Rt Hon Lord Lilley

    The Roots of Federalism

    Two Visions of Europe

    Someone once said: ?We don?t have ideas. Ideas have us?.

    I want to discuss the two visionary ideas of Europe?s future which are competing to have us.

    We can strive for either a Europe of Nations or a Nation of Europe.

    Those whom we in this country persist in calling ?federalists? believe in the latter.

    They believe the historic states and nations should be replaced by, and subsumed into, a United States of Europe which should become in effect a nation state.

    The new nation state of Europe would ultimately become the primary focus of political allegiance and the fountain of sovereignty.

    The Roots of the Federalist Ideal

    I want to look back to the origins of the federalist idea and what gave it renewed vitality as its original motive forces weakened.

    The concept of a United States of Europe really originated as a potent ideal in the aftermath of the Second World War.

    Three factors combined to give it credibility.

    (1) War, nationalism and proliferation of states

    First, revulsion against war itself which was assumed to be caused by nationalism and the proliferation of sovereign states.

    Nationalism is a word used rather loosely to cover a variety of vices and virtues.

    But it should be clear that wars between states are not caused by the desire of countries to govern themselves.

    They are caused by a desire to govern others or to tell them how to govern themselves and a willingness to impose those wishes by force.

    In short wars are the result of ethnic and ideological imperialism.

    By contrast, patriotism – the love of one?s own country and its independence – is essentially pacific.

    Indeed love of one?s own country should generate a sympathy towards the desire of other peoples to govern themselves.

    That may be why democracies have almost never made war on each other. And it is why they have often supported oppressed nations struggling to gain their freedom to govern themselves.

    Nor is there much evidence that the proliferation of states is in itself either a necessary or a sufficient cause of military conflicts.

    There are [over] 30 independent states in Africa.

    But almost all the conflicts on that continent in recent years have been within states not between states.

    Much the same has been true of Latin America.

    And most of the current conflicts in the world are within states or the bloody aftermath of the collapse of artificial federations like the Soviet Union or Yugoslavia – scarcely an argument for trying to create another artificial federation.

    Moreover, conflicts within states are often more cruel and destructive than those between states.

    The most devastating war in the century prior to the first world war was not between the nation states of Europe.

    It was the American civil war.

    More Americans died in that terrible war between brothers than have died in all the other wars in which America has been involved put together – the two world wars, Korea, Vietnam etc.

    History shows that neighbouring states between whom conflict used to be endemic can learn to live in harmony without abandoning their sovereignty or merging into a larger state.

    The Scandinavian countries are a case in point.

    After centuries of attempts to conquer each other they finally realised the futility of conflict.

    The possibility of war between them ever again has long seemed so remote as to be laughable.

    Maybe that is why the peoples of Scandinavia are not easily persuaded that they need to hand over their sovereignty to a supra-national body in the interests of peace.

    I believe the experience of two world wars and the entrenchment of democracy has produced a permanent change in political realities in the rest of Europe similar to that which occurred in Scandinavia a century earlier.

    It is as unthinkable now that any countries of Western Europe will ever again contemplate war against each other as it is of the Scandinavian countries.

    The idea that members of the European Union can only be restrained from fighting each other by adopting a single currency or by submerging themselves in a super state is absurd. It is almost as absurd as the thought that, if countries were still so inclined, such mechanisms would prevent them.

    The desire to eradicate war from Europe was the most noble motive behind the ideal of a United States of Europe.

    And in the aftermath of a second horrific conflict this century fear of a recurrence of war seemed realistic.

    Yet happily that now seems the most dated motive for European federalism, not least to young people who find faintly ludicrous the notion that they are nursing bellicose ambitions against each other.

    Europe has now enjoyed peace between states for 50 years and that peace is now permanently entrenched in the hearts and minds of the peoples of Europe.

    The removal of barriers to trade and travel within the European Community and the resultant multiplication of contacts between people has contributed to that process.

    But it has manifestly not required the abolition of the nation state nor the creation of a fully fledged United States of Europe.

    Hence the paradox that the Europhiles still need to brandish the threat of war (as Chancellor Kohl did in his claim that EMU was about war and peace) while accusing Eurosceptics of stirring up fear of foreigners!

    We should all rejoice that we have now had peace between states in Western Europe for 50 years and that peace is permanent.

    We should also note that the only conflicts within Europe over that period have involved national minorities within states – Basque terrorism in Spain, the IRA in Ulster.

    Where national groups are geographically intertwined such conflicts are hideously difficult to resolve.

    But they should be a warning against trying to suppress the natural desire of peoples to govern themselves by submerging them in a super state.

    (2) The Soviet threat

    The second factor fuelling demands for a United States of Europe after the war was fear of the Soviet threat to Western Europe.

    The threat of this supranational monolith seemed to require the creation of another.

    One of the first plans for European integration was the proposed European Army.

    This was aborted by the French Assembly and led the founding fathers of Europe to conclude that they should pursue a more indirect approach to European integration.

    In practice of course NATO provided a framework for defending western Europe without member states abandoning their sovereignty.

    With the collapse of the Soviet Union and communism this motive for the Federal ideal has evaporated.

    And we should remember that despite all the communists did to undermine national allegiances it was the power of national sentiment which helped undermine the soviet empire.

    (3) The USA as model and threat

    The third factor which gave impetus to the Federal idea at the end of the war was the emergence of America as the pre-eminent super power.

    The USA had rescued Europe from Hitler and was defending Europe against Stalin

    So the United States of America seemed a natural model for creating a United States of Europe.

    It was a model not just for those who were grateful to America for rescuing them but even more so for those who were resentful of American dominance.

    From the start Euronationalism has had a strong anti-American component.

    America has largely ignored this.

    The USA has consistently encouraged the development of a USE.

    Americans have assumed that anything modelled on America must be good for America.

    That is an understandable assumption though a non sequitur.

    The US State Department has always assumed that it would be far easier to deal with one large state rather than all these different states each with its own government.

    Only recently have a number of prominent Americans begun to realise that trying to create a United States of Europe might be damaging to Europe and of no benefit to America.

    Creating a new nation from millions of immigrants in America?s great melting pot was one thing.

    It is not remotely like trying to weld into one state fifteen different countries with different languages, cultures and traditions of governing themselves.

    The result may well be unstable and unpredictable.

    Moreover, if the prime motivation of the politicians who are driving this venture is to be able to challenge what they see as American hegemony, the result may not be to America?s liking.

    Hence the recent transatlantic warnings about the dangers of Economic and Monetary Union from such eminent voices as Henry Kissinger, Martin Feldstein (former Chairman of the President?s Council of Economic Advisors) and Milton Friedman.

    How the Collapse of Socialism Gave Federalism a New Impetus

    So, of the factors which originally fuelled European Federalism fifty years ago only the desire to create a United States of Europe in emulation of, and as a counter weight to, the United States of America remains a motive force.

    Even that has been sapped by growing recognition on both sides of the Atlantic that the analogy between the USA and a USE could be dangerously misleading.

    The Soviet threat has disappeared entirely.

    The notion that the continued existence of sovereign states or the desire of countries to govern themselves would result in a war within western Europe seemed increasingly ludicrous.

    As the circumstances which gave rise to it have faded into the past European federalism has looked increasingly like an old man?s religion.

    Its high priests belong to the generation of Chancellor Kohl, Ted Heath and the late President Mitterand.

    All of them are great men but rooted in a different era.

    As that generation increasingly gave to those who did not experience the last war it seemed that the Federal idea was faltering.

    What was it that gave it renewed impetus in the 1980?s?

    I believe it was the collapse of socialism.

    In the early post war period the Left wing parties in many European countries had been suspicious of, if not hostile to, European federalism.

    They saw its early stages – the Common Market in particular – as a capitalist plot.

    But in the 80s, socialism was in retreat electorally and intellectually.

    – It was seen to have failed in Eastern Europe

    – Voters increasingly resented high taxes

    – And global competition conflicted with national governments? desire to tax, regulate and control business.

    As a result, socialism collapsed as a workable, credible or saleable doctrine.

    Consequently, socialist and social democratic parties were left with a huge intellectual vacuum.

    Human nature abhors a vacuum.

    So Federalism filled the void left by the demise of socialism.

    The idea of creating a powerful Superstate, Europe-wide, was congenial to those left of centre parties who had been thwarted in their desire to expand state power within their own countries.

    The left in Europe increasingly sees Europe as its best chance of reasserting state control over the economy in the face of global pressures.

    This motivation has clear implications for the sort of Europe the left of centre governments will want to pursue.

    They want a high spending Europe.

    We see them using the excuse of the current recessionary pressures to justify spending programmes (rather than tax cuts).

    They want an interventionist Europe – with more controls, regulations and industrial ?restructuring?.

    They will tend towards a ?Fortress Europe? using anti-dumping and other measures in an attempt to keep out foreign competition.

    They will tend to create an elitist, technocratic, undemocratic Europe.

    The man in the Charlemagne building knows best!

    And they will tend to create an anti-capitalist, anti-American Europe.

    Vision of a Free Europe

    That is the direction the old federal vision is taking now it is largely driven by the left of centre parties? attempts to regain state control over the economy and society.

    The alternative vision has always been of a European Community of States co-operating together.

    We want to see free trade within Europe.

    Free trade is not just economically beneficial, it binds countries together by a web of mutual interest.

    We want to see the completion of the single market to remove remaining barriers.

    Wherever possible we should rely on mutual recognition of each other?s standards and regulators, with agreement on minimum standards if need be – rather than harmonisation or centralisation of regulation and standards.

    We want Europe to be open to the rest of the world, participating fully in the global economy.

    We believe the global economy is not a threat but an opportunity for prosperity.

    We believe the diversity of Europe is part of its strength, not something to be progressively eliminated.

    And that diversity requires separate independent states.

    In his famous book, ?The Rise and Fall of the Great Powers?, Paul Kennedy analyses the reasons for Europe?s success since 1500.

    At that date there was little difference between the level of development in Europe, China and Japan.

    But China and Japan both chose to cut themselves off from the rest of the world.

    And internally each was a single state.

    By contrast, Europe remained open to the world and had a number of independent governments each pursuing different strategies, different modes of government, providing alternative backers for innovators in technology, industry, navigation, etc.

    In Kennedy?s analysis, it was that diversity which made Europe so creative and that diversity depended on the existence of independent states.

    In the early states of European development, the two competing visions led in the same direction.

    Creating a Common Market to allow free trade required the removal of barriers between states.

    Likewise, the creation of a single European State required the elimination of what were described as internal frontiers.

    Those whose aim was to encourage free trade wanted to remove barriers between states within the Common Market.

    Those whose aim was to begin merging states into a Single European State wanted to eliminate ?internal frontiers?.

    The effect was the same.

    Likewise, those whose aim was simply to encourage co-operation between sovereign states wanted to establish institutions to facilitate such co-operation.

    To the advocates of a single state these institutions were to be the embryonic state to which sovereignty would ultimately be transferred.

    Essentially the programme for creating a U.S.E. involves the one-way transfer of the attributes of statehood upwards from member states to the supra-national institutions.

    Nation States have currencies.

    Therefore the new Nation of Europe must have its own currency.

    And the old nation states must lose theirs as they become provinces of Europe.

    That is the federalist logic.

    So the next step in that process is the creation of a single European currency.

    There was initially some dispute as to whether it was premature to create a single currency before Europe had acquired the other attributes of statehood of a political union.

    The USA for example was a fully fledged political union for over a century before it acquired a currency.

    Likewise, the German Zollverein became a political union before it acquired a single currency.

    However, the advocates of creating a political union were eventually persuaded that creating a single currency first would force the EU to move more rapidly to creating a single government and single state.

    Chancellor Kohl said, ?We want the political unification of Europe. If there is monetary union, then there cannot be political union and vice versa.?

    And he is probably right.

    After all, there never has been an official currency before in the history of the world without a government to run a matching economic policy and a state to back the money with its authority.

    Almost certainly Europe will move towards acquiring ?un gouvernement economique? with the powers to tax, spend, borrow and regulate that normally complement monetary policy.

    The current European Presidency has already made tax harmonisation its policy.

    Britain has a markedly lower tax burden than the countries of Euroland.

    Joining in with harmonisation would inevitably involve raising our tax level – depriving us of a considerable relative advantage.