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Europe after the intergovernmentalconference—the French viewJean‐Marc Trouille a

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Modern & Contemporary France (1997), 5(4), 457-465

Europe after the IntergovernmentalConference—the French view

JEAN-MARC TROUILLEUniversity of Bradford

AbstractTwo important events coming in close succession—the législatives ofMay-June 1997 and the Amsterdam Summit of the European Union—havehad far-reaching consequences for the French. This article provides anintroductory examination of the specifically French view of developmentsin Europe, against the background of the social and economic difficultiescurrently besetting the country, above all the apparently insoluble problemof unemployment. The outcome of the Intergovernmental Conference (IGC)and its impact on the Franco-German relationship are also discussed.

The last few months have witnessed a number of major political changesaffecting the European scene, with general elections both in Britain and inFrance. In this context, the modest results of the Intergovernmental Conference(IGC hereafter) released during the Amsterdam Summit came at a time when theEuropean Union is passing through one of the most crucial phases of its historyand is having to work through a very busy agenda: indeed, the economic resultsof 1997 and their conformity to the convergence criteria as stipulated by theMaastricht Treaty will be assessed in 1998 in order to determine who qualifiesfor European Monetary Union (EMU) on 1 January 1999. In addition, prelimi-nary negotiations to establish which countries will be the most likely candidatesto join the European Union are to start in December 1997, at the next EuropeanSummit in Luxemburg. Furthermore, the way the Union is currently financedwill have to be revisited in the near future. In this broad context of futureEuropean challenges, the initial outcome of the Amsterdam Summit and theresults of the IGC, have been overshadowed by the heated Franco-Germandebate on the Stability Pact and on the inclusion of a social component in thenew European Treaty.

Before looking at the French approach to the IGC and to the new EuropeanTreaty of Amsterdam, we should first contemplate the current situation in Francein economic, political and social terms, as well as in terms of general morale:

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the country's morale is rather low, and is characterised by pessimism, morositéand fear of global change. Last June, over three million people, that is, 12.8 percent of the working population, were officially registered as unemployed.1 The'social fracture' and the phenomenon of social exclusion are gaining ground:with 580,000 unemployed aged between 18 and 25,2 a whole generation iscurrently excluded from the world of work. Disenchantment with politicalparties has been exacerbated by the unpopular measures taken by the last Juppégovernment and by a high level of corruption and political scandals. The Frenchare experiencing a crisis of confidence, and they have become somewhatsceptical about the future of their society in a global world. To some extent, theyare wrong: France's economic potential and technological achievements areimportant and impressive and should allow France to face the challengespresented by mondialisation with much more confidence. In other respects,however, the French are also right: they fear the dangers of the current politicaland social situation in France, and the faith they had in their political leaders tofind real solutions to the social scourge of unemployment has weakenedconsiderably. But they also find that their will to preserve French identity isperfectly compatible with the project of a united Europe. Even though theenthusiasm of the French voters for the adoption of the Maastricht Treaty in1992 was limited, the French are generally very much in favour of the Europeanproject, and they support and believe in the Euro, which potentially means morestrength, more stability and more growth.

And yet, at first glance, if one tries to disregard the social crisis and the largecohort of unemployed, the economy, paradoxically, to a large extent appears tobe successful. France is the world's fourth biggest economy and its GrossDomestic Product (GDP) per head is amongst the highest in Europe. So, whatare the French complaining about? Their economy has grown continuously overthe last few years. The strategy of the franc fort and competitive disinflation,which has been pursued by all governments, whether right- or left-wing over thelast 14 years, has proved to be highly beneficial in many areas of the nationaleconomy: France has one of the lowest rates of inflation amongst industrialcountries. French interest rates are at an all-time low. The financial situation ofFrench companies is generally healthy. French foreign trade is now blossomingand the overall balance of payments has since 1992 generated considerablesurpluses that contrast sharply with the chronic deficits of the 1970s and 1980s.It has proved to be possible to increase competitiveness whilst at the same timefighting inflation and stabilising the currency, which is closely linked to theDeutschmark in the mechanics of the European Monetary System. However, thiswhole strategy aiming at copying the virtuous pre-unification German model hasnot been sufficient to resolve the problem of high unemployment, which is themajor social challenge that France is facing, and which was the key issue duringthe last election campaign, as well as of the ones that preceded it. Since the lastrecession of 1992-1993, economic growth has been too low to generate thedesperately needed jobs in the country, and the fact that the July 1997 rate ofinflation of 0.9 per cent over the last 12 months had been the lowest for 40 years,

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in the main reflects a deflationary trend and a lack of confidence among Frenchconsumers rather than real economic strength.3

Two years ago, Jacques Chirac was elected President of the Republic on asocial programme promising to give top priority to job creation as a means ofreducing the 'social fracture' and of fighting the phenomenon of social ex-clusion. But instead of this, what has emerged is a fracture between politicalpower and public opinion. Nearly five months after being elected, and after along period of doubt and hesitation about his real intentions on Europe, JacquesChirac made a U-turn and converted to monetary orthodoxy after a visit to Bonnon 26 October 1995. European issues were not at the heart of public debateduring the 1995 presidential election campaign, since the main contenderspreferred to focus on internal affairs. A similar situation occurred earlier in 1997.Jacques Chirac took the risk of dissolving the National Assembly ten monthsahead of time to call early elections at short notice, in an attempt to secure arenewed parliamentary mandate in the period leading up to Economic andMonetary Union. Rather than have the parliamentary elections take place asscheduled in March 1998, Chirac invoked the need for France to be in a positionof strength and political stability for the major European negotiations next April,when conformity to the criteria of economic convergence would be assessed andparticipation in the EMU would be decided upon. Quite clearly, his intentionwas also to prevent a large-scale debate on alternative economic and Europeanpolicies, since such debate would otherwise have started during the autumn of1997, gradually becoming more intense through to spring 1998. And so, onceagain, European issues appeared to have been kept away from the centre of therecent French electoral debates, despite their considerable importance for thecountry, and despite the reason invoked by Chirac himself for having these earlyelections. It was as if the main political parties did not trust the French voterssufficiently, and it was as if they thought that Europe was far too important amatter to be entrusted to the French electorate. Such fears were quite clearlyunjustified, although they are, to some extent, understandable, considering thenarrow outcome of the French referendum on the Maastricht Treaty in 1992.Nevertheless, a good majority of the French people are European-minded andalso need to be trusted. It would be a misinterpretation to assume that the lastelectoral defeat of the Right meant a rejection of the Single Currency by theFrench population, since all recent surveys suggest the opposite. According to asurvey carried out in December 1996 in France, Germany, Britain and Italy, theFrench are, with the Italians, the most enthusiastic supporters of the Euro.4

French public opinion realises that the Single Currency, in which they havealready invested so much effort, potentially means more stability and growth.The 1997 legislative elections were not a vote against Europe or against theSingle Currency: they were the clear rejection of higher taxes and recordunemployment that came with the austerity policies introduced by the lastgovernment of Alain Juppé in order, precisely, to meet the Maastricht criteria.

The recent electoral victory of the French Left marks an interesting redistribu-tion of political power in France, insofar as a third period of cohabitation this

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time involves a Gaullist President and a socialist Prime Minister for a period thatcould last up to five years. But this was an election the new French left-winggovernment did not expect to win: as a result, the campaign agenda was loadedwith unrealistic promises and contradictory ideas. Thus, the French socialistspromised to enter the Single Currency on time, but without levying new taxesor adopting new spending cuts to meet the EMU guidelines. During thecampaign, they also promised to shift the whole direction of EMU policy awayfrom rigid monetary orthodoxy to favour growth and job creation instead. Jospinalso pledged to increase unemployment benefit as well as the minimum wage—which has subsequently risen by 4 per cent—to create 700,000 subsidised jobs,of which half are intended to be civil servant positions, and to start negotiationswith all interested parties in the autumn on reducing the working week from 39to 35 hours without lowering the pay.

Even if one leaves aside the likely costs generated by the campaign promises,it is anticipated that the French budget will be heading for a deficit of at least3.6 per cent this year,5 only slightly below last year's 4.2 per cent, but wellbeyond the Maastricht critical measurement of 3 per cent for joining EMU. Quiteclearly, the new French Finance Minister, Dominique Strauss-Kahn, was statingthe obvious when he claimed that France needed 'a generous and flexibleinterpretation of these guidelines' to keep the EMU project intact.6 The newsocialist government faces the following dilemma: in order to reduce the budgetdeficit and qualify for the Euro, more efforts are required, more sacrifices thatcould generate more protests and social conflicts. This is hardly compatible withits interventionist stance and firm electoral promises to stimulate and consolidateeconomic growth by injecting capital and increasing consumption. And yet, thisis precisely what the new French government intends to do: to combinereflationary policies with the necessity of reducing the public deficit, in order tobring them down near to 3 per cent by the end of 1998, instead of 1997, asstipulated in the first budget.7 Even with this breathing-space, and the relianceupon an interpretation of the convergence criteria en tendance, Lionel Jospin'smargin of manoeuvre will be extremely tight, and at the time of writing (July1997) his government is preparing the French for the fact that electoral promiseswill only be kept after further reduction of the deficits.

It is certain that Lionel Jospin recalls the lessons to be drawn from the lastaborted attempt, in 1981 and 1982, to boost the economy and generate jobs byincreasing the level of subsidies and adopting Keynesian policies. Such policiesare more likely to be successful and generate growth and jobs this year and nextthan was the case in the early 1980s, at least in the short term: indeed, the OECDforecasts 2.5 per cent growth for 1997 and 2.8 for 1998, compared with only 1.5per cent in 1996.8 But these policies will also, most certainly, increase the publicdeficit. But Jospin has no choice: if he wants to encourage consumption andreduce unemployment in the short term, whilst keeping public deficits understrict control, as was stipulated in his government's first budget,9 his margin ofmanoeuvre will be very limited, and he will need the support of all interestedparties. The alternative to this mix of monetary orthodoxy and Keynesian

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intervention may be to look across the Channel, but this would, of course, raisethe question of credibility: if, all of a sudden, Jospin advocated ultra-liberal,'Anglo-Saxon', solutions, the whole of France would again, in all likelihoodcome to a standstill the following week: the transport system would be paralyseddue to strike actions of the communist trade union, the CGT (among others) thelorry drivers might decide to block the main arteries and road networks, as wasthe case in December 1995. Decision-making can be a difficult process in thecountry of Astérix, since the French do not have the same consensual traditionsas their German social partners do. Consensus in France, or, rather, compromise,can generally only be reached after confrontation.

In this rather depressed social and political climate affecting France, it is notsurprising that many French people were not even aware of the importantnegotiations taking place, this year and last, on the reshaping and modernisationof European institutions. There was clearly a dearth of information on this rathertechnical subject, despite its relevance. Besides, the 15 member-states concen-trated their efforts in Amsterdam on the endorsement of the Stability Pact which,strictly speaking, was not part of the IGC. Let us therefore remind ourselves ofthe facts of the IGC and its initially ambitious targets.10 This conference wasofficially launched on 29 March 1996, reuniting representatives of all the currentmember-states of the European Union. After 15 months of delicate negotiationscarried out in Brussels in order to revise the Maastricht Treaty and strengthen theinstitutions of the Union, the conference ended in mid-1997. Its conclusionswere presented at the end of the last European Summit in Amsterdam on 16 and17 June, which marked the end of the Dutch presidency of the EU. They formpart of a new Treaty of Amsterdam, whose intention is to consolidate theMaastricht Treaty itself and to mark a new. step in the process of Europeanintegration. The prime aim of the IGC was to provide unanimously agreedsolutions on a number of issues that have become imperative necessities for thefuture of the European Union.

First, there is the question of the indispensable deepening of Europeanintegration, in order to ensure that the institutions of the Union work better, moreefficiently, and that they are able to fulfil their role. Indeed, the European Union,as created by the Maastricht Treaty in 1992, currently numbers 15 members, butthe European institutions were created for a Community of six or nine members,and hardly work with 15, as was demonstrated in Amsterdam, since currentdecision-making procedures are no longer sufficient or appropriate.

The second crucial issue concerned the widening of the European Union, towhich the deepening, or modification, of the institutions is clearly the precondi-tion. At the summit of Madrid in 1995, the 15 member-states firmly committedthemselves to welcoming up to a dozen new members in eastern, central andsouthern Europe, countries whose economic, political and social situation variesconsiderably from one case to the next, revealing sometimes rather strikingdiscrepancies. Negotiations about their entry are expected to start by the year2000 or 2001, in fact before EMU is fully achieved. The membership of thethree major contenders, Poland, the Czech Republic and Hungary, may by then

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have been achieved, since preliminary negotiations about their entry will start asearly as December 1997 at the Luxemburg summit. It is therefore of the utmostimportance for the Union to be better equipped in order to face the challenge ofexpansion.

The third major theme of the IGC concerned the need to face new challengesresulting from global changes which affect society in many areas: securitymatters, with the necessity to fight international crime, terrorism and drugtrafficking more efficiently; it also embraced external politics, with the increas-ing need for Europe to speak with one voice on the international stage, andfinally the idea—dear to the French—of a European defence policy.

Such were the original intentions of the summit. What may be said about theoutcome of the IGC? There is a nice expression in the French language thatwould seem to describe perfectly the disappointing outcome of these negotia-tions after 15 months of brainstorming: 'la montagne a accouché d'une souris'.In other words, a great deal of effort was made for very slight returns.Jean-Louis Bourlanges, President of the European Movement in France, sharplycriticised the European Summits of Heads of States and Governments,11 compar-ing them to a theatrical company giving performances at regular intervals, butwhich is unable to tackle the real problems of the Union in a proper way. Togloss over these problems, three classic techniques are applied: deferral, avoid-ance and the complication of matters. Postponing major decisions has developedinto a kind of European disease, and this partly explained why the IGC s agendawas so heavy. Ten days before the Amsterdam Summit, Jacques Delors declaredthat another conference would have to be organised in the year 2000 or 2001 toadapt the institutions and prepare the accession of new candidate-states into theUnion.12 Other more optimistic commentators argued that a satisfactory compro-mise had emerged in Amsterdam. In fact, the heated debate about the StabilityPact drew most of the attention and overshadowed the real issues surroundingthe IGC, which itself bore little fruit. Multiple conflicts of interests, and differentviews of these issues revealed a huge discrepancy between, on the one hand, thelimited efforts the 15 member-states are prepared to agree upon and, on theother, the need to ensure that an enlarged Union works efficiently and democrat-ically.

Nevertheless, despite the disunity and the sometimes quite strikingly divergentviews in Amsterdam, the new Treaty produced some quite significant agree-ments. The touchstone of the negotiation consisted of four key issues: theextension of the areas subject to majority voting; the principle of more flexiblecooperation and decision-making, so that those member-states who wish tointensify cooperation with a hard core of states determined to progress at higherspeed on the path of integration should not be prevented from doing so by othersusing their veto. Some progress was made on these first two points, even thoughsome limitations were introduced on the domains in which it can be applied. Butno agreement could be reached on the next two items, that is, the reform of theEuropean Commission by limiting the number of commissioners, and thequestion of how to distribute votes fairly between member-states, taking into

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account their number and their respective weight, since this is a potential sourceof contention between large and small member-states. The attempts to create acommon defence policy by incorporating the West European Union into Europewere watered down by Britain as well as by several neutral countries.

The adjournment of the reform of European institutions was undeniably aserious set-back for Europe. Whilst America is, in political and economic terms,in a real position of strength, and whilst countries in south-east Asia areexperiencing a huge economic expansion that is outstripping the Germanpostwar economic miracle, in Amsterdam the European Union gave the perfectillustration of its inability to constitute a powerful force in the world. The onlyclear European project, currently, is a financial one which gravitates around theSingle Currency. Failure of this project would undoubtedly confirm thesupremacy of the dollar and the yen, and the only alternative for Europe wouldbe to become a free trade zone. In a European project based on the financialeconomy, the major European players run their economies according to differentcultural traditions: they all have a different solution to offer and their economiccultures differ enormously, for historic as much as geographic reasons. Britain,for instance, advocates free trade and wants to promote deregulation andencourage flexible labour markets, with the emphasis on getting people offwelfare and into work. Germany has not forgotten the hyperinflation of the1920s, and above all praises the cult of stability and social consensus. TheItalians and the Dutch are keen on preserving solidarity, whilst at the same timedeveloping their own form of liberalism. In France, state interventionism hasbeen a long-standing rule, and dirigisme is by no means a prerogative of theLeft. This has been gradually changing since the mid-1980s, with Franceopening its markets and experiencing three waves of privatisation.13 But politicalhabits as well as traditions inherited from the grandes écoles die hard. EveryEuropean player is convinced that their own values and solutions are the bestway to face a severe European crisis consisting of at least 18 million unem-ployed and of the precariousness and inequalities that derive from mass unem-ployment. The main difficulty in the European struggle to face the challenge ofglobalisation will consist of finding a viable system, a synthesis of all thesenational cultures, a synthesis which might possibly end up in a genuinelyEuropean economic and political culture. This is, of course, easier said thandone.

In any event, perhaps even more worrying than the disappointing outcome ofthe IGC is the fact that the Franco-German locomotive, whilst currently releasingplenty of hot steam, appears in reality unable to gather sufficient momentum topull the European train. The crisis sparked between France and Germany at the69th Franco-German summit in Poitiers on 13 June, and the difficulty of findinga compromise in Amsterdam on the Stability Pact, have revealed the extent ofthe divergences between Paris and Bonn as regards their respective economicand financial conceptions and the monetary construction of Europe. Bonnconsiders the Stability Pact almost fetishistically as being indispensable andunquestionable for technical reasons—to guarantee the value of the Euro—as

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well as for political and psychological reasons—in order for the Euro to beaccepted by a rather reluctant German public opinion, as well as by the Bundes-bank and by German savers. The Keynesian policies advocated by the new Frenchleft-wing government are therefore in total contradiction with the German priori-ties of imposing strict budget discipline, and French politicians irritated Germanleaders profoundly before the summit. A high German official in Brussels claimedthat it took François Mitterrand two years to accept Europe, that Jacques Chiracneeded six months and that Lionel Jospin would therefore only take two months.14

The truth is that it took him only two weeks, since Jospin decided, shortly afterhaving been appointed Prime Minister, to validate—in its entirety—a StabilityPact that he had firmly condemned during the electoral campaign, claiming that itwas 'an absurd concession made by the last French government to the Germans'.15

In the end, the fact that the Stability Pact was adopted without modification wasperceived as a very positive sign by Jospin's German counterparts, who welcomedthis as one of the main successes of Amsterdam, and as a real success forChancellor Kohl and his Federal Finance minister, Theo Waigel. Helmut Kohldeclared that the summit had been 'highly successful' and suggested that reformof the institutions should be postponed, and another 'Maastricht III' conferenceshould be organised at a later date.16

The French found the Stability Pact very constraining in many ways, and theyhave obtained in return only some vague promises in favour of growth and jobcreation. A conference on this subject will be organised later in 1997, to coincidewith the next European summit. Some limited funds, mainly from the EuropeanInvestment Bank, will be made available. Instead of the 'European EconomicGovernment' initially proposed by the French socialists to coordinate theeconomic policies of countries adopting the Euro, an 'economic pole' will beenvisaged, though only as an 'informal forum'17 whose precise content remainsto be discussed. Any decisions in this framework will be subject to unanimousvote, and can therefore be vetoed. In other words, Jospin did not succeed in hisattempts to change radically the mechanisms of integration, and some arguedthat he returned from Amsterdam virtually empty-handed after having aban-doned firm election promises. But one may legitimately put the question, whatelse could he have done at such short notice, having only had two weeks toprepare for the Franco-German summit in Poitiers and the EU summit, andconstrained also by a new period of cohabitation under the scrutiny of inter-national financial markets? Considering that the French delegation was, to someextent, untested and only just discovering the real extent of the problems, andthat the German delegation was obsessed with the Stability Pact, it is by nomeans surprising that the IGC concluded by postponing the thorniest issues.Notwithstanding this, to some extent the recent Franco-German crisis has beena warning to European leaders that it is unadvisable to implement the SingleCurrency without making allowances for employment and without placing thetrue preoccupations of European citizens at the heart of their approach. In thiscontext, Amsterdam can be seen as a first and modest step towards opening thedebate on the social dimension of European construction. Whether the autumn

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conference or the Luxemburg summit in December will allow the Union to gofurther on this front remains to be seen.

It is undeniable that the personal relationships at the heart of the Franco-Ger-man alliance have rarely been more strained, and other similar clashes may beanticipated next year when it comes to assessing the convergence criteria. Thereis genuine concern in Germany about France's ability to meet the Maastrichtcriteria of budget discipline, since the macro-economic policies of the Jospingovernment will automatically result in increased spending instead of the furtherausterity measures required. Chancellor Kohl is said to have indicated in privatethat if the French deficits overstep 3.5 per cent in 1997, this would have seriousconsequences that could prompt Germany to postpone the introduction of theEuro.18 It may be argued that the German financial and social situation at homeis no more enviable than the French one, in terms of budget deficit as well asof high unemployment, and that the pressure of the opposition is stronger therethan it is in France. In mid-1997 the Bundesbank recommended increasingefforts to reduce further expenditure: in order for Germany to meet the baseline3 per cent in 1997, 10 billion Deutschmark must be saved during the year, and30 billion in 1998.19 Nevertheless, thanks to the Amsterdam compromise on theStability Pact, the Euro is still expected to be launched on 1 January 1999, eventhough Paris and Bonn will both find it difficult to meet the criteria of deficit anddebt. Should Jospin fail to keep control of these criteria, it could result in thefailure of the Single Currency and even the failure of the whole Europeanproject. On the other hand, Amsterdam clearly revealed that the 15 member-states do not share the same vision of the future of Europe, even though it maybe in the interest of all member-states of the EU to act together and to openEurope to new members.

Notes and references1. Le Monde (1 juillet 1997).2. Source: INSEE.3. Ibid.4. Daily Telegraph (10 January 1997).5. Le Monde (28 juin 1997).6. The Independent (19 June 1997).7. Le Monde (28 juin 1997).8. OECD, Perspectives économiques semestrielles (juin 1997).9. Le Monde (28 juin 1997).

10. See 'l'Europe à l'épreuve de la Conférence intergouvernementale', Documents—Revue des questionsallemandes (avril 1997).

11. See 'La comédie d' Amsterdam' in Le Monde (21 juin 1997).12. Radio interview on Europe 1 (6 June 1997).13. See MACLEAN, M., 'Privatisation, dirigisme and the global economy: an end to French exceptionalism?',

Modem & Contemporary France, 5, (1997), pp. 215-28.14. Le Monde (14 juin 1997).15. Le Monde (18 juin 1997).16. Die Zeit (20 June 1997).17. Le Monde (18 juin 1997).18. Ibid.19. DEUTSCHE BUNDESBANK, Monatsbericht (May 1997).

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