What's odd and harder to explain is the virulent opposition to the European Union that emerges in the various proposals for renegotiating or, often in a veiled sense, pulling out of the European Union. This is the position analogous to the position in the American debate held by people like Pat Buchanan and Ross Perot. It’s the kind of nationalist, far right wing opposition to international cooperation and it has nothing to do with trade liberalization.
This attitude has some basis in uncompetitive sectors of the economy, small business, and so on. But basically the appeal is not pragmatic. The appeal is ideological. And the language of this kind of opposition is nationalist; it's a language of independence, of sovereignty, and so on. It's quite odd because the great consensus in European business circles is skepticism toward this kind of opposition and favoring of the European Union. It could take or leave something like the economic and monetary union. And I'm not entirely unsympathetic to British who want to leave it. But to pull out of the customs union—as Bill Cash and his fellow partisans support openly or implicitly—is something that very few businessmen would support.
Who holds this position in Europe? Well, we have real fascists who call themselves post fascists in Italy. We have similar parties of anti-immigration and occasionally there is a little pro-Hitler remark, in countries like Austria, Netherlands, or Germany. You have Jean-Marie Le Pen in France. And then you have Mr. Cash's party, the British Tory Party. And what I've never understood--
[Laughter.]
MR. CASH: I can't believe what I'm hearing.
[Laughter.]
MR. MORAVCSIK: This is not guilt by association. This is a fact. And the fact is, which Mr. Cash will not deny, is that there are certain parties of the right in Europe that oppose the European Union and are not supported by the bulk of the pseudo right business interests. Now, the Tory party is such a party, as are the Italian post-fascists, and that's a fact. Why they do it may be quite different in these cases. I'm not speculating. In fact, I'm posing questions. My first question is, why it is that these parties take a position that is so at odds with what the bulk of competitive business in their countries want?
The conventional explanation for the British position, which I really am somewhat skeptical of, is that the British press is disproportionately owned and influenced by old colonials, Australians, New Zealanders, Canadians, and so on—the “Lord Beaverbrook effect,” you might call it.
Moreover, it's curious that these parties adopt the rhetoric of sovereignty and national independence as an end in itself, rather than sovereignty and national independence as a means to an end. The United States, despite its very strong rhetoric, has a relatively differentiated position with respect to something like the WTO. Mostly it's been pro strengthening the WTO because it's been in its economic interest. But the British Tory Party has pursued this policy even though it's been an electoral disaster for them. And that strikes me as curious. Though there's considerable support in Britain for not entering into economic and monetary union, there isn't very much support for pulling out of the EU altogether.
I would like to know what concrete policies Mr. Cash would like to see the European Union do or conduct that it's not conducting now. I’d like to know why his party is taking such an electorally risky position.
Having stated that the EU doesn't have a democratic deficit problem and trying to provoke Mr. Cash into explaining why some people are so vehemently opposed to it, I just want to close by highlighting what it is we should focus on.
If this constitutional convention is not about any significant proposals and if there isn't a basic institutional problem in the EU, what should we focus on to understand the current trajectory of the EU? Because this is, in fact, a tremendously important organization. It's a super power in trade. It's a super power now in money. It's very active in foreign policy.
And I think there are two things to consider. The first is enlargement to the east. This group of countries in Europe is about to let in five, eventually probably ten countries to the east, countries that have a per capita income that's about 20 percent or 15 percent of the current nations. This is an extraordinary commitment on the part of a group of nations in an international system.
Americans often think in terms of NATO expansion. Americans often ask me why is it that the Europeans don't hurry up with this enlargement. Why can't they deliver like we did with NATO enlargement? And I say to them, suppose Vincente Fox came over the border tomorrow and said he had a proposal for us to expand the reach of USTR, the Department of Agriculture, the Antitrust Division of the Justice Department, the Supreme Court, and the Fed to Mexico. How long do you think it would take to negotiate that treaty? That's actually a very modest conception of what is involved with the EU; actually much more is—and enlargement is a major commitment. The Europeans should be praised for doing it at all, let alone doing it as quickly as they have.
European policy is tied together with the conception of international politics that the Europeans have. That they can do more, or at least they can do their part, by integrating these potentially unstable countries into an economic and legal sphere and thereby stabilize them. We should keep an eye on this process, and give the Europeans some time to do it right. It probably will involve a tricky situation, with respect to American agriculture, and we should be forthcoming when the time comes.
Final point: we should keep an eye on the budget. The EU has a small budget, but it has a budget that's important in certain areas. And in particular I think what we're likely to see in the next 10 years is the common agricultural policy--the bedrock of European integration since the start, next to the common market--come under pressure. The number of farmers is dropping in Europe. Now it's below 4 percent in most countries. There's always U.S. pressure. There's the eastern countries coming in and nobody really wants to pay to support the whole Polish agricultural sector. As a result, there's going to be pressure to cut agricultural spending and replace it with something else like structural funding for the weaker countries or research funding for more advanced industries. And that effort, in my view, is probably going to be led by the British and will probably be successful. And it's going to lead to a change in political alignments within Europe that's going to be quite striking and, in some ways, it has the potential to ameliorate relations across the Atlantic.
My bottom line--the EU is legitimate. The EU is effective. The EU is acting in the American interest. The EU is liberal. If it ain't broke, don't fix it.
MR. GREVE: Thank you, Andy. Bill Cash?
MR. WILLIAM CASH: Well, I have just been associated with the nationalist far right wing ideological neo-fascists, which I think anyone who knows even the faintest thing about me would know is complete nonsense. The same smear has been applied to members of the conservative party who take a similar view to myself, ranging from Margaret Thatcher to Ian Duncan Smith and taking in pretty well everybody else in the center right of conservative politics.
May I add, just for the record, that this idea about people being put into compartments is something which one really ought to avoid at all costs. I happen actually to be chairman of the Third World Debt Reduction Committee in the House of Commons, which is a new party committee dedicated to trying to relieve poverty in Africa. So that the suggestion that somehow or other I fall into the other category, I have to repudiate completely. But let's not worry about that too much, because I've heard this from you before.
[Laughter.]
The real important question here is what direction is Europe going and why is there a constitutional convention?
I'll just go to two of the points that Andrew raised. On the question of support for the European Union, you only have to look at the turnout in European Union elections. In the Netherlands, for example, it reached about 30 percent. In Britain it was down to around 24 percent. We are talking about a lack of connection between people and elites on a huge scale.
Another point Andrew made, I call it an allegation, that the European Union is democratic and transparent. There may be some changes as a result of this constitutional convention, but historically the Council of Ministers has always held its meetings in private. And what you cannot do is to ignore that this process is intrinsically undemocratic and unaccountable. This is the real problem. Saying, as Andrew does, “oh, they've only got a few civil servants and they don't really exercise too much power,” strikes somebody, such as myself, who has been engaged in analyzing the nature of European law and politics since at least 1964, as hollow. I can assure you that the European Union exercises the most monumental amount of power. It is not merely the number of statutory instruments or laws that are passed. It is the qualitative fact of that power and its impact upon people. And that is the thing that one really has to focus on. The EU in practice--and I don't mean this in a slighting fashion--is effectively a Trojan horse in each member state. Albeit, it is by agreement. If you take the British system, we agree through the principle of direct effect that all laws, which are frequently, if not invariably, passed by majority votes in the Council of Ministers, will be applied and will have direct effect in their implementation in the United Kingdom. And the process takes place in each member state.
If you look at the impact and the range of those laws, and then try to argue that it’s acceptable because it only represents 1 percent of the civil servants in Europe, something has just gone completely balmy in the argument. The actual delivery of those powers is absolutely stupendous and it affects every walk of life. We are talking about approximately 70 percent of all laws that are passed in the United Kingdom.
Therefore, I do think that one needs to put the issue in a context. You have the central bank, which is very undemocratic in regards to those who are part of it (and thank God the United Kingdom is not since we've prospered very well outside it). The central bankers, under the Maastricht treaty, are not allowed to seek or take instructions from member states, so they have monumental power and independence.
When Andrew talks about the democratic credentials of the EU, he overlooks how worried the European Union itself and even its elites are about the democratic deficit. It's an openly acknowledged state of affairs. When Ireland had the temerity to vote against the Nice treaty--which I opposed in the House of Commons with 235 of my other members just for good measure—and gave the European Union a five page absolutely crystal clear analysis of what the treaty would mean to Ireland and what it would mean for Europe, Romano Prodi described the process as undemocratic. This is ridiculous. It's like being in a hall of mirrors.
It's like when Andrew says there is no European army. Romano Prodi said it doesn't matter whether you call it X, Y, or Mary Ann, it is a European army. If you create, under treaty arrangements, governmental functions on the scale the EU is creating, and then you don't support them by having the resources to go with them--and there are Americans in the Pentagon who are deeply worried about this for a variety of reasons not unconnected with their war on terrorism and the current
Middle East situation--there is a big problem. You can call it a humiliation, if you like.
If you look at the European Union, it's split on the whole question of security. There is no such thing as a common foreign security policy. I don't criticize people for this failure. I just notice it and say I wouldn't want to have my affairs run by the EU. I'd rather see Colin Powell and the current American administration handling these questions than witness the kind of squabbles that have been going on in this context in the EU.
As to the question of British business being against people of my persuasion, this is simply not true. I could give you a vast amount of statistical evidence to rebut what Andrew is saying. Business suffers constantly from over-regulation, and is immediately concerned with the questions like the 35-hour work week. Businessmen are suffering in relation to the new social agenda, which is imbedded in all the treaties from Barcelona backwards, as well as from the increase in the problems relating to the funding of pensions. They are very concerned about the manner in which the economic rules in Europe impinge on the control that individual governments have over them. Before you believe Andrew’s description, you're going to have to think about Hans Eichel and his problems in Germany. You're going to have to think about what's going on in Ireland or Portugal. And you only have to look at what's happening in the United Kingdom. We got our budget today. And although Gordon Brown won't be saying it, the fact is that much of what he decides will be determined by the extent to which he's seen to be bumping up in terms of public expenditure against the artificial 3 percent deficit rule, which is imposed by the Maastricht Treaty and the Growth and Stability Pact.
The reality is that the Labor Party--that's the chaps on the back-benches and the people outside in the government--is increasingly concerned about this. And you've got trade unions, like UNISON, etcetera, beginning to jib at it very significantly. So there are very many things about what Andrew said which are not only challengeable, but are actually incorrect.
Andrew talks about extraordinarily limited government. The European arrest warrant is not limited government. Now, as Shadow Attorney General, I've strongly recommended that we take a positive view on the question of the application of the arrest warrant with regard to terrorism. But there is absolutely no justification whatever. And we now get into questions of habeas corpus. We get into questions of who has judicial authority. The fact is that the whole of this European arrest warrant is the creation of this corpus juris. And when I hear Andrew saying that there is no European police arrangement, I invite him to read the European arrest warrant and the evidence that's been taken by the European Select Committee in the House of Commons on it. The fact is that there is a huge amount of power which is concentrated in this European arena.
By the way, just for the record, I am in favor of the single market. I am in favor of European cooperation, very strongly. I voted yes in 1975. I voted for the single market in 1986. I am against European government because it's going to fail. And it's going to fail for the reasons that I've indicated, which is that the resources and the tax policies that need to go with it are simply not going to match up to the range of functions and the degree of power that is being conferred. It is a constitutional question. And it's my job to look at those questions and advise accordingly.
On the question of the European convention, I might make the point that it is not a minor matter as Andrew was suggesting. It is a huge matter, because it is about recalibrating existing power, not just about limiting competences. The EU is actually going to have more concentration of power in relation to the member states.
It's not comparable to the Philadelphia convention. But please remember that of the 105 delegates, only 5 adopt the kind of views that I do, which includes, for example, the question of whether or not you should have a democratic and accountable and transparent Europe. All the others, in varying degrees, have pretty well committed themselves in advance to the idea of further European integration.
There are complications, for example, about whether or not we're going to require unanimity for treaty changes recommended by this convention. In other words, when you make changes in the treaty, this is where the power is exercised. At the moment, you have to have unanimity. But if you're going to have majority voting for the changes in relation to the changes in the treaty, that is going to be a monumental step forward. That is something which is being seriously considered at the moment.
Then there is the question of the applicants to the EU from outside of Europe, including the African countries. I would say a sort of blackmail is underway, i.e., if you don't sign up to the entire body of European law, and rewrite the whole of your own statute book in each of the enlargement countries, then you can't come in. That strikes me as being extremely undemocratic.
At the heart of this there is the question of whether or not we're heading for a super state. I say emphatically that we are. The evidence for it is crystal clear. The suggestion that we're not moving toward it is not substantiated by the evidence. And I do not believe it's in America's interest to have a European Union which is caught up in a lot of the anti-Americanism, which is currently emerging from the European Union, combined with the prospects for collapse as a result of the top-heavy system that they are now creating.
I'd be very happy to answer any questions. But I would strongly urge you to be very skeptical, if I may say, about what Andrew has been alleging. I'm afraid it doesn't stand up in practice.
MR. GREVE: Thank you, Bill. Walter Klitz?
MR. WALTER KLITZ: Thank you very much, Michael, for the invitation. Jefferson said, "It is not by consolidation or concentration of powers, but the distribution that government is affected." And I think this is one of the major questions we will have to talk about at the European convention.
I don't agree with Mike and Andrew when they say that we already have a constitution in Europe because we have treaties. We have the Treaty from '51 on coal and steel. We have the Treaty of '57. But there are some really important things missing in these treaties. First of all, we don't have clear enumerated powers to the European Commission in these treaties. The treaties speak about goals, about aims. Further, when you have a look in the former Article 235 and the new Article 306 or 307, it seems that the European Union feels it doesn’t have special powers given to them by the treaties.
So what we have to do at the convention is to define clearly limited powers to the European Union. And Giscard d'Estaing was absolutely right, in his opening remarks, when he suggested that the convention is not about sovereignty. It's not about giving up powers to the European Union or reserving powers to the nation states. It's more about competition.
What is the end of the European Union building process? Will it be a federation comparable to the German example? This would be a bad example because we don't have competitive federalism in Germany. Instead we have a social cooperative model which is under great pressure at the moment. It’s a mixture of systems with no clear responsibilities.
In contrast, competitive federalism would be a good example. Another good example is what Charles de Gaulle spoke about in the fifties, that is, a federation of nations. So the discussion should be one of separation of powers.
I don't think there's a constitution because there are three criteria that make a constitution, and we are only starting to discuss them now. The first criteria is European citizenship. I have a German passport, but it is also a European passport. I don't see greater problems in having European citizenship. Greater problems may come in defining European territory in light of the enlargement of the European Union. Will this be the final enlargement? If not, when does it end? With 25 countries, with 28? What is the European territory? I can't define it. I don't know.
A third criterion is power. What power should we give to the European Union? I think that the powers given to the European Union are not limited at the moment and they should be. They should be clearly defined. There is no doubt that trade policy should remain in the responsibility of the European Union and also no doubt about the single market.
But about the single market, perhaps there should be the discussion of whether the European unit itself is responsible in every field for creating a single market or whether we should leave more things to competitive forces. For example, the European Union failed in creating a single market after '57 and failed again with the Single European Act in '87.
The problem with the attempts in '57 and '87 was that the European Union tended to harmonize everything instead of leaving things to competition. Luckily, we have the supreme court of the European Union, for they decided on a precept of recognition. This was really the breakthrough for competition and the breakthrough that created the single market.
We need a security defense policy. We also need an environmental policy, but only when global aspects are involved. We don't need regulation from the European Union, for example, on how to pick up the trash in local communities.
Mr. Cash just spoke about enlargement of the European Union, which will take place in 2004. At least, I hope it will take place in 2004. I lived in Estonia for a couple of years, from '94 to '96. I see, of course, that the new member states have difficulties. It's also an emotional question for them to give up power to an upper level, to the European Union. Some were members of the Soviet Union (for example, Estonia, Latvia, Lithuania), and they know quite well what it means to give up power to an international institution. They are reluctant to give up powers they gained with their independence just 10 years ago.
I'm very skeptical concerning the constitution. I think this is a mission impossible because you don't have a common understanding on what the final goal of the European Union is; whether this will be a federation or a federation of nations. And as long as you don't have a common understanding on that, the outcome will certainly only be a major reform of the existing treaties. Thank you very much.
MR. GREVE: Thank you. Jeff Anderson?
MR. JEFFREY ANDERSON: Thank you. In discussions with Michael last week, I decided to volunteer to be the optimist about the convention. Viewed through standard-issued lenses, this is an impossible assignment. To argue that the convention is going to dictate the terms of debate and shape, in a careful way, the final outcome of the 2004 Intergovernmental Conference (IGC) is pure folly. Nothing in the way the EU is currently constructed, or in the way the integration process has worked over the last half century, should lead one to conclude that the convention will matter in this rather narrow sense.
But viewed differently, with common sense and with a general appreciation of the way large scale political reform movements have worked elsewhere (that is, once begun, they are very difficult to control), it's possible to make at least a plausible case that the convention will matter and that it deserves to be watched closely. In fact, I think the convention will matter regardless of whether it succeeds in fulfilling some version of its mandate. And I'll have a few things to say a little bit later on about what we might mean by success or failure. If it does not succeed, it will have served as a bellwether for a general state of incapacity and carelessness within the EU that, with virtual certainty, will carry over into the IGC. If it does succeed, however, it will set strong decision-making parameters for the member governments when they formally convene in 2004. Perhaps they will even adapt the outline of a Euro-constitution.
Let me start by talking about why the conventional analytical templates are no longer as useful as they once were in thinking about the role of the convention. Up through the early 1990s, before the onset of the referenda on the Maastricht Treaty—particularly, the Danish and French referenda--I think observers of the European community gained a lot of mileage by evaluating processes and outcomes in terms of the clash between two contending images of integration. One image was based on the member states, in particular their unceasing efforts to push their national interests. Under this view, this energy provided the main driving force behind integration. The other image looked to European level actors, the Commission, the European Parliament, the Court of Justice and transnational groups, as providing the main impetus behind the integration process.
Although by no means defunct, this paradigm is much less appropriate today than it was 10 years ago. Let me give you a few reasons why, just to paint a picture of what's happened within the last 10 years. For one, we now are sitting at the end of the passive consensus that underpinned integration for decades. The mass publics in Europe are now part of the equation whenever questions of integration are entertained by elites. Second, we are looking at the imminent enlargement of the European Union. This poses incredibly complex and even unfathomable implications for the functioning of EU institutional arrangements. This is a situation that will certainly persist for many, many years.
A third change is the different role that Germany is playing now as a result of unification. The German position on integration is not the same as it once was. It used to be the most federal, the most pro-European, of the large member governments. Talk of the United States of Europe was frequently heard in the halls of power in Bonn. That is not the case in Berlin. It is not to say that the Germans have become Euroskeptics, but they take a much more sober minded view of the long-term goals and objectives of integration. That needs to be taken into account as well.
Finally, and perhaps most importantly, we have to look at the changing perceptions of the international system and Europe's role and place within it as seen by elites and the general public within Europe. This rethink has been framed not just by September 11th, although that impact is undeniable. It's also been shaped by longstanding concerns about the role of the United States as a so-called hyper power. It's also shaped by very real hopes and aspirations connected with the launch of the Euro and the territorial expansion of the EU.
All of these changes together have created a situation in which there is far less certainty among the relevant players about the means and ends of integration. And so in some ways the old frameworks no longer serve us as well as they once did.
The EU has become populated with fewer and fewer actors who conform comfortably to one or the other of these two images. If you look at the usual suspects among the category of supernational actors, Commission members, and parliamentarians in Strasburg, you hear aims and rhetoric that are far less expansive and much more sober minded than you did 10 or 15 years ago. If you look among the usual suspects in the category of intergovernmental actors, the member states, you hear tangible awareness that business-as-usual, in which complex and opaque deals were cut among chief executives behind closed doors, is problematic. It results neither in effective nor legitimate governance decisions. There is a shared understanding that something has to be done to change this.
So where does the convention fit into all this? The natural thing to do, and one sees this very frequently in the press in particular, is to evaluate the convention in terms of the conventional paradigm. The convention is seen as a kind of super- nationalist initiative, i.e. a raid against the member state interests. According to one version of this script, the convention is supposed to produce a draft constitution for a United States of Europe. It does not, however, take too much effort to assemble a whole raft of reasons why this is not going to happen.
Using the old paradigm risks overlooking some important and uncomfortable facts. One, while the people that we might describe as supernationalists constitute a majority of the convention presidium, the same cannot be said for the body of convention delegates. Euroskeptics are represented, perhaps, not as well as William Cash would like, but they're there. And a new body, the so-called Euro pragmatists are there in force as well. This is anything but an assembly of radical elements. The key members of the presidium have openly acknowledged that at the end of the day the member states acting through the IGC will have the final say. And they are going about their business with this end point in mind.
For their part, the national leaders of the member governments have acted and spoken in ways that suggest a tangible shift in approach to the institutional reform issue. If you look at the Laeken Declaration itself, which called the convention into existence, there is a sense of concern on the part of the member governments about so-called “business as usual.” Romano Prodi described the Laeken Declaration and the convention itself as a break with the past, taken by the member governments in response to the harsh criticism that accompanied the Nice Treaty process.
If you look at the Laeken Declaration, you see a very large agenda assigned to the convention. Nothing is taboo. Everything is essentially on the table. There is a stress on transparency and openness in convention proceedings. There is, as has been mentioned several times up here on the panel, explicit mention of the word “constitution,” a first for the European Council. But I should add that there is no obligation on the part of the convention to issue a draft constitution. That is one, among many things, that they are entitled to consider.
Although it is far too early to predict the outcome of the convention or, for that matter, the 2004 IGC, it is clear that the decisions that will ultimately be taken will have to simultaneously strengthen certain European decision-making powers and strengthen the democratic process--and here I mean strengthen national control over integration.
Now, what does the convention need to do to positively shape this agenda? We would do well to take the statements of Giscard D'Estaing, as well as other members of the presidium, not to mention numerous utterances by garden-variety delegates, as a functional benchmark for measuring success.
If the convention drafts no more than a long set of options for the IGC to consider, then its impact will indeed be negligible. This would almost certainly result from a lack of consensus among the convention delegates. It would be the equivalent of throwing one's collective hands up in despair. There would be something in there for everyone, which would leave no useful guidance or indicators for the IGC to follow.
However, if the convention can come up with a joint draft that focuses on a small but crucial set of issues, it's going to be extremely difficult for the member states to ignore that without betraying the lofty goals that attended their announcement of the convention back at Laeken.
In my opinion, the least promising areas--and here I'm speaking from the vantage point of public opinion which, after all, is the principle reference point in this whole process--for the convention to focus on would be the kinds of issues that
Andrew Moravcsik raised, such as qualified majority voting formulas, rotational principles for the council of ministers, and so on. These technical and complex issues of institutional reform are not the sorts of things that are going to galvanize the convention or public opinion.
The most promising areas, not only from the standpoint of public opinion, but also with respect to sentiments already expressed by many member governments themselves, include the following: attention to the European citizenship question, a bill of rights, a basic formula for a division of competences among the super national and national levels. We might think in terms of a supple finalité politique, along the lines of the 10th Amendment of the United States Constitution. Delegates should discuss the method for selecting the Commission president, either by direct election by the European citizenry or election by the European Parliament. These kinds of issues have immediate tangible connections to the democratic deficit. The deficit may exist; it may not in an objective sense. But the fact that there is a strong perception that it exists means that it's an issue that needs to be dealt with in a meaningful way.
Now if--and this is a big if--Giscard D'Estaing and members of the presidium can artfully manage such an outcome, I think this draft would provide a compelling focal point for subsequent IGC negotiations.
I’ll conclude by saying that depending on where you sit in the spectrum, most of us should want the convention to succeed in these terms. I take William Cash's point about the gap between commitments and capabilities as extremely important. This is the crucial issue in Europe today. You can describe it as overstretch. Europe is aspiring to more than it's currently capable of accomplishing. That sets up a terrible gap in credibility and legitimacy on the part of the public. If that's not closed or reduced in some way, if these perceptions of democratic deficit are not addressed, I foresee very real problems not too far down the road.
MR. GREVE: Thank you very much. I'd like to go directly to the audience and give the panelists latitude in responding to the questions so they may also respond to the comments of their fellow panelists. Sir?
MR. ROBERT LIEBER: Bob Lieber, Georgetown University. Some reflections on the subject, and some questions to the panelists on the connection between the EU, in whatever form, and the United States.
Let me suggest some things that are a little pessimistic. They all have to do with the problem of how Europe defines its identity. The problem is that there are many different priorities among European states in the EU, and there's a tendency to grasp for ways to define Europe. Europeans tend to define themselves in opposition to what the United States does because it's a convenient way of trying to shape a European identity.
Good thinkers on both sides of the Atlantic would welcome partnership, but there is a problem with that, too. It is so difficult for the 15 members to arrive at a shared position, and that once that position evolves, whether it's on a foreign policy issue or a technical or trade related matter, there's very little flexibility. You saw that play out on the environmental negotiations at The Hague in 2000. An agreement was shot down because of that inflexibility.
Another problem: the EU is bringing in a group of states, mostly from east Europe, who have a long record of living between the tender mercies of the Russians and Germans. They may have very good reasons for wanting to retain as strong an Atlantic tie as possible as a counter balance.
Finally, as recent elections and forthcoming ones could suggest, there is a political shift in store in Europe, a subtle, or not so subtle, shift of political balance among the member states from what has been center left to center right. How does that affect US/EU relations?
To questions, then: one, do these factors impinge on the collective identity and direction of Europe, and two, are there some things going on that reflect a sharper and edgier relationship with the United States?
MR. ANDERSON: I think these are real challenges that you point out. Nonetheless, I'm pretty optimistic, particularly on the foreign policy front, for three reasons. First, the European arrangements don't really require the member states to wholeheartedly agree at 15 or 20, but only that they tacitly permit other people to go ahead in a coalition of the willing. I think that will help a lot. Secondly, there's a division of labor with the United States when it comes to security issues. In many ways, a European defense force is seen for peacekeeping and peace making. European has a largely civilian capacity to affect its immediate surroundings. There can be a real division of labor there with the Americans doing the heavier military stuff. I don't see anything in patterns of European spending and decision-making that's going to change that.
Third, and perhaps most subtly, I think there's a political sense in which a deep commitment to NATO and deep commitment to European political cooperation are compatible. You could argue that Europe hasn't been as pro-NATO in the last 50 years as it is right now. But that creates some tensions in countries. Maybe not in the UK. But if you're French or Swedish, you’ve got some political problems if you're that pro NATO. And the result of that is that you need to have some political cover. And what political cover could be more useful than spending 2 percent of your military spending on a European defense force. So there is a sense in which politicians are hedging their bets. And I think that's healthy.
MR. CASH: The question of America’s relationship with Europe, in my opinion, is one of the most important questions concerning global stability. The anti-Americanism pouring out of Europe, and the mouths of Europe’s leaders, has been quite explicit, and it's very difficult to understand. It's also accompanied by policies. Consider the manner, for example, in which the European Union reacted over Kyoto, or the question of missile defense, or the question of the death penalty, or the question of Israel, or the question of Arafat.
The fact is that there has been an explicit determination by many European leaders to create a superpower to rival the United States. I could spend much more time than I have available in trying to untangle the psychology of this, which seems to me astonishing and when one considers the Marshall Plan and the First and Second World Wars, and the general commitment of the United States to democracy and accountability. The latter cannot be said for many European countries as they have functioned in the past, and, indeed, for that matter, as they are functioning in the current constitutional convention.
The list of problems that have been created by Anti-Americanism is endless-- questions of competition, policy, protectionism, interventionist reflexes, hormone beef, etc. There is a reevaluation going on, on this side of the Atlantic, about whether the pro-European enthusiasm which lay at the heart of the Marshall Plan and the post 1945 settlement has run its course. And I believe emphatically that it has.
Let me return for a moment to Andrew's accusations of nationalism. He is actually describing an interest in democracy. There is nothing anti-European about being pro-democracy. It is obvious that there are a whole raft of completely undemocratic attitudes and techniques that have been and continue to be employed by EU politicians. For example, the European Court of auditors has failed to discharge the European budget for seven years. I mean, it's almost Enron-like in its failure to be able to deliver. Or the fact that Jacques Santer had to resign in a welter of accusations of corruption and the rest of it. That was driven by the Euroskeptics, by the way, not by the conventional parties.
And so I'm very fearful about the future of Europe in relation to America. As our Shadow Foreign Secretary said the other day, we need to have Europe and
America, not Europe or America. The current situation is actually creating a very serious problem for the global stability of the world. If the system implodes for all the reasons that I've given--because the monetary system doesn't function, the pension burden is too great, the lack of compatibility, as Jeff was saying, between functions and resources—it will not be surprising. These are the characteristics of great empires in the past which have gone wrong. I promise you that there is a very serious crisis on the horizon. It's not, as Andrew says, a little matter. The Europeans are not actually evaluating what's gone wrong, but, instead, they are continuing to motor forward without taking account of the fact that the elites and the people are miles away from one another.
MR. GREVE: I should point out we have an entire panel following this one on transatlantic implications of European constitutional convention and other matters. Jeff Anderson had a few words. I'll then take the next question.
MR. ANDERSON: Clearly people in this town are very concerned about what kind of partner is going to emerge from this long process of enlargement and institutional reform. Now, I'm still relatively new to Washington so I'm not sure how burning this issue ultimately will be. But I think what's often overlooked, at least in terms of the discussions that I've participated in and overheard, is that the way in which the United States interacts with Europe can have a profound effect on what kind of partner ultimately emerges out of this process.
And my fear--I tend to be a little bit more pessimistic about this--is that, in the last 18 months or so, we've overlooked the fact that the partnerships and the friendships we have with European countries need to be taken not just as means but as ends in themselves. If we use them only as instrumentalities we simply play into the hands of the anti-American sentiment that we've been hearing from circles in Germany and Britain and France and elsewhere.
WALTER BERNS: I'm Walter Berns of AEI, formerly Georgetown University. I must say I was astonished when I found out that the British had signed the Nice and Amsterdam Treaties, astonished because of their long history of constitutional government. I said as much in a paper that I wrote for a conference on constitutionalism in London last November. Not for the first time I thanked the founders of the United States for giving us a written constitution that would make that sort of thing literally impossible in this country.
My history with a version of this question goes back at least 49 years. I was at the University of Chicago at that time and that was, in a way, the birthplace of the idea of world government. Our President, Robert Maynard Hutchins, was one of the movers and shakers of that idea. While at the university and as a response to that, I wrote a paper entitled, "The Case Against World Government," making the argument that world government would inevitably be worldwide tyranny. My paper emphasized the lack of consensus that is a precondition of constitutional government or liberal democracy. That kind of consensus would always be missing on a world-wide scale.
The United World Federalists, on the other hand, insisted that fear of the bomb would be enough to bring about this consensus and to put an end to all the disagreements at that time, for example, between the United States and Soviet Union. As a result of having written that paper, I was engaged in many a discussion and many a debate with members of the United World Federalists who were, of course, appalled by my argument and disagreed with every aspect of it.
That series of debates with United World Federalists came to an end a few years later when, as a result of a violent argument within it, the United World Federalists collapsed.
MR. CASH: I am extremely encouraged to hear the wisdom going back 49 years on the subject. I think I mentioned I put down 235 amendments in this treaty, only 100 I think to Amsterdam, and led the rebellion against John Major's government on Maastricht. But it's always, in fairness, been a constructive opposition because it's been aimed at trying to stabilize the situation rather than to create the circumstances in which a collapse is going to become inevitable.
As a prelude to part of the Nice proposals, there is an amazing statement in a green paper submitted by the European Commission and/or one of the Council bodies which actually does say the European Union is the laboratory for world government. It actually says that. It's astonishing that it's true. I read it out in the House of Commons and people could not believe it, but it was there in black and white. That is what some of the people driving these things, the elite, actually believe in. I could enlarge on that, but I think I'll rest my case.
MR. ANDERSON: Actually what that paper says is that some of the techniques the Europeans have developed to deal with very heterogeneous interests of states through very decentralized means might be of use to some international organizations. It's not exactly a blueprint for world government.
MR. CASH: It actually said it.
MR. ANDERSON: And I would add that I'm a social scientist so I learn from empirical data. I note that the World Federalist collapsed. I note the European Union goes from strength to strength. What do we learn from that?
MR. DANIEL MITCHELL: I'm Dan Mitchell with the Heritage Foundation, and I'll confess right at the start I'm agnostic on whether or not European integration is good or bad. To me it depends on whether it moves toward market liberalization and more trade. And my concern is, especially looking at fiscal policy, is that greater European integration is going to lead to more harmonization and, in effect, undermine jurisdictional competition.
You already have very high tax burdens in Europe. You have, with the exception of a handful of countries like the UK, enormous long-run pension problems that make our social security system look like a piece of cake. You have people like Jospin and Schroeder, who are openly talking about setting tax policy on a Europe-wide basis. You even have a European Union savings tax directive where that cartel is predicated on the participation of non-EU nations like the United States.
I guess my concern is that if you move farther and farther down the track toward European integration, it will not be a vehicle for liberalization, but instead a vehicle for cartelization and harmonization where governments no longer face any pressure to be responsible in terms of their fiscal and economic policies.
MR. GREVE: I would like to give every panelist a chance to respond to that question very briefly either by way of addressing the larger picture, or by way of commenting on the institutional aspects that Andy mentioned at the outset--namely, the fact that the constitutional convention deals with a constitution. Budgetary matters are on a separate institutional track.
If you want to comment on those kinds of intricacies of European politics, that's also perfectly fine. Why don't we start with Walter?
MR. KLITZ: This is exactly the point I wanted to make. I have this fear as well. That's the reason why I said we have to give them clear responsibilities, limited responsibilities, limited powers.
I will give you one example. Part of the constitution is a bill of rights. Do we need one more bill of rights in the European Union? In every constitution in every country of the European Union you have a bill of rights with comparable standards. You have the bill of rights of the Council of Europe. Why not simply recommonize these common standards instead of trying to reinvent the wheel?
Similarly, when it comes to taxation, do we really need a common income law? Looking at indirect taxes, value added taxes, the tendency goes to a common taxation system in European Union. Why not leave it to competition?
People are concerned because Brussels is far away. You have to bring politics closer to the people when you want their support. That’s a very important thing to take into account when talking about the European constitution and the development of Europe in total.
MR. ANDERSON: In terms of the status of the internal market, it's going to remain in tumult for a while as these central and eastern European countries work through their derogations. There are derogations of up to 7 to 10 years in some cases, depending on the policy area. So we're not going to have a uniform common market for some time.
Secondly, when it comes to harmonization, I think what's often overlooked is that the impetus in many cases comes not from Commission bureaucrats trying to solve theoretical problems, but from firms trying to solve practical problems. They want a level playing field or they want an advantage that they don't currently have or enjoy. And I don't expect that to change with enlargement. I certainly don't expect that to change with constitutional reform. In fact, these issues, as was suggested, are on entirely separate tracks.
MR. MORAVCSIK: Europe is going to strike a balance. ?? Some people talk about democracy, but they don't actually believe in it. People don't take into account the fact that Europeans have different preferences than we do regarding social welfare systems and the balance necessary between them and markets They're more interested in paying a higher share of taxes for social welfare systems.
The result is that the European Union is, on balance, an extraordinarily powerful liberalizing force, a pro-market force in Europe. It's putting a considerable amount of pressure on national social welfare systems. And they're reforming as, say, the Dutch example shows you. But is one thereby going to eliminate environmental policy in Europe, or eliminate higher levels of taxation than the United States, or eliminate social welfare provisions? No. Some sort of balance is going to be struck.
Now, the role of the European Union in this process of striking a balance is on net liberalizing. That is because the European Union makes it relatively easy to open up markets and permits that to happen by qualified majority voting. To run a social welfare system or to provide subsidies or to intervene in new policy areas, you need unanimous support in Europe, and you need fiscal resources. The EU is not set up to do that. And it's not going to be set up to do that any time soon.
So the basic role of the European Union is to provide moderate downward pressure on national, social, and regulatory systems with some reform capacity, say, in areas like worker health and safety or transportation or pollution. Also, its role is to create a harmonized standard that gives Europeans what they feel they need. This strikes me as a perfectly reasonable compromise.
Now, some people have said, yes, but this institutional arrangement isn't under sufficient constitutional control. Why don't we have explicit enumeration of more rights? Why don't we have explicit limitations? Why don't we write a constitution like the American Constitution?
Well, I would remind you that the American Constitution, like the European Constitution, is a common law constitution. It actually has evolved greatly through the incremental interpretation of its terms over time. And that's exactly how the European constitution works. If you want to understand what controls the EU, don’t look for somebody writing down like a bureaucrat some enumerated right to do this or some enumerated prohibition against that. Look for the checks and balances. Look for the decentralization. Look for the agenda setting.
What you see when you do that is an extraordinary separation of powers between different institutions, an extraordinary level of decentralization which basically leaves the issues that you're concerned about to the member states. You also see an extraordinary set of restraints, mostly of a super-majoritarian and unanimous voting type, on any kind of new movement forward. It is much more difficult to legislate in Europe than it is in the United States. We're used to thinking of the United States as a country where rule making is difficult. What does that tell you?
My final point: whatever the European Union has achieved over the last 50 years, it's achieved because an extraordinarily large consensus of Europeans support it. And that ultimately is the justification for what they've done.
MR. GREVE: Bill Cash, very briefly.
MR. CASH: I don't believe, if I may just address Andrew’s comment, that there's any evidence for overwhelming enthusiasm throughout Europe for the way Europe is going. In fact, the Euro barometer poll shows exactly the opposite. I'm not going to enlarge on that. But I think his assertion is unjustified.
On the substantive question that Dan Mitchell raised, I have enormous sympathy with what he's saying. If you look at tax policy in Ireland and Bermuda, you can’t help but notice that America is seeing companies shifting out as a result of these policies. I think that there's a really serious question for the United States with respect to the question of the WTO tax decision. I know that Bill Thomas was here yesterday discussing it. As far as I know, Larry Lindsey's been making some comments in the papers yesterday and today on this too. It's clear that there are some steps being taken to try to sort the thing out. But territorial taxation seems to me to be a very good principle. And I think extra territoriality carries with it the connotations of world government. And then, of course, with it the whole question of how you enforce the criminal sanctions that go with people who evade the tax, the complexity of the filing of the system for the revenue service, and so on.
It is an unnecessary burden. And it's extremely difficult to understand why it has grown so big. And I think that a lot of careful thought has to be given, which I have no doubt Congress is giving now, as to how to come back to the principles that Dan Mitchell was talking about.
MR. GREVE: Please join me in thanking the panelists for a spirited, informative discussion.
[Applause.]
Panel Two: Transatlantic Implications
MR. GREVE: Welcome to our second panel on the transatlantic implications of the European constitutional project. We have a very distinguished panel. It's also a very disciplined panel. All members of it will stick strictly to their assigned 15 minutes.
We will start with Jonathan Davidson, who is a Senior Advisor for Political and Academic Affairs at the European Commission Delegation in Washington, D.C. We'll then move to Rod Hunter, who is now with the USTRs office as Counselor to the General Counsel. He has extensive experience in Europe as a former Chairman of the Center for the New Europe. We will then move to Ludger Kuehnhardt, who I thank in particular. David Calleo, who was on this panel, called yesterday to cancel. He came back from China with bronchitis and had to send in his regrets. Professor Kuehnhardt graciously agreed to substitute at the very last minute. He's a prolific writer on European integration and its international implications. I'm a great admirer of his writings on the subject. He’s the Director at the Center for European Integration Studies where he's been since October 1997. And finally we have Bill Kristol, who will be Bill Kristol. Jonathan?
MR. JONATHAN DAVIDSON: Thank you very much for the invitation to join you today. Some myths from the last panel should simply not be allowed to lie on the table. I would like to very strenuously challenge the myth that the convention is driven by opposition to the United States or anti-American sentiments. I'm not denying that such sentiments exist in Europe. It would be obviously ridiculous to suggest that nobody has such sentiments. But the notion that the convention is driven by such ideas rather than driven by the internal dynamics of European development is clearly wrong.
Likewise, the myth that Europe is generally hostile, in terms of cultural values or political instincts, to the United States simply defies the reality. I've been in this town for many years, and there is, on any objective reading, no partner of the United States more committed to the fundamental values of democracy, human rights, and liberal trade and economic regimes than Europe. To ignore that fundamental reality simply because of differences of view on political issues is a mistake that needs challenging.
To turn more specifically to the subject before the panel, the U.S. has always supported European integration since its outset in the fifties. President Bush 43 is only the latest of many presidents since Truman to call for the vision of a "Europe whole, free and at peace."
But equally consistently,. the U.S. has always been equivocal and ambivalent about European integration. Sometimes this ambivalence derives from fears of European strength or undue competition from Europe. Sometimes it’s an objection to narcissism in Europe, its tendency to dwell too much on its internal affairs.
I was here in the eighties when the single market project was announced and the refrain was constant about a “fortress Europe.” It was only when we explained ourselves better and when Americans took a closer look that they recognized that the single market was, on balance, strongly in the American interest. Likewise, enlargement to central and eastern Europe is regarded as something of a geo-political strategic prize for the United States, as well as for the European Union. But at the same time, some segments of American business regard it as a competitive nightmare, with the expansion of the customs union and the expansion of the single market to ultimately a total of some 500 million consumers.
Sometimes this American ambivalence relates to doubts about European credibility. I was here during the nineties when we heard a constant refrain of doubts and skepticism about the project of a European single currency. “It’ll never happen,” was the almost universal refrain from the economists and from most political commentators. Then, when it happened, they said, it wouldn’t work very well. So there is doubt about credibility which is sometimes overcome when the reality overtakes the doubts.
Sometimes the ambivalence stems from both fear of the potential threat from Europe and doubts about credibility of the commitment at the same time. ESDP (European Security and Defense Policy) is one good example of this. Some argue that it will both be a threat to NATO and in some ways undermine the viability of the Atlantic alliance. Others question the commitment of Europe to finding the resources to make it a credible option.
So I regard the Federalism Project’s concern about the European convention as in the tradition of American interest in European integration. I think we should welcome this scrutiny regardless of whether you conclude that it's on balance beneficial or detrimental to American interests.
As far as the outlook for the convention is concerned, you've heard a range of opinions as to its importance and the viability of its likely product. You will form your own judgments, but my instinct, for what it's worth, is that Europe will continue to feel its way towards a finalité politique, sometimes with a few steps backwards, sometimes with a few steps forward, more likely incrementally than in some bold new fashion.
Nevertheless, the convention has several large issues on the table that could affect American interests substantially. I would like to touch on four of these issues. First is the issue of legitimacy and its closely related counterpart, the issue of governance of Europe.
It's quite right that European citizens have become detached or alienated in some way from the European project. The evidence of that is undeniable. So as the proponents of more European integration pursue their project and their vision, they cannot get far without marshaling more public support. This issue is now in the public domain. It's not in the domain of the pinstripes and the suits behind closed doors. The European project cannot go forward without public and political support in Europe.
Alienation from the political leadership is by no means unique for the EU, but it is a relatively recent phenomenon. Mr. Cash mentioned the Euro barometer. A few years ago the support for the European integration process was generally in the upper half of the brackets of percentages, in some countries as high as 70 or 80 percent. Even in the most Euroskeptic countries, and I won't be so invidious as to name any of them, it was traditionally above 50 percent. Not so any longer. And that's a problem.
As a champion of democratic legitimacy and public accountability, the way in which the EU tackles its democratic deficit, if it has one, is of concern to the United States given the importance of European partnership. If, by some chance, the convention should succeed in capturing public imagination, I would argue that the United States should applaud.
The second broad area of the convention's business that I would like to touch on is the question of the EU’s world impact. The United States has no more important partner, whether regionally or globally, than the European Union. To be a more effective partner, it's up to the EU to improve the efficiency and the effectiveness with which we act on the world stage. Whatever the convention does, we will remain a hybrid system run partly by the community institutions and partly by the 15 member states, or however many member states the union ultimately contains.
However, even if we are a super power, we're clearly not going to be a super state. People as diverse as Tony Blair and Romano Prodi have dismissed the notion that we can be a super state. We can act much more effectively in the world when we act together in unison amongst the 15 member states than we can when we are in disarray.
Public focus, particularly in recent days and weeks, is on dissension across the Atlantic. Our unquestionable differences concern our respective views on the Middle East and, to some extent, on how to handle counter terrorism. There is no denying these policy differences; however, I think we need to unravel them a little bit. The focus both in the U.S. and the EU should be on how best to manage policy differences across the Atlantic and to recognize the broad concurrence of views on bedrock issues. Looking at the external threats that the West faces at the current time, it is amazing that anybody would consider shooting themselves in the foot by dwelling on transatlantic differences without paying adequate regard to the fact that we agree on the broad array of interests and threats that we face. We can achieve so much by working together rather than fighting internally amongst ourselves. A more unified and a more coherent EU acting on the world stage is a much better ally for the United States than is a Europe in disarray.
The third set of issues is the decision-making and the institutional issues, the “eyes glaze over issues,” which the last two Intergovernmental Conferences succeeded in solving at a minimal level. They achieved the minimum necessary to go forward with the project of EU enlargement. But many institutional and decision-making issues remain on the table. And one way or another, we've got to find ways of addressing them.
Can we and should we enlarge the number of issues that we settle by majority vote? Can we simplify and rationalize the formula for weighted state voting to both protect the interests of the smaller states in the union and the larger states, and at the same time allow reasonably efficient decision-making? How to reform the Commission? How to rethink the rotating presidency? These are some of the institutional issues on the table. While the U.S. can't expect to have much say over how those issues are resolved, can you doubt, for example, that a Commission that in some way is elected, whether indirectly or by a broad public vote, would have more political resonance with the United States? Can you doubt, if the union were to drop or fundamentally change the system of the six-month rotating presidency, that it would have important implications for the way the U.S. does business with the EU?
Who knows whether or not the convention can come up with some formula that would provide an answer to Kissinger's apocryphal question, what is the EU's telephone number?
The fourth issue concerns the existential question: what is the EU? We know that the union has been overwhelming successful in its first four or five decades, though not everybody in the room is going to agree with me on that. I fervently subscribe to the notion that, overall, the EU has been a phenomenally important and a successful experiment in governance. It's effectively abolished the notion of military conflict within Europe as a way of settling our disputes. It's built the single market. It's created the Euro. We've developed a unique system of community policy-making. We've begun to establish ways of managing internal security in this open, liberal free market. We've begun to launch an external relations capacity. And we're poised, as has been frequently mentioned, to complete the largest enlargement in our history.
With this record behind us, and in the new global environment, Europe is at a crossroads. A lot of people are looking for some kind of definitive statement of the EU's destiny. We've heard varying views as to whether or not the convention will try or succeed to frame some sort of constitution. We've even heard the argument that we already have a constitution.
Whether or not that takes place, there is a broadly shared impulse in Europe that we have to move beyond the notion simply of an ever-closer union as our defining purpose. Whether or not the convention will succeed in reaching some kind of finalité politique that has eluded most attempts before them I don't know. It's a new, novel method. It's a new approach to tackling these difficult and complex issues of our governance. It's pretty representative. Mr. Cash said that it even contains some 5 percent of people who share his viewpoint. I think that's an appropriate figure. It contains heavyweight representatives from throughout Europe, including the acceding states. So it is a novel approach to tackling these problems. But the problems are innately difficult and complex and success cannot be assured.
If Europe can establish a more concrete existential identity and a more coherent role as a world player as we move on into the 21st Century, I believe that the benefits for the United States far outweigh the negatives.
In summary, the EU is going to remain a hybrid entity combining what I hope will be the best of our community policy-making approaches, mechanisms, philosophies and outlooks, which I think are very relevant to the problems of globalization that we all face. We have an instinct in Europe, which isn't shared very much in this country, for multi lateral approaches to complex, international problems. I think it is a benefit for the United States that this approach to solving problems be available to complement what are perfectly understandably strong national imperatives that drive American policy. This is a wonderful potential partnership in which the best of both sides of the Atlantic can be brought to bear on our shared threats, problems, and approaches to solutions.
I see little or no risk of a European hegemon, but if we adopt a more coherent posture in the world and a more streamlined process of decision-making, we can work better and more comfortably with the United States, for example, in managing crises in real time. We can better marshal the enormous resources available in Europe in pursuit of goals and interests that we fundamentally share with America,
So I think the U.S. has got little to lose and much to gain from a successful outcome. If the EU can better develop its capacities to address the challenges of globalization, conflict resolution, crisis management, crime, terrorism, health, environment, or economic development throughout the world, we are a better partner to the United States, which has the same fundamental goals. We saw that with President Bush in Monterey, for example.
Certainly, there is a risk and a potential cost for the United States when Europe can stand up to them in political affairs, because we are more coherent and united. That's a price worth paying even at the cost of perhaps more competitive trade and commercial implications. A Europe which has a mechanism to speak in a united voice and to negotiate in a united way with the United States and other trade partners is a better partner.
To sum up, at every step in the European construction, going back to the origins of the Treaty of Rome through the single market, through the single currency, as we dabbled in security and defense policy and internal security, there has always been equivocation in the United States about what it portends for America. I believe that the outcome of the convention, particularly if it's positive in general for European construction, will be roughly the same story. There will be concern, as there should be, about its impact on American interests. And at the end of the day, there will be recognition that a step forward in European integration is a healthy step for the United States. Thanks very much.
MR. GREVE: Jonathan, thank you. Rod Hunter.
MR. ROD HUNTER: Thank you very much. I have to begin by saying that my views don't necessarily represent those of the Administration, my employer, or even my boss, Ambassador Zoellick, and you may actually be pleased to know that once I get started. I am also particularly pleased that I don't have to talk directly about trade issues.
I think that Mr. Cash finds himself often in the situation of having to explain that just because one criticizes Europe doesn't necessarily mean that one is against Europe or, indeed, the European undertaking. Pro-Europeans can criticize some of the institutional arrangements or political choices that are currently being considered.
With that caveat, I would like to begin by asking the simple question of whether continued European centralization is in the U.S. interest. Centralization is really what the ongoing treaty drafting exercise, and indeed enlargement, is about. I guess the answer is that it depends. It depends on the sorts of institutional changes that are made in the upcoming treaty revisions.
But given my 11 or 12 years of experience of living in Brussels and working on a lot of these sorts of issues, I must say that I'm a little skeptical. It's not so much that European citizens have different policy preferences. Notwithstanding what Andrew said, I'm not sure you can conclude that people prefer high social spending because governments have high social spending. All you have to do is look at the line of cars going to Luxembourg from Brussels over the weekend so people can visit their banks to figure out that perhaps Europeans aren’t entirely enthusiastic about paying higher taxes in Belgium or France or Germany.
Secondly, I'm not sure that much hinges on whether Europe represents a substantial economic actor on the world stage that will be hostile to U.S. interests. Notwithstanding the Lisbon exercise where Europe aspired to make itself the most productive part of the world economy by the year 2010, economic indicators suggest that it's going the opposite direction. So that in and of itself is not at the crux of the issue.
I think that it has a lot to do with the bureaucratic details. After all, the EU was largely created by bureaucrats. If you look closely at the treaties, you'll see that the European institutions, given the way they're structured and the way they act, pursue policies which are at odds with the American liberal tradition.
The thing that's most important to keep in mind about EU institutions is this: the legal order is, at bottom, executive-driven. The member states’ executives draft the treaties. Those of you who have worked in the executive branch in Washington will appreciate that drafting treaties through an interagency process is not likely to produce a particularly good treaty. But that's the way each of the treaty revisions has been drafted. The environment chapter is given to the Environment Ministries, social affairs is given to the Labor Ministries, and so on.
Second, the Commission itself plays a role in the legislative process. It has the monopoly right to propose legislation, and can withdraw proposals at any stage in the legislative consideration, up until adoption. It effectively exercises judicial responsibilities, particularly in the area of competition. It exercises legislative authority through its delegated rule-making procedures which are utterly beyond control of individuals, and largely beyond public scrutiny.
The legislative technique used to implement the 1992 Program, called the “New Approach,” was the use of standardization bodies for delegated rule making. This will sound fantastically tedious and bureaucratic, but here in Washington one should understand how important such procedures can be. The essence of the standardization process is that the EC gets a basic standard that toys shall be “safe,” and delegates to standards bodies, which are made up of the European regulated parties, to draft what a “safe toy” means. Not surprisingly, the local participants draft standards, that often, perhaps by accident, fit the products they already make. This makes it more difficult for people who seek to import. I'll come back to why this matters outside of Europe.
Andrew, on the earlier panel, suggested that on balance the European Union was a liberalizing force. I think at the outset that was true. But that was before qualified majority voting and before the 1992 Program on the use of the New Approach. Since qualified majority voting, since the Single European Act, and, with each subsequent treaty expanding qualified majority voting, the political circumstances and the power relationships have changed substantially. Now, instead of being about liberalization, it becomes about harmonization. The EC works as a one-way regulatory ratchet. The mechanism seems to be based on the assumption that more regulation is necessarily a good thing.
The member states--I saw this in many instances in my legal practice in Brussels—use the EC legislative process. For example, once a member state decides to adopt a particularly burdensome environmental regulation, it wants to make sure that producers in other member states don't have an advantage. So the member states seek to level the playing field by getting the legislation adopted at the European level.
Of course, the Commission's perspective in this is, the more the merrier. If member states increase the scope of regulation, the European Commission becomes relevant both for legislative drafting as well as for enforcement. Its sphere of influence expands with each attempt of member states to protect their domestic regulatory regimes or neutralize the negative effect of its regulatory measures.
As for the EC legislature, it is not like the U.S. Congress. It is largely dominated by the national executives. The member states are represented in the council, but that really means that it's the national ministries and their ministers that are represented in the council. Executive officials tend to like having more authority because, of course, we all think that we are particularly rational, reasonable people--if we only had enough authority, we would exercise it in the most judicious fashion. But you can see how this mechanism creates a constant institutional interest in having more legislation. I think, on balance, the result is not more liberalization over time.
Now, Andrew gave the example this morning of taxing authority. He rightly noted that you need unanimity in the council for tax policy--not for much else these days, but at least for tax policy. But I would point out that whenever you buy something at a store in Europe, you pay a value added tax of about 20 percent because of an EC rule. That's the member states getting together, preventing competition between them in tax policy.
There is considerable pressure to extend qualified majority voting to tax policy. Besides, it misses the point to argue that, because the community doesn’t have tax policies, they can't really do much that's serious. Just as Congress can impose legislative burdens on the states so that they have to go and spend money, the EC can impose mandates. Most of environmental policy over the last 5 years consists of very expensive mandates. For example, member states are required to spend a great deal of money on collecting packaging which ultimately may or may not be recycled. But they have nonetheless to set up systems and try to recycle. You could look through each of the policy areas and find similar examples.
It is natural for governments and individuals in governments to try to export their model. We try to get other people in other countries to adopt some of our institutional arrangements, so it's not surprising that the EC seeks to remake the world in its own image. You can find examples of that in the attempts at tax harmonization, particularly in the approach of the Commission representing the member states in WTO negotiations. One of the ambitions of the Commission and the member states was to have competition policy dealt with in the next trade round, which has recently been launched, as well as substantial aspects of environmental policy. In other words, by expanding the trading regime, and taking it beyond what it was essentially designed to focus on, namely, preventing discrimination against importers, the EC has adopted a much more ambitious agenda that is more world government-like.
There are experts in the room who can speak more authoritatively than I about these subjects. I would just note that there was an attempt by the European Union to replicate domestic European waste shipment rules legislation at the international level, and also to create opportunities for delegated rule-making at the international level. Given the institutional constraints created by our Constitution, it's not clear that our executive would be able to exercise such delegated rule-making authority at the international level. There is a confusion of functions that's frequent in the European context.
The subject of standards may seem tedious, but given the way the WTO rules have been structured, they’re important. If a WTO member country complies with or bases its national rules, even if discriminatory, on international standards, it can arguably get by the trade rules. The Europeans got the international standard on food labeling for sardines structured so that it applies exclusively to fish caught off the Spanish coast. Anybody else who wants to call their fish “sardines” in Europe may not. It becomes very difficult to challenge that rule given that it has been replicated in an international standard. The Europeans are very good at working these standards bodies. But whether that is good in terms of political economy at large, I'm not sure.
So where is the EC heading? Perhaps something wonderful will come out of this convention exercise. Maybe the draftsmen of the IGC will have an epiphany and will draft a new order which will not be as executive driven. But where it's heading now doesn't seem particularly promising. I think it will likely create lots of opportunities for trade friction as we deal with some of these essentially domestic policies in the international context. Thank you.
MR. GREVE: Thank you. Ludger?
MR. LUDGER KUEHNHARDT: Well, thank you, Michael, for the kind invitation. I was only told this morning that I was supposed to speak. If I would have known that I was going to have to replace David Calleo, I would have exempted him from having lunch with me a couple of days ago so he could have better recovered from his cold he got in China.
I agree with what Jonathan Davidson said at the beginning of his talk: the project of the EU convention is not about defining Europe in contrast to the U.S. I find the debate over the last year or two not as astonishing as other people here today do because I think this is a logical consequence of the current lack of grand strategy. We, on both sides of the Atlantic, very often get confused when it comes to priorities. We get obsessed with sardines or hormone beef or the death penalty or European social debates, and this or that, and we end up missing the big picture. There will continue to be a problem in the relationship between the U.S. and the EU as long as we lack a grand strategy.
I think that we are still in the formative period after 9/11. The potential is there, but we haven't come up with a new grand strategy to define the parameters in which the EU and the U.S. can be both partners on substantial issues and rivals on sardines and competition over markets. I don’t think the two are mutually exclusive. In fact, the distinction is very logical and has been the case for many centuries.
A couple of weeks ago, on board of my plane, I was reading Andrew Moravcs ‘s article in Newsweek, "If It Ain't Broke, Don't Fix It." There is hardly anybody in this country I enjoy talking to and being in disagreement with more than Andy Moravcsik. I respect him so much for his knowledge and insight in the European process, but, on this issue, I have to disagree with the conclusion he draws.
I think there is a serious problem right now on both sides of the Atlantic, in Europe as much as here, in that we don't get our respective agendas right and don't really understand what the other is doing. Therefore, I would like to just add three points to what has been suggested by Andrew about the constitution building process.
To begin with, it is not about public relations. And I would even go a step further and say it is not about bridging the gap between public opinion and the political elite. That is an element of the discussion, and a very justifiable one. But I don’t think this is at the core of the matter. To my mind, at the core of the matter is that the constitution building process of the European Union is the logical consequence of 50 years of European integration. It is not an ad hoc reaction to some frustration in Ireland, or to the outcome of the Nice summit, or anything else like that. Certainly it's not driven by anti-American feelings. Again, it is the logical consequence of 50 years of European integration.
European integration has been a political project from the very beginning. I’m sorry to disagree with Andy, but integration has always been more than a narrowly tailored issue. It is transnational in many of its aspects. It was designed from the very beginning, by the founding fathers of the 1950s, as a political project. Economic integration was its catalyst. The Euro is the consequence and culmination of the search for a common market, which has not been completed. It is full of problems, controversies over sardines, and what have you, but the Euro is nothing, to my mind, but the logical consequence of the idea of the common market, which is an element, and only but an element, of the overall idea of building a politically integrated Europe.
Now we come to a new stage, the process of constitution building, of identity building and of institution building. Phase one was building the economic institutions, building the supernational institution which is the European Commission and creating the enormous set of contradicting and inconsistent structures we know today. Phase one also included the addition of pre- constitutional elements which brought us from the Treaty of Rome, to the Single European Act, to the Treaty of Maastricht, to the Treaty of Amsterdam, to the Treaty of Nice, and so on. These were elements of a pre-constitution, if you like, a preliminary part of the European constitution building process.
To consider the issue of the impact of all of this on the transatlantic relations, it is necessary to understand that this is a process, a process towards, let's say, a parliamentary democracy in Europe. Europe hasn't really made up its mind about the finalité politique. These big words about democratic deficit and other matters are just a cover-up sometimes for the real debate, which is still out there in Europe, that is, a debate about what institutions are going to run this business in the next 50 years. If you believe that the Council of Ministers should always remain in the driver's seat, then you become obsessed with ideas of weighting votes and with how many commissioners every country has. We have seen all of this unraveling and coming to the forefront in Nice.
If you believe that the European Commission should be the protector of the integrity of the treaties, and, while being somewhat responsible to the Council of Ministers, should otherwise be running the European Union as a bureaucratic executive business, then you start reforming the Commission. Because that is dear to your heart and you want to get it fixed somehow, you want to improve it. If you just look at the European Commission alone, you might do so because your preference is in having an executive Europe.
But if you think that Europe at the end should be about democratic legitimacy, accountability, transparency--in other words, you believe that Europe should be run by a parliamentary democracy--than you think that the European Parliament shall be, if not the only one in the driver’s seat, then at least be as much in the driver’s seat as the Council of Ministers and the Commission are.
This debate has been going on now for 20 years, since the first direct election of the European Parliament in 1979. I would suggest that this constitutional convention is part of this process, and it adds a political dimension to this larger process of constitution and institution building in Europe. It’s a defeat for those who thought Europe was going to be run by the Council of Ministers, which acts almost like the North Korean politburo behind closed doors.
In this sense, the constitutional convention has already been a success. It has defeated the idea that the next 10, 20, or 30 years the EU will be led by intergovernmental conferences sitting in back room meetings, like the Council of Ministers does. This has been the real debate over the last two years in Europe, whether this continuous process of European constitution building shall take place along the lines of the Council of Ministers, behind closed doors, or whether it should be brought out into the open, to be more public, more political, more controversial.
So I'm extremely relaxed when it comes to the potential outcome of this. The convention might come up with a joint proposal which will cover all the divergent positions. It might come up with options to be put on the table. But in any case, it will be the Council of Ministers who decides at the end of the day what will come out of it. And there will probably be another intergovernmental conference following this process. This constitutional convention is not the end of the story. It is setting the precedent in terms of the standards of the debate and how public this process is going to be between now and the year, let’s say, 2050.
One of the most interesting aspects of this convention is the echo it is causing in the smaller, candidate countries. I think it would be a mistake to believe--because it also stems from the logic of the council being exclusively in the driver’s seat-- that what matters here is merely what the Germans or the French or the British think. I note, as a German, that the real majority in the years to come will not be the Germans or French or British; rather it will be the smaller states. The European Union, after the next round of enlargement, will be a small-state continent. And it has always been in the interests of smaller states to be accommodated in a federation because a federation plays to the interest of smaller states. Otherwise, Luxembourg or Estonia would never have any say in European politics. The constitutional convention is all about identity building in a continent of big powers by small powers with an enormous breadth of history, both positive and negative, in their relationships.
One of the echoes of this constitutional convention in the candidate countries is in Slovakia, where they have set up national a convention on the future of the European Union structured along the lines of the EU convention’s agenda. Every five or six weeks or so, there is a big public discussion for a day on Slovakian television on these topics. I find this a very fascinating, as it helps bridge the gap between Europe as a political process and what it means to have European citizenship, which was installed, at least legally, in the Maastricht Treaty of 1991.
Skeptics might point out that reforms are all just on paper. What does all this talk really mean? My answer would be that ten years is nothing in terms of a historical project. How long did it take to get from the Mayflower to the Constitution? Wasn't it only 1930 that the Federal Reserve was established in this country? Many in Europe have been looking at the development of the U.S. Constitution. I think you should feel very proud about this.
Look, constitution building is a process which includes many two steps forward, three steps backwards experiences. It includes amendments, and territorial enlargements. I think what this constitution building process really is all about is bridging the gap, which is still very wide in Europe, between what Europe is and what it should do. In other words, it bridges the gap between identity and a future global political role of Europe in the world. This constitution building is linked psychologically to the search for a common security. Common foreign security policy is way behind in being efficient or credible or capable. But it is as much on the agenda as the constitution building process is.
As for the EU/US relationship, first, I'm not surprised that a lot of skepticism is aired in this country about the constitution building process. I think this criticism, and similar types of criticism in Europe, is similar to the criticism we have heard for 20 years over the Euro. It's a bad idea in the first place. It might not work. It cannot work. The Brits have different opinions anyway. And once you get it, it is going to fail. Methodologically speaking, we are now in for 10 years or so of a similar debate on both of these issues, that is, foreign policy and constitution building in Europe.
Second, I mentioned already that the U.S. should take pride in the fact that the constitution building experiences of this country are sometimes taken as a role model for focusing some European minds on what we are involved in beyond bureaucratic “business as usual” activities.
The third point is, yes, there is a need to include an American dimension in the European process, but that's a two way street. I'm one of the rare species who is a European federalist while also believing very strongly in the transatlantic relationship. So I'm all for this inclusion of an American dimension into the European process. But it would require, for instance, that the EU/US relationship is taken seriously here, as seriously as the NATO relationship. There is an upcoming summit in a few weeks between the EU and US, and I wonder how much attention this will get beyond the war on terrorism issue.
As Jeff Anderson mentioned this morning, whenever there is a perception in Europe that the Atlantic alliance is used not as an end in itself, but as an instrument, it encourages what I call Euro-goalism, namely, a strong Europe detached from its Atlantic ties. And maybe the other way around works the same way, that is, patronizing Europeans expressing what I call Euro-goalism--pride on the basis of this idea that we can go it alone, without American assistance--adds fuel to the unilateral instinct in this country. This is very bad on both sides.
Europe by definition, intuitively, is multi-lateral. Therefore, you shouldn't be surprised to see Europeans criticizing the fact that, for instance, the U.S. has not embraced the creation of the International Court of Justice. I think these are issues which are really impacting the EU/US relationship, which as I said, is so important as a compliment to NATO. And what has always been said about NATO is true about the EU/US relationship. Only a strong, cohesive, and a transparent Europe can be a viable and strong partner for the U.S. Therefore, I think this whole effort of constitution building in Europe is in the interest of America because it will bring about a more consistent, more cohesive European Union.
MR. GREVE: Thanks, Ludger. Bill Kristol?
MR. WILLIAM KRISTOL: Well, Jonathan said earlier that America's been equivocal and ambivalent about European integration for 50 years. I would associate myself with that traditional American position. I think it's sensible enough, because there's a lot to be ambivalent and equivocal about. There have been some good accomplishments of European integration. Solving “the German problem,” at least for now, is not a trivial matter. Perhaps it would have been solved without greater integration in the EU, but one can't be sure. That’s a pretty big benefit, and it probably makes a lot of the petty annoyances worthwhile.
Like Rod, I'm sort of agnostic on the convention. It all depends how it turns out. It depends on which countries it strengthens in Europe and which forces in Europe it strengthens. In principle it could lead towards freer markets--as Brussels itself in principle could, and in practice has, led at the same time both to more regulation and to a strengthening of market forces. I think it's still uncertain which way that ultimately goes.
I think the constitutional convention could lead to a reduction of the democratic deficit in some ways. Maybe the term is used as a PR term, but there's a real issue there. That could be a very good thing. More practically, from an American point of view, it looks as if it is likely to diminish the strength of France. Look, what is the EU? The EU was a French-encouraged arrangement under which the French kept the Germans under
