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Coming of Age: The European Community and The Economic Summit

Susan Hainsworth

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1. Introduction

The Western Economic Summits have entered into their third round: the most recent summit, a grandiose and ceremonious affair staged in Paris simultaneously with the bicentennial of the French Republic, in July 1989, constituted the fifteenth annual reunion of the political leaders of the seven leading western industrialised nations (United States, Japan, West Germany, France, Britain, Italy and Canada). The Paris Summit was the thirteenth attended by representatives of the European Community which acceded to the elite club in 1977.

The EC has recently celebrated its thirty-second anniversary since the ratification of the Treaty of Rome in 1957. Originally founded upon a Common Market with a common external tariff, a common commercial policy and a common agricultural policy, the Community has diversified and broadened its competences into other domains, such as social, regional, and environmental policies. With the accession of Spain and Portugal to the Community in 1986, the EC's original membership has doubled to twelve; the EC has also recently been revitalised by the ratification of the Single European Act (SEA) which entered into effect in 1987. The evolution and consolidation of the EC system embodied in such developments as the European Council, the European Monetary System (EMS), European Political Cooperation (EPC) and most recently expressed by the ratification of the SEA and the launching of the ambitious 1992 initiative for the completion of the internal market can be considered a reaction to the dual challenges of internal Community necessity and external pressures.

The genesis of economic summitry in the mid-1970s was a reaction to the need for more effective collective management of the global political economy in an era of intensifying interdependence. In a more profound and extensive sense, the development of the European Community since the mid-1970s represents an institutional response to the increasingly intricate and urgent demands for the management of Western European integration and interdependence. Necessarily, these two entities share common concerns and interests as they interact to monitor and influence the actions and policies of economically interdependent western industrialised democracies.

As the scope of Community competences has been fortified and extended, its importance to international summitry has augmented. Community competences coincide increasingly with issues treated by leaders at the summits. In part, this progressive overlapping is inevitable, due to the essentially transnational character of a growing number of issues on the contemporary international agenda: coordination and cooperation within international frameworks is not only beneficial, but crucial, in the interdependent global system. This overlapping is also due to the inevitable spillover of the multifaceted politicaland economic implications of the EC's 1992 aspirations onto the summit agenda, particularly in the domains of structural adjustments, research and technology, environmental policy, and monetary and macroeconomic affairs.

While the EC system has not developed into a "federalist superstate" in the late 1980s, neither does it resemble that of a purely intergovernmentalist structure. Rather, the EC system is a synthesis of these two trends, a hybrid in which parallelism transcends its functions. Indeed, the examination of the role of the Community, and specifically of the Commission President, at the Summits of the "Seven Plus" serves as a clear and excellent example of the translation of the "parallel" (or cooperative federalist approach) to Community affairs transposed into the realm of the EC's external relations. In this context, the institutions of the Community interact alongside the larger EC member states in a parallel and complementary capacity. Political and institutional evolution within the EC system have thus translated directly into a more powerful and confident EC Commission presence on the international stage within the context of economic summitry.

This paper is intended only as a limited analysis of the EC's performance in international economic summitry, concentrating primarily upon the performance and role of the Commission as it has evolved over the fifteen year history of summitry. It will examine the manner in which political and institutional developments within the EC, embodied for the most part in the "parallel" or "cooperative federalist" trend for EC system growth, have sculpted a nascent EC "external identity" which has been transposed onto the scene of international economic summitry.

After a brief examination of the historical circumstances surrounding the birth of international economic summitry, and the accession of the EC to the elite club in 1977, the paper will proceed to a summit-by-summit analysis of the EC's performance. The instutional links between the EC and the summit will be discussed. The Community's role, and factors which have affected the EC's performance in particular issue areas that have dominated recent summit discussions will also be touched upon.

In the final chapter, conclusions will be drawn concerning the overall pattern of EC participation in the process of economic, demonstrating that the role played by the Commission President at the annual summits has reflected the evolving political and institutional balance within the EC system itself. In the period of dynamism and cohesiveness within the EC system which has been ushered in by the SEA and the 1992 initiative, the EC has demonstrated a powerful and undeniably influential capability and presence upon the international stage, in the unique and increasingly comprehensive international forum which brings together the leading industrialised economies to manage collectively the problems of the day.

The origins and development of economic summitry

Some political science theorists view the development of economic summitry among the leaders of western industrialised democracies and the associated agencies and mechanisms which found their origins in the summit process as the third major wave of international institution building in the post1945 era.1

The first phase, in the immediate aftermath of World War Two, was the United Nations system, including its Security Council, its General Assembly, and its extensive network of associated specialised functional agencies. However, the possession of a veto power by each of the five Security Council members ensured that the system would reach paralysis and political deadlock. In short, the structural shortcomings of the United Nations rendered it unable to adapt to and to cope effectively with the myriad developments and demands within the evolving postwar world. Instrumental in the early shortcomings of the UN system was the initial exclusion of Germany, Italy and Japan from its epicentre, and the granting of Security Council status to Britain, France and China which was no longer comensurate with their real capabilities.

The second major phase of institution-creation after 1945 was Atlanticist in emphasis, to cope with the Cold War. A range of more restricted, Atlantic-centric international and multilateral institutions and regimes took shape such as the North Atlantic Treaty Organisation (NATO); the General Agreement on Tariffs and Trade (GATT); and the International Energy Agency (IEA); the Organisation of European Economic Cooperation (OEEC), and its progeny, the Organisation of Economic Cooperation and Development (OECD) and the European Economic Community (EEC). The non-inclusion of Japan in the NATO military command structure and in other Atlantic institutions was a serious deficiency, which was accentuated over the years as Japan's growth rate, prosperity, and economic might skyrocketed. The Americans and Europeans agreed that Japan should become more actively involved in the governance of the international economy. Both also were united in viewing an increasingly prosperous Japan as a formidable economic and commercial rival. The concept of bringing Japan into the 'fold', and giving it a role in the running of the world economy represents a crucial development in the world system. Thus, the third major wave of post-war international institutional construction commenced, with the move toward a system of economic summitry among the industrialised democracies of the West.

In the quarter century after World War Two, the priority of the American hegemon had not been to make its hegemonic dominance more secure. Rather, the United States had encouraged and promoted the integration and growth of the European Community, and had fed the engine of Japanese economic dynamism. Thus, by the early1970's, the concept of collective management of, and responsibility for, the welfare of the international economic system appeared as a viable and indeed necessary step for the world's leading industrialised democracies to take.

The cumulative impact of successive economic crises in the early 1970's -- embodied in the collapse of the Bretton Woods system of fixed exchange rates, the first oil shock, and the consequent severe worldwide recession -- rendered the international economic system precarious and unstable. The vulnerability of the world economy was accentuated by the decline of American predominance and the apparent inability of traditional multilateral entities, such as the GATT, the IMF and the OECD to cope with the monetary crisis in the context of the heightening interdependence of the global economy.

The idea of a western summit to deal with the management of the international economy within the framework of the Western Alliance had been considered several times by the U.S. Administration. In his memoirs, Kissinger mentioned that he believed such a meeting between the United States and the Europeans was inevitable in the aftermath of the 'Nixon shock' of 1971: "To bring matters to a head, I recommended to Nixon that he intervene personally with the European Heads of State. My original idea was a summit of the Western leaders".2

This idea was revived in Kissinger's ill-fated "Year of Europe", but confronted with opposition from the French, who were suspicious of all forms of multilateralism. Contemporaneously, the Trilateral Commission -- a group of influential American, European and Japanese civil servants and businessmen -- explored the possibility of drawing Japan into active participation in the management of the international economy, and made this proposal in 1973.

However, the timing was not yet favourable to bring this idea to its fruition.3

In 1974, a political upheaval occurred which overturned the leadership of the five leading western industrialised nations, and catalysed progress to a resolution of the international economic impasse4: in Britain, Labour's Harold Wilson returned to power, Giscard d'Estaing became the new French President; Helmut Schmidt replaced Willy Brandt as West German Chancellor; in the U.S., Nixon resigned and Gerald Ford assumed the reins in the aftermath of the Watergate scandal; and in Japan, Takeo Miki became premier. Thus was ushered in what Kissinger would classify as 'one of the best periods of Atlantic cooperation in decades'.5

It was the French President, Giscard d'Estaing -- with the strong support of West German Chancellor Helmut Schmidt -- who sought to create a political remedy to international economic and monetary instability through the introduction of international economic summitry. As former finance ministers, both Schmidt and Giscard had participated in the "Library Group", a series of highly confidential and informal meetings of finance ministers from the United States, Japan, U.K., France and West Germany which had commenced in 1973. The French and West German leaders attempted to translate their "Library Group" experience into the promotion of a small, flexible, and informal gathering limited to the heads of state or government of the leading industrialised nations. At such a reunion, they believed, common concerns could be discussed and national viewpoints exchanged in order to enhance cooperation and coordination within the international economy.

The economic summit would satisfy three fundamental requirements. First, it would establish a regime for collective international economic management in order to counteract the waning of American hegemony which had underpinned the postwar global system .

Secondly, it would provide a vehicle for the reconciliation of the increasingly complex interaction between domestic and foreign policies, a distinction that had become increasingly blurred by the entanglements of economic interdependence.

Thirdly, the summit would exert top-level political leadership and responsibility to counter the growing trend toward bureaucratisation and bureaucratic paralysis in international relations.6 This anti-bureaucratic slant was emphasised by the fact that all preparatory groundwork for the economic summits was to be executed not by official heirarchical bureaucratic teams, but rather by a personal representative of each leader, dubbed 'sherpas'.

Indeed, a parallel development occurred simultaneously within the European Community, promoted by Giscard and Schmidt, and founded upon the same motivations. The inauguration of the European Council in 1974 7, consisting of regular summit meetings of European political leaders in a flexible and confidential atmosphere provided a top-level forum to discuss longterm European perspectives and to promote the smooth functioning of the EC system. The European Council was considered the ideal vehicle to galvanize the political will to respond to the conflicting pressures of interdependence and national imperatives within the Community at the highest political level. 8 Recently, the European Council was institutionalised into the legal framework of the Community system through the ratification of the SEA in 1987. Bereft of its own permanent secratariat and bureaucracy, the European Council is dependent upon the existing Community machinery, principally the Commission, the Council of Ministers and COREPER, to implement its decisions.

Unlike the European Council summit, the summit of the western industrialised democracies lacks an international legal covenant, as it has no sacred foundation treaty. Also, it has no administrative secretariat, executive machinery or permanent headquarters, and its discussions are kept at a relatively informal and spontaneous level. Thus the summit has none of the structural features of a traditional 'international organisation', while it does fulfill some of the expected functions of such an organisation, such as the gathering and exchange of information and the establishment of standards and guidelines for internationally acceptable behaviour. 9 Economic summitry represents a purely discretionary system, with no binding contracts or obligations.

This anti-organizational bias and lack of binding legal covenant, coupled with the continued insistence on informality and flexibility, coincides with a very elastic interpretation of interdependence regime theory, where a regime is defined as 'implicit or explicit principles, norms, rules and decisionmaking procedures around which actors' expectations converge in a given area of international relations'. Putnam and Bayne emphasise that the concentration of the summits on discretionary and ad hoc management rather than upon the formulation of firm rules of conduct, and their preoccupation with specific issue-areas rather than branching out in attempts to forge stronger links with organizations dovetails with this 'elastic' regime theory for understanding the evolving functions of economic summitry.

John Kirton believes that the summit serves three primary purposes in the contemporary international system: first, it defends core societal values against severe shocks; second, it defines the international order where the old regime has been destroyed, or a new rules have yet to be defined; third, it devises coordinated programmes and mechanisms required to secure compliance with these new definitions. In short, the summits provide system stability, create necessary international order, and support consultative mechanism for preparation, delegation and follow-up. 10

By these criteria, Kirton suggests, the summits have not digressed from an integral and instrumental component of political-economic history in the 1970's to virtual failure and redundancy in the 1980's, as many observers and political scientists argue. Rather, there has been a triple progression in the effectiveness and success of the western summits: from effectiveness in the period 1975-80, to reduced effectiveness in the period 1981-1984, to a renaissance in effectiveness in the period 1985-89.11

The economic summits can act as a catalyst, by channeling the efforts of the most powerful leaders of the western world and exerting decisive influence on existing institutionalised regimes in specific issue-areas , such as the OECD (economic policy coordination), energy policy (IEA), monetary stability (IMF, IBRD), international trade (GATT). Along withproviding endorsement and stimulus to progress which is being made in these international organisations, the economic summits also establish parallel treatment of issues ( i.e. outside traditional, established international regimes) through the implementation of new "regimes" or agencies to handle international cooperation. The most prominent example of this would of course be the work of the Group of Seven Finance Ministers who have essentially usurped the exchangerate and monetary stability role as well as management of Third World debt issues which had been formally performed by the IMF. In addition, summits commission specialised task forces to monitor and study specific problematic issue-areas on the international agenda.

Thus, the summits of the leading industrialised democracies can be considered as a key and core element in a rapidly evolving new international order12, in which the leading powers in the system come together in a "concert" in order to manage, to catalyse, and to implement regimes which can facilitate the operation of the global system in an increasing number of issue-areas:

The EC and the Economic Summit

Inevitably, the introduction of the Western Economic Summit in 1975 on to the world stage, as an elite decision-making forum without a defined mandate, a legal foundation, nor a defined relationship to other existing international institutions -- such as the UN, the GATT, the IMF, the OECD, and particularly the European Community -- aroused suspicion and concern. Non-participating countries, especially in Western Europe, were convinced that high-level political decisions affecting their interests would be reached at the summit, and that the summit might rival -- or even replace -- the EC as the principal entity to resolve and manage West European and transatlantic issues.

From 1975-1977, the Community struggled for recognition as a legitimate international actor that possessed the competence and authority to represent the interests of its member states in the forum of economic summitry. No extra-European country was opposed to Community participation at the summit. It was among the Community member states themselves that the bitter and prolonged debate regarding EC inclusion in summitry took place.

The member states of the European Community finally agreed upon and adopted a compromise formula for EC representation at the Western Economic Summit in 1977, where a bicephalous delegation composed of the Presidency-in-office of the European Council and the President of the Commission would represent the Community in areas of its competence without a fixed or binding mandate.

Thus, the Community as such would attend the annual western summits; the crucial acknowledgement which was made by the EC's member states at this time was the admission that the Commission Presidentthe head of a supranational executive bureaucracy which was charged with the mandate of furthering the cause of European Unioncould negotiate in international fora alongside the four largest member states of the EC, without eliminating them or replacing them.

This formula for EC representation in the forum of economic summitry did not reflect the characteristics of a 'communautaire' or federalist theoretical paradigm for the EC, which would have demanded that the Commission President and the Presidency of the Council speak on behalf of all member states of the EC on the basis of a legal and binding negotiating mandate so that the Community could speak strictly 'with one voice' at the summit.14 Nor was it a fulfillment of the predictions of the "realist" or 'Gaullist" school, which stipulated that international negotiations must take place on an intergovernmental level, would not have permitted any role for the Commission at the summit, on the grounds that only sovereign states are the legitimate units in world politics.15

Rather, this compromise formula adopted by the Community -- acknowledging the irrevocable interdependence of Western European states and accomodating elements of both intergovernmentalism and supranationalism -- was an illustration of the 'parallel' approach,16 which was increasingly developing into the norm within the EC system at this time. This 'parallel' approach allowed for the participation of the Commission alongside EC member states in a complementary capacity.

In 1977, the Commission was only grudgingly invited to attend some of the economic sessions of the London summit gathering, with its competences being severely and rather arbitrarily restricted to North-South issues and international trade. In 1978, however, the Community cemented its right to participate in all economic discussions. Finally, in 1981, the Commission was admitted to political discussions on foreign policy issues at the Ottawa Summit, due to its formal inclusion in the EPC framework within the Community system in that same year. From 1981 on, therefore, the Commission has been recognised as a legitimate participant in all summit exchanges -- both political and economic.

In 1989, the Commission of the EC 'came of age' at the Western Economic Summit and was assigned a task which paid tribute to its technical, bureaucratic and managerial expertise, and its unique and advantageous historical, cultural and political situation. The summiteers granted the Commission a mandate to design and coordinate an emergency food aid and economic cooperation and reform package which represented the reaction of western industrialised countries to Eastern bloc countries -- namely Poland and Hungary -- who have recently renounced Soviet-dominated socialist orthodoxy and are striving to transform their state-controlled economies into pluralist, market-oriented systems. This is a gargantuan task of critical importance. That the Commission was given the responsibility to execute this coordinating function is a clear demonstration of the Commission's "coming of age" and of the legitimacy, respect and confidence which other leaders of the western world have attributed to the Commission and to the Community's increasingly defined "external identity".

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