Briton will give different answers. Things are made tougher still by having different languages, which makes it difficult to create a common polity - if you don't have a common polity it is difficult to have meaningful elections across Europe, which in turn means it is hard to hold leaders to account. Most people agree that there is a democratic deficit in Europe, but they say, time will deal with it. Time might deal with it, but it might be a very long time.
Kaletsky Michael is right about the lack of a polity, but it could develop if only Europe would stick to a certain set of institutions and policies. If people could understand what Europe was about - the single market, in some places the euro, co-operating more closely on trade or catching criminals - then over time people would begin to grasp that if you want to have an impact on trade policy, if you are worried about your jobs being taken away by the Chinese, then you have got to think Europe rather than think Britain or France.
The trouble with the draft constitution is that it is trying to do two different - and contradictory - things. One is to make the Europe that we have today work better, be democratic, transparent and so on. But the other is to build yet more new institutions and to open up new aspects of policy, in foreign affairs for example. That's why people are suspicious and don't accept that the constitution is just a tidying-up exercise.
Grant I want to question this idea of the democratic deficit. There was a brilliant article by Andrew Moravcsik (Prospect, March 2003) arguing that the EU is not a state and therefore the kind of direct democracy we associate with the nation state is not applicable. The EU is a coalition of nation states, with some pooling of sovereignty, and what matters is accountability and legitimacy, and how best to connect the decisions taken in Brussels to our national democratic procedures. He says the EU is a kind of technocratic, indirect democracy. It has a small bureaucracy and a tiny tax base, it has very little direct power - except in areas like competition and trade - and significant new policies require a high degree of consensus. Moravcsik also points out that of the five most salient issues in EU states today - health, education, law and order, pensions and tax - none is mainly an EU competence. So it is not surprising that few people vote in European elections, and so long as EU institutions deliver in their limited areas and are not too corrupt we should not worry so much.
Hughes Moravcsik is wrong. The EU is a hybrid, but half of it is a state. Look at the commission: it initiates legislative proposals and when agreed as EU laws they make up about half of new national laws. Social, environmental, consumer, trade, labour issues - this is not just technocratic. We have put a lot of power at the centre in Europe without applying democratic accountability to it. Some of the EU constitution proposals are a step in the right direction - opening up the legislative process, for example. It is outrageous that European laws have been made in private in the council of ministers for so long.
Liddle I think the draft constitution is not at all too bad. Having a permanent president of the European council [the meetings of the EU heads of government] helps make it more transparent and allows people to see that on the big questions, accountability flows down from the European council through the prime ministers to national parliaments. And Charles is right about the need for better connections between Brussels and national parliaments, and so it is welcome that in the constitution national parliaments will now be able to raise a yellow card if they don't like a proposal that comes out of the commission. This will encourage national parliaments to work together to try to enforce subsidiarity, something that they have not been very effective at.
Andréani There is some truth in Anatole's "perpetual motion" problem - we have had too many intergovernmental conferences on institutional issues in the past 10 years; citizens find it hard to follow. But once things are stabilised on the institutional side, I think there are a huge number of EU-wide policy areas where our citizens would like us to do more - defence is one, narrowing the technology gap with the US is another. And what about legitimacy? At the outset it was based on the nation states, but with the idea that this would gradually move to a more direct polity of European citizens. Today legitimacy still lies mainly with the states, but the evolution is continuing.
Grant So will the constitution be ratified?
Kaletsky There is a chance that with up to half of the 25 states having referendums, at least one will vote no. If this set off a chain reaction ending with a big country like France voting no, then obviously the whole thing would be dead.
Portillo If one country votes against, I suspect it will be invited to vote again and again until it gives the answer it has been instructed to give. As far as Britain is concerned, the government will obviously hold out against a referendum. And although I agree that this is more than a tidying-up exercise - it is significant that it is called a constitution and a great deal has happened since the British last voted in 1975 - I think Blair has won in the sense that he has made most people think that it is not very important. People are bored with it. Lord Rees Mogg will bang the drum but he will be in a small minority.
Hughes If three or four countries vote against, we will be in uncharted territory. We won't be able to redraft a few minor details because these countries are likely to have voted against for different reasons.
Liddle We should have a referendum on the euro, which would be a very big transfer of sovereignty - giving up your monetary policy for a wider gain. But I am not persuaded of the case for a referendum on the constitution. We didn't have one on the single European act or on Maastricht, and what do we elect members of parliament for if not to scrutinise the ratification of complex treaties of this kind? One of the ironies about the constitution is that for the first time it contains an explicit withdrawal clause. So, if you are anti-European, perhaps you should support ratification to make it possible to exercise the right!
Andréani As we are calling this a constitution - it is in fact a constitutional treaty - there will be pressure in France to hold a referendum. We should manage to get it through, but it may depend on the IGC going smoothly, with not too many big arguments making the voters anxious.
Grant A final thought: if Michael is right and Blair can get away without a referendum, then perhaps one could argue that the poison has been drawn from the European debate in Britain for several years to come - or at least until the euro comes up again.
Liddle The Tories will keep the constitution alive. They think opposition to it is popular and will help them to success in next June's European elections.
Kaletsky That doesn't mean the constitution issue will catch on with the public. I actually think that, once again, Blair has been lucky with the way the euro issue has developed. So yes, I think the Europe issue has been neutralised for a few years at least.
Grant We must stop there. Thank you all for coming.
- Prospect has published the draft EU constitution, along with a foreword from the convention secretary general, John Kerr, and a guide by the Centre for European Reform. Click here to download the draft constitution in PDF format.
