In 1989 the political systems of three centuries came to an end in Europe: the balance-of-power and the imperial urge. That year marked not just the end of the Cold War, but also, and more significantly, the end of a state system in Europe which dated from the Thirty Years War. September 11 showed us one of the implications of the change.
To understand the present, we must first understand the past, for the past is still with us. International order used to be based either on hegemony or on balance. Hegemony came first. In the ancient world, order meant empire. Those within the empire had order, culture and civilisation. Outside it lay barbarians, chaos and disorder. The image of peace and order through a single hegemonic power centre has remained strong ever since. Empires, however, are ill-designed for promoting change. Holding the empire together – and it is the essence of empires that they are diverse – usually requires an authoritarian political style; innovation, especially in society and politics, would lead to instability. Historically, empires have generally been static.
In Europe, a middle way was found between the stasis of chaos and the stasis of empire, namely the small state. The small state succeeded in establishing sovereignty, but only within a geographically limited jurisdiction. Thus domestic order was purchased at the price of international anarchy. The competition between the small states of Europe was a source of progress, but the system was also constantly threatened by a relapse into chaos on one side and by the hegemony of a single power on the other. The solution to this was the balance-of-power, a system of counter-balancing alliances which became seen as the condition of liberty in Europe. Coalitions were successfully put together to thwart the hegemonic ambitions firstly of Spain, then of France, and finally of Germany.
But the balance-of-power system too had an inherent instability, the ever-present risk of war, and it was this that eventually caused it to collapse. German unification in 1871 created a state too powerful to be balanced by any European alliance; technological changes raised the costs of war to an unbearable level; and the development of mass society and democratic politics, rendered impossible the amoral calculating mindset necessary to make the balance of power system function. Nevertheless, in the absence of any obvious alternative it persisted, and what emerged in 1945 was not so much a new system as the culmination of the old one. The old multi-lateral balance-of-power in Europe became a bilateral balance of terror worldwide, a final simplification of the balance of power. But it was not built to last. The balance of power never suited the more universalistic, moralist spirit of the late twentieth century.
The second half of the twentieth Century has seen not just the end of the balance of power but also the waning of the imperial urge: in some degree the two go together. A world that started the century divided among European empires finishes it with all or almost all of them gone: the Ottoman, German, Austrian, French , British and finally Soviet Empires are now no more than a memory. This leaves us with two new types of state: first there are now states – often former colonies – where in some sense the state has almost ceased to exist a ‘premodern’ zone where the state has failed and a Hobbesian war of all against all is underway (countries such as Somalia and, until recently, Afghanistan). Second, there are the post imperial, postmodern states who no longer think of security primarily in terms of conquest. And thirdly, of course there remain the traditional “modern” states who behave as states always have, following Machiavellian principles and raison d’état (one thinks of countries such as India, Pakistan and China).
The postmodern system in which we Europeans live does not rely on balance; nor does it emphasise sovereignty or the separation of domestic and foreign affairs. The European Union has become a highly developed system for mutual interference in each other’s domestic affairs, right down to beer and sausages. The CFE Treaty, under which parties to the treaty have to notify the location of their heavy weapons and allow inspections, subjects areas close to the core of sovereignty to international constraints. It is important to realise what an extraordinary revolution this is. It mirrors the paradox of the nuclear age, that in order to defend yourself, you had to be prepared to destroy yourself. The shared interest of European countries in avoiding a nuclear catastrophe has proved enough to overcome the normal strategic logic of distrust and concealment. Mutual vulnerability has become mutual transparency.

The main characteristics of the postmodern world are as follows:

· The breaking down of the distinction between domestic and foreign affairs.
· Mutual interference in (traditional) domestic affairs and mutual surveillance.
· The rejection of force for resolving disputes and the consequent codification of self-enforced rules of behaviour.
· The growing irrelevance of borders: this has come about both through the changing role of the state, but also through missiles, motor cars and satellites.
· Security is based on transparency, mutual openness, interdependence and mutual vulnerability.

The conception of an International Criminal Court is a striking example of the postmodern breakdown of the distinction between domestic and foreign affairs. In the postmodern world, raison d’état and the amorality of Machiavelli’s theories of statecraft, which defined international relations in the modern era, have been replaced by a moral consciousness that applies to international relations as well as to domestic affairs: hence the renewed interest in what constitutes a just war.
While such a system does deal with the problems that made the balance-of-power unworkable, it does not entail the demise of the nation state. While economy, law-making and defence may be increasingly embedded in international frameworks, and the borders of territory may be less important, identity and democratic institutions remain primarily national. Thus traditional states will remain the fundamental unit of international relations for the foreseeable future, even though some of them may have ceased to behave in traditional ways.
What is the origin of this basic change in the state system? The fundamental point is that ‘the world’s grown honest’ . A large number of the most powerful states no longer want to fight or conquer. It is this that gives rise to both the pre-modern and postmodern worlds. Imperialism in the traditional sense is dead, at least among the Western powers.
If this is true, it follows that we should not think of the EU or even NATO as the root cause of the half century of peace we have enjoyed in Western Europe. The basic fact is that Western European countries no longer want to fight each other. NATO and the EU have, nevertheless, played an important role in reinforcing and sustaining this position. NATO’s most valuable contribution has been the openness it has created. NATO was, and is a massive intra-western confidence-building measure. It was NATO and the EU that provided the framework within which Germany could be reunited without posing a threat to the rest of Europe as its original unification had in 1871. Both give rise to thousands of meetings of ministers and officials, so that all those concerned with decisions involving war and peace know each other well. Compared with the past, this represents a quality and stability of political relations never known before.
The EU is the most developed example of a postmodern system. It represents security through transparency, and transparency through interdependence. The EU is more a transnational than a supra-national system, a voluntary association of states rather than the subordination of states to a central power. The dream of a European state is one left from a previous age. It rests on the assumption that nation states are fundamentally dangerous and that the only way to tame the anarchy of nations is to impose hegemony on them. But if the nation-state is a problem then the super-state is certainly not a solution.
European states are not the only members of the postmodern world. Outside Europe, Canada is certainly a postmodern state; Japan is by inclination a postmodern state, but its location prevents it developing more fully in this direction. The USA is the more doubtful case since it is not clear that the US government or Congress accepts either the necessity or desirability of interdependence, or its corollaries of openness, mutual surveillance and mutual interference, to the same extent as most European governments now do. Elsewhere, what in Europe has become a reality is in many other parts of the world an aspiration. ASEAN, NAFTA, MERCOSUR and even OAU suggest at least the desire for a postmodern environment, and though this wish is unlikely to be realised quickly, imitation is undoubtedly easier than invention.
Within the postmodern world, there are no security threats in the traditional sense; that is to say, its members do not consider invading each other. Whereas in the modern world , following Clausewitz’ dictum war is an instrument of policy in the postmodern world it is a sign of policy failure. But while the members of the postmodern world may not represent a danger to one another, both the modern and pre-modern zones pose threats. The threat from the modern world is the most familiar. Here, the classical state system, from which the postmodern world has only recently emerged, remains intact, and continues to operate by the principles of empire and the supremacy of national interest. If there is to be stability it will come from a balance among the aggressive forces. It is notable how few are the areas of the world where such a balance exists. And how sharp the risk is that in some areas there may soon be a nuclear element in the equation. The challenge to the postmodern world is to get used to the idea of double standards. Among ourselves, we operate on the basis of laws and open cooperative security. But when dealing with more old-fashioned kinds of states outside the postmodern continent of Europe, we need to revert to the rougher methods of an earlier era – force, pre-emptive attack, deception, whatever is necessary to deal with those who still live in the nineteenth century world of every state for itself. Among ourselves, we keep the law but when we are operating in the jungle, we must also use the laws of the jungle. In the prolonged period of peace in Europe, there has been a temptation to neglect our defences, both physical and psychological. This represents one of the great dangers of the postmodern state.
The challenge posed by the pre-modern world is a new one. The pre-modern world is a world of failed states. Here the state no longer fulfils Weber’s criterion of having the monopoly on the legitimate use of force. Either it has lost the legitimacy or it has lost the monopoly of the use of force; often the two go together. Examples of total collapse are relatively rare, but the number of countries at risk grows all the time. Some areas of the former Soviet Union are candidates, including Chechnya. All of the world’s major drug-producing areas are part of the pre-modern world. Until recently there was no real sovereign authority in Afghanistan; nor is there in upcountry Burma or in some parts of South America, where drug barons threaten the state’s monopoly on force. All over Africa countries are at risk. No area of the world is without its dangerous cases. In such areas chaos is the norm and war is a way of life. In so far as there is a government it operates in a way similar to an organised crime syndicate.
The premodern state may be too weak even to secure its home territory, let alone pose a threat internationally, but it can provide a base for non-state actors who may represent a danger to the postmodern world. If non-state actors, notably drug, crime, or terrorist syndicates take to using premodern bases for attacks on the more orderly parts of the world, then the organised states may eventually have to respond. If they become too dangerous for established states to tolerate, it is possible to imagine a defensive imperialism. It is not going too far to view the West’s response to Afghanistan in this light.
How should we deal with the pre-modern chaos? To become involved in a zone of chaos is risky; if the intervention is prolonged it may become unsustainable in public opinion; if the intervention is unsuccessful it may be damaging to the government that ordered it. But the risks of letting countries rot, as the West did Afghanistan, may be even greater.
What form should intervention take? The most logical way to deal with chaos, and the one most employed in the past is colonisation. But colonisation is unacceptable to postmodern states (and, as it happens, to some modern states too). It is precisely because of the death of imperialism that we are seeing the emergence of the pre-modern world. Empire and imperialism are words that have become a form of abuse in the postmodern world. Today, there are no colonial powers willing to take on the job, though the opportunities, perhaps even the need for colonisation is as great as it ever was in the nineteenth century. Those left out of the global economy risk falling into a vicious circle. Weak government means disorder and that means falling investment. In the 1950s, South Korea had a lower GNP per head than Zambia: the one has achieved membership of the global economy, the other has not.
All the conditions for imperialism are there, but both the supply and demand for imperialism have dried up. And yet the weak still need the strong and the strong still need an orderly world. A world in which the efficient and well governed export stability and liberty, and which is open for investment and growth – all of this seems eminently desirable.
What is needed then is a new kind of imperialism, one acceptable to a world of human rights and cosmopolitan values. We can already discern its outline: an imperialism which, like all imperialism, aims to bring order and organisation but which rests today on the voluntary principle.
Postmodern imperialism takes two forms. First there is the voluntary imperialism of the global economy. This is usually operated by an international consortium through International Financial Institutions such as the IMF and the World Bank – it is characteristic of the new imperialism that it is multilateral. These institutions provide help to states wishing to find their way back into the global economy and into the virtuous circle of investment and prosperity. In return they make demands which, they hope, address the political and economic failures that have contributed to the original need for assistance. Aid theology today increasingly emphasises governance. If states wish to benefit, they must open themselves up to the interference of international organisations and foreign states (just as, for different reasons, the postmodern world has also opened itself up.)
The second form of postmodern imperialism might be called the imperialism of neighbours. Instability in your neighbourhood poses threats which no state can ignore. Misgovernment, ethnic violence and crime in the Balkans poses a threat to Europe. The response has been to create something like a voluntary UN protectorate in Bosnia and Kosovo. It is no surprise that in both cases the High Representative is European. Europe provides most of the aid that keeps Bosnia and Kosovo running and most of the soldiers (though the US presence is an indispensable stabilising factor). In a further unprecedented move, the EU has offered unilateral free-market access to all the countries of the former Yugoslavia for all products including most agricultural produce. It is not just soldiers that come from the international community; it is police, judges, prison officers, central bankers and others. Elections are organised and monitored by the Organisation for Security and Cooperation in Europe (OSCE). Local police are financed and trained by the UN. As auxiliaries to this effort – in many areas indispensable to it – are over a hundred NGOs.
One additional point needs to be made. It is dangerous if a neighbouring state is taken over in some way by organised or disorganised crime – which is what state collapse usually amounts to. But Usama bin Laden has now demonstrated for those who had not already realised, that today all the world is, potentially at least, our neighbour.
The Balkans are a special case. Elsewhere in Central and Eastern Europe the EU is engaged in a programme which will eventually lead to massive enlargement. In the past empires have imposed their laws and systems of government; in this case no one is imposing anything. Instead, a voluntary movement of self-imposition is taking place. While you are a candidate for EU membership you have to accept what is given – a whole mass of laws and regulations – as subject countries once did. But the prize is that once you are inside you will have a voice in the commonwealth. If this process is a kind of voluntary imperialism, the end state might be describes as a cooperative empire. ‘Commonwealth’ might indeed not be a bad name.
The postmodern EU offers a vision of cooperative empire, a common liberty and a common security without the ethnic domination and centralised absolutism to which past empires have been subject, but also without the ethnic exclusiveness that is the hallmark of the nation state – inappropriate in an era without borders and unworkable in regions such as the Balkans. A cooperative empire might be the domestic political framework that best matches the altered substance of the postmodern state: a framework in which each has a share in the government, in which no single country dominates and in which the governing principles are not ethnic but legal. The lightest of touches will be required from the centre; the ‘imperial bureaucracy’ must be under control, accountable, and the servant, not the master, of the commonwealth. Such an institution must be as dedicated to liberty and democracy as its constituent parts. Like Rome, this commonwealth would provide its citizens with some of its laws, some coins and the occasional road.
That perhaps is the vision. Can it be realised? Only time will tell. The question is how much time there may be. In the modern world the secret race to acquire nuclear weapons goes on. In the premodern world the interests of organised crime –including international terrorism – grow greater and faster than the state. There may not be much time left.

It is not uncommon for people to spend the long days of retirement trying to reverse the achievements of their working lives. Think of Alfred Nobel, Robert Oppenheimer, even the ever-certain Margaret Thatcher. But for Robert McNamara – the Defense Secretary in charge of the Vietnam war in the Kennedy and Johnson administrations – to call for an international criminal court and say that his own record should come under scrutiny gives a whole new meaning to the wisdom of age. While Henry Kissinger runs every time he hears a mention of a Spanish or French judge, McNamara, is concerned with ensuring that the terrible mistakes of his lifetime are not repeated. His moral conundrums are an embodiment of those of the liberal left in America. His CV reads like a potted history of the US in the twentieth century: President of the Ford Motor Company in the fifties via the Cuban Missile Crisis and Vietnam to a political afterlife running the World Bank. Throughout he remained close to the Kennedys: he was the first person Ted turned to for advice after his mysterious
car crash at Chappaquiddick.

But it is the political journey from the gilded days of Camelot to the protracted nightmare of Vietnam that still haunts him. The confident defender of the war, bristling with statistics that proved US success, gradually lost faith in the whole enterprise. By 1967 his call for peace-talks made it impossible to serve a President still wedded to military victory and he left, though claims still not to know whether he resigned or was fired. Nevertheless, McNamara refused to discuss his role in Vietnam for 27 years after leaving his post as secretary of Defense. Then seven years ago he shocked America with a very public mea culpa, admitting that Vietnam had been a terrible, terrible mistake. Now 85, and preoccupied with leaving his legacy intact, he is in London to promote his latest volume: Wilson’s Ghost (written with James Blight, Public Affairs at £17.99). This grandly titled manifesto for peace completes the circle by drawing on his experiences to warn that the twenty-first century will be even more bloody than the last unless the US adopts a multilateralist liberal agenda. Though his hands are mottled and shaky, he drums his pen on the table with ferocity, interjecting before the end of questions, giving time-checks with military precision. It’s not hard to imagine the boss who terrified underlings in the Pentagon with demands for written rather than oral briefings – he claimed to be able to read faster than they could speak.

We meet on the day of President Bush’s decision to rip up the treaty calling for an international criminal court. He refuses to attack Bush’s leadership but is angry about the arrogant unilateralism of the US administration. McNamara has become convinced that political and military leaders are more likely to be persuaded to behave humanely by the threat of prosecution than they are by ineffectual economic sanctions or military action. He claims that opposition is not based on facts: “It is not understood in the US. They say we are not going to subject our officials or our soldiers to the whims of Gaddaffi and give Gaddaffi the right to imprison our soldiers when they are carrying out the orders of their government or pursuing the interests of the US and its allies. He points out that US officials or soldiers would only be tried in the international criminal court if a US court refused to try them. It’s not nearly as risky a world for US political and military leaders and personnel as they describe it.”

Listening to him speak is gripping, as each carefully chosen word has implications for his own record: “Henry Kissinger was travelling in Europe the other day and there were suggestions that he should be brought before the Criminal Court. Now I am not certain what the allegations were or what rule of international behaviour he had violated that would justify bringing him before the court. But I can think of rules that would in my case. For example, we used Agent Orange – which allegedly killed people. Or we used Napalm to burn individuals. Were those in accordance with the accepted rules of war or not? Well that subject needs a lot more discussion.”

So would an international criminal court have changed his behaviour or that of other leaders in conflict situations? He is convinced it would: “How are you going to reduce the risk of conflict leading to killing of that order? Well one of the ways is to determine that certain kinds of conflict will be prohibited by law. I think that is highly desirable. But I don’t believe we have gone far enough to make very clear what the rules are. And that needs to be done. What would worry me is when it isn’t clear what the rules of war are. Just take Agent Orange as an illustration. I don’t think anyone had even thought about whether it was contrary to the rules of war. I doubt very much that its toxicity was very much known.”

This explanation will do little to satisfy the human rights groups who accuse him of being the first person to sanction the first use of chemical weapons since the First World War. It certainly seems extraordinary in today’s climate to discover that no one tested the toxicity of a substance which scientists estimate to responsible for up to 500,000 children being born with defects. The 19 million gallons of Agent Orange dropped on the forests which provided cover for the Viet Cong were the equivalent to six pounds of chemical for every man, woman and child in South Vietnam. His explanation today conceals the obvious unease he felt at the time. In a letter to Johnson in 1967, he appears to concede that the U.S. was flirting with war crimes: “There may be a limit beyond which many Americans and much of the world will not permit the United States to go. The picture of the world’s greatest superpower killing or seriously injuring 1,000 non-combatants a week, while trying to pound a tiny backward nation into submission on an issue whose merits are hotly disputed, is not a pretty one.”

McNamara’s other ghost is the threat of nuclear weapons. He is horrified at the complacency of Bush’s decision to tear up the Anti-Ballistic Missile Treaty – his labour of love from the Kennedy regime. “The US nuclear policy review published just a few weeks ago states that the US is going to retain substantial numbers of large scale nuclear weapons in perpetuity. Yet no other country can ever have one. And we are going to retain thousands. It’s absurd. It ain’t going to work.”

It is clear that the Cuban Missile Crisis is never far from his mind. “We came very, very close”, McNamara confides slowly, “closer than we knew at the time.” He treats it as a Near Death Experience, constantly replaying the options and going over what might have happened. As the sole surviving member of the team at Kennedy’s side during the crisis, it is knowledge that he felt duty bound to pass on. Living up to his reputation as the Human IBM machine earned at the Defence Department, he has dissected the experience in minute detail – taking part in a five year research project with his friend James Blight that interviewed protagonists on either side. He has an unnerving recollection of conversations that happened over forty years ago – complaining that Hollywood’s recent version of the Cuban Missile Crisis, Thirteen Days, put many of his comments, gleaned from contemporary tapes, into Kennedy’s mouth.

The film presents McNamara stopping the Pentagon bullet-heads from firing shots at Russian submarines on the edge of the blockade area. Was there any truth in the portrayal? “They made the chiefs appear much more belligerent than they were. I think that is unfortunate. But we ultimately removed the Chief of Naval Operations, Admiral Anderson. He was the only chief of staff in the history of the country who has ever been removed in service by presidential action and the movie shows some of the reasons why.’’ He describes the crucial exchange in a room with 30 admirals: “At one point Anderson and I were having an argument and he said: ‘Mr Secretary, the navy’s been handling blockades successfully since John Paul Jones. If you let us handle this one, then we’ll handle this successfully.’ I replied: ‘Have you heard what I said, there won’t be shot fired without my permission, is that understood?’ Then I walked out of the room.”

McNamara did not realise how crucial that exchange had been until forty years later when, a few months ago, he travelled to Moscow for a showing of the film. After the showing, a man with a straggly beard who looked like Bin Laden got up to ask a question. It turned out to be one of the Russian submarine commanders, who revealed that the subs approaching the blockade were carrying nuclear tipped torpedoes. He claimed that they had orders to shoot when they thought it was desirable if they were out of radio contact. Several did lose contact with Moscow, and continued preparing to launch for days after Kruschev had ended the crisis. McNamara has since discovered that when these submarine crews returned to the USSR they were severely criticised and disciplined because they had not launched nuclear weapons. He is still visibly shaken by the recent discovery: “We had never heard of that until that time. And I was so shocked I lost my cool.”

So how will history judge Robert McNamara? In many ways, he embodies the contradictions of the Kennedy generation in the 1960s: the combination of idealism and soaring rhetoric with ruthlessness about means to ends. His language is soaked in the spirit of the New Frontier, from lofty invocations of “we, the human race”, to his abiding faith in the advancement of humanity. But even now his obviously genuine- liberal zeal will sit side-by-side with moral blind spots. This comes out, for example, in his warm praise for the late Chinese leader Deng Xiao Ping: “No country has ever advanced the welfare of its people as much – nutrition, literacy, health, housing – as China in that twenty years.” There is scant criticism for the man who ordered the shooting of student demonstrators in Tiananman Square. McNamara’s latest manifesto undoubtedly challenges war correspondent Robert Speer’s unforgiving characterisation of him as a steely corporate bean-counter who took over the Pentagon and defined victory in Vietnam by the number of Vietnamese dead, even if they were the children and mothers slaughtered. But the ghost of his moral ambivalence will continue to haunt all perfectionist leaders who talk about spreading freedom and invoke a global morality, including the present incumbent in Downing Street.

The success of Le Pen was greeted in Britain as a seismic political event. The Times produced a four-page pull out special, normally an honour reserved for Royal Weddings and the death of former Beatles. Even the tabloid press devoted acres of space to Le Pen – complete with the obligatory photos of Hitler – and made dark predictions about the “spectre of fascism haunting Europe”. But the media uproar missed the real threat: the danger is not that Le Pen will become President of France. It is that his policies will seep into the platforms of mainstream political parties (including the UK). Claims that fascism itself is on the march are not backed by the polling figures. It is not just that Le Pen only got a couple more percentage points in 2002 than in 1997. Support for extreme parties everywhere has fluctuated over the last decade – rising in some countries and falling in others. In Switzerland, Belgian and Norway, the Hard Right has made gains. But in Austria support for Jorg Haider now seems to have peaked. In Italy the National Alliance lost a quarter of its support in last year’s general election. Even in Denmark, routinely referred to as the next country threatened by the far-right, support for Pia Kjaersgaard and her Danish People’s Party has started to decline from the 12% she won in a recent national vote.

The biggest question is whether mainstream parties can respond to this challenge, particularly on the Left. So far, they have either been cowed into silence (choosing instead to talk about their preferred topics of education and social solidarity) or forced to ape the hard-line policies of the right. The shortcomings of Jospin’s campaign have been well documented – from his desiccated oratory style to his wild changes of political direction. But what chimes with British political history is his abject failure to persuade the electorate that the Left is capable of dealing with crime and immigration. Le Pen cannily exploited Jospin’s na�e admission that he thought crime would come down in tandem with falling unemployment. His plan for a rationalized “super-ministry” to co-ordinate France’s various forces of law didn’t capture the electorate’s imagination in the way that successful political narratives must: it was too abstract and technical. Crucially, it failed to refute Le Pen’s seductive promise that the crime wave could be solved by 200 000 extra prison places. The alternative mistake is even worse – trying to outflank the extremists on their own territory. There is, after all, a thin line between drawing the sting from the Far Right and co-opting their priorities. It is the mainstream conservative party, not the fascists that is talking about repatriation in Denmark. In Austria the left is toughening up on asylum. In Britain this week Home Secretary David Blunkett spoke of the dangers of immigrants “swamping” schools, and called for them to be educated in separate classes. If a foam-flecked demagogue of the far right had advocated these policies they would have been universally condemned. Whatever the intent of the remarks, they conferred gripes about immigrants with mainstream respectability. As The Economist argued this week: “The uncomfortable truth is that there is a price to be paid for being “connected”. The apocalyptic coverage of Le Pen’s success has masked the incoherence and vulnerability of his platform. The problem is not that mainstream parties cannot come up with a more credible stance on crime and immigration – it is that their complacency and inherited ideological baggage has stopped them from connecting with the concerns of many citizens. The Left does not need to abandon its values – but it does need to start from the perspective of working class citizens who are most affected by these social problems. For decades, the British Labour Party had the same problem as Jospin with crime. Between 1979 and 1992 its instincts were far more progressive than the electorate’s. It was caricatured as being more interested in the welfare of criminals than victims – and would avoid talking about the issue at any cost. In the early nineties, following the shocking murder of a toddler by two children in Liverpool, they adopted a different approach. Tony Blair, then a rising star in the party, coined the phrase “tough on crime, tough on the causes of crime” dealing robustly with criminals whilst also spending more on social ills. At a stroke, the left had a tough and intelligent political message that out- maneuvered right wing calls for more retribution. The then Conservative Prime Minister, John Major’s remark: “We should condemn a little more and understand a little less” seemed bone-headed in comparison. This is the kind of message that Jospin failed to communicate.

As immigration into the EU increases, anti-system parties will continue to exploit the antagonisms that arise as immigrants arrive in culturally conservative communities. Le Pen is not the only right-winger likely to trade on notoriety and feed on the condemnation of an “out of touch political establishment”. But the left has yet to develop a convincing narrative on immigration. This has to be the big challenge of the decade. It should start with the economic imperative for immigration, the benefits that successive migrants have brought to our countries – but it must marry these to a system that enjoys public support. Politicians from the Left need to preach the economic benefits of migrants for a continent with an ageing population and severe skills shortages. This might sound like madness: presenting the xenophobic right with an open goal. But as long as extremists go unchallenged in presenting immigration as a threat rather than an opportunity, they will be to exploit the “indecision” and “weakness” of mainstream politicians. Establishing a clear framework for economic migration which is aligned to our economic needs must go hand in hand with schemes to integrate newcomers into our societies through language tuition, skills recognition and labour market policies which allow them to become contributors to the national economy. The European Left should be eclectic and radical in borrowing policy prescriptions which allow them to show that immigration is an opportunity rather than a threat. For example the Canadian “Private Sponsorship Programme” allows community groups to subsidize migrants through their first year in a country. This neutralizes complaints that refugees represent a “burden” on the state and creates a political climate in which far greater numbers can be admitted.

This isn’t just a national challenge. With immigration the nation state no longer has the power to solve the problem on its own. A hotchpotch of different regimes throughout Europe, without co-ordination between customs and police forces, increases the numbers of illegal migrants slipping into Europe. There is electoral mileage in pointing out that the prescriptions of the far-right – dismantling the European Union – would make the problem far worse. But more importantly mainstream politicians need to develop policy solutions that clearly embody the values and priorities of European citizens: a well-run migration scheme that is in line with our economic needs, and a strong framework for the integration of refugees. The collective political class is on trial on this issue.

If they get it wrong – either by failing to come up with progressive solutions or by failing to find a language which connects – we will all pay the price. The success of Le Pen is rightly seen as a triumph of anti-politics over a political system that doesn’t connect anymore. The anarchists have a slogan to express these sentiments: “it doesn’t matter if the left or right get more votes – the government will win”. The danger that Europe faces is that the anarchist slogan becomes a reality in a perverse way: it doesn’t matter who wins the elections, Le Pen’s policies will win.

The theme of the debate, Democracy and the EU, can be interpreted in three ways. The EU as a safeguard for democracy. Democracy in the EU, and democracy in member states. All three aspects are important, and cannot be separated from each other.

Let’s remember history: the predecessors of the EU were once created to make Europe safe for democracy, and to prevent a sliding back into what happened in the thirties and forties. That is why the Union is based on the universal values of democracy and human rights.

This has already had a strong impact on southern Europe. One of the factors that led to the fall of the dictatorships in Spain, Portugal and Greece was the prospect of membership of the EU, and the EU was important to anchor and secure the democracy in the previous dictatorship.

I have often discussed this with Georgious Papaandreou, Foreign Minister of Greece. He speaks perfect Swedish after his years as a refugee in Sweden. He is a living example of how the EU secures democracy in new democracies – and one of the promoters of enlargement.

Today it is the candidate countries in Central and Eastern Europe who see membership of the Union as a guarantee for a continued democratic and peaceful development.

The universal values are now integrated into the Copenhagen criteria for accession. Furthermore, in the Amsterdam and Nice Treaties member states have included new safeguards against undemocratic developments in member states. The Nice treaty creates a possibility of an early warning system, if there is a clear risk that a member state does not respect the principles of fundamental rights.

We are not there yet, far from it. But, the rising tide of right-wing xenophobic populism in many countries is, of course, extremely worrying.

We’ve seen it in Austria, Italy, Denmark, France among others. And no country is protected. We had a similar development in this country as well, if not that bad, 10 years ago. In 1992 some 50 refugee houses were attacked, and some 50 other attacks were carried out against refugees with Molotov- cocktails or explosives. A sniper was targeting refugees in Stockholm. We had a right-wing, xenophobic party, New Democracy, in our parliament. They failed completely, and we are still ‘vaccinated’ from this kind of party – but we won’t be vaccinated forever.

These events 10 years ago, however, taught us several things:

First, you must have a very tough attitude, that is to say a zero-tolerance against xenophobic movements. To try to meet them halfway, and thereby disarm their arguments, wont work. Not on the national level. Not on the EU- level. Concessions will only legitimise their demands and make them stronger, and could shift the whole debate towards more restrictions for refugees – as we have seen in Denmark.

Second, you must promote a dialogue with, and knowledge about, other cultures. That’s why the Swedish Government is now distributing to all schools a book, JALLA!, based on stories by teenagers from Muslim countries.

Third, you must manage the economy, and the welfare and fight unemployment. The root of the problem often lies in the daily lives of citizens: high unemployment, the down-turn in the economy with job losses, fiercer competition and fundamental changes in established institutions, in some cases even partly caused by the effects of the EU internal market. Social exclusion. Worries about the pension systems and the ever greater difficulties of the health care systems in fulfilling their tasks.

These are universal problems in Europe and they have to be met by concrete action. The breeding-ground for these movements will not be eliminated by a few information campaigns or some institutional reforms. The EU, and the member states, has to take unemployment, pensions, education and social exclusion very seriously. Otherwise, people’s legitimate worries and fear of things foreign can always be capitalised by ruthless Populist leaders.

Given what the EU stands for, it is not surprising that extremist movements are very negative to the Union. When nationalists on the right wing gain ground, support for the Union decline. That is especially worrying since the EU today is the strongest defender of democracy and human rights in Europe, and also a strong promoter of these universal values world-wide. Given this development, I would hope to see increased support for the EU from the left also here in Sweden.
…
The second aspect, democracy in the EU, should be seen against this background. World-wide we see a worrying trend towards less and less interest in political life. We can see it at the national level, in the slowly sinking turn-out in national elections, and steadily decreasing participation in political parties and organisations, particularly among young people. At the European level we see it, among other things, in the very low and decreasing turn-out in elections to the European Parliament.

The reasons behind this general trend are many and complex, but to a great extent they are the same as those underlying the rise of the populist movements.

We need to show that the Union is capable of handling issues that are at the top of people’s agendas. That the EU can make a difference to create more and better jobs, protect the environment, fight international crime and promote global solidarity. And we need to show that we can develop the Union and it’s institutions to fulfil these tasks.

But we must also reach out to citizens, to really involve them in this debate on the future of Europe. That is why the Swedish government has summoned a special committee, composed of parliamentarians, to stimulate the national debate before the next inter-governmental conference.

The Nice Treaty has been criticised heavily on the grounds that it did not go far enough, and decide on profound changes to the structure. One often hears the argument that the engine was made for a community of six member states, and that it does not work properly even with 15 members, let alone 27.

I don’t buy that. That was simply not the task of the Nice Treaty. The task was to decide on the institutional reforms that were absolutely necessary in order to bring in twelve new member states. It had a number of precise tasks: weighting of votes, composition of the Commission, seats in the European Parliament and other institutions, and increased use of qualified majority decisions. But the process we have started now, with the convention and the next inter-governmental conference will give everyone the opportunity to discuss radical changes.

We have the question of the balance of power between the EU institutions, in other words how citizens in member states can influence Union decisions. We have the balance between member states. And the balance between the EU as such and member states.

Should we go for the dream of a federal model, where one would turn the Commission into a kind of European Government, based on a parliamentary mandate in the European Parliament, and let the national government resign themselves to a role as a kind of senate, or house of Lords, for legislative matters?

The federalist dream envisages a system like a national system. If the Government meets strong opposition in parliament it has to resign. And then the logical consequence is that the Government can dissolve parliament, and call new elections.

This system has obvious benefits, it is a clear model, it will give every citizen’s vote the same weight, and it could give the European Government a strong mandate.

But is that a realistic perspective for the European Union?

People identify first of all with their nations, partly with Europe, but very little with the EU. Although more and more decisions are taken at the EU- level, most people pay much more attention to national political debate than the EU- debate. A “European nation” cannot be brought about artificially through institutional measures. On the contrary, moving towards some kind of federalism without support from the citizens will surely create a backlash.

In the federalist dream we would not have an independent Commission any more. Before elections the candidates would have to formulate a platform, create alliances and give promises to different political groups or member states, in order to gain a sufficient majority. It would be naive to believe that such a Commission would then want to exercise its office in a neutral and disinterested way. And the balance between member states, large and small, and geographically, would be lost, certainly to the disadvantage of smaller and medium-sized countries.

The Swedish government sees the national political system as the basis for EU politics also. The national parliaments will continue to be the main source of legitimacy for citizens in member states. The national governments will continue to be seen as the main representative in the decision-making process in the EU. Sweden finds the present institutional balance reasonable. We see a strong Council with the axis to national governments and parliaments as the backbone of the Union.

Some argue that the present system does not make room for democratic accountability. I disagree. The governments of member states have a political responsibility to their national parliaments. And this is a powerful driving force in many member states. The way governments act and take care of national interests is scrutinised closely.

If we want to give the European Parliament a greater role, we should think carefully about exactly what we want. New responsibilities for the EP would basically mean diminished responsibilities for the national parliaments. Do we, for example, wish to give them an increased role concerning the budget, or the financing of the Union?

But we certainly need strong supranational institutions as well, in particular a strong Commission. It is indispensable as a driving force and initiator of proposals. It has a vital role as guardian of the treaties and a watch-dog over the implementation of EU legislation and politics in member states. It can play an important role also in the open method of co-ordination, which could be suitable for a number of new challenges that the Union will be facing. The Commission’s task is to look after the interests of the Union as a whole. That is why it has to be totally independent, and its members are strictly forbidden to pay particular attention to the interests of their own country or a particular country, or to seek or receive instructions from any government or other group. In this respect the Commission can be seen as a safeguard for the medium-sized and smaller countries against irregularities from the larger ones. This is one of the corner-stones of the Union.

Some claim that there is a contradiction between this and the rules of the treaty which require that there must be one citizen from each member state in the Commission. In fact, it is the other way around. It is necessary for the independence of the Commission that at least one of it members knows each individual member state, their past, their traditions and their national debate.

Take the Swedish Commissioner, for example. She often takes the opposite position to the Swedish government. In fact, I am certain she would disagree with a great deal of what I am saying today. But she is Swedish, and also from northern Sweden. She knows about Sweden, she knows about our problems. Without that knowledge, the Commission would be handicapped in its role as a spokesman for the interests of the whole Union.

The balance between Member states and the Union, in other words the competencies of the Union is one of the main issues of the convention. But let me say right away that I do not think this is a major problem. Who does what is already clear. There is no great need to define it in greater detail. Most member states realise that it is neither desirable nor possible to draft a detailed catalogue of competencies.

That could involve a risk that we, unintentionally, rip up what the EU has achieved in some fields up to now. The other risk is that we tie our hands and do away with the tools we might need. When the Rome Treaty was signed in 1957, there was not one single word in it about the environment. And who could have foreseen, a year ago, the measures we would have to take after September 11? If we had had a competence catalogue, carved in stone, we would have been much slower in responding to the challenges.

Many people seem to see a constitution as the overall objective. German newspapers often talk about the convention as a “constitutional convention”. Even some Swedish papers and participants in the Swedish debate see a “constitution” as the magic word that will solve all problems.

Of course, it is positive with a reshuffling to get one comprehensive document. But, strictly speaking you could say that the present treaties already constitute a kind of “constitution”, with detailed rules about the competencies and responsibilities of the different actors, and about procedures. So the issue is not so much whether we should have a constitution, but rather which constitution we should have.

But one vital question is whether we should try to decide all these issues once and for all, and have the commandments carved in stone, or whether we should stick to the present method and let the treaties and institutions develop, when new problems appear on the agenda and old ones fade away.

It should come as no surprise to you that my sympathy is with the second approach. Creating the European Union is not something you do once and for all, according to some clever blue-prints. It is rather like building a community. You start with the main street and a few buildings. Then the city grows with new houses, and new streets, and new areas. Sometimes we have to knock down old buildings, and make room for new ones. If not, some might collapse of their own accord. Communications become more important, and so do traffic rules, energy supply and even waste disposal. Suburbs begin to mushroom. And finally we have to ask the question whether everything should take place in that city, or whether some of the activities should be moved elsewhere.

Having said that, there is a lot we can and should do to develop the Union and its institutions:

Firstly, there are serious deficiencies in the way the Council works now. The European Council meetings are not very well prepared and managed. There are deficiencies in the co-ordination between different sectors. There is too often a lack of focus on the vital issues. And sometimes too much of our political and administrative resources are spent on minor issues. Despite progress in the last two years, there is still not enough openness in the work of the Council, or in the other institutions. Enlargement will put additional emphasis on our shortcomings.

But it is important to stress that most of the problems can be solved now, without any Treaty amendments. Therefore, it is important that governments address these issues, and not let themselves be hampered by the work of the convention. Sweden has put forward some proposals in this respect – how presidencies should work together, how the council should be reformed, and how a language reform should be pursued. I hope that we can already see the first results at the summit in Seville in a few weeks time.

Secondly, agricultural and regional policy – and with them budgetary policy – will need far-reaching reform. Not because of enlargement – reforms are already long overdue. The Common Agricultural – or should I say Anachronistic – Policy was once conceived for a quite different situation when Europe was threatened by food scarcity. Today, it restricts market access for other countries. Today, its’ subsidised products destroy the market in candidate countries and the third world. Today, it is often contrary to sound environmental policies. Today, it is also a heavy financial burden, it costs over 40 billion euro per year, making up almost half of the total EU budget. We can forget about legitimacy among the citizens if we can’t create a sound system. They want a system that promotes good environment, animal welfare and biodiversity. Only one third of EU citizens find that the CAP fulfils its’ goals. The question is not whether CAP should be reformed, but when and how.

Thirdly, we should develop our common foreign policy, which is something that the citizens always indicate. Had the EU had a common foreign policy ten years ago, we could have avoided a decade of war in the Balkans. This spring, for the first time in over a decade, we don’t have a war raging in the Balkans, much because of the work the Union has done.

In many ways we are much better off than ten years ago: We are developing military and civilian capacities for crises management; we are more active and influential in the Balkans, in the Middle East, in Africa. And in the world after September 11, the EU, when acting as one, is effective and influential. But we should do much more to work for global development, human rights and democracy, the Johannesburg Summit will be one opportunity to show the EU’s commitment. We should also do much more to prevent conflicts, and to support the UN.

But we need greater coherence in our policies. Only with a truly coherent Common Foreign and Security policy where trade, development, migration and environment are integrated, where policy areas and pillars are co-ordinated, and where the different voices of the Union – the Presidency, the Commission, the High Representative and the Member States are co-ordinated, will we be influential.

I think we need the EU to be a global actor. We need the EU sometimes together with the US and sometimes to balance the US. It is never positive with only one power on the global arena. The EU should – and could – be a more important global actor. But to be a strong global actor, the EU have to be backed by opinion in our countries in Europe.

Some years ago, we had a discussion about a federal Europe. Swedes, British, and others were blamed not to go further in this direction. Today we see a different trend: the EU is more criticised, national interests are gaining ground, and there is a clear risk of a backlash for the European co-operation.

I think, we are now heading towards a situation where we, as pragmatic Social Democrats (gråsossar) have to take the responsibility to protect and defend the Community method, the European project, what we have already achieved. Let’s not make big European revolutions, lets go step by step, so citizens will be able to follow and support the EU, also as a global actor.

Launch of “From War to Work”
by Rowena Young
in association with Globalegacy

Monday 20th May 2002, 10.00am-12.00pm at the Design Council

On Monday, 20th May The Foreign Policy Centre launched “From War to Work: Drug treatment, social inclusion and enterprise,” by Rowena Young. The key-speakers were: Jonathan Nicholls from MORI Social Research Institute, who spoke on recent trends in public attitudes towards drugs; David Cameron MP, member of the Home Affairs Select Committee on the work the committee has done on their forthcoming report on drugs policies, published on 22nd May; Jeff McAllister, London Bureau Chief of Time Magazine, on the state of the drugs debate in America; Adele Blakebrough, Founder and Executive Director of the Community Action Network and former Director of Kaleidoscope, on the challenges being faced by people working in drugs treatment field. Mark Leonard, Director of The Foreign Policy Centre, chaired the debate.

Background

In the run-up to the publication of the Home Affairs Select Committee report on drugs legislation, The Foreign Policy Centre held a debate on: ‘Drugs: Is legalisation the answer?’
While focusing on the creation of a sensible legal framework for tackling drugs, speakers were asked to consider how we create a space for a radically different debate on drugs. Key issues discussed included:
– the links between drug dependency and social exclusion
– the importance of social rehabilitation, job creation and regeneration
– the creation of frameworks for policy exchange both between government and grass roots treatment agencies and between different countries

Creating a new learning environment

Adele Blakebrough gave an insider’s view on drug treatment and highlighted the need to narrow the gap between drug policy at government level and drug treatment practices at a grass roots level. Some examples of good practice include: providing easily accessible provision of entire treatment packages in a single location and concentrating on job creation and employment as one of the key issues in drugs rehabilitation. The failure to link employment and drug treatment, for example, has lead to short-term approaches which tackle the symptoms of drug dependency but have failed to create integrated and long-term treatment models.

Changing the focus of the debate

David Cameron spoke about the taking of evidence carried out by the Home Affairs Select Committee.
He set out four key challenges:
a. Focus on law enforcement alone had been a failure: targets on the whole have been limited to aspirational notions of a ‘drugs free world’ and were unreachable. The result has been doubling of the number of drug addicts and drug-related deaths in the last two decades. For example, while figures from Customs and Excise proved that they were becoming more effective at intercepting drugs coming into the country, their success was having very little effect on the availability of drugs on the street
b. Learning from abroad: Cameron drew attention to the international examples used in “From War to Work” and said they could prove to be very useful for the development of future treatment schemes.
c. “Let a thousand flowers bloom”: Because drug treatment is an immensely complicated issue, we should not be looking at offering simple solutions. Treatment agencies, both at grass roots and government lever, need to look at every individual case and provide treatment based on needs. Furthermore, the complexity of the drug problem made simple positions (for example, the extremes of liberalisation vs. prohibition) untenable.
d. Changing the focus: Cameron agreed with the call made in ‘From War to Work’ for refocusing of the drugs debate on the more damaging drugs, which caused most death and crime.

Examining public attitudes towards drugs

Jonathan Nicholls presented the findings of MORI research of public opinion in Lambeth following the introduction of trials under which people possessing small amounts of drugs received a warning rather than a caution or prosecution. The polls conducted by MORI for the Police Foundation, involved more than 2000 residents and showed some interesting results. 74% of people in the borough believed that the scheme would reach its aim of redirecting police time into more serious crimes. Meanwhile, 36% of those interviewed approved of the scheme and another 47% approved if the police spent more time tackling serious crime. 64% of the population agreed that the scheme would have a positive impact on community relations. On the other hand, qualitative research conducted simultaneously by MORI showed that some people were concerned that the scheme made it seem as though the police had “given up” on enforcing the law on soft drugs and questioned whether the police would actually redirect its time to tackling other issues. A national survey carried out in parallel showed that there was a slightly less approval, 27% compared to 36% in Lambeth, towards implementing such a scheme on a national level.

Opening, not closing, the debate

Jeff McAllister focused on the drugs debate in America and the huge cost of the war against drugs. Every year the US government spends $100 billion dollars on tackling drug and imprisons 460 000 people for drug related crimes. Drug addicts in jail are today treated through so-called “coercive abstinence” methods and since 11th September policies towards better drug treatment programmes have become less of a priority. He criticised the current administration’s moralistic approach towards drug policy and the unilateral belief in working for “a drug-free America”. “They still think they can beat it!” as McAllister put it. McAllister did however point toward incidences of good practice in the US. Although they are faced with massive criticism, some state governors have tried to initiate a debate on the decriminalisation of softer drugs. He also spoke of the “Delancey Street” project in San Francisco, which involves mutual support programmes and income generation through enterprises such as the sale of Christmas trees. He concluded that this is sort of small-scale initiative shares a lot of the elements of the case studies in “From War to Work”.

“From to War to Work” claims that the “war on drugs” has failed because the debate has become polarised between the advocates of increased policing and incarceration of drug dealers and users, and those who favour the ‘treatment model’ and approach drug addiction as a disease. “From War to Work” demonstrates that neither group has had much success in reducing the soaring number of drug users.

This important report is part of The Foreign Policy Centre’s exploration of the interrelatedness of foreign and domestic policy. It costs £9.95 and is available from Central Books, Tel: 020 8986 4854.

Introduction

In this paper I will discuss two interrelated questions: (1) What role, if any, should the European Union (EU) play in the development of social policy? (2) Does the proper role of the EU, as we would define it when answering the first question, require any changes to be made to the Treaty? If the answer to the second question is positive, the European Convention and the forthcoming Intergovernmental Conference (IGC) offer a unique opportunity to include the desired changes in a new European Treaty.

My discussion of the EU’s role in social policy will not be exhaustive. I will concentrate mainly on the development of social protection, thus not going into employment policy and related issues. Nor will I relate the discussion on social protection to the discussion on how Member States can maintain the necessary funding for social programmes in a context of ‘tax competition’, nor to the debate on the future of the structural funds. This is not to say that these discussions are not important, quite on the contrary. However, my aim here is to examine the impact of the EU on the typical work of a national minister who is responsible for social protection (including health care), and what kind of EU such a minister would like to see develop now, and after the Convention.

In the first part of my paper, I will provide a succinct answer to my first question, concerning the role of the EU in social protection policy. In the second part I will present a brief survey of the European agenda of ‘social protection’ ministers as it stands today, and suggest short-term proposals for the further development of that agenda, which do not presuppose changes to the Treaty. My second part will show that the social protection agenda has gained some momentum since the Lisbon Summit of March 2000, but also that it remains politically and institutionally fragile. In the third part of my paper, I will elaborate on six proposals concerning the Treaty. These proposals answer to the questions raised in the first part and to the post-Lisbon experience discussed in the second part.

1. What role should the EU play in the development of social protection policy?

What role, if any, should the EU play in the development of social protection policy? In order to give a coherent response to this question, we should first assess the facts: what role does the EU play in the development of social protection?

In an excellent textbook on policy-making in the European Union, Stephan Leibfried and Paul Pierson summarize the facts as follows: “The process of European integration has eroded both the sovereignty (by which we mean legal authority) and autonomy (by which we mean de facto regulatory capacity) of member states in the realm of social policy. National welfare states remain the primary institutions of European social policy, but they do so in the context of an increasingly constraining multi-tiered polity”[2]. In addition to direct pressures on national welfare states resulting from social policy initiatives undertaken by the European institutions, the dynamics of market integration have created indirect pressures on national welfare states, de jure, through the direct imposition of market compatibility requirements by the European Court of Justice (ECJ), and de facto by the forces of economic competition in an integrated market.

1.1. Diminished legal authority through market compatibility requirements

Direct imposition of market compatibility requirements, or ‘negative policy reform’, as Leibfried and Pierson call it, mainly occurs through the application of two fundamental freedoms provided for in the Treaty: the free movement of workers and the freedom to provide services.

The application of the principle of free movement of workers implies that,

· firstly, a Member State may no longer limit most social benefits to its citizens;

· secondly, a Member State may no longer insist that its benefits only apply to its territory and thus may only be enjoyed there;

· thirdly, although a Member State is still largely free to prevent other social policy systems from directly competing on its own territory with the regime it has built, it is no longer entirely able to do so;

· fourthly, Member States do not have an exclusive right to administer migrants’ claims to welfare benefits.

The application of the principle of free movement of services is closely linked to the fact that the treaties, as well as secondary European law, focus on economic activity and entrepreneurial freedoms. The question is obviously: do welfare state services constitute an economic activity? If so, the freedom to provide financial or social services would apply, as would the general European competition regime, implying, for example, that Member governments can no longer exclusively decide who may provide social services or benefits.

Fortunately, European integration does acknowledge non-economic true welfare activity. However, there is no general exemption for welfare state activity from the treaty’s market freedoms, and the distinction between ‘economic’ and ‘welfare’ (or ‘solidarity’) activity is not always clear-cut. Hence, drawing – and continually redrawing – this fine line between ‘economic’ and ‘solidarity’ activity is what much of the legal conflict and judgements of the ECJ are about.

In an outstanding report for last year’s Belgian Presidency of the EU, Professor Elias Mossialos[3] and his team have shown that, in particular in the field of health care, there are significant prospects for a substantial remoulding of national policies through this ‘market filter’. As Leibfried and Pierson also stress, this is mainly due to the fact that health insurance has more ‘market characteristics’ in most national systems, is more fragmented into provider groups which already operate in markets (medical instruments, pharmaceuticals) or quasi-markets (doctors in private practice sickness funds) and has in most countries been traditionally exposed to substantial private provision. Moreover, national reforms have been increasingly geared to ‘market cures’ and de-regulation in recent decades. To the extent that these reforms move social insurance away from redistribution and solidarity, it is clear that beyond an as yet unidentified threshold, such programmes would become just another economic enterprise that must compete with private health insurance and other competitors on a level playing field.[4]

The example of health care shows that it would certainly be simplistic to blame ‘Europe’ for the problems national social policy makers are confronted with, as if ‘Europe’ enforced market solutions upon reluctant Member States. As a matter of fact, instead of asking the question “Do welfare state services constitute economic activity?” one could put forward a slightly different question: “To what extent do Member States believe they can organise their domestic welfare services as an economic activity?”

The actual consequences of the application of the European competition regime and internal market rules have repeatedly been illustrated in rulings issued by the European Court of Justice. Let me give just one example. In the Kohll[5] and Decker[6] rulings, the Court considered that by demanding prior authorisation for the reimbursement of orthodontic treatment and the purchase of spectacles outside its territory, the Luxembourg health insurance rules had created an unjustified impediment to the free movement of goods and services within the European Union. Consequently, the Luxembourg social security system was forced to reimburse this unauthorised health care in another Member State. Even though I will explain later that these rulings were more nuanced than first thought (Section 3.2), they did make it clear again that social security systems, even if a matter of national competence, were not exempt from European law.

Moreover, the Kohll and Decker rulings create a dual system of social cover for health care:

– On the one hand there is the procedure governed by the EC regulation on the coordination of social security (Regulation 1408/71, to which I will refer in Section 2.4). This Regulation integrates the patient who has received authorisation from his or her social security institution into the social protection system where he receives the medical treatment, “as though he were insured with it”. This mainly implies that the patient is subject to the same cost sharing and the same regulations (e.g. referral for specialist care), and that costs are settled between both social protection systems according to the tariffs of the State where treatment was delivered. Mobile persons temporarily become ‘members’ of the host country’s health care system.

– On the other hand, patients using the procedure created by Kohll and Decker are not integrated into the social protection system of another Member State but, when returning to their country of residence, claim the coverage of their home country’s social protection system “as if they received the treatment there”. This would mean that reimbursement in the State of residence is subject to the conditions and according to the tariffs applicable there. [7]

This duality not only creates some complexity and scope for confusion, it poses a more fundamental problem. The traditional procedure allows (conditioned) mobility, yet it preserves the internal cohesion of national health care systems. The Kohll and Decker procedure introduces a degree of freedom, which, if unlimited, may disrupt the internal cohesion of national health care systems. Thus, it might lead both to increasing inequalities in access to health care and to increasing problems when it comes to guaranteeing the quality of care to patients – two essential objectives European national health ministers generally want to achieve. This is not to say that increased patient mobility is intrinsically problematic. On the contrary, I believe increasing patient mobility can, for a number of reasons, be very positive if developed in the right kind of framework. For instance, it would allow the development of a system of European centres of excellence, especially for highly specialised medical treatments, as well as new and experimental therapies; it would allow to reap the full benefits from cross-border co-operation projects; or, to organise tangible solidarity between Member States with particular difficulties in the field of health care. However, the nature of the framework we apply to organise patient mobility will be crucial.

A practical example may illustrate what I mean. Suppose UK citizens were entitled to health care anywhere in Europe, in Belgium for instance, without prior authorisation, with the NHS having to reimburse the costs. Mobility of patients would create opportunities for the UK government and its citizens: it would provide an immediate solution for waiting lists, whilst the extra investment the UK government is currently undertaking takes time to produce practical results; and, in so far as the NHS would consider contracting-out its patients to the private sector within the UK, transparent and well-organised price competition between the British private sector and health care providers in the rest of Europe might be beneficial (since supply would be increased). However, free patient mobility also entails significant risks, both for the UK government and for its citizens: not just the risk of an uncontrollable bill (as the UK government cannot monitor cost-efficiency abroad), but also potential problems with regard to the quality of care, given the asymmetry of information that characterizes the health care sector. From the point of view of the Belgian health sector, mobility of British patients would create opportunities, such as extra revenue. But simultaneously, mobility of patients, if based on a ‘Kohll and Decker’ type of procedure and not on the traditional procedure provided by Regulation 1408/71, might fuel the development of a ‘two-speed’ health care system in Belgium, if British patients were to be treated at ‘free’ tariffs (that is, tariffs not conforming to the Belgian national convention on tariffs). Indeed, a growing influx of patients from abroad, based upon Kohll and Decker, might nourish the development of an increasingly important ‘non-convention’ sector within Belgian health care, a development we would certainly not like to see.

One can also imagine other interactions between Member States. If a Member State X decided to semi-privatise part of its domestic health care system, the application of a ‘Kohll and Decker’ type approach to patient mobility may, to some extent, favour privatisation of health care activity in neighbouring countries. In other words, when it comes to patient mobility, the fundamental question is: will we create opportunities, by offering new solutions to European patients with respect to the built-in solidarity of our systems, or will we simply export our problems to each other?

1.2. Diminished autonomy due to de facto pressures on welfare states

De facto indirect pressures on welfare states are the result of enhanced competition within the single market as well as of the economic and budgetary policies promoted by the EU.

I believe one should avoid cheap talk about ‘social dumping going on in the EU’. Intensifying competition in an integrated market is only one of the many challenges our national welfare states are facing. Today, our welfare systems are under strain primarily because (a) the traditional fields of social protection, such as pensions and health care, require greater resources, and (b) because new social risks and needs have emerged. Furthermore, we know from experience that European integration does not necessarily lead to retrenchment. Indeed, in many countries the single market led to renewed agreements between the social partners and consequently to the rethinking – rather than the retrenchment – of their welfare states.

Nevertheless, it would be naïve just to extrapolate.[8] Economic and monetary integration and the growing importance of capital and labour mobility within the Union will leave a bigger mark on the architecture of our welfare states in the long run. Furthermore, in the short term, we are on the eve of the enlargement of the Union. In other words, the history of integration still has to be written. When it comes to the actual impact of European integration on welfare state development, the jury is still out, although economic theory is quite clear on this issue. For instance, economists have long recognised the potential dangers of increased mobility leading to a loss of the tax base (perhaps even to ‘tax competition’) with consequential effects on the capacity of EU Member States to finance their social programmes.

Pressure on welfare states is not just the result of market integration, but is also created by the follow-up of Member States’ economic policies through the EU’s Broad Economic Policy Guidelines and multilateral surveillance, and the assessment of the budgetary situation of the Member States through the annual stability plans. To be sure, recognizing that these political processes create pressure by no means implies that the considerable attention in the EU to sound public finances is to be swept under the carpet. On the contrary, sound and sustainable public finances are a conditio sine qua non for a sound and sustainable social policy, which is evidently a major issue in our ageing societies. However, a focus on financial prudence always carries with it the danger that one myopically economises on what would be sound and necessary investment. Social investments are no exception to this observation. Intelligent social investment is much needed for two reasons: to answer the increasing expectations of our citizens concerning the quality of today’s public services in general (a matter of public concern in many Member States, and one of the sensitive issues in recent elections); and, secondly, to prepare our welfare states for the future, given the reality of ageing. It may be the case that a ‘straightforward’ shift of costs to the private sector lightens budgetary burdens, but on the other hand this may offer few substantive solutions to tricky issues such as quality, equity and justice – it may even lead to less quality, equity and justice.[9] Hence, sound public finances should be accompanied by sound social investment. Whilst there is tangible EU pressure (and rightly so) for sound public finances, there is, so far, comparatively little EU pressure for intelligent social investment.

1.3. Common objectives and legitimate diversity

A sober assessment of the facts, together with uncontroversial economic theory, points to two conclusions. Firstly, it seems fair to say that Member States have lost more control over national welfare policies in the face of pressures from integrated markets than the EU has de facto gained in transferred authority, substantial though the latter may be. Thus, there is a growing gap in our steering capacity with regard to welfare policy. This is problematic, since the combination of diminished Member State autonomy and authority and continued weakness in developing responses at EU level may restrict both the scope and the pressure for innovative social investment, which is needed everywhere given the common challenges – for health care and elderly care, and for pension systems – created by the dynamics of demographic ageing.. The problem will be exacerbated by EU enlargement because the requirement of unanimity in the Council for important areas of social policy entails the risk of paralysis of decision-making in the social field, and, probably even more importantly, because enlargement will bring about dramatic increases in the economic, social, politico-cultural and politico-institutional heterogeneity among EU Member States.[10]

Secondly, in a context of increased mobility, not just of workers and capital, but also of service organisations, care providers and patients, the Treaty constellation might prioritise two polarised trajectories, as Leibfried and Pierson fear: core welfare state components (redistribution, pay-as-you-go,…) would remain ‘intervention-free’, to the extent that they are ‘pure’ welfare; but the more these functions are provided by market-based services, the more the welfare state (in whole or in parts) would tilt towards the sphere of ‘economic action’ from the point of view of the EU institutions, thus becoming subject to single market principles and market regimes. Thereby the welfare state could gradually be submerged into a single European ‘security’ market, that is, a single market for personal protection and insurance instruments.[11] There are fundamental and well-known economic reasons (information asymmetry, adverse selection…) as to why market principles and social security are no easy twins, neither at national level, nor at European level. As I will argue below, the Court has, so far, followed a cautious path, with sufficient nuances and due respect for the prerequisites of national welfare policies. Yet, although it would be unfair to blame ‘Europe’ for some of the difficulties facing national social policy makers if they choose to rely more on market or quasi-market mechanisms in their welfare provision (as I emphasized in Section 1.1), the Treaty provides no robust guarantee against a polarised development as feared by Leibfried and Pierson.

It is not a matter of political opinion but a matter of fact that the economic and institutional dynamics of creating a single market have made it increasingly difficult to exclude social issues from the EU’s agenda: “the tidy separation between market issues, belonging to the supranational sphere, and social issues, belonging to the national spheres, is unsustainable.”[12] However, the answer to this problem is not an additional transfer of national competencies to the EU, nor the imposition of uniformity, let alone harmonisation for the sake of harmonisation. Although I will stress that the concept of ‘a European social model’ not only makes sense but should be specified by means of ‘common objectives’, I also think national governments could not possibly agree on a detailed European blueprint for the core functions of the welfare state. As Fritz Scharpf rightly argues, any attempt to override legitimate diversity by imposing uniform European solutions could blow the Union apart. National diversity cannot be treated as illegitimate; on the contrary, it is itself part of the legitimating structure of beliefs and practices supporting the multilevel European polity.[13]

Although there is a proper role for EU legislation in the social domain (and decision making has to become more efficient in this domain, as I argue in section 3.4), social protection policy is and should primarily remain the responsibility of municipalities, regions and nation states. Nevertheless, Europe should enable the Member States to develop ‘active welfare states’ and encourage intelligent social investment, by indicating the broad objectives, both where employment and social protection are concerned. And cross-border mobility should create additional opportunities for intelligent welfare solutions, rather than make welfare policies more difficult to sustain.

2. The post-lisbon challenge: turning principles of co-operation into operational practice

This approach to EU social policy – that the EU needs an operational social policy concept, yet that it is not synonymous with imposing uniformity, nor with a transfer of competences – inspired the Belgian Presidency of the EU in the second half of 2001. Our leitmotiv was to put the principles agreed at the Lisbon Summit of March 2000 into practice, building on the work done by the French and the Swedish Presidencies which followed the Portuguese Presidency. These ‘Lisbon principles’ – as I would call them – hinged both on a substantive idea (economic performance and social cohesion are not mutually exclusive, but mutually reinforcing objectives, between which a new equilibrium has to be found) and on a methodological proposal, coined ‘open method of co-ordination’. The Portuguese Presidency moreover had a precise ambition concerning the ‘leadership’ of European co-ordination: it intended to enhance the steering and co-ordinating role of the European Council, and attempted to reduce the virtually exclusive competence of the Economic and Financial Affairs Council (ECOFIN) over the Broad Economic Policy Guidelines and to take employment and social concerns into account in their drafting.[14]

With regard to social protection, our ambition ‘to implement Lisbon’ implied three goals: firstly, to make European co-operation in the fight against poverty and social exclusion operational; secondly, to launch the open method of co-ordination in the field of pensions; thirdly, to prepare the ground for reforming the current rules governing the co-ordination of social security schemes for mobile citizens (Regulation 1408/71).[15] The third priority – social security co-ordination – belongs to the realm of EU legislation, or ‘hard law’; the first two issues belong to the realm of the ‘open method of co-ordination’, or ‘soft law’.

I will discuss the notion of open co-ordination in section 2.1. Next I will summarize what has been achieved so far with regard to social inclusion, pensions and social security co-ordination in sections 2.2, 2.3 and 2.4, and indicate a number of short-term challenges. In section 2.5 I touch upon the prospects for developing the open method of co-ordination in the field of health care and care for the elderly. In sections 2.6 and 2.7 I will briefly address two other instruments of policy making, which also have their role to play: EU legislation and social dialogue. Together with the questions raised in Part 1, this description of our current experience sets the scene for my discussion of necessary Treaty changes in Part 3.

2.1. The open method of co-ordination as a creative instrument[16]

The methodological foundations for the open method of co-ordination as a new Europe-wide approach to social policy were formally laid down at the Lisbon European Council in March 2000. Before that, policy co-ordination at EU-level had been applied to economic policy (multilateral surveillance of national economic policies, provided for in the 1992 Maastricht Treaty) as well as in the field of employment (the Luxemburg process, formalised by the 1997 Amsterdam Treaty as “co-ordinated strategy for employment” and fine-tuned by the Luxembourg European Council the same year). In what follows, I distinguish the ‘policy co-ordination’ that had been established before the Lisbon Summit, for which a formal basis exists in the Treaty, and the ‘open method of co-ordination’ as it was defined in Lisbon. Together they constitute however one ‘cookbook’ of soft-law methodologies, and in the political debate these methodologies are often conflated under the general heading of ‘open co-ordination.’[17]

In a nutshell, the open method of co-ordination is a process in which clear and mutually agreed objectives are defined, after which peer review, on the basis of national action plans, enables EU Member States to compare practices and learn from each other. This method respects – and is in fact built on – local diversity; it is flexible, but it aims to promote progress in the social sphere. An efficient learning process requires the use of comparable and commonly agreed indicators in order to monitor progress towards the common goals, as well as evaluation and, possibly, soft recommendations made by the European Commission and the Council. The exchange of reliable information aims – at least to some extent – at institutionalising intelligent “policy mimicking”.[18]

Because it is pragmatic, this ‘open’ approach can effectively lead to social progress. Thus, we have found a way that implies a credible commitment to a social Europe. Consequently, we are sending important messages to European citizens. For instance, the explicit formulation of a European social agenda can be seen as a ‘defensive shield’ against a possible retrenchment of our welfare states in the light of economic unification. However, I believe the added value of the open method of co-ordination goes beyond being a technical learning process and beyond preventing welfare retrenchment in Europe.

Defining commonly agreed objectives is much more than merely a useful technique in view of the intended progress in the Member States. Common objectives are essential because they allow us to translate the much discussed but rather abstract “European social model” into a tangible set of agreed objectives to be rooted in European co-operation. For the first time, thanks to the open method of co-ordination, this abstract concept is being interpreted by means of more precise definitions of the outcomes we want to achieve.

Echoing Anton Hemerijck,[19] I would say that the open method of co-ordination is both a cognitive and a normative tool. It is a ‘cognitive’ tool, because it allows us to learn from each other. In my opinion, this learning process is not restricted to the practice of other Member States, but also extends to their underlying views and opinions, an area that is no less important. Open co-ordination is a “normative” tool because, necessarily, common objectives embody substantive views on social justice. Thus open co-ordination gradually creates a European social policy paradigm.

Open co-ordination is not some kind of fixed recipe that can be applied to any issue. Our methodology in the field of social inclusion (see section 2.2) differs from the policy co-ordination that has been developed with the 1997 Luxembourg Employment Process on the basis of Art. 128 of the Treaty. (In the Employment Process, a report is submitted every year. On the basis of this report, individual recommendations are made to individual Member States). Our methodology with regard to pensions will differ in turn from that applied to social inclusion: it consists of a fairly light process, where Member States report to each other every three or four years on how they include commonly agreed objectives in their national policy, with a yearly update which will enable us to integrate common conclusions on pension policy into the Broad Economic Policy Guidelines drawn up by the Union every year. In other words, policy co-ordination and open co-ordination together constitute a cookbook that contains various recipes, lighter and heavier ones.

Elsewhere, I have emphasised that when using this cookbook we have to bear certain key principles in mind.[20] Firstly, this is only one method amongst others. We cannot fly to a social Europe on the wing of open co-ordination alone. We also need another wing, namely legislative work. Therefore, the open method of co-ordination must not replace legislative work where it is necessary. Secondly, we must not confuse the objectives with the instruments of social policy. Confusing these elements goes against the spirit of subsidiarity that is fundamental to the open method of co-ordination. Moreover, lack of clarity with regard to fundamental objectives leads to biased policy analysis.[21] The third principle is ‘comprehensiveness’: we have to include all possible tools in the analysis.[22] The fourth principle concerns the choice of benchmarks we use when we want to put objectives into practice: when we define our standards, we have to be realistic and ambitious at the same time. We definitely need best practices in the learning process: feasible “standards of excellence” instead of standards of mediocrity. The fifth – and final – principle for the useful application of the open method of co-ordination is located at a practical level. We cannot possibly measure progress without comparable and quantifiable indicators. For this reason, finding an agreement on a set of indicators with regard to social inclusion was a top priority for the Belgian Presidency of the EU. For the same reason, we now want to develop a set of pension indicators. It seems to me that this fifth principle is the actual litmus test for the political readiness to engage in open co-ordination. Anyone who paid lip service to this method should put their words into action when it comes to the development of indicators. Related to the fifth principle is the need for statistical capacity building at the EU level.

The ‘soft’ character of open co-ordination is often met with scepticism. Yet, I believe that by means of ‘soft’ co-operation and consensus building we can go far beyond solemn but vague declarations at European Summits. Admittedly, as far as social inclusion and protection are concerned, the jury on the results of open co-ordination is still out. Nevertheless, I think we are entitled to extrapolate (mutatis mutandis) from our experience in the field of employment. The first comprehensive test as to whether the policy co-ordination applied to employment is actually able to meet the high expectations will be the mid-term evaluation of the Luxemburg process. In July 2002 the European Commission will present a Communication in which it will evaluate the employment strategy, based on an analysis of the national impact assessments. As far as the Belgian impact assessment is concerned, the report rightly states that “there is no doubt whatsoever that the employment and labour market policies have been modified by the European employment guidelines. […] The European employment strategy brought about changes and innovations in all branches of employment policy […]. Co-ordination between the different levels of government has evolved in the positive sense since the introduction of the National Action Plans in 1998”. One may conclude that the ‘convergence stress’ has been very real, and tangible results can be indicated. The assessments will without doubt highlight that the impact has varied among the Member States, and the assessments will be critical of a number of issues. If the assessment report written by the Belgian institutions is representative, there will be criticism, amongst others, of the lack of evaluation mechanisms and of the fact that a report must be produced every year. This gives rise to an increase in what are sometimes irrelevant short-term measures, because new measures need to be thought up every year, at the cost of efficiency in the longer term.

Legitimate questions are raised, notably by the European Parliament, about the relation between open co-ordination and democratic decision making in Europe. One of the potential gains of open policy co-ordination is that it requires all national governments to prepare and discuss their policy reforms in public, and this, moreover, simultaneously. Open co-ordination definitely implies ‘openness’ in that sense too. On the other hand, the absence of formal involvement of the European Parliament points to a democratic deficit. This constitutes an important issue for the debate on the future of Europe’s institutions that will be prepared by the Convention.

In more general terms, a potential risk with the further development of the open method of co-ordination is that it might gradually change the actual balance between the European institutions – the Parliament, the Council, the Commission – in an undesirable way, which is detrimental both for the Parliament and the Commission. Not only, open co-ordination must not replace other policy tools that have proven their usefulness; it should not be an instrument against either the Commission or the Parliament. Moreover, without involvement of the Commission, effective open co-ordination itself is difficult to envisage.

Let me therefore conclude this section by emphasising again that open co-ordination is not a panacea, let alone a magic formula for social policy. Yet, an effective open method of co-ordination is more than an intelligently managed learning process and a defensive instrument. If we employ it judiciously, open co-ordination is a proactive and creative method that allows us to define ‘social Europe’ in more specific terms and to anchor it firmly as a common collective good at the heart of European co-operation.

2.2. Combating poverty and promoting social inclusion

Eradicating poverty and promoting social inclusion constituted one of the key ambitions set out by the Lisbon European Council of March 2000. In December 2000, a political agreement was reached on common objectives with regard to social inclusion and, at the beginning of 2001, the Member States were called upon to submit national action plans on social inclusion. By the end of 2001, we were able:

· to adopt a first joint EU report on social inclusion, containing both an analysis of the national action plans on social inclusion laid down by each Member State last year in June, as well as “soft recommendations” for Member States’ policies;

· to adopt a set of 18 quantitative indicators on social exclusion within the EU Member States.[23] They will now enable each country to accurately measure the current situation and the evolution of social exclusion, as a multidimensional concept, in a comparable way. This first set covers four dimensions of social exclusion: financial poverty, employment, health and education. The best known example of these indicators is the ‘low income rate’, defined as the percentage of individuals living in households where the total household income is below 60% of the median national income; it indicates the percentage of individuals who are at ‘risk of poverty’. Other indicators are: the rate of ‘persistent low income’; the rate of persons with low educational attainment; regional cohesion; the rate of people living in jobless households; the proportion of early school leavers not in further education or training; self-perceived health status according to income level; and the proportion of the long-term and very long-term unemployed;

· to approve a four-year action programme, which will be formally launched later on this year and aims at stimulating co-operation between policy makers, social partners, NGO’s, scientists and the socially excluded.

Thus, one ‘round’ of open co-ordination has been implemented, and with the commonly agreed indicators the method can become fully operational. Moreover, further progress is on the agenda. During the second half of this year, the Danish Presidency will have to engage in an assessment and a review of the common objectives on social inclusion that were agreed at the Nice European Summit. In my opinion, this review should be restricted to a limited number of important issues, such as the mainstreaming of the gender issue in the inclusion process and the commitment of the Member States to setting national poverty targets, which can be linked to the commonly agreed indicators. As the indicators are multidimensional, a pragmatic way to make progress would be to require the Member States to present targets, but to give them the possibility to choose their own priority target(s).

With a view to enlargement, I very much appreciate the fact the European Commission has engaged in bilateral discussions with the accession countries. From this summer onwards, accession countries will start preparing their own national reports called “Joint Inclusion Memoranda” (JIM’s), based on National Action Plans on social inclusion so that they will be ready to immediately become members of the Social Protection Committee and fully engage in the open method of co-ordination in this field as soon as enlargement takes place. As I indicate in section 3.3, we should now prepare the implementation of the open method of co-ordination after enlargement – and where necessary, adapt it – both in terms of its practical feasibility, and in terms of its legal entrenchment.

2.3. Pensions: a social challenge with financial constraints

Regarding pensions, the Employment and Social Affairs Council and the Economic and Financial Affairs Council (ECOFIN) and later the European Councils in Laeken and Barcelona, agreed on 11 common objectives and a working method for European co-operation in this field[24]. These common objectives refer to the adequacy of pensions, the financial sustainability of pension systems and their modernisation in response to changing societal needs. The Belgian Presidency very explicitly wanted an integrated approach, encompassing both a concern for financial sustainability and a concern for the adequacy of pensions.[25] This broad perspective has been institutionalised by including both the Employment and Social Affairs Council and ECOFIN in this process, but also by the explicit request that the results be integrated into the Broad Economic Policy Guidelines. This should allow Europe to speak with one – balanced – voice on pensions for the first time.

An integrated approach is indeed reflected in the 11 objectives. For instance, the first common objective states that Member States should “ensure that older people are not placed at risk of poverty and can enjoy a decent standard of living; that they share in the economic well-being of their country and can accordingly participate actively in public, social and cultural life”. According to the sixth objective Member States should also “reform pensions systems in appropriate ways taking into account the overall objective of maintaining the sustainability of public finances. At the same time sustainability of pension systems needs to be accompanied by sound fiscal policies, including, where necessary, a reduction of debt. Strategies adopted to meet this objective may also include setting up dedicated pension reserve funds.” According to yet another objective, Member States are required to “ensure, through appropriate regulatory frameworks and through sound management, that private and public funded pension schemes can provide pensions with the required efficiency, affordability, portability and security”.

Member States also agreed to draft a first National Strategic Report on pensions by September 2002. In this report they will elaborate on their efforts made at national level to meet the common objectives. Finally, Member States have agreed to start developing indicators for assessing and monitoring action in the field of pensions. I believe the forthcoming Danish Presidency should give priority to the development of common indicators in the field of pensions, so that we can assess the progress in this area by the end of this year. A final agreement should be possible by the end of 2003, under the Italian Presidency.

Still in the field of pensions, next year’s Presidencies, namely those of Greece and Italy, will have to ensure that the work on pensions is truly integrated into the Broad Economic Policy Guidelines. This is important in view of the fact that our European open method of co-ordination approach to pensions is the result of long and sometimes difficult negotiations which aimed, successfully, at striking a balance between two formations of the Council, ECOFIN and the Employment and Social Affairs Council. It would be unacceptable for the Broad Economic Policy Guidelines, which are an important instrument (provided for in the Treaty) in the hands of the ECOFIN Council for the coordination and monitoring of economic policies of the Member States, to deviate, as far as pensions are concerned, from what was agreed on in the joint open method of co-ordination approach. This would certainly be unacceptable in view of the two explicit requests from the Heads of State and Government regarding the Guidelines. In Lisbon, the European Council indeed requested that the Guidelines should also focus on reforms aimed at promoting social cohesion. In Göteborg the European Council asked to incorporate the results of the joint work on pensions into the Guidelines.

Notwithstanding our clear political intentions, this year’s Broad Economic Policy Guidelines do not sufficiently reflect the importance of employment and social policy objectives. I fully agree with the opinion of the Social Protection Committee on this year’s Guidelines when it states that: “The Guidelines should be a central instrument in promoting a well co-ordinated policy mix which reflects the articulation between economic, employment and social policies – the so-called policy triangle – established by the Lisbon European Council. This should also involve giving greater recognition to the work being done, under the open method of co-ordination, in relation to the fight against poverty and social exclusion and on the provision of safe and sustainable pensions, to give effect to the objective of creating ‘greater social cohesion’ established by Lisbon”[26]. With regard to one of the fundamental ‘Lisbon principles’, we are certainly not yet where we should be. What happens with the result of the open co-ordination on pensions in 2003 will be the real ‘moment of truth’.

2.4. Social protection for mobile citizens: simplifying and improving the European co-ordination of social security systems

Free movement of persons is one of the cornerstones of European integration and one of the four freedoms enshrined in the EC Treaty. One of the determining factors as to whether people may enjoy this freedom is the guarantee that administrative barriers will not affect their social security rights. In 1971, the Council of Ministers therefore adopted Regulation No 1408/71, which guarantees that people moving within the European Union retain their social security rights.

While this Regulation affords ample protection, one could say that the complexity of the Regulation and its numerous amendments are an impediment to free movement. That is why the Belgian Presidency decided to address the fundamental question of how to proceed with the necessary simplification and improvement of Regulation 1408/71. In December of last year, the Employment and Social Affairs Council reached an agreement on a number of principles and basic options (so-called “parameters”) which provided the political framework within which the Council and the European Parliament are now working on specific reforms for modernising Regulation 1408/71. At the last Social Affairs Council under the Spanish Presidency (3 June 2002), the Council reached a political agreement on the general provisions of the new Regulation, which determine important matters such as the personal and material scope of application (who is covered? To which branches of social security does the Regulation apply?) and the general principles governing the co-ordination of social security (the aggregation of insured periods, equal treatment and the determination of the competent State – “which law applies”?). From July onwards, the Danish Presidency will continue negotiations on the specific chapters of the Regulation. As things are now, we may well find an agreement on a new co-ordination mechanism, at least at the level of the Council, by the end of next year.

In this context, we also reached an important political agreement on the conditions for the extension of Regulation (EEC) No 1408/71 to third-country nationals. Such an agreement would not have been possible without the strong support of the European Commission. The purpose of this extension is to enable third-country nationals in the future to export their social security rights built up in one Member State to another when moving within the EU. Until now, this has only been possible for EU nationals.

An example can illustrate the consequences that this has on the current situation: the daughter of a Moroccan employee working in France is going to study in London. Her father has been working in France for thirty years. Yet, in principle, he loses the right to child benefit, despite faithfully paying all his social security contributions.

Last year in December, the Ministers of Social Affairs agreed firstly on the apparently trivial but politically difficult question of the legal basis for the extension of 1408/71 to third-country nationals; secondly on the principle that such an extension should apply to the social security systems of all the Member States. This implies that the United Kingdom and Ireland have the possibility to join the other Member States in the extension of the Regulation to third-country nationals by using their right to “opt in”. Thirdly, the Ministers agreed on the fact that the co-ordination applicable to third-country nationals should give them a set of uniform rights which are as near as possible to those enjoyed by citizens of the European Union.

Thanks to the important efforts of the Spanish Presidency and the fact that the UK and Ireland have indeed decided to opt in, the Social Affairs Council of June 3 2002 reached a political agreement on this extension of Regulation 1408/71 to third-country nationals. It is not an exaggeration to say that this agreement represents a milestone in the objective of the European Union to achieve more equality between EU and non-EU nationals. It will diminish legal and administrative difficulties for the social security institutions and should contribute to the establishment of solidarity as well as to a socially just Europe. I call upon the European Parliament to take up its political responsibility and quickly deliver their obligatory yet non-binding opinion on this dossier, so that it can take immediate effect in all Member States from the beginning of next year.

2.5. Open co-ordination on health care and care for the elderly

In addition to social inclusion and pensions, a third area has been identified as being eligible for applying open co-ordination: health care and care for the elderly. Since the pension challenge is compounded by the increasing cost of health and elderly care in our societies, an adequate assessment of future social protection requires an integrated approach. By the next spring European Council, in March of next year, the European Commission will prepare a full report on this issue, which will give us sufficient elements to decide upon the conditions for launching an open method of co-ordination in this field.

Even though we should be careful not to start applying the open method of co-ordination to new areas simply for the sake of “doing something”, I do indeed believe that the growing impact of European integration on national health care systems to which I have referred, does justify the preparation of some form of European open co-ordination in this field. Ideally, trilateral co-operation between the Social Protection Committee and the Economic Policy Committee and a specific Committee (yet to be created) of the Council of European Health Ministers would be highly interesting, to provide input for the Commission and the Council. The different Committees involved could focus each on one of the principles of accessibility, financial sustainability and quality, identified by the European Council as the main challenges in this field. But the absence of such an elaborate advisory structure does not mean we cannot get started.

2.6. The legislative agenda: a focus on delivery

My focus in Part 3 of this paper on the work in Convention and the next IGC should not let us forget that we should be able to round up the Social Policy Agenda agreed in Nice (December 2000) before then. This agenda encompassed, amongst other things, a certain amount of legislative activity in the social field (in this section I include employment policy in my discussion of social policy). Having said this, and engaging in a little crystal ball gazing, I consider it unlikely that EU legislation in the social field will develop very significantly over the next few years. This does not mean that EU legislation so far has been unsuccessful. Just to give two recent examples: the Directives on information and consultation and on the involvement of workers in European companies[27], were adopted last year.

It is mainly because this substantive acquis exists that I think an increased focus on implementation is in order right now. I think there are two related reasons: firstly, the major differences between the current Member States in their performance in transposing EU legislation into their national legislation, and, more importantly, the prospect of enlargement.

In this context it seems only to make sense to say that we should now give priority to the effective implementation of the current acquis, which is already quite solid and will thus imply enormous and sustained efforts, especially on the part of the new Member States. The focus thus is now on delivery. Clearly, what has been decided in the Social Agenda, at the Nice European Summit, must be carried out.

For certain existing legislative acts the Social Agenda saw scope for revision and updating. This is the case for the Directives on insolvency[28], exposure to asbestos[29], and equal treatment of men and women with regard to employment[30]. Within the same remit falls the simplification and modernisation of the third Regulation ever to be issued by the Union, now regulated by Regulation 1408/71, which I discussed earlier

The Social Agenda also called for limited new legislative initiatives. The proposal for a Directive on temporary work[31] was recently presented by the European Commission. Negotiations on the Directives concerning the protection of workers from the risk of vibrations[32] and noise[33]as well as that on the activities of institutions for occupational retirement provisions are close to being or have already been rounded up successfully[34].

2.7. European social dialogue

The European social dialogue covers on the one hand (bipartite) interprofessional and sectoral negotiations and on the other (tripartite) consultation on a wide range of issues. Those who have called social dialogue at European level a success, most often refer to the bipartite sectoral bargaining between employers and trade unions, which covers no less than 27 sectors and has produced a range of binding and less binding agreements. Others, referring to the result of interprofessional negotiation, consider the European social dialogue to be in its infancy. The fact of the matter is that since the launching of the “Val Duchesse social dialogue” in 1985, we have progressed from the stage of a mere discussion between the European social partners to the explicit recognition of their role in the Treaty and, furthermore, the recognition of the primacy of bargaining channels over legislative channels. Despite this, interprofessional bargaining has delivered few tangible results. Today, we are far removed from a true European handling of industrial relations: only three collective agreements have been reached.

Yet, on the eve of the Laeken European Council, the social partners issued a declaration in which they expressed their willingness to develop social dialogue by jointly drawing up a multi-annual work programme, and agreed on the need to develop and improve co-ordination of tripartite consultation on the various aspects of the Lisbon strategy. In addition, the recent Barcelona European Council urged the social partners to place their strategies at the service of the Lisbon Strategy and Objectives. To that end, they are being asked to produce an annual report on their efforts both at national and at European level, and to present this to the Social Affairs summit, which from now on will be held before each spring European Council.

The EU has therefore expressed its willingness on several occasions to grant responsibility to the social partners. Today, I think it is safe to say that further development in this area will have to be triggered mainly by the social partners themselves. It is in the first place up to them to prove that they in turn are willing and able to become real players at European level. On the other hand, there are certain arguments in favour of amending the Treaty so as to facilitate European social dialogue, as I will suggest in Section 3.5.

3. Anchoring social protection policy through the European convention and the IGC: six proposals

In Part 1 of this paper I discussed the role the EU should play in the field of social protection, starting from the role it actually plays. In very general terms, I concluded that Europe should enable the Member States to develop active welfare states and encourage intelligent social investment, by indicating the broad objectives, both where employment and social protection are concerned. And cross-border mobility should create additional opportunities for intelligent welfare solutions, rather than make welfare policies more difficult to sustain. In Part 2 I presented the current EU agenda with regard to social protection, which has gained some momentum since the Lisbon Summit. My survey in Part 2 also underscores that this momentum depends very much on the political willingness of Member States’ governments to make progress, and thus remains politically and institutionally fragile. Moreover, the answers to important questions (such as the proper organisation of patient mobility) remain open, as the Treaty lacks an explicit balance between the principles of the single market and the principles pursued by national welfare states. And the efficiency of decision making in the field of social protection can be improved.

The European Convention and the forthcoming Intergovernmental Conference (IGC) provide a window of opportunity to anchor this approach to social protection policy to the EU’s architecture, and to find a new and explicit balance between the principles of the single market and the principles pursued by national welfare states. To give social protection a proper place in the EU’s architecture, six propositions must be considered. Although I know the Convention may lead to an entirely new text concept for a future basic Treaty, I have developed these propositions as amendments to the actual Treaty text, to make my argument as concrete as possible.

3.1. Including the Charter of Fundamental Rights into the constitutional Treaty

First, we would have to include the Charter of Fundamental Rights into the constitutional (basic) Treaty. I consider this rather uncontroversial, firstly, because basic rights are the essence of every constitution, and secondly, because there is widespread agreement on the content of the text. Even though this would not grant citizens legally binding entitlements with immediate effect, it would make the social principles horizontal and thereby give a clear indication of the fundamental European commitment to the idea that our citizens are not merely factors of production. More importantly, such an insertion of the Charter would imply that every action taken by the Union and every action taken by the Member States in the implementation of Union law, must respect the provisions of the Charter.

3.2. Including a statement of fundamental principles of social protection policy in the Treaty

In Section 1.1 I discussed the diminished legal authority of Member States, emphasizing the role of the European Court of Justice. By way of example I referred more particularly to the famous Kohll and Decker cases, which caused quite a stir throughout Europe because the Court stated that the special nature of medical services and goods does not remove them from the ambit of the fundamental principle of freedom of movement.[35] Now, it would certainly be simplistic to blame the European Court of Justice for the problems we are confronted with. Firstly, the ECJ can only apply the Treaty provisions by taking into account the objectives as recognised in the Treaty, but it can of course not create policy as such. Having said this, and this is my second point, it seems that the ECJ has in fact developed a coherent theory of social rights, which defines the limits of European economic integration much more than the EC legislation would suggest. In the Kohll and Decker cases, for example, the Court took into consideration the financial balance of the social security system. Still, in the cases under consideration, the balance tipped in favour of free movement because the Court found that the benefits sought, namely the reimbursement of a pair of spectacles in the Decker case and the reimbursement of orthodontic treatment in the Kohll case, were not of the kind to have significant effect on the financing of the national social security systems.[36]

The Kohll and Decker Rulings were followed in July 2001 by the Smits-Peerbooms rulings which have further clarified the application of European law to Member States’ health systems. In these judgements, the ECJ confirmed that all Member States must comply with Community law when exercising the power to organise their social security systems. The Court further confirmed that medical activities including hospital services fall within the scope of Article 50 of the Treaty (the freedom to provide services within the Community). But, the need to maintain the financial balance of social security systems and the maintenance of a balanced medical and hospital service open to all may justify a restriction such as is provided for under the system of prior authorisation. However, the Court stated that, in order for a prior administrative authorisation scheme to be justified, even though it derogates from a fundamental freedom, it must, in any event, be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion so that it is not used arbitrarily.[37]

The ECJ undoubtedly tries to weigh up the social objectives of the national systems when deciding upon the applicability of market rules, but it does not have the possibility of taking into account all the possible – direct but also mainly indirect – consequences of its decisions without clearer guidance from the Treaty. Moreover, we cannot be entirely sure in which direction the Court’s rulings will develop in future.

Therefore I fully share the view of Elias Mossialos that we need to agree at the highest political level on a statement of fundamental principles that enshrines the values and objectives of European health systems, thus creating a common framework, without however diminishing the Member States’ current degree of autonomy in shaping and reforming their health care systems.[38] These principles should be incorporated into a future Treaty, thus balancing the internal market with social goals pursued by Member States’ health care systems.

However, we should not confine the scope of this re-balancing act to health care, but broaden it to the full realm of social policy. In order to be able to clearly express the idea that the social dimension is part and parcel of the Union, we should strive for a reformulation of the general principles of the European Community, as laid down in Articles 2 and 3 of the Treaty. The best way to do this would be to amend, or rather, complete, Article 3, § 2 which deals with the promotion of equality between men and women. This new Article could usefully integrate the social acquis jurisprudentiel of the European Court of Justice. In practice, the new Article could be formulated as follows: “In all the activities referred to in this Article, the Community shall aim to eliminate inequalities and to promote equality between men and women, and shall take into account social protection requirements, in particular with a view to promoting accessible and financially sustainable social protection of high quality, organised on the basis of solidarity”.

Text proposal

Including a statement of fundamental principles of social protection in the Treaty

Article 3, § 2 concerning equality between men and women (the reference is to the Amsterdam Treaty) should be completed as follows:

“In all the activities referred to in this Article, the Community shall aim to eliminate inequalities and to promote equality between men and women and shall take into account social protection requirements, in particular with a view to promoting accessible and financially sustainable social protection of high quality organised on the basis of solidarity”.

For the sake of consistency, the current Article 6 concerning environmental protection and the promotion of sustainable development should become Article 3 § 3.

Klik hier voor het tekstvoorstel in het Nederlands
Appuyez ici pour la proposition de texte en français

All actions undertaken by the Union would then have to take these principles into account, as well as the fact that Member States want to preserve their capacity to implement them via welfare state services and measures. This includes the application and interpretation of internal market and competition rules by the European Commission, the European Court of Justice and the Member States, but even more generally the establishment of Broad Economic Policy Guidelines, Employment Guidelines, etc.

Agreement on such general principles could build upon the mutual understanding we are now developing by means of the open method of co-ordination, and would in turn specify the framework for the Member States when they further develop the details of the open method of co-ordination in different areas.

3.3. Anchoring the open method of co-ordination on social policy to the EU’s architecture

A potential weakness of open co-ordination as it has developed today, is that this kind of intergovernmental collaboration tends to be highly dependent on the coincidental political constellation of the moment. In view of the fact that the open method of co-ordination is not part of the formal acquis we need to think of ways of ensuring that that this soft acquis remains valid after enlargement. The soft acquis should not be seen as yet another hurdle to be overcome, but as strong support for social policies in the accession countries and the tangible outcome of the voice social ministers have in the European policy formation process. Without a doubt the accession countries will be glad to hear that this voice sounds different as far as social policy is concerned to the voices of international bodies that they have become accustomed to, such as the IMF and the World Bank.

The enlargement of the EU to 25 Member States will certainly make the processes of ‘peer review’ and evaluation in the open method of co-ordination more complicated. Practical feasibility will require simplification (and maybe a revision of the frequency) and possibly integration of the various processes. I will not elaborate upon this, since my concern here is with the legal entrenchment of the open method of co-ordination in the field of social protection.

Given the ambition to establish a coherent and transparent new Treaty, it seems logical to argue, within the Convention, for the inclusion of the open me

Linking National Politics to Europe, 22nd April 2002

The Foreign Policy Centre in conjunction with
The British Council and Weber Shandwick | Adamson

This event was held to celebrate two events: first, the launch of Simon Hix’s policy brief entitled Linking National Politics to Europe, second, to assess the first two months of the Convention on the Future of Europe. The aim of this event was to reinvigorate debate about the future of Europe – a matter with heightened relevance in the wake of the results of the first round of the French Presidential election, and Jean-Marie Le Pen’s anti-Europe platform.

First, Simon Hix introduced his proposal for linking national politics to Europe through a national-level election of the Commission President. The objective of his policy brief is to tackle the problem of democratic accountability and offer solutions. His key points were:

There are currently many checks and balances in the European Union – a hallmark of a system designed with democracy and legitimacy in mind. So, why do we need change? There are 6 main reasons:
1. Once policies have been agreed, they are very hard to change, for example Common Agricultural Policy.
2. With enlargement, it is harder to form working coalitions.
3. Extending qualified majority voting reduces the legitimacy of legislation.
4. The Commission is unaccountable.
5. National parliaments’ power is being eroded.
6. Public understanding of EU politics is poor.

These reasons together mean that even though outcomes are close to public wishes, EU policy is not legitimate.

What is needed:
– Contest and debate, with a mandate for political change when needed.
– Greater accountability of the Commission.
– No division of polities along national lines.
– Checks and balances maintained to constrain the majority.

Four possibilities:
1. Retaining the Nice status quo, with election by qualified majority in the Council.
2. Election by a simple majority in the European Parliament.
3. Direct presidential election.
4. Indirect presidential election by an electoral college comprising members of national parliaments.

Problems with the status quo:
– Reduced legitimacy of the most powerful office in the EU.
– Likelihood of the same majority in the legislature and the executive branches.
– Removes a key check on the majority in the Council.

Problems with a simple majority:
– The European Parliament majority will be less legitimate than the Council with qualified majority voting.
– No strong winning majority.
– Low electoral turnout will not improve.
– Fusing of executive and legislative majorities.
– Strength of the European Parliament will be weakened (compare the Commons in the UK to Congress in the US).

Problems with direct election:
– Europe is not ready. Look at turnout and single issue voting in European Parliament elections.
– There would be no debate on EU-level issues.
– Too much power to electorates in large states.
– Too much power to the Commission President.

Hix’s proposal is to establish an electoral college comprised of national parliamentarians. Electoral college votes would be awarded to countries in line with their number of MEPs. Candidates would have to gain broad support in order to stand. Elections would all be held on the same day, with a run-off between the two leading candidates.

In practice, this would mean there would be a limited number of candidates, chosen by Europe-level parties. National parties would ‘declare’ for a candidate. The press, with its focus on national parliamentary politics, would cover the debate. Manifestos would focus on policy issues such as Common Agriculatural Policy, labour market reform and world trade. With the run-off, the second round would be highly likely to produce a moderate winner, who would be a well-known political figure.

Reasons to support this proposal:
– There would be debate about EU politics, covered by the media.
– Checks and balances would be reinforced, preventing majoritarianism.
– The sovereignty of national parliaments would be strengthened.
– The winner would have support in each parliament within the EU. This would make governments accountable.
– There would be a mandate for policy reform.
– EU politics would be reinvigorated.
– The system allows for the evolution of direct presidential election, if this is demanded.

Next, David Heathcoat-Amory spoke of democracy in Europe, and refocussing political power at state-level:

The Convention on the Future of Europe sometimes tries to draw comparisons between itself and the 1787 Convention of the Founding Fathers of the USA. However, there are many differences between the two situations. Europe has a much larger population than the new US, and a longer history. While it was essential for the US to establish a constitution, the EU has taken this upon itself. The process took four months in America; in Europe it took four months just to agree the procedure.

Debate is really about the future of the European Union, not the future of Europe. In this debate, there are two main problems to address:
1. The lack of democracy in the EU has reached crisis proportions. At best there is indifference, with an average turnout below 50% Europe-wide in EU elections, and below 25% in Britain.
2. Hostility to the EU is revealed in referenda – for example, the Danish, or the Irish on Nice, which produced unexpected results. The French election is also indicative.

There is a widening gulf between the elite and electors, with a crisis of consent.

Enlargement would ideally bring with it input of a broader range of ideas. What is more likely, though, is that democracy will become even less prominent. More majority voting in the Council is a technocratic response to enlargement, but will further dilute democracy.

We are at the ‘de Tocqueville’ point in Europe. Now the French model has reached its limit, de Tocqueville would look to the American model to ask, is it possible to have democracy on a continental scale? The answer would have to be ‘no’, as two of de Tocqueville’s central conditions are not met: we have no common language, and no shared moral belief.

Peoples’ political alliances are asserted at state-level, so it is here that power should be focussed. The default position must be at national state level.

In response to Simon Hix, the first question that we ask must be why do we have a Commission? What is it for? By going down the route of electing the Commission President as has been suggested, the role of government is emphasised, when in fact we should be questioning it institutionally. Decision-making must be taken back to the stage at which the people are at – that is, of questioning the fundamentals of the EU.

Gisela Stuart then spoke about some of the practicalities of the Convention, and the importance of asking the right questions:

We need a non-partisan debate on Europe. It is possible to be in favour of the European project as a whole, yet find fault with the structure of the EU. There is a certain pretentiousness about the Convention. We are not equivalent to Madison and Jay. The Convention is driven by four power blocks: the Commission, national governments, the European Parliament, and national parliaments. There is no common view amongst national parliaments within the Convention, as compared to other blocks such as the European Parliament. The national parliamentarians do not yet know each other, so it will take a considerable time for them to find a common, collective voice.

The members of the Convention still do not know who one another are, so it is impossible to find a common mind. Contrary to Simon Hix’s proposal, EU-level parties do not translate into parties at the national level. National parliaments need to find a collective voice.

The second flaw with Simon Hix’s formula is that there is no agreed sense of purpose in the EU. To involve people and the press in a community of 330 million people, the right questions must be asked. The Commission is a bureaucracy. Giscard D’Estaing commented that before 1973 the Commission was the executive, but then became the council. He said the EU needs a new executive, but. would we want to elect the head of the Civil Service? Why not elect a President of the Council of Ministers?

Candidate countries want to defend the powers of their national parliaments. They think the Commission will protect them from dominance by large countries, but this is not the case. The idea of having both strong nation states and protection is contradictory.

The success of Jean-Marie Le Pen in France, and the result of the Irish referendum, signify an ‘against’ position – they do not show voters as being ‘for’ anything. If the EU lifts national boundaries as people are disengaged, the result may be splits along ethnic lines. It is crucial that we do not forget Turkey, where such a split is quite possible. Any structure the Convention designs has to be able to accommodate the inclusion of Turkey.

Following Gisela Stuart’s speech was discussion, in which these four main topics brought out the following points:

The nature of the debate
• The EU has an ever-growing impact on peoples’ lives. Most people see national parliaments as the main locus of politics.
• We need to step outside the bounds of current debate: institutional bargaining leaves the public absolutely cold. We should be asking, what do we want? Not, what is there? The Convention should not be about power struggles or institutional debate.
• We must ask what the EU is for. In previous generations, the point of Europe has been to prevent war, and then to create provision for such things as working abroad. Some would argue that in our day it is to provide an answer to globalisation.
• An election will allow people to examine the question of what Europe is for.
• The European Court of Justice was a valuable political tool in the 1980s, but does not provide us with a good democratic model. We need two-way valves for democracy.
• Constitutions should not be written by those who will implement them. We need a clear separation of roles and competencies.

The Presidency
• Though the Commission is a bureaucracy, it also has a monopoly on the legislative initiative. Its power is increased with more qualified majority voting. It is unimportant to which role we elect a president, they will run on a legislative platform.
• Direct election of the Commission President is an undesirable end. The Commission may be a supra-national elite, but it is not a constitutional council. Its role as outlined by Simon Hix may be constitutionally true, but is not actually the case. In practice, ideas are raised by member states in the Council.
• However, the Commission is already a political body. It is essential to maintain a clear separation of the roles of different bodies, and Simon Hix’s proposal ensures this is the case.

Elections
• Under Simon Hix’s proposal, heads of government would still discuss behind the scenes in order to prevent the election of an undesirable candidate.
• This would guarantee a moderate President from the centre-left or centre-right.
• Simon Hix’s proposal would only allow for an election once every five years. This will do nothing to integrate the EU into daily political discourse.
• With the media interest which would be generated by the method of election proposed by Simon Hix, we can expect the national press to retain an interest in the Presidency throughout its term.
• Election would sanctify the role of the Commission. However, more strength does not entail better democracy.
• The Commission would be made more democratic not by virtue of its increased strength, but through a legitimate and transparent Presidential election as proposed by Simon Hix.

Parties
• If the President were partisan, whether within a Euro-party or a national level party, confrontation would ensue. Hix’s proposal, therefore, is undemocratic.
• Member states have a strong desire to reach consensus rather than vote. Qualified majority voting allows for compromise.
• Qualified majority voting with an expanding EU will only serve to alienate a larger majority than it does now.
• Institutions serve to create political identity. Though parties currently operate at national level, we need a valve that will allow for an EU-level mandate.

Boundary fixing and subsidiarity
• The boundary between the Community and its member states must be drawn, with the principle of subsidiarity in mind.
• Boundary fixing is hard. There are divided competencies on many issues, and it would be difficult to place new issues within this framework.
• Subsidiarity does not work. Boundary drawing may be difficult, but is essential to create clarity and certainty
• The EU should be structured according to peoples’ needs. We must ask what should be done, where it should be done, and for whose benefit.

The recent G8 Summit in Kananaskis, Canada, showed how little energy Western governments have expended in involving civil society in global governance. With over $100 million of taxpayers money spent on enforcing a six kilometer exclusion zone, one wonders what signals were sent to the wider world about citizen participation in politics. Canadian Prime Minister Jean Chretien called this “getting back to business-as-usual”, despite the fact that representative and direct democracy have coexisted in healthy tension since the days of Ancient Greece.

But though it has yet to be translated into practice, the publication of NGO Rights and Responsibilities by the Foreign Policy Centre eighteen months ago marked the beginning of a consensus on civil society involvement in global governance. Citizens groups can improve the quality of decision-making in international institutions by injecting more transparency into the international system, and can make decisions more effective by involving more of those whose support is required to make them work. These contributions, however, are not realized in every context, since the outcome of civil society involvement depends on whose voices are represented, how competing interests are reconciled, and whether civic groups are effective in playing their evolving roles. Unless participation is effectively structured, the result may be gridlock, or chaotic policy-creation processes open to manipulation by the loudest groups. The question for NGOs and governments, therefore, is how to structure citizen participation in global governance, not why.

Behind the scenes in Canada, some significant discussions took place between G8 government sherpas from Canada, France, Japan and the UK, and representatives from NGOs under the auspices of the Forum Internacional de Montreal, supported by the Ford Foundation. This group debated the rationale for civil society involvement and brainstormed potential solutions. As hosts of next years G8 Summit, French follow-up will be essential, and thus far the signs are good: the French Government is already making plans to meet with representatives from French and global civil society well before the Summit to discuss tactics, including the radical network ATTAC. In Canada, the House of Commons Standing Committee on Foreign Affairs and International Trade has called for task force on G8 reform to look at options for expanding democratic public accessand enlarging participation by parliamentarians and non-state actors in the G8 Summits structure, mandate and processes. The UK Government should support such a task force and implement its recommendations when they host the Summit in two years time.

Further progress in this direction will have to resolve the tensions that exist between structuring participation (to guard against those who shout loudest, or have the richest backers, dominating the debate), and protecting diversity (the hallmark of a healthy civil society). In striking this balance, some argue that we should push for democratically elected non-state bodies to stand alongside inter-governmental structures, such as a “Global Peoples’ Council” to complement the Security Council and the UN General Assembly, but there is little political support for these ideas from governments in any part of the world. Others recommend minimal changes that can easily be accommodated into the structure of international institutions, like the NGO advisory committees to the World Bank and UNDP. These ideas enjoy more political support, but lack the resources and mandate to make any real difference. The most important innovations lie between these two extremes, in experiments that balance greater access to debates with more attention to NGO legitimacy. Examples include multi-stakeholder bodies that foster honest engagement between governments, business and civil society groups (much in use at the upcoming Johannesburg Conference on Sustainable Development), and discussions between civil society groups and inter-governmental bodies outside of their formal sessions, as in the OECD Committee process. Alternative reports from civil society groups can also be tabled alongside official reports from governments, as in the UN Commission on the Rights of the Child.

These innovations work best when backed by codes of conduct that instill the same self-discipline in global NGO networks that marked out the US Civil Rights Movement and other successful causes – the New Economics Foundations Code of Protest, for example, or Friends of the Earth-Europes Principles for Peaceful Protest. In 2001, the Institute for Agriculture and Trade Policy (IATP) in the US developed an exchange of accredited places between Northern and Southern NGOs at the WTO Ministerial meeting in Qatar.

The role of civil society will continue to increase over the coming years. The issue is not whether but how best to realize the potential of citizen involvement in global governance, offset any associated costs, and balance the demand for rules with the benefits of organic development. Heavy handed regulation by governments and inter-governmental bodies is unlikely to yield the best results, since the temptation will always be for some states to use the rules to exclude dissenting voices. Instead, we should look for measures that provide incentives to responsible practice, and reward those who rise to the challenge with more access to the negotiating table. In the 21st Century, civil society will have a voice in world affairs, if not a vote, and both governments and NGOs must structure those voices in ways that promote genuine democracy.

Mike Edwards is Director of Governance and Civil Society at the Ford Foundation, and author of Future Positive and Global Citizen Action

The argument in support of newcomers is beguilingly appealing. The effects of an ageing population on the labour market and welfare state require immigration because immigrants can fill labour market gaps and sustain pensions and health care. The UK population of state pensionable age is projected to increase from 10.8 million in 2000 to 11.9 million in 2011 and to peak at around 16 million in 2040.

But this replacement migration argument has a flaw: immigrants require replacements given that they settle down, have children and get old too. More and more immigration is then needed. Maintaining the support ratio that matches the working age population to the elderly population would require net migration into the UK of around 1 million people a year and increase the population to around 120 million by 2050. This is a ridiculous proposition for obvious social, political and economic reasons.

Bringing the debate to a more practical level, if the UK were to maintain a constant working age population and a constant total population then UN estimates suggest that this would require 48,000 and 114,000 new immigrants each year, respectively.

Net migration into the UK currently outstrips this latter figure and is projected by the National Statistical Office to be around 160,000 a year until 2007. An explanation for this is the significant pull effect generated by labour market shortages that tend to be specific rather than general. The construction sector Three sectors illustrates this point. Increased government expenditure on public services coupled with changes in the housing market have generated a construction boom that is particularly focused on the south east of England, but sends ripples to the Midlands and the North. From high skilled to low skilled occupations, there is an increased construction industry reliance on foreign workers (employed both legally and illegally). Labour shortages in the construction sector are exacerbated by a dearth of young people entering the industry. Attempts to improve the construction industrys image and attract more youngsters are longer-term ventures. According to one senior construction industry figure, its not unusual to go onto a site in London and find that 70-80 per cent of the workforce can speak little or no English.

There are also labour demands that cannot be met from the domestic workforce in key public sector jobs such as teaching and health care. Labour needs are closely linked to government spending and political priorities, but attempts to solve one problem can beget others. Where shortages of teachers, doctors and nurses have arisen it is often because of the unavailability of affordable housing. Much of the demand for immigrant workers is in London and the South East where the regional economy is at risk of over-heating. While there is likely to be a continued need for immigration in certain key sectors, it is not a magic bullet that will resolve labour market and welfare state problems.

Other remedies such as improved labour market participation, increased productivity and greater mobility within the EU will also be important. The EU has resolved to tackle insufficient occupational mobility as part of the new European economy agenda sort-of agreed in principle at the 2000 Lisbon summit. In 2000 only 16.4 per cent of workers in the EU had been in their job for less than one year, compared with 30 per cent in the USA. Only 1.2 per cent of the EU population changed region to live during 1999, compared with 5.9 per cent of people in the USA who moved between states.

As well as structural reform, European Governments must tackle widespread misconceptions amongst their electorate about immigration. A conspicuous feature of public opinion in Britain is that most think there is more of it than there actually is. A MORI opinion poll published in the autumn of 2000 under the heading Are We an Intolerant Nation? found that, on average, respondents thought that 20 per cent of the British population were immigrants. In reality, the figure is 4 per cent. Perhaps not surprisingly, 66 per cent of respondents also felt that there were too many immigrants.

In the early 1990s, fears that 25 million migrants would cross from Eastern Europe into the West led to restrictions on access from Soviet bloc countries. Similar fears provide the backdrop for the next EU enlargement to Central and Eastern Europe. The accession negotiations have been riddled with mistrust because of assumptions from existing states about the potential for large-scale migration from Central and Eastern Europe.

So how many people from accession countries will want to move? Recent research on the potential scale of post-enlargement migration put the figure at around 500,000 people metaphorically sitting on their suitcases with around another 5 million adjudged likely to move during the next 18 years (around 277,000 a year). According to OECD figures, immigrants from Central and Eastern European Countries have accounted for around 15 per cent of the EUs total migrants since 1989. This picture is superimposed on a complex mosaic of relatively short-term movement based on a highly intensive shuttling back and forth across international borders to make a living. As the OECD put it, central and eastern Europe is becoming a a theatre of much more complex movements than just a straightforward move to the west, although this remains the prevailing perception.

The UK population is expected to increase from 59.8 million in 2000 to around 65 million by 2025. Around two-thirds of this projected increase is attributed to immigration with the remainder from natural increase. But though this will be valuable in plugging skills gap, it is not a substitute for improving homegrown skill levels and labour market mobility.

Dr Andrew Geddes is Senior Research Associate at the Foreign Policy Centre and Reader in Politics at the University of Liverpool.

Last week Denmark took over the rotating Presidency of the European Union declaring the three top priorities as “enlargement, enlargement and enlargement”. Agriculture is the most contentious and unresolved element of historic agreements that will bring the first wave of former-communist central European countries into the Union. It is no coincidence that the European Commission is this week/today [Wednesday 10 July] announcing radical proposals for the reform of the Common Agricultural Policy.

Over the years the CAP has come to represent all the failings for which the European Union is criticised. It is bureaucratic, expensive, wasteful, undemocratic, open to fraud, and has a sclerotic resistance to reform. It takes up half of the EU budget, food prices to European shoppers are the highest in the world and farm incomes have not only failed to keep pace with the rest of the economy, they have fallen dramatically in recent years. We owe it to ourselves – and to the 10 countries seeking to join us – to prove that the European Union has the imagination and political will to tackle the biggest single policy failure of the European integration project. In domestic terms, tangible proof that the EU can make the grown-up decisions needed put its house in order will be a boost for those who argue for British membership of the eurozone.

The last reform attempt in 1999 was meant to prepare the CAP for enlargement but failed, largely thanks to French obstruction. But since then Germany has been struck by a BSE crisis that led to a radical shift in its farm policy. New priorities of consumer protection, organic farming and animal welfare and a desire to limit the massive financial drain on German taxpayers have convinced the German government of the need for reform.

Sensing the shifting sands, EU Agriculture Commissioner Franz Fischler has surprised everyone with a brave and radical proposal for reform. His plan will eliminate incentives for farmers to over-produce, set specific environmental requirements for farms that receive taxpayer support and limit annual subsidies to a maximum of £200,000 per farm. Money cut from production subsidies will be channelled into new environmental and rural development programmes. But there are important safeguards. The changes will not disadvantage the 60% of Europe’s farms that receive less than £3,500 a year in support.

The French government was so shocked by leaks of the proposals that it issued rebuttal so rapid that it would make New Labour’s finest spinners proud.

British Governments of both sides have long seen themselves as cheerleaders for CAP reform. But when it comes to the crunch there has been a tendency to retreat to a policy of defending the narrow and short-term interests of British farmers. It is understandable that DEFRA Secretary of State Margaret Beckett will come under pressure from farmers. What is less acceptable is that her officials are very likely to be advising her to block proposals that they deem to be against “the national interest”. Defining the national interest as the right of around 500 barley barons to receive unparalleled levels of corporate welfare is the kind of thinking that contributed to the unfair reputation of DEFRA’s predecessor MAFF as the Whitehall branch of the National Farmers’ Union. The Commission is proposing a package not a menu. Once reform-minded countries start picking it apart it will rapidly unravel.

Much is made of the impact that enlargement might have on the EU budget. An image is conjured of 2 million Polish farmers marching to Brussels, with pitchforks aloft and asserting their rights to fat subsidy cheques. The reality is that the combined agricultural output of the 10 accession countries is about that of Spain. Polish agricultural output is just 3.8% of its GDP. More than half of Polish farms are subsistence operations.

Central Europe has spent most of recorded history being invaded or exploited by powerful neighbours. It’s not surprising they’re suspicious that the unexpected appearance of a radical CAP reform proposal in the last months of accession negotiations is part of an underhand attempt to do them down. The EU must work hard to dispel any impression of sharp practice. The British Government is right to insist that new members become equal members and that transition measures are as short as possible. We need to show them how costly have been our mistakes in pursuing industrial agriculture at all costs. And how subsidies always end up undermining the prosperity of innovative and market-oriented farmers. Instead of allowing Brussels to tie up accession countries in red tape, we should be pushing for greater flexibility in how new members can spend their share of EU money.

In the Doha Declaration that kicked of a new round of WTO negotiations, western governments made explicit promises to help the world’s poorest countries. Reducing agricultural subsidies tops the list. Any sign that the rich countries are about to renege on these pledges will invite developing countries to abandon the talks and will confirm the view that the WTO is about nothing more than imposing the will of big business on the world’s most vulnerable people.

Unfortunately the unilateralism of the Bush Presidency has found yet another outlet in a massive new farm subsidy package that wipes out all the progress Bill Clinton made in reducing subsidies. This is a setback but it presents Europe with an opportunity to take the moral high ground at the WTO and make real a more humane vision of the global economy through fairer trade designed to help the world’s poor.

European leaders fluffed the last attempt at CAP reform in Berlin in 1999. Once German elections this September are out of the way none of the largest four EU countries will be holding elections for at least two years. Will this be a moment for political leadership to transcend the needs of powerful domestic farm lobbies? At a defining moment in the history of Europe, agriculture policy is about much more than farming.

Jack Thurston, Special Adviser, MAFF (1999-2001), is currently working on the Foreign Policy Centre’s Future of European Rural Communities project.