The major institutions and actors Publihed Renaud Dehousse The European Court of Justice Justin Greenwood interest Representation in ‘the European Union (3rd edn) Fiona Heyes Renshaw and Helen Wallace The ‘Council of Ministers (2nd edo) Simon Hix and Christopher Lord Political Parties inthe European Union David Judge and David Eamehaw The Eurepean Pariament (2nd edn) ‘Nall Nugent and Mark Rhinard The European ‘Commission (2né ea) [Anne Stevens with Handley Stevens Brussels Bureaucrats? The Administration of the European Union| ‘Woliging Wessels The European Counct Forthcoming Ariana RipllServent The European Parliament ‘Sabin Saurugge and Fabien Terpan The European ‘Court of justice andthe Plitis of Law The main areas of policy Published Karen Anderson Soca Policy inthe European Urion Michael aun and Dan Marek Cohesion Policy in the European Union Michele Chang Monetery Integration in the European Union Michelle Ciniand Lee McGowan Competition Policy in the furopean Union (2nd edn) \iym Grant The Common Agricultural Policy Martin Holland and Mathew Delage Development Policy of the European Union Jolyon Howerth Security ané Defence Policy in ‘the European Union (2nd eda) Janna Kantla Gender andthe European Union Stephan Keukelie and Tom Delreux The Foreign Policy of the European Union (2nd edn) Brig afon The Finances ofthe European Union Malcolm Levit ond Chistopher Lord The Political Economy of Menetary Union Jane Haaland Matlry Energy Policy inthe European Union John MeConick Enviconmenta Polley in the European Union John Peterson and Margaret Shap Technology Policy in the European Union Handy Stevens Transport Pliy inthe ‘Europeen Union, Sieglince Gstohl and Dik de lew The Trade Policy ofthe European Union Cristian Kaunert and Seah Leonard Justice and Home Affairs in the European Union| Maren Kreutle, Johannes Peliak and Samuel Schubart Energy Policy in the European Union oul Stephenson, Esther Versus and Mendel van Keulen Implementing and Evaluating Policy in the European Union Also planned Political Union| The member states and the Union Published Catlos Close and Pel Heywood Spain and the European Union Andrew Geddes Britain andthe European Union Nin Guyomarch, Howard Machin and ll Ritchie France in the European Union frig Laffan and Jane O'Mahoney land ard ‘the Eoropean Union Forthcoming Sima Bulmer and Willa E Paterson Germany ‘andthe European Union trig Laan The Europeen Union and ts Member states Issues Published Senem Aydin-Daxgh and Nathalie Toce Turkey fane the European Urion Derk each The Dynamics of fropean Integrator: ‘Why and When 8 nstttions Matter Christina Boswell nd Andrew Geddes Migration and Mobility inte European Union ‘Thomas Christiansen and Christine Reh Consitutionalizing the European Union Robert Ladrech Europeanizaion and National Politics Cele Leconte Understanding Euroscepticism Steven MeGuire ae Michal Smith The European Union andthe United States ‘yn Res The US-EU Security Rlotionship The “Tensions between uropet and Global Agora Forthcoming Graham Aver Enlarging the European Union KE00208 0432 Europe Recast A History of European Union 2nd Edition Desmond Dinan MM {yyi00s ANA AB43608~ 4022 Europe Recost 28, See, for instance, D, Sidjanski, The Federal Future of Europe: From the Eu ropean Community to the European Union (Ann Arbor: University of Michigan Press, 2000). 25. A. Milward, P, M. B. Lynch, F. Romero, R. Ranieri, and Y. Sorensen, The Frontier of National Savereigniy: History and Theory, 1945-1992 (London: Rout- ledge, 1993) 50. John Gillingham, Coal, Steel, and she Rebirth of Europe, 1945-1955 (Cam- bridge: Cambridge University Press, 2005) 31. Andrew Moravesik, “Negotiating the Single European Act: National Inter- ests and Conventional Statecraft in the European Community.” International Orga: nization 45, no. 1, pp. 651-688. ‘32, Andrew Moravesik, The Choice for Europe: Social Purpose and State Power from Messina to Maastricht (Ithaca: Comell University Press, 1998). "33. Craig Parsons, A Certain Idea of Europe (Ithaca: Corel! University Press, 2003), 34. Berthold Rittberger, uilding Eurape’s Parliament: Democratic Representa: tion Beyond the Nation State (Oxford: Oxford University Press, 2005). 35, John Gillingham, European Integration, 1950-2003: Superstate or New Market Economy? (Cambridge: Cambridge University Press, 2003), p. xii. 436. Emmanuel Mourlon-Droul, A Europe Made of Money: The Emergence of the European Monetary System (ithaca: Cornell University Press. 2012). 37. See N, Piers Ludlow, Frédéric Bozo, Marie-Pierre Rey, and Leopoldo Nati, eds. Ewrope and the End of the Cold War: A Reappraisal (Abingdon: Routledge, 2008); Michel Mangenot and Sylvain Sehirmann, eds.. Les institutions européennes “font leur histoire (Brussels: Peter Lang, 2012); Katja Seidel, The Process of Politi in Europe: The Rise of European Elites and Supranational Insitations (London: Tautis ‘Academic, 2010); Maria Giiner, uc origines de fa diplomatic européenne (Brussel: Peter Lang, 2012); Ana-Christina L. Knudsen, Farmers on Welfare: The Making of Europe's Common Agricultural Policy (Ithaca: Cornel University Press, 2009). 38. Alan Milward, The European Rescue of the Nation State, 2nd ed. (London: Routledge, 2000) "39. Alan Milward, The UK and the European Community, vol. 1, The Rise and Fall ofa National Strategy, 1945-1963 (London; Cass, 2002) 40, Stephen Wall, The Official History of Britain and the European Community vol 2, From Rejection to Referendum, 1963-1975 (Abingdon: Routledge, 2012). 1 Finding a Way Forward ‘THE 1940S IN EUROPE SAW THE END OF ONE WAR AND THE BEGIN- ning of another. World War Il ended in 1945; the Cold War began almost, immediately afterward. The Cold War was not inevitable but occurred as a result of deep-rooted antagonism, intense mistrust, and happenstance. It gelled in the late 1940s, dividing Europe into two armed camps, Western Europe gratefully accepted US protection from a menacing Soviet Union. Eastern Europe lay under Soviet control, as the Red Army turned from a liberating to an occupying foree. The main fault Tine between East and West ran through Germany, the geopolitical fulcrum of twentieth-century Europe. World War II changed Europe completely. Germany was defeated, de- stroyed, and divided into four zones of occupation. Soviet-controlled Com- smunist parties came to power throughout Eastern Europe, establishing dic- tatorial governments, seizing private property, and imposing command. economies. Coping with the consequences of the war and an emerging threat from the East, Western European countries urgently sought economic recovery, political stability, and military security. The United States made it possible for them to achieve all three. ‘The United States promoted international interdependence through free trade and unrestricted financial flows, Wester Europe was an important el- cement in the US-inspired global system. But Western Europe was too weak ‘economically and financially to participate fully in the emerging interna- tional order immediately after the war. The United States came to the rescue with the Marshall Plan to expedite economic recovery and, with the Euro~ pean Payments Union, to facilitate currency convertibility. The North At- antic Treaty, signed in Washington in April 1949, provided a security um- brella for Western Europe in the form of the US-led North Atlantic Treaty Organization (NATO).24 Europe Recast ‘This chapter examines the early years of European integration in the context of the emerging Cold War. It shows how the United States sup- ported European integration in order to enhance regional security and accel- trate economic recovery, although Europeans were ambivalent about shar- ing national sovereignty. Very few advocated a United States of Europe: most subscribed to a vague notion of solidarity and transnational coopera~ tion, Rhetorical support for integration reached its zenith in the Congress of Europe in 1948, leading to the establishment of the intergovernmental Council of Europe a year later. Economic integration along supranational lines emerged instead as a solution to a specific problem in postwar Europe: what to do with the new West Germany. The Schuman Declaration of June 1950 was a French initiative to resolve the German question by means of ‘eaty-based economic integration From World War to Cold War By the end of World War II, Germany was thoroughly defeated and utterly devastated. The former Reich was at the mercy of the four occupying pow- cers (Britain, France, the Soviet Union, and the United States). For Germany, 1945 was “zero hour” (Stunde Null). The country changed shape as Poland and Czechoslovakia regained disputed territory in the east. Hundreds of thousands of ethnic Germans fled westward. Together with a huge number ‘of displaced persons already in Germany (Forced laborers and concentration camp survivors), these impoverished arrivals caused a refugee problem of ‘unprecedented proportions. The official economy collapsed and a thriving black market emerged. ‘The situation varied elsewhere in Europe in the summer of 1945 but was generally grim.' Many countries in Central and Eastern Europe had ‘uffered grievously under German occupation and were ravaged by the epic battles of 1944 and early 1945 between the retreating German and advanc~ ing Soviet armies. The German occupation regime in Western Europe had not been as harsh as in the east, nor had the scale and impact of fighting on the Western Front been as great as on the Eastern Front. Conditions differed markedly within liberated Western Europe, al- though most countries endured considerable economic privation and social dislocation. Having been liberated before the end of 1944, Belgium was rel: atively well off in 1945, Parts of neighboring Holland, by contrast, were a battlefield almost until the end of the war. Some liberated countries, such as France and Italy, went through short but sharp civil wars at the time of the German army's retreat, as the resistance settled scores against local Fascists ‘and against elements within its own ideologically diverse membership. Under the leadership of Josef Stalin, the Soviet Union had withstood a series of ferocious German onslaughts since June 1941, suffering massive Finding a Way Forward 25 Germany Under Occupation RN sancas enw North Sea POLAND LueMeouRs FRANCE ‘SWITZERLAND physical destruction and loss of life. Having pushed the progressively ‘weaker German army all the way back to Berlin, the Soviet Union emerged Thom the war as a great power whose armies were encamped in much of Central and Easter Europe. Thus Stalin was in a position to impose Com- ‘munist regimes in a region that the United States and Britain, the two lead: ing Western powers, recognized as a Soviet sphere of influence. Initially, Stalin seemed content to allow non-Communist parties to reorganize them- selves in Central and Eastern Europe and participate in coalition govern- ments with the Soviet-supported Communist parties. Nevertheless, historical enmity between Russia and most ofits neighbors, as well as the generally loutish behavior of Red Army troops, fostered a climate of deep suspicion toward the Soviet Union. “The United States ended the war undamaged and more powerful than any of the other protagonists. It had global postwar ambitions and interests. ‘The United States wanted above all to establish an international economic system conducive to free trade and investment. This required a tripartite in stitutional structure: the World Bank, the International Monetary Fund26 Europe Recast (IMF), and the International Trade Organization, later the General Agree ‘ment on Tariffs and Trade (GATT). Only a country as self-confident and in- fluential as the United States at the end of the war could have hatched such 1 grandiose scheme for global economic management. Ultimately, US plans for the postwar world foundered on domestic and foreign resistance and were only partly realized.” Despite profound differences between their political and economic sys- tems, the United States and the Soviet Union hoped to maintain a working re~ lationship after the war. The United Nations (UN) was to have provided an ‘overarching political framework for postwar diplomatic relations among the members of the wartime Grand Alliance (ihe countries that had fought against Germany). Instead, US-Soviet cooperation deteriorated rapidly after the end of hostilities. Mutual mistrust, widespread before the war, quickly resurfaced, Postwar Politics Independent national governments returned to power in Europe &s soon as the German army withdrew. Apart from discredited collaborators who had ‘no political future (in the short term at least), there were two main distine- tions between politicians at the end of the war: the party to which they be- longed and where they had spent the years of occupation. Some politicians hiad fled abroad and formed governments in exile; others remained at home and in many cases joined the resistance. Tension arose between those who stayed and those wio left, even within the same party. But the main distine- tion among politicians after the war, as well as before and during it, was ideological orientation and party affiliation. Communists emerged stronger from the war because they had played @ leading role in the resistance and had the support of the Soviet Union, a country widely credited with having defeated Hitler. Social Democrats were also popular because of their long- standing opposition to fascism and the appeal of the social market to voters ‘wary of both communism and capitalism. Eager to distance themselves from disgraced right-wing political parties, conservatives recast themselves after the war as Christian Democrats, advocating compassionate capitalism ‘and accepting the welfare state Most governments immediately after the war were coalitions of Com- munist, Socialist, and Christian Democratic parties. Often infused by the re sistance ideals of partnership and shared sacrifice. and conscious-stricken by the failure of anti-Fascist popular fronts in the 1930s, they attempted (© Work harmoniously together to build better socicties and fairer economic systems, Human frailty, lingering resentments, political ambition, and party rivalry soon drove them apart. Distrust between the Communists and non- Communists ran deep and erupted into the open at the onset of the Cold ‘War, By the late 1940s, Communist parties were leaving or being thrown out of government in Western Europe (as in France and Italy) and were Finding a Way Forward 27 throwing non-Communist parties out of government in Central and Eastern Europe (for instance in Czechoslovakia and Poland). Socialist and Christian Democratic parties, sharing a common antipathy toward the Communists, ‘generally continued to cooperate with each other in Western Europe, Britain was an exception to the postwar European pattem. For one thing, Britain did not have a significant Communist party. Due to a series of politi- cal and economie reforms, the vast majority of the British working class had eschewed revolutionary socialism in the nineteenth century. Instead, most British workers supported the nonrevolutionary, social democratic Labour Party. For another thing, Britain had a two-party system in which one party alone traditionally formed the government, Following the collapse of the Lil eral Party early in the twentieth century, Labour and the Conservatives were the two main parties. Although they had formed a national unity government under Winston Churchill during the war, the two parties competed against ‘each other in the first postwar election, in July 1945. Despite their gratitude for Churchill's wartime leadership, most Britons did not ust the Conserva- tives to provide housing, jobs, and a generous welfare system. Promising. comprehensive state care “from the cradle to the grave,” Labour won by a landslide and remained in office untit 1951." Continental Socialists looked to the Labour Party for leadership and in- spiration, Denis Healey, later a leading British government minister, was Labour's international secretary in the late 1940s. He recalled that “among, socialists on the Continent, the British Labour Party , .. had a prestige and. influence it never enjoyed before or since. Britain was the only big country in Europe where a socialist party had won power on its own, without de- pending on any coalition partners. Britain had stood out alone against Hitler after the rest of Europe crumbled. And Britain had won.” Yet the Labour ‘government pursued a foreign policy that placed relations with European ‘countries third in line behind relations with the United States and with the Empire and Commonwealth (a collection of former colonies). Germany was another exception to the postwar continental political norm, but for very different reasons. Life in postwar Germany initially re mained under the strict control of the four powers, whose approach to focal ‘government varied considerably.® The occupying powers were supposed {0 hhave cooperated in governing Germany through the Allied Control Council, consisting of senior US, British, French, and Soviet officials, but never did so. Reparations became a major sticking point, The Soviets wanted to get hold of as much industrial plant and material as possible in the Western zones. Mindful of the economic mistakes made in Germany after World War and realizing that it would ultimately have to foot the bill, the United. States objected and eventually stopped delivering reparations to the Soviets, in May 1946, triggering a series of events that drove the former allies fur- ther apart. One of the most dramatic of these was the Berlin Blockade of28 Europe Recast 1948-1949, when the Soviets blocked all rail, road, and water routes be tween Berlin and the West, The Western powers responded by supplying {heir beleaguered zones in Berlin with food and other essentials by ait, De ore the Soviets lifted the blockade eleven months later. The Berlin Block- fe symbotized the collapse of the Yalta and Potsdam agreements of 1945 among Britain, the United States, and the Soviet Union on Europe's future ‘and the emergence of a bitter confrontation between East and West Mindful of the Great Depression, European electorates wanted their governments to provide economic growth, full employment, and generous ovial welfare, That was a tal order atthe best of times, let alone immedi- ely after the war when disaster relief was the frst priority t was surprising, tinder the circumstances, that economic recovery proceeded as quickly as it did in postwar Europe. By 1946 a number of smaller countries—Belgium, Denmark, and Norway—attained a level of gross domestic product (GDP) equivalent to that of 1938, he last year before the outbreak of war. France Gad Italy followed suit in 1949. Britain, relatively unscathed in the war, continued to improve upon its 1938 level during the war itself, whereas Germany, greatly damaged at the end of the war, attained its 1938 level only in 10517 This recovery took place despite the massive wartime de- Suction of industry and infrastructure, shortages of skilled borin critical economic sectors, and millions of displaced persons. Nor did the weather help: the winter of 1946-1947 was exceptionally cold and wet, and the summers before and after exceptionally hot and dry. The Marshall Plan Following the abrupt termination in August 1945 of its wartime Lend Lease program, the United States continued to assist war-damaged Europe Through the United Nations Relief and Rehabilitation Administration. That helped European counties meet pressing demands for food and fuel. AS Europe's recovery gathered speed, Europeans looked to the United States for additional supplies of basic commodities as well as for machinery, raw materials, and consumer goods. The cost of imports depleted Europe's pre- ‘ious dollar reserves. Hence the emergence of a “dollar gap”: the difference sn dollars between what European countries nceded and what they could af- ford to buy in the United States. The gap could have been narrowed by & Combination of domestic austerity and more intra-Buropean trade. But aus- ferity was unpopular and therefore politically impracticable, especially so Soon after the war, at the same time a plethora of restrictions on the move- trent of goods and capital, together with the hoarding of dollars for deal- ings with the United States, hobbled intra-European trade US officials were well aware of Europe’s predicament. Reports of wide- «prea hunger and poverty in Germany in early 1947 intensified State Depar- seen efforts to promote Europe's economic recovery. Although Germany's The Cold War Divides Europe Between East and West ‘Notes: Yugoslavia boke avay from the Soviet Bloc early inthe Cold War and protsimed it- setf"nonaligned.” Alani nd lowly denounced the the world, proclaimed itself completely independent and self-reliant and regulary ‘Tne States, the Soviet Usion, China, and just abou everyone else in30 Europe Recast situation was not typical of the Continent’s as a whole, the humanitarian mo- tive proved useful when selling to Congress the idea of additional aid, as did the far more compelling case that an economically buoyant Western Europe ‘would be less susceptible fo communism. More than anything else, the con~ Solidation of Soviet control in Central and Eastern Europe and the strength of ‘Communist parties in Westem Europe galvanized elite opinion in the United ‘States in favor of a long-term assistance program. ‘The provision of massive assistance was also in the economic interest of the United States. As William Clayton, undersecretary for economic affairs, informed Secretary of State George Marshall in a memorandum in May 1947: Without further prompt and substantial aid from the United States, economic, social and politcal disintegration will overwhelm Europe. Aside from the awful implications which this would have for the future peace and security of the world, the immediate effects on our domestic economy would be dis- astrous: markets for our surplus production gone, unemployment, depression. ‘heavily unbalanced budget on the background of a mountainous war debt. These things must not happen Based on reports of Germany’s plight and mote broadly on their assess ment of Europe’s economic and political situation—the dollar gap and the threat of communism—officials gave Marshall the outline of an idea to as- sist Europe’s recovery through the provision of US assistance, in cash and in kind, for a period of several years. The United States would act in con- cert with Europe. As Marshall said in his famous speech in June 1947: 1k would be nether fiting nor efficacious for this Govemment to undertake to draw up unilaterally a program designed to place Europe on its feet eco- nomicall, This is the business ofthe Europeans. The initiative think, must ‘come from Europe. The role ofthis country should consist of friendly aid in the drafting of a European program and of later support f such a program so {ar as it may be practical for us to do so. The program should be a joint one, agreed to by a number, if not all, European nations? It took a year of intensive negotiations among the Europeans them- selves, between the Americans and the Europeans, and especially within the US government before what became known as the Marshall Plan was fully fleshed out and functioning." Its immediate objective was to close the dol- lar gap while simultaneously promoting intra-European trade. Its longer- term objectives were to inculcate US business practices and to fashion in Europe a marketplace similar to the one in the United States: large, inte- grated, and efficient. In US eyes a single market was an essential prerequi- site for peace and prosperity in Europe and for Europe's full participation in the global economic system. Earlier, in March 1947, President Truman had announced the doctrine ahents Seen Aeteftameatiad. Gieveabntides doiitlccinar olaiiie dictate oct Hisiiide: Bisaatt theadiaems Finding a Way Forward 31 off a Communist insurrection thought to be supported by the Soviet Union) and to any other European country that came under Communist attack. The Marshall Plan was the economic counterpart of the Truman Doctrine. The Americans were careful not to exclude the Soviet Union explicitly from the Marshall Plan, but Soviet participation was incompatible with the plan's anti-Communist intent. The Soviet foreign minister attended the conference of potential aid recipients in Paris in July 1947, but withdrew after failing. to convince the others to reject the US insistence on a joint European re- {quest for assistance, Claiming that the Marshall Plan amounted to US inter- ference in domestic affairs, the Soviets forbade the Central and Eastern Eu- Fopean countries from participating as well. ‘Thus the Marshall Plan and the Soviet Union’s negative response to it were pivotal events in the early history of the Cold War. For many Ameri- cans and Western Europeans, the Marshall Plan was synonymous with the selflessness and generosity of the United States toward allies and former enemies alike, in marked contrast to the rapaciousness of the Soviet Union in Central and Eastern Europe. The Communist seizure of power in Czechoslovakia in February 1948 and the Berlin Blockade three months later deepened the growing Cold War divide. Like the Marshall Plan, these ‘events were immense propaganda coups for the United States. ‘The Marshall Plan was a resounding success. Politically, it signaled the intention of the United States to remain engaged in Europe after World War IL, in contrast to the country’s disastrous disengagement a generation ear= lier. Economically, the plan did not “save” Europe, because Europe was al- ready on the road to recovery. Nevertheless, Marshall aid helped close the dollar gap, even though a recession in the United States in 1948-1949 de- pressed US demand for European goods, causing the gap temporarily to ‘widen again, Through the sale of goods supplied by the plan, recipient gov~ emments wore able to generate revenue in local currency with which t0 pursue national economic objectives such as infrastructural development or debt reduction. According to Charles Maier, a leading historian of the pe- riod, “by easing balance-of-payments constraints and freeing key botile~ necks for specific goods, American aid allowed the European economies to ‘generate their own capital more freely, certainly without returning to the de- flationary competition of the 1930s. US aid served, in a sense, like the Iu- bricant of an enginc—not the fuel—allowing a machine to run that would otherwise buckle and bind.” The European Movement In May 1948, three years after the end of the war in Europe, several hun- dred people attended the Congress of Europe in The Hague, the political capital of the Netherlands. They included senior politicians from most Eu- seamen sahebnivtne neal hiaiiiblaat eesthin Paelading ths Conbeaetaths. Ait eke.32 Europe Recast ticipated in a private capacity. Winston Churchill, the already legendary prime minister of wartime Britain, then the underemployed leader of the ‘opposition Conservative Party, presided over the event. "The Hague Congress was the high point of the postwar European movement.'* Inspired by appeals throughout the ages for European unity, tnd appalled by events in the interwar and wartime periods, the moyement included several dozen organizations—some nationally based, others transnational—encompassing thousands of individuals in more than twenty countries," Popular support for European unity in the immediate postwar years was widespread and deeply felt. The idea of European integration in the 1940 was not elitist but had reasonably broad public support. {Although members of the European movement subscribed to the gen- eral goal of European union, they disagrced among themselves on what form it should take. A few were ardent federalists, convinced by the lessons ‘of the recent past that relations between European states needed radical re casting, Some of the more ideological of them, notably Altiero Spinelli, saw federalism as a panacea for Europe’s ills, an antidote to the evils of nation alism and the corruption of modern capitalism!" By contrast, most of those attending the congress had only a vague vision of Europe’s future. Like the vast majority of Europeans, they were cither indifferent to federalism or opposed to it. For them, a high degree of intra-European cooperation was desirable or even imperative, but the legitimacy and efficacy of the nation-state were not disputed. The idea of European union had political, economic, and cultural dimensions, with- ‘out as yet having precise constitutional contours. For all its proponents. however, European union meant an unequivocal commitment to democ- tucy, justice, and human rights. It also acknowledged the need to bring Germany back into the international fold. The rhetoric of European union ‘was pan-European, but the reality of the emerging Cold War meant that concrete initiatives would be restricted to Western Europe and therefore also to West Germany. ‘The large and influential attendance at the congress reflected the appeal ‘of European union. Yet ringing phrases in the final resolution could not dis- guise the difficulty within such a heterogeneous group of deciding on next steps. There was general agreement to transform the International Commit tee of the Movement for European Unity, the body that had organized the congress, into an umbrella organization called the European Movement ‘The new organization was launched in Brussels in October 1948 under the joint presidency of Churchill, Leon Blum (a French Socialist), Alcide de Gasperi (an Italian Christian Democrat), and Paul-Henri Spaak (a Belgian Socialist). There was general agreement also on establishing a postgraduate institution for the study of European integration. The College of Burope duly opened its doors in the picturesque city of Bruges, Belgium, in 1950. Finding @ Way Forward 33 (On more substantive issues, however, @ consensus could not be found. Efforts to establish a European Assembly, a tangible expression of the movement's commitment to democratic principles and responsiveness (0 public opinion, became the biggest bone of contention. Deep differences, quickly surfaced over the assembly’s purpose and organization. Federalists, wanted a constituent assembly, organized on transnational lines, to draft a European constitution; antifederalists wanted nothing more than a consulta tive body. organized on national lines and responsible to ministerial body. ‘The congress agreed to disagree, leaving the precise nature of the proposed assembly for another day’s work. ‘The French government, then groping toward a policy of rapproche- ment with Germany, took up the cause of a European Assembly in July 1948, under the aegis of the five-power Brussels group (made up of Britain France, Belgium, the Netherlands, and Luxembourg). The French ran straight into strong British opposition, The governing Labour Party was un- interested in a European Assembly, however anodyne its responsibilities. Churchill himself, for that matter, liked to orate about European union with ‘ut being either personally or politically committed to it. Churchill's most famous speech on European union, delivered in Zurich in September 1946, in which he called for “a kind of United States of Europe,” is often cited as evidence of Euro-enthusiasm. In reality, Churchill was too nationalistic 10 champion a new European system based on shared sovereignty. Regardless of what Churchill said or what people thought that he should say, official British policy toward European union was extremely. negative. Britain saw itself as a global power whose foreign policy priori ties were relations with the United States and relations with the Empire and Commonwealth, The idea of Eurofederalism was anathema to Britain, a country proud of its distinctive political institutions and culture and of its, recent wattinte record. The prevailing view in London was that shared sov- cereignty was for continental losers, not for British winners. Eventually the British government agreed to the establishment of a Consultative Assembly, but one that was virtually powerless and that was an- swerable to an intergovernmental body, the Committee of Ministers. This was. the institutional foundation of the Council of Europe, which ten countries. the Brussels powers plus Denmark, Ireland, Italy, Norway, and Sweden— formed in May 1949, British foreign secretary Emest Bevin suggested that the Council be located in Strasbourg, a city long disputed between France and Germany and far enough away from national capitals to help ensure the Council’s marginalization. ‘The assembly met for the first time in August 1949. Churchill led the delegation of British Conservatives at the inaugural session and gave a rousing speech in Strasbourg's war-damaged city center. It was vintage Churchill: emotional, entertaining, and enthralling. It also marked the34 Europe Recast zenith of Churchill's career as the champion of European union. Although the former prime minister presided over the newly launched European Movement and although popular interest in integration remained strong on. the Continent, the Couneil of Europe’s obvious weakness sapped political support for similar grandiose schemes. “Enthusiasts for European integration nevertheless continued to look to the assembly for inspiration and leadership, believing that it could act as a constituent body for a federal union. Spaak, Belgium’s foreign minister and the assembly's first president, personified their hopes. His resignation from the assembly’s presidency in December 1951, in protest against most gov- ernment" opposition to any federal initiative, signaled the end of the road for the Council of Europe as a possible instrument of political integration. Prospects for Economic Integration ‘A number of international organizations existed immediately after the war ‘with the aim of rebuilding national economies, but not necessarily integrat~ ing Europe economically. These included the United Nations Relief and Re- habilitation Administration, which closed down in 1949. The United Nations Economic Commission for Europe subsumed the remaining emergency or- ‘ganizations in May 1947, Walt Rostow, a US official who was special asis- tant to the Economic Commission's first executive secretary, wrote opti- ristically in 1949 that the commission “appeared a possible realistic first step along the long slow path towards a democratically negotiated, economic tunity in Europe.”"* “The onset of the Cold War destroyed whatever potential the organiza- tion had to promote European integration. The Soviet Union was content to Keep the commission in existence but had no intention of turning it into a forum for economic cooperation along capitalist lines. The United States and the countries of Westen Europe focused instead on the Marshall Plan, which, unlike the Economie Commission for Europe, had the financial means fo match its economic ambition and, the United States hoped, to stimulate European integration. ‘Undersecretary Clayton urged that the proposed package of US assistance “be based on & European plan which the principal European nations should work out. Such a plan should be based on a European economic fed eration on the order of the Belgium-Netherlands-Luxembourg Customs Union, Europe cannot recover from this war and again become independent if her economy continues to be divided into many small watertight com- partments as itis today.” Clayton's equation of “economic federation” and Seustoms union” shows that integration lacked a precise meaning at the time, Charles Kindleberger, then one of Clayton's officials and later an in- ternationally renowned economist, noted in 1950 that “at no time was there Finding a Way Forward 36 in existence a single clear idea of what [integration] meant.” Thus the Mar- shall Plan presented an opportunity for the United States “to usher in a new cera of European collaboration, cooperation, unification, or integration—to run the polysyllabie gamut.” Michael Hogan, one of the foremost historians of the Marshall Plan, has described the endeavor as “a grand design for remaking the Old World in the likeness of the New." John Killick, another Marshall Plan historian, quotes a resentful British Treasury official complaining that “the Americans ‘want an integrated Europe looking like the United States of America— God's own country." What the Americans really wanted was what eventu- ally happened in Europe not in 1952 but in 1992: a single market involving the free movement of goods, services, and capital. The free movement of people—the “fourth freedam” in the single market program—seemed nci- ther desirable (except for Italy) nor obtainable in the early 1950s and was not fully implemented even in the early 1990s. ‘The Foreign Assistance Act of April 1948, which enacted the Recovery Program (as the Marshall Plan was o! the following “Declaration of Polie’ iropean ially called), contained “Mindful of the advantages which the US has enjoyed through the existence of a large domestic market with no internal trade barirs, and believing that similar advantages can accrue to the countries of Europe, itis declared to be the policy of the people of the US to encourage these countries [receiving ‘Marshall si] through a joint organization exen common effors... which ‘wll speedily achieve that economic cooperation in Europe which i essential for lasting peace and recovery. ‘The countries of Western Europe had no objection to submitting to Washington a joint assistance request, Soon after Marshall’s speech in June 1947, they Formed the Committes on European Economic Cooperation, and upgraded it in April 1948 to the Organization for European Economic Co- operation (OEEC). But they balked at the suggestion that they should inte- arate their economies into a single European market. In effect, they paid lip service to the idea of economic union as a guiding principle for Europe's future. Western European governments were jealous of their prerogatives. In an uncertain economic environment, most of them sought maximum na- tional advantage through a plethora of tariff and nontariff barriers. The le: sons of the interwar years may have taught otherwise and the shetoric of the postwar years may have claimed otherwise, but protectionism was deeply entrenched in Europe in the late 1940s, ‘A cursory examination of various calls at that time for the formation of customs unions bears out the point, Belgium and Luxembourg, which formed an economic union in 1921, agreed with the Netherlands in 1944 to form the Benelux customs union. It came into existence in 1948, but36 Europe Recast palance-of-payments problems and the persistence of nontariff barriers to trade impeded prospects for closer economic integration, Moreover, Benelux was conceived not as a first step toward wider European integra tion but as a defensive mechanism against possible postwar economic re- cession and protectionist measures by larger states. French interest in forming a customs union was motivated not by a de- sire 10 open the European marketplace but by the goal of limiting Ger- many’s economic recovery. The French idea of establishing a customs union without Germany had little appeal for Belgium and especially for the Netherlands, which, having had close ties to the prewar German economy, was eager to hasten Germany's postwar recovery. Nevertheless a series of negotiations followed in Brussels, under the auspices of the European Cus- toms Union Study Group, from November 1947 to December 1948, Four: teen countries, including Britain, took part in the talks. It soon became clear that each country was jockeying for sectoral advantage rather than seeking to open markets, and that concern about sovereignty would preclude Britain from participating even in a customs union. The study group then trans formed itself into the Customs Cooperation Council. a standing body that slaved away on tariff nomenclature, Finally, in April 1949, France called for a customs union with Benelux and Italy (fo be known as Fritalux). Once again, Dutch insistence on including Germany thwarted the initiative. The fate of these efforts shows that economie integration was an idea whose time had not yet come, The OEEC was a prototypical organization for European integration, But the British were not about to concede eco- nomically to the OFEC what they refused to concede politically to the Council of Europe: a share of national sovereignty. The Americans wanted Spaak, a leading advocate of European union, to become director-general of the OBEC; the British successfully objected to the nature of the office and to Spaak holding it. British obstructionism and continental indifference ‘consigned the OFEC to the role of a clearinghouse for economic informa- tion, devoid of real decisionmaking power. In effect, the OEEC became a cover for European disregard of US insistence on closer integration in re~ turn for Marshall aid. The OEEC gave the impression that Europeans were integrating by providing a collectivist gloss to individual requests for na~ tional assistance. The Americans were not fooled. They realized the limits of their influence as well as the extent of European resistance to shared sov- cereignty in economic affairs. ‘Yot in the long term, as the success of the single European market pro- gram showed more than forty years Tater, the Marshall Plan and related US initiatives had a profound effect on European integration. As Killick ob- served, “US policy and the Marshall Plan pushed Europe towards an inte- ‘grated and multilateral furure, created mechanisms to transfer the best of US commercial organization, social patterns, and technology, and attempted Finding a Way Forward 37 to create an open and unified international market.”** Marshall aid bad an immediate impact on the growth of intra-European trade through the estab- lishment in 1950 of the European Payments Union, which restored multilat~ cral settlements and paved the way for the introduction of full currency convertibility by the end of the decade. Backed by the United States, the Payments Union allowed its members to run surpluses or deficits with each other without fear of either nonpayment or withdrawal of credits. The launch of the Payments Union coincided with the adoption by the OEEC of ‘code of trade liberalization, calling for the progressive removal of quanti- tative restrictions on a nondiscriminatory basis. ‘The Marshall Plan, the OEEC, and the Payments Union triggered a vit= tuous cycle by encouraging countries to reduce tariff and nontariff barriers in order to promote cross-border trade. At the same time, participation in the US-sponsored GATT set European countries on the long road to global trade liberalization, The gradual abandonment of trade protection facilitated the emergence in the late 1950s of the European Economic Community. Yet the FEC could not have come about unless European countrics had tackled a residual postwar problem of fundamental political and economic impor tance, That was the German question. Tackling the German Question ‘The immediate question was how to realize Germany's enormous economic potential without risking a return to German hegemony and a new imbal- ance of power in Europe. A solution was as pressing for Germany as it was for the United States and for Germany's neighbors in Europe. The United ‘States had long since abandoned plans that called for Germany to be polit cally and economically emasculated for a lengthy postwar period. By the late 1940s the United States wanted an economically strong Germany, par- ticularly in view of the worsening Cold War. US thinking was clear and comprehensible: a weak Germany meant a weak Europe, and a weak Eu: rope meant a weak Atlantic alliance, Britain underwent a similar change in its approach to Germany after the war, So did France, but only up to a point, and certainly not to the point in 1949 of countenancing German remilitarization, as Britain and the United States were inclined to do. In the meantime, France was far more re- Juctant than either Britain or the United States to allow unfettered Germa industrial revival, The difference in allied thinking about Germany was due in part to geography: France was much closer to Germany than was either Britain or, more obviously, the United States. It was also due to history: since the industrial age, France had been economically weaker than Ger~ ‘many; Germany's greater economic strength had contributed to nearly a century of Franco-German conflict. Tackling the German question therefore38 Europe Recast ae apeny speaking the Geman question was the Franco-Cennan Heanor tere was no “lalian question’ feling of Pench n- ec een ay ater the wa, Although aly ke Germany, a united eee eteerth centry and Fought against France in World War I ae tunes ald not threaten France, Compared to Germany and even lay ed lined ecomomie potenti. Moreover, Hal was burdened Fran ay Maaned and densely poputated south, France and Kaly made oor the war, ignng a peace tea) in ebraary 1987, Kay's a oe rater wax pital sei due to limited sonome OP Mey ante svience + powertal Communist pay, ded Oo ae gar ender, sed the threat o indigenous communism et ron o ation iigrans nthe Usted Sts o maximize US arcane sin tun helped the Chrnian Democrats defeat Tors nthe decisive general lection in 1948 = France also faced political uncertainty: immediately after the war. Chance Guat leader of the wartime Prce French Movement, formed aaa rumen of berated France (lasted from August 1544 uni aan oY) Despite pressing domestic probles, de Gaulle was keenly sana Pi Toe affair The foreign poliey that he pursued then, and ina othe Fith Republic beeen 1958 and 1968, often de eek randeur (greatness). I ook for granted ta France was re lal nteress No aly tha, But France was a victor aa ony redeemed the detent of 1940 with the partition ot French Torces in the allied victory of 1945, But France was not invited to aoe conferences withthe Big Tree powers, hein Yalta in Feb aa Suga Poatam in July-August 1945, where the fae of Germany rea pcr Larope wt broadly decied- De Gaulle despised the Yala and aa ements and waded by their terms ol) when itsuted im. or Pa fected the acquiescence by Briain andthe United States ina ee pest infence tn Easier Europe, ut accepted the decision a Sov her ue Prance a small zone of occupation in Germany ln de ror prance had every right to occupy part of Germany and have saa Ms th atin, he Soviet Union, and the United Stats in decid ing the county ft ” "Yet de Gaulle was not so unrealistic as to think that other countri oun ake Frnace mt fae valu. France's econemi weakness, stretching aaa ere care wan a apparent to de Gaulle 35 it wast tbe tae gen Bevis supposed isan for he dismal enc, in 1948 de ae cred conideble tention nok only to France's inmedite eco oan a talae ta eventual esorgence nthe shor term, France omic Med tet capitalize on Germany's economic demise Finding a Way Forward 39 De Gaulle shied away for political reasons from undertaking thoroughgoing ‘monetary reform. French economic recovery, no matter how impressive, would therefore rest on a tickety financial foundation. The Monnet Plan Jean Monnet, a senior civil servant, advocated a modernization plan for France that held out the prospect of achieving economic recovery and long: term security, Monnet did not approach de Gaulle direetly—Monnet rarely approached key decisionmakers directly—but hooked de Gaulle on his idea by first winning over one of the general’s closest advisers. Monnet was. wary of de Gaulle in any case because of their previous dealings with each other, Like de Gaulle, Monnet was in London in June 1940 at the time of the French military collapse. But Monnet did not join de Gaulle’s Free French Movement, opting instead to work on allied economic policy in ‘Washington, where he was attached fo the British embassy. Monnet and de Gaulle met again in Algiers in 1943, where de Gaulle was fighting (politi- cally) to wrest control of the provisional goverament-in-waiting from Henri Giraud, a senior French general who enjoyed US president Franklin Roo- sevelt’s support. Roosevelt asked Monnet, whom he knew in Washington, to intercede in Algiers on Giraud’s behalf. Once in Algiers, Monnet quietly switched sides and supported de Gaulle, who clearly was better qualified 10 lead the Free French than was the bumbling and autocratic Giraud. De Gaulle should have been grateful to Monnet, but gratitude was not in the general's nature. Instead de Gaulle resented Monnet for a variety of re sons, including Monnet’s refusal to serve under him in London in 1940, his subsequent service in the British embassy in Washington, his cultivation t of influential US policymakers, and his cosmopolitanism and internationalism. Nevertheless, de Gaulle appreciated Monnet's skill and experience as an eco- nomic planner, Monnet aso lal & major virtue in the general’s eyes: he was ‘not a member of any political party. De Gaulle hated political parties, espe- cially those that had sprung back to life in France after the liberation. He craved strong presidential power. De Gaulle was hamstrung as president of the provisional government by what he saw as the machinations of small-minded political parties and their leaders, Those politicians prevailed over de Gaulle in the struggle for the constitution of the new Fourth Republic, which incorpo- rated a parliamentary rather than a presidential system of government. Accord- ingly, in January 1946, de Gaulle resigned in a huff, but not before he had ap- proved the appointment of Monnet to head the national planning commission (Commissariat Général du Plan), a government agency independent of the giant finance and economies departments. Monnet spent the next few years absorbed in French economic affairs. He and his small staff oversaw the work of numerous sectoral committees, that brought together representatives of all sides in industry, setting guide-40 Europe Recast lines for resource allocation and production levels in order to meet domes: tic demand and fill foreign markets, For the moment, France depended far more on imports than exports for its economic survival. Clearly, interna- tional developments held the key to future French and European prosperity.” Monnet paid particular attention to the United States, the country at the cen- ter of the emerging international economic system and the source of badly needed dollars French planning was not at all like planning in the Soviet Union, which had a command economy, Monnet was not a Socialist, let alone a Commu- nist. Having grown up in the brandy business and spent many years as an international financier before the war, he was a bona fide capitalist. Yet he personified the consensus in postwar France that capitalism could best be ferved by judicious government direction of key economic activities. This view was not anathema to Washington, where a number of New Dealers ‘vere still influential in government. The promulgation of the Marshall Plan, although very different from the Monnet Pian, showed that Washington also accepted the idea that market mechanisms alone would not suffice to get the European economy fully going again. “The Marshall Plan was a mixed blessing for France. It presented both an opportunity and a threat, The opportunity was the prospect of funding the Monnet Plan’s strategy of investment in French industrial modemiza- tion, Funds from the sale of goods supplied to European governments were rot supposed to have been used to implement national economic planning. Bur the Americans made an exception for Monnet, who had a host of influ- ential friends in Washington. Historians often say that the Marshall Plan saved the Monnet Plan. France Under Pressure Yet the Marshall Plan also posed a threat to the Monnet Plan and to French security in general. Whereas the Marshall Plan sought German economic tecovery as an integral part of European economic recovery, the Monnet Plan sought French economic recovery by exploiting German economic ‘ncakness, This was especially true of the coal and steel sectors, the basis of industrial power in mid-twentieth-century Europe. Historically, France's tack of coking coal, which Germany had in abundance, notably in the Ruhr region in the west of the country, hobbled French steel production. Monnet based his plan to modemize the French steel industry on the assumption that. with Germany on the ropes economically, France would have ualim- ited access to Ruhr coal and could exploit postwar markets previously filled by German producers. As Francois Duchéne, Monnet's biographer, put it, France would develop its steel industry “on a dict of Ruhr coke till it largely replaced German steel." Because of the nature of Germany's pre war and wartime military-industrial complex, the Ruhr was synonymous in Finding a Way Forward 41 France with militarism and the rise of Nazism. Controlling the Ruhr was therefore a vital French interest, economically and strategically. ‘The United States, by signaling through the Marshall Plan its intention 1 allow Germany to revive economically, challenged France’s Ruhr policy and stoked French security concerns. Sensitive to France's situation, the United States sought somehow to reconcile French interests with its own determination, for economic and strategic reasons, to reconstitute Germany. As the terms of the Marshall Plan indicated, the Americans believed that European integration could provide the solution. Rather than impose a par ticular scheme, however, the United States wanted the Europeans them~ selves to come up with a proposal for economic and, ultimately, political in- tegration. The United States looked primarily to Fran German question. * ‘The ensuing swing from repression to rapprochement in French policy toward Germany, in response to pressure from the United States, is a key theme in the history of European integration in the late 1940s and carly 1950s. As Robert Marjolin, a Monnet planner, remi for a solution to the isced: The Ruhr Fuhr a East Germany ) Z West Germany. . (os ome x France: %42 Europe Recast Despite the violence of my feelings towards the Germans before and during the war, I had rapidly convinced myself after the hostilities ended that Europe ‘could not recover unless Germany were rebuilt and became once again a reat indusrial country... Edi foot] believe inthe dismemberment of west fem Germany, from which the Rhineland and the Ruhr, for example, would have been separated. That would have sown the seed for future wars. Iwas therefore quite ready to include the Germans in European cooperation. Marjolin was ahead of most of his compatriots in his attitude toward Germany so soon afer the war. Thus France refused to merge its zone of occupation with those of Britain and the United States and acquiesce in the raising of Ger- many’s allied-approved levels of industrial production. France found itself fighting a rearguard action as Britain and the United States merged their zones, in 1947 and raised Germany's production levels regardless. ‘As long as the Communists were still in government, France was un- able to work closely with its Western allies. The removal of the Commu nists from office in May 1947, a consequence of the deepening Cold Wer, increased the French government's freedom of maneuver vis-a-vis the United States, but closed the door on cooperation with the Soviet Union. ‘The intensification of the Cold War in turn intensified US pressure on France to relax its policy toward Germany so that Germany's economic po- tential (and eventually its military potential as well) could be put at the dis posal of the West France gradually yielded as western Germany rebounded politically sooner than any of the allies had expected. Germany’s Social Democratic Party, proscribed since the Nazi seizure of power in 1933, was reconstituted relatively quickly after the war, and a new Christian Democratic Party came into being, Konrad Adenauer, a wily old conservative with impeccable anti- Nazi credentials, emerged as leader of the Christian Democrats. Kurt Schu- macher, an implacable Socialist and ardent nationalist (but a bitter foe of National Socialism), was the undisputed leader of the Social Democrats. Ti the London Accords of June 1948, France finally agreed to the for- mation of the Federal Republic of Germany through the merger of its zone of occupation with the previously merged US and British zones. France in sisted on a federal, decentralized Germany, with the smal city of Bonn as its capital, and on maintaining control of the Saar, a coal-rich region in southwest Germany, France also hoped to thwart German control of the Ruhr through the establishment of the International Ruhr Authority to over see coal production and distribution. These conditions were enshrined in the Occupation Statute of April 1949, which regulated relations between Germany and the Western allies. The narrowness of the French National ‘Assembly's approval of the London Accords indicated the depth of French uction of Western Europe, pp. 56-61 12, Charles S. Maier, “The Two Postwar Eras and the Conditions for Stability in ‘Twentieth Century Western Europe,” American Historical Review 86, no. 2 (April 1981), p. 382 13, See Hendsik Brugmans, L"dée ewropéenne, 1918-1965, 2nd ed. (Bruges: De ‘Temple, 1966); Frederick L. Schuman, “The Council of Europe,” American Political Science Review 45, no, 3 September 1951), pp. 724-740. 14, See Walter Lipgens, A History of Europea Integration, vol 1, 1945-1947: The Formation ofthe European Unity Movement (Oxford: Clarendon, 1982). 1, See Altievo Spinelli, “The Growth athe European Movernent Since World War IL" inC. Grove Haines, ed, European Incegration (Baltimore: Johns Hopkins Univer- sity Press, 1957), pp. 37-63. 16. Walt W. Rostow, “The Economic Commission for Europ ‘ganization 3, no. 2 (May 1949), p. 255. 17. William L. Clayton, “GATT, the Marshall Plan, and OBCD.” Political Science ‘Quarierly 78, no. 4 (December 1963), p. 498, 18, Charles P.Kindleherger, “Memo forthe Files: Origins ofthe Marshall Pan, July 1948," quoted in Charles P. Kindleberger, Marshall Plan Days (Boston: Allen and Unwin, 1987), pp. 27,48 19, Michael Hogan, The Marshall Plan: America, Britain, and the Reconstruction in, 1990), p. 76 History ofthe Allied Occu- " International Or: of Western Europe, 1947-1952 (Cambridge: Cambridge University Press, 1987), p. 53 20, Killick, United Staves and European Reconstruction, p. 161. 21, The text of the act is available at hitp:/hwww let leidenunivalfhistorygires| marshal. htm. 122, See Wendy Asheck Brusse, Tariffs. Trade, and European fnvegration, 1947-1987: From Study Group 10 Common Market (New York: St. Martin's, 1997), pp. 52-63, 23, See Maier, “Two Postwar Eras,” pp. 66-69