We all learned from the sorry experience of state-sanctioned bureaucracies in Eastern Europe and the Soviet Union; decentralising is crucial to both freedom and excellence . – Jerry Brown (then US senator)
The American president (bless him for all the business he is giving Prestwick) is, perhaps, the clearest indication of centralised power – especially his latest statements about lowering the banking reserves. This would give an immediate boost to the economy – good for re-election chances in 2020 – but at the cost of long-term problems. However, let us stick with Europe where the centralisation effect is subtler.
When the Berlin Wall fell it was an obvious sign of a new order in Europe.
The Maastricht Treaty of 1992/1993 formalised the creation of the European Union and further enhanced the role of the European Parliament and, at the same time, created new bureaucracies devoted to foreign policy and economics. The Amsterdam Agreement of 1997 added to the Maastricht Treaty; henceforth, for most matters, the European Council and Parliament had to approve all laws and regulations. By then the Euro was on the table; the European Monetary Institute was established in 1994 and thus another step towards centralisation was in place.
During this time Austria, Sweden and Finland had joined the EU (unobtrusively Greenland had left in 1985) and some other countries had merged with the European Economic Area (although without actually joining the EU). This strengthened the wider European community and, at the start of 1999, the Euro was officially adopted as the formal currency of most EU countries.
In truth, France and Germany were now beginning to call the shots. Both countries gained a considerable degree of financial control through these measures (they had the largest blocs in the parliament) and (whisper this) the Euro, more or less, was the German Mark under a different name.
But if Britain was growing ever more sceptical about the EU, other nations were clamouring to get in: Estonia, the Czech Republic, Hungary, Poland, Lithuania, Latvia and Romania had all suffered under the totalitarianism practised by Mother Russia. Understandably they wanted Western freedoms and Western wealth and saw their guarantee of this in uniting with the EU.
By no means were these countries as developed or as sophisticated as those already in the Union. Some were run by little more than the gangsters that had run them in the Soviet era; yet they had resources in land, minerals and, above all, cheap labour. That made them attractive to Western businesses so there was a rush to bring them into the fold. Even their out-dated factories were attractive – Renault took over Dacia in Romania for one.
There was also the pressure, less than subtle, from the US. That country had already established military bases in Romania and Bulgaria (to the economic delight of these countries) and viewed a larger EU as a bulwark against Russia (which was still considered the ‘enemy’).
However, it was the established resources of those Eastern European countries that had the first immediate effect.
The quality of their production may not have matched the quality of the West but, at the time, Eastern European wages were so low (the average Romanian worker earned about £10 per month when Romania joined the EU) that they were highly competitive. The then joke in Romania, where gross over-staffing was rife – ensuring everyone had a job – was that: ‘We pretended to work; they pretended to pay us’.
Naturally, this disparity in earnings had consequences for Western firms.
By 2004 we had, therefore, a two-tier European Union; those that were in the monetary union and those, like Britain, that had stayed out. The linking of the monetary fate of those European countries in the Euro gave Germany a strong hand. Its policies began to dominate – although that did not come without a cost. As the largest economy in Europe, Germany had to shoulder the responsibility for bailing out those economies that had suffered the growth pangs of the wider Union.
The enlargement of the Union also gave rise to the hope that the move towards centralisation within it would be halted; the reasoning was that, with so many countries now involved, it would be difficult to reach a unified consensus on policies that would have a direct and negative bearing on centralisation and so, in turn, hand the European Parliament and Commission increased powers over the individual states.
And the enlargement of the Union did ensure that the European Parliament had the final say over the Commission and its members. The executive was then directly accountable to the member nations but in proportion to their population numbers and economic strength. However, direct accountability to the electorate is questionable as, on the whole, the European electorate has not warmed to the European elections; the European average voter turn-out is below 50% and the UK turn-out, last time round, was below 40% (against almost 70% in Luxembourg).
European issues are often technical and complex and MEPs do not have the same recognition value as local ‘people’s representatives’. Generally, the votes in EU elections have as much to do with domestic issues as they have European ones. In this year’s European election, some 17 million people in the UK voted against 46 million eligible to do so. Even with passions running high over leaving or staying in the European Community, only 37% voted – this was slightly up on 2014 when only 34% voted. In 2019, the Brexit party won almost 40% of the votes whilst the Liberal Democrats, as the clear Remain party, took 22%. Labour, the maybe this, maybe that party, took 14% (all these figures are rounded) and the Green party, also a Remain party, took 10%. The Conservatives, a bitterly divided party, weighed in at 5.5%.
So, where does this leave us? More next time.
Bill Paterson is a writer based in Caithness
By Bill Paterson | 25 September 2019
