1.

The Background: Britain and Europe, 1945-1973

BRITAIN came late to membership of the European Communities. When the negotiations began in 1950 that led to the creation of the ECSC, forerunner of the present EC, the British Labour Government of Clement Attlee was invited to participate, but declined. When the six states that had formed the ECSC started to discuss extending the common market in coal and steel into a general common market, the British Conservative Government of Sir Anthony Eden initially took part in the discussions, but withdrew when unable to convince the Six to be less ambitious in their plans. As a consequence of this refusal to become founder members, the British found themselves outside a highly successful economic grouping which, as their own economic problems grew and their independent influence in the world declined, it proved impossible for them to ignore. Within a few years of the setting-up of the general common market the Conservative Government of Harold Macmillan was opening negotiations to see whether a basis could be found for British membership. But, because of French resistance, it took until 1973, and two further applications, before membership was actually achieved. This delay in achieving membership meant that Britain did not participate in the most successful period of the history of the Communities, and only managed to become a member as world economic conditions ushered in a period of recession. As a result, membership did not come to have the popular positive connotations in Britain that it had in the founder states. Also, during the years when Britain was not a member, the Communities took on a shape that suited the original six member states far better than it suited Britain.

The International Context

The alliance of Britain, the United States, and the Soviet Union that had been victorious over Hitler had been under strain before the end of the war, and broke apart soon after it. In March 1946 the British wartime leader, Winston Church ill, spoke of an iron curtain that was descending across Europe from the Baltic to the Adriatic. 1 This line marked the division between the states of Eastern Europe, which were in the Soviet sphere of influence and on to which the USSR imposed a communist form of government, from the states of Western Europe which lay beyond the influence of the Soviet Union, but in some cases only precariously so. By the end of 1946 co-operative relations between the Soviet Union and its former allies had effectively broken down, and a condition of hostility falling short of armed conflict had emerged. This condition came to be called the Cold War.
Within the capitalist world the United State s was undoubtedly the dominant state. It had the strongest economy, and the greatest

military potential, including possession of the atomic bomb. In contrast to the healthy position of the US economy, the states of Western Europe were in a parlous condition as a direct consequence of the war. In June 1947 US Secretary of State George Marshall announced a European Recovery Program, under which the United States between 1948 and 1952 was to give $17 billion in grants to the states of Western Europ e to help them to rebuild their economies. Marshall Aid was offered to the Soviet Union and the states of Eastern Europe, but with little hope that it would be accepted. When Soviet Foreign Minister Molotov walked out of talks on the aid programme in P aris, the seat was set on the division of Europe into two ideologically opposed camps. In 1949 the division was graphically symbolized by the creation of two separate German states, the Federal Republic in the west and the Democratic Republic in the ea st, and by the election of the anti -communist Konrad Adenauer as first Chancellor (Prime Minister) of the Federal Republic. There followed a period during which the leadership of the United States within the capitalist world was unchallenged, even if in some quarters it was resented. The threat that Stalin's USSR appeared to present to the West fostered unity behind the strongest capitalist state. The signing of the North Atlantic Pact, which instituted the North Atlantic Treaty Organization ( NATO), in April 1949 marked the formal commitment of American troops to the defence of Western Europe. As if to underline its necessity, the invasion of South Korea by the communist North in 1950 appeared to confirm the inherent expansionism of the USSR: the parallel between a divided Korea and a divided Germany reinforced the unity of the leaders of Western Europe behind US leadership. The price that the West Europeans paid for US protection and economic assistance was the acceptance of a world economic or der based on a US blueprint. That meant accepting a commitment to multilateral world free trade, and an international monetary system based on the dollar. It was a system that gave certain privileges to the United States, such as allowing it to run a b alance of payments deficit without having to introduce domestic deflationary measures to correct it; but it also assisted the recovery of the European states, some of which in the 1950s began to outstrip US rates of economic growth. 2 This new prosperity was partly, though, based on the investments that had been made in Western Europe by US multinational corporations, which was resented in some quarters, particularly in France. There was also resentment in France of the political dominance of the United States, highlighted in 1956 when a joint Franco British force attempted to repossess the Suez Canal from Egypt, whose President Nasser had nationalized it, only to be prevente d by US opposition. The incident also caused a deterioration of Franco British relations, because it was the British who bowed to US pressure to halt the operation when the French wanted to go on. 3 A turning-point in relations between the United States and Western Europe was the return to office in France of General Charles de Gaulle, the man who had led the Free French forces during the war, and the first Prime Minister after the liberation of the country. Unsympathetic to the liberal and socialist parties that dominated the first elections, and without a political party of his own to back him, he resigned as premier in 1946, but remained active in politics, condemning the political manoeuvring that was a

prominent feature of the Fourth French Republic. In 1958 he was swept back to office when an army rebellion in Algeria, against moves to end French rule, raised fears of a civil war. De Gaulle, with his military background and conservative credentials, seemed the only man able to salvage the situation. His price for doing so was the dissolution of the Fourth Republic and the installation of a Fifth Republic which rapidly developed into a presidential regime. As President, de Gaulle reserved foreign affairs in particular to himself. One basis of de Gaulle's foreign policy was anti -Americanism. His own experience of US attempts to unseat him as leader of the Free French during the war gave personal commitment to this policy, but it drew its strength from tapping a latent resentment of US domination that stretched across the French political spectrum. In its first phase the policy centred on developing the Communities into an organization with a joint foreign policy , under French leadership. When this approach collapsed in the face of resistance from the smaller member states, de Gaulle dispensed with the backing of the rest of the Communities, although accepting the economic necessity of continued French members hip, and contented himself with acts of defiance against the United States. He visited Moscow in 1964, and signed trade agreements with the Soviet leadership; he withdrew French forces from the integrated NATO command structure in 1966, and expelled NA TO headquarters from French soil; and in the later 1960s he conducted a concerted campaign to undermine the dollar by converting dollars from France's foreign currency reserves into gold, thus precipitating a serious monetary crisis. 4 By the end of the 1960s US leadership was no longer unquestioned elsewhere in Western Europe. A relaxation of tensions between East and West, that developed gradually under Stalin's successors Khruschev and Brezhnev, encouraged dissent to become more open. Following the demise of Adenauer in the Federal Republic, a momentum began to build for a diplomatic opening to the East, which in 1969 brought into office the Social Democrats under Willy Brandt, who was committed to an Ostpolitik of improved relations with the communist bloc. 5 Throughout Western Europe a generation of young people who did not remember the war, or th e fears of Soviet invasion that followed it, campaigned against US involvement in Vietnam, and put pressure on politicians to repudiate US leadership. Although still the strongest single economy in the world, the United States no longer dominated the capitalist system as it had immediately after the war. West European states and Japan had caught up with and were overtaking US levels of productivity and wealth. By the beginning of the 1970s the United States was running a balance of trade deficit wi th Japan, and becoming increasingly concerned about its relative performance. At the same time it was becoming irritated with allies that criticized it but made little contribution to ensuring the stability and maintenance of the capitalist world system from which they were benefiting. By the end of the 1960s the post-war international system was about to reach a major turning-point.

The Domestic Context

Between the end of the war and the start of the 1970s the Labour and Conservative Parties altern ated in office. To the surprise of many people, who expected that Winston Churchill's wartime leadership would produce a Conservative victory, Labour won the first general election in 1945 with a substantial majority, and proceeded to put through a programme of economic and social reforms that included the nationalization of key sectors of industry and the creation of a National Health Service. The popularity of this programme is indicated by the extent to which it was accepted by the Conservatives, and became the basis of a broad consensus on domestic policy that lasted through to the 1970s. But the Labour Government also necessarily presided over a period of economic restraint which was an inevitable consequence of the dislocation caused by t he war; and the weariness that this produced in a people who had suffered for too many years contributed to such a drastically reduced majority for Labour in February 1950 that another election had to be held in September

1951. This time, by courtesy of Britain's electoral system, the Conservatives won, despite polling fewer votes than Labour, and so were in office in time to claim credit for the effects of the world economic boom that was just beginning. On this basis they held office for the next thirteen years, under four Prime Ministers: Churchill until 1955, Anthony Eden from 1955 to 1957, Harold Macmillan from 1957 to 1963, and Alec Douglas-Home briefly from Macmillan's resignation to the general election in 1964. During these thirteen years there was first a recovery in national self-confidence, then a steady decline. The Suez crisis of 1956 is often seen as a turning-point: it emphasized the relative weakness of Britain in world affairs, and sparked a bout of national selfexamination which extended beyond matters concerned with foreign and defence policy to a questioning of the performance of the economy. British rates of economic growth in the 1950s were extremely high by historical standards, but the sense of well-being that this generated was gradually undermined by the realization that other European states were performing better. Balance of payments crises became a recurrent problem, as imports expanded faster than exports, and inflation rose more rapidly than in the economies of Britain's competitors. Governments found themselves trapped into a 'stop-go' cycle, expanding the economy through the stimulation of demand only for the balance of payments to plunge into deficit so that demand had to be reined back to avert a sterling crisis. By 1960 concern was such that the Government, under pressure from the Federation of British Industry ( FBI), decided to embark on a programme of modernization of the economic structure. But this implicit admission that all had not been as well as it had been portrayed during the previous decade played into the hands of the Labour Party, which presented itself as a more dynamic modernizing force and, helped by scandals that undermined the moral authority of the Government, won the 1964 general election with a very narrow majority.

Labour, under the leadership of Harold Wilson, consolidated its victory and increased its majority substantially in 1966. Elected on a programme that stressed the need for Britain to undergo a technological revolution, it soon found itself grappling with intractable obstacles. One was the balance of payments, which, because of the weak export performance of the British economy,
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5

On Ostpolitik, see Willy Brandt, A Peace Policy for Europe, trans. Joel Carmichael ( London, 1969); Michael Kreile, "Ostpolitik Reconsidered", in Ekkehart Krippendorf and Volker Rittberger (eds.), The Foreign Policy of West Germany: Formation and Contents ( London, 1980), ch. 4.

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4

On de Gaulle's foreign policy in general, the best book is Edward L. Morse, Interdependence and Foreign Policy in Gaullist France ( Princeton, 1973); on the policy of exchanging dollars for gold, see Henrik Schmieglow and Michele Schmieglow , "The New Mercantilism in International Relations: The Case of France's External Monetary Policy", International Organization, 29 ( 1975), 367-92.

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2

For more detailed accounts, see Stephen George, Politics and Policy in the European Community ( Oxford, 1985), chs. 4 and 5; E. A. Brett, The World Economy since the War: The Politics of Uneven Development ( London, 1985), chs. 3 and 5; Joan Edelman Spero, The Politics of International Economic Relations ( 3rd edn., London, 1985), ch. 1. 3 See David Carlton, Britain and the Suez Crisis ( Oxford, 1988).

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1

In a speech in Mar. 1946 in Fulton, Missouri.

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9. Conclusion: Still Awkward after all this Time

ON the face of it, little changed in the relationship between the British Government and the rest of the EC in the period covered by this book. John Major's Government could still be described as an awkward partner. Yet changes did take place in the underlying fundamentals of the relationship which suggested that the condi tion might not be inevitable, that Britain had at least the opportunity to be seen as a less awkard partner. This was partly due to changes in Britain, and partly to changes in the EC.

There were several reasons for Britain's reputation for awkward ness: domestic political constraints on the positions that British Governments could adopt; real problems for the British economy in adjusting to membership, especially the problems of Britai n's contributions to the common budget; an awkwardness on the part of British negotiators in handling the terminology of political debate that had developed among the original members; and an instinct of many leading British political figures to look f irst to the United States for partnership. If we examine each of these factors in turn, we can see where the deep structures were changing, even if the surface relations remained static.

Domestic Political Constraints

Not even the Heath Government made any real effort to convert the British people to Europeanism, and the need to win elections in a political culture that was, for much of the period under review, sceptical of the benefits of being linked to the rest of Europe led easily to anti-EC rhetoric from politicians of both the leading parties. This in turn tended to reinforce rather than undermine attitudes based on generations of imperialism, of Britain looking to the wider world and treating Europe with disdain, of negative attitudes to the French that became embodied in popular culture,

5. The Thatcher Governments, 1979-1984: Settling the Budgetary Dispute

WHEN a Conservative Government under Margaret Thatcher was elected in Britain in 1979, there may have been hopes in some quarters that it would adopt a more co -operative attitude towards the Community than its Labour predecessors. There were reasons for such hopes. The party while in opposition had been very critical of Labour's handling of Community affairs. But hopes of a m ore co-operative approach did not last long. The new Government soon took up the theme of the unacceptable size of Britain's net contributions to the Community's budget. Shortly after coming into office Sir Geoffrey Howe, the Chancellor of the Exchequer, announced that the size of the problem was far greater than the Conservatives had realized whilst in opposition, and something would have to be done about it urgently. The issue was to dominate Community affairs for the next five years, duri ng which time Britain became more isolated than ever within the EC, and other member states began making plans to further European unity, if necessary without British participation.

The International Context

A second oil crisis was sparked off by devel opments in Iran, where a popular mass movement against the Shah led to strikes in the oilfields in October 1978, which by December had resulted in the

complete cutting off of Iranian oil to the world market. Although much of the shortfall was made up b y increased production by other OPEC states, especially Saudi Arabia, the revolution in Iran, which deposed the Shah in January 1979, led to panic buying of oil on the spot markets as stocks were laid in against the possibility of shortages. The spot markets deal in oil that has not been committed for sale by contract between the producer states and the oil