EUROPEAN UNION: STATUS AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004100100003-5
• Release Decision: RIFPUB
• Original Classification: S
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• Document Creation Date: December 19, 2016
• Sequence Number: 3
• Content Type: REPORT

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M
16 August 1963
OCI No. 0293/63B
Copy No. 71
SPECIAL REPORT
EUROPEAN UNION: STATUS AND PROSPECTS
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
a10Rl?c DF Facie ` i f I
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16 August 1963
In the seven months since the collapse of
Britain's bid for Common Market membership, mutual
suspicion among the member countries has sharply
retarded the remarkable progress which the EEC
maintained in its first five years. Integration
of agriculture--essential to the community's
internal balance--is stalemated on differences
between Bonn and Paris. The community institutions
in Brussels are proving increasingly inadequate to
carry out the economic objectives of the Six, let
alone effect their political integration. Above
all, moves toward political union are stalled on
the refusal of France's partners to accept the
Gaullist concept of a "European Europe" dominated
by Paris and competing with Washington.
The European movement seems thus to have come
to another of its major turning points--with De
Gaulle in the key role. Integration cannot proceed
without France, and only De Gaulle is in position
to bring about another rapid advance. Assuming De
Gaulle desires some kind of European union, his
chances of achieving it any time soon would seem to
depend on his willingness to accept a somewhat more
modest role in it for France and on his defining a
generally acceptable basis for the union's relations
with the United States.
The Current Malaise
Since De Gaulle's veto
last January of Britain's ap-
plication for Common Market
membership, the odds on European
union have suffered their worst
decline since the European
Defense Community fiasco nine
years ago. In the last seven
months, the Common Market has
concentrated primarily on hold-
ing the gains of the past five
years, and the little additional
progress it has made has depended
on agreements reached prior to
the veto. Decisions of major
importance have been postponed,
national and even nationalist
interests have strongly com-
peted with the "community spirit,"
and differences over the ulti-
mate objectives of European
union have intensified.
Few if any observers would
suggest that the European unity
movement is moribund. Many
are beginning to question, how-
ever, whether prolongation of
the present malaise might reduce
the EEC to the relative impotence
of the Coal-Steel Community, and
whether it remains a realistic
expectation that the Common
Market will be the vehicle of
political integration, as its
members initially thought. These,
in turn, give rise to other
questions: whether the European
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Community is now or is likely
again to become a viable base for
a European-American partnership,
or whether the search should now
begin for alternatives to deal
with the forces which would be
unleashed if all hope of a united
Europe should disappear.
The ultimate outcome, how-
ever, will not turn upon one
victory or one defeat, but
will be the result of a cumula-
tive process. Several closely
interrelated issues are at hand
on which at least the immediate
course of the community movement
almost surely hangs. These are
(1) the clash of national inter-
ests involved in the integration
of agriculture; (2) the creeping
debilitation of the community's
institutions; (3) the imbalance
of power within the Six--i.e.,
the problem of De Gaulle and
the French-German special rela-
tionship; and (4) the disagree-
ment over Europe's eventual rela-
tionship--commercial, political,
and military--to the United
States.
France, Germany, and
The Price of Grain
Of the several potentially
disruptive conflicts of truly
vital economic interests among
the EEC members, the dispute
over the future of European
agriculture is the most critical
one. Although all the member
countries are involved, the
issue is primarily one between
Bonn and Paris, and it focuses
principally on the price of
grain.
As De Gaulle noted in his
29 July press conference, the
EEC treaty made "adequate pro-
visions for industry, but merely
raised the question of agriculture,
without answering it." To an
important extent this "gap" has
been filled by subsequent nego-
tiations--notably,'by the mara-
thon meetings in December 1961.
and January 1962 which produced
the general regulations for an
integrated EEC market in grains,
pork, eggs, poultry, fruits,
vegetables, and wines. However,
similar regulations for trade
in beef, dairy products, and
rice have not been established,
nor above all has agreement been
reached on a community price
for grains.
The importance of the grain
price lies in the impossibility
of opening free trade within
the EEC in either grain or in
the animal products dependent
on it until all the member coun-
tries are pegging the price of
grain at approximately the same
level. The difficulty of achiev-
ing such a harmonization lies
in the fact that the West German
price is more than 30 percent
higher than the French--these
two being the highest and lowest
in the EEC. Elimination of this
differential would have major
implications for the technological
revolutions already under way in
agriculture in both these coun-
tries, for their commercial rela-
tions with each other, and for
the outside world--and perhaps
would even affect the balance
of economic power within the
community as a whole.
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Given the political weight
of the German farmer, it has
been the natural tendency in
Bonn--despite the pressures from
France--to let the grain issue
slide. The EEC treaty provides,
however, that if an agreement
is still lacking by 1966, a
majority of the EEC Council is
sufficient to decide. Since ma-
jority sentiment almost certainly
favors a community price closer
to the French than to the German
level, this provision is a strong
inducement to Bonn to bargain
soon for a solution rather than
wait until a settlement is im-
posed. The other main pressure
on Bonn is the upcoming Kennedy
Round of tariff negotiations,
from which West Germany can ex-
pect no benefits for its indus-
trial exports unless the EEC is
in a position to negotiate as a
unit on agricultural products.
These inducements, plus
the cajoling from Paris, appear
to be bringing the farm issue
to a head. The question pre-
dominated at the De Gaulle -
Adenauer meeting in early July,
and talks between the French
and German ministers of agri-
culture have followed. On Bonn's
side there appears to have been
acceptance of the necessity of
eventual reduction of the German
price, and Paris for its part
appears prepared to agree that
the resulting problems for the
German producer may be temporarily
eased with direct subsidies fi-
nanced in part from the EEC's
agricultural fund. Proposals
along these lines are known to
have been drafted by EEC Commis-
sioner Mansholt, and expectations
are that they will be formally
advanced by the Commission later
this year.
A preliminary understanding
of this sort, however, would
by no means ensure solution of
the farm problem. Complex
details would have to be settled.
In recent talks with Special
Representative Herter, Bonn of-
ficials were pessimistic of
early agreement, and De Gaulle's
virtual ultimatum in his 29 July
press conference suggests a
growing impatience in Paris--al-
though this may have been intended
primarily for the ears of the
discontented French farmer.
In any case, the climate of crisis
which has now developed is not
likely to nurture careful regard
for US farming interests.
Institutions: The Search
for Decisions, Authority,'
and Responsibility '
The complexity of these
issues has focused increasing
attention on the rickety institu-
tional machinery established by
the community treaties. Deci-
sions are neither easily nor
quickly taken, and once taken,
they are "frozen." It has been
a matter of growing concern to
democratic opinion that the
community's growing bureaucracy
is subject to no political re-
view. Moreover, the foreign
missions which have crowded into
Brussels in search of the locus
of responsibility have found
themselves shuttled instead
from the commissions to the per-
manent delegations to the member
states and back again.
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There are numerous examples
both old and new of the inade-
quacy of the Common Market's
institutions to the task of
running an economic complex
roughly comparable to the United
States. For more than five
years, for example, an ttinter-
executive committee" has
searched without success for a
common energy policy to bridge
the competing interests of
coal, petroleum, and natural
gas. For the US, the poultry
problem has been a particularly
frustrating instance of insti-
tutional weakness. Although
the EEC Commission was sympa-
thetic to the US desire for a
reduction in the poultry levies,
it was powerless to effect
one. Moreover, the increase in
the levies approved last April
over US protests was affected
by the six agricultural minis-
ters without the knowledge of
the foreign ministers. Still
another example of the diffu-
sion of power was the side-
tracking of important decisions
at the 19 June Council meet-
ing pending the outcome of the
De Gaulle - Adenauer meeting
in early July.
As the work of the Common
Market has increased, the six
foreign or economic ministers
have found themselves sitting
in Brussels as the EEC Council
with ever-increasing frequency
at progressively longer meet-
ings. The issues they decide,
however, are so technical that
they must defer to the techni-
cal ministers--agricultural,
for example--a situation which
has the effect of imparting to
community policies an increasingly
parochial outlook. In the present
atmosphere of jealous defense of
national interests, the Council
finds great difficulty in accept-
ing the "community position" it
is the purpose of the Commission
to advance. The European Parlia-
ment has found it difficult to
make its influence felt to
any great extent, and it has
hesitated to use its power of
censure against any of the three
Commission executives lest they
be weakened in their struggle to
establish a measure of independence
from Council control.
Despite the demonstrated
need for basic overhaul, the
pro-Europeans have been chary
of opening the institutional
question more than a cautious
THE EUROPEAN COMMUNITIES
(MEMBER STATES: FRANCE, W. GERMANY, ITALY, BELGIUM, NETHERLANDS, LUXEMBOURG)
EUROPEAN ECONOMIC COMMUNITY (EEC) COAL-STEEL COMMUNITY (CSC) EURATOM
GENERAL
PURPOSE
PARLIAMENTARY
CONTROL
Reviews and debates annual re-_
ports of the three communities.
By two-thirds vote may compel
executive commissions and CSC
High Authority to resign.
EEC COUNCIL
OF MINISTERS
CSC COUNCIL
OF MINISTERS
EURATOM COUNCIL
OF MINISTERS
POLICY
FORMATION,
COORDINATION,
& EXECUTION
JUDICIAL
CONTROL
One cabinet-level representative of
each state, usually foreign or
economic ministers.
EEC
COMMISSION
CSC HIGH
AUTHORITY
5-9 members appointed by agree-
ment among member states or
co-opted.
7 judges and 2 advocates a p-
pointed by agreement among the
member states.
Formulate general community pol-
icies and harmonize related na-
tional policies.
Majority principle tends to re-
place unanimity as treaties are
implemented.
Generally supervise application of
the three treaties.
Recommend community policies--in
some cases councils must be
unanimous to overrule.
Interprets and reviews legal ap-
plication of the three community
treaties.
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crack for fear of De Gaulle's
antipathy for the Brussels
"technocrats." In the past
several years, however, consid-
erable support has developed
for two proposals which might
strengthen the community's ma-
chinery without involving any
shift of powers among its agen-
cies or between them and the
member states.
Proposed Institutional Changes
One of these would merge
the High Authority and the EEC
and EURATOM Commissions into
a "high European commission,"
perhaps with an enlarged member-
ship, Although exercising only
the combined powers of the present
executives, such a commission,
it is thought, would have in-
creased prestige, attract per-
sonnel of higher caliber, and
combine the technical services
of the three communities--which
combination, strangely enough,
has never been fully completed.
The other reform measure
would merely carry out the
existing but unimplemented pro-
visions of the three treaties
for replacement of the European
Parliament--now designated by
the national parliaments--with
an assembly elected by direct,
universal suffrage. The detailed
regulations for such elections
are contained in an intergovern-
mental convention drafted by
the present parliament in 1960
but never acted on by the member
governments. Like the merger
of the executives, mainly psy-
chological advantages are at-
tributed to the idea of a popu-
larly elected assembly. It
would, it is thought, seem
truly supranational in character,
bring increased public support
and interest to the community's
work and, like most assemblies
without much to do, perhaps
become a "restless force" working
for further integration.
One may be skeptical that
the advantages of either merger
or elections would be as great
as anticipated. In particular
it is questionable that a popular
assembly could "usurp" powers
not willingly relinquished by
the member states. Neverthe-
less, Paris has opposed any
scheduling of European elections
as "inopportune," and has made
its support of executive fusion
conditional on treaty revision.
However, at the meeting
of the EEC Council of 11-12
July, the French themselves
shifted their position somewhat
by introducing a resolution call-
ing for merger of the executives
by the end of this year, a com-
mitment to "harmonize" the com-
munity treaties within three
years, and consideration cf
"any" proposals which might be
presented for "strengthening
the relations between" the
European Parliament and the
other community institutions.
This resolution was further dis-
cussed at the Council meeting
of 29-30 July, and agreement
would apparently have been
reached on the proposal for
an end-of-year executive merger
but for the reluctance of Luxem-
bourg to relinquish the seat
of the CSC High Authority.
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Despite the cries of pain
from Luxembourg, the US Mission
believes it will be possible to
find some "payment" for Luxembourg
--perhaps the seat of the European
Bank--which will permit merger
to be approved some time this
fall. The outlook is much less
favorable for agreement on the
other French proposals, however,
and barring some major shift
in sentiment, the parliamentary
elections idea seems likely to
remain buried for the foreseeable
future. Indeed, indicative of
continued suspicions surrounding
any French move, a responsible
Italian official has expressed
the view to a US Embassy offi-
cer that "the French wish to
give the appearance of favoring
fusion of the communities and
strengthening parliament, but
attach such conditions as to
make progress extremely diffi-
cult."
The Stony Path
of Po i ica Union
The implications for the
longer term struggle over the
political organization of Europe
have given the institutional
question an importance going be-
yond the efficient functioning
of the existing communities.
Discussions of the question, how-
ever, have tended to descend to
bickering over details.
The community founders
were convinced that political
union would gradually unfold
from the economic institutions
established in Brussels. This
conviction has no doubt been
shaken by the events of the
past five years, but among the
advocates of a directly elected
European parliament there are
still those who see such a
body as a step toward a con-
stituent assembly that would
establish a formal European
political union. Although
increasingly less likely now
to say so publicly, these "pro-
Europeans"--essentially feder-
alists--envisage the eventual
emergence of a European govern-
ment based on a parliament elected
by the "European peoples," some
kind of multiple executive re-
sponsible to it, and perhaps
some agency (such as a senate
derived from the present coun-
cils) to represent the member
states.
Opponents of this concept
have included the skeptics who
have consistently doubted that
Europe could move--absentmindedly,
so to speak--from economic to
political union without an act
of will. It has also included
those (West Germany's"Erhard is
an example) who have believed
a broader, if looser, union more
important than one restricted
to countries willing to accept
the federalist rules for unifi-
cation, and the British, who
have advocated a pragmatic rather
than a logical route to European
cooperation. Above all, it has
included De Gaulle the theoreti-
cian, with his disdain for
supranationalism and integration,
but perhaps not De Gaulle the
politician, who accepted the
EEC's common agricultural policy
and is now pressing for a more
fully integrated agricultural
market.
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In the last few years, how-
ever, both camps have recognized
the growing difficulty of de-
lineating either their own or
their opponents' positions. The
familiar labels of the postwar
argument over the route to
union in many cases have lost
their meaning, and under the
force of events, the gap be-
tween theory and practice has
widened on both sides. Such
ardent federalists as Paul-
Henri Spaak and Jean Monnet were
strong supporters of Britain's
admission to the community,
knowing full well London's aver-
sion to federalism. Yet, in
excluding Britain, De Gaulle, the
ardent anti-integrationist, was
able to pose as the defender of
the community because there
were those federalists who saw
the justice in at least some of
his arguments.
enterprise, and indeed it is
a matter for legitimate debate
as to what position he will
finally take. There are those
who believe that the concepticn
of French-German "union" to
which De Gaulle turned after
his failure to obtain a six-nation
treaty of cooperation represents
the distilled essence of his
European policy. While there
were numerous rumors earlier this
year that De Gaulle would follow
up his exclusion of Britain
from the Common Market with a
renewed campaign for a political
union, no such campaign has been
launched. Now, some observers
are saying that the references
in his 29 July press conference
to a possible "disappearance"
of the Common Market are an
indication that De Gaulle de-
sires, or at least envisages,
this end result.
Moreover, while there is
no question of the negative
role France has frequently played
vis-a-vis the three communities,
a case can be made that it is
France under De Gaulle which has
provided much of the impulse
behind the advance toward union--
by contributing personnel of
superior stature to the Brussels
institutions, by pressing for
agricultural integration and
community planning, and by push-
ing for "tpractical" immediate
steps toward political coopera-
tion.
Given the vigor of De Gaulle's
nationalistic language, it has
been extremely difficult for the
leaders of the European movement
to credit him with any support--
intentional or otherwise--of their
With De Gaulle it is im-
possible to know, but on balance
it seems most unlikely that he
has abandoned his drive for a
European union--that is, for
one of Gaullist configuration.
Rather, the French-German treaty
appears to have been in the
nature of a second choice--a
tactical retreat for a later
advance. His failure since
last January to push for exten-
sion of the treaty appears to
reflect an estimate that there
was no chance for progress in
the post-January atmosphere of
mutual recriminations over
Britain. His 29 July statements
that 1963 "will be a decisive
year for the future of a united
Europe" suggest an expectation
that the ausni.ces are improving--
in De Gaulle's words, "if in
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the heart of the world, the
Six constitute, completely and
truly, an economic community,
it can be thought that they will
turn to organizing themselves
politically."
Prospects For a
Political Confederation
Assuming it is De Gaulle's
intention to renew his bid for
a European confederation, it is
ironical that the main obstacles
to his achieving it are primarily
French in origin.
When the political talks
adjourned last year, agreement
had been reached on the main
features of a treaty of cooper-
ation in foreign, military, and
cultural affairs and the insti-
tutional arrangements to bring
it about. Only two issues of
substance were then outstanding--
a clause to assure that the
political union would not impinge
on the existing communities, and
an article providing the possi-
bility of a stronger union after
a period of trial.
Although involving the
principle of federation vs. con-
federation,neither of these
issues seemed incapable of resolu-
tion at the time nor do they seem
so now. Instead, the treaty
really foundered on the fears of
the Dutch and Belgians of domina-
tion'by Paris, Lacking the assur-
ances which a supranational union
would provide against such domi-
nation, both insisted on the bal-
ancing participation of Britain--
an arrangement which De Gaulle
said he could not countenance un-
til such time as Britain had
become a Common Market member.
Rather than any question
of approach or philosophy, it
is this question--of the rela-
tive position of France vis-a-
vis the other community coun-
tries--which almost certainly
will again plague De Gaulle in
any new bid for European union,
and it'is a question on which
there is as yet no evidence that
De Gaulle has found an acceptable
reply. At his 29 July press
conference, De Gaulle was
asked: "Would France agree to
support a development--on the
political, military, and scien-
tific plane--which in the Europe
of tomorrow would keep the
little countries from being as
dependent in relation to France
as Europe now is in relation
to America?" He gave no response,
except that the question in-
volved "another series of hypoth-
eses."
To the other community
countries, however, these are
not hypothetical questions.
From its emergence, the six-na-
tion community was an uneasy
balance of power between the
big powers and the small, the
latter assuming not only a supra-
national evolution of the com-
munity, but its eventual enlarge-
ment as well. Not only have
these expectations not been
fulfilled, but the internal
situation within the community
has materially changed since
1958.
The economically weak and
politically divided France has
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become--for the present at
least--both politically and eco-
nomically strong. By almost
any standard, De Gaulle--liter-
ally and figuratively--is head
and shoulders over any other
European leader and the only
really commanding figure now
on the European stage. To a
very important extent, the
Brussels bureaucracy is domi-
nated by the expertise of the
postwar crop of French techni-
cians. And finally, in the
latter years of the Adenauer
regime, Bonn has become not a
balance or even a rival to Paris,
but in some respects a junior
partner.
The result is that with
the bonds of economic integra-
tion progressively reducing the
chances of escape, the other mem-
ber countries see themselves
becoming--not so much the willing
participants in a community
enterprise--but the potential
provinces of an imperial France,
a status they reject. This is
not to suggest that there is
no basis for an eventual com-
promise. The European community
movement is of French inspira-
tion, and most Europeans find it
impossible to conceive of its
fruition without a leading role
for France.
France, Europe, and the US
In midsummer 1963 the ef-
fort since World War II to find
a more rational economic and
political structure for Western
Europe appears,then,to have come
to another watershed. Union
cannot proceed without France,
and the only European leader
now in sight who might bring
about the early addition of
political ties to the economic
ones of the EEC is De Gaulle.
In order to proceed, however,
De Gaulle would appear to be
under a necessity to offer his
partners more convincing assurances
than he yet has that a "European
Europe" would not be merely a
larger France, that it would
be a "collective" and not a
"singular," and that its in-
stitutions would be as binding
on Paris as on any other of the
capitals.
De Gaulle must also find
some more generally acceptable
statement of the world position
that Europe so organized would
occupy. Somewhat to their sur-
prise, the Six have discovered
in the past five years the ex-
tent to which the process of
effecting an economic union in-
volves external economic inter-
ests--their own and those of
others--and the extent to which
these interests are by no
means identical. Relatively
self-contained France, for
instance, has felt no imperative
economic need to reach an eco-
nomic accommodation with the
rest of Europe, nor has it the
same degree of interest as the
other EEC countries in successful
completion of the Kennedy Round
of tariff cuts.
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Since De Gaulle first pro-
posed a European confederation,
the Six have also been painfully
discovering that the same sort
of considerations apply to po-
litical and military cooperation.
They cannot accept closer bands
with Paris without at the same
time adjusting their political
and military ties to their
other European allies and, above
all, to London and Washington.
Inevitably they see these ties
in different lights because
they do not have identical for-
eign policy objectives or the
same security problems.
In light of the develop-
ments of the past two years,
it is reasonably certain there
is not now a majority for De
Gaulle's concept of an econom-
ically autarchic Europe which
excluded "the Anglo-Saxons"
politically. However, in view
of all the possibilities on the
horizon, it would be very risky
to assume this negative major-
ity will hold indefinitely. In
both Bonn and Rome, where new
governments will emerge this
fall, there is by no means a
single view of De Gaulle, nor
is it possible to say for sure
what impact on Europe a new
government in London may have.
Moreover, the attitude of the
anti-Gaullist would probably be
affected by any easing of US-
French frictions--and even more
by an East-West detente.
In any case, it must be
expected that the complex prob-
lems which the restructuring
of Europe has posed the US in
the past year will be even more
complex in the next few months.
The cost to the US of a united
Europe--in terms of the commer-
cial, military, and political
adjustments it has required--
has already proved high. Re-
vival 'of intra-European conflicts
of the prewar type would be
infinitely more costly to US
interests. (SECRET NO FOREIGN
DISSEM)
SECRET
Approved For Release 2006/12/27: CIA-RDP79-OP927A004100100003-5
 Approved For Phase 2006/1 GC) EL 79-0092704100100003-5
SECRET
Approved For Release 2006/12/27: CIA-RDP79-00927AO04100100003-5