From our archives: The European project – dismantling social democracy, globalising neoliberalism

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by Andy Storey (Centre for Development Studies, UCD,

Note: This article was originally published in April 2004.

Paper for presentation at the conference ‘Is Ireland a Democracy?’, Sociology Department, National University of Ireland Maynooth, 2nd/3rd April 2004.


Pierre Defraigne, Deputy Director General for Trade at the European Commission, professes himself puzzled by Europeans’ attitudes towards the phenomenon of globalisation:

“Today, Europeans are ambivalent as regards globalisation. How is it that a people that ‘discovered the world’ at the time of the Renaissance and, for two or three centuries, colonised four continents, can fail to see the many benefits that the conquest of new markets and the emergence of new producers present for their own well-being?” (Defraigne, 2002).

While Defraigne is baffled by the inability of Europeans to correctly perceive where their own best interests lie vis-a-vis globalisation, other commentators are exasperated at the inability of some to recognise what it is that Europe can and does contribute to the world. According to Senator Martin Mansergh (2003), the EU is not a “a neo-liberal militarised superstate” in the making, but rather “a force for peace, development and social and environmental progress”.

There are two important arguments at work here: first, globalisation is good for Europe (Defraigne); second, Europe is good for the world (Mansergh). But do the best interests of Europeans truly lie in the more thoroughgoing embrace of globalisation, as currently constituted? Is the EU, as Senator Mansergh claims, a force for good in the world? More broadly, what is the relationship between the regional project that is the European Union (EU) and wider issues of globalisation and global governance? And how should those concerned with issues of social justice – both within Europe and globally – respond to the current pattern of European interaction with globalisation? These are the questions that this paper addresses.

Defining terms

This paper adopts a fairly conventional definition of globalisation as the tendency towards international economic integration across national territorial borders. This can take the form of increased trade, investment and/or capital flows. This, of course, focuses only on the economic dimensions of globalisation, but it is an adequate definition for the purposes of the present discussion. ‘Globalism’ may be defined as a policy or set of policies – how states and other governmental actors respond to, and seek (or do not seek) to govern, processes of economic integration. By the same token, regionalisation refers to the regional integration of markets, and regionalism to the way in which states (and other governmental actors) govern (or choose not to govern) market forces within a given region.

Nesadurai (2002) helpfully distinguishes between two models of regionalism in relation to globalisation: ‘open’ and ‘resistance’ (though she does not claim that these two options exhaust the range of possible regional governance models, and, in practice, any country is likely to exhibit aspects of both ‘openness’ and ‘resistance’). Open regionalism establishes regional governance arrangements that serve to facilitate globalisation, whereas resistance regionalism seeks, in one way or another, to govern a region so as to restrain or limit aspects of globalisation and to favour regional interests over those from outside the region. An example of the latter – though it might also be termed ‘developmental’ regionalism in this case (Nesadurai, 2002: 26) – is the Association of South East Nations (ASEAN) Free Trade Area (AFTA) project, which contained a stipulation (put in place in 1998) that foreign investors would only receive full market access and other privileges 10 years after ASEAN investors (Nesadurai, 2002: 31)1.

It is fairly clear that the current structures of global governance (globalism) are, broadly speaking, promotive, rather than restraining, of globalisation: “Neoliberal ideas associated with globalisation have been increasingly institutionalised through a multilateral rule-based framework that has substantial authority over national governments, especially through the WTO” (Nesadurai, 2002: 9). Do most current examples of regionalism essentially go along with these tendencies at the global level, or are there emergent resistance regionalisms constituting alternatives to globalisation and globalism? In particular, what is the relationship between, on the one hand, the dominant form of European regionalism (the EU, or the European project) and, on the other, globalisation and globalism?

Visions of European regionalism

Anthony McGrew, a leading commentator on globalisation, identifies a choice “between a European project which articulates a political alternative to neo-liberal globalization – the building block of a more humane world order – or a project which broadly embraces and reinforces it” (McGrew, 2003: 344). McGrew is here recasting, in normative as well as descriptive terms, the distinction between open and resistance regionalism (or, at least, variants thereof) drawn by Nesadurai (see above).

McGrew goes on to argue that, in practice, European élites have determinedly opted for an open regionalism within Europe that has served to foster the extension and institutionalisation of globalisation. For McGrew, the European project is not an alternative to globalisation – rather, globalisation is embedded within the European project itself:

“For the most part, Europe is not so much a barrier as a key building-block of the liberal global economic order. In this respect, for European states – East or West – regionalism in its present form does not necessarily present, if it ever did, a meaningful political alternative to liberal globalization… The European project for all the political rhetoric appears to many of its citizens today simply an extension of the global economic project” (McGrew, 2003: 348, 353).

As we will see, there are good reasons why European citizens might see the European project in these terms. But for some, McGrew’s argument comes close to heresy: after all, as former French prime minister Lionel Jospin has argued, “Europe is much more than a market. It stands for a model of society” (cited in McGrew, 2003: 357).

Jospin’s view is not confined to top European politicians. A recent article (first published in the German newspaper Frankfurter Allgemeine Zeitung) by two of Europe’s leading philosophers – Jurgen Habermas of Germany and Jacques Derrida of France – makes similar claims. According to Habermas and Derrida (2003: 291), 15th February 2003, the date of the huge marches against war with Iraq, represented the “birth of a European public sphere”, evident on the streets of “London and Rome, Madrid and Barcelona, Berlin and Paris”. Interestingly, the enormous marches which also took place that day in the United States and elsewhere in the world against the war are not referred to by the philosophers and thus the claimed public sphere remains exclusively European, establishing Europe alone as the locus of an alternative to the “hegemonic unilateralism” of the US (Habermas and Derrida, 2003: 293)2.

The nature of that European alternative, in the view of Habermas and Derrida, is encapsulated in two distinctively European models. The first is a model of post-national governance, a means of reconciling national identity with a wider (in this case regional) identity which supersedes national allegiances and dilutes national rivalries. The EU, it is argued, provides a unique model for how people can live together simultaneously within and beyond nations, thus removing a perennial source of conflict between peoples.

The second claimed dimension of the European alternative is a peculiarly European model of social protection:

“Europeans have a relatively large amount of trust in the organisational and steering capacities of the state, while remaining sceptical towards the achievements of markets… They maintain a preference for the welfare state’s guarantees of social security and for regulations on the basis of solidarity” (Habermas and Derrida, 2003: 295).

For Habermas and Derrida, while this ‘social model’ is distinctively European, Europeans can seek to transfer it to the global arena and imbue globalisation and globalism with the idea of social solidarity currently exclusive to Europe alone. Thus, in summary, because of their distinctive perspectives on, and practices of, citizenship and social solidarity, Europeans can make the world a more civilised and safer place if they have the confidence and capacity to export their ideas and models to the rest of the world.

A somewhat similar view is expressed by economist S. Mansoob Murshed, who has also called explicitly for the globalisation of the European social model:

“Europe can play a leading role in bringing about reform and can offer a viable alternative policy to unfettered globalisation…. This is because of Europe’s experience in extending social protection within its own internal borders, its history of successful broad-based post-conflict reconstruction and its relatively more generous record in development assistance” (Murshed, 2003: 1520).

Like Habermas and Derrida, Murshed is pitching his vision of Europe in direct and overt opposition to the US approach (which is seen as the driving force behind “unfettered globalisation”).

The historical trajectory of European regionalism

Leaving aside for now obvious questions of how exclusively European are the citizenship and social models discussed above, to what extent does European regionalism in the form of the EU currently promote these models? We may conclude with little argument that it does promote a certain version of post-national citizenship (though increasingly restrictive asylum and immigration policies render that rather less inclusive than its adherents might claim – Beatty, 2004). However, does it promote the social model? In the view of some observers, including Anthony McGrew (see above), it most certainly does not.

Van Appeldoorn (2001) provides some useful historical perspective on these questions. He identifies three different visions of European order: neoliberalism; neo-mercantilism; and social democracy. The neo-mercantilist vision, it is argued, underpinned the initial drive towards the creation of the European single market and Economic and Monetary Union (EMU). For neo-mercantilists, a European competitiveness gap vis-a-vis the rest of the world was attributed to fragmented markets, a related inability to fully exploit economies of scale in production, and insufficient investment in research and technology. (For neoliberals, the problems were – and still are – more likely to be attributed to factors such as inflexible labour markets, and unsustainable and work-discouraging welfare states).

As van Appeldoorn documents, the neo-mercantilist project was closer to a ‘resistance’ than ‘open’ model of regionalism (see above):

“A strong European home market was expected to serve as both a stepping-stone to conquer the world market as well as a protective shield against outside competition. The neo-mercantilist project thus constituted a defensive regionalisation [more precisely, regionalism] strategy oriented towards the creation of a strong regional economy, not only through the completion of the Internal Market, but also through an industrial policy aimed at the promotion of ‘European champions’, if necessary protected by European tariff walls” (van Apeldoorn, 2001: 75).

Under the protective banner of the neo-mercantilist framework, social democrats envisaged “a united Europe [as offering] an opportunity to protect the ‘European model of society’, and its traditions of the mixed economy and high levels of social protection, against the potentially destructive forces of globalisation and neo-liberalism” (van Apeldoorn, 2001: 76). Thus, a confluence of interests between neo-mercantilists and social democrats underpinned the construction of what seemed to many a genuinely alternative model of regionalism.

But the vision was not realised: “as the internal barriers came down, no external barriers were erected and the Internal Market provided as much opportunity for US and Japanese as for European firms” (van Apeldoorn, 2001: 79). The idea of developing and supporting ‘European champions’ was abandoned. Tariff barriers and interventionist industrial policies were eroded rather than deployed.

Lobbying from corporate groups played a vital role in this outcome, especially the influential European Roundtable of Industrialists (ERT), which, from the 1980s onwards, decisively shifted towards, and lobbied for, a neoliberal version of the single market. Kol and Winters (2003: 345) note, approvingly, that “The ERT was the main driving force to urge the European Commission to create the Single Market, and saw to it that it did not result in a fortress Europe”. Van Appeldoorn attributes this shift and subsequent lobbying pressure to the phenomenon of globalisation itself: the interests of the leading European companies came to lie, for the most part, in the extension of open markets globally, and many of these companies had or developed interests (investments, strategic alliances, and others) in the US and elsewhere as well as in Europe. Globalised or globalising companies such as Shell, Unilever, ICI, BP, La Roche, BT and Bayer joined or rejoined the ERT from 1988 onwards, whilst longer-standing members saw their interests go more global than merely regional (van Apeldoorn, 2001: 80).

European capital, in other words, became increasingly globalised and relatively disinterested in ideas such as ‘European champions’ (Gill, 2001: 49). This did not mean that sections of European capital would not continue to welcome and pursue state support wherever possible, as the example of European agribusinesss defending the Common Agricultural Policy demonstrates. But most European capital came to perceive its interests as lying, broadly speaking, in the embrace of neoliberal globalisation. And European regionalism, with some exceptions and hesitations, followed the lead of capital (Holman, 2001: 171; van der Pijl, 2001), as even ‘left-wing’ European political parties increasingly embraced neoliberal policies (Esman, 2003).

Institutionalised neoliberalism in the EU

Instead of a neo-mercantilist and/or social democratic project, EU integration ended up institutionalising what Stephen Gill (2001) has dubbed ‘disciplinary neoliberalism’. Neoliberal policies are locked, politically, into the structure of the EU. Examples of such policies include:

  • An activist competition policy at EU level, which can act against exclusive state provision of certain goods and services. For example, the US parcel service company UPS used the Commission to break the German post office (Deutsche Post) monopoly over the German parcel market (Wickham, undated: 15). In the words of former Competition Commissioner Leon Brittan the objective of competition policy has been “to help European capitalism become more healthy, vibrant and competitive and prevent its decline into the cosy corporatism that so much of the European left used to espouse” (cited in Allen, 2003: 64). At the same time, the fact that competition policy is decided upon on a case-by-case basis means that more powerful corporate actors have better chances of getting favourable rulings (Carchedi, 2001: 127).
  • As a subset of competition policy, the EU limits state aid to private businesses, especially where such aids distort the ‘level playing field’ of competition. For example, German public banks, whose investments are guaranteed by the state, have been deemed to be in receipt of illegal state subsidies and, as a result, government policy towards the sector has to be altered by 2005 (Döring, 2003). In similar vein, Électricité de France, the state power company, has been ordered by the Commission to repay €1 billion in subsidies received from the French state, and the French government ordered to terminate its credit guarantees to the company (Irish Times, 15th December 2003). A dramatic and more recent example is the EU ruling that a Belgian regional government’s support to Charleroi airport constituted illegal state aid (in this case, to the main Charleroi user, Ryanair). The ability of publicly owned airports (or other enterprises) to compete with privately owned ones is, as a spokesperson for Ryanair has pointed out, severely damaged by the ruling (Fitzsimmons, 2004). Accession states are also subject to pressure in this regard as a Commission investigation of Polish state aid to its energy sector attests (Frydrych, 2004).
  • Monetary policy is administered by an ‘independent’ (from electoral pressure) European Central Bank (ECB) with an anti-inflationary mandate but with little or no concern for issues of growth and employment (Irvin, 2004; Stiglitz, 2003). The statutes of the ECB state that “The primary objective…shall be to maintain price stability” ( and ECB president Trichet has emphasised “the overriding goal of monetary policy should be the maintenance of price stability” (cited in Keegan, 2004). Bonefeld (2002: 133) notes that “the removal… of the Central Bank from political influence.. [accords] it a quasi-judicial status independent from the established liberal-democratic systems, expelling the ‘mob’ from the seat of government”, though, of course, this expulsion had already often occurred at national state level prior to the foundation of the ECB (see later sections of this paper).
  • Fiscal monitoring by the EU Commission through the Stability and Growth Pact (SGP) seeks to limit (to 3 per cent of GDP) states’ capacities to run fiscal deficits even when these might appear justified by the need to lift an economy out of recession (Irvin, 2004). Tensions surrounding the SGP are now obvious given the failure of France and Germany to abide by its rules and this subject is returned to in the conclusion to this paper.
  • The negotiation of international agreements by EU authorities, such as through the World Trade Organisation (WTO), binds European countries into the global liberalisation of trade in goods and services (again, this is discussed further below).

Bonefeld (2002: 127) accurately describes “an institutionally ’embedded’ and legally regulated economic liberalism” at EU level. All of the above constitute mechanisms, not of defending or extending the European social model, but rather of undermining it. While the EU does not prohibit public ownership per se, it prohibits many of the features that make public ownership useful i.e., it limits market distortions, whereas the very point of much public ownership was precisely to distort the market and ensure outcomes that the market would not otherwise deliver (McGiffen, 2001: 78).

Sociologist James Wickham summarises the situation as follows:

“increasingly the Commission has been removing national barriers to competition within the EU, sometimes even opening up markets, such as in postal services or electricity supply, which hardly existed before… Increasingly too, public services such as transport are being ‘opened up’ in the same way, partly by rulings of the European Court of Justice… Finally, the Commission has been clamping down on national state aid to companies… Far from protecting the European Social Model from globalisation and/or Americanisation, the EU is at the moment busily undermining it” (undated: 15, 2).

As stated by Wahl (2004: 38), “the EU is today the conduit through which the neoliberal social and economic model is being institutionalised in Europe”. There are, of course, counter tendencies and tensions (and these latter are discussed more fully later in this paper). Those who see the persistence of social democracy within the European project point, for example, to the ongoing popularity of terms such as ‘social cohesion’ and ‘social inclusion’ within EU discourse. Thus, for example, the ‘Lisbon Agenda’ adopted by the European Council in March 2000 reads as follows:

“The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”

The claimed commitment to social cohesion (see Atkinson, 2002) was followed up at the Nice Summit in December 2000, where it was agreed that each member state would prepare a national action plan every two years on progress in combating poverty and social exclusion. The Commission would then monitor and prepare progress scorecards for each country on the basis of indicators such as poverty, inequality and unemployment. This process is now ongoing, but there is no element of compulsion here – the Commission can ‘name and shame’, but it cannot impose fines or take Member States to court for failure to prepare or fulfil a plan. Unlike competition policy, limits on state aid to business, and the Stability and Growth Pact, social cohesion policy is not legally and institutionally embedded into the structure of the European project.

At the same time the Lisbon Agenda can be drawn on to support the extension of neoliberalism, as is evident in Irish Finance Minister McCreevey’s announcement, in the context of discussing the Agenda, of a campaign “to prioritise regulatory reform in a concerted effort to seek more flexible European product, capital and labour markets” (cited in Humphreys, 2004b). Proposals to create a new Commission vice-president for competitiveness have caused European trade union leaders to charge that the social dimensions of the Lisbon Agenda are being downgraded (Brennock, 2004)3.

The EU’s role in globalising neoliberalism

Rather than globalising the social model, as Habermas, Derrida and Murshed (see above), have advocated, the EU is internally dismantling that model. Furthermore, it is indeed engaged in a process of globalising policies, but these are neoliberal rather than social policies. For example, the EU (along with the US and other actors) has signed up to a ‘stability pact’ for south-eastern Europe, point 10 of which involves:

“creating vibrant market economies based on sound macro-economic policies, markets open to greatly expanded foreign trade and private sector investment, effective and transparent customs and commercial/regulatory regimes, developing strong capital markets and diversified ownership, including privatisation, leading to a widening circle of prosperity for all our citizens; fostering economic cooperation in the region and between the region and the rest of Europe and the world, including free trade areas” (cited in Engel-Di Mauro, 2002: 128-9).

Further afield, at the WTO talks in Cancún, Mexico, in September 2003, the EU pursued an aggressive strategy designed to maximise market access for European companies, whilst clinging stubbornly to high levels of protection for European agribusiness (Jawara, 2003; Staunton, 2003).

The previous year – on 4th July 2002 – the EU tabled requests under the worldwide General Agreement on Trade in Services (GATS) to 109 countries; each such request involves asking the government of the country concerned to open certain, specified service sectors up to competition from EU firms. The requests largely originate from the European Services Forum (ESF), a European business lobby group (Corporate Europe Observatory, 2003)4. While these requests were not initially made public, leaked documents obtained by the World Development Movement (WDM) led that organisation to draw conclusions about the EU’s negotiating stance, as follows (WDM, 2003):

  • The EU is targeting the poorest countries in the world in its pursuit of services market access for European companies. Mozambique, for example, has received six sector requests.
  • The EU is targeting countries where “effective non-market based delivery systems are in operation” (WDM, 2003: 2), precisely because such not-for-profit systems limit the commercial opportunities available to European service exporters. Bangladesh’s water sector has been targeted, for example, putting at risk workers’ cooperatives’ involvement in water supply and sewerage services in the city of Dhaka.
  • EU requests constitute attacks on the principle and practice of public service provision. Again, the water sector is an example – the state-owned water company of Honduras has performed successfully in recent years, but would find itself exposed to potentially ruinous competition if EU requests are acceded to. The EU ‘Water Initiative’ (EUWI) in general is orientated towards creating business for the European multinationals – including Suez, Vivendi, RWE-Thames and SAUR – that dominate the water sector worldwide (Hall, 2003)
  • EU requests for binding commitments to the liberalisation of services undermine democratic policy making (by taking aspects of economic policy making out of the realm of political debate once the binding commitment is entered into). For example, India was able to evict Enron from its activities in the state of Maharashtra in 2001 for environmental and other reasons, but a binding commitment to liberalisation of the energy sector (which is one of the EU’s requests to India) might render such actions illegal in the future.
  • EU requests seek to restrict countries’ abilities to regulate foreign investment. Examples include the EU request to Malaysia to drop its current cap on foreign equity participation in its insurance sector, and to Brazil to end its restrictions on profit repatriation.

The countries targeted may choose to refuse the EU’s requests (see Chanda, 2003), but this does not alter the fact that the EU is seeking not to limit or restrain globalisation, but to extend and deepen it. This is also evident in the trade negotiations being pursued by the EU since 2002 under the Cotonou Agreement with the 78 African, Caribbean and Pacific (ACP) countries with which the EU has traditionally had special trade and aid relationships (previously formulated under the framework of the Lomé Convention). The EU now seeks to establish Economic Partnership Agreements (EPAs) involving the establishment of reciprocal market access arrangements with these countries on a regional basis. The organisation Traidcraft (2003; see also Hurt, 2003) has documented the negotiating stance adopted by the EU vis-a-vis these EPAs, including:

  • Demands for liberalisation of public procurement in the ACP states (allowing EU firms to bid for public works contracts there and not allowing ACP governments to support or prioritise local contractors);
  • Movement towards liberalisation of all service sectors, beginning in 2006 i.e., an even more ambitious approach than the GATS one of tabling sectoral requests (see above);
  • And pressure to ensure European firms receive at least as favourable treatment as local ones in the ACP countries, meaning that ACP governments would not be allowed discriminate in favour of locally owned firms or require European companies to abide by special conditions with regard to local employment or procurement.

These processes may have yet further to go. The EU draft constitution aims to make trade policy on health, education and cultural and audio-visual services subject to qualified majority voting (QMV) at the Council of Ministers, ending the existing practice whereby EU countries opposed to the liberalisation of trade in such services could exercise a veto (Young, 2004). These traditionally sensitive markets may therefore be opened up – both inside and outside Europe – in the same way as is happening already for other service sectors (see above).

The European state and corporate power

Far from representing a social model, the European project is actively dismantling that model within its own borders and seeking to globalise a neoliberal vision of world order, especially in its dealings with poorer countries. It is important to note that European regionalism in the form of the EU is not the only, and sometimes not even the most important, conduit for the dissemination of neoliberal policies. A study of the electricity and telecommunications sectors found that much liberalisation would have occurred within Europe even without European integration, mainly because there were often pressures for such policy changes at the national level (Levi-Faur, 2004). Indeed, the policies that came to be embedded within the EU tended to reflect these national-level preferences rather than vice versa. At the same time, the Commission in particular did play a role in the liberalisation of these sectors in, for example, Italy and in the accession countries, more so in the case of electricity than of telecommunications.

Because the EU largely serves a neoliberal agenda set by the interests of capital, this does not mean that it is always and everywhere the driving force behind that agenda. National-level policies and/or corporate lobbying (such as by the European Services Forum) may be more influential. On the other hand, this also does not mean that there is a straightforward relationship between corporate preferences and EU policies. The US Foreign Sales Corporation issue provides an interesting example. The European Commission took the US government to task at the WTO over what was deemed to be an illegal subsidy to US exporters which placed EU companies at a competitive disadvantage (conferring particular benefits on large US corporations including Microsoft, Boeing and Motorola). But a study by Hocking and McGuire (2002) found that the Commission was not necessarily responding to complaints from European companies, though Airbus did lobby on the issue. Many European companies, especially those whose activities spanned the Atlantic, had mixed feelings on the issue and feared that the Commission’s complaint to the WTO could spark a damaging trade war, as indeed it may now do (Power, 2004;, 1st March 2004). Hocking and McGuire (2002: 466) conclude:

“The Commission launched the FSC Case without much, if any, consultation with European business… The relative autonomy enjoyed by states on deciding which cases to bring and pursue does not support the more extreme arguments that governments are mere messengers at the WTO for corporate preferences”.

In part what is at issue here is the institutional desire on the part of the Commission, in cooperation with the governments of some Member States, to assert Europe’s identity and role as a global actor, even at some cost to business. However, the fact that the Commission is adopting a fairly moderate and compromise-orientated approach to the resolution of the FSC issue shows that costs are never irrelevant (Irish Times, 14th February 2004). Ultimately, “the increasingly dense set of EU-US corporate links” (Hocking and McGuire, 2002: 467) will likely prove the decisive factor in bringing about a settlement.

There are also other areas where elements of the EU and Member State governments may promote the interests of the Union in its own right – as a global ‘player’ – even when there are no direct corporate interests at stake. An example is the evident determination of some figures to develop a European military capacity, at least partially distinct from that of the US (Storey, 2002). Two EU Commissioners have recently proposed that the EU invest €2 billion per annum in defence and security research (Castles, 2004). While European military capacities might ultimately be used to further the economic agenda of European business interests, and while European armaments companies would expect to be beneficiaries of increased European military spending, this is an element of the European project that cannot be explained simply in terms of corporate lobbying and political response – the agenda, for some, is longer-term and more strategic than that.

More broadly, while Hocking and McGuire may overstate their case somewhat by referring to relative state autonomy, there is no doubt that the European ‘state’ (used here to describe an interlocking set of Member State and EU institutions) remains an important actor in the emerging pattern of European regionalism. While the overall trend may be towards deregulation and liberalisation, these processes in themselves require extensive state action and oversight. Vital state roles include:

  • The initiation of actions under EU competition law;
  • The initiation of actions against illegal state aids;
  • The maintenance of an anti-inflationary monetary policy;
  • The policing of the terms of the Stability and Growth Pact;
  • The conduct of trade negotiations vis-a-vis the WTO, the GATS and the EPAs, amongst other fora.

In each of these areas, the European state (whether it is the Commission, the ECB, or some other agency) exerts important regulatory influence. It is therefore inaccurate to characterise European regionalism as a simple triumph of the market over the state. Rather, the role of the state has been reworked to become an essentially (and essential) disciplinary agent in the advancement of the neoliberal agenda, while some of its other functions (including the provision of social services and supports) have been eroded. Thus, the state remains an important site of political struggle (see below).

The question of democracy

“‘Europe’ provides the framework for economic adjustment based on law and controlled by state bureaucracies and big capital. It focuses economic policy as a technocratic exercise that regulates market freedom through institutionally ’embedded’ and constitutionally safeguarded ‘rules’ which stand apart from mass democratic influence” (Bonefeld, 2002: 129).

Many commentators would accept, as the preceding section concluded, that the state remains an important actor, but go on to argue that the capacity of European citizens to change state policy is itself diminished by aspects of the European project. This argument is, in essence, that the EU suffers from a so-called ‘democratic deficit’. Part of the problem is, for example, the power wielded by behind-the-scenes corporate lobbyists, as discussed above; of course, lobbying happens at the national level also, but large corporations are usually best placed to maintain a permanent lobbying presence in Brussels and Strasbourg (Balanyá et al, 2000; McGiffen, 2001: 139). The fact that this lobby power operates through decision-making structures that are often lacking in transparency aggravates the problem – EU trade policy formulation provides a particularly egregious example of non-transparency (Worldwide Fund for Nature, 2003).

The fact that the ECB – “an unelected board of central bankers, one of the narrowest ruling élites in recent history” (McGiffen, 2001: 141) – is independent of popular or electoral pressures is also sometimes cited as an example of the democratic deficit. On the other hand, the Irish Central Bank, when it determined interest rate and other elements of monetary policy, was not, in theory, subject to such pressures either, so the mere fact of the transfer of power from the national to the regional level is not, in itself, a defeat for democracy. However, what the transfer of power upwards in this case ensures is that no individual Member State can respond to popular pressure by making ‘concessions’ in the area of monetary policy (and the SGP partially helps ensure that the same is true for fiscal policy). Most starkly, the euro ensures that devaluation is off most national agendas. The significance of the transition – from the national to the regional – is explained by Bonefeld (2002: 132-3):

“The importance of EMU, then, is not that it makes democratically unaccountable what previously had been democratically accountable… Rather, the importance of EMU is that national states, on their own initiative, will no longer be able to accommodate class conflict through credit expansion or currency devaluation. EMU, then, inscribes the neo-liberal policy of market freedom… through the creation of supranational institutional devices that check expansionary responses to labour conflict”.

In other words, the structure of European regionalism in theory ensures that no one state can go ‘soft’ and make concessions to its own working class (though debates on the SGP rules show that this is not entirely how things work out in practice). Instead, adjustment costs must be borne through adjustments in wages and in the ‘social wage’ of the welfare state. McGiffen (2001: 91) quotes an approving neoliberal economist: “Either the euro subverts the welfare state, or Europe’s welfare state will subvert the euro… [S]mart money should bet on the euro”.

A further element of the ‘democratic deficit’ may be seen in the tendency of European-level institutions to exercise power in a technocratic manner. Thus, significant areas of, especially economic, policy are decided upon not by democratic discussion and debate, but by administrative fiat. Competition policy, state aid rules, the appropriate level of the interest rate and many other matters are all now largely determined by technical ‘experts’ operating in a supposedly neutral realm of objective facts and data. To that extent, there has been a shift to the democratically unaccountable from the previously democratically accountable, to use Bonefeld’s phrase (see above). This is, arguably, part of a wider phenomenon through which the “room for real political change has been displaced by a technology of expertise” (Edkins, 1999: xii), and its discursive dimension is discussed further below5.

Andrew Moravcsik takes up this theme, but in the context of a spirited defence of the EU. Moravcsik (2002) argues that most governments commonly delegate certain functions to bodies (civil services, courts, etc.) that are not democratically elected and whose roles are shielded from public debate, and sometimes even public scrutiny. He goes on to claim that the EU simply specialises in such functions – including central banking, economic negotiations with third parties, administration of commercial law, and others – so that its apparent lack of democratic accountability is simply a function of a division of labour within the EU’s system of governance. If carried out at the national level, the EU’s main functions would, it is argued, also be outside political contestation.

Moravcsik’s is an interesting but ultimately unpersuasive argument. To take one example, by institutionalising deficit spending limitations within the terms of the SGP, the European project aims to deny European people the right to democratically debate matters such as whether deficit spending, above a certain level, should be encouraged in the context of a recession. True, this power was handed to the EU by democratically elected governments, but the fact remains that it has resulted in closing off space for democratic debate of this important issue, amongst others. EMU, as McGiffen (2001: 64) puts it, “abolished the tiresome influence of popular, democratic institutions on macro-economic policy”.

The European project also ensures that EU citizens cannot choose to elect a government that wishes to limit the scope of EU competition policy; that wishes to see substantial increases in state aid to industry; that does not want to enter into reciprocal free trade agreements with third countries; or that wants to stimulate the eurozone economy through exchange rate devaluations or interest rate reductions. Or, more precisely, they cannot choose to elect a government that wishes to pursue such an agenda and remain a Member State of the EU, as currently constituted. Again, these restrictions are in place because Member State governments put them in place, but the end result is that no European electorate now has the option of changing those policies by electing an alternative government. Even if a government with a radical reform agenda vis-a-vis the EU (such as a commitment to bringing the ECB under democratic control) were to be elected it could not unilaterally alter the rules of the EU and thereby respect the wishes of its voters. At best, it could engage in a debate with other EU governments, but this means that electoral mandates become aspirational rather than directly deliverable. In this way, democratic choice is substantially narrowed by the European project.

An additional dimension of the problem, and one already adverted to, is the discursive construction of the appropriate realms of the ‘political’ and the ‘technical’. An increasing range of decisions is being progressively removed from the realm of the ‘political’ and transferred into the realm of the ‘technical’ (Edkins, 1999). This does not, in practice, make them non-political matters – the level of the exchange rate and the interest rate, for example, have important distributional consequences. But it does serve to limit the public’s very right to even discuss issues that are portrayed as inappropriate subjects for public debate (such decisions being best left to the ‘experts’). Thus, policies are not only politically and legally ‘locked in’, they are also discursively locked in.

In particular, neoliberal policies are increasingly regarded, within élite circles especially, as ‘common sense’ or self-evident nostrums – mere technical (rather than political) solutions to technical problems (Holman, 2001: 173). Discourse analyst Ruth Wodak dissects the formulation of an EU policy paper on employment: her linguistic study reveals a strong emphasis on the part of the paper’s drafters of the need to persuade people of the merits of a more or less agreed (amongst the ‘experts’) position regarding flexible labour market responses to globalisation. Within this discourse, “experts act rationally, whereas the ‘European citizens’, the non-experts, act irrationally” (Wodak, 2000: 191). The role of the citizens is simply to be persuaded of the arguments of the experts, and the only role of politicians is to better engage in that task of persuasion. This type of approach results in a restricted and debilitated version of democracy.

Tensions and resistances

“the mainly ideological construction of a European Social Model allows European states to point to the allegedly inferior pure market economy of the United States. Paradoxically, however, the very notion of any sort of social model raises the expectations of ordinary people concerning the level of employment, social security and labour standards. These raised expectations stand in stark contrast to the EU’s practice of promoting greater competition among working people as well as the unemployed in order to drive down their standards of living. The contradiction between expectations and everyday experience has produced a crisis of legitimacy for European integration” (Schmidt, 2003: 43).

The EU is, in large part, a mechanism for the transmission and institutionalisation of neoliberalism – within and beyond Europe. If the EU did not exist, doubtless there would be (and already are) other transmission and institutionalisation mechanisms. The argument of this paper is not that the EU is the sole agent responsible for the dismantling of social democracy in Europe and the globalisation of neoliberalism. But it is one such agent, and a significant one in many respects. On the other hand, it is by no means all-powerful.

The ECB has ignored calls from some leading European politicians, and even some sections of European business, to lower interest rates (, 4th March 2004; Carter, 2003), but neither the French nor the German governments have been able to keep their budget deficits within the terms set by the SGP. This reflects the failure to persuade the populations of those countries that they must accept the dictates of European ‘disciplinary neoliberalism’ (Gill, 2001). The goal of EMU – to put in place regional institutions to ensure that national states cannot make their own compromises to class conflict (Bonefeld, 2002: 132) – has not been fully realised.

Gill (2001: 65) notes the opposition of powerful public service workers in France and many German unions to the expenditure cut-backs mandated by the SGP criteria. Chancellor Schröder’s proposed economic reforms have had to be substantially watered down in the face of trade union (and other) opposition (Guardian, 17th December 2003). Italian workers in their millions have successfully protested against proposed new anti-labour legislation (Petras, 2003: 186). The point made by Schmidt in the quotation that opens this section is reinforced by Gill (2001: 65) – that because most Europeans (though this is by no means exclusive to Europeans) are still stubbornly attached to social solidarity, the EU’s erosion of the mechanisms of solidarity confronts it with a fundamental legitimacy crisis.

The disjunction between the idealised vision of Europe propounded by Habermas and Derrida, and discussed extensively at the outset of this paper, and the reality of neoliberal regionalism is stark and politically destabilising. This disjunction was evident at a January 2004 meeting of EU employment and social ministers in Galway, where anti-poverty campaigners pointed to the “absolute contradiction” between stated aspirations towards a European social model and the reality of cut-backs in social assistance in Ireland and a number of other Member States (Dooley, 2004).

Some Member State governments have sought a way around their problems by using the EU as an alibi for the imposition of austerity policies: “an anti-labour policy wanted by national governments (on behalf of their capitals) is disguised as if it were an economic policy imposed by some distant bureaucracy, for which the member states are not responsible” (Carchedi, 2001: 139-40). But, insofar as this tactic is successful, it further undermines the European project in the eyes of EU citizens, who further identify the EU with globalisation and neoliberalism.

Other contradictions and tensions abound. The EU and the US, as adverted to earlier, are engaged in a variety of trade disputes that could yet escalate and undermine the corporate alliances that currently span the Atlantic, thereby eroding the level of economic support for globalisation and leading business leaders on both sides to call for resistance or defensive regionalism in the form of retaliatory trade sanctions or other measures. For example, The US Senate majority leader has described the EU Commission’s fining of Microsoft for anti-competitive business practices as the first shot in a potential trade war (Wray, 2004). Such a scenario could conceivably arise from developments in domestic US politics i.e., from forces largely outside European influence.

Tensions and contradictions create spaces for resistance, which is already occurring, as the trade union examples cited above demonstrate. The European Social Forum – an eclectic mixture of socialists, environmentalists, feminists, anti-war activists, and others, with 50,000 delegates gathering in Paris in November, 2003 – calls for ‘Another Europe’, an alternative to the EU’s neoliberal regionalism (Brassett, undated). What ‘another Europe’ would look like is not precisely clear, nor even agreed amongst these disparate groups, but it would certainly involve a much higher level of democracy and accountability.

In Ireland, resistance is constrained by two, closely connected factors. The first is the extent to which the EU is seen by many as a positive and progressive force (or resource) for change in Ireland. Some feminists point to the way in which EU directives on equal pay and in other areas have helped advance Irish women’s rights (Kennedy, 2003: 95). Some environmentalists point to the way in which the EU is forcing the Irish government to adopt certain environmental safeguards, though often with a large amount of Irish foot dragging: “per capita Ireland has received the highest number of legal warnings involving the bad application of EU environmental legislation” (McKenna, cited in Humphreys, 2004a; McDonald, 2003). Some animal rights campaigners extol EU initiatives on, for example, animal transport (McConnell, 2003). Many trade unionists (especially trade union leaders) see the widening and deepening of European integration as a necessary counter to the ‘American model’ of completely unregulated markets (Cassells, 2000). Some political commentators see the emergence of a European military capability as a means of advancing peace and human rights around the world (McSweeney, 2002). And some cultural commentators see Ireland’s participation in the EU as a key element in the promotion of Irish cultural openness and self-confidence (Ryan, 2000).

These are important arguments. However, alternative perspectives exist on each of these issues. For example, this paper has argued that the EU does not promote a social model distinct from the US vision of free market capitalism; rather, the EU is undermining the social protections long fought for by national labour movements throughout Europe. The EU’s environmental credentials are tarnished by factors such as its promotion of Trans European Networks, transport projects with significant environmental costs (McGiffen, 2001: 119-20), and its support for nuclear power (Ahern, 2004). Critics of EU militarisation point, amongst other things, to the extent to which Europe buttresses, rather than challenges, US military aggression (Storey, 2003). The claimed cultural gains of EU membership must likewise be set against the problems of participation in a European project that carries with it a strong sense of Eurocentrism and European superiority, of which a typical example is Commission president Romano Prodi’s assertion that Europe’s history constitutes “the richest store of culture and heritage amassed by mankind” (cited in Hansen, 2004: 58).

Nonetheless, there is no reason why campaigners against the current nature of the European project need throw the baby out with the bathwater. Where progressive gains have been made – in, for example, the advancement of women’s rights – these can be retained and extended in any recasting of the European project. Such a nuanced position vis-a-vis European regionalism may, however, encounter problems inserting itself into Irish political discourse. This is because of the second constraint to the development in Ireland of support for a radical overhaul of the European project (the development of a genuinely resistance regionalism), namely the manner in which critics of the EU are all labelled right-wing reactionaries, as has recently, for example, been done by O’Connell (2003).

Some Irish critics of the EU are obviously conservative, but, as this paper has argued, there are valid left-wing reasons for critiquing and seeking to change the current pattern of European regionalism. Not to do so merely to avoid the risk of being labelled reactionary is to participate in a discursive narrowing of the room for democratic debate, an acceptance that certain positions cannot be openly stated whatever their intrinsic merits. This, in itself, is unacceptable and deeply anti-democratic.

In many important respects, and to a growing extent, the emperor that is the European social project has no clothes – it is time to point out this nakedness and to begin the task of rebuilding European regionalism. Such a reconstituted regional model could then also become, to echo McGrew (2003), a building block of a more humane and just global order.


1.This reflected the close links between domestic capital in South East Asia and political élites in the region.

2. Similarly, Will Hutton (2003), editor of the Observer newspaper, argues that “we Europeans have a lot in common. Europeans believe in a social contract – the big idea behind the NHS and state education. Europeans believe that their civilisations are enriched by public interventions and institutions – from public footpaths to public service broadcasting”.

3. Staunton (2004) also notes that the Lisbon goals will “involve privatisation of state enterprises or the end of state monopolies”.

4. In the words of one Commission official, speaking in 1999, “The European Commission is going to rely heavily on the ESF… We are going to rely on it just as heavily as on member state direct advice in trying to formulate our objectives” (cited in Corporate Europe Observatory, 2003).

5.This ‘technicisation”of politics is not confined to the EU level. In an analysis of the rhetoric of New Labour in the UK, Fairclough describes the Labour government as being about ‘governance’ – a regime for the management of public affairs – rather than being about politics, where politics is defined as “the domain of struggles amongst groups of people over substantive aspects of social life, including, centrally, struggles over the distribution of ‘social goods’ in the widest sense” (2000: 172). Whereas politics is characterised by “disagreement, dissent and polemic”, governance tends to “exclude, marginalise or suppress disagreement” (Fairclough, 2000: 172). This suppression works through the denial that there is even a political choice to be made, by insistence on the existence of a single technically correct solution to any given problem. Fairclough cites welfare reform as an example of where “the [Labour] Government’s policies are sold as merely technical solutions to an agreed problem…[as] managerial problem-solving” (2000: 180). A commitment to a technocratic style of governance is, arguably, longer established within EU institutions than most other (especially national) authorities (Joerges, 2001). This, perhaps, partly reflects the origins of the EU in seemingly hyper-technical matters of inter-governmental cooperation, including atomic energy (Barry and Walters, 2003).


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