THE EURO AND GLOBALISATION

Note: An appreciable part of this analysis is derived from: S. Dawe - BUSINESS ANDENVIRONMENTAL PRESSURE GROUP INFLUENCES UPON THE TRANS-EUROPEAN TRANSPORT NETWORKS (thesis, 2001).

Executive Summary

page 1Introduction

page 2The Vietnam War and the oil crises of the 1970s

page 2The Single European Market

page 3Lobbying: a brief history of commercial infiltration of the European Institutions

page 5Business groups in the EC 1973-1986

page 11Business groups and the development of the Single European Market page 17The coming of the Euro: “one currency to rule them all and, in their darkness, bindthem………”

page 26Policies for local, regional and household economic security page 28

EXECUTIVE SUMMARY: Globalization is a misleading term for US-led actions to free capital movement

which the US could benefit from, as the dollar is a global reserve currency. Thereare globalising processes: globalization does not mean anything. Structuralweaknesses and deficits in the US in the 1960s were aggravated by the VietnamWar, which increased the efforts of US administrations to achieve freedom ofcapital movement and effective sovereignty over natural resources in many statesthrough legal and illicit, interventionist means in cooperation with complaintstates, international institutions and TNCs.

Connections between the development of the Single European Market and USattempts to recast the global economy in a form most advantageous to the US are

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numerous. The development of the Single Market from its origins in the fourfundamental freedoms of the early EC is examined in detail, demonstrating thelongevity of attempts to cripple the autonomy of governments and regions andimpose neo-liberal values and policies, usually referred to as ‘liberalisation.’ Thisboth parallels preferences of US administrations and is influenced by USgovernments periodically. The role of peak level European business organisationsin adding to European vulnerability to globalising processes is demonstrated.Promoted strongly by such organisations, the Euro now exists in the context of thepolicies of the European Central Bank which serves the interests of neo-liberalismrather than humanity.1

Alternatives to globalising processes and to the Euro are outlined in the finalsection with particular reference to three challenging topics: credit, housing, andthe need for real wage increases in the UK.

Introduction:The development of globalisation has been associated with the growth of transnationalcorporations during the 20th century.2 Corporations grew and consumed smallerbusinesses amongst their suppliers and competititors: vertical and horizontal integrationwhich led large corporations to become conglomerates: businesses with numerousaspects. ITT, for example, by 1972, was a vast network of hundreds of businesses withinterests including: telecommunications, hotels, arms and insurance.3 The role of theWTO has been examined elsewhere,4 and others have reviewed the role of the WorldBank and IMF.5 International institutions contribute to globalising processes but it ishighly debatable whether they could be considered as pre-eminent in them. By 1981, aserving UN official once told me, the UN had achieved the distinction of having astaffing level similar to that of the New York Fire Department. Adding all employeestogether in the various European institutions would produce a figure less than the numberof people employed by Kent County Council. It can therefore be argued that such bodiesare incapable of being really effective across the wide policy areas they notionally cover.

‘Globalisation’ is best understood as a vague term for reconstructing the global economyin a manner which protects the US from its own errors, greed and unwillingness to acceptinternal reform. US manipulation of political systems and willing compliance by somestates has created a global economic environment in which a variety of internationalinstitutions and actions by US administrations combine in a pavanne of self-justificationfor unacceptable interference in many countries all over the world.6 Poverty and human

1 See THE EURO AND THE EUROPEAN CONSTITUTION from steve@no-euro.com 2 Leslie Hannah – The Rise of the Corporate Economy (London: Routledge, [2nd edition] 1983).3 Anthony Sampson – The Sovereign State (London: Hodder, 1973). See also: Anthony Sampson – TheSeven Sisters: the great oil companies and the world they made (London: Coronet, 1988).4 TRADE, CLIMATE CHANGE AND THE EURO – briefing available from stevedawe@gn.apc.org . 5 See for example: Peter Korner et al – The IMF and the debt crisis (London, Zed, 1986); Teresa Hayter –Aid: Rhetoric and reality (London: Pluto, 1985).6 See for well-documented examples: William Blum – Killing Hope: US and CIA interventions since WWII(London: Zed, 2003); Michael McClintock – The American Connection volume 1: state terror and popularresistance in El Salvador and by the same author Volume 2 on Guatemala, both (London: Zed, 1985);

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rights abuses follow in the wake of these activities. What are the connections betweenglobalising processes aka globalisation and the Euro and European integration?

The Vietnam War and the Oil Crises of the 1970s:This briefing argues that what we now call ‘globalisation’ is little more than areconstruction of the global economy to suit US interests. US deficits and the effects ofthe Vietnam War led the US and UK to press for removal of statutory controls over themovement of capital.7 Margaret Thatcher achieved this for the UK in 1979, with the restof the European Community following suit in stages up to the creation of the EuropeanSingle Market on 1st January 1993. Remaining with the US experience briefly: TheUnited States supported - and then substituted for – France in its post WWII attempt tosuppress the Viet Minh, a Vietnamese nationalist movement which gradually, under thesemalign influences, became communist and better known as the Viet Cong, before beingeffectively merged into the North Vietnamese Army. Crippled by a hopeless strategy, theUS retreated from Vietnam in the midst of the impact of the first Oil Crisis. This crisishad been brought about by US foreign policy, primarily, as the US led western states tosupport Israel in the 1973 Arab-Israeli war. This combination of events provided amplereasons why the US wanted to extend dollar domination of the global economy ratherthan increase taxes at home. But trade deficits had been affecting the US economy fromthe 1960s onwards, so there was earlier motivation to create freedom of capital movement– which would have benefits for the US such as benefiting from capital flight from theclient states the US was maintaining in Latin America. This process was assisted by theUK Government and financial institutions through the creation of the Eurodollar market.8With these two states as evangelists, the gospel of freedom of capital movement wasimparted successfully to some states and forced upon many others through the IMFworking with other bodies like private international banks. The gateway to debt re-payment in dollars was opened wide. This approach had a receptive audience in westernEurope since the four fundamental freedoms of the Treaty of Rome were freedom ofmovement of people, goods, capital and services. Progress on achieving these ‘freedoms’was comparatively slow until the coming of the Single European Market.

However, the US was also enormously assisted by profligate lending by internationalbanks afloat with funds from the newly-enriched OPEC states, which led to inadvisablelending for poor countries – a hefty flow of repayments in dollars - and to the debt crisiswhich has prevailed ever since. The interest rate increases of the Reagan years effectivelycreated the debt crisis, but did not make poor, resource-important states any more stable.This has led to the US significantly escalating its involvement in resource-relatedconflicts and in the political and economic manipulation of governments for resource-related reasons.9 The political model for this activity could be described as globalisation

Philip Agee – Inside the Company: CIA diary (Harmondsworth: Penguin 1975); Philip Agree and LouisWolf – eds. – Dirty work: the CIA in western Europe (London: Zed, 1978); Stephen Gill and David Law –the Global Political Economy: perspectives, problems and policies (Hemel Hempstead: Harvester-Wheatsheaf, 1988), especially part III, The Post-war System. 7 Ann Pettifor – ed. – Real World Economic Outlook: the legacy of globalization: debt and deflation(London: New Economics Foundation, 2003), chapter 1 and see: E.Helleiner – The Re-emergence of globalfinance (Ithaca: Cornell University Press, 1994).8 Ann Pettifor , 2003, pp9-11. 9 Michael T. Klare – Resource wars (New York: Henry Holt, 2002).

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but is better understood as neo-liberalism – an emphasis on markets and freedom ofmovement of capital.10 Numerous governments in poor countries were aided intocorruption by TNC and state bribery and encouraged to run up debts for armaments - touse often on their own people. Perhaps 20% of the global debt burden of poor countries isthe result of arms purchasing. The relentless cruelty of US Governments towardsextremely poor states, demanding they continue to pay debts incurred at variable rates ofinterest, and now realistically unpayable, is part of US foreign policy to maintain theflow of dollars into the US, propping up the value of the dollar and avoiding tax increasesor spending cuts or rational defence spending in the US. But the flow of dollars into theUS is in decline and the Euro, and some other currencies, are being used more and moreby countries which would previously have preferentially used the dollar for transactionsor reserves.11

The Single European Market:Without the US desire to have other countries prop up its currency and the lifestyle of itspeople, the freedom of capital movement upon which the Single European Market wasbuilt might not have led to the formation of that market. Without the Single EuropeanMarket, there would be no basis for the Maastricht Treaty on European Union whichestablished the preliminary basis for the Euro as a set of essentially monetarist criteria.Who wanted the Single European Market and why? Later sections examine the historicaldevelopment of European institutions with reference to both globalising processes andhow we arrived at a Single European Market. Robert Cox has suggested that we cannotengage in defining problems in global politics:

"...without presupposing a certain basic structure consisting of the significant kindsof entities involved and the form of significant relationships among them."12

Nowhere does this process seem to be more difficult than in respect of the Europeaninstitutions. A relatively small bureaucracy exists in a complex set of relationships with, forexample, member governments, lobbying groups, corporations, other internationalinstitutions, non-member states and citizens of the European Union. This same smallbureaucracy also has relationships with particular global forces which include - amongstothers - war, competitiveness, nationalism, ‘globalization’, the pursuit of human rights andthe drive for sustainable development. It can also be suggested that the existing EuropeanUnion is a prototype for a state, but without the scale, skills or range of policy tools to beseen as a state. In consequence, it appears to be dependent upon outside bodies for a verywide range of assistance in its policy process. Peters suggests that:

"The institutions of the EC create a number of arenas for the interplay of relativelyautonomous groups."13

10 Anthur McEwan – Neo-liberalism or democracy: economic strategy, markets and alternatives for the 21st

century (London: Zed, 1999). 11 THE EURO AND THE DOLLAR: the risks of competition, discussion document – briefing availablefrom stevedawe@gn.apc.org 12 Robert Cox, Towards a post-hegemonic conceptualization of world order, chapter 5 of James N. Rosenauand Ernst-Otto Czempiel, eds – Governance without Government: order and change in world politics(Cambridge: Cambridge University Press, 1992), p.131.

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Peters argues that corporatist features of state-society relations within for example themember states of the EU, are not really replicated at the level of the European institutions, aview Greenwood et al share. This is despite the fact that as Van Schendelen notes, groups ofall kinds have found it necessary to be active within the "arenas" Brussels provides to protecttheir preferred interest in domestic political contexts. He also suggests that "transnationalpolicy making calls for anticipation in Brussels."14 In writing of "...relatively autonomousgroups," Peters seems to be emphasising the unsettled nature of relationships betweengroups active within the EU. Whilst agreeing with Peters on this point, it can be argued thathe over-emphasises the notion of the EC as a system with multiple points of access,suggesting this makes agenda setting easier within the EU than in nation states. Since the EUexists in the presence of global forces like those mentioned above, points of policy accessshould not be over-simplified and nor should the resources of TNCs in making use ofaccess. The actual successful setting of the agenda - which results in policy beingimplemented in member states - seems to be very much more restricted than he issuggesting.15 The role of lobbying by large scale business, in support of freedom of capitalmovement and freedom of movement for goods and services, is a critical aspect of Europeanintegration as it is of globalizing processes. Further, given the symmetry between theseprocesses, we should question whether an autonomous European integration actually exists.Do we witness instead the European branch of globalizing processes?

Lobbying: a brief history of commercial infiltration of European institutionsLobbying within the European system actually pre-dates the formation of the EuropeanCommunity. Haas has outlined the formation of groups and lobbying in respect of theEuropean Coal and Steel Community (ECSC) in the early 1950s.16 After the formation of asix member European Economic Community and the European Atomic Energy communityin 1957, groups representing interests within all six member states and sometimes largerareas of Europe, began to form, reaching 300 such groups by 1970, prior to the firstenlargement of the Community. Groups representing business interests were amongst thefirst to be formed, amongst them the premier employer’s organization in Europe, UNICE,the Union of Industrial and Employers’ confederations in Europe.17

13 Peters, B. Guy, 1994, Agenda setting in the European Community, Journal of European Public Policy, 1(1), pp9-26, p.19. (Greenwood et al note eight major routes to policy making via the nation state. Greenwood,Justin, Grote, Jurgen R. and Ronit, Karsten, eds., 1992, Organised Interests and the European Community.London: Sage, pp22-23.)

14 Schendelen, M.P.C.M. van, 1993, ed., National Public and Private EC Lobbying. Aldershot: Dartmouth,p.288.

15 Peters, 1994, p.11.

16 Haas, Ernst B., 1958, The Uniting of Europe: political, social and economic forces 1950-57. Stanford:Stanford University Press.

17 Lanzalaco, Luca, 1992, Coping with heterogeneity: peak associations of business within and across westernEuropean nations. In: Greenwood et al, 1992, p.180. (The customary distinction made between business groupsand groups representing the sector of agriculture is tantamount to suggesting agricultural enterprises do notoperate in a market environment. For the purposes of this research, business groups organised at a Europeanlevel are deemed to include groups representing agricultural commercial interests.)

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By 1980, EC officials under the auspices of the Economic and Social Committee created aregister of formally-recognised "Euro-groups", numbering 439. Recognition meant that thegroup concerned appeared on the Commission list, had been invited to provide members toan advisory committee and/or was regularly consulted by elements of the Commission.18

Given its own relative weakness within the emerging system during the 1970s and early1980s, the European Commission attempted to create coalitions with other organisations tostrengthen its position in relation to the Governments of the member states, without whoseconsensual support policy could not be easily introduced. More than 200 advisory andconsultative committees were identifiable by 1985. Amongst these various formal andinformal groups was the European Roundtable of Industrialists, formed in 1983.19

At this point it is worth noting that the ERT's formation could be taken as symptomatic ofthe divided nature of business representation to the EC at the time of its formation andcoming into prominence. As well as UNICE and the ERT, there are four other "sector-unspecific peak associations" representing business.20 The other groupings areEurochambres; the European Centre of Public Enterprises (CEEP); the EuropeanCommunity Services Group; and the American Chamber of Commerce EC Committee(AMCHAM). To complicate matters further, the business representatives on the EuropeanCommunity's ESC are appointed in a personal capacity, meaning they need not reflect thewishes of UNICE or any other grouping to which they belong. This fragmentedrepresentation combined with sectoral representation and individual companyrepresentation, contrasts sharply with the arguably more coordinated but not necessarilymore successful representation of trade union and agricultural industry groups, and seems tohave created a window of opportunity for a new grouping to aggregate ideas, articulatepolicies and generally lobby for business interests: the ERT, representing large European-based transnationals.

It should be clearly understood that lobbying within the EU can be directed towards theCommission, the Council (of Ministers) or the EP, and may often be supplemented bylobbying within member states. Mazey and Richardson note how quickly interest groupsrespond to perceived changes in the distribution of power. As Brussels gained influence,there was an "explosion of lobbying" at both EC and national level in response.21

Similarly, Schneider notes the growth of lobbying in parallel with the development andextension of EC institutions.22 The process of lobbying has been largely unregulateddespite its now very large scale and obvious impact upon the European institutions,

18 Schneider, Volker, 1992, Organised interests in the telecommunications sector. In: Greenwood et al, 1992,p.65.

19 The ERT is an invitation-only membership organisation for Chief Executive Officers of European-basedTNCs. Research credits the ERT with both the creation of the Single European Market and design of themodel of European Monetary Union which has led to the Euro. 20 Lanzalaco, 1992, p.180 and pp182-183.

21 Sonia Mazey and Jeremy Richardson – eds – Lobbying in the European Community (Oxford: OxfordUniversity Press, 1993), preface.

22 Schneider, 1992, pp44-45.

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although some concerns have been expressed to which the Commission has responded, aswill be seen below. However:

"..it is commonplace for the Commission to respond to overload problems byencouraging private interests to perform public interest functions through self-regulation."23

Despite this qualification, the same article does outline work done by the Commission ininvestigating regulation and codes of conduct.

Lobbying forms a vital part of the policy development system of the European Union. In linewith the Commission's nominal role as an impartial bureaucracy, Donnelly asserts that theCommission "..has no ideology.."24 However, it is charged with implementing andmaintaining a Single Market, enhancing competitiveness, increasing trade and encouragingEuropean economic integration, all ideas replete with the ideological imperatives of neo-liberalism.25 This could be a partial explanation for the fact that TNCs do seem to be theCommission's most diligent and successful allies, as will be demonstrated below.

Business groups have succeeded in establishing a dominant role in the EU's labyrinth of apolicy-making process. This is not surprising, as Ernst Haas observed in the 1950s:

"Industrialists are the private parties most consistently and continually under thedirection of supranational institutions, and therefore directly concerned with theprocess of integration."26

It could be argued that Haas was primarily concerned with the European Coal and SteelCommunity(ECSC) in which business interests were bound to be paramount. However, inthe absence of a European Defence Community and progress in transport policy, thedevelopment of alternative foci of Community policy development - like environment after1973 - cannot be said to have substantially altered the focus of the Community away fromcommercial development. The presence of UNICE and the European Trade Unions’Congress coupled with the representation of agricultural interests throughout the history ofthe EC/EU is indicative of a strongly commercial emphasis in the Community's concerns.Also, and perhaps most critical, we shall show that the transnationals represented by theERT have participated in setting the agenda for the European Community. If we accept that"..agenda setting is an initial crucial veto point in the policy process.."27 and that an effectivecorporatism, which might make for policies reflecting a wider range of interests than just

23 McLaughlin, Andrew M. and Greenwood, Justin, 1995, The Management of Interest Representation in theEuropean Union. Journal of Common Market Studies 31, (2) pp143-156, p.148.

24 Donnelly in Mazey and Richardson, 1993, p.75.

25 Grahl, John and Teague, Paul, 1990, 1992: the big market: the future of the European Community. London:Lawrence and Wishart, p.17.

26 Haas, 1958, p.162.

27 Peters, 1994, p.9.

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business, certainly did not exist in the Community in the 1980s or later, then explaining theERT's role and successes becomes easier.

Schneider surveys the proliferation of business groups at the European level, noting theabsence of a "..integrated associational hierarchy.." which would be indicative of a Europeancorporatism. Instead, a far more loose inter-organizational coordination is present.28 Thismay well make it easier for large transnationals to lobby and influence policy agendas andoutcomes. A considerable body of literature exists on international integration as it ispracticed by transnational corporations and a similarly appreciable body of material exists onregional economic integration.29 However, until the mid-1990s, relatively little literatureexamined the role of TNCs in promoting their views through lobbying the EU, which couldincorporate some insights from international economics, research on lobbying, and researchon the kind of international institutions transnationals have created to represent theirinterests, for example. Dunning and Robson argue persuasively that objectives deemed tosupport corporate integration such as improving profitability, more liberal tradearrangements and emphasis on long-term competitiveness are very similar to those promotedin support of regional economic integration. In the latter, the cooperation between states overtrade rules, capital movements and general economic policy coordination, permittingspecialisation for example, also include goals like enhancing profitability and long-termcompetitiveness.30 In the long-term, however, it may be that regional economic integrationwill be less significant than globalizing processes influencing market activities, notably inthe form of actions of the World Trade Organization which can prosecute offending states.

To summaries briefly, new actors have been formed to access the developing Europeansystem effectively. Procedures regulating lobbying are minimal and lobbying itself is notprofessionalized or consolidated into a limited number of groups. This justifies extremelybroad definitions of what constitutes lobbying. Interest articulation with an influence on theEuropean policy process may take place at any level within the European Union. The systemis still evolving, making strategic policy formulation still very important, with the vexedquestion of conflicts over the nature European Monetary Union providing the most obviouscurrent example.

It is important to give these business groups a context for the period 1950-87. This coversthe period from the formation of the ECSC in the early 1950s, to the 1957 Treaty of Romewhich brought the EC into being, up to the introduction of the Single European Act, whichled to the formation of the Single European Market. The following account of the early yearsof the ECSC and the period just prior to the formation of the EC draws particularly uponHaas, 1958.

28 Schneider, 1992, p.67.

29 See for examples, Dunning, John H. and Robson, P., 1988, Multinationals and the European Community.Oxford: Basil Blackwell.

30 Dunning and Robson, 1988, pp2-3.

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In the late 1950s, and really until the substantial changes wrought by the passage into law ofthe Single European Act31 in member states, the EC's policies were almost exclusivelyconfined to economic or commercially-orientated measures. Naturally, these were appliedonly within the 6 founding member states but they would inevitably have implications forother European democracies trading ever more extensively with the Community.

Dunning and Robson provide a view of the early Community's effect upon investment.32

They cite positive effects upon investment crossing borders within the Community and fromthe Community to the outside world, because of factors like better coordination ofproduction, specialization and the protective effect of the Common External Tariff. Theyignore air pollution and greenhouse gas emissions resulting from more long distance roadtransport.

Founders of the attempts at European integration in the 1950s, like Robert Schuman,believed common European interests could be found and a "..true community of interests.."could emerge.33 In fact, the formation of the ECSC, a "dress rehearsal" for the EC, facedstrenuous objections to anti-cartel proposals in the draft ECSC Treaty. However, thecountervailing attraction of promised investment funds overrode such questioning byindustry.34 These reactions, mirrored to varying degrees in each member state, encapsulateindustry's general attitudes to the Community 1957-87: a resistance to regulation and awillingness to see public funds utilised for industrial investment/subsidy.

Haas argues that, in the crucial German context, leading industrialists were the ones whorefuted criticisms of supranational authority and the particular operations of the ECSC.35

French support for economic integration at this stage was negligible36 but did not prevent theECSC being formed with the support of many industrialists, despite strong French tradeunion opposition for example. Conversely, Italian public support for economic integrationmeasures was not shared by many industrialists.37 In the Cold War period of the 1950s, apartfrom a brief thaw in which Austria and Finland were allowed to pass wholly outside theSoviet sphere of influence before the Hungarian uprising of 1956, the US would seem tohave been very happy to see deepening European cooperation as bulwark againstcommunism and the creation of stable markets for the entry of US goods and services.

31 Commission of the European Communities, 1986, Single European Act, Bulletin of the EuropeanCommunities, supplement 2/86, Luxembourg. (See also: HMSO Cmnd.9758, The Single European Act.London, March 1986.)

32 1988, pp8-10.

33 Schuman in 1950 quoted by Haas, 1958, p.25.

34 Haas, 1958, pp163-64 and p.169.

35 Haas, 1958, p.171.

36 Haas, 1958, pp176-180.

37 Haas, 1958, p.199.

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The key sectoral integration achieved by the ECSC did lay a basis for the EC's laterformation. On 13th October 1955, Jean Monnet formed an "Action Committee for theUnited States of Europe", a follow-up to discussions at the Messina Conference of 1st-2ndJune 1955. This had no industrial representation, comprising only political party and tradeunion representatives unified around the idea of a political federation of Europe. Thisstimulated into action industrialists who were clearly not enamoured with the prospect of anew supranational "dirigisme" (interventionism), having learnt from the ECSC's formationof the potential risk of a new international forum involving interventionism. Neither theFrench nor the German governments wanted their authority undermined either, and thesecombined concerns led to the early European Commission having far less effective powerwithin the European Community than the so-called "High Authority" of the ECSC within itssphere of responsibility.38

Business representation in the emerging western European institutions developed alongsidethe formation of the ECSC and the EC. As early as February 1953, the InternationalChamber of Commerce had formed a European Council of Merchants' Associations.Between 1949 and 1958, Haas notes the formation of 58 private international organisations.Most were exclusively within the six states of the Community formed in 1957, althoughsome had member countries outside. Leading industrialists, like Fritz Berg, president of theFederation of German Industries, envisaged the formation of a united Europe and a"western economy" in place of "national economies."39 Despite such sentiments, the kind ofattitudes which might have led to an earlier formation of a SEM did not seem to exist:

"Granted that the similar socio-economic milieu of all western Europeanbusinessmen already predisposes them toward thought along identical or parallellines, the institutional impact of the ECSC has nevertheless so far avoided theevolution of an industrial ideology transcending national frontiers."40

Green41 goes so far as to suggest a "..lack of active business support for EC initiatives in the1950s," citing Haas, 1958. However, the complex picture Haas gives does not seem topermit this conclusion. In particular, Haas seems to contradict his statement on ideology bystating how the "..institutional and political logic of supranationalism.." would tend to leadto the defensive grouping of commercial interests (at a supranational level) fearful of nolonger being able to lobby effectively at a national level. He then cites, the creation ofseveral international business organisations around the process of creating the ECSC.42 Ifparticular industrial units did not have a substantial degree of common ideology, then

38 Haas, 1958, p.309.

39 Haas, 1958, pp318-321.

40 Haas, 1958, p.353.

41 Green, Maria L., 1993, Setting the agenda for a new Europe: a story of the Roundtable of EuropeanIndustrialists. Paper presented to the Political Economy of European Community High Technology Policypanel of the 34th Annual International Studies Association Conference in Acapulco, Mexico, 23-27th March1993, p.5. (A similar paper appears in the Journal of Common Market Studies 33 (4) December 1995, pp501-526.) Note that Green became Maria Green Cowles and is referred to by this name, where appropriate,according to the name given on her research.

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presumably these new organisations would not have been formed. The assessment by Haasof a rush towards "..defensive grouping.." is to some extent justified by the expansion ofbusiness representation in Brussels as the Community enlarged and acquired greater powersover nation states through the pooling of sovereignty. From 1958 to 1973, intra-EC tradegrew far more quickly than the growth of trade internationally: 1000 per cent compared to450 per cent.43 For the purpose of achieving brevity, rather than looking at changes inindustrial sectors implied by this trade, or the role of business groups in particular in theformation of the Community, we will consider instead the period from the early 1970s,when Community action on transnationals provoked a variety of responses, which sharpensthe focus on the interests of transnational corporations in the evolving EC, of which ERT isone strand. Green suggests that "big business" paid little attention to the EC before the mid-1970s.44

BUSINESS GROUPS IN THE EUROPEAN COMMUNITY 1973-1986 It can be argued that business interest in the European Community burgeoned in directproportion to perceived threats of a nascent European "anti-trust".45 Both Van Apeldoornand Robinson make references to employer resistance to a European Commission-proposedEuropean Company Statute of 1970. American-style anti-trust legislation was feared,although the American experience suggests that remarkably little influence on businessbehaviour was achieved in practice.46

The effectiveness of business interests in promoting their own views on these issues andothers seems to have been the result of TNCs seeing both opportunities and threats in agrowing EC. From 1973 onwards, the EC did make a series of statements and legally-enforceable policies influencing the conduct of transnationals.47 Many documents arereproduced in full in Robinson, (1983), notably Multinational Undertakings and theCommunity, a European Commission document for the Council of Ministers of 8thNovember 1973, primarily the work of the then Industry Commissioner Altiero Spinelli,which identifies seven areas of concern: protection of the public; protection of workers'interests; maintenance of competition; takeover methods; equality of conditions of42 Haas, p.318 and p.323. (See also McLaughlin, Andrew M., Jordan, Grant and Maloney, William A., 1993,Corporate Lobbying in the European Community. Journal of Common Market Studies, 31 (2), pp.191-212,p.192.)

43 Robinson, John, 1983, Multinationals and Political Control. Aldershot: Gower, p.25. See also Dunning andRobson, 1988, p.9.

44 Maria L. Green, Setting the agenda for a new Europe: a story of the European Round Table ofIndustrialists conference paper 1993, p.5. and later version: in Journal of Common Market Studies 33 (4)December, 1995, P501-526).

45 This is the substantive thesis of John Robinson, Multinationals and Political Control, (Aldershot: Gower,1983), and Bastiaan van Apeldoorn, Transnational Class Strategy and European Integration: the strategicproject of the European Round Table of Industrialists, (thesis, University of Amsterdam, 1994),especially,pp59-60.

46 Green, Mark, Moore, Beverly and Wasserstein, Bruce, 1972, The Closed Enterprise System. Ralph NaderStudy Group Report on Anti-Trust Enforcement. New York: Grossman Publishers.

47 Dunning and Robson, 1988, p.7.

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reception; protection of developing countries; improvement of information. These themesare returned to repeatedly in the Community documentation on transnationals andcommercial activity in general prior to 1987.48

Some would argue that such discussions were a spin-off from United Nations andOrganisation for Economic Cooperation and Development (OECD) discussions anddecisions on voluntary codes for transnationals.49 However, there was also the very realstrategic economic concern about the exact role played by oil companies in the 1973-74 oilcrisis, which prompted a Commission report.50 It is, however, difficult to see the origin ofthe near-panic reaction of transnationals to new EC regulations along Spinelli lines, assuggested by Robinson since, although it clearly included proposals going further than theOECD, such regulations existed in individual industrialised countries already and equaltreatment, non-discrimination and action against cartels, as examples of concerns, wereenshrined in many Commission documents; some on cartels going right back to the Treatyof Rome itself.51

Robinson goes on to argue that encouragement was given to the formation of Europeantransnationals, earlier than the implicit support for such initiatives embodied in the SingleMarket. Summarising the EC policies on transnationals up to 1983, Robinson identifies fourkey trends: specific measures of containment where anxiety was generated by transnationalactivity; an industrial policy approach he sees as corporatist; encouragement to European-based transnationals by the removal of obstacles to a single EC market; a theoretical non-discrimination between transnational and national companies. Later,52 he also emphasisesthe EC's attempts at defeating transfer pricing, efforts defeated by the existence of differenttaxation policies in each member state. Non-discrimination was a sore point with non-ECtransnationals since rules covering public procurement policies did not influence the policiesof member state governments until after the SEM measures were introduced.

These policies existed against a changing background of intra-EC trade. Although intra-ECtrade continued to grow 1973-83, there were declines in quite a number of areas of48 Examples included in Robinson, 1983; Heertje, Arnold, ed., 1983, Investing in Europe's Future. Oxford:Basil Blackwell for the European Investment Bank; European Parliament Directorate General for Research,1982, Principal Developments in the European community from June 1981 to June 1982. Luxembourg:European Commission; European Parliament Directorate General for Research, 1985, 1986 and 1987, Progresstowards European Integration: survey of the main activities of the European Parliament. (Publication detailsand location not given in these three documents).

49 The United Nations Centre for Transnational Corporations, formed in the period just after the first OilCrisis in the 1970s, attempted to promote a code of conduct for transnationals. It gradually became more ofa PR exercise on the benefits of transnationals for the education of poor states. It was shut down prior to the1992 United Nations Conference on Environment and Development since the subject of controls over TNCactivity was not welcome to the US administration of the period. 50 Commission of the European Communities, 1975, Report on the behaviour of the oil companies in theCommunity during the period from October 1973 to March 1974. COM (75) 675 10th December, 1975, andreferred to in Hellman, Rainer, 1977, Transnational Control of Multinational Corporations. New York:Praeger.)

51 Rainer Hellman, Transnational control of multinational corporations (New York: Praeger, 1977), pp79-81.

52 Robinson, 1983, p.68.

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manufacturing by Europe-based firms: for example, motor vehicles, radios, TVs, office anddata processing products.53 This was the result of Asian-origin goods beginning to enter theCommunity and also production by Asian-affiliated enterprises within the EC itself. Themanufacturing role played by ERT members' companies perhaps explains their particularconcern about questions of competitiveness and developing a common European response tothis trend.

Robinson also argues that:

"..the EEC represents the first attempt both to devise a transnational marketframework for MNCs [multinational corporations] and simultaneously a legalframework for their behaviour within this framework."54

This is not strictly correct. The Andean Common Market's attempts to regulate the activitiesof TNCs pre-date those of the EC.55 Like the early Community efforts, the Andean group'srulings were to be enacted by national governments. Unlike the Andean countries, however,the EC was both a major host and a home for transnationals, making for a combination ofliberal and interventionist responses to TNCs. This fluctuating policy approach Robinsonassociates strongly with the person most responsible for the formation of the ERT: EtienneDavignon, European Commissioner for Industrial Affairs and the Internal Market withresponsibility for EEC policy on transnationals 1977-81 and Commissioner for Industry1981 onwards. (Robinson also positively describes Davignon as an "..expert centre-righttactician..")56 A change of responsibilities with the coming of a new Commission in early1981 under a new President, Gaston Thorn, still left Davignon with substantial influence ontransnationals policy.57

Davignon's individual role is of crucial importance for EC policy on transnationals. Aninterview with him in 1977 is a revealing precursor to debates and policies within the EC oflater years.58 Davignon emphasised that the new multinationals office within the53 Dunning and Robson, 1988, pp9-10.

54 Robinson, 1983, p.22.

55 Furnish, Dale B., 1976, The Andean Common Market Regime for Foreign Investments. In: Sauvant, Karl P.and Lavipour, Farid G., Controlling Multinational Enterprises: problems, strategies, counterstrategies.London: Wilton House Publications.

56 Viscount Etienne Davignon bears some examination given his importance in the formation of the ERT. Inaddition to his Commission roles, Davignon was Chair of the Governing Board of the International EnergyAgency 1974-76, after a period as Head of the Office of the Minister of Foreign Affairs in Belgium in 1963, anda member of the Political Directorate of the Belgian Government 1969-1976. A variety of business rolesincluded being a director of ICI from 1991 and Managing Director then President of the Board of Directors ofSociété Générale de Belgique. (International Who's Who, 58th edition of 1994-1995, London: Europa, 1994)p.375.

57 Robinson, 1983, p.23, p.33 and p.37 and see also Green, 1993, for details concerning Davignon's role insetting up the ERT.

58 Davignon, Etienne, 1977, Interview with Etienne Davignon, EEC Commissioner for Industrial Affairs, onEEC policy towards multinational companies, reproduced from Multinational Service No.10, 25th May, 1977,

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Commission is an "..open shop..", a forum for genuine two-way communication. Hespecifically rejected the notion of preferring European industry over industry of otherorigins, something which the Single Market gave practical effect to, by for exampleencouraging privatization and altering national public procurement policies to permit accessfor foreign enterprises. On this last, he does refer to the issue of public purchasing and itsrole in the US economy. He makes it clear that voluntary guidelines alone, as for exampledrawn up by the Organisation for Economic Cooperation and Development, will not beenough. These actions are absolutely critical is assisting globalizing processes as initiated bythe USA, and in laying the basis for moves towards a Single European Market.

During his period of office, EC policy on transnationals evolved very much in line withDavignon's modified liberal approach. The Community Law and Codes of Conduct forMultinational Enterprises59 refers to issues including: right of establishment; removal ofbarriers to integrated industrial and commercial activity; maintenance of competition;coordination of company and tax laws. Recognition of both positive and negative features oftransnational activities is accompanied by "..transparency.." as a significant proposed cure tomany difficulties. Green60 notes how Davignon met with industrial leaders in many sectorsas well as trade unions, often by-passing UNICE: the Union of industrial and employers’confederations in Europe to do so, in search of coordinated approaches to issues like marketshares and subsidies. Agreement between the Commission and twelve large Europe-basedelectronics companies to secure a superior effort in information technology (Davignon's firstEuropean Round Table: on information technology) led to the Esprit research cooperationprogramme and to similar arrangements for other areas like biotechnology andtelecommunications.61 Commission alarm at the entry of AT and T (more generally knownas ITT) into the European telecommunications market, for example by joint ventures withPhilips and Olivetti, seems also to have assisted Davignon in his preferred roles, leadingnotably to a Special Task Force within Directorate-General III (Internal Market), in 1983,with responsibility for making a broad response to this challenge and nearly 40 decisionsrelating to telecommunications emerged from the Council of Ministers and Commission1984 to 1992.62 The same article notes that it was only after this that UNICE began to beinvolved in advising the Commission on policy issues in telecommunications. Eventually,the various research initiatives following the Esprit effort were merged into the FrameworkProgramme with substantial EC funding.63

in Robinson, 1983.

59 Commission of the European Communities, 1978, Community Law and Codes of Conduct for MultinationalEnterprises. Internal Commission policy paper of 22nd December, 1978, reproduced by Robinson, 1983.

60 1993, pp6-7.

61 Grahl and Teague, 1990, p.153; Schneider, 1992, pp49-50; Wyatt-Walter, Andrew, 1995, Globalization,corporate identity and European technology policy. Journal of European Public Policy (2) 3, September 1995,pp427-46, pp430-431.

62 Schneider, Volker et al, 1994, Corporate Actor Networks in European Policy Making: harmonizingtelecommunications policy. Journal of Common Market Studies (32) 4, December 1994, pp478-498, pp484-486.

63 Wyatt-Walter, 1995, p.431.

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A number of researchers also make reference to what is generally known as the VredelingDirective of 1980, which proposed employee rights to information on transnationals, with anensuing conflict between companies, unions and the European Commission.64 While theformation of the ERT may not be seen as a simple linear descendant from this confrontation,it can be seen as one of the concomitant effects.

Clearly, Davignon did have the support of the Commission President of the time, RoyJenkins, for his effort to involve business and unions in dialogue about industrial policy. Heis also likely to have had many internal Commission allies in the various Directorates, otherthan those in his own Cabinet, not least since interest groups of all kinds are deemed to havesucceeded in getting their people into Commission employment.65

Grahl and Teague note that:

"The informal, corporatist development of industrial policy under Etienne Davignoncould only work by privileging the very largest companies in the formation ofpolicy, and has resulted in structures which continue to favour the strongest and mostpowerful economic agents."66

It is arguable that the linkages Davignon established were to be of greater significance forthe EC than the commonly accepted vision of a direction-less Community prior to theformulation of the Single European Act. The significant aspects of history are not alwayswhat seems obvious at the time. Although Davignon's work for the Commission coincidedwith what was termed "Eurosclerosis"67, this latter phenomenon was primarily seen as theresult of French vetoes on further powers for the European institutions. Nevertheless,considerable improvements in the linkage of business to the Commission occurred duringhis period of employment particularly because of Davignon's personal activism. Thereforethe term "Eurosclerosis", implying stagnation or stasis, is actually rather misleading. Grahland Teague seem to concur with this view suggesting "..two hypotheses of structuralimbalance and system-wide uncertainties.."68 In line with such an approach it is worthsuggesting at this point that Davignon's actions can be seem as attempts to correct what hepersonally saw as structural imbalances in both private and public sectors and as attempts toeliminate uncertainties resulting from competition and increasing trade between ECcountries. The Davignon Plan, imposing controversial mandatory quotas on steel outputunder ECSC rules in 1980, is an important example of this tendency.69 It is inevitable thathis dalliance with large corporations would have involved responding to external forces in

64 Robinson, 1983 and Van Apeldoorn, 1994, are examples of this.

65 Van Schendelen, 1993, p.10.

66 Grahl and Teague, 1990, p.177.

67 See the Economist's lament in an editorial of 20th March, 1982: Alas Poor Europe, editorial and: Don't TearUp the Treaty, also editorial in the same issue.

68 1990, p.24.

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the form of US and SE Asian competition, although he had himself laid the ground for theEC becoming more open to its main international competitors.

Davignon's activities could be expected to have generated the expansion in lobbying alreadynoted because he had opened channels of communication with a wider range of groups.Mazey and Richardson70 give a brief account of plastics and pharmaceutical companieslobbying Davignon in 1978-79, in defence of their interests, partly because of the EC'sgrowing role in common external trade policy development. They also assert that suchactivity grew rapidly after the Single European Act's implementation.

Davignon was particularly active in resisting the efforts, led by Altiero Spinelli, to regulatetransnationals comprehensively.71 The EC did not adopt a code of conduct for transnationals,whilst retaining a preference for legally-binding measures in practice rather than voluntarycodes, according to Robinson. However, the EC favoured voluntary codes in its externalrelations, thus suggesting the existence of an EC protectionism during the 1970s and early1980s. (Common external tariffs and the use of quotas for some manufactured goods andsome foodstuffs, can all be taken as examples of this protectionism) It is noteworthy that aDavignon-originated attempt to reduce capacity in fibre manufacturing in 1978 wasapparently not joined by two major US manufacturers for fear of US anti-trust law.72

Robinson tries to argue that the European policy on transnationals represented aconvergence of Commission and ETUC views, but fails to substantiate this position.73 Hedoes provide evidence of the growth of individual transnational "public affairs department"representation in Brussels.74

It could be that the global interests of transnationals were the real agenda behind thepromotion of another phase of European economic integration. By 1976, roughly half of theworld's transnationals were based in the EC, 4500 out of about 9500. More specifically, 70out of the 200 largest transnationals, by turnover, were EC-based compared with 103 in theUSA and just 20 in Japan.75 Up to 1988, most of the investment by transnationals in theEuropean Community was by US-based transnationals, especially in high technology.76

Cross-border collaboration between firms in the EC was still minimal by the early 1980s,

69 Van Apeldoorn, 1994, pp32-33; Grahl and Teague, 1990, p.148. Van Apeldoorn's juxtaposed contentionthat 1980 was the first significant contact between the European Commission and large European companiescannot be taken as correct, since EC reports on transnationals during the 1970s do seem to have provoked somereactions. See for example, Robinson, 1983.

70 1993, p.5.

71 Robinson, 1983, pp36-39; Hellman, 1977, pp73-74; European Parliament/US Congress, 1976, EuropeanParliament resolution on Multinational Corporations, version of 16th April, 1977, a draft code of principles formultinational enterprises, reproduced in Robinson, 1983.

72 Robinson, 1983, p.39.

73 Robinson, 1983, pp200-201.

74 Robinson, 1983, p.203.

75 European Commission, 1976, Survey of Multinational Enterprises reproduced in Robinson, 1983.

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but nevertheless growing steadily.77 Jenkins offers a view giving a different impressionconcerning the need for a Single Market to compete with the USA and Japan. He asserts thatlarge US firms did not grow as quickly as European firms 1957-77: the average rates ofgrowth of sales annually were 7.8% for the former and 9.9% for the latter. If continentalEuropean large firms are assessed separately, their average is 12.8% per year.78 Thisevidence calls into question some of the arguments about the EC's economic positionrelative to the US and Japan used to justify a SEM.

BUSINESS GROUPS AND THE DEVELOPMENT OF THE SINGLE EUROPEANMARKETIt is not possible to assess the role of the ERT without assessing its role in the establishmentof a SEM. The ERT's work on transport infrastructure pre-dated its research about andpromotion of a SEM but the ERT's transport proposals - other than the Channel Tunnel (CT)- went into virtual stasis until after the Single Market was implemented.

There are numerous references to the significant role of European business leaders in theformulation, development and implementation of the Single European Market and Act,including many of those quoted for this chapter.79 Pressed upon this point, Caroline Walcottof the ERT, when asked about the agenda-setting role of the ERT, agreed that the ERT was"..critical to.." the development of the SEM. She comments that the process of turning outDirectives was very slow, and was "..grinding itself to a halt." There were "..self-perpetuating programmes without deadlines," in a "..small organisation that had becomeself-feeding.." She felt that the bureaucracy and its procedures had taken over from theresults. There was "..no outside push, there was no urgency." She notes critically that themember state governments did not seem to see any reason to apply pressure even thoughindustry was "..crying out for directives." She emphasised that: "In those days you didn'tblock directives, you wanted them." She places emphasis on the cooperation betweenDavignon, Ortoli and Delors in the period. They were "..very keen.." and that "..theconsensus was not to publish the ideas, but to get others to buy into this project and supportit...", an approach she describes as a "..foundation stone.." of the way the ERT operates.Agreement in principle would be obtained first, that something was on the agenda, andformalisation of proposals would then take place. Lord Cockfield and others were involvedin getting all those proposing the eventual Directives and other policy instruments to scaledown their requests to those essential to the completion of a SEM.

Walcott quoted Commission official David Wright as saying that "The ERT makesproposals which then in three years become European policy." She emphasised very stronglyhow early ERT work was heavily descriptive, giving "..lots of detail.." and how later reports

76 Dunning and Robson, 1988, p.10.

77 Dunning and Robson, 1988, p.18.

78 Jenkins, Rhys, 1982, European Transnational Corporations in Latin America. In: Pearce, Jenny and LatinAmerica Bureau, eds., 1982, The European Challenge: Europe's new role in Latin America. London: LatinAmerica Bureau, pp132-33.

79 Sandholtz, Wayne and Zysman, John, 1989, Recasting the European Bargain. World Politics, 42, October1989, and Green, 1993, both have an extensive list of sources.

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became "..much more general and give lots of recommendations." Asked if "agenda-setting"was the correct expression for what the ERT does, she agreed, adding "priority setting: "..sothat once people have decided to do X that they don't get lost in a mire while doing X."80

This process is no doubt assisted by meetings between ERT members and high-levelofficials during the plenary sessions of each Council presidency at the beginning of each six-month term of office. The Government official involved is often the head of state or ofgovernment. At such meetings, ERT members present their perception of priorities for thecoming Presidency.81

This section of the interview with Caroline Walcott and the latter point raise fundamentalquestions about the transparency of the EU policy process. If the procedure of agreeingmatters with the Commission first is done before any publication of proposals, then whatalternative views are heard within the process before actual formalisation of proposals hasalready started? To what extent are Presidencies offered policy packages that have beencreated without the involvement of significant sections of opinion, including that of therelevant committees of the EP? If the process above could be reasonably described as a"closed dialogue", then the issue of whether a form of "regulatory capture" correctly explainspolicy formulation in the EU needs examination in further investigative research.

Van Apeldoorn suggests that the ERT sold its strategy of a Single unified European Marketby lobbying with the idea of replacing so-called "national champions" - nationally-importantleading enterprises - with "European champions."82 Many mergers did follow from theintroduction of the SEM, as he notes, but the market measures undertaken also madealliances with TNCs outside the EC easier too, so any notion that the ERT and its allies wereafter a new simpler era of Euro-protectionism does not stand close scrutiny. VanApeldoorn’s contention that the success in lobbying which resulted in the Single Market ledto protectionist pressures by ERT-related companies is inconsistent with the Single Marketmeasures which make it easier for all cross-border business collaboration to take place, notjust intra-EC collaboration.83

Wisse Dekker, of Philips, in a mid-1989 interview,84 lays considerable stress on theimportance of the entry of large companies into new alliances both within the Communityand from the Community to TNCs based elsewhere. Issues like economies of scale andtechnological capability were in the forefront of his mind, and other business leaders seem tohave agreed. Companies seem to have had dual strategies - alliances outside if they couldnot get protection inside. Dekker cites the US transnational ITT's involvement with Alcatel,

80 Interview with Caroline Walcott, Deputy Secretary-General of the European Round Table of Industrialists,at the ERT Office, Brussels, 3rd September, 1997.

81 Cowles, 1995, pp230-231.

82 1994, p.64.

83 Van Apeldoorn, 1994, p.78.

84 Dekker, Wisse, 1989, The Globalization of Europe: an interview with Wisse Dekker by Nan Stone.Harvard Business Review, May-June, 1989.

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both major telecommunications companies. In fact, ITT has long had very diverse interests.85

He also mentions the joint venture arrangement between AT and T (the name ITT used inthe USA) and Italel.86 The ERT produced one of its largest works to date, on mergers, as aresult of a conference in October 1989.87

Although Dekker does also mention such activity within the EC, it could be suggested thatthe SEM was a globalising strategy for transnationals. It opened up European markets ratherthan simply rebuilding market structures within the EC. A uniform market was felt to benecessary by TNCs, rather than one which enhanced local or regional economies, or marketstructures, despite the general view that small and medium-sized enterprises were better atgenerating jobs than large transnationals. TNCs were obviously enthusiastic to enter publicprocurement markets soon to be freed from Government stricture by the Single Market. Thisview of the Single Market as globalisation rather than a purely European effort can also beconsidered to be justifiable given Dekker's view of competitiveness:

"...we need a single European market with common technical standards.Without it, we cannot achieve the optimum scale and the lower unit costs weneed to be competitive worldwide. Nor will we have a launching pad forentering the world market, as our Japanese and American competitors havein their home markets."88

He also complains of excessive social costs in Europe compared with North America andSouth-East Asia. Such statements are compatible with US administrations pursuit of openmarkets.

European Commissioners Davignon (Industry) and Francois Xavier Ortoli (Economic andFinance) met heads of European TNCs at the first official meeting of the ERT - 6-7th April,1983. Europe-wide infrastructure projects were proposed as an early objective for the group,although these took more than seven years to bring into EU legislation.89 This was despitethe early publication of ERT documents calling for such initiatives in the area of transport.90

This focus seems to reflect the common interest of ERT member's companies in fast

85 Sampson, Anthony, 1973, The Sovereign State: the secret history of ITT. London: Hodder and Stoughton.

86 Dekker, 1989. Community telecommunications policy had developed quickly after the publication of aGreen Paper in 1987 which produced responses from UNICE, the European Telecommunictions Producers(ECTEL) and the ERT. (Schneider et al, 1994, pp487-489.)

87 European Round Table of Industrialists, 1989b, Cross Border Mergers in Europe, documents from the 7thERT Youth Conference held 20-23 October, 1989. Brussels: ERT.

88 Dekker, 1989.

89 Green, 1993, p.12.

90 European Round Table of Industrialists, 1984b, Missing Links: upgrading Europe's transborder groundtransport infrastructure. Paris: ERT; European Round Table of Industrialists, 1985, Changing Scales. Paris:ERT; European Round Table of Industrialists, 1988, Keeping Europe mobile: a report on advanced transportsystems. Paris: ERT; European Round Table of Industrialists, 1989a, Need for renewing transportinfrastructure in Europe: proposals for improving the decision-making process. Brussels: ERT.

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distribution of their products, since the companies involved were almost exclusively verylarge manufacturing concerns.

The ERT meeting of 1st June, 1983 drew up a memorandum for Commissioner Davignon,Foundations for the future of European Industry, which elaborated on the need for a unifiedEuropean market. Davignon distributed copies of this memorandum to industry andeconomics ministers of member states to demonstrate industrial support for a Europe-wideprogramme of economic change.91 All major ERT ideas were discussed extensively by ERTrepresentatives with Commission directorates.92 Commission officials even attended ERTpreparatory meetings prior to official meetings with the Commission. At the same time, aconcerted effort was made by ERT members to promote their ideas within nationalgovernments, especially in France, coordinated by the initial French office of ERT (later theERT was based in Brussels, from 1988).

The French ERT members were the largest national contingent within the early ERTmembership, which assured them of a receptive French government audience at a time whenFrench economic policy was beginning to change away from what could be looselydescribed as a nationalistic interventionism. The ERT also had good links with the ConseilNational des Patrons Français (CNPF), the main French employer’s organisation. One ERTmember, Roger Fauroux of St.Gobain, even became Minister for Industry in the FrenchGovernment in 1988. Along with other industrial leaders, he had been resisting thepreviously highly-interventionist policies of the socialist government.93 However, ofprobably more significance for the Single Market project were meetings of French ERTmembers with the French finance minister and future President of the EuropeanCommission, Jacques Delors. Five ERT members also met with Jacques Attali, a closeassociate of President Mitterrand, in March 1984, to discuss the idea of a unified market.This was soon followed, during the subsequent French presidency of the European Council,by French officials calling for market liberalization and collaborative research anddevelopment, as advocated by the ERT.94 It can be suggested that this apparent "capture" ofkey members of the French Government was to prove exceptionally important for the futurepursuit of the Single Market project.

Delors toured European capitals to discuss EC reform with political leaders, not initially as asupporter of reform of the European marketplace. However, in November 1984, MaxKohnstramm, formerly secretary to Jean Monnet within the High Authority of the ECSC,organised a meeting including Delors; Michel Charpentier, head of the Esprit researchprogramme; Paolo Cecchini, later to be the author of the Cecchini report on the formation ofa Single Market95; and other key people from various directorates-general of the European91 Green, 1993, pp13-15.

92 Green, 1993, pp20-21.

93 Green, 1993, pp23-25.

94 Green, 1993, pp26-27.

95 A Single Market for the eight richest states of the European Community, since the needs of the poorer fourstates or their capacity to benefit from such a Market were not assessed at this early stage. See Cecchini, Paolo

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Commission. The consensus position that developed was exactly as the ERT would havewished, support for internal market reform with the active support of industrial leadersassured by the ERT's involvement.96

On 11th January, 1985, Wisse Dekker, head of Philips and a founder member of the ERT,unveiled a "Europe 1990" plan to a 500-strong Brussels audience which included manyrecently appointed European Commissioners. This had four themes: elimination of borderrestrictions on trade; the opening of public procurement markets to the private sector;harmonising technical standards; tax harmonisation, especially of Value Added Tax.97

Although strictly a Philips initiative, the outlined programme quickly obtained ERTendorsement. There had already been publication of an ERT report in line with Dekker'sspeech.98 During the same period, the early ERT publications were being sent to heads ofstate and of government in Europe. In pursuit of infrastructure objectives, ERTrepresentatives met, for example, with the transport ministers of France and Italy.99

Generally, the ERT initiatives were well-received. Only Margaret Thatcher, amongst leadersof larger EC states, declined initially to meet with the ERT. In most countries, ERTengagement with government was significant: to give the Netherlands as an example of this:Wisse Dekker of Philips had strong support from the two other major transnationals with aDutch base: Royal Dutch Shell and Unilever, giving a significantly unified voice totransnational concerns when dealing with the Dutch government.

At the European Commission, Delors invited the ERT to a significantly "on the record"meeting discussion of ERT objectives, in March 1985, after Dekker's speech. Members ofthe Delors Cabinet met with the ERT secretariat to prepare for this meeting. This followed aDelors speech to the EP of 14th January, indicating that the Commission would urge theCouncil to complete a series of internal market creation measures by 1992. The Commissionmet with the ERT on 14th June, with the Cockfield White paper for the completion of aSingle Market being submitted at the European Council held in Milan later that samemonth.100 The White Paper bears some resemblance to the ERT publication - consolidatingpolicies which were the subject of Wisse Dekker's January 1985 speech.101 In fact, Cockfield

with Catinat, Michael and Jacquemin, Alexis, 1988, The European Challenge 1992: the benefits of a SingleMarket. Aldershot: Wildwood House.

96 Green, 1993, p.29.

97 Green, 1993, pp30-32 and Van Apeldoorn, 1994, p.67.

98 European Round Table of Industrialists, 1984a, Europe 1990: an agenda for action. Paris: ERT.

99 Green, 1993, pp32-33.

100 European Commission, 1985, Completing the Internal Market: White Paper from the Commission to theEuropean Council. Brussels: European Commission. Also, see Moravcsik, 1991, pp59-60.

101 Doherty, Ann and Hoedeman, Oliver, 1994a, Misshaping Europe: the European Round Table ofIndustrialists. The Ecologist, 24 (4) July-August 1994.

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has acknowledged the debt he owes to the ERT publication.102 Delors also acknowledgedthe ERT role in promoting the Single Market103 Similarly, Wyatt-Walter cites the ERT as:

"..an important factor in generating support among national governments both forthe completion of the Single Market and the vigorous pursuit of a Europeantechnology policy."104

It can be argued that the ERT involvement with the Commission prior to the White Paperhad done much to identify the kind of measures needed, and those most likely to have theconsensual support so important to the Commission's functioning. Delors believedamendment of the Treaty of Rome through an intergovernmental conference (IGC) wasessential, and one was agreed despite opposition from Britain, Denmark and Greece -probably because of anxieties about the extension of qualified majority voting to more areasof the EC's remit. In pursuit of the Single Market, a total of six meetings of the IGC wereeventually held prior to the formal signing of the Single European Act by all the membersstates in Luxembourg (17th February, 1986) Some states did not in fact sign until a Danishreferendum result was known on 27th February, 1986.

During this period, ERT lobbying peaked with a Dekker-edited telex urging the adoption ofthe Single European Act (28th November, 1985), with the support of thirty chief executiveofficers who were EC-based ERT members.105 Even after the formal signing of the SingleEuropean Act, the ERT members were not entirely convinced that the governments wouldimplement the programme. (They were not entirely incorrect, different VAT rates remain inplace, for example) This led to the ERT acquiring new members to broaden its base inEuropean-based transnational corporations. These included two former EuropeanCommissioners who were now heads of transnational corporations: Etienne Davignon, from1986 of SG in Belgium, and Francois Xavier Ortoli, of the French oil company, Total.106

To supplement this effort, a symposium of 2nd June 1986, entitled "Europe is Urgent"included Wisse Dekker proposing a "watchdog" group to monitor Single Marketimplementation. This group would particularly identify as targets for lobbying any notablebottlenecks inside governments, European institutions or industry. The first formal meetingof the resulting "Internal Market Support Committee" (IMSC) occurred on 1st December,1986. This meeting authorised contact with the British Government which held theEuropean presidency at the time and, contrary to her previous behaviour, Mrs. Thatcher had

102 ERT, 1984a.

103 Doherty and Hoedeman, 1994a; Apeldoorn, Bastiaan van Apeldoorn and Holman, Otto, 1994,Transnational Class Strategy and the relaunching of European Integration: the role of the European RoundTable of Industrialists. Paper presented at 35th Annual Conference of the International Studies Association,Washington, D.C., 28th March 1994 to 1.4.94; and van Apeldoorn, 1994.

104 Wyatt-Walter, 1995, p.429.

105 Green, 1993, pp39-41.

106 Doherty and Hoedeman, 1994a.

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a positive exchange of correspondence with Patrick Sheehy (BAT Industries) who acted onbehalf of the IMSC.107

ERT anxieties about Single Market implementation were justified when the followingBelgian presidency was accompanied by a variety of disagreements and slow progress oninternal market-related Directives. The IMSC was exceedingly displeased by the delays and,after meeting with Delors and Cockfield, issued a threat to withdraw investment fromEurope:

"If progress towards the implementation of the European market is as slow as atpresent, it is unavoidable that European industries might have to reconsider theirlong-term strategies in order to stay competitive, with the possibility of redirectingindustrial investments to other parts of the world outside Europe. This could lead toa serious setback in Europe's industrial development with grave consequences foreconomic activity, employment and general welfare in Europe....."108

This press release was sent to the national media in the countries of the IMSC members.Despite this threat, agreement on the areas of the Single Market programme still in disputehad to wait for the German European presidency in 1988, when, for example, the issue ofreforming the structural funds of the EC was agreed.109 The intervention of Germanpresident Helmut Kohl was apparently decisive in promising resources to meet new needs.Pinder also notes the importance of business actors in making this happen.110

Delors and Etienne Davignon were similar in philosophy. Delors saw the market as a sourceof efficient allocation with equity and a "..moralized social order.." being guaranteed byother institutions including the EC.111 Davignon was representative of a strain of Europeanbusinessmen with Christian Democratic and even Social Democratic leanings, alsoexemplified by the ERT.112 Consequently, the Delors Presidency of the EuropeanCommission, rather than a threatened regime under the less ambiguously socialist ClaudeCheysson113 was considerable good fortune for the ERT. Social objectives, ordemocraticization of the Community, were neither at the forefront of Delors' apparentpriorities nor were they to be central to his personalised re-launch of the Community.114

107 Green, 1993, pp42-43.

108 Internal Market Support Committee press release, 24th June, 1987 quoted in Green, 1993, p.44.

109 Dunning and Robson, 1988, set the blame for failure to achieve a European integration for the benefit ofEuropean industry squarely upon the EC (p.21). Cantwell, in the same volume, p.39, notes continuing permittedbarriers to trade in pharmaceuticals, for example.

110 Pinder, John, 1989, The Single Market: a step towards European Union. In: Lodge, 1989, p.102.

111 Ross, 1995, p.18.

112 Green, 1993, and van Apeldoorn, 1994.

113 Ross, 1995, p.28.

114 See Grahl and Teague, 1990, pp18-19.

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Delors, once in office, had continued to be amenable to Davignonesque notions of industrialpolicy. Some may believe that the European Commission was committed to a generalmarket liberalisation in which industrial policy did not have significance, as under theThatcher regime in Britain 1979-90.115 But ailing electronics firms, including Philips,Olivetti, Bull and Siemens, lobbied Delors, sending representatives to what appear to havebeen frequent meetings between him and industrial leaders, requesting financial assistance,even hinting at protectionism.116 This was accompanied by a renewal of threats about thefallout of business failure influencing business confidence in the Commission, languageimplicitly implying withdrawal of investment from Europe if assistance was not rapidlyforthcoming. In October 1990, the lobbying produced Industrial Policy in an open andcompetitive environment.117 This document was allegedly the culmination of disputesbetween different Directorates-General.118 Community policy was to involve stablemacroeconomic conditions, a genuinely competitive commercial environment and lessintervention since sectoral policies were not seen as providing "..structural adaptation." Thismay be considered to be a very different conclusion from that drawn by successive Japanesegovernments.119 The more critical assistance was in fact still to be an issue-by-issueresolution of problems within the Commission's extensive purview. Such assistancecontinued to be led by Directorate-General XIII which interpreted its role in high-technologypolicy as a duty to fight for "..sectoral interventionist policies,"120 whatever the Commissionmight say in its publications.

A parallel process of enhancing the effectiveness of competition policy within the EC hadbeen happening after the agreement of the Single Market process. Competition policy hadfeatured in the Treaty of Rome and had been activated from a relative dormancy by activistCommissioners for Competition: Peter Sutherland and then Leon Brittain.121 It seemsdoubtful that large firms appreciated being caught up in the anti-cartel actions resulting fromnew investigative zeal on the part of the Commission's competition "police." However,defence was difficult since the TNCs in the ERT and in other groups had sold the idea of anactive approach to the Commission in the first place. Markets were still suffering from115 Michie, Jonathon, ed., 1992, The Economic Legacy 1979-1992. London: Academic Press.

116 Ross, 1995, pp115-117.

117 Brussels: European Commission, COM 90 (556), 1990.

118 Opinion offered by Anne Stevens, University of Aston.

119 See for example: Morrison, Charles E., 1988, Japan and the ASEAN countries: the evolution of Japan'sregional role. IN: Inoguchi, Takashi and Okimoto, Daniel L., The Political Economy of Japan: the changinginternational context (Volume 2). Stanford: Stanford University Press, p429. Morrison notes that there has beenmanaged sectoral reform, which he describes as :

"..structural change in the Japanese economy away from resource-consuming industries and towardless resource- intensive service and high-technology activities, and the success of energy and rawmaterials conservation efforts within the industrial sector."

120 Ross, 1995, p.176.

121 Ross, 1995, p.129 and Dunning and Robson, 1988, pp7-8.

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segmentation by producer behaviour in 1993, which was deemed to prevent the full benefitsof market completion for which large producers had argued.122

Walcott firmly emphasises cooperation between the ERT, UNICE and the EuropeanCommittee of the American Chambers of Commerce (AMCHAM). She describes this as"..very close cooperation.." with formal meetings between the then current chair of the ERTand the chair of UNICE being coupled with informal meetings between the Secretaries-General, the staff of the organisations and members of working groups. The ERT refrainsfrom putting in comments when UNICE is already engaged with the detail of manyproposals. If asked for comment, ERT does respond to the Commission. There aresimilarities of views on most topics. Both UNICE and AMCHAM produce far more"..position papers.." than the ERT, contributing to a process in which these three key groupsare consulted first, usually before sectoral industry associations which also exist in Brussels.Also, Walcott says that ERT documents are routinely distributed in bulk to UNICE andAMCHAM who then distribute them widely, with no obligation to reciprocate. Therelationships are sufficiently strong that a representative at a meeting with the Commissionmight even represent more than one of the organisations. Cooperation between UNICE andERT is particularly strong concerning social legislation.123 Together, both organisations alsowork with the EC Affairs manager of AMCHAM, the US Business Roundtable, the AfricanBusiness Roundtable and the Keidanran, the Japanese big business organisation.124 Thisdemonstrates that globalizing processes are not nebulous or impersonal effects of neo-liberaleconomics, but the result of coordinated efforts by TNCs responding to an environmentmade suitable for them by the US and its allies. Absolute agreement does not exist, withUNICE favouring the dropping of discussions on environmental liability with the ERTrecognising this was not realistic given the European Parliament's recent acquisition of Co-Decision.125 This degree of suggested organisational cooperation is replicated amongst thekey environmental lobbying groups, but with minute resources.

Cowles emphasises how the ERT does not seek to duplicate the work of UNICE, preferringto act as an "..idea generator.." and "..agenda setter.."126 However, Cowles also advances as ahypothesis that big business "..played a critical role in restricting the policy roles and choiceof non-governmental institutions.." particularly UNICE. She argues that Europeancorporations exercised increasing influence "..over traditional business groups."127 Thisappears to be contradictory.

122 Robson, Peter and Wooton, Ian, 1993, The transnational enterprise and regional economic integration.Journal of Common Market Studies, 31 (1) March 1993.

123 Walcott, 3rd September, 1997.

124 Cowles, 1995, p.231.

125 For reasons of space, description of AMCHAM and the complex and every-changing architecture ofindustry representation in Brussels is excluded.

126 Cowles, Maria Green, 1995, p.225.

127 Cowles, 1994, p.38.

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Middlemas notes:

"It is not clear, for example, whether the oligopolistic tendencies among firms inthis stagnant decade [the1980s] were caused by the failure of small and mediumcompanies to adapt quickly enough, or by large ones exercising their advantagethrough concentration and monopoly power, often in collusion with their nationalgovernments. Yet the internal market was advocated by players who took the latterassumption for granted, together with its logical extension to the concept of a singlecurrency. Nor is it obvious that the Single European Act was the only way to remedythe collusive, anti-competitive state of mind which appeared to envelop Europeanbusiness and industry in the face of American and Japanese challenges."128

The coming of the Euro: “one currency to rule them all and, in their darkness, bindthem………”The Maastricht Convergence criteria for joining Economic and Monetary Union were:

Annual average inflation not to exceed by more than 1.5% the level of the three bestperforming- participating states.

The level of annual average interest rates not to exceed by more than 2% the level ofthe best three states.

“The government deficit (total public sector) may note exceed 3% of GDP, or shouldbe falling substantially, or be only temporarily above, though still close to, thislevel.”129

Corrective authority, under the terms of the Maastricht Treaty, lies with the EuropeanCentral Bank if states deviate from the deficit criteria. In practice, States may not usewhat is deemed “excessive” public borrowing to maintain services and employment: theymay only use solutions such as cutting spending, privatizing or raising taxes to supportspending. These criteria are monetarist in nature and in effects. In practice, to allow forfluctuations in growth and in revenue, Governments would need to achieve a much lowerborrowing figure than 3% of GDP to hope to remain below 3% constantly, which has theeffect of undermining attempts at public investment and making public sector jobsvulnerable to privatization, to take public services outside public borrowing.

The Euro appears a growth of the wider project of European integration. However, itserves the model of globalisation developing during this century rather better than itserves the states of the Eurozone, hamstrung by public spending constraints, experiencingsteady growth in consumer/household debt.130 What does European integration mean ifthe regions of Europe are not converging in terms of indicators of income, wealth and

128 Keith Middlemas, Orchestrating Europe (London: Fontana, 1995), pp111-112.

129 Steven P. McGiffen – The European Union: a critical guide (Pluto Press, London, 2001)p.60.130 See PUBLIC SPENDING AND THE EURO for an examination of this topic. Available fromstevedawe@gn.apc.org

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sustainability? Diane Perrons offers a convincing demonstration that the Maastrichtconvergence criteria for the creation of a single currency have in fact proven to workagainst convergence, and economic and social cohesion, of conditions in the statesinvolved. She argues that the combination of the Convergence Criteria and the WhitePaper Growth, Competitiveness and Employment of 1993 run counter to goals likeeconomic and social cohesion. During 1983-1995, regional disparities increased in all EUstates other than the Netherlands. Taking 1994 as a point for comparison, unemploymentin the EU was 11%; Japan 3%; USA 6%.131

Nobel prize-winning economist Joseph Stiglitz has noted the option-denying qualities ofthe Growth and Stability Pact:

“…the EU's stability pact, as commonly interpreted, requires either that tax ratesbe raised (always difficult, especially in a recession) or that expenditures be cut.Either way, such policies will exacerbate the downturn. The stability pact put intoplace an automatic economic destabiliser.”132

The European Central Bank has urged immediate cuts of £10 billion in British publicspending with an implied long-term reduction of £40 billion. Given decades of publicspending constraint since 1975, this was highly inappropriate. How much moreinappropriate would be it be to urge cuts on poorer countries, exactly what the ECB hasdone to Portugal? And, in future, to Eastern European states expected to join the Eurobefore the end of the decade?

Policies for local, regional and household economic security:Credit, real wage increases and the supply of secure housing are three critical areas whichneed to be addressed as part of campaigning efforts to remove the burdens of US-favoured globalising processes and the negative actual and potential impacts of theEuro.133 The reasoning for a brief focus on these topics is as follows:

They inter-relate: the income people need and the access to credit which peopleactually exercise is frequently driven by high housing costs in the UK. Globalisingprocesses undermine job security as interest rate control by the European CentralBank can undermine job and household security in the Eurozone or in futuremember states of the Eurozone.

It follows that deliberately diminishing access to credit may well need to beaccompanied by rises in average real wages through above-inflation additions tothe minimum wage. Since people are expected to save for both pensions andrealistically for the higher education of their children, very few people canrealistically save in the UK since we have the lowest wages/salaries in the EU.

131 Diane Perrons – Deconstructing the Maastricht Myth? Economic and Social Cohesion in Europe:regional and gender dimensions of Inequality pp186-187 IN: Ray Hudson and Allan M.Williams – eds. –Divided Europe: society and territory (Sage, London, 1999). Similarly, McGiffen notes a regional analysis1986-1996 showing that the poorest 25 regions in the EU showed a minor rise of income from 53% to 55%of the EU average (p.121).132

133 On housing, see HOUSING AND THE EURO available from stevedawe@gn.apc.org

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Neither shoving people into negative equity or out of their housing as a result ofEuropean Central Bank interest rate policies or by increasing the supply ofhousing are socially or environmentally acceptable – so change must beaccomplished slowly.

This analysis overall suggests a complex interdependence between US foreign policy andthe development of European integration, which really began with US sponsorship of theMarshall plan which led to the European Coal and Steel Community and emphasis ontrade between European states and a good reception for American business. (Clearly, anexamination of the chain of evidence presented would require reading all the sources usedhere.) This analysis also suggests a number of policy initiatives are necessary to achievesustainable and stable, de-globalised economic activity in Europe. Doing so should havebeneficial effects on the rest of the world as per capita consumption of finite resources inEurope is cut back. The shadow ecology134 of Europe which has been created by Europeanimperialism and its 20th century aftermath throughout the rest of the world can be lifted byGreen alternative policies.135 The US-driven globalising processes of recent decadesrequire robust alternatives and not crass anti-Americanism apart from selective boycottsof US oil companies which is the most important and vulnerable pressure point in USeconomic activity because of visibility and the vital importance of resisting climatechange. Achieving both fair trade and localization require removal of US and EUagricultural subsidies other than for achieving organic agriculture.

It has been demonstrated elsewhere that private home ownership has possessed thepreviously disposable household income of European states, to the extent that funds forinvestment and savings are diminished and credit expansion exceeds all previousexperience.136 To stop this prop to capital movement and achieve sustainable economies,it follows that stability depends on reining in credit, which implies increasing real wagesto raise residual incomes and savings and decreasing the cost of housing by increasingsupply. As suggested above, this should be done gradually, in order to minimise negativeimpact upon households and businesses, ideally over a planned 25 year period.Specifically:

1. Access to personal credit should be reduced across the board, regardless of theapparent means of individuals, to counter the emphasis on consumption andincrease the emphasis on private investment and savings. It is suggested this bedone on a percentage basis: 5% reduction in credit per year on existing creditcards and loans and new ceilings for new credit card or loan holders strictlyrelated to residual income (which will need clear definition) at a rate of 10% ofannual residual income in any given year. Exceptions may be made for housing

134 See Nicky Chambers, Craig Simmons and Mathis Wackernagel – Sharing Nature’s interest: ecologicalfootprints as an indicator of sustainability (London: Earthscan, 2000).135 Key information on alternatives: www.greenparty.org.uk ; James Robertson – Future wealth: a neweconomics for the 21st century (London: Cassell, 1989); Colin Hines – Localization (London: Earthscan,2000); Edward Goldsmith and Jerry Mander – The case against the global economy and for a turn towardslocalization (London: Earthscan, 2001); Caroline Lucas MEP – Time to replace globalisation -http://www.carolinelucasmep.org.uk/framesets/publications.html 136 HOUSING AND THE EURO, and see Ann Pettifor – ed. – Real World Economic Outlook: the legacy ofglobalization: debt and deflation, (Basingstoke: Macmillan, 2003), pp5-42 particularly.

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improvements and for renewable energy specific lending. Opinions will varyabout what a sustainable level of savings will be for a society. I suggest prudencedictates that we see what level of savings appears at the end of such a 25 yearprocess rather than seeking any arbitrary figure;

2. Real wage increases: people in industrialised societies are obliged to pay for farmore services than they used to, although real wages have gone down in manystates. Pensions and the higher education of offspring are issues in many states asthey diminish savings for investment or for personal use. Bigger companies andless competition mean higher prices than necessary as a result of cartel activityaka price fixing, something the competition watchdogs of the EU prosecutegroups of companies each year for doing. Progressive taxation, includingprogressive local taxation, will assist in redistribution of income and wealth, butrather than raising the minimum wage in real terms each year alone, we alsoshould be looking at other methods of increasing residual income. AllGovernments do require a feelgood factor of some kind: people must feel they arebenefiting by Government policy over sustained periods, in quality of life at thevery least. A clearly improving environment – the result of environmental policyintegration into all sectors of policy - is critical to this. Lower housing costs willbe of assistance; statutory regulation of all forms of insurance payments wouldalso assist: eg. Longer guarantee/warranty periods on consumer goods and phasingout of insurance on these items; aggressive anti-cartel action, via the EuropeanCourt of Justice etc., to reduce cartel activity and push prices down; closure of taxhavens; systematic reduction of defence spending to territorial and UNresponsibilities; support for socially useful third sector employment, LETsschemes; creating an expanding cooperative movement to offer people affordableroutes away from slave labour in retail and fast food chains;

3. Housing supply: increase housing supply rapidly to meet social needs and you willlower house prices. Hooray! But you will make installation of energy conservationmeasures and renewable energy technology cease to be an addition to the value ofa home when prices are in long-term decline as a result of an increase in supply.Like it or not, people have been used to accumulating property to hand its valueover to their offspring, or to use for converting gains on property into pensionsupplements. Private landlords might well want to reduce their property holdingssince the value of improvements to housing, where actually done, could notnecessarily be realised upon sale of the property. This could deplete the privaterental housing market putting pressure in some areas upon housing supply.Accordingly, since we do want sustainability-orientated changes to happen, thelocal authority has to be able to step in with more generous grants forhouseholders and maybe selectively landlords too - backed up by regulations eg itbecomes impossible to repair a roof without having full insulation inside it andsolar water heating and photovoltaics added to it, with the exception of listedbuildings. Since as much as half of new mortgages in some months in the UK canbe mortgage equity withdrawal, borrowing against the increased value of one’shome, it follows that this income substitute disappears under conditions ofincreased housing supply which will cut prices. This further drives up wagepressures, making a general move upward in incomes necessary, at least for lowerand middle-ranking income groups. One way to achieve this is to claw back the

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real gains made by the top 10% of income earners since the income tax thresholdfor higher earners was cut to 40p in the £. This would allow more generous taxallowances at the bottom at least until a Citizens Income backed by realisticminimum wages could be fully introduced.

Steve DaweGreen Party worker at the No Campaign56 Ayres StreetLondonSE1 1EU0207 378 0436/ FAX: 0207 089 3827(Mondays & Wednesdays)Home numbers: 01233 645167/07904 382203stevedawe@gn.apc.org

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