Show Hide image Archive 27 April 2021 From the NS archive: Jacques Delors interview 2 January 1998: The euro, expansion, and all things EU. By Charles Grant Sign UpGet the New Statesman’s Morning Call email. Sign-up From 1985 to 1995, the French politician and former minister of finance Jacques Delors was president of the European Commission. He was a bogeyman to much of the British right-leaning press for his support for greater European integration and monetary union. Needless to say, his views were far more nuanced than much of the British media gave him credit for. In this interview in 1998, when Delors had left politics to run a think tank, he expanded his thoughts on how Europe could be improved. Even more important than greater financial union or expansion was the need to engage the European public with the work of the Commission. Citizens felt they had a stake in their national policies but not EU ones, and this needed to be changed. And contrary to popular opinion, Delors’s views on Britain’s role in the EU were pragmatic: the UK would always be slightly detached, but better in than out. *** One of the best-kept secrets about Jacques Delors is that, despite being vilified by our tabloid newspapers, he remains an ardent Britophile. In his youth he read the New Statesman and the New Left Review avidly. He has not forgotten that when he spoke to the TUC at Bournemouth in 1998 – doing much to make the trade unions more pro- and Margaret Thatcher more anti-European – he received a warmer reception than he has ever had from the French Socialist Party. And on the evening before this interview when he spoke at a dinner held in his honour in the gilded splendour of the British ambassador’s Paris residence, he sang the praises of Geoffrey Howe and Douglas Hurd. He even speaks respectfully of Thatcher, claiming that she treated the European Commission more correctly than did François Mitterrand. It is three years since Delors retired from the Commission. Now a spry 72, he run Notre Europe, a small Paris-based think tank. When I had last seen him, in June, just after the Malmo summit of European socialist leaders, he was indignant at what seemed to him the cocky, triumphalist style of the Labour government. Now he is more positive about new Labour which he praises for its professionalism, its emphasis on education and for Gordon Brown’s statement in the House of Commons on economic and monetary union, which was “the maximum one could expect of a British government in November 1997”. For Britain to join EMU in 1999 would not be realistic, he says, because of the weight of public opinion, the state of the media, the strength of sterling and the fact that Britain’s business cycle is out of kilter with the rest of the EU. He finds Britain’s policy on EMU “forward-looking and realistic” but believes Britain will “always observe from the side lines and join only if it is a success”. Yet such diffidence carries a price. “If monetary union works, it will be seen by historians as the jewel in the crown of economic integration and as the launching pad for a political Europe. One has to be part of it to be heard and to influence the course of events.” Delors is far from sure that EMU will succeed, however, even though he has done as much as anyone to make the idea of monetary union a reality. It is often forgotten that Helmut Kohl was sceptical about EMU until the spring of 1988, when Delors persuaded him to pursue it. Kohl then made Delors chairman of the committee of central bank governors, which drew up the plan that ended up, to a large extent, in the Maastricht treaty. Delors’ main concern is the lack of an economic government to balance the European Central Bank (ECB). “It is foreseen in the Delors report on EMU and in the Maastricht treaty that there must be a pact to co-ordinate economic policies.” Ministers should discuss, for example, how each country's policies affect the others, and the risks of recessions or economic shocks. “I will fret if EMU does not walk on two legs: a monetary leg on one side, and an economic leg on the other.” The French have long stressed the importance of the E in EMU. But, unlike some in the Jospin government, Delors does not want the “Euro-X” committee (the informal grouping of EMU members from which Britain will be partly excluded) to provide that economic leg. He follows the British and German governments in stressing that Ecofin, the formal meetings of all 15 finance ministers, should remain the key economic forum. He says there is no harm in the euromembers meeting informally before an Ecofin, but he is critical of France's hard line on Euro-X: “After what Gordon Brown told the House of Commons, trying to exclude Britain from the discussions was stupid and counterproductive. It does not encourage the British government [to move further towards Europe].” Delors would build this economic leg as follows. Each year in April the Commission would submit an analysis of the economic situation, with recommendations, for consideration by Ecofin and the council of employment ministers. The Commission would then rework its proposals and present them to the European Parliament, before handing them in June to the European Council (as summits of heads of government are known), which would decide the broad outlines of policy. In Britain the common view of monetary union is that it does not require much tighter coordination of other economic policies. Delors disagrees for political and economic reasons. “The ECB will be very powerful. As soon as there is a bad economic crisis, public opinion will treat the ECB as a scapegoat and rebel against ‘la construction européenne’.” Thus Ecofin, consisting of ministers from democratically elected governments, needs to be a visible alternative focus of economic power. As for the economics, Delors notes that since 1991 the continent has had “a too-rigorous monetary policy, combined with a restrictive budgetary policy, so we’ve had feeble economic growth and rising unemployment. And all because we have not been coordinating our economic policies.” Delors is a Euro-Keynesian. While the fashion in Britain is to attribute most of France’s 12.5 per cent unemployment to over-regulated labour markets, Delors – although he accepts the need to liberalise labour markets – thinks the root cause of the problem is insufficient demand. Economic policies, he says, must be coordinated to avoid a repetition of what he calls in Franglais the “mauvais policy mix” of recent years. He avoids direct criticism of the Bundesbank, of which he has never been a great fan, but that is the body which has run monetary policy for countries in the Exchange Rate Mechanism, and which dreamed up the Maastricht treaty’s rule that budget deficits had to be limited to 3 per cent of GDP. Another reason why this coordination is essential, he says, is that the likely EMU zone of 11 countries (Germany, France, the Benelux three, Spain, Portugal, Ireland, Italy, Finland and Austria) is not, in economic terms, an optimal single-currency area. The economic and social traditions in those countries, he believes, are not sufficiently close for sustainable growth and job creation to occur naturally under a single currency. “But it’s worth going ahead with the Euro so long as we get a balance between the economic leg and the monetary leg. I’ve spent two years trying to convince the Germans of this with great difficulty.” The Pact on Stability and Growth agreed at the Dublin summit a year ago, says Delors, was a necessary but not sufficient part of the economic leg he desires. The pact sets out rules for punishing countries that run excessive budget deficits but despite the name, Delors points out, it has nothing to do with “growth”, that word having been inserted merely to keep President Chirac happy. “One should not focus just on the punitive side. One may have to increase the rate of growth rather than reduce the budget deficit. Hence the need for a new pact of economic policy coordination.” He would not, for example, want sanctions imposed on a country that refused to join an EU-wide attempt to reflate. Instead he would rely on public chastisement from other governments to push the miscreant into line. Once the new procedures have got going he says, the Union should reflect on new policy instruments, such as using the EU’s budget or EU credits to promote growth. Before last month’s Luxembourg summit, Delors lobbied hard for the heads of government to agree a new economic pact. In the event they adopted a resolution calling for closer surveillance and coordination of economic policies, for sterner specific recommendations to countries that flout guidelines and for “more focus on measures to improve member-states' growth potential thus increasing employment”. Despite the Delorsian language, the resolution disappointed him. He wanted hard-and-fast rules for economic policy coordination, akin to those in the Pact on Stability and Growth, and an agreement on detailed procedures. But he concedes that the EU took a “step forwards” at Luxembourg. Delors believes the wave of Euroscepticism that swept across northern Europe after the June 1992 Danish referendum on the Maastricht treaty has subsided. “I can’t explain why the discontent hasn’t grown, given that we’ve applied very deflationary policies with real social costs to fulfil the Maastricht criteria.” He points to recent opinion polls that show growing support for EMU throughout the EU (including Britain). But he recognises the difficulty of making the EU less distant and more relevant to ordinary people. “Thanks to the Maastricht and Amsterdam treaties we’re moving towards a common European judicial area, but we don’t have a common political area.” When the Blair government announces a national minimum wage he says, newspapers write about it, the social partners express views and ordinary people talk about it. “But in Europe, if the Commission proposes something it gets submerged, like the Beatles’ Yellow Submarine and stays in administrative committees for two years before resurfacing.” He urges politicians to involve public opinion and national institutions in debates on European policy. “Politicians should apply the three principles of transparency simplicity and subsidiarity [devolving decisions to the lowest level of government practicable]”. He suggests for example that after each meeting of the Council of Ministers a simple three-page explanation of its decisions should be published. “We have to take fewer initiatives at European level but prepare them better so that national parliaments and the European Parliament engage in real debate.” But won’t the centralisation of economic authority that Delors envisages only increase the EU’s democratic deficit? “When a national government presents a budget the media cover it and people sit up and take notice. It will be the same each June when the European Council debate the economic situation and make recommendations.” It may be optimistic to think “citizens and national parliaments will become integrated in this annual event”. Like most who ponder the EU’s democratic deficit, Delors is stronger on analysing the problem than on finding a solution. He believes that monetary union will encourage EU-wide policies in many other areas, foreseeing “a pressure, especially from companies but also from employees for an approximation of rules on tax and employment”. That need not occur through law, he says, pointing to last month’s first ever Ecofin agreement on guidelines for corporate tax rates. “That would not have happened without EMU coming, and companies complaining to their governments that their fiscal regime is much less favourable than that in, say, Ireland.” He also foresees some minimal harmonisation of the taxes that individuals pay on their investments. For the EU’s external policies, “only the presence of the euro will make the European countries appreciate their strength”. They will want to be represented more coherently “to defend their commercial interests to work for a more balanced global economy and to contribute to the reform of the big international economic organisations”. But will EMU lead in the long run to political union? He predicts that when public opinion sees that the euro is leading to the EU running a lot of economic policy, “it will turn to the European Council with greater urgency to demand that it consider the question of political integration and democratic accountability”. The implication is that EMU will eventually resolve its own contradictions: the centralisation of economic power will expose the lack of accountability and thus provoke a leap toward a more federal and democratic constitution. That sounds like wishful thinking from a life-long Euro-enthusiast. Surely a euro driven concentration of EU power could just easily inspire much greater hostility to it? He acknowledges the risk, if the EU fails to deliver “growth employment, well-being and social progress. All great human endeavours carry risk but EMU is worth attempting”. The other great endeavour Delors describes as his “historic duty”, is enlargement into eastern Europe. While the British like to emphasise that enlargement cannot occur without reform of the Common Agricultural Policy, Delors stresses that the existing institutional structures could not cope with a much larger membership. Both are right. Delors wants to revive a technique that has, in the past, proved an effective means of preparing the way for major constitutional change: the committee of experts. The Spaak committee begat the Treaty of Rome, the Dooge committee the Single European Act, and the Delors committee the EMU sections of the Maastricht treaty. Delors is surely right to say that one reason why the intergovernmental conference (IGC), which ended last June in Amsterdam, lasted so long and achieved so little is that no group of experts had honed the arguments in advance. He says that when the EU kicks off formal talks on enlargement in March, it should at the same time appoint “six wise persons to clarify the problems”. They should focus, he says, on how to make the EU more transparent, more efficient and more accountable. And he wants them to tackle fundamental questions: “Do we agree on the marriage contract? Why are we living together, what are we struggling for and do we have the same ambitions? Greater clarity on these issues would be a first step towards accountability.” By 1999, he says, this group should produce either a single institutional blueprint for a Europe of 25-30 members, or a range of other options. “The heads of government would meet to consider this report and take decisions within three months. If we have another IGC run by ministers’ representatives, it will drag on for 18 months and achieve nothing.” Many senior figures in the Jospin government worry that the Germans – for so long in the vanguard of moves towards federalism – think they can have enlargement without the bother of reforming EU institutions. In Amsterdam it was Kohl, not Blair, who did most to block the extension of majority voting. The concern in Paris is that enlargement without reform would render the EU incapable of effective decision-taking, causing it to degenerate into a mere free-trade zone. But Delors is not so worried. He believes that when the time comes, the Germans will accept the logic of reform. And he, like the Jospin government, is optimistic about the British, traditionally the most opposed to reform. The Blair government, says Delors, “gives the impression of confronting the institutional problems seriously”. Delors’s only formal role these days is to head his think tank. It is hard to gauge the extent of his influence in France. On the one hand he remains the country’s most popular politician, as he was in 1994 when he decided not to run for the French presidency. And although he is not in government, many of his followers hold powerful positions. To name just three, Martine Aubry, his redoubtable daughter, is minister of labour; Jean-Pierre Jouyet, his former chef de cabinet, is the number two in Jospin's office; and François Hollande, a protégé and the nearest thing the French socialists have to a moderniser of the Blair variety, has just become leader of the Socialist Party. Yet Jospin seldom consults Delors. Indeed, Delors sees more of Chancellor Kohl than he does of the French prime minister. But in one sense that does not matter, because the policy that Delors, as finance minister, set down in 1983 – a strong, stable currency supported by economic rigour – has never been seriously questioned by governments of left or right. And just as the Chirac who won the presidency was a wobbler on EMU before becoming a staunch supporter in office, so Jospin has cast off his earlier doubts. France’s ruling classes are firmly committed to the single currency in particular and European integration in general. The France that Delors declined to lead is, in many essentials, Delorsian. Read more from the NS archive here and sign up to the weekly “From the archive” newsletter here. A selection of pieces spanning the New Statesman’s history has recently been published as “Statesmanship” (Weidenfeld & Nicolson) Subscribe For more great writing from our award-winning journalists subscribe for just £1 per month!