EU: Recent Developments

Lord Tugendhat Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Tugendhat]

My Lords, it is many years since the noble Lord, Lord Hannay, and I were working not together but in the same place, in Brussels. I shall always look back with pride on my time as a European Commissioner because I believe that I played a small part in the most exciting and hopeful political initiative to have been undertaken in Europe in modern times. However, I have never been under any illusion as to the fragility of the project. However much political leaders might proclaim grand principles and grand ambitions, popular support in all member states has always been conditional. It has always ultimately depended on the extent to which public opinion in each member state has perceived the European Union to be contributing to the solution of that country’s national problems—be they political, economic, social or, in many cases, historic. For as long as the EU is perceived to be contributing to the solution of major national problems, it enjoys widespread popular support. Once that ceases to be the case, support cools. Once it comes to be seen as part of the problem rather than part of the solution, public opinion is likely to turn sharply against it.

We have seen that happen even in such a formerly staunch supporter, one of the original six, as the Netherlands. Now I fear that, thanks to the travails of the eurozone and the policies primarily laid down in Berlin to resolve them, it is becoming increasingly true of wide swathes of public opinion across the European Union.

That brings me to the delicate point which underlies all recent events in the European Union. That is the profound shift in the balance of power between the member states of the eurozone in favour of Germany. That was not a position sought by Germany. Germany never set out to be a hegemonic power. That is the precise opposite of what economic and monetary union, which Germany supported, was supposed to achieve, but, thanks to the success of German economic policy and the self-discipline of its people, on the one hand, and the way that the euro has worked out on the other, Germany is now overwhelmingly the dominant power in the eurozone.

That is the antithesis of the theory on which the European Union is based. That theory was the principle of the equality of rights between member states. In reality, of course, it was always recognised that some were larger and more influential than others, but, for long, the power of even the largest member states was tempered, partly by convention and restraint and partly by the fact that there were three big powers within the European Union, each with different attributes, and several others that were quite large. The fact that decisions were formally taken in Councils of various sorts, with input from the European Parliament and implemented by the European Commission, maintained that European character.

Now, within the eurozone, all can see that nothing can be achieved without German support nor against the will of Germany. What Germany wants, Germany gets, and others, whatever their doubts, can make only relatively minor modifications. That is a dangerous situation. Dominant powers are never popular and, for reasons of history, German actions and motives are more open to mistrust and misrepresentation than would be the case with any other country. Anti-German feeling is already rife in many European countries and rising all the time. That is a disturbing feature of the present crisis.

The danger is compounded by the fact that Germany insists on a one-size-fits-all diagnosis and treatment of the economic problems of other member states. The proposed new treaty, about which we have heard so much during the course of this debate, is an example of that. Regardless of the differing causes of the different national problems, Germany insists on the same austerity measures for all.

Of course, one understands why. First, German politicians, economists and public opinion believe that that medicine is in the best interests of the other member states and of the EU as a whole. Last week I heard the former Chancellor, Gerhard Schroeder, make a powerful speech in which he was explaining why everybody should set about resolving their problems in the way that Germany did. It is of course also the price demanded by German electors for helping others, yet it takes no account of the fact that Germany is the biggest single beneficiary of the eurozone both in terms of the huge surpluses that it has built up trading with other members states and through the great success that its exports have achieved elsewhere in the world, partly of course because of their outstanding quality and partly because they meet the needs of the market, but also because of the relatively low external value of the euro, thanks to the travails of the other member states.

Therefore, I fear very much that the longer Germany maintains its present stance, the worse the possible consequences might become. One is of several countries—not just Greece—being condemned to prolonged recessions. Another is that the protests will not stop in the streets. Extremist political forces will gather strength and there will be an explosion against the whole euro edifice and perhaps even against the European Union itself. I fear that all the European Union’s great achievements, built up over many years, could be put at risk. I fear, too, that democracy may be put at risk in some member states.

I hope very much that Germany will see the dangers and modify its stance in two important respects before it is too late. One is to respond to the sage advice of Prime Minister Monti of Italy, among others, and to indicate that it is willing to co-operate in the formulation of a eurozone growth strategy without ruling out any possible initiatives beforehand. The other is to indicate that it is willing to negotiate on a multilateral basis with other member states to find the best way forward, as distinct from laying down a menu of preconditions.

Since the 1950s, no country has done more to build the European Union than Germany. We should all pay tribute to it for that. It has contributed generously in financial terms; it has been a constant source of ideas and constructive proposals; and it has produced many very high-quality officials and politicians who have contributed greatly to the building up of policies in many areas. It would be tragic if Germany were now to become the instrument of the dismantlement of so much that has been achieved.