fabian tract 398 Europe: out of the impasse contents 1 Britain's role in an impotent Europe 1 2 stalemate in the common market 5 3 way out of the impasse 8 4 the political community 10 5 the role for Europe 14 6 the socialist contribution 18 A ,~... ~ ' ' 0,. J. ~~~C"JLI f!CAL IJ.: •.-AN[) 0 . .. ' ,,y' '~ this pamphlet, like all publications of the Fabian Society, represents not the collective view of the Society but only the view of the individuals who prepared it. The responsibility of the Society is limited to approving the publications which it issues as worthy of consideration within the Labour move- ment. Fabian Society, 11 Dartmouth Street, London SW1. October 1969 SBN 7163 0398 1 fabian tract 398 Europe: out of the impasse contents 1 Britain's role in an impotent Europe 1 2 stalemate in the common market 5 3 way out of the impasse 8 4 the political community 10 5 the role for Europe 14 6 the socialist contribution 18 A ,~... ~ ' ' 0,. J. ~~~C"JLI f!CAL IJ.: •.-AN[) 0 . .. ' ,,y' '~ this pamphlet, like all publications of the Fabian Society, represents not the collective view of the Society but only the view of the individuals who prepared it. The responsibility of the Society is limited to approving the publications which it issues as worthy of consideration within the Labour move- ment. Fabian Society, 11 Dartmouth Street, London SW1. October 1969 SBN 7163 0398 1 1. Britainls role in an impotent Europe For the first time for centuries, Europe has ceased to be the spear-head for progress, and the continent from which innovation, culture and the benefits of civilisation have spread to the rest of rhe world. Since the second world war, the production of nuclear weapons and massive technological developmentshave enabled world leadership to passinto American and SoVIiet hands, whilst Europe, sapped of vitality following two imperialist oonfliicts, has become the periphery of the two super powersfacing each other across a border crudely drawn through the middle of our continent. This rivalry and polarisation of power 'has tended to accentuate political and economic dlifferences between the two blocks, and forced the majority of smaller countries to choose and align themselves with either the United States or the Soviet Union. This development has taken a particularly acute form in Europe, where deviation from allegiance is regarded as casus belli by the protectling power. Thus Soviet suppression of the Hungarian revolution and last year's military occupation of Czechoslovakia has ·been matched in form if not mcontent by America's military alliance with 'Franco in Spain and more recently by her support of the totalitarian regime in Greece. Their respective actions and policies, justified by over-rlidingstrategic considerations have met with the passive acquiescence of the other super power. Some individual European countries have made efforts to detach themselves from positions of subservience.. For instance both France and Jugoslaviahave striven in specific areas to develop independent forei:gn policies. The last decade has shown that neither country (even when allied to countries in the Afro-Asian group) has the power or resources to stand alone and exert any significant influence on woJ:'Ild affairs. Their po~ioies on non-alignment have had little effect lin separating or lessening the military confrontation of the super powers or their total domination of world events. Thus major questions of war and peace have became the exclusive concern of the two super powers, and predictably the United Nations orgauisaVion has became ineffective and 'impotent except when backed jointly by the Soviet Union or America. In consequence West European countries 'have had no influence over such critical issues as Cuba or Vietnam, nor indeed have they been able to affect sU'bstantively the whole question of nuclear rivalry and d~sarmament. On matters of vital European interests and concern such as the conflict in the Middle East, Soviet naval penetration in the Mediterranean, the suppression of Hberty in Greece or Czechoslovakia, European countries have been forced to look on impotently, and with greater or .lesser grace follow the atvitudes of their protectors. At the same time the European nations are obliged to spend vast proportions of their nationai income on armaments to defend their respective satellite positions. The !Yig powers' domination extends 'beyond quest·ions of foreign and defence policies. The overwhelming military power of the Americans and the Russians has been achieved by a massive investment in research and the development of advanced techn•ology, and the fall-out from technological innovation has meant for the super powers a substanVial industrial superiority in those spheres on which future econ·omic development and prosperity will depend. Thus American industry has been ab1e to penetrate and dominate industries of advanced technology in western Europe, whilst in eastern Europe industrial production is gearedprlimarily to sustain the needs of the Soviet economy. The growing technological gap between America and western Europe has not yet overtiy affected living standards in our continent, and thus concern a:bout it has failed to arouse much passion. But the increasing American control of the fastest growing advanced branches of industry, and the resulting brain- drain, not only to the USA but a!lso to Amer1ican subsidiaries in Europe, carry alarming implications for our future economic growth. When Harold Whlson said that Europe wouJd be condemned to an industrial helotry, his language may have been colourful but in the context of the technologicalrevolution hardly inaccurate. European impotence is certaWy no less significant within the wo11ld monetarysystem. Indeed international trade and development is dependent at present upon an archaic and chaotic system for the exchange of currencies which is frequently undermined by temporary fluctuations in national ba!lances of payments, and uneashly susta•ined bytwo national reserve currencies, the dollar and sterling, which are becoming increasingly unstable. Thus in November 1968 we saw the world monetary system go to the edge of the precipice, whilst Europe, and in particular Britain, whose livelihood depends on world trade and therefore a reliable means of exchange, was incapable of any joint action to pull it back. The uneasy compromise reluctanHy dictated byattitudes of national prestige and protecilive tendencies may yet drag us into an international economic crisis of similar proportions, though dillerent in character, to that of the early 'thirties. It is ·becoming increasingly evident that as long as Europe remains balkanised and d[vided with each individual country ineffecVively trying to assert an illusory national sovereignty we will remain impotent, with ill the important decisions about our future economic and political development taken either in Washington or Moscow. And tomorrow a third centre may be Peking. "B11itain has lost an empire but has not yet found a role." In this perceptive phrase used in 1962 Dean Acheson summed up our own dilemma. Ever since the war crises in our balance of payments have been occurring with monotonous regularity. This chronic economic weakness has forced successive British governments to recognise that we no longer possess the means to play a world rdle as a first class power, and we have progressively withdrawn from wide-flung military and economic commitments in Asia, Africa and the Middle East. The Empire imaginatively transformed ·by the Attlee government into a Commonwealth of independent nations has lost cohesiveness as the mother country found 'herself unable effectively to defend and economically to assist the emerging but severely under-developed new nations of Africa and ASia. It is in any case a reflection of insular self- deception to believe that most Commonwea• lth countries now look to us for ~leadership. Neither in political or economic terms is this true. Indeed, those in Britain who retain these at~itudes are no more than ~atter-day im •perialists. Economic self-interest has forced the new members of the Commonwealth to look increasingly elsewhere for capital needed for development, and for the diversification of -their trade outside the former British Empire. The advantages of Commonwealth preference have been steadhly eroded. whilst Britain's place as a leadingtrading nation, largely dependent upon her imperial possesSions, has been progressively overtaken by others. Similarly the commercial advantagesof being a banker in charge of one of the world's two reserve currencies have been over-shadowed by the intolerable burden the international role of sterling has become for Britain's fragile economy, backed as it is by inadequate reserves. Successive British Governments have been forced to subordinate rational growth policies to the need to prop up sterling for the sake of its overseas holders. A realistic assessment of our economic weakness, of our over-extended commitments and our resulting impotence has now led the present Labour Government to shed past illusions, and for the first time since the war to tackle the fundamental problems facing a Britain which has to stand on 'her own feet and which cannot expect that the world continues to owe her a living. Each successive defence review has been marked by the reduction of overseas military commitments and the canceHation of some over-sophisticated weapon whidh has become a luxuryfor a country ceasing to play an independent world military role. The 1969 review has underlined these factors and has in addition made explicit the sh'ift of our commitment to Europe. Efforts are being made to shed the burden of sterling's reserve role and to insulate our economy from the effects of damaging speculative runs on our currency which have so much inhibited our own economic growth. Our whole economy is being restructured , industry modernised and made more competitive, and capital investment diverted from overseas to meet our internal needs. These policies are all designed to re-establish a powerfu·l economic base from which to recapture the lead lost in foreign markets for our trade, and rega'in some of our lost influence in world affairs. At the same time, the technologicalrevolution has brought new problemsin its train. In the most ·important and basic areas of modern technology, be it computers, electronics, telecommunications, defence equipment, or nuclear power, research and development costs are fast reaching a level beyond the means of even a medium sized nation such as Britain, unless the home market for our products were considerably enlarged and development costs shared with others. This is equally true of many of the more traditional industries, such as aviation, automobiles and machine tools. If these industries are to survive and remain under Europeancontrol, design, produotion and marketing techn