EU History II : EU History II Eurosclerosis, 1973-1984


Legion of internal and external problems: Legion of internal and external problems The impact of enlargement (Britain’s budgetary crisis) Oil crisis (aftermath of Arab-Israeli war, Arab producers quadruple the price of oil, and embargo port of Rotterdam) Fluctuating superpower relations German unassertiveness (strong economically but politically unassertive) Oscillating exchange rates (US devaluing the dollar) Uneven economic performance among member states Paralyzed decision-making process (Unanimity) Massive CAP spending, out of control. In the early 1980s the CAP had run out of control with an obscene accumulation of surplus production for which farmers received guaranteed high prices. Inflation, unemployment, trade deficits


Britain Renegotiates : Britain Renegotiates --Wilson returns to office after Labour’s victory: British concerns: Recalculation of Britain’s contribution to the EC budget Reform of the CAP Protection of Commonwealth interests (New Zealand dairy products --January 1975, Commission Publishes report: “The unacceptable situation and the correcting mechanism.” The eight accept New Zealand imports and Wilson aggress that the correcting mechanism yielded a reasonable figure for Britain.


Tariffs in the EC: Tariffs in the EC Poor leadership and growing divergence between member states. States apply non-tariff barriers. The launch of the European Council in 1975 helped hold the EC together. Giscard d’Estaing and Helmut Schmidt pressed for regular institutionalized summits of EC prime ministers (*and French president).


Reports on the status of EEC: Reports on the status of EEC Tindeman’s Report (1976)– on ways to advance European integration: focused less on a federal Europe and more on institutional reforms and a small increase of EC competence. 3 Wise Men Report (1979) reform without Treaty revision. Report criticized the Commission but also criticized the political leaders for their unwillingness to act. Report has the same luck as the Tindeman report= went into the archives.


The European Monetary System: The European Monetary System Jenkins (Commission president from 1977-81) sought to create a monetary union as a regimen for stagflation (inflation, low growth and unemployment). --Compensatory amounts and compromise: Germans and French compromised on compensatory amounts: funds introduced in the early 70s to cushion the CAP from exchange rate fluctuations. French support the EMS.


The British Budget Problem: The British Budget Problem --Thatcher to the offensive In Strasbourg June, 1979: Thatcher infuriates all members. In Dublin November, 1979: Thatcher demands Britain’s money back, without a having a precise number. In Luxembourg 1980: figures for an interim two-year period are presented (difference between demanded and offered was only 400 million ECU). Thatcher rejects the compromise. May 1980: Thatcher agrees to a refined offer made by the eight at the foreign ministers meeting in Brussels. Merely a temporary solution, with Thatcher returning to the offensive once the interim period ended at 1983 Stuttgart Summit.


The British Budget Problem: The British Budget Problem --1984, France takes over Council presidency: Mitterrand launches a concerted diplomatic offensive to try and bring the issue to a close before the Fontainebleau summit. Fontainbleau summit: A possible solution emerged based on a rebate in the form of a fixed percentage each year of Britain’s net contributions: 66 percent. Agricultural spending is curtailed, increase of the EC’s own resources by increasing from 1.0 to 1.4% of the VAT


Impetus for political and economic integration : Impetus for political and economic integration --The Commission: European Strategic Program for Research and Development in Information Technology (ESPRIT). principle of ‘mutual recognition’ following a landmark case in the ECJ. Commission avoids the impossible process of harmonizing member states’ diverse legal norms


Impetus for political and economic integration: Impetus for political and economic integration --The Genscher-Colombo proposals launched an initiative to assert the EC’s international identity, while reassuring the US of its intentions. The proposal advocated more effective decision making and greater EC competence in external relations. Gives Rise to Solemn Declaration on European Union.


Impetus for political and economic integration: Impetus for political and economic integration --The European Parliament Altiero Spinneli and the Crocodile Club (dedicated to reforming the EC, and increasing its powers). 1981: The Crocodile Club becomes the Institutional Affairs Committee. February 1984: Draft Treaty Establishing the European Union is passed through the EP.