Mr. Watkins is an assistant editor for The Freeman.
Since the end of the Second World War, there has been much discussion about European integration. What began as the European Coal and Steel Community (ECSC) in 1951 developed into the European Union (EU) with the ratification of the Maastricht Treaty in 1992. Unfortunately, the trend thus far has been toward centralization, but there is one more opportunity to restore the balance between the member nations and the ever expanding bureaucracy in the EU’s capital, Brussels.
The year 1996 will witness an intergovernmental conference on the future of the EU and problems arising with the Maastricht Treaty’s one-size-fits-all remedies. If Europe is to develop a system that operates smoothly and secures the peace, next year offers perhaps the last chance to settle major constitutional issues.
Since the early post-war discussions about integration, Europe’s explicit goal has been to bind Germany’s future and prosperity to peace on the Continent. Hans-Dietrich Genscher, Germany’s former foreign minister, called the EU’s structure “a living model for a peaceful European order, with Franco-German cooperation as its Centrepiece.” In light of the results of Prussian militarism in this century, it is understandable why France and the Benelux nations (Belgium, the Netherlands, and Luxembourg) are pushing for a stronger union in which they hope Germany will be content and contained. However, their centralizing efforts could generate the very conflict they seek to avoid as diverse peoples are forced together in unnatural political arrangements.
Voices from Past
The threat of centralization and socialism to peace in Europe is not new. The guns of the Axis and Allies had hardly fallen silent before European socialists were holding conclaves in London and Paris regarding integration to promote “a socialist Europe which is economically and politically independent.” Little did these intellectuals realize that Europe once was economically integrated (though protective tariffs did cause stress) by a shared metallic monetary standard before World War I. This early integration emerged naturally “without super-plans, super-planners, super-bureaucracies, super-conferences, and without a super-state and ‘High Authority.’”
In the end, Europe’s economic integration was “destroyed by an economic foreign policy which had its roots … in … collectivist-inflationary policy … that sailed under the flag of ‘planned economy,’ ‘full employment,’ ‘cheap money,’ and deficit spending.”
Some things seem never to change. Though there is much talk of free markets in Europe today, many of the same old collectivist policies of the welfare state remain in place. For instance, in EU countries, each 100 workers now labor to support 40 pensioners. By 2004 each 100 workers will support an additional 10 pensioners on top of the current 40.
Unfortunately for Europe, the technocrats in Brussels, see “No discernible association … between either the level or growth of social spending in member states, on the one hand, and their trade performance, employment or unemployment, on the other.” This attitude explains why one-tenth of the workers in the EU are now jobless and why during the first year of the much vaunted single market the EU’s GDP shrank by 0.3 percent. Wilhelm Roepke’s prediction that in any proposed European economic union “the highest degree of inflation in any member country will be adopted by the others along with the longest paid vacations and the greatest measure of intervention or planning,” has fast become a reality.
Because of the collectivist attitudes in Brussels, there will certainly be future trouble as member nations seek to revive their economies by abandoning the policies of the past. And if mechanisms are to be designed to allow a peaceful transition to nonintervention, the 1996 intergovermnental conference is the proper place to begin. Decisions made there will shape the future power arrangements of Europe for years to come.
Unfortunately, the French and the Germans—both with strong centralizing tendencies—along with the power-hungry European Parliament will make most of the Conference preparations. Nevertheless, there is an opportunity to curb the foolishness in Brussels that has led to edicts regarding everything from subsidies to the curvature of cucumbers.
Ever since French recalcitrance over agricultural policy sparked the “Luxembourg Compromise” in 1965, nations have enjoyed a national veto in the Council of Ministers. This veto applies to areas such as taxation, treaties, the acceptance of new members, and foreign policy. Britain successfully used her veto to strike at plans for further centralization last year when she vetoed the appointment of Jean-Luc Dehaene to the presidency of the European Commission. Nonetheless, if each member nation is to retain her national sovereignty, the national veto must be strengthened against encroachments.
Encroachments will most likely come from the courts. The European Court of Justice claims the power to declare acts of member states and EU institutions void if they violate the Treaty of Rome (which formed the European Economic Community in 1957). From American history we learn the danger of a Supreme Court that claims final say over the constitutionality of state and national legislation. In the early days of the American republic, Thomas Jefferson saw the danger that the Supreme Court posed and correctly predicted that it would be “the engine of consolidation.” It should be a priority in 1996 to ensure that a European John Marshall will not have the power to alter the balance between Brussels and the member nations. The nations should have final say concerning the legitimacy of EU as well as their own legislation because they retain their sovereignty and have entered the compact as equal partners.
Such a power of nullification does, however, pose serious risks and could be detrimental to the very idea of a common market. Individual nations could nullify free-trade initiatives, which were the impetus for the EU in the first place, in order to protect local economic interests. Though this is a possibility and it would be regrettable if nations used their power of nullification for frivolous purposes, the risk is worth taking. A national government with exclusive power to judge the constitutionality and breadth of its powers will tend, as in the United States, to become consolidated. A single consolidated government would be deleterious to the peculiar local habits and customs that are at the heart of European culture.
Along with the precedent of a national veto, since Maastricht a precedent has been set for nations to opt out of certain EU programs that they feel are detrimental to their national welfare. For example, Britain has been exempted from Maastricht’s onerous social chapter and any future European Monetary Union (EMU). Denmark is exempted from the final phase of the EMU, European citizenship, and common defense and legal policies. Even Germany, a self-described “core of the hardcore” regarding union, insists that her parliament have final say-so regarding the replacement of the mark with a common currency.
Nevertheless, opt-outs, in their current form, have drawbacks. For instance, since opting out of the social chapter of the Maastricht treaty, Britain has lost the power to block trade unions’ demands for worker-consultation councils and other pro-union measures. These councils demand that workers be consulted about such things as restructurings, closings, or changes in production methods. Though British firms operating domestically are unaffected, British multinational firms operating in the EU are at the mercy of Brussels.
To check such excesses, member nations must retain their veto power over legislation emanating from Brussels whether they have opted out of the particular legislation or not. Member states should be allowed to retain their voices concerning any EU legislation that could affect them adversely.
The EU has already caused much tension and is held in disrepute by citizens of many member nations. In fact, 60 percent of the EU electorate opposed the Maastricht treaty and 65 percent of Europeans are against abandoning their national currencies. Norman Lamont, former chancellor of the British exchequer, predicts that Brussels’ centralizing tendencies “may mean one day contemplating withdrawal” from the EU.
When nations finally decide to abandon welfarism and planning in favor of a more liberal alternative, such a decision will necessitate a withdrawal from the EU and its massive schemes of redistribution. And if the nation choosing withdrawal is not a net recipient of redistributed wealth (as will likely be the case), then the beneficiaries will no doubt try to stop their victim from escaping.
The EU’s Common Agricultural Policy (CAP) is already causing divisions similar to the American sectional conflict of the nineteenth century. However, in Europe’s case it is the agricultural interests that are exploiting the commercial interest. The CAP already eats half of the EU’s budget with its guarantee of minimum prices to farmers. As the EU expands and admits the poorer nations of Eastern Europe, transfer payments will skyrocket. Under current policies, admitting Poland’s five million farmers to the CAP would require a boost in the EU’s budget of $74 billion. Such transfers can and will breed only contempt from those who have their earnings confiscated by the technocrats in Brussels.
Tragedy looms ahead for Europe as incompatible cultures are thrust together in unnatural centralized arrangements. Once the intoxicant of political unity wears off, the nations of Europe must be able to coexist peacefully in a loose confederation or go their separate ways. The 1996 intergovernmental. conference offers perhaps the last opportunity for EU nations to secure constitutional guarantees ensuring their sovereignty and future. For Europe to prosper, it must soon abandon the impoverishing policies of the welfare state. Because such an edict is not likely to be issued from the mismanagers in Brussels who thrive on power wrought from consolidation, the future of Europe rests on the power of the people acting within their nation-states to do so when the ideological climate finally changes. 
2. For an excellent discussion of the early socialist schemes regarding European integration, see Hans F. Sennholz, “The Socialist Movement for a United States of Europe,” in How Can Europe Survive (New York; D. Van Nostrand Company, Inc., 1955).