Governing the European Union, by Michele Boselli

1. The European Common Agricultural Policy (CAP)

The Common Agricultural Policy’s three main features are:

b) support prices of agricultural produce above a politically set minimum level;
c) restrict imports to the EU from other countries to give preference to home-grown produce; and
d) subsidize export from the EU of the surplus stocks created by the CAP’s itself promotion of higher agricultural productivity since its introduction in the Sixties.

High productivity was indeed the main goal of European governments (namely those of the six founding countries: Belgium, France, Germany, Italy, Luxemburg and the Netherlands) which, facing food shortages in the years after the second world war, needed a common strategy and a common market in order to achieve food self-sufficiency and keep unemployment low. Thanks to the simultaneous technological innovations, they proved to be highly successful in turning Western Europe from a traditional position of importer of agricultural goods into one of exporter (Europe now produces far more food than it needs) to an extent that the CAP has been almost too successful.

In fact, the huge surplus production resulting in the disturbing destruction of food, the trade protectionism persistently damaging the economies of developing countries, and eve the threat to food safety and public health epitomised by the BSE disease, all fit well in the “conflict and consensus” theme as well as in the “inclusion and exclusion” one as the clearest example of how the EU institutions, along national governments, affect the lives of the people – as professor Brown observes “these issues demonstrate just how far the reach of the CAP and RU policy making goes: policies designed to address agriculture in Europe have international importance, and impact on some of the poorest countries in the world”.

The study of the agricultural case provides a savoury sampling of the broad concept of governance, a decision-making process wider than government alone, when we focus on the unlikely coalition of the different socio-economic interests of farmer and agribusiness that has until recently made virtually impossible to tackle the CAP’s self evident, above-mentioned problems. The CAP can also be seen as the connection between the development of the agricultural sector and the policies of governments and the EU towards agriculture. In this respect, the only key feature of the CAP is the high level of government intervention in the market since it was founded in the Fifties.

Now that we have outlines the CAP’s key features, it will be interesting to see how this policy fits in with the aims and aspirations of the founding fathers of the EU, such as Jean Monnet. Whether or not they would have found the CAP’s developments consistent with their idea of Europe is an issue which could easily fall into the dichotomy between the socialist ideology and the liberal, market-oriented thought. We know of Monnet’s contempt for economic protectionism. He indicates it as a major threat to peace in Europe in his 1945 speech, so we can assume that he would be quite horrified by the CAP’s budget-eating proportions along the decades.

But such judgements are easily misleading if extruded from the proper historical context. As we have seen, after the war there were severe food shortages in Europe. The priority was to achieve a self-sufficiency never experienced before, also as a measure to establish economic ties to make war impossible after the mistakes of the intra-wars period policies (or non-policies). Other measures included the establishment of the first European community, the one on coal and steel (ECSC). Monnet became its president in 1952, thus fulfilling his idea to “share” Germany’s Ruhr as a guarantee for peace.

That post-war Europe was non place for extreme liberism is well shown by the cases of Germany and Italy, where the ruling Christian-Democrats respectively led by two other founding fathers, Adenauer and De Gasperi, carried out popular if not populist policies much softer for the working class than what would have been expected according to their right-wing position in the political spectrum (or indeed woul be in contemporary Europe).

Welfare, argues Judt in his essay on Europe, is the great West European achievement of recent years: “it is what distinguishes the region not only from the United States, where there is almost no community provision for the health and protection of all its members, but also from Earn Europe, were the provisions were formal but often not much more”. Judt’s 1996 statement is supported three years later by Motsi defining the much-discussed third way as “an attempt to combine America’s free market traditions, with their emphasis on flexibility, inventiveness, and risk-taking, with European social-democratic principles”.

Such views, applicable to the CAP as well as to many other aspects of modern Europe’s political and socio-economical situation, would probably satisfy the aims and aspirations of the Union’s founding fathers. However, they could also concern them in view of the future perspective of enlargement to include Central and Eastern European post-communist countries and, possibly, Israel and Turkey.

Enlargement cannot come without a deep revision of the Union’s processes and policies (the CAP is in fact the first to be addressed) and such reform cannot come without a brave and bold move towards the “United States of Europe”, a concept astonishingly introduced by Churchill in a speech delivered at Zurich University in 1946. Churchill himself anticipated that it would astonish the audience, for he said that “the first step in the recreation of Europe must be a partnership between France and Germany”, an assertion that one would not expect at that timing after the war and especially from the British point of view.

A truly visionary statesman, Churchill foresaw what is still today the ideal European federalists aim to, the axis of the Union would develop around, and embodied the unique position of half participant and half observer that Britain has had over the following decades and still has today towards everything European, particularly towards the CAP. In that, Churchill could be seen as the fifth pillar in the building of Europe, albeit not taking part in what he suggested, along the other founding fathers usually recognised in the names of France’s foreign minister Shuman, the above-mentioned Adenauer and De Gasperi, and the same Monnet, who said that “it is not the addition of sovereign nations getting together that makes an entity of them”.

That brings us back to the question of how the CAP fits in with the founding fathers’ aims and aspirations. We can conclude that yes, it fitted in well up to now for it proved, together with other policies, to be effective in maintaining over fifty years of peace in Europe, which was the founding fathers’ priority. It is now our job, citizens of an enlarged and strengthened Europe, to make their ideal fly high again “for a positive common cause” – as Seton-Watson would say – “for something more exciting than the price of butter”.

Governing the European Union, by Michele Boselli

2. The European families of political parties

Although embedded in political parties which organize on a national basis, it makes sense to speak of a European family of party traditions. David Scott Bell argues that, since the Roman Empire, European states have intensely interacted and political developments such as those on human rights have been contagious, so that “none of the great contemporary political traditions […] can be said to be the exclusive development of one society”. Political parties were established to embody the divisions generated in society by revolutions. In the order they developed according to Von Beyme and based on the social cleveages analysed by Lipset and Rokkan, we can identify eight major political traditions: liberal, conservative, socialist, regional, Christian, communist, fascist and ecologist.

Liberalism was the reformist engine of the nineteenth century, to the point that its main principles have later been shared by other political parties, thus leaving liberals in a crisis of identity reflected in poor electoral performance in most of the twentieth century. Today European liberals are united on a pro-European stance, but divided on economic matters (Lord); therefore not all of the national parties of liberal tradition are part of the European Liberal, Democrat and Reform Party (ELDR), which is however the European Parliament’s (EP) third parliamentarygroup with 52 members. They were 42 in the 1994-99 legislature.

Conservatism is the important right-of-centre political tradition that distinguishes itself from Christian-democrats for its secular character: it doesn’t refer to Church doctrine. The pest known conservative party is the British one, which is very Euro-sceptical: for example it wants to keep (conserve) the British currency, fearing loss of sovereignty for the UK. However, in the EP they form a single parliamentary group with the Christian-democrats: the European People’s Party – European Democrats (EPP-ED) and provide 36 of the 232-strong group (17 out of 202 in i994-99).

Socialism and social democracy find their roots in the industrial revolution and their definition of the Second International, while the Third one defines the Communist ideology. Differently from the latter, the socialist policies were well rooted in the Western camp during the Cold war, supporting the Atlantic alliance and European integration. However successful their policies were during the booming 1950s and 1960s, they proved inadequate to tackle inflation and unemployment in the 1970s, and the Second International parties began to seek a “third way” to save the welfare state.

Christian-democracy is, together with socialism, one of the two major political forces in Europe, as it is reflected in the composition of the EP, where they currently hold 232 and 181 seats respectively (they were 202 and 214 in 1994-99). Christian-democracy finds its roots in the Christian faith and played an important role in the building of the EU as three of the founding fathers were Christian-democrats in office: German chancellor Adenauer, French foreign minister Shuman, anf Italian premier Alcide De Gasperi. The three other founding members states of the Communities, Benelux, also had (and still have) “catch all” Christian-democratic parties.

Communism has fallen in popularity among the European electorate with its failure in the Eastern half of the continent. I halved its percentage from 7-8% in the decades 1950s-1970s, to just 3.5% in the 1990%. Communists opposed European integration since the beginning and they still “stand somewhere outside it”; unable to impose their own view they “press for changes and act as a pressure group on the main parties on the left” (Lord, Gaffney).

The extreme right party are essentially nationalist parties that oppose European integration and can hardly co-operate among themselves. As Union of Europe of the Nations (UEN), they conquered 23 seats in the 1999 EP election against the 15 they had in 1994-99 as IEN, but the appeal of their demagogic position against immigration seems to have weakened recently with poor electoral performance in France, Germany, and Austria.

Some Greens have opposed integration, too, depending on the pro- or anti-European “mood” of their national electorates, but the transnational implication of problems such as pollution should lead them to a more transnational attitude. The ecological movement is relatively recent and is focused on post-material values which do not sit easily in the Left/Right divide (Ingelhart). Their electoral performance in the current EP improved to 46 seats against 27 in the previous one.

Finally, regional parties in favour of a “Europe of the Regions” diverge in their demands, collocation in the Left or the Right, and attitude towards European integration. It is therefore difficult to analyse them in the context of the European family of party traditions. In conclusion, as Bell writes: “Europe has not eclipsed the nation state as the principal focus of political community, but […] there are multiple loyalties in politics [and] it is possible […] to live with a series of identities”, Europe being one of them.



Governing the European Union, by Michele Boselli

3. Intergovernmentalism as the key feature of the building of the EU

Intergovernmental organisations allow their member states to pursue their national interests and exercise the power of veto on policies that they don’t agree with, in other words any decision has to be taken unanimously. The concept of Intergovernmentalism is therefore opposed to that of supranationalism: supranational organisations limit the possibility for member states to exercise such power of veto and oblige them to accept decisions taken by the majority, or a qualified majority (QMV), of the other states participant in the organisation. In order to address the question whether intergornmentalism has been and remains the key feature of the building of the EU, we must look back at its beginning in the years after the second world war, where we find several examples of international organisations which can help us to better understand the concepts of intergovernmentalism and supranationalism. One such organisation is the Council of Europe (not to be confused with the European Council, an institution of the EU) which is a perfect example of an intergovernmental organisation comprising 38 member states, not necessarily members of the European Union.

Another typical, explicitly intergovernmental organisation is the European Free Trade Agreement (EFTA) a trade-based organization set up by some European countries (such as the UK, traditionally supportive of the intergovernmental approach) as a response to a partnership of the type of the European Communities, which they felt was too binding. The first of these was the European Coal and Steel Community, established in 1951-52, in order to share the management of these resources among the six participant countries: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. By doing that, they agreed to a certain degree of supranationalism: the policies in that particular sector would be carried out by an independent body. In the words of Nugent: “the ECSC was the first of the inter-state organisations to possess significant supranational characteristics”.

Other areas of common interest among those six countries were also placed under the governance of similar communities in the 1950s, namely the one on nuclear power (Euratom) and the European Economic Community (EEC), and in the 1960s the three communities were merged into a single institution, the European Communities (EC), which now constitutes just one of the three pillars of a wider and deeper European Union, the one pillar that over the decades became remarkably supranational, ehile the other two are strictly intergovernmental: the Common Foreign and Security Policy (CFSP) and the Justice and Home affairs (JHA). As we can see, while it is certainly true that intergovernmentalism has been the key feature at the beginning (the most significant step in EU development were taken by means of Intergovernmental Conferences), it is not correct to say that it remains the key feature. A more appropriate and balanced assertion would be that of Heffernan: “the making of the EU has been an uneasy compromise between intergovernmentalism and supranationalism”. Indeed, over the decades the EU has been transformed from a strongly intergovernmental organisation with just a supranational hint to a considerably supranational organisation with federalist ambitions.

Among the major institutions of the EU, while it is incontrovertible that the intergovernmental European council (made up of the prime ministers and the foreign affairs’ ministers) is “the most important European institution in determining the pace, strategic direction and feasibility of integration” (Heffernan), on the other hand the introduction of the QMV has been a significant step towards supranationalism. At the same time, more power has been granted to the main supranational institutions, the Commission and the Parliament, and a particularly strong case for supranational advocates is offered by the European Court of Justice (ECJ), which through its deliberations established the principle that the community legal order has supremacy over national law. The Court is not competent on policies regarding the second (CFSP) and third (JHA) pillars, but several JHA policies have already been moved from their traditional (and intergovernmental) place in the third pillar into the first one, the Community pillar, so that the Court will have jurisdiction, argues Wincott against the intergovernmentalists’ vision that community law is under control of the member states acting intergovernmentally and subsequently the ECJ would have been a subordinate subject controlled by the member states. Sure, the major breakthroughs of the Union (the founding and subsequent Treaties) are basically intergovernmental agreements of a confederal nature, as opposed to the federal concept in which states surrender sovereignty, but “somewhere between retaining and losing sovereignty, states can establish supranational organisations” (Bromley).

Governing the European Union, by Michele Boselli

4. To what extent can the European Union be described as “democratic”?

In order to debate to what extent can the European Union be described as democratic, first of all we have to define what is meant by “democratic”. Democratic governments as in a usually strong position in terms of legitimization because they enjoy the consent of the people who have elected them and through periodical elections have control of a system where politicians are responsible to take in consideration their needs and incentivated to do so. According to Simon Bromley, “in liberal-democratic states the scope and intensity of government is limited and at the same time guaranteed by the fact that it operates according to the constitutional rule of law, derives its authority and purposes from the rights of the people and is subject to democratic contestation through competitive party elections”. Christopher Lord, in Governing the European Union, reduces to just two the main attributes of such system of government, in which people essentially rule themselves: the public must be able to:
a) control the decision makers acting on its behalf; and
b) exercise such control on an egalitarian basis.

Parliaments usually have two ways of exercising control over executives: the power to appoint or dismiss important office-holders, which is weak in the case of the European Parliament (it may gain a role in executive formation only at some price to its independence), and the power to grant or withdraw financial resources through legislative authority, which by contrast is quite significant in the EP: on some supranational issues it even has the power of co-decision with the Council. There are, however, two deficiencies in this system: the most obvious is the that supranational issues are confined to the first, Community-pillar of the Union, so that it has no power of lawmaking or control over the second (defence and foreign affairs) and third (justice and home affairs) pillars. The second deficiency, reiterates Lord twice, is the absence of a credible electoral link: because the election of the EP is felt by national politicians and electorates as a “second-order electoral contest”, there is no systematic electoral linkage to the politics of representation (electoral outcomes cannot be interpreted as preferences for one or another manifesto on the prospective development of the Union over the following five years) or accountability (a judgement on the performance of the EU and the EP itself over the previous five).

The EU lacks a source of authority in popular sovereignty” (Lewis) and we are focusing the attention on the European Parliament because it is undoubtedly the key existing institution we must refer to when meausing democracy in the EU. Although it was conceived to reflect national communities more than the citizens of Europe (as the over-representation of smaller member states demonstrates), and initially had little more than a symbolic function, over the years it has acquired more powers towards other EU institutions and their policies. However, it can exercise these powers only on a majority of its membership, not the majority of votes cast, therefore because there are always high levels of absenteeism, in order to produce an EU position on almost any policy the two major European parties (socialists on one side and Christian-democrats plus conservatives on the other) are forced to co-operate in a way that softens political competition and consequently determines the lack of contestation which ultimately is the salt of democracy.

However, not all the consociational politics (a notion introduced by Lijphart in 1977 to describe in a primarily intergovernmental context a form of consensual democracy made of joint decisions based on legislative coalitions, proportional distribution of executive power and veto procedures for important decisions) in the EU are necessarily negative: institutional mechanisms that force players to build consensus not only across member states but also across the political spectrum can be healthy for a new, transnational political system. Bearing in mind the three-dimensional structure constituted by political as well as national cleavages, the Union could run into legitimacy troubles if a major political family is always excluded from the advantages of integration. Moreover, a high degree of cross-party consensus on final decisions does not necessarily limit the possibility of a lively political debate in the committees of the EP studying and reporting to prepare final decisions on various matters. Then again, critics of the consensual processes will retort that “commitite” is instead one of the most evident demonstration of the EU democratic deficit. Take for instance the European Central Bank: obviously the choice of an economic system is also a political one, in need of legitimation as any form of political governance. But since efficient market regulation is a technical matter, regulation is not exactly a political activity, so in the regulatory sphere “independence and accountability can be reconciled by a combination of control mechanisms rather than by oversight exercised from any fixed place in the political spectrum” (Majone).

Instead, in the eminently political sphere, a response to the problem of lack of accountability might consist in giving the EP the power to choose the Commission or its President, but this can be neither practical nor desirable: in the current situation the fact that the Parliament has no obligation to support the Commission (like a majority should normally have in a national parliament in regard of a government in office), offers more freedom to the EP and the advantage that it is often able to put together legislative coalitions on a non-ideological basis where for MEPs losing on an issue does not mean they also lose the possibility to win on the next one debated. Given that strengthening the powers of the EU is not necessarily, as Lord insists, neither practicable nor desirable to the end of the EU further democratisation, the author introduces us to another possible, original and carefully balanced scenario in which “a direct popular election of the Commission President [is] immediately followed by an electoral college in which MPs and MEPs cast votes for individual Commissioners in direct ptoportion to the popular vote received by their parties in the first round of voting for the presidency”, offering the adbantage that a directly elected President would be held accountable by the electorate and at the same time his/her Commission would enjoy the widest popular support.

Would it be feasible? Let’s go back to the 1950s, when Haas developed neo-functionalism identifying three particular spillovers by which an unavoidable European integration would elude control of the member states: the technical spillover of policies from an area to others; the political spillover of attention from national to EU level by individuals, groups and businesses; and the geographical spillover towards non-member states. Indeed, half a century later we see hao enlargement is – with further democratisation -, the most important issue to be tackled in the building of Europe. Democracy and the rule of law constitute one of the three main conditions that applicants must satisfy to join the EU (the other two being a functional market economy and the acceptance into national law of the acquis communautaire). While most of the current member states have a lengthy record of well-established democracy, the communist experience puts the applicants in the position of being thoroughly examined: the potential new members have only recently adopted liberal-democratic political systems and of some relevance to their ambitions is the case of Spain, whose economic and democratic stability were more advanced but its accession took more than eight years.

Democracy could not necessarily be a compulsory feature of international organisation, intergovernmentalists argue, but if the EU is to become a 25 to 30 member states Union the current system of representation in the Parliament and particularly the Commission is certain to collapse. Too much dependence on the link between the Union, national institutions and domestic constituencies could even deepen what is seen by many as the much-debated EU democratic deficit. In conclusion, both intergovenmentalist and supranationalist advocates involved in the debate on to what extent the EU can be described as “democratic” will probably agree that, yes, the EU already have many, if not most, of the features and elements of democracy, but will certainly disagree on the measures to be taken in order to further democratise it, with the former more in favour of keeping the status quo and the latter arguing for a stronger European Parliament, the dict election of the President of the Commission (or indeed the President of Europe) and, last but not least, the introduction of euro-wide, Swiss-style referenda on particular matters to involve citizens in the consensus-building process. This is the trend bound to prevail, as over the time in the EU there has been a shift “from the indirect towards the more direct mode of legitimation; from performance as virtually the sole criterion towards issue of democracy and identity; fron inter-European élites to national populations as the addresses of legitimacy claims” (Beetham and Lord).

Governing the European Union, by Michele Boselli

5. To what extent does the evidence support the view that the European Union is creating a single economy for its member states?

Nowadays it would seem pretty easy to say that the European Union is creating a single economy for its member states: it is a view supported to a great extent by the Evidence of the Euro, the single currency recently introduced among 12 of the 15 countries (the exceptions being Denmark, Sweden and the UK). A currency is only an (important) element of the economy, which is made up of complex relations of many other elements, such as social framework, macroeconomic institutions, political intervention, corporate governance…, and the question should be addressed with a historical view to the developments that through the last five decades led to this great conquest towards integration.

The most evident data is the growth of intra-EU trade from 35.2% in 1958 to 62.6 in 1993, just 35 years. This is resulting from the gradual but continuous integration among the European national economies, an objective pursued above all by the successful establishment of a common market founded on the four freedoms of the Treaty of Rome (freedom of trade, investment, labour movement and service provision), and also pursuing common, albeit controversial policies in important issues such as agriculture and VAT harmonisation. This is the exten to to which we can seriously talk of an European economy, on the verge of the monetary union, but many differences persist and we now aim to see where.

In order to address this question we cannot examine every single economy of the 15 member states and the other 15 or more of the continent. We must necessarily simplify by examining three countries that best represent the three main economic systems in Europe: the United Kingdom, with an Anglo-American, market-oriented system; Germany, with a regulatory-oriented system similar to other important European countries such as Sweden; and France, with a slightly different “Mediterranean” version of the regulatory-oriented system, closer to that of the fourth big European economy, Italy.

By taking such approach we imply a more basic distinction between Anglo-American and continental economies which reflects two different systems: the market-oriented order is characterised by more competition and it is self-regulated by the invisible guiding hand of the market itself; banks play a minor role, and the stock exchange a major one, in companies’ ownership, which is a separate thing from management; most important from the social point of view, the influence of employees is very limited in the decision-making process, which is rather the outcome of how the market “awards” the merits of a (highly incentivated) management or punishes it by means of deregulated, hostile take-overs from winning companies. To summarize this in ome single word related to a very important, recurrent concept in our studies, Grahame Thompson simply writes “non-governance” in Governing the European economy.

On the other hand, in the regulatory order there is a state bureaucracy supervising the economy, a nuch more significant participation of banks at the expenses of relatively smaller stock exchanges, and extensive control by families traditionally owning the companies (in particukar small and medium-sized enterprises that make up the economic tissue of many European regions). There is, in sum, an active intervention in the governance of the economy, which comprises a stronger influence by workers, organised in large trade unions, and also by an articulated system of cross-participation: for example in chapter 3 of the same Governing the European economy, Michael Moran shows that the Deutsche Bank owns 7% of the insurance group Allianz which in turn owns 5% of Deutsche Bank, and the same happens between Allianz and Dresdner Bank (owning respectively 21.7% and 10% of each other), so that we can paradoxically extrapolate that through Allianz both Deutsche and Dresdner banks own part of each other (respectively 0.5% and 1.5%), and consequently even that even through this web of participation car maker Daimler becomes a remote "cousin" of its fiercest domestic competitor, BMW, and vice versa.

Hoping that this gross, inevitably summary in its conciseness, representation of the two systems is clear (we will not tackle the subtler subdivision within the regulatory order, i.e. the Germanic and Mediterranean varieties), we now learn from Graham Watson (Governing the European economy, chapter 4) that "the German macroeconomic policy framework was more influential on the design of the EU macroeconomic policy and institutions than those of the UK and France". This means that the governance of the economy has had a heavy de jure, "positive" intervention besides the "negative" de facto intervention: polarities that characterise the regulatory and the market order respectively.

Critics of this vision (or indeed of the regulatory system itself) point out that in the 1970s and 1980s there has been a move from the regulatory order towards a market order among the EU economies. this will become an increasing necessity as greater problems will loom in the next round of enlargements towards Central and Eastern European countries: for example, a regulatory policy par excellence such as the Common Agricultural Policy like we know it today will be unsustainable in an Union comprising Poland. They highlight that the crisis of the European social model of the 1950s and 1960s led to a reform in the need of greater flexibility in the labour market and welfare provision. The balance point in this debate would probably be, as Dawson concludes, that "the experience of economic and monetary union so far suggests that the EU macroeconomic polici is based on a pragmatic blending of Keynesian and neo-liberal elements", where Keynesian refers to the economist's theories, particularly on unemployment.

Thw Union, in fact, has so far produced little in terms of a common social policy, which is an essential element of integration. Back to the Euro, for example, the Maastricht convergence criteria for the single currency are merely monetary, including inflation, interest rates and government finances but exluding unemployment. This brings us again to simplify the social aspects by taking the same three big countries to represent the major tendencies. Social policy is the field where Germany and France broadly agree on stricter worker protection laws, a greater consultation with trade unions, and a consumer protection to ensure transparency about the origin of products. The UK is fiercely protective on social security questions and won the right to keep its veto on the matter.

On taxation policies, Europe already has a degree of tax harmonisation - for example VAT rates are set with a certain minimum in order to make the single market more effective. The three big member states have different views on whether there should be further harmonisation, but now maintains that taxation policies should remain at national or regional government level. France supports the view of the European Commission that a new, direct tax should be levied by Brussels to provide a direct link between citizens and the EU, and wants a unified tax policy, including common rules for business taxes, but the UK is strongly opposed to a common tax policy and refuses to give up its veto on tax decisions.

In conclusion, the debate on the European economies' degree of integration has again taken us to the usual themes of our studies: tradition and transformation (the evolution of the economies); conflict and consensus (the social issues); inclusion and exclusion (of employees in the decision-making process, or even whole countries in the Union). There is a theme that revealed itself to be more important in the case in study, in the sense that both supporters of the regulatory and the market approach would probably agree on it as a picture of the situation, rather than take sides on the positive/negative polarities (centralisation/decentralisation, de jure / de facto, ...) that we have examines, and it is that of unity and diversity.

The EU member states' economies were very different in the post Second World War period, when "a real tendency for a single European social model (or family of models), involving similar industrial relations systems and social protection systems" emerged (John Grahl, Governing the European economy, chapter 5) and these economies have since then converged toward a common position in many areas. They still differ in their approaches to the welfare state, employment law and trade union organisation, divided into two broad types: the Anglo-American version and the continental European version. These differences are important in limiting integration because there is an issue - Grahl concludes - about the long-term prospects for successful economic integration among economies with disparate unemployment rates. That will be the next, very difficult challenge towards a European single economy, while the common market and the monetary union remain, nonetheless, historical achievements.

Governing the European Union, by Michele Boselli

6. The relationship between regulation and the market in the development of an European economic space

In this short essay we aim first of all to briefly re-illustrate the different models of governance described in the previous one, as a basis to develop a discourse explaining what has been the relationship between regulation and the market in the development of an European-wide economic space. On one hand the Anglo-American, free-market model emphasises that the market regulates itself and the state should limit its intervention to a minimum. On the other hand, the Franco-German, regulatory model accept a heavier intervention of the state and other actors besides those purely in the market, mainly for reasons of social consensus building.

These different models of governance explain the paths that the national economies of the member states of the European Union have followed before founding or joining it. During the last five decades, and raise the issue of integrating these economies through the changes that they inevitably must undergo to become a single economy.

European unity has already been achieved in creating a single market and a single currency (British and Danish electorates will probably change their opinion in a few years time if the euro proves itself successful), but diversity remains in the fiscal and social policies of the member states. It is difficult to manage an EU monetary policy in an economic environment where there are so many differences in the business cycles and financial market structures of member states. Perhaps diversity in taxation would be beneficial to be kept as the last major national instruments left to adjust to specific needs in a context where interest rates are the same for all, set by the European Central Bank (ECB), but on the other hand “the many linkages between monetary and fiscal policy may require member states to pool their fiscal policy capacity more at the EU level, thus leading to more co-ordinated and even common EU policies on taxation and public expenditure” (Dent, 2001).

The ECB, based in Frankfurt, is today the place where the main source of authority of economic decision-making in Europe has recently been relocated, but with little practical effect on what is feared by nationalists as a move toward a political union. Actually, the ECB is no different from the Bank of England and other national banks in being an independent body, and indeed Europe has witnessed in the past 25 years a move from a regulatory order toward a market order. This may seem a paradox considering that the above-mentioned Bank is a regulating body, but paradoxes abound in European economy and particularly in the case of the euro.

The new European currency has been in almost continuous decline against other currencies since its launch in January 1999, plummeting from about US$ 1.20 to somewhere sometimes lower than 85 cents. But in spite of that, a surprisingly large proportion of financial assets is now held in euros: more than a third of all international bond and note issues were denominated in euros in 2000, and the euro gained further ground in the first quarter of 2001, accounting for more than 47% of all such debt issues.

So why has the euro been so weak? The ECB is often blamed for not paying enough attention to the currency's external value, and for sending out confusing signals about its intentions to the markets. But the irritation at the ECB apparent failure to worry more about the euro's value reflects a basic misunderstanding about its mandate, which is meant to be more focused on inflation rather than exchange rates. Price stability within the euro area is not only the ECB's main responsibility but an objective which contributes to global economic stability. Of course, the euro's exchange rate is an important factor of euro-area inflation, but it is only one of several.

Looking at the euro issue in a wider international context, just because an economy accounts for a significant proportion of global output does not mean that its currency will have an important international role: the British pound remained an important reserve currency well into the 1970s, long after Britain's economic power had faded, and it is widely traded today along "minor" currencies such as the Swiss franc. The British experience carries a warning for those who want to see the euro take on a bigger international role. A reserve currency might bring greater international influence, but it can also bring obligations that are sometimes uncomfortable. The sterling decline from 1967 onwards created considerable resentment, even anger, on the part of holders of sterling, who saw the value of their asset fall and switched their currency reserves into American dollars. For the euro there is a lesson in the sterling's history: the bigger the international role, the greater the potential for volatility, and the more complex the implications for domestic policy making.

A unique experiment in economic governance, the euro will also have a major impact on international relations in setting an example for other common markets (Asean, Mercosur, Nafta) to follow, as the contiuos trad wars with the US demonstrate. Although there is no centralised body to legislate for international economic governance, states co-operate with one another because there are benefits from doing so. In order to facilitate such co-operation, states establish institutions and agree principles to guide their collective decision making.

Heir of the GATT part of the Bretton Woods institutions (BWI), the World Trade Organisation (WTO) is a body which, far from being elected, in not in any meaningful way accountable to the public and in every opportunity during its six-years existence has sacrificed the public interest on the altar of corporate gain. So far the WTO has ruled against the EU's ban on imports of potentially health-threatening hormone-treated beef and the EU's banana importing regime, designed to give preferential access to bananas produced by small farmers in the Caribbean. in these two cases, the WTO authorised the imposion of sanctions of US$ 128m and US$ 190m respectively.

Given that, it is now necessary to take a brief step back to the timid beginning of global economic governance. The BWI were set up among the avanced capitalist countries after the Second World War in order to play a major role in the governance of international trade and monetary relations. These institutions consist of the so-called World Bank (IBRI, International Bank for Reconstruction and Development), to support investment in countries underdeveloped or recovering from war; the IMF, focusing on matters of monetary and financial policy; and the General Agreement on Tariffs and Trade (GATT), which was later to become the WTO. Over the years these institutions, developing simultaneously to the EU, set precedents which acquired the force of law. In fact, despite differences and conflicts over both the appropriate institutions and the principles by which they should operate, "international economic governance within the EU and the wider Bretton Woods system operates in a framework of law" (Bromley 2001).

This consolidation of international economic governance as law and its authority developed much further in the EU, in the framework of the community pillar, than it has in the other global institutions governing trade (the WTO) and money (the International Monetary Fund, IMF). This is what distingueshes the EU as a system of international economic governance: a very high level of shared sovereignty under a common legal order for its trade and monetary affairs. Here we get to the point of the relation between market and regulation: should the law serve the interests of the market and its actors as supported in neo-liberal terms (the de facto vision), or authorities have the right to impo, de jure, non-market outcomes? Both elements can be found in the EU framework, but the main protagonists of international law are the member states, albeit the broadening of legal rights for othe economic actors.

In conclusion, the relationship between regulation and the market in the development of an European economic space has been a very complex and articulated one. It involved, and still involves, merging different economic traditions deeply rooted since a long time in member states, and thus it is a very delicate matter because shifting the regulatory power to a supranational body generates fears of losing national identity. But the cost of renouncing to national sovereignty over economic matters to transfer it at EU-level authorities has proved to pay in terms of the benefits of the more coherent approach required to manage the economy in a globalised context.

Governing the European Union, by Michele Boselli

7. The forces of diversity changing the patterns of identity and belonging to Europe

Forces of diversity are what make Europe unique in comparison to much more homogeneous unions or group of countries, such as for example the United States of America, from the historical and cultural point of view. Many people argue that these diversities are a richness to exploit in the building of a geopolitical entity different from anything else experimented before in human history, others point at the diversities as being too rooted and inconciliable among them to overcome in a unifying project. These forces of diversity are many, but a priority has to be chosen, inevitably reflecting personal preferences, and mine will be to discuss the issues of: a) regionalism; b) immigration; and c) language.

As a matter of fact, regionalism and immigration are sources of diversity often linked between each other: both are strongly associated with the concept of identity. According to James Anderson “regions vary widely in their size, population, levels of economic development, historical origin, contemporary identity, cultural distinctiveness and political activism (or the lack of them)”. We can see for example regions of Europe which are better defined as nations because they have been autonomous kingdoms in the past, like Catalonia and Scotland, where regionalism is strongly supported, historically and culturally, while other regions are simply administrative units with no historical/cultural glue to characterise them. Mainly because of these differences between them, Anderson appears to be very sceptical on the “small is beautiful” ideology of a Europe of the regions.

Similarly but with different nuances, another author, Paul Treanor, marks the difference between the cultural-historical variant of regional federalism and the economic one. The former, Europe des pays, “includes restoration of historic regions, nostalgic regionalism, and semi-commercial regionalism (regional theme parks). [The latter] include sector-based and trade-based regional federalism. Sectoral co-operation is found among declining regions, or agricultural regions. Trade-based regionalism includes proposed restorations of trading leagues among cities, such as the Hansa”. Quoting a document (Prospects for the Future: The European Union of Regions) of Italy's Northern League: “Yet these dreams must survive: they may be eventually realised in an European Union based on a federation of Regions, after the dissolution of nation-states; after all, the structure of the nation-state is a historical artefact functional to a given social and economic situation which will soon become obsolete”.

This may be true, but it is not difficult to imagine Anderson replying that, like it or not, it is still largely the existing member states which control EU integration and define the regions, not to mention that the aspiration of regionalist movements is often that of building their own nation-state, thus being new nationalists, anti-federalists in essence, while the answer to the complexity of governing diversity is to be found in ma ultilevel governance system, with multiple identities and loyalties, like that of the successful Catalan model (Catalonia is one of the “Four motors”) of European continental economy along Baden-Wurttemberg, Lombardy and Rhone-Alpes).

Italy's ethno-nationalist, anti-immigrants Lega Nord bring us from focusing on the subject to that of immigration: “The South continues to create and export people, while in the North the opposite happens, with the Padans dying out. On the other hand in Padania the constant increase in population due to immigration causes a decrease in vital room and quality of life and could inadvertently lead the local people to contrast overpopulation in their land by making less children”. Is is easy to see a profound Catholic mark in this statement, in a country where Catholicism has still considerable influence it could have been released by the Bishops' Conference, albeit with subtle tones. The truth is that while feeling threatened in their regional and local identities by a relatively recent (in comparison with other big European countries) influx of immigrants from Africa and Asia and Eastern Europe, Italians today desperately need their workforce to sustain the economic growth that they have enjoyed. To illustrate the paradox, here are some excerpts from a couple of recent brief articles published by Italian leading daily newspaper Corriere della sera. On 22 February 2001:

The Federation of Farmers [Coldiretti]: “We want more immigrants”
27 THOUSAND MORE IMMIGRANTS ARE NEEDED – HARVEST AT RISK
Coldiretti ask to raise from 13,000 to 40,000 the number of entrance authorisations for seasonal workers
ROME - “We want more seasonal immigrants or the harvests will remain in the fields”, that's what Coldiretti asked during a demonstration in front of the Ministry of labour.

And again less than three months later, on 17 May 2001:

A new decree on immigration quotas 
IMMIGRATION: ALL TO THE NORTHERN REGIONS THE NEW ARRIVALS
The regional distribution of 53,900 new permits
ROME – All of the new work permits regulated by the influx decree for 2001 are concentrated in the Northern regions. The decree foresee the entrance of 50,000 immigrants for permanent employment and 33,000 seasonal workers. All the latter and 20,000 out of the former have already been allocated according to different evaluation of the regional labour market, avoiding Southern regions with high unemployment rate.

A bleak picture of populism and demagogy in a society confronted with such a huge contradiction on inclusion and exclusion, pressures on traditional forms of identity, and still new, undefined social and cultural processes and political structures to deal with them. As an Italian from Milan, thus coming from a country that experienced massive emigration itself, I feel quite ashamed by Lega Nord rhetoric and hypocrisy on the Padania, for “the notion tat Europe was ever composed of homogeneous nation states is a myth” (Leyton-Henry), but I think that it reveals itself for what I is to the intelligent reader and there is no need to discuss it further. Instead I would like to move on to discuss the next, third issue of identity and diversity: language.

Should English be the EU's only official language? This was the provocative question submitted to internet surfers in June 1998 by the BBC on-line “Talking Point” in its website. Not surprisingly for a question posed on an English-language website to an English-speaking audience, 63% of the people who responded said that yes, it should. More surprising instead is the 37% who, in spite of being advantaged in such perspective by already knowing English, said that no, it should not, and some of the explanations provided are very interesting: “A common language for Europe can be a neutral language only [and] only Esperanto can fulfil this condition”; [...] a neutral second language is the cheapest most effective way to bring simpler communication to the world: everyone keeps their own language (and culture) and communicates to other people in Esperanto”; “There are a lot of irregularities in English and it takes ten times longer than to learn Esperanto”; “Only when people are speaking Esperanto they can speak it so easily as their mother tongue and are really equal”; “Esperanto [is] a language designed to be very easy and logical for everybody from diverse cultural background”.

It is always surprising to find how Esperantists around the world demonstrate alive and kicking every time the international language designed by Zamenhof is prematurely considered dead. Zamenohf was a young Pole and Jewish doctor living in Byalistok, a city in eastern Poland that at the time was exemplificatory of the diversities which, grown rotten in hatred and contempt, ultimately led to the holocaust 60 years later. It was 1887 in this city where four languages were spoken (German, Polish, Russian and Yiddish) that Zamenhof developed the basis of a language designed to facilitate people communicate to each other, in the hope (hope is the linguistic root of the word Esperanto itself) that easier communication would have helped eliminate the misunderstanding among the different communities, their histories, cultures and languages.

There is a strong connection between history and culture” - writes Guibernau - “since crucial elements in the culture of any given community, such as symbols, language, sacred places, heroes, anthems, legends and traditions, are inextricably bound upwith the community's history”. Among these elements, language has in my opinion a prominent role, and Esperanto represents the most accepted way, albeit not the only one, to overcome the problem of the cost of non-communication in Europe. The new European Parliament controversial building in Strasbourg has been built without taking into account that the entrance of new member states in the Union will require new languages to be used, bringing the number of translation combinations and cabins to hundreds. At present, in fact, each of the 11 official languages of the EU is translated into the other ten. Esperantists propose to use Esperanto as a bridge-language because thanks to its accuracy there would be no danger of misinterpretation (as often currently happens). Thus each language would be first translated into Esperanto, and then from Esperanto into the destination language, bringing the number of translation combinations (and the increasingly unbearable costs associated to it) dramatically down.

There are roughly two million Esperanto speakers in the world. They are not many, but they have never coveted for the first place: they rather support its use as a second language, a neutral communication tool preserving cultural diversity in a European Union where – with the obvious exception of the British Isles – 90% of its citizens does not speak the idiom of Shakespeare. If it remains to be assessed whether an artificial language is appropriate like the natural ones when addressing the sphere of feelings, Scottish poet William Auld has demonstrated that it is not a sterilised code but can be used in producing excellent literature. As author Umberto Eco has put it talking about the young Esperantists from different countries who fall in love during their conferences: “Esperanto has been taught in difficult conditions for a few decades, and we have people making love in Esperanto. Latin has been intensively taught for centuries, but even a priest and a nun would not use it while making love!”

In conclusion, we have examined just three of the forces of diversity changing the patterns of identity and belonging to Europe. The discussion on regionalism has shown how it is possible to live peacefully with multiple identities. That on immigration a more striking challenge to the traditional, mainly Judaeo-Christian values that over the centuries have united Europe “against the enemy” but also divided it within. And finally, I allowed myself a less orthodox exploration of a singular linguistic phenomenon that proposes itself as a brilliant solution to communication problems: it may be questionable, but certainly there could be no doubt on th enthusiasm of the Esperantist movement in the colourful family of European federalism.

Governing the European Union, by Michele Boselli

8. The extent of a single European identity

The question as to what extent there is now a single European identity is debatable, depending first of all by the definition of (a) “Europe” and (b) “identity”.

Europe and the EU are not the same thing. The latter is an economic, juridical and to a lesser extent political institution currently encompassing 15 member-states, albeit bound to enlarge to comprise a similar figure in the next decade or do. The former is sometimes a geographical, other times a cultural concept that extends well beyond current borders. “The shifting character of European geographical boundaries is illustrated by Turkey and the other twelve countries from Central and Eastern Europe which are currently negotiating access to the EU” (Joseph Llobera).

Identity is a common set of values uniting a group of people or peoples, but it is also open to controversy because of the lack of agreement on which and how many of those values (common history, culture, language, religion) are enough to say that there is a common identity. In Italy, for example, a country unified relatively recently (less than 150 years ago) wide differences persists among its twenty regions on how people perceive their regional, national and ethnic identity,

moreover, the interpretation varies between Eurosceptic partisans on one side, denying that there is a level of common identity to justify further integration, and on the other end enthusiast federalists who believe that identity would be strenghtened by, say, the establishment of a European citizenship.

However, a statistic tool has been developed since the 1970s to measure with scientific method how European citizens feel about a range of issues, including identity. According to the Eurobarometer, a periodical demoscopic survey of about 1,000 people, the sentiment of belonging to an entity called Europe is rather limited. The result of successive editions of the Eurobarometer show that in most European countries only a very small percentage of people, around 5%, declare having an exclusive European identity, while up to half of them do not have any sense at all of European identity (in the middle, people declaring to have a multiple identity, some giving way to the European over the national one, some vice versa). European political identity is weak and there is also a great variation across states.

It would have been naïve to expect the feeling of Europeanness to blossom in a world in which the dominant political entity is the nation state. But, in the light of the acquis communautaire (the community patrimony), the EU has deeply influenced the economic and juridical spheres of the European society, and by gradually creating a common political space has begun to build a sense of European identity. Indeed, confronted by the fact that despite the elections of the European Parliament the public opinion is generally inspired by national politics, this is due perhaps to the limitation of such institution, rather than lack of interest in the institution itself.

Is Europe a society? The answer is 'not yet' or simply 'not'”. That's how Salvador Ginet and Montserrat Guibernau conclude, conceding however the “undeniable and effective effort being made by contemporary Europeans toward the establishment of a society worthy of our civilization and the best traditions of our history”.

In conclusion, hope resides in education and culture. Culture tends to unite Europeans and education plays a key role in the construction of an identity: a common curriculum in education, shared by all European students, will be fundamental in its development. As for culture, Joseph Llobera brings the example of a cultural phenomenon quintessentially European: the novel. Quoting Czech writer Milan Kundera, he highlights how the novel has accompanied Homo europaeus for the past four centuries; it reflects the passion to know, a feature typical of European civilisation. The novel is the “imaginative realm of tolerance […] a realm many times betrayed but none the less strong enough to unite us”.

Another important factor will be the ever-growing interconnection of the civil society actors in the framework of governance: the labour movement, regional movements and new social movements such as the environmental ones. According to Giner and Guibernau “the development of a European identity will be the outcome of a long process in which bottom-up as well as top-down initiatives are likely to be employed”. This is precisely what our studies are about in exploring the concept of governance and, among others, the theme of unity and diversity.

Governing the European Union, by Michele Boselli

9. In what ways membership of the European Union contributed to the transformation of the lives of its citizens

Today's European Union is the ever-developing result of a 50-year-old mainly economic process undertaken among previously belligerent countries so that the horrors of World War II would not repeat. During half a century such a project has evolved to encompass the juridical, cultural and socio-political spheres of the citizens of the Union's member-states, tranforming their lives to a considerable extent, although a total transformation has been prevented by traditions historically routed in each nation or region of the Union. To examine the ways these transformations have taken place, we will briefly consider them in the area of (a) politics; (b) economy; (c) society; and (d) identity.

Politics. Nowadays European citizens have got accustomed to deal with European institutions and legislation (Directives). Everybody knows about (and sometimes curses) “Brussels”, the place where the “government” of Europe is based, and since 1979 we vote to elect the European Parliament. The EP is an assembly that despite its weaknesses (in origin it was a merely symbolic institution), has gradually acquired powers to influence the decision-making process of what remains a mainly intergovernmental institution, the above-mentioned “Brussels government”, made of an executive Commission and a pivotal Council of Ministers. It looks like a very loose institutional system, and indeed it may be, but so wide has been its ramification in every area of human activity that local governments (i.e. regions or big city councils) have begun to develop direct links with Brussels, thus by-passing national governments.

Economy. Having been the focus at the time of the establishment of the first European Community (on coal and steel), economics is the area where the largest developments have occurred. Up to the point that, having a common market already in place and working, and a monetary union under implementation in the upcoming months, it makes sense to speak about a single European economy. Differences remains among member-states in the labour and fiscal policy, but the biggest part of economic integration has already been done. Even too much, as the protectionist regulatory intervention in agriculture (Common Agricultural Policy) has harmed poorest developing countries and has now become a headache in view of the enlargement to Eastern Europe agricultural countries. As for the political one – and the two things always come together -, economic integration in the framework of the Union can be welcomed or can be cursed. It can hardly be ignored or dismissed that it has a very significant effect on the every day life of the citizens of Europe and even beyond.

Society. Besides the transformation implied by political and economic changes, European society in the past 50 years has been greatly influenced by cultural developments coming also from outside Europe, especially from America. Social movements such as labour unions have become both less accountable toward their members and less influential in political institutions and parties, while a new model of self-organised network such as the environmental groups emerged as the “product of changes in the socio-economic relations and cultural values which underpin European societies” (Mark J. Smith). Some of the demands of the women's movemnt for equal rights have been taken up by the European Union, giving women greater choice in arranging their lives. The EU “played an important role in encouraging gender equity in the field of employment, regulating discriminatory treatment of women at the workplace and setting up structures to help reconcile occupational and family roles” writes Catherine Lloyd emphasising that this has been a force of transformation as opposite to national frameworks that may pose obstacles to this.

Identity. Determining a European identity is as much a political and economic task as a social and cultural one. For example, European media policy, driven primarily by the economic goal of enlarging the market and encouraging competition, indirectly contributed to a sense of European identity by promoting audio-visual self-sufficiency, albeit with controversial results. In general, write Denis McQuaid, new technologies such as the internet have the potential for increasing cultural independence as well as for reducing it, but “their impact and the vulnerability of national […] diversity […] have been much overestimated”.

In conclusion, if the transformation of our lives has not been total, on the other end it certainly cannot be argued that no changes have taken place.