the politics of europe 2001: adversity and persistence

Industrial Relations Journal 33:5ISSN 0019-8692

The politics of Europe 2001:adversity and persistence

Erik Jones

In its annual report to the European Parliament ‘on the progress achieved by theEuropean Union in 2001,’ the European Council (2002a: 2) was not unjustified inasserting that ‘the year 2001 was a year in which the Union again demonstrated itsability to rise to new challenges while consolidating and building on past achieve-ments’. Nevertheless, too much emphasis on the persistence of European integrationin the face of adversity is misleading. What it implies is a sense of momentum: TheEU can survive by muddling through if nothing else. Hence Europe’s leaders canrefer to the historic commitment to enlargement as though ‘history’ and ‘commit-ment’ are themselves sufficient to ensure enlargement will come about. What thepersistence of European integration leaves open is the stability of the mechanismbehind it: could the act of muddling through undermine Europe’s ability to resistthe influence of external factors?

This question lies at the heart of the European Council declaration made at Laekenin December 2001. The concern is not that the process of European integration issomehow out of touch with the people and therefore unable to function. Rather it isthat continuing to function while remaining out of touch with the people is likely toundermine the future viability of the European project. Such concern cannot be justi-fied solely with reference to the record of events. In order to assess whether theconcern expressed at Laeken is warranted, it is necessary to understand the mech-anisms that allow European integration to resist the influence of external shocks.

This argument about the politics of Europe in 2001 is made in four sections. Thefirst outlines the shocks witnessed during the course of the year: the Irish veto ofthe Nice Treaty and the riots surrounding the Gothenburg summit; September 11;and the collapse of business confidence in Europe and elsewhere. The second exam-ines the resilience of European projects in the face of those shocks: enlargement;security; and economic and monetary union. The third suggests three plausible expla-nations for this resilience: multilevel governance; path dependence; and distributiveequilibrium. The fourth section questions whether persistence can guarantee stabilityin the future.

❒ Erik Jones is resident associate professor of European Studies at the John Hopkins Bologna Center.

Blackwell Publishers Ltd. 2002, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main St., Malden, MA 02148, USA.

The politics of Europe 2001 377

Adversity

The Nice European Council summit of December 2000 was an exhausting andunsatisfying one for the European Union’s heads of state and government. The meet-ing was longer than usual, more politicized, more contentious. Worse, the Treaty ofNice was less ambitious and more ambiguous than most had hoped. Nevertheless,the expectation was that the reforms proposed in the Treaty would be sufficient tosee the European Union through the coming enlargement process. Few anticipatedthat the Treaty of Nice would be difficult to ratify and most looked forward to arelatively easy year to come in 2001.

The generally low expectations of Europe’s heads of state and government can beread in the list of tasks set out by the Nice European Council for the upcomingpresidencies of Sweden and Belgium. The Swedish presidency had one importantinnovation to tackle. The March 2001 summit in Stockholm would be the first dedi-cated economic summit under the Lisbon strategy. Hence, the Swedes would haveto report on progress in implementing the new open method of coordination as wellas addressing questions about a range of issues such as ‘eEurope’, social exclusion,pension reform, and financial market regulation. Beyond this core economic agenda,however, the guidance given by the Nice European Council was both limited andvague. According to the Nice presidency conclusions, the June 2001 European Coun-cil summit in Gothenburg should provide ‘the necessary guidance for the successfulcompletion of the [enlargement] process’, it should report on efforts to construct acommon European Security and Defence Policy (ESDP), it should examine the Euro-pean ‘tax package’ relating to the harmonization of taxation on business and savings,and it should make proposals on sustainable development and carbon gas emissions(European Council, 2000a). Finally, a declaration annexed to the Nice Treaty callsupon the Swedish presidency to ‘encourage wide-ranging discussions with all inter-ested parties’ on the future of Europe. Only two of these tasks were to carry overexplicitly into the Belgian presidency which would have to make a formal statementabout ESDP and which should ‘agree on a declaration containing appropriate initiat-ives for the continuation of this process’ of discussing the future of Europe (EuropeanCouncil 2000b: 83). Of course both the Swedish and the Belgian presidencies wouldbe engaged in the complicated process of implementing existing programmes andagendas—with the Belgians facing the daunting challenge of preparing for thechangeover to the single currency. However, the emphasis for 2001 was on businessas usual.

Business as usual

The Swedish presidency programme reflected this business-as-usual approach.Rather than setting out new initiatives, the government of Sweden chose to focusattention on prominent existing themes—enlargement, employment, environment.These themes not only have the advantage of garnering widespread domestic sup-port in Sweden (where, for example, ESDP would be more controversial), but theyalso encompass the major innovations of the previous five years. Hence, the Swedishgovernment was not being complacent in its programme selection. In insisting that‘these three Es will be the distinguishing features of the Swedish presidency’(European Council, 2000c: 4), the Swedish government was being ambitious. To bor-row from Swedish Prime Minister Goran Persson: ‘We already have grandiose poli-cies. What we lack is the initiative to do what we said we would do’ (EuropeanVoice, 2001a).

The extent of the challenge was apparent already in the first three months of theyear. Progress on enlargement was rapid, but remained constrained by the willing-ness of the existing member states to tackle issues related to the Common Agricul-tural Policy and to address the finances of the Union more generally. In addition,the allocation of seats in the European Parliament proposed at Nice was manifestly

378 Industrial Relations Journal Blackwell Publishers Ltd. 2002.

inequitable (Jones, 2001: 372) and, though unrelated, public support for enlargementin some of the leading countries (notably Poland) was beginning to waver. On theemployment front, early indications of an economic downturn spreading across theAtlantic sapped enthusiasm for fiscal consolidation and labour market reform despiteSwedish admonishments to the contrary. Meanwhile, a public spat erupted over Ire-land’s adherence to the broad economic policy guidelines between the EuropeanCommission and the Council of Ministers, on the one hand, and the Irish govern-ment, on the other hand. Finally, on the environment, the new Bush Administrationin the United States (US) announced that it would renege on the US commitment tothe Kyoto protocols. And while this had the desirable effect of bringing the EUtogether on the subject of carbon emissions, it also underscored the limits of Euro-pean unity to effect change on the global environment.

In the event, the Swedish presidency of the European Council was largely a busi-ness-as-usual affair. The Stockholm summit made some progress in key economicareas both in terms of setting or revising performance targets (employment) and interms of marshaling the political will for reform (financial services). And it facedsubstantial opposition in other areas (energy markets). Moreover, much of what theCouncil agreed had to be qualified in line with the ‘less supportive’ internationaleconomic environment. The Stockholm Presidency Conclusions insisted that ‘this isnot the time for complacency’ and yet the sub-text was that it is a time for pragma-tism (European Council, 2001a: paragraph 5). Indeed, the summit was moreimportant for having implemented the process set out in Lisbon the year prior thanfor any precise topic deliberated or accepted by the European Council.

The expectation looking toward the Gothenburg summit of 15–16 June was thatthe Swedes would provide for another workmanlike event. However, two unrelateddevelopments conspired to change the tenor of the Swedish end-of-presidency sum-mit to be entirely different from presidency itself. The first of these was the Irishrejection of the Nice Treaty in a popular referendum held just days before the Goth-enburg summit. The second was the violent clash between anti-globalization pro-testors and Swedish police on the streets of Gothenburg.

Shocks

The Irish veto was unexpected both by the heads of state and government and, morespecifically, by the Irish governing elites. In the previous referenda on Europe—such as those ratifying the Maastricht Treaty and the Amsterdam Treaty—the Irishelectorate voted overwhelmingly in favour of the European Union. Moreover, Irelandhas benefitted not only from massive EU transfers but also from brisk economicgrowth. While the link between the transfers and the growth may not be as close assome imagine (Barry, Bradley and Hannan, 2001), Irish attitudes toward Europe wereexpected to be very favourable. Surprisingly, Irish attitudes toward Europeanenlargement were favourable as well—and that despite the obvious impact thatenlargement would have in terms of reducing the net transfers from the EU intoIreland. According to Eurobarometer data collected in November/December 2000and published in April 2001, 52 percent of the Irish supported enlargement againsta European average of only 44 percent (Eurobarometer, 2001: 82). In this light, theNice Treaty was expected to find easy acceptance.

When the polling took place on 7 June, the rejection of the Treaty was comprehen-sive. Not only did the referendum fail by a vote of 54 to 46 nation-wide, but it alsofailed in some 39 of the 41 voting constituencies. In parts of Dublin, Kerry, andDonegal, the ‘no’ vote exceeded 60 percent. The reasons for this comprehensive rejec-tion of the Treaty are varied and most had little to do with enlargement per se.Among the many issues raised around the referendum question were neutrality pol-icy, economic autonomy, and even abortion rights. Where enlargement did come intoplay, it may even have had a supporting role. Indeed, just prior to the polling date

The politics of Europe 2001 379 Blackwell Publishers Ltd. 2002.

one of the principal opposition groups, ‘No to Nice’, went so far as to suggest thatpre-referendum public opinion surveys systematically overestimated support for theTreaty because they included a reference to enlargement in the polling question (deBreadun, 2001).

The problem is that the Nice Treaty and enlargement are interconnected. Hence,the shock of the Irish veto was felt across Europe. Even worse, few observers werewell-placed to understand it. And fewer still were able to reconcile the referendumoutcome with the Irish Foreign Minister’s repeated assertion that his country remainsin favour of and committed to European enlargement. Meanwhile, the incoherenceof domestic debate in Ireland was exceeded by the incoherence of popular protestsboiling around the EU summit in Gothenburg. Anti-globalization protestors orig-inally descended on the city during the bilateral EU–US summit held the day priorto the European Council meeting. Given the US president’s controversial stand onglobal warming and on defence issues, coupled with the more traditional associationof globalization with Americanization, the presence of these protestors was unsur-prising. Moreover, the broad themes of their protest were easily recognized. Theprotestors were against big business and big government, and in favour of peace,equality, and participatory democracy. That anyone would support such ideals wasnot difficult to understand—particularly in protests directed at a controversial Amer-ican president. What was more difficult to understand was why the protests grewin intensity after the US president departed.

Neither Europe’s heads of state or government nor the Swedish police were pre-pared for the escalation of violence. By the end of the first day of the Gothenburgsummit, some 25,000 protestors were on hand—many of whom were trying to invadethe summit venue and some of whom began attacking the police with bricks, bottles,and stones. The police responded by opening fire on a group of protestors, injuringthree. The politicians responded with vitriolic rhetoric, best exemplified by TonyBlair’s reference to the protestors as ‘an anarchists’ travelling circus that goes fromsummit to summit with the sole purpose of causing as much mayhem as possible’(BBC, 2001). Both actions, the police violence and the political rhetoric, backfired—at least in part. By advancing the chain of escalation, the ‘authorities’ inadvertentlynurtured perceptions of conflict between the protestors and the governments of Eur-ope. In this way, official reactions to the violence in Gothenburg contributed to theeven greater degree of violence and injury that was witnessed the following monthat the G-8 (Group of Eight leading industrialized nations) summit in Genoa. Comingout of Genoa, the concern was not just for the scale of the protest, but also for thepropensity of Europe’s governments to overreact.

The combined political impact of the Irish veto and the anti-globalization protestswas only the first of the three major shocks to rock the European Union in 2001. Thesecond was the terrorist attack on the World Trade Center in New York. The eventsof the terrorist strike are well known. Early on the morning of September 11, fourteams of armed hijackers took control of trans-continental domestic flights in the US.Two of these teams succeeded in crashing their planes into the twin towers of theWorld Trade Center. One succeeded in crashing into the Pentagon. The fourth planewas brought down by its own passengers in a field in rural Pennsylvania. These facts,together with the horrific destruction and loss of life, were shocking in themselves.

However, for Europe’s leaders there were three other surprises to emerge fromSeptember 11. First, many of the hijackers had resided in Europe where some eventook flying lessons. Hence any intelligence failure was a collective one and not lim-ited to the US. Second, the decision by the European members of the North AtlanticTreaty Organization (NATO) to invoke their responsibilities under Article 5 of theTreaty of Washington (‘an armed attack against one or more . . . shall be consideredan attack against them all’) was largely ignored by the Bush Administration. Byimplication, while terrorism may pose a collective threat, the US would prefer notto respond within the constraints of ‘collective security’. Third, the Bush Adminis-tration’s prosecution of the ‘war against terrorism’ not only displayed the technicalcapacity of US forces to operate across the globe without assistance, but also the


willingness of US politicians to do so. Meanwhile, the Administration’s calls for arapid growth in defence outlays suggested that this capacity would only increase inthe future. European countries, notably Great Britain, could operate alongside theUS, but they could not replicate its abilities and the gap between the US and Europecould only be expected to widen.

These three additional factors to emerge from September 11 were not surprisingin themselves. Intelligence shortcomings concerning global terrorist networks such asAl Queda are well-recognized. The ambivalence with which the Bush Administrationregards multi-lateralism was manifest even before the Clinton Administration leftoffice. And the technological uniqueness of US military capability became evidentduring the 1991 Gulf War if not earlier. The shock lay in the combination of factors.Not only was the world a more insecure place after September 11, but Europe’s rolein promoting global security was also more ambiguous.

The third major shock to hit Europe was the collapse of business confidence andthe accompanying economic recession. The early indications came toward the endof 2000 with the draw-down on inventories and the weakening of demand in theintermediate goods sector. During the first two quarters of 2001, this slowdown inindustrial activity spread to investment spending and the demand for capital goods.Both developments are indicative of a decline in business confidence regarding thefuture. Firms are reluctant to tie up their financial resources in large inventories orin new productive capacity for which they do not anticipate an adequate demand.Moreover, industry was probably correct in its bearish assessment of the markets.Foreign demand was hampered by the collapse of the dot.com bubble in the US andby the enduring weakness of Japan. At the same time, domestic demand in Europewas constrained by the relatively high price of energy and, within the single cur-rency, by the relative weakness of the euro. Finally these same factors—high energyprices and a weak euro—were feeding into consumer price inflation more generally,and so restricting the ability of the European Central Bank (ECB) to lower interestrates (ECB, 2002).

The deterioration of business confidence and market conditions would havespelled trouble for the European economy even without the events of September 11.Given the necessity for ECB monetary policy to prioritize the problem of inflation,the need for the member states to continue with efforts at fiscal consolidation, andthe generally slow pace of market-structural reform across Europe, it is difficult tosee how this cyclical fluctuation could have been avoided. The effect of September11 was to suppress business confidence even further. In this way, not only did econ-omic activity slow suddenly—and in some industries dramatically—but also the rootcause of the recession moved ever farther from the influence of policymakers. Lowerinterest rates can reduce the cost of investment but they cannot increase the incentiveto invest in absolute terms. Increased discretionary fiscal outlays can stimulateactivity, but they cannot change the propensity of either consumers or businesses tospend money of their own. Indeed, new fiscal outlays may actually heighten concernsabout future taxation. Finally, dramatic or sweeping market-structural reforms aremore likely to engender domestic conflict than they are to encourage business confi-dence. Hence the economic shock for Europe’s leaders was not simply that the econ-omy was doing poorly. Rather it was that the economy was doing poorly and therewas little that policymakers could do in response. Moreover, this sense of power-lessness only reinforced the root cause of the crisis. As finance ministers and centralbankers each accused the other of failing to address the weakness of economic per-formance, the conditions for inspiring business confidence could only worsen.

Combination and change

The striking factor about the three shocks of 2001 is how closely they are interrelated.The political unrest expressed in Dublin and Gothenburg differed in substantiveterms from one context to the other. However, both the Irish veto and the globaliz-


ation protests expressed skepticism with respect to military interventions abroad,they expressed sympathy with those who are themselves alienated from the politicalprocess, and they are bound inextricably with the performance and functioning ofthe global economy. The war against terrorism, with its black-and-white intensity,introduces an unexpected complication into Irish politics as well as into the oftenviolent protests of the anti-capitalists. Meanwhile, the incidence and threat of terror-ism has had a hammering effect on the US and world economies, crippling wholeindustries (such as civil aviation and insurance) while at the same time hamperingthe performance of all the rest. Within this complicated set of relationships, what isclear is the time-frame for returning to normal is a long one. The landscape of Europehas changed, at least for the foreseeable future. And the expectation should be thatthe European Union will have changed as a result.

Persistence

Surprisingly, not much has changed in Europe as a result of the shocks experiencedin 2001. The major projects remain in place at the end of the year, as do the majorproblems. There has been acceleration in some areas (enlargement, counter-terrorism)and consolidation in others (single currency). But there have been continuingdisappointments (public opinion) and frustrations as well (ESDP and economicgovernance).

Indeed, the evidence for continuity is ubiquitous—as should be expected. Euro-pean projects and European pathologies tend to develop over long periods of time.Consider, for example, the ‘strategy for sustainable development’ announced at theGothenburg European Council summit (European Council, 2001b: paragraphs 19–32). Virtually every substantive element of the strategy from the focus on ‘gettingthe prices right’ to the objective of integrating environmental concerns into the corebusiness of the European Union can be traced back to European Council deliberationsstarting in the early 1990s if not earlier (Jones, 1999). What is new in the Gothenburgstrategy is procedural—the decision to include environmental protection within theambit of the Lisbon strategy and its open method of coordination. However, this toorepresents a continuity with procedural changes that developed during the courseof 2000 but that originated even earlier (Jones, 2001). There is nothing remarkable inthis continuity. Given the explicit ambition of the Swedish presidency to implementplans already in existence, it would be surprising if it were otherwise.

The same cannot be said with reference to all policy areas—some of which havefelt the direct impact of the major shocks witnessed during the course of the year.Therefore, in order to illustrate the persistence of European integration in 2001, thissection focuses on those policy areas most likely to have changed. The objective isnot only to illustrate the persistence of programmes but also the persistence of prob-lems. Things might have gotten better, but they also might have gotten worse. Withinthis framework, the three areas of interest are: enlargement and popular legitimacy;security cooperation and burden-sharing; monetary union and asymmetric adjust-ment. The pairing is not meant to suggest self-contained issue couplets but ratherareas of important intersection. Both the programmes and the problems are bigenough to touch on virtually the whole of the integration process.

Enlargement and popular legitimacy

Consider the pairing of enlargement and popular legitimacy. Both issues have beensorely affected by the Irish referendum. This is most easily asserted with respect toenlargement. So long as the Irish electorate refuses to endorse the Nice Treaty, theinstitutions of Europe cannot be adapted to accommodate the increase in member-ship. Hence, despite any progress on the negotiations between the EU and the candi-


date countries, the enlargement project remains in doubt. The impact on popularlegitimacy is less straightforward but no less important. That a country could havebenefitted so much and so obviously from EU membership and yet still turned outso comprehensively and unexpectedly against the Nice Treaty is a clear indicationof a problem of popular perception. If nothing else, therefore, the Irish referendumwas a public relations failure for the Irish government and for the European Unionmore generally. The impact of the anti-globalization protests is less obvious withrespect to enlargement and less potent with respect to popular legitimacy. Neverthe-less, the implications of the protests were still palpable. As Irish Prime Minister BertieAhern pointed out at Gothenburg: ‘There is a frustration at what is sometimes seenas an absence of clarity, openness and responsiveness in how the Union goes aboutits business. There is a real and urgent need to focus on how we can make theUnion more meaningful to our citizens and how its democratic accountability canbe strengthened’ (Norman, 2001).

That said, during the Gothenburg summit and the Belgian presidency that fol-lowed there was considerable action both to strengthen the enlargement process andto explore new ways to connect Europe’s institutions more closely with the people.With reference to enlargement, the Gothenburg presidency conclusions provided aprecise date for the first wave of accession. ‘The ratification process for the Treatyof Nice will continue so that the Union is in a position to welcome new MemberStates from the end of 2002.’ ‘The objective is that they should participate in theEuropean Parliament elections of 2004 as members’ (European Council, 2001b: para-graphs 4, 9). In turn, the Laeken presidency conclusions established the most likelyscale of participation in that first wave. ‘[If] the present rate of progress of the negoti-ations and reforms in the candidate States is maintained, Cyprus, Estonia, Hungary,Latvia, Lithuania, Malta, Poland, the Slovak Republic, the Czech Republic, andSlovenia could be ready’ (European Council, 2001c: paragraph 8). Of the twelve coun-tries undertaking negotiations, only Romania and Bulgaria have been singled out forslower treatment—while Turkey remains in the pre-negotiation phase of its appli-cation for membership.

Progress has been similarly dramatic with respect to efforts to tackle the perceivedproblem of popular legitimacy. Although the Gothenburg presidency conclusionsmade scant mention of the debate on the future of Europe, it did record Swedishefforts to initiate such a debate and it reiterated the charge that the issue be takenup at the Laeken European Council summit in December (European Council, 2001b:paragraph 15). For its part, the Belgian presidency moved to ‘future of Europe’ debateto the centre of its Laeken deliberations. Not only did it issue the ‘Laeken Declaration’setting out the justification for a European Convention to help frame the next majorset of European treaty reforms (due to take place in 2004), but it also enjoined theforthcoming Spanish presidency to begin the process of simplifying the treaty instru-ments and streamlining the institutional arrangements that are the substance of theUnion (European Council, 2001c: paragraphs 3–4).

The danger lies in presuming that this progress has taken place in response to thepolitical shocks that originated around the time of the Gothenburg summit. Forexample, the Irish referendum outcome was more of a hindrance of the enlargementnegotiations than a stimulus. Not only did it give the candidate countries much causefor alarm and confusion, but it also gave the existing member states the breathingroom to avoid making tough decisions about how best to handle the financial impli-cations of new members. Hence any progress made on the enlargement front was inspite of these influences.

The same can be argued about the Convention specifically and the Laeken declar-ation more generally. The idea of a Convention to inform the 2004 IGC was floatedwell before the Irish veto (Shelley, 2001). So too was the need to simplify the treatiesand institutions of the Union. What was striking in that context was the contrastbetween these stated objectives and the public reactions of both European andnational officials. Blair’s oft-quoted dismissal of the ‘anarchist’s travelling circus’(referred to above) is only one example. The remark made by European Commission


President Romano Prodi in Dublin two weeks after the Irish referendum is another:‘I believe the people of this country [Ireland] need more time and opportunity toconsider what is actually in the Nice Treaty. I sincerely hope your final decision willbe based on the Treaty’s contents and its implications rather than on other issues’(Prodi, 2001a). Whether Prodi is correct in his assessment as to why the Irish votersrejected the Nice Treaty is beside the point. By suggesting that the Irish may havemade a ‘mistake’ or that they should quickly reverse their decision through anotherreferendum, Prodi and others have reinforced the perception that they are somehowwantonly out of touch with the people. Progress made in the ‘Future of Europe’debate was also hard won.

Security and burden-sharing

The pairing of security cooperation and burden-sharing provides for a similarlyambivalent tale. The terrorist attack had a dramatic impact and triggered immediateand fulsome declarations of support for the US. Invariably, such declarations alsocarried with them an appeal for action at the European level. On 12 September,European Commission President Prodi indicated his desire ‘to send the strongestpossible signal of European solidarity with the American people and . . . [to] call fora common European approach to all aspects of this tragedy’ (Prodi, 2001b). Laterthat same day, Prodi suggested before European Parliament that ‘these dramaticevents . . . once again underscore the necessity for a united Europe, strong, determ-ined, united in purpose, in order to protect freedom and safeguard the peace, inEurope and in the world’ (Prodi, 2001c). Two days later, the heads of state andgovernment came together with the European Commission President, the Presidentof the European Parliament, and High Representative for the Common Foreign andSecurity Policy (CFSP), in order to set out precisely how the EU should respond tothe crisis. Their four-point response emphasized commitment to sustained actionagainst terrorism, further development of the Union’s CFSP, efforts to ‘make theEuropean Security and Defense Policy operational as soon as possible’, and acceler-ated implementation of projects underway to create ‘a genuine European judicialarea’ (European Commission, 2001a).

The actual record of policy development is somewhat less comprehensive than the14 September declaration would suggest. At the extraordinary European Councilmeeting of 21 September, the heads of state and government focused the bulk oftheir attention on outlining their ‘plan of action to combat terrorism’, most of whichcentred on issues pertaining to Justice and Home Affairs (e.g. common arrest war-rant, common definition of terrorism) rather than to either CFSP or ESDP. Foreignand security policy receive some mention, but only in passing (European Council,2001d). This pattern of emphasis was the same when the European Council met inGent on 19 October. At that meeting, the European Council confirmed ‘its staunchestsupport for the military operations’ initiated by the United States in Afghanistan.Nevertheless, the declaration summarizing the European Council’s ‘follow-up to theSeptember 11 attacks’ emphasizes activities undertaken to facilitate cooperationbetween judicial and police authorities across the Union and makes no direct refer-ence to CFSP or ESDP (European Council, 2001e). At end of year summit in Laekenthe same was also true. The presidency conclusions clearly address issues related toCFSP and ESDP, but only outside of the context described as ‘the Union’s actionfollowing the attacks in the USA on 11 September’ (European Council, 2001c: para-graphs 13–18).

This pattern of emphasis should not be interpreted as a lack of action in eitherforeign policy or security policy. Rather it is to suggest only that where action didtake place, it was as a result of prior commitments and not in response to the shockof September 11. Hence, for example, 2001 witnessed the establishment of three per-manent military-related groups at the EU level: the standing Political and SecurityCommittee; the Military Committee; and the Military Staff. The function of thesegroups is to provide strategic direction, military advice, and management capabilities


for the Union’s security policy. The members states also held a ‘capability improve-ment conference’ in November 2001 along much the same lines as it had done duringthe run-up to the Nice summit in 2000. The specific purpose of the conference wasto identify national contributions to ESDP. However, the broader purpose of bothconferences (and all three military-related groups) is to meet the ambitious targetsset out at the December 1999 Helsinki European Council summit—targets which havemore to do with the achievement of so-called Petersberg tasks than with the pros-ecution of a war against terrorism (Jones, 2000: 255–258).

The explanation for the lack of a European response to September 11 along thelines of CFSP or ESDP is simply that there was no European consensus on how bestto respond and no European agreement on how best to organize separate nationalcontributions. Instead, military and foreign policy responses to September 11 havetended to be national rather than European. During October, for example, only sixEU member states contributed to the US-led international coalition. By the end ofthe year, the total number participating was ten (White House, 2002). At the heartof the matter is a problem of burden-sharing within the EU that is not unlike theburden-sharing problem experienced within NATO during the 1980s. To the extentto which the prosecution of the war against terrorism has had an impact on thedevelopment of ESDP or CFSP, it has been to underscore the differences betweenthe member states in terms of how much they are willing to contribute to collectivesecurity (including military spending) and what they expect from the commonforeign and security policy. The war against terrorism has also inadvertentlyreinforced the contrast between the two most prominent representatives of the Euro-pean Union in the international arena: Javier Solana, the Union’s High Representativefor the CFSP, and Chris Patten, the European Commissioner responsible for external(economic) relations. Finally, the war on terrorism reinforced the importance for anyEuropean Security and Defense Identity (ESDI) to be able to draw upon NATO (and,by extension, American) military assets. However, conflict between Greece and Tur-key continued to hamper cooperation between the EU and NATO. In this way, what-ever progress had been made in terms of establishing joint capabilities remains con-tingent upon the resolution of very specific concerns (European Voice, 2001b).

Monetary union and adjustment

The final pairing is with monetary union and asymmetrical adjustment. The year2001 marked ‘the end of the beginning’ for the European Union’s decades-long effortto construct an economic and monetary union (Jones, 2002: 1–15). With the start of2002, the national currencies of the twelve participating member states would bewithdrawn from circulation and replaced by a single European currency. The scaleand complexity of this changeover were unprecedented, and planning for the effortconsumed much of the Belgian presidency. Hence as the European Council held aninformal meeting of the heads of state and government in Gent to consider its reac-tions to September 11, it also considered reports from the ECB, the European Com-mission, and the Council of Ministers of Economics and Finance (ECOFIN Council)about the state of preparations for the currency changeover and about the impli-cations of the prevailing economic climate.

Within this juxtaposition of issues, the advantages of the single monetary policyand the single currency were clear. The stability of exchange rates between thosecountries participating in the single currency is an obvious case in point. Not onlywas there no turmoil in European currency markets during the initial phases of theeconomic downturn, but there was no dramatic realignment as a result of September11. Given that the exchange rates between participating countries are ‘irrevocablyfixed’ this is hardly surprising. However, it is worth recalling that neither the Euro-pean Monetary System nor even the Bretton Woods System could have offered suchstability for countries such as Italy, Spain, Portugal, or Greece, in the face of suchshocks. Somewhat more surprising, is the fact that exchange rates between the singlecurrency and those member states not participating in EMU were more stable after


September 11 than they were before—as was the exchange rate between the euroand the dollar.1 This stability can be attributed at least in part to the decisive actiontaken by monetary authorities in Europe and in the US to respond to the economicconsequences of the terrorist attacks with a swift reduction in interest rates. The ECBmade cuts of one-half a percentage point on 17 September and again on 8 November.Hence even though the euro lost value relative to the dollar, dropping erraticallyfrom about 90 cents on 10 September to about 88 cents on 28 December, the singlecurrency still can be said to have been a source of monetary stability in Europe.

The disadvantages of the single currency and single monetary policy were evidentas well. One major problem has been the mutual accommodation between the Euro-pean Central Bank and European financial markets. This is primarily a problem ofcommunication. Throughout the three-year life of the ECB there have been com-plaints that its monetary policy is not sufficiently transparent and that the two-pillarstrategy of basing interest rates decisions on expected inflation and monetary aggre-gate growth is too ambiguous. These complaints strengthened in 2001 as the ECBovershot on both indicators—with expected inflation in the euro-zone running abovethe ECB’s own definition of stable prices (2 percent inflation per annum) and withthe growth of broad money (M3) well above the reference value of 4.5 percent. Forits part, the ECB has done little to respond. At the end of 2001, the bank reconfirmedthe two-pillar strategy and the reference value for M3 (ECB, 2001a). Where it didmake a concession, however, was in the timing of interest rate decisions. Rather thandeciding on monetary policy twice a month, the Governing Council of the EuropeanSystem of Central Banks will do so only once a month (ECB, 2001b). This will notimprove the transparency of the decision-making per se. However, it will at leasthave the effect of providing more time for information to change between meetingsand so it will make it easier to understand why the monetary policy has changedfrom one meeting to the next.

The communication problem of the ECB is a teething problem, that should resolveitself as both monetary policy makers and financial actors become more accustomedto the changed institutional environment that is the single currency. A more signifi-cant problem can be found in the asymmetrical patterns of adjustment across EUmember states. Here it is useful to contrast the situations of Ireland and Germany.Ireland was reprimanded at the start of 2001 for running too small a surplus on itsfiscal accounts. With Irish price inflation already well above the average for the euro-zone and with the Irish economy on the verge of overheating, the European Com-mission and the ECOFIN Council decided in February that a tax cut instituted bythe Irish government was sufficient grounds to issue an ‘early warning’ (Council ofMinisters, 2001a: 16–17). For its part, the Irish government both protested andignored the reprimand. Nevertheless, the implication that Irish economic perform-ance was sufficiently out of step with the rest of the euro-zone was clear.

As the European economy continued its decline in performance during the courseof the year, however, the Irish situation improved. The slower growth on the conti-nent translated into lower demand for Irish production and so less danger ofoverheating. When the ECOFIN Council met in November to consider Ireland’s reac-tion to the reprimand, the Council acknowledged that: ‘unexpected developments,which are slowing down the economy and thereby reducing inflationary pressures,mean that the inconsistency addressed in the Recommendation between the Irishbudgetary plans and the goal of economic stability has lost part of its force for thisyear’ (Council of Ministers, 2001b). For Germany, however, the situation was

1 This statement is based on calculations of the standard deviation in indexed exchange rates usingthe average for January 2001 as a baseline. The currencies I looked at were the Danish krone, theSwedish kronor, the British pound sterling, and the US dollar. In all cases, apart from Sweden, therewas a marked decline in the standard deviation from the period before 11 September to the periodafter. This decline persisted even when I incorporated data from 2002 in order to make the beforeand after periods equivalent in length. The data source is the daily exchange rate statistics publishedby the Dutch Central Bank at http://www.dnb.nl


reversed. While the European economy was relatively strong, the German budgetaryposition was stable. As European economic performance deteriorated, however, Ger-man fiscal accounts moved ever further out of balance. At the heart of the problemlay the rigid institutional structures of the German economy and the poor capacityof both firms and regions within Germany to adapt to changing economic circum-stances. The extent of this weakness in many ways sets Germany apart from the restof the Union (European Commission, 2002). Hence, going into 2002, it was clearthat Germany would run into difficulties meeting its fiscal obligations within EMU.However, the cause lies not in the economic downturn per se, but rather in thecontrast between, for example, Germany and Ireland.

This problem of dissimilar economic performance across countries is not going todisappear. However, it can be accommodated. The challenge lies in creating sufficientflexibility for different member states without adding to the ambiguity of communi-cation between the ECB and financial markets. However, this challenge is in no wayunique to Europe’s economic and monetary union. The Bank of England’s struggleto accommodate the contrasting performance of North and South, West and East, isa case in point. And, the challenges confronting the ECB and the Bank of Englandare in no sense the product of the downturn in economic performance witnessedduring 2001. Rather, the need to balance between flexibility and transparency isinherent to all central banks and monetary systems. The ECB was going to confrontthis problem no matter what happened during the course of 2001—if, indeed, it hasnot been wrestling with it already.

Explanation and implicationsThe European Union is not much altered at the end of 2001. The three shocks thatstruck the Union have had an impact, but that impact has not altered the progress ofEuropean integration to any great extent. Moreover, this persistence is unsurprising.Despite the severity of the shocks, any more dramatic response by the EuropeanUnion would have been unexpected to say the least. Consider the counter-factual:Who seriously anticipated a sudden shift in the institutions of the Union to favourgrass roots democracy, the rapid emergence of a true European army, the construc-tion of an economic government to pair with monetary union or, at the oppositeextreme, the collapse of the single currency altogether? That these things did notcome to pass is unsurprising. However, that lack of surprise does not mean under-standing why such things did not emerge in response to the shocks of 2001 is unim-portant.

Only by looking behind the persistence of the European Union can we assess itsstability for the future. Therefore, this section sketches three plausible explanationsthat are widespread in the scholarly literature on European integration: multilevelgovernance, path dependence, and distributive equilibrium. My goal is not to layout these explanations in any great detail. The existing literature is already volumin-ous and I have nothing to add to the theoretical debate. Therefore, my objective israther to provide only so much insight into the mechanisms behind the three expla-nations as is necessary to understand the general persistence of European integration(and the specific persistence of Europe in 2001).

‘Multilevel governance’ is more of a descriptive label than a causal model. Whatit means, simply, is that both the growth of institutions at the European level andthe degree institutional inter-penetration across European, national, and regional lev-els are such that it is no longer possible to identify or privilege any one particularlevel as the seat of governance. ‘Europe’ is not a federal arrangement. It is not asystem of nation-states. And it is not a loose confederation of regional authorities.Rather it is some combination of the three. Moreover, the ambiguity of governanceexists within all three levels. So, for example, some aspects of the European Unionoperate in a more centralized (federal) manner—such as the European Commissionor the ECB. Some aspects operate in a more decentralized (confederal) manner—suchas the Council of Regions or the European Parliament. And some aspects operate in


an almost purely intergovernmental manner—such as the Council of Ministers orthe European Council. Finally, many of the specific institutions also display differingtendencies. Although usually lumped together, the European Council is moreintergovernmental than the Council of Ministers, which is itself more intergovern-mental and less supranational than the Council Secretariat.

What this description of multilevel governance suggests in practical terms is thepossibility that what might be viewed as a shock at one level, in one institution, orin one part of an institution, may be disregarded by some or all of the rest of thesystem of governance. The European Council may have been disrupted by the riotsin Gothenburg, but the Council Secretariat continued to function as normal as didthe European Commission, the governments and regions of the various memberstates, and so on. This is an obvious source of persistence in the process of Europeanintegration. As the pattern of governance becomes more complicated, it also becomesmore difficult to dislodge.

A good example of the reinforcing effect of multilevel governance can be foundin the European Commission’s July 2001 White Paper on European Governance(European Commission, 2001b). At the surface, the document is a plea to engageboth the European electorate and all levels of governance in a single European pro-ject. Hence, the White Paper is replete with proposals to establish or strengthen pat-terns of information, consultation, and negotiation. The White Paper also emphasizesthe importance of transparency both as a basis for understanding European govern-ance and as a means of clarifying institutional roles and procedures. At a deeperlevel, however, the White Paper can be read as a ‘largely defensive’ attempt ‘to fendoff threats’ to the Commission’s role within the European system of governance(Wincott, 2001: 909). From this view, the paper is not a response to the problem ofpopular legitimacy so much as it is a reaction to the encroachment of the Council ofMinisters on what were once the exclusive activities of the European Commission.

The explanation for persistence that is derived from the concept of multilevelgovernance is grounded in institutional agency. The different levels or institutionsof governance pursue their separate agendas over time. A different explanation couldbe derived from the notion of institutional constraint. Rules or agreements that weremade in the past have the effect of shaping behaviour in the present and into thefuture. Whether this influence of rules or agreements operates through the consti-tution of values or through the change in opportunities or incentives is not importantat this level of argument. All that matters is that persistence can be explained assome function of path dependence on prior commitments. Here a good examplemight be found in the dilemmas of economic governance confronted by the EuropeanUnion. Having committed to an absolute price stability rule, to a high degree ofcentral bank independence, and to a complex system of multilateral surveillance offiscal policies, the European Union lacks a certain degree of flexibility both in howit responds to changes in economic performance and in how it regards nationalresponses to changes in economic performance. This inflexibility is no straightjacketand presumably past commitments could be revised or abandoned. Rather what itreflects is that it is sometimes easier to adapt to prior commitments than to changethem. The measure of persistence, therefore, is the extent to which adaptation alongthe path of dependence is the easiest or most acceptable pattern of response.

A third plausible explanation for the persistence of European integration can bederived from the discussion of burden-sharing in the context of security and defencepolicy.2 The basic insight is that the pattern of integration persists because no actor—member state, institution, etc.—is willing to change their position or contribution ina manner that would be acceptable to others. Any actor that tries to do or contributeless will be censured. And no actor is willing to do or contribute any more. In thissense, the existing distribution of roles, responsibilities or commitments of the differ-

2 Eiko Theileman at the London School of Economics is currently convening a series of workshopson the subject of generalizing the burden-sharing debate from the security context to other aspectsof European integration.


ent actors can be said to be at an ‘equilibrium’ if only because any change wouldinvite conflict. Here, an obvious example can be found in the budgetary implicationsof enlargement. The 1999 Berlin budgetary negotiations were hard won and representa complex compromise between the willingness of member states to contribute tothe cost of enlargement (Jones, 2000). However, since that time, not only has thestrategy for enlargement changed, but the pace and commitment have changed aswell (Jones, 2001). Nevertheless, virtually none of the member states is willing torevisit the Berlin agreement. That compromise persists because no other can beforeseen.

At the juxtaposition of multilevel governance, path dependence, and distributiveequilibria, the persistence of European integration in the face of external shocks isheavily over-determined. Any one of these arguments alone could explain the patternof policy development in 2001. The change between the Europe Union of today andthe pattern of integration witnessed, for example, in the early 1950s is over-determ-ined as well. Europe’s institutions are now more numerous and more complex, thenumber and significance of existing commitments is much larger, and the scale ofrelative contributions has increased greatly. From an analytic standpoint, the extentof this over-determination is embarrassingly inelegant. It would be far more usefulif we could identify what is the relative contribution of each mechanism so that wecould prioritize whichever is more important for analysis. However, from the stand-point of an external observer, the scale of this over-determination is vaguely reassur-ing. Given the number of different institutions, the scope of their prior commitments,and the complexity of the bargains underwriting various roles and contributions,surely European integration will persist under any circumstances.

The future of Europe

The Laeken declaration points to a weakness in this complacency. If Europe’s elector-ates refuse to accept the legitimacy of multilevel governance, then they may concen-trate their support on a much more restricted set of institutions. In turn, these insti-tutions will be able to use this electoral support to pursue a more restricted agendafor governance. If European voters threaten to punish national politicians for adher-ing to prior commitments, then they will strengthen the incentives to change insti-tutions rather than to adapt within them. And if European voters change the prefer-ences of their politicians with respect to the balance between contributions at homeand abroad, then they could disrupt the equilibria negotiated at the European level.Even in a heavily over-determined context, persistence can weaken as a result ofchanges in popular attitudes regarding Europe.

Worse, the year 2001 provided early indications of a political change underwayon the continent. While Tony Blair was able to return easily to power through theelections held in Britain in June, his counterparts on the centre-left in Italy (May)and Denmark (November) were not so fortunate. In both the Italian and Danishcases, the centre-right governments formed have had to draw at least some measureof support from more right-wing parties that appear to be less reluctant to acceptthe authority of the European Union, more willing to depart from existing commit-ments, and more insistent on the need to change relative national contributions.Moreover, the indications at the end of 2001 were that this shift to the centre-rightwould continue throughout the year to follow (Harding, 2001). If the Laeken Conven-tion to address the future of Europe fails in its objectives, then it is conceivable thatthis shift to the centre-right will put the ‘certain persistence’ of European integrationto the test.

Corresponding author: Erik Jones, John Hopkins Bologna Center, via Belmeloro 11, 40126Bologna, Italy. [email protected]


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the politics of europe 2001: adversity and persistence

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