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Maastricht in trouble.

BRITAIN is taking the Chair in the European Community on July 1st until the end of the year. It will be the most troublesome period in the history of Britain's membership. The European Single Market is to come into force on January 1st. This means that the twelve member countries ought to have ratified the Maastricht Treaty by then. There is also the question of whether President Jacques Delors will have his term of office renewed for another two years. It is unlikely that he will want to if there turns out to be real trouble with the Maastricht Treaty. It is his main achievement and is strategically linked with the acceptance by the EC Council of his |Package II', his Budget for the next five years. There is also the renewal of the mandates of the members of the Brussels Commission due on that date.

It appears unlikely, however, that Maastricht will have been duly ratified by that date. This is why the |Euro-Summit' to be held in Edinburgh at the end of December will be the biggest test for Britain. The treaty of Maastricht has lost its glamour. One cause, shown in the recent elections in France, Germany and Italy, is that politicians are losing their authority and their genuineness and sincerity are doubted. And it is politicians and experts who produced Maastricht after years of hard bargaining. It ought to be borne in mind, responsible German sources are now saying, that Maastricht was worked out when politics and the situation were dominated by the facts of a divided Europe. Now politics must be worked out for a less divided and much larger Europe. The EC had to recognize that it must be radically changed and the Rome Treaty must be looked at especially. If there was an enlarged EC, with 18 or 20 members, Britain would be in the Chair every nine or ten years and the membership of the Commission would go up accordingly. The |Big Four', Britain, France, Italy and Germany might have to abandon their second member. Indeed, Mr. Delors, the fighting head of the Brussels Commission, has already prepared sweeping proposals to change the EC Constitution by setting up a Super-Executive that replaces the Commission itself and the six-monthly rotating Chair of the EC. This is to be put to the Euro-Summit in Edinburgh. It will require key amendments to the Maastricht Treaty. The question is arising whether ratification should wait until the changes have been decided on.

When one sets aside Denmark and Ireland and their referenda, France and Germany, key members, present the main problem to the treaty's approval. In France President Mitterrand has attached ratification of Maastricht to his personal status and prestige. He has engaged on a risky adventure considering his fallen prestige. The Constitutional Court has made Maastricht an issue of national sovereignty. It has decided that there must be three changes in the Fifth Republic Constitution before Maastricht can be ratified. It has caused surprise and embarrassment because the three issues are linked with the current political controversies. One is the right that Maastricht bestows on all nationals of all member countries to vote in local elections in all member countries where they are resident. But in France elected local authorities have a vote in the Colleges that elect Senators. Therefore that right directly affects France's sovereignty. Equally importantly the proposed famous EMU, Monetary Union, with its |irreversibly' fixed exchange rate within fixed bands affects the Constitution and so does, thirdly, the rule that visas for non-EC nationals should be regulated in Brussels by majority vote. That, at least, is how the Court sees it.

A hard pressed President Mitterrand is now asking for the Senate and the Assembly to make the necessary changes in the Constitution at a joint session. But a three-fifths majority is needed. Mitterrand's compromise aims at non-French EC residents to be restricted to voting in municipal elections. This can be seen as a new interpretation of the Maastricht Treaty. Even the Socialists and the Giscard Centre are split. President Mitterrand has warned that he will then, in the tradition of de Gaulle, decide on a referendum. But some leading politicians argue that he cannot have a referendum. The fight over Maastricht is likely to go on and if Mitterrand has to have a disputed referendum on Maastricht and loses because, for instance, a vote for EC foreigners is rather unpopular, never mind about a New Europe, Mitterrand is likely to resign, as de Gaulle did in 1969 after losing his referendum. France is therefore likely to be an embarrassing background factor during Britain's chairmanship.

The German situation is equally significant. Some observers are already saying that Maastricht will not be ratified by the time of the Next Year. Germany is paying 28% of the total EC budget and Delors, in his five year budget plan, wants to increase expenditure to 60 [pounds] billion. A unanimous vote of the Bundesrat, the Federal Council of the 16 self-governing Lands, demands a say in what other members contribute. They demand a veto on the transfer of powers envisaged in the Maastricht Treaty and changes in the German constitution to guarantee controls of budget deficits. A two-thirds majority is needed in the Bundesrat and in the Lower House to ratify Maastricht and Chancellor Kohl has been warned that he will not get it. It is significant that in a recent poll 87% of the young and 60% of the middle-aged replied that the cost of Maastricht is too high.

Public opinion, and most politicians, resent the plan that the deutsch-mark is to disappear in the ECU, the monetary union currency some time in 1996/7. Experts are beginning to warn that the reconditioning of East Germany will take much longer than expected and absorb more resources. This, they warn, will force Germany to fail meeting the standards of economic performance, like the 5% of the Gross National Product, GNP, limit of a budget deficit, the required single currency target for 1996/7. It implies that Germany is now not in a hurry to meet the Maastricht targets. Chancellor Kohl has already warned that the other EC members must take a greater share of the burden of giving aid to the East Europeans.

Britain is facing Germany on several issues. It is regarded as certain that Germany, and Spain, will demand that the famous rebate for Britain's contribution, acquired by Mrs. Thatcher, must be ended and also that the European Central Bank to run the single currency must be in Frankfurt since Germany will be the chief provider. The sense of crisis is also revealed in a statement by Helmut Schmidt, the last, and extremely successful, Social Democrat Chancellor, who warns that the EC could |sink towards a Free Trade Zone' if Maastricht was not enacted. If there was no single currency the EC would simply be a Free Trade Zone with a few institutions since this year only a few small steps had been taken towards the real Single Market.

The Germans object especially to the |Cohesion Fund', set up to transfer considerable, carefully calculated, aid, to the |Poor Four', Ireland, Greece, Portugal and Spain. Connected with this is Delor's proposal to increase the basic regular contribution to Brussels from 1.2% of the GNP of member countries to 1.37%, an increase of over 10%. Delors is fighting for every half per cent on this. His relations with the Foreign Secretary, Douglas Hurd are not too good which also means that Britain will have a difficult time in the Chair. When Hurd warned that there was enough in the Brussells kitty and that Britain's contribution may increase by 1 [pounds] bn, Delors quipped that the British must improve their arithmetic.

The work of the Brussels Commission is enormous. In a year roughly 8,000 documents, every one in nine languages, are sent out. The Maastricht Treaty involves 282 specified regulations for the 1993 Single Market and 232 have been turned into legislation. Also hundreds of |Directives' are sent out, one for instance on motorcycle type and parts standards. The Commissions presses governments all the time to accept all of them. Britain has turned 113 of these directives into Law while 19 were turned down.

Tricks, of course, are inevitable. The Italians, for instance, are arguing that their 5% budget deficit limit must take into account their Black Market as well which means that their official 5% can be increased, without them being exclued from EMU, if it comes about. Again, the overall performance of the EC is to be seen against the findings of the official European Anti-Poverty Network. Its statistics say that 55 million of the total EC population are living below the poverty line. This line is drawn when people earn less than half the average income where they live. This means, of course, that in terms of money that line differs greatly between, say, Portugal and Denmark. This is where resentment against the Cohesion Fund comes in.

This is also where the widening of the Community and the aid to the former Soviet Republics comes in. The Germans, spending 60 [pounds] billion on East Germany, want that extension not to cost them too much and Chancellor Kohl has said that the Germans will now supply knowledge rather than finance to the East. Their inflation is now hovering around 5% and the money supply has grown by around 10%. With its strikes, shooting up expenditure and government crisis Germany has ceased, for the time being at least, to be the force pushing for integration. Again, the |convergence' of members' economies, the key feature of the Maastricht Treaty, is becoming a problem.

It seems now that the Portuguese Chairmanship was a pause due to developing circumstances that the Portuguese could not possibly influence. The British will have to face the real beginning of negotiations for the entrance of the new EFTA members now that the European Court has removed certain legal obstacles. Britain is keen on a reasonably early admission of Sweden in the first place. This is connected with the extremely sensitive issue of keeping the ERM, Exchange Rate Mechanism, going. The Germans want a steady rate of exchange because their natural preference, and chief worry, is the reconditioning of what had been East Germany. That takes priority over the need, of Britain, for instance, to lower its rate of interest. Here the admission of new members plays a role because they would also prefer a flexible exchange rate until they have adjusted. And there remain the new doubts about ratification of Maastricht and, even more, the prospect of the Delors Budget being cut significantly.

Britain, for her part, is subtly, but forthrightly, pressing for a reasonably early admission also of the Baltics, Poland, Czechoslovakia and Hungary, admission at least on the same associate basis as, say Turkey, that has now agreed to wait for full membership until the Central Asian situation is clarified.

But so much will depend on what happens to the Maastricht Treaty. If it had to be renegotiated, and as the debate progresses, more fundamental features of the Rome Treaty itself are now to be looked at, membership could be made easier. The Brussels Commission itself has shown its desire to be informal by agreeing to deal in quite a few issues directly with the regions of member countries. All 16 German Lands have offices in Brussels and Welsh and Scottish offices are being established. Spanish and Italian Provinces are also eager to deal directly with Brussels. There is more than meets the eye going on and central governments have to cope with more than expected. In effect the latest proposal by Mr. Delors to set up a new Supranational EEC-Executive has changed the whole picture and put a question mark against the present text of the Maastricht Treaty.
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Title Annotation:Treaty on the European Union, 1992
Author:Muray, Leo
Publication:Contemporary Review
Date:Jun 1, 1992
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