Europe, Looking to the Future - MacGill Summer School

29 Jul 2002

From a trade union perspective the great question about the future of Europe is whether the social market model of capitalism can endure in the face of globalisation.

Globalisation is not a new phenomenon in the world. The most analogous period of growth, technological change and global reach to the present was between 1880 and 1914 when urbanisation exploded, trade boomed and Europeans migrated in their millions to the New World. What makes this present day manifestation of globalisation different is the incredible mobility of capital made possible by deregulation and technology. This has significantly shifted the balance of power between capital and labour. Moreover, the liberal market model of capitalism is capable of creating both great wealth and great inequality. It has been described as "creative destruction".

In these days we are seeing the weaknesses of this system made manifest. The fraud which has emerged in Enron, Worldcom, Tyco International, Xerox, Quest Communications to mention the most prominent, is on a massive scale. This fraud, compounded by the culpability of some of the larger audit firms must surely cause reasonable people to wonder not whether there are a few rotten apples, but rather about the condition of the barrel itself.

It seems extraordinary to me that European Social Democrats have been so silent in the light of these events. It may be explained by the absence, until now at any rate, of any real conviction about a European way of doing things. To be fair to Lionel Jospin he tried to set out a distinct vision for the future of Europe but he is now off the political scene.

In this country we have debated the question in terms of "Boston V Berlin" but it is not just a question of the future direction of Ireland, it is a question of the future direction of Europe.

European leaders have been the victims of a psychosis whereby they believe that to deliver American economic dynamism they need Europe to be like America accepting the tidal wave of propaganda from the US that the European way is at heart wrong, and that what Europe must do is to be Americanised. There is thus a fundamental disconnection from reality. The European political class finds that it cannot champion and celebrate European values and institutions as a seedbed of productivity and social justice - asset which, however they might need to be modernised, are in essence worth preserving. It finds instead that, while making ritual obeisance to European difference, it then proceeds to champion the Americanisation of Europe - quoting tendentious figures about the role of small business, lack of enterprise, poor productivity and so on. For anyone who may be interested I explain why I think the figures are tendentious in an article I wrote for "The Independent" a few weeks ago. I would be happy to make it available to anyone interested in this point.

Anyway, the revelation of the fraud and corruption of recent weeks means that it is the time to give up hankering after trying to import the American model. What must be done instead is to find ways of returning to Jacques Delors' agenda of positive integration around a social Europe and of organising a European economic and social space. In short, Europe has to find ways of defending its economic and social model - and to be proud and self conscious in what it is doing. In an age of globalisation, the priority is no longer negative integration - by which I mean deregulation - to establish a single market. That has been largely achieved. The new injunction is to protect and further the interests of Europe's citizens in an age where the market is king, creating a vibrant and distinct European capitalism that incorporates its history and the views of its peoples. It must use the instruments that it has - notably the single currency - and develop others to serve Europe's interests. Above all, it must believe in Europe. It must do so urgently, not only for itself but also for all those who believe in multilateral action to create international public goods - a process which Europe is trailblazing for the globe.

The alternative is to leave the task of world leadership to the United States. But that is hardly appropriate given that country's unilateralism under the Bush administration. The President has demonstrated no serious intent to tackle corporate governance. Indeed he cannot do so for he is surrounded by men up to their ears in the systematic rot affecting American capitalism. His Vice-President may yet be indicted for his activities while CEO of Haliburton - using creating accounting to boost profits.

Moreover, the administration has tried to wreck the international criminal tribunal, has withdrawn from six international agreements and has intimidated senior UN officials out of their jobs. In the area of trade it has imposed protectionist measures on steel, timber and textile dying and it has increased farm subsidies by $18 billion. In short it exports a model of capitalism which has serious systematic failures and which it itself does not follow when it suits. In international politics it follows a reductionist approach which means that you are either for or against the United States in the war against terror. Without concrete evidence of culpability in this war it seems that it may attack Iraq.

In these circumstances for Europe to be ceding the leadership of the world to the United States is wrong. I want Europe to be a force in the world. I want it to practice an ethical foreign policy. I want to facilitate participation of the developing countries in the global economy. I want it, in short, to be the bastion of world civilisation.

I recognise, however, that it can never do these things effectively until it achieves greater cohesion. This is why I want positive integration and I hope and expect that the convention will move towards constitutionalising the values set out in the Charter of Fundamental Rights.

I would like now to turn to the question of enlargement.

Congress is not sanguine about the implications of enlargement. As a matter of fact we recognise that there are challenges to be faced up to at an institutional, economic and political level

  • Institutional, because if there is a perceived democratic deficit in a Europe of 15 States the problem can only be exacerbated in a Europe of 25 States unless there is very effective institutional reform. It is not clear that the reforms in the Nice Treaty will meet that criterion of effectiveness
  • Economic, because above and beyond the well known problems caused by reform of CAP and the structural funds, the Europe of the past twenty years, the Europe of the single market and monetary union, has been based on the presumption that participating states were all similar. Enlargement to very diverse States, whose administrative systems are also very unequal, constitutes a strong test.
  • Political, because the motivation of the candidate countries are not the same as the architects of the European Union, and because a Europe this numerous and diverse will be able to move forwards only with a high degree of political will.

It would, perhaps, have been better to adopt a phased approach to enlargement rather than the "Big Bang" now in prospect in 2004.

But we have to deal with the question as we find it.

As it seems to me the position is this:

  • If we reject the Nice Treaty for a second time we will force the EU to find an alternative route but we will not stop enlargement. They will find a way to make it happen and we will not be forgiven either by the existing European establishment or by the accession countries;
  • Enlargement will put great pressures on the EU but if it happens by an alternative route then we will be blamed for the problems whether that blame is justified or not;
  • If we do end up marginalised as a result of rejecting the treaty it is clear that, as a matter of practical politics, it will be difficult for any Irish Government to win allies for any case we might wish to fight.
  • Most American foreign direct investment is here because of access to Europe. People argue about whether that would be affected if we achieve "pariah" status. Maybe it will and maybe it will not - but as the representative of the workers in the factories funded by that investment I am not willing to risk voting "No".
  • Apart from US sourced investment there are 600 European companies investing in Ireland. There must be a real risk that they would take a jaundiced view if we pull the rug from under the biggest European project ever attempted.

In one of the reports of the Forum the Chairperson observed that everybody, regardless of their stance on Nice, was in favour of enlargement. I beg leave to doubt this. I suspect that a sizeable proportion of the people opposed to Nice are really opposed to enlargement. In fact I suspect that most are opposed to the very concept of the European Union.

People are perfectly entitled to hold this opinion but I think we would get a more honest debate if they declared this position openly rather than citing dissatisfaction with the details of the Nice Treaty as the reason.

Trade Unionists pondering the question of what to do in the referendum might want to consider the position of our colleagues in the United Kingdom. The big issue of the moment is the relationship between the unions and the Government and the campaign of the TUC to persuade Tony Blair to implement EU legislation on employment rights in Britain. They might also wish to note that earlier this month the European Court ruled that the use of financial incentives to encourage employees to surrender collective bargaining rights was a breach of human rights. I submit that this demonstrates that, even though there is still an imbalance in the importance attributed to economic and social legislation, the EU has the potential to moderate the excesses of big business beyond anything that can be achieved by workers in individual countries.

While respecting absolutely the right of anyone to be against Nice or enlargement or even Europe, I find it strange that people of the centre left of politics would have common cause with the extreme right wing parties of Europe and the Thatcherite rump of the British Tory Party.

Finally, I want to turn to an issue which I think is potentially explosive.

In recent weeks it has been suggested that the accession of Central and Eastern European countries and the immediate opening of Ireland to migration from those countries would lead to large numbers of immigrants to Ireland. It has been further suggested that this would undermine wages and conditions and that IBEC is supporting a "Yes" vote in the referendum in order to achieve this objective.

I want to state emphatically that Congress does not believe this to be the case.

In the research literature available there are some ten studies of this subject. Half of them are based on empirical data extrapolated from what happened when Greece, Portugal and Spain entered the EU and on migration flows within the US. The other half are based on surveys of the intentions of people in the accession countries as regards migration

Using the empirical data approach the projections envisage the Central and Eastern European populations of Germany and Austria expanding to 2.5 million and 0.5 million respectively by 2030. In Ireland the forecast is that the population will rise from 272 in 2002 to 682 in 2010 and to 912 in 2030.

More than a third of all interviewed persons (37 per cent) would choose Germany as their prime destination and about a fourth (24 per cent) would like to go to Austria. The strongest preference for Germany is in the Czech Republic. In Hungary there is a very distinct preference for Austria. In Poland and Hungary, the United States, Canada and Australia are also popular destinations of would-be migrants. Some 9 per cent of all persons willing to migrate would choose Switzerland. Intentions to go to other European countries play only a minor role. France, Italy, Scandinavia and the Netherlands as well as other Central European countries are prime destinations for less than 5 per cent of all potential migrants.

The surveys also show that in Central Europe the wish for short and medium-term labour migration is much more common than the intention to emigrate for good. Two-thirds of all potential migrants declared that they did not want to leave their home country on a permanent basis. About 65 per cent of those persons surveyed who are potentially willing to migrate did not want to stay abroad for longer than five years. Of those, about 19 per cent would prefer to stay abroad for only one year; 26 per cent would like to stay abroad for up to two years. For many persons commuting on a daily or weekly basis would represent the ideal form of mobility between East and West. Working in the West and maintaining a household in Central Europe secures on the one hand a high Western wage level and at the same time allows one to profit from the lower costs of living in Central and Eastern Europe. For several regional labour markets this is a realistic perspective, particularly for the Bratislava-Vienna region or for western Poland and Berlin.

In light of this evidence Congress is satisfied that there is no significant threat to employment or to wages and conditions posed by inward migration from Central and Eastern Europe.

That is not to say that fears about immigration in general can be brushed aside. We are on the public record as saying that Ireland needs a coherent immigration policy which matches the numbers of people coming to our country with the capacity of our economy to support them. This is an important and indeed urgent question but it should not be confused with the particular issue of negligible migration from the accession countries. Most emphatically it should not be used as a weapon in the Nice Treaty debate.

It has been asserted that the Nice Treaty is the one last and final opportunity to affect the course of European development. I do not see it like that.

Over the next couple of years Europe will have to take a number of hugely significant decisions relating to:

  • Enlargement to 25 countries at Copenhagen in December next;
  • The conclusions of the Convention and possibly a new Constitutional Treaty in 2004;
  • The Common Agricultural Policy and Budget Reform in 2005.

As I see it, of all these important decisions, the one which will definitively determine the future of Europe, is the treaty which will address the conclusions of the Convention.

Congress will support a "Yes" vote in the referendum because the moral case for integration of the accession countries is overwhelming in terms of their entitlement to an opportunity to develop and because of the history of oppression of many of them during the Twentieth Century.

Despite the practical challenge which enlargement will bring we believe that it will lead in time to a European continent free from war and poverty and the repository of a value system which will embody prosperity, individual freedom and social justice in equal measure.

Address by David Begg, General Secretary of Irish Congress of Trade Unions