France and European Integration: Toward a Transnational Polity?

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France and European Integration

France and European Integration Toward a Transnational Polity? MICHEL R. GUELDRY

Library of Congress Cataloging-in-Publication Data Gueldry, Michel R. France and European integration : toward a transnational polity? / Michel R. Gueldry. p. cm. Includes bibliographical references and index. ISBN 0–275–96734–4 (alk. paper) 1. France—Politics and government. 2. European federation. 3. European Union—France. 4. Political culture—France. I. Title. JN2594.2.G775 2001 320.944'09'049—dc21 00–058025 British Library Cataloguing in Publication Data is available. Copyright 2001 by Michel R. Gueldry All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 00–058025 ISBN: 0–275–96734–4 First published in 2001 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America TM

The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48–1984). 10 9 8 7 6 5 4 3 2 1

Contents Acknowledgments

vii

Acronyms

ix

Introduction

1

1.

2.

‘‘The Nature of the Beast,’’ or the Nation-State Revisited

2

Why France? France as a Leading EU Power

5

Why the French State? A Core in Crisis

10

Outline and Intended Audience

13

The French State in Historical Perspective

15

A Brief Historical Overview

15

The Post-War Social Democratic Consensus

23

The Post-War Consensus and European Membership

30

Governmental Institutions and Culture: The Nation-State vs. European Institutions

37

Traditional Decision Patterns within the French State

39

Constitutional and Legal Order

44

Executive and Legislative Branches

55

Toward a New Political Culture

62

vi

3.

4.

5.

6.

7.

Contents

Economic Policy: Colbertism vs. the Laissez Faire State

67

The Commission’s Regulatory Powers A Clash of Economic and Administrative Cultures

67 70

Social Policy: The Welfare State against the Constraints of Convergence

89

Sećurite´ Sociale: An Institution in Crisis

93

What Are the Solutions? Unemployment and Its Discontent

102 110

Europe’s Social Agenda

113

Monetary Policy: National vs. Federal Currency

119

Why Did France Adopt the Euro?

121

France’s Evolving Monetary Policy The Euro after Maastricht

125 133

Security Policy: National Autonomy vs. Deepening Integration

147

The Cold War Status Quo The 1989–1994 Strategic Evolution Since 1995: A Revolution in Slow Motion

148 157 161

Territorial and Identity Politics: Jacobinisme vs. Post-Modernism

175

The End of the Unitary State? The Meaning of Frenchness

176 185

Conclusion Retrospective The Nation-State, Present and Future

191 192 196

Notes

203

Glossary of Key French Expressions

229

Brief Chronology of French History (1936–2000)

233

Selected Bibliography

235

Index

237

Acknowledgments My grateful acknowledgments go to Dr. Leslie Eliason, Ms. Elizabeth Karnes, Ms. Kyla Stinnett and Dr. Carolyn Warner for their invaluable help with this manuscript. All errors remaining are mine. The author also gratefully acknowledges the support of the Oregon Humanities Center at the University of Oregon (Eugene). Thanks to the Humanities Center’s 1998 Humanities research fellowship, the author was able to complete much of the work on Chapter 5.

Acronyms ASSEDIC

Association pour l’Emploi dans l’Industrie et le Commerce

Buba

Bundesbank

CADES

Caisse d’Amortissement de la Dette Sociale

CAP

Common Agricultural Policy

CEJA

Conseil Europe´ en des Jeunes Agriculteurs

CET

Common External Tariff

CFSP

Common Foreign and Security Policy

CIS

Commonwealth of Independent States

CJTF

Combined Joint Task Forces

COREPER

Comite´ des Repre´ sentants Permanents

CSCE

Conference on Security and Cooperation in Europe

DG

Directorate General

DM

Deutsch mark

EAA

European Armament Agency

EAGGF

European Agricultural Guidance and Guarantee Fund

EAU

European Accounting Unit

EC

European Community

ECB

European Central Bank

ECJ

European Court of Justice

EcoFin

Council of Economy and Finance Ministers

ECSC

European Coal and Steel Community

ECU

European Currency Unit

x

Acronyms

EDC

European Defense Community

EDF

Electricite´ de France

EDSI

European Defense and Security Identity

EFC

Economic and Finance Committee

EMI

European Monetary Institute

EMS

European Monetary System

EMU

European Monetary Union

ENA

Ecole Nationale d’Administration

EP

European Parliament

EPU

European Political Union

ERDF

European Regional Development Fund

ERM

Exchange Rate Mechanism

ESCB

European System of Central Banks

ESF

European Social Fund

EU

European Union

FIFG

Financial Instrument for Fisheries Guidance

GATT

General Agreement on Tariffs and Trade

GDR

German Democratic Republic

IGC

Intergovernmental Conference

JHA

Justice and Home Affairs

MBFR

Mutual and Balanced Forces Reduction

MEDEF

Mouvement des Entreprises de France

MEP

Member of the European Parliament

NACC

North Atlantic Cooperation Council

NCB

National Central Bank

PHARE

Pologne-Hongrie: Actions pour la Reconversion Economique

PTT

Poste, Te´ le´ graphe, Te´ le´ communications

QMV

Qualified Majority Voting

RATP

Re´gie Autonome des Transports Parisiens

RPR

Rassemblement pour la Re´publique

PfP

Partnership for Peace

SALT

Strategic Arms Limitation Talks

SEA

Single European Act

SGP

Stability and Growth Pact

SNCF

Socie´te´ Nationale des Chemins de Fer

START

Strategic Arms Reduction Treaty

TENs

Trans-European Networks

Acronyms

xi

TEU

Treaty on the European Union (Maastricht Treaty)

UNEDIC

Union Nationale Interprofessionnelle pour l’Emploi dans l’Industrie et le Commerce

WEU

Western European Union

Introduction The relationship between the European Union (EU) and its member states raises the key issue of the distribution of power between the two levels of governance. As John McCormick states, the EU “has changed the political, economic, and social landscapes of Western Europe . . . and it is steadily becoming less realistic to think of Western European states in isolation; we must think of them instead as elements in a growing European Union.”1 The historical uniqueness of this configuration of institutions, its atypical power distribution and rapidly evolving character—reflected in the periodic renaming, from Common Market to European Community (EC) to European Union—have contributed to an ongoing debate over the nature of this regional integration. Some, like Stanley Hoffmann, consider the EU as a one-of-a-kind entity: “The Community, so far, is neither a classical Confederation, it goes way beyond, nor a Federal Union, it falls far short, nor an ordinary intergovernmental organization. The more it evolves, the more sui generis it becomes: its range expands, but its ‘supranationality’ gets diluted . . . its institutional structure becomes more Byzantine, its legal homogeneity more cracked.” For others, like James Caporaso, there seems little case for uniqueness: “To say that the EC is unique is simply a shorthand for saying that we have not yet developed the categories, abstract enough, to see the EC as an instance of a more general class of phenomena.”2 Others, like Alberta Sbragia, simply strike a middle ground: The “institutional makeup of the Community puzzles many observers because it does not fit into the institutional patterns that emerged within the nation-state. . . . The European Community is a political entity that does not fit into any accepted category of governance. . . . It is perhaps most useful to think of it as an ongoing experiment in fashioning a new structure of governance.” And the adjective “ambiguous,” for all its vagueness, encapsulates many observers’ reactions.3

2


“THE NATURE OF THE BEAST,” OR THE NATION-STATE REVISITED The EU is a sui generis structure because it has brought ad hoc solutions to some fundamental issues of international relations: How do European nationstates cope with forces such as economic development, monetary instability and security requirements that are beyond their individual scope of action? How do formerly antagonistic nations transcend their historical parochialism and reconcile their divergent interests in rapidly changing international conditions? The hybrid institutional nature of the EU polity and the absence of a discernible blueprint for its future stem from the fact that it consists of an original and evolving give-and-take between the 15 member states and the Community institutions in the wider context of the economic, social and technological changes experienced by the continent.4 Because of its successive enlargements (1973, 1981, 1986, 1995), growing policy scope and increasing institutional complexity, the original 1951–1957 plan has lost much of its clarity of intent, or rather its evolution has revealed the fundamental ambiguity of the European project— the ambivalent relationship between these nation-states and their transnational creation. Four competing visions of the EU may thus be identified. Multi-speed Europe posits an agreed-upon general direction with common goals which may be reached at different times; its insistence is on the underlying commonality of purpose and inspiration. To use a well-known visual metaphor, various European cars, representing their countries of origin, travel along the same highway, going in the same direction but at different speeds. BMW, Renault and Fiat (i.e., Germany, France and Italy) attain monetary union before others, but there is no exit before reaching the common final destination. Volvo (i.e., Sweden) may reach its goal later, but it may not follow its own “less trodden path.” With its insistence on common goals, this is the most teleological and avowedly federal vision of European integration. Concentric Europe, also known as core and periphery Europe, envisions a core group of countries which implement all European policies while other noncore countries enforce only the policies which they find beneficial. Thus, from the most involved to the least involved, member states belong to ever-widening outer circles. The pre-federal inner circle shares all common EU policies and acts as an initiator of policy legislation. This arrangement may be compared to a solar system with a stable, hierarchical planetary system where the outer “planets” retain an orbit of their own, provided they remain within the European solar system and do not hinder its growth. Indeed, Article K7 (Title VI) of the Maastricht Treaty allows for several countries to go beyond what most member states already do in some policy areas (coope´ ration renforce´ e). The in-group tends to be the European Coal and Steel Community (ECSC) and Rome Treaty founding members plus Spain, while Great Britain and Denmark sit on the edge. This scenario is a variation on the “multi-speed” vision, as the EU is seen as a cohesive entity, speaking with a distinctive voice in international affairs. How-

Introduction

3

ever, it allows for more national autonomy than the one-dimensional “highway” scenario. Under multi-centric Europe, or Europe a` la carte, each “guest” can choose different items from a vast selection. Member states implement some common EU policies and reject those they deem contrary to their national interests or their national sovereignty. For instance, France, Germany and the Benelux countries (Belgium, the Netherlands, and Luxembourg) willingly embrace the constraints of the “single currency circle,” the Schengen circle and the Eurocorps circle. But France would not belong to the same “environmental policy circle” as the Nordic democracies, which boast a stronger record of environmental achievements. The idea of a core Europe with its sense of purpose is eliminated; this EU is only the addition of disparate policies, with no overarching guiding principles. This “situationist” vision of the EU insists more on collaboration and concertation than on unity and efficiency. It advocates pragmatism and respect for national rights against the tenants of a more structured vision of European integration. Pierre Maillet envisions this variable geometry as a temporary expedient dictated by necessity, but one that needs to be structured for the sake of preserving a minimum of coherence within the EU, and with a view toward developing more cohesion.5 But British Tories see variable geometry as a goal and a model in itself, thereby refusing any “core” Europe. Yves Doutriaux calls this British minimalist approach “negative subsidiarity.”6 The Kern Europa (“core Europe”) scheme advocated by German Conservative leaders Karl Lamers and Wolfgang Schauble in their 1994 memorandum to the French government combines the desire for a strong European core with the acute awareness of the necessity of differentiation. Their document reflects the need to develop a coherent European entity while preserving national sensitivities—a difficult exercise of political balance. This compromise between a core project and a variable geometry approach, rather than predicting the EU’s future, reflects the current reality. Obviously, forcing reluctant nation-states into some sort of European straitjacket would guarantee a systemic implosion. This is why the Maastricht Treaty in its Title II, Article 3B, addresses this issue of balance through subsidiarity. Since then, a growing body of literature about subsidiarity testifies to the emergence of what Abram and Antonia Chayes call a “new sovereignty,” a sovereignty that does not define the relationship between the nation-state and its international environment solely in adversarial terms or as a zero-sum game.7 Visions of “sovereignty at the crossroads” (Luis E. Lugo), of the “twilight of sovereignty” (Walter B. Wriston) and the evolution of the nation-state “beyond sovereignty” (David J. Elkins) inspire much of the international relations literature dealing with the post–Cold War nation-state.8 Thus, it is clear that whether one advocates or refutes the vision of the EU as a singular construction and regardless of the degree of integration this construction is supposed to espouse, “exploring the nature of the beast,” as Thomas Risse-Kappen puts it, begins with an appraisal of the relationship between the EU and its member states. The study of the “Europeanization of the French

4


state” that is presented herein is inspired by Risse-Kappen’s observation that recent works on the EU indicate “an emerging consensus that the boundaries between the ‘domestic’ and the ‘international’ spheres, as well as between the ‘state’ and ‘society’, have to be crossed when conceptualizing the EU.”9 Despite the EU’s ups and downs and the divergence of opinion about their significance, there is a progressive trend toward integration and polity building. In June 1988, Jacques Delors declared that “in ten years, 80 percent of national economic legislation—and maybe even fiscal and social legislation—will originate from the EU.”10 Today, France is committed to an irreversible process of restructuring its economy, finances, budget and social policies. Speaking of the magnitude of these changes, William Safran states that [i]t is increasingly difficult to deal with the French polity in isolation from the European regional context. . . . With the progressive development of supranational institutions and European Community laws, many decisions taken in Paris are no longer entirely national. This is particularly true in economic policy; legislation on agriculture, social security, education, investment, value-added taxation, transport, and interest rates enacted in Paris must follow the guidelines and parameters set in Brussels.11

The French model of economic development, social solidarity and state intervention, which lies at the heart of the national sense of identity, is increasingly called into question by the process of Europeanization. As Jacques Chirac declared in August 1997, “[g]lobalization is just beginning. France is still learning to adjust to this phenomenon which is often misunderstood by its citizens. The states that have agreed to the rules of global competition in the financial and labor markets have also accepted sacrificing a portion of their independence, be it in the area of currency, taxation or budget.”12 These comments illustrate how much France’s perspectives on international relations have evolved since de Gaulle’s flamboyant but quixotic and ultimately counterproductive nationalism in the 1960s. Today, with a peculiar mixture of decisiveness, resistance and trepidation, old France is evolving and distancing itself from what Yves-Thibault de Silguy, the French Commissioner (1995–1999) for monetary and financial affairs (the then DG II), calls France’s “archaic syndrome.”13 Given the above considerations, this book addresses the transformations brought upon the French state by European integration through an incremental and cumulative process generally referred to as “Europeanization.” Some key words beg for definition here. For James Caporaso, governance “refers to collective problem-solving in the public realm. It directs attention to the problems to be solved and to the processes associated with solving them, rather than to the relevant agents.” Government “refers to the institutions and to the agents (personnel) who occupy key institutional roles and positions.” State, in turn, refers to “the enduring structure of governance and rule in society” and includes “not just formal rules guiding inter-state actions” but also “accepted ongoing ‘ways of doing things,’ that may or may not result from formal legislation.”14

Introduction

5

As Vivien Schmidt reminds us, the boundaries between “state” and “society” may be shifting ones; they may become blurred in some policy areas, where social forces are able to penetrate governmental bureaucracies and shape policy making.15 Europeanization may then be approached as a situation where interpenetration between state and region occurs. To borrow from Robert Ladrech, Europeanization “is an incremental process reorienting the direction and shape of politics to the degree that EC political and economic dynamics become part of the organizational logic of national politics and policy-making.”16 This book thus examines how regional integration affects French governmental structures, public policies, political processes and culture. This introduction first addresses the methodological justification for choosing France and the French state as a case study of the Europeanization of a national polity. It then lays out the outline of this study and describes its intended audience. WHY FRANCE? FRANCE AS A LEADING EU POWER Why single out France for this study in regionalization? To put it simply, France matters for Europe. France has been at the center of European integration since the onset, when it initiated a diplomatic revolution with the April 1951 Paris Treaty that created the ECSC, the harbinger of the 1957 Rome Treaty. And without the Franco-German collaboration, which the Paris Treaty initiated, the history of Europe since the 1950s would have been quite different. France also matters in transatlantic relations. British scholar Jolyon Howorth even states that [t]he key element in the history of the West since 1945 has arguably been the triangular but highly asymmetrical relationship between Paris, Washington and Bonn. The relationship between Paris and Washington has defined the fundamental options facing policy makers on both sides on the Atlantic in the two crucial areas of foreign/security policy and economic/trade policy. The relationship between Washington and Bonn has informed the agenda and the orientation of these fundamental policy options. The relationship between Paris and Bonn has conditioned not only the relative success or failure of these transatlantic options, but also the rate of progress of the new Europe which has lain at the heart of them. . . . On both fronts, the driving force has been France.

As a consequence, Howorth takes exception to Philip Gordon’s skeptical interpretation of the Franco-German defense and security policy. Howorth insists on an “overwhelmingly French agenda” as a driving force behind “this triangular relationship” and, tongue in cheek, concludes that “London gets hardly a look-in. But there is still time.”17 Despite high unemployment, France is the second largest economic power on the continent and the first agricultural exporter among the 15 member states.18 It also considers itself a grande puissance moyenne (i.e., a “great medium power”), with aspirations to a global role. It bases this flattering but increasingly

6


contested self-representation on its past history and world status, its current independent nuclear armament and doctrine, its seat on the United Nations’ Security Council, its unique role in sub-Saharan Africa, its self-proclaimed republican universalism—which manifests itself as a sense of a mission in world politics—and the real worldwide appeal, and assumed exemplarity, of its literature, arts, landscapes and joie de vivre. These features long sustained, and in the 1990s continued to sustain, although in a less striking form than before, a sense of historical exceptionalism. Indeed, with the opening of the French economy and society to global forces, this so-called exception franç aise has made great strides toward normalization. The most acute form of this current questioning of traditional cultural ethnocentrism is a sense of national malaise.19 In the course of building the EU, France has developed an unparalleled cooperation with Germany. France was compelled by a host of inescapable geographical, historical, economic and diplomatic factors. However, what Haig Simonian calls the Franco-German “privileged partnership”20 is the result of much work on the part of both partners. The Fourth Republic (1946–1958) launched a visionary plan for bilateral reconciliation with the 1951 (ECSC) Paris Treaty and the 1957 (Common Market) Rome Treaty. In 1958, General de Gaulle established a diplomatic tradition, based on what Ge´ rard Bossuat calls “l’entente franco-allemande,” an orientation which his successors carried further.21 Franco-German bilateralism thus has been a structural feature of European politics since the 1950s. It survived the fall of the Fourth Republic and the creation of the Fifth Republic in 1958 on quite different institutional bases, the decolonization process, the 1973 and 1979 energy crises, the economic recession and Europessimism of the 1970s, four enlargements, several shifts of political majorities in both capitals (including three bouts of cohabitation between a president and a prime minister of different political persuasions in Paris), German unification, the demise of communism on the continent and a lingering economic downturn in the 1990s. In significant and surprising ways, bilateralism was reinforced by these changes. In January 1963, Konrad Adenauer and Charles de Gaulle signed the Elyse´ e Treaty, thereby formalizing their countries’ historical reconciliation. In January 1983, on its twentieth anniversary date, Franç ois Mitterrand addressed the Bundestag to lend his support to an embattled Helmut Kohl in his struggle against German neutralists and pacifists in the Euromissile dispute. Ironically, Mitterrand, a Socialist, backed his conservative ally against the German Social Democratic Party, which was opposed to the deployment of Pershing missiles on German soil. This initiative inaugurated a bilateral cooperation unparalleled in Western relations—with the possible exception of the Anglo-American “special relationship.” In 1995, Helmut Kohl even compared the Franco-German Zusammenarbeit (collaboration) to “a law of nature, a law of physics in politics.”22 Four enlargements have diluted France’s relative influence, and Germany’s unification has reinforced its supremacy on the continent, but Paris remains one of the key powers in the EU—partly thanks to this bilateral accord with its powerful eastern neighbor. One scholar describes this unique fea-

Introduction

7

ture as an “alliance within the [Atlantic] alliance,” while another deems it a “linchpin.”23 In so far as much political capital is vested in this relationship by both states, it is likely to remain a defining feature of European integration—albeit an evolving and problematic one. This “privileged partnership” is sometimes viewed with suspicion by smaller European states and by Great Britain. This distrust even led one British observer, Jack Hayward, to describe the FrancoGerman relationship as a “condominium”—a telling exaggeration.24 Since the Maastricht Treaty, the Franco-German entente has been reinforced by both countries’ single-minded pursuit of the single currency objective, despite its political and social costs. French opponents to the single currency blame the stringent convergence criteria for the abdication of monetary sovereignty, the crisis of the welfare state, the loss of productive investment and soaring unemployment. They also quip that the Franc fort (strong franc) policy is really a “Francfort policy,” that is, that France is abdicating national autonomy to the Francfort (Frankfurt)-based European Central Bank (ECB). The referendum on the Maastricht Treaty, which Franç ois Mitterrand initiated in 1992, proved a defining moment for both European and French politics, as the French were offered for the first time the opportunity to shape what had until then been largely a governmental endeavor. The dramatic shift from an essentially technocratic venture to one that includes some democratic participation revealed deep fractures within French society.25 Despite his personal reluctance, Jacques Chirac voted in favor of the Maastricht Treaty—albeit casting his vote not as chairman of the Rassemblement pour la Re´ publique (RPR) but as “a personal choice.”26 Despite his maneuvering in 1992 and during the 1995 presidential campaign, President Chirac embraced a pro-Maastricht policy in the winter of 1995, when his Conservative prime minister, Alain Juppe´ , tried to curtail public expenses and social benefits. This drove a wedge between him and nationalistic Gaullists who castigate the loss of French policy alternatives. The denunciation of the social costs of European unification on a pro-Maastricht blueprint provides easy political ammunition to demagogues in a country suffering from a social crisis and an identity crisis.27 One underlying assumption of this book is that since the 1951 ECSC, France has constantly been faced with a choice between a “bad solution” and a “very bad solution.” The bad solution means operating within the constraints born of growing regional interdependence. The very bad solution, or “the strong man stands alone” stance, would have required France to face globalization and other challenges of fin de sie`cle Europe alone. Since the 1980s, France has consistently, if often half-heartedly, opted for the first alternative because it has been able, to a degree, to use integration for its own benefit. In retrospect, the period stretching from 1957 to the mid-1980s is the golden age of French influence within the Community, when France influenced the European project in at least two important ways: trade policy and agricultural policy. France was able to shape the Common Market as a coherent regional trading bloc, with a Common External Tariff (CET), which curtailed member states’

8


free access to world markets (because of import taxes on a host of goods and services that insured that cheaper international goods would not undermine European-made products), and the principle of “Community preference,” which encouraged European companies to find their suppliers and clients within the borders of the European market. As France was losing its colonial empire (Vietnam in 1954, Morocco in 1956, sub-Saharan Africa in 1958–1959, Algeria in 1962), it sought an alternative economic outlet by advocating a strong European entity with its primary trade focus on itself. Great Britain, on the other hand, held on to its global trade philosophy and refused to join what seemed (in 1957) an untested regional trading agreement as well as an impediment to international trade. France and Germany were thus in a position to shape the Common Market trade policy. As Europeans refuse to accept the rules of the international order defined by Washington to serve the U.S. national interest, their search for a cohesive European entity is often reviled by some. For instance, John Laughland denounces “the ideology of European integration” as “illiberal and anti-American,” and he adds that “supporters of European integration commonly affirm that their project is incompatible with the liberal order. A recently published French textbook on the European Union argues that the main threat to European integration is free trade.”28 There is little doubt that, in the 1950s and 1960s, France was instrumental in shaping a distinctive system of regional preference, and until the 1980s it benefited from the relative protection this regionalism permitted. Common Market trade policy clauses tended to shield French and, more largely, European businesses from world competition. However, under the Title II, Articles 2, 3 and 3A (Single Market) of the Maastricht Treaty and under the 1993 GATT (General Agreement on Tariffs and Trade) agreement, the EU as a whole opened its markets more to international competition. In fact, the EU’s resistance to U.S. “leadership” in international trade policy merely testifies to the divergence of interests between allies and to the quest for another capitalist model in Europe. John Laughland’s criticism had more merit in the 1960s, 1970s and early 1980s, than in the post–Single European Act (SEA) and the post-GATT period. International trade has advanced significantly in Europe, and the EU’s European Court of Justice (ECJ) has backed the Commission’s liberalizing agenda. In spite of high unemployment and severe recession throughout much of the 1990s, Europeans did not close their markets. Brian Hanson even argues that “[w]hat is most remarkable about European trade policy in the 1990s is that, despite ominous warnings and theoretical expectations, fortress Europe has not been built. . . . [S]ince the 1980s not only have few new trade barriers been erected, but external trade policy in Europe has been significantly liberalized in recent years, even in politically and economically sensitive sectors.”29 This, says Hanson, is the result of the completion of the Single Market. Transatlantic trade conflicts do occur, notably regarding agricultural products, but EU and World Bank officials have also vigorously contested this accusation of “fortress Europe” by emphasizing the EU’s openness to international trade. For instance, Jacques Mallet, a previous member of the Eu-

Introduction

9

ropean Parliament (1984–1989) and chairman of its Committee on External Economic Relations, wrote in 1992 that [m]ore dependent on foreign trade than its main partners, the European Community is not, cannot be and will not be a fortress. Of all the great economic powers, the EC is, whatever may be said, the most open. Even in the relatively protected agriculture sector it remains the foremost importer in the world. The single market will be even more open than the Community is currently. It must be open but not just given. The demand for reciprocity does not express, on behalf of Europe, a protectionist attitude but the search for mutual advantages. With regard to Japan, a guarantee of access to markets should be obtained, so that the concessions really counterbalance each other. This point is still far off.30

In addition, Jean Baneth, in a 1993 World Bank discussion paper, recognizes the existence of impediments to free international trade but is of the opinion that “protectionist measures act as minor aggravations rather than as real obstacles.”31 The second positive feature of European integration for France was the Common Agricultural Policy (CAP) because it was the result of a dual adjustment: an economic compromise between free market philosophy and sectoral protection requirements on the one hand and a political arrangement between German industrial interests and French agricultural interests on the other hand. Through a series of maneuvers (such as the December 1961 stopping-of-the-clock negotiation and marathon negotiations with its partners) Paris was able to impose its agricultural agenda on Bonn. France’s leverage vis-a`-vis Bonn was augmented by Germany’s relatively low political and diplomatic status within Europe. In the 1950s and 1960s, one of Bonn’s chief political concerns was to reestablish its democratic credentials after the dark Nazi period. This desire was also fueled by the German Democratic Republic’s (GDR) twisted historical revisionism. In the context of the Cold War, the GDR cast itself as a victim of Nazi atrocities and denounced West Germany as the sole historical heir to the Nazi regime. West Germany channeled its quest for democratic legitimacy through economic collaboration with, and political accommodation of, its former war victims and demonstrated little willingness to flex what political muscle it possessed against its European trading partners. De Gaulle used Germany’s need for democratic recognition to his advantage in the agricultural sector. According to Gisela Hendriks, [d]uring 1960 the French government was under great pressure to find new markets for France’s growing agricultural surpluses. . . . Since a rise in farm incomes depended on finding new markets, the French turned to the Community and made it clear that they would not agree to the second stage of the transitional period unless substantial progress were made towards a common organization for agricultural markets. . . . In the interest of European unity, and other overriding political objectives, Germany was prepared to subjugate German sectoral interests to wider considerations.32

10


Because of Germany’s desire for democratic inclusion, and in the absence of Great Britain as an alternative partner for Bonn within the Common Market, France benefited from a unique historical “window of opportunity” to shape the budgetary mechanisms of the CAP. As a consequence, says William Safran, “[t]he pressure for agricultural efficiency was reduced somewhat when the European Community’s Common Agricultural Policy (CAP), put in place in the late 1960s, created a captive market for French farm products.”33 Speaking of the 1958 Stresa (Italy) conference where the CAP’s financial conditions were decided, Napoleon Marayevas also points out that “[o]ne can detect from the formulations of Stresa that France, primarily due to the importance of its agricultural sector, and Italy, mainly due to its small and inefficient farms, asked for high prices and external protection.”34 This founding compact resulted in an imbalance in favor of agricultural producers at the expense of consumers and taxpayers. Mechanisms of sales price support for agricultural produce insured guaranteed revenues for farmers with little consideration for the modernization of agricultural production and distribution structures. Isolation from more competitive international food markets caused domestic food prices to remain comparatively higher than world prices. This subsidies system weighed heavily on the taxpayers, while the absence of regulating mechanisms between supply and demand encouraged chronic overproduction. The French-Italian conceptions prevailed at least until Margaret Thatcher’s challenge to the system, which led to the CAP budget reforms of the 1984 Fontainebleau European Council. The results of the 1993 GATT negotiations, which provided for a temporary exclusion of European agricultural products from trade liberalization, also testify to the tenacity of the French government’s diplomatic action within the EU on behalf of its farmers. It is thus clear that France played a key role in shaping EU trade and agricultural policies and still does, although not as freely as it once did. This deepening participation, however, comes at a growing cost for the French state apparatus. In many respects, the French state, the core of traditional French identity, is in crisis. WHY THE FRENCH STATE? A CORE IN CRISIS This section argues that this volume’s emphasis on the French state is justified by the status of scholarship and by the intrinsic importance of the state for French society and its current crisis. The impact of European unification on the French economy has received considerable attention in English-language publications over the past few years, as Pierre Gerbet’s voluminous bibliographical volume La France et l’inte´gration europeénne shows.35 On the other hand, the changing French state is less studied. In this field, the following English-language studies, to which the author gratefully acknowledges his indebtedness, stand out: Franç ois-Georges Dreyfus’ France and EC Membership Evaluated (1993) focuses on the pre-Maastricht

Introduction

11

transformation of its foreign, economic and social policies. Gregory Flynn’s Remaking the Hexagon (1995) studies the economic, cultural, social and political changes of “the new France in the new Europe” but fails to address the issue of the changes to the state apparatus. Vivien A. Schmidt’s From State to Market? (1996) deals in depth with the transformation of French government business policy. Her masterful study of the restructuring of French capitalism, managerial practice and elite dominance seems directed first and foremost at specialists of contemporary France and trained political scientists. So is John Keeler and Martin Shain’s penetrating study of Liberalization, Europeanization and Malaise in France (1996). In-depth international comparisons are also drawn in the State and European Union four-volume series edited by James Forder, David Hine, Jolyon Howorth, Hussein Kassim and Anand Menon (1996–1998). This book, on the other hand, is geared toward non-specialists of French and European Union politics. And to this day, Alain Guyomarch’s France in the European Union (1999) is the best synthesis in English about the topic at hand.36 There is also a wealth of French-language books on changes in the French state, and one of the goals of this study is to make their substance accessible to English speakers who have little or no knowledge of the French language. There exist countless French administrative documents on this topic, but this literature is quite scattered, hard to locate and harder to decipher because of its use of legal jargon and the technical nature of the subject. Another purpose of this book is thus to draw on French studies of governmental origin. In 1997, Franç ois Scheer, former French ambassador to Bonn, characterized France’s pro-European diplomacy as “une entreprise contre nature.”37 Indeed it was an “improbable enterprise” in the 1950s and became increasingly so because of the insistence in the French political culture on national grandeur and autonomy. Traditional Frenchness, long centered around the state, has been partially sacrificed to the building of a European polity. Ronald Tiersky expresses it best: “France is still such a fascinating and useful case in comparative politics precisely because it is that European country which has had the most intense, most vivid sense of its distinctiveness, its undeniable exceptionalism.” The sharp contrast between the prominent role played yesterday by the state and its crisis today provides a further rationale: “France used to be a bellwether of nationalism’s irreconciability to cosmopolitanism, of national interest’s rejection of interdependence. . . . Contemporary France is an example, a most intense one, of the internationalization of the most developed nation states in the late twentieth century.”38 All observers agree about the central role of the state in French political culture. In addition, since France was built around the idea of the nation as embodied by the state, Stanley Hoffmann’s 1993 comparison proves useful: [T]he French melting pot has never been quite like the American one. The United States is “a nation of immigrants,” France is a nation that attracts and incorporates immigrants. . . . There is only one French culture, and separate subcultures are not welcome insofar as they impede assimilation to the French culture. . . . [W]hereas each wave of American

12


immigrants contributes to and shapes American identity, French immigrants are asked to adopt a firmly preestablished model of French identity.39

Today’s growing Europeanization of France coincides with the political coming-of-age of immigrant groups, notably beurs (second-generation Arabs or French citizens of North African descent).40 Globalization, the volatility of financial markets, the growing competition from the Asian tigers and other newly industrialized nations, all preclude France from resorting to the political recipes of yesteryear. In order to secure its grandeur, so the national rhetoric goes, or more realistically in order to survive as a prosperous country, France has to transform its identity. Europe has thus been transformed from an instrument of French national interest to a necessity. What was long presented as a diplomatic option, supposedly among other diplomatic alternatives, is revealing its true nature: Europe is France’s fate and destiny. In fact, it always was, even though tenacious defenders of French national sovereignty claimed the contrary. Former Prime Minister Edouard Balladur (1993–1995), a pro-European Gaullist, sums it up best: Germany has several policies at her disposal: a European policy based on the FrancoGerman axis, a policy of close relationships with the United States, a policy based on a strong presence in the East. Depending on the circumstances, she makes use of one or the other without omitting to reassure each of her partners about her intentions. France has only one policy: her European policy. She needs to regain a level of flexibility comparable to the one Germany enjoys.41

France is a key EU player whose core, the state, is in crisis partly because of the EU. In February 1996, the Economist asked: “Is France, under its first Gaullist president since de Gaulle himself, gradually abandoning the last Gaullist foreign-policy taboos?” Its answer, for its brevity, captures the essence of French changes since the early 1990s: [P]iece by piece, the evidence is emerging of France’s long-delayed reaction to the collapse of the Soviet Union and the unification of Germany. Those two events deprived France of its former self-assigned role as a balancing force between the superpowers and of its former dominance in Europe. In their place has come not a rejection of its global role but a new method of holding on to that role—a system of partnerships and alliances which involves a shift away from the traditional insistence on absolute national independence.42

In response to the end of the Cold War and German reunification, France embraced a bolder European “system of partnerships and alliances,” symbolized by the Maastricht Treaty. In return, the EU affects features of the state long familiar to French citizens and policymakers: the relationship between national sovereignty and international cooperation, the constitutional and legal basis of

Introduction

13

its state, its very notion of citizenship, and its economic and diplomatic orientations.43 This book’s topic represents a moving target for EU scholars, but a daily reality for French citizens and decision makers. Thus Hussein Kassim rightly argues that “what emerges from a consideration of France is what one might call the ‘dissipation of the national.’ ”44 However, adds Kassim, one should resist the temptation of viewing the French case as a “typical” example of Europeanization. The EU’s impact on the nation-state has not so much induced a convergence of national administrative and governmental models, let alone outright institutional fusion, but rather a mosaic of specifically national adaptations and increased functional interdependence. The patterns of adaptation to European integration are not consistent across the 15 member states, nor are they coherent within each national polity. As Michael Mann argues, “Western European weakenings of the nation-state are slight, ad hoc, uneven and unique. . . . Until the 1980s, the EC was almost entirely compatible with the nation-state . . . Thus Europe is not moving toward a single state or even toward a federal state. . . . Overall sovereignty is now divided and messy.”45 Hence, this study of the French state may be construed as just one case study of Europeanization, upon which comparative studies may be built. OUTLINE AND INTENDED AUDIENCE This book emphasizes the post–SEA (February 1986) period because the momentum of the integration process accelerated after this milestone treaty. Granted, European integration is a work in progress: The EU and the member states are not equal at all times and in all domains in their capacity to initiate, shape or reject institutional and policy changes. Granted, there are clear instances of “renationalization of EU politics,” especially in the 1970s, when as Paul Taylor points out, “there was a marked increase in the range and status of the intergovernmental institutions of the European Communities, and a matching decline in the authority of the Commission.46 However, since the mid-1980s relaunch of the European vision by Jacques Delors, there is a trend toward increasing encroachment on national autonomy by Community legislation and institutions. Functional collaboration, which was first conceived in the 1950s and 1960s as a “fragmented, issue-oriented, incremental problem solving” process, has led to both functional and substantial interdependence.47 The intended audience for this book is undergraduate students with a sound knowledge of EU history, institutions and policies, but with little or no knowledge of French history and politics. This book does not include a presentation of the EU, as such surveys are plentiful, and because it is resolutely a national case study. Chapter 1 focuses on the role of the state in French history and politics, the nature of the post-war social-economic consensus in France and the changing role that European membership has played in the promotion of France’s national interest since 1957. Chapter 2 analyzes the transformations of

14


the French governmental structures caused by the EU. It charts the evolving relationship among the three branches of government in relation to their European context, the emergence of a new European culture among French governing elites and the growing internalization of the European parameter in governmental culture and processes. Chapters 3 through 6 appraise the impact of European integration on the sovereign functions of the French state. They study the curtailing of economic interventionism, the constraints of convergence for the single currency on France’s budgetary policy and its welfare state, the transition from a national to a federal currency and the evolving defense and security policy and changing definition of the national territory. As this reform of the state touches the very core of a complex set of issues, linking the sense of national identity, the national political culture and the nature of the Fifth Republic (the old Gaullist synthesis), Chapter 7 addresses the issue of new territory-based and identity-based values and attitudes. Because of the questioning of the unitary state, the crisis of state legitimacy and the slow emergence of a new political culture among French elites and citizens alike, the conclusion discusses the book’s key postulate. This key postulate is the demise of traditional Gaullism, the emergence of the Sixth French Republic and the slow but steady affirmation of a “transnational polity” based on multi-level governance. This book does not claim to offer a definitive assessment of the ongoing and evolving relationship between the EU and one of its most important member states. Hence, the need to address a wide audience supersedes academic perfectionism and theoretical considerations. In fact, the chief preoccupation of this work is to remain accessible and as jargon-free as feasible; subscribing to Raymond Legrand-Lane’s caveat: “All we can hope to do is to provide a few guidelines for thought, rounding off the historical overview.”48

Chapter 1

The French State in Historical Perspective France’s adjustment to the EU is especially challenging because its state apparatus lies at the core of its sense of national identity. Thus, without a clear understanding of the historical roots of the French state and their ramifications in contemporary society, it is difficult to fathom the severity of the European challenge to French identity and citizens’ resistance to the European Union. Underlying this elevation of the state are centuries-old developments. First, starting around the thirteenth century, the French monarchy conducted a vigorous centralizing effort. In so doing, French monarchs presented themselves as defenders of French unity against feudal Balkanization. Second, the 1789 Revolution that ushered in the democratic age in France also spawned two centuries of chronic political instability, which rendered a strong central state bureaucracy essential in fighting off centrifugal tendencies. Third, the post–World War II political and social-economic consensus posited a centralized and interventionist governmental apparatus. Its primary mission was to ensure both economic progress and social peace by devising a specifically French mode of capitalist development. The French state attained this through participation in a European project that, with time, forced it to redefine itself. A BRIEF HISTORICAL OVERVIEW In The Language of Leadership in Contemporary France (1996), Helen Drake and John Gaffney observe that in France “there is something sacred about the discourse of popular sovereignty. This is largely because it needed to replace another political form—the rule of kings—itself justified in religious terms.”1 France as a country is the product of political will exercised over many centuries by successive kings, their armies and bureaucracies. The French nation-state,

16


not unlike other Western European nations, but earlier and more vigorously so, was built at the expense of pre-established powers both from within and without. An Early Definition of National Sovereignty Starting from their local power base in the Paris region, the French monarchs eradicated regional autonomy and distinctive local identities, both cornerstones of the feudal system. Their countless wars, marriages, annexations, alliances and treaties forced together into one country and one single nation peoples from different fiefdoms, speaking different languages, using different currencies and entertaining competing political allegiances. France was created by political might and military means “from the top down,” rather than “from the bottom up,” as was the case with the United States, which is a nation of immigrants that gave itself a federal government with “residual” powers. The recurrence of regional and aristocratic uprisings in French history testifies to the early centralizing efforts of successive monarchs. The French monarchs also sought early their independence from neighboring European powers. Jean Bodin (1529–1596) is credited with coining the word souverainete´, from which “sovereignty” is derived. In his Six Books of the Republic (1576), he developed a concept of undivided, though not unlimited, power that later provided the theoretical foundation for absolutist monarchs such as Louis XIV. Jean Bodin’s vision of sovereignty rested on the affirmation of “regal rights” (droits re´galiens), that is, the absolute authority of the king within the boundaries of his kingdom. This power was limited only by pre-established local rights and traditions—such as tax laws and exemptions, which differed enormously from one location to the next—and was exempt from encroachment from outside, non-French authorities. Bodin’s theories represent the intellectual culmination of a 300-year-old effort by French kings to emancipate their monarchy from outside interference, notably the spiritual authority of the Catholic church and the pan-European aspirations of the Holy Roman Germanic Empire, which as heir to the pax romana claimed precedence over European dynasties. In fact, many theoreticians of monarchical power predate Bodin: As early as the thirteenth century, King Philip the Fair (1268–1314) founded a tradition of national independence by proclaiming that “The king is (sole) emperor in his kingdom.” This was one of the main reasons behind his ferocious 1310 attack on the Order of Templar Knights, whose financial status as an international banking power and direct allegiance to the papacy posed a direct threat to the French king’s aspirations of autonomy. These claims to national self-determination were backed by dynastic ambitions and gave credence to the theory of droits re´galiens. This expression of monarchical origin is still used today in Republican France to describe the government’s exclusive domain (diplomacy, defense and monetary and budgetary policies are referred to as “les fonctions re´galiennes”) and to uphold national sovereignty. The French monarchy developed earlier than those of its European neighbors and carried its claim of autonomy further. Whereas Jean Bodin en-


17

visioned a monarchical power limited by traditions and respect for local rights, later advocates of absolutist monarchy saw the king as the sole source of political legitimacy. Monarchist theoreticians such as Bishop Bossuet (1627–1704) and prime ministers such as Richelieu (1585–1642) and Mazarin (1602–1661) emphasized the role of the monarch as the sole source and support of all legitimate authority within national boundaries, even at the expense of nobility, township, bourgeois and clerical power. It is also interesting to note that linguistic unification in favor of the “French” language—that is, the language that happened to be used in the Paris region by the monarchs and their administration—against the transnational claims of clerical Latin and the atomistic local languages started as early as 1539 with King Francis I’s (1494–1547) Ordonnance de Villers-Cotteret.2 The Birth of Republican Authoritarianism During the 1789–1799 Revolution, the struggle between Royalists and Republicans and the infighting among revolutionary factions generated instability and prompted calls for an authoritarian ruler. Civil disturbances at home and constant war on the continent set the scene for the political fortune of the French military and fueled Napole´ on Bonaparte’s meteoric rise to power. These chaotic circumstances were instrumental in defining authoritarian republicanism (jacobinisme) as well as ce´sarisme de´mocratique, or confiscation of power by a single ruler in the name of democratic salvation. Eighteenth-century Parisian revolutionaries animated by Rousseau’s vision of sovereignty, proclaimed the French Republic to be “one and indivisible.” In his 1762 Contrat Social, Jean-Jacques Rousseau (1712–1778) defined legitimate political authority as popular sovereignty, as opposed to monarchical sovereignty, and deemed it “inalieńable et indivisible”: It could be neither taken away nor divided. In contrast with John Locke’s conception of natural individual rights based on a limited and representative government, Rousseau’s “social contract” insisted on the rigid unity and “the absolutism of general will.” As Stanley Hoffmann notes, “nation,” as incarnated in the popular will, was a concept used against the Old Regime monarchy: “Where liberalism tries to define a common will out of the clashes of and bargains among individual and group interests, Rousseau based his general will on the sense of a common interest he believed inherent . . . in all members of a civic community. He postulated a hierarchy in each of them, between the (superior) will to the common good and their (inferior) individual or group interests, and he demanded the repression of the latter in the public sphere.”3 But in the end, it was not so much Rousseau’s theory of democratic representation as the dire circumstances of the birth of the First French Republic (1793–1799) that shaped its character and, ultimately, the very definition of republicanism in France. In 1792–1793, two options—centralism and federalism—for the organization of the Republic were conceivable. Federalism emphasized local rights but was

18


quickly considered with suspicion by besieged French patriots. Royalists instigated riots everywhere. They controlled the cities of Lyon, Toulon and Marseille, opened the ports of Toulon and Marseille to British armies and assembled on France’s eastern borders to launch a war of ideological reconquest against their own country. In the western region of Vende´ e, near Brittany, Republican troops waged a bitter civil war against popular Royalist insurrections with a strong anti-Parisian flavor and in the process committed many crimes in the name of national unity, a painful legacy which is still felt today. Given these circumstances, moderate, federalist Republicans (Girondins) were suspected of encouraging the dismemberment of France by playing into the hands of local counterrevolutionaries. The Republic was engaged in an uncertain battle for survival, and respect for local rights was promptly confused with separatism and anti-republican activities. With its legitimacy resting on shaky grounds, the First Republic could ill afford a debate about the comparative merits of various forms of republican government. The Jacobins, the most radical and centralizing Republican faction, argued against the Girondins that swiftness and forcefulness of political decision were the order of the day—not balance of power and respect for (potentially seditious) minorities. The Jacobins eliminated not only the Royalists but also the Girondins, their erstwhile allies in the struggle against the monarchy. Their radical and largely intolerant version of republicanism triumphed not only over its Royalist enemies but also over moderate Republican ideals. The fear of factionalism at the core of Jacobinism expressed itself as authoritarian centralization defined in geographical terms (Paris leading the rest of France), institutional terms (the executive branch dominating the legislature and the judiciary in the name of efficiency) and social terms (one party dominating the media and other parties). Even parliamentary activities were then viewed with suspicion, since to contradict the executive branch was to contradict and imperil the people. Jacobinisme had a distinctive militaristic flavor, an obsession with treason and anti-patriotic conspiracies, and a fixation on ideological purity. These ideological excesses that in retrospect we might consider as the result of Jacobin sophisms and rationalizations of executive dictatorship were elevated in the 1790s, a time of war within France and on all its borders, as the condition for the survival of the Republic. During its radical Jacobin phase (1793–1795), the French Revolution became fundamentally illiberal and inimical to local and minorities’ rights—and remained largely wary of them even after the political and physical elimination of the Jacobin faction by dissenting Republicans.4 Today, Jacobinism has lost its militaristic and authoritarian associations, but it still permeates the French political culture in a much milder form. It expresses itself as the defense of political centralism, nationalism, national sovereignty and the rejection of minorities’ and women’s claims to special protection or special treatment under the law. Since the 1789 Revolution, French law protects individual rights but also rejects “community rights”—the notion that some groups may have different rights and duties. Nothing could be further from the


19

Jacobin model of old than the motto of the American Republic: E Pluribus Unum. For many French politicians, the legal recognition of different communities and ethnic groups (communautarisme) within the national social body is viewed with suspicion. Affirmative action, or the promotion of minorities’ and women’s rights through special legal provisions, was long regarded as antidemocratic in France because it confers special rights to certain people, thus violating the principle of equality of all citizens under the law and endangering the unity of the social body. This attitude long cut across party lines. Today the French Left is more favorable to differential treatment under the law to redress historical wrongs, but Conservatives remain concerned that granting special recognition to groups that have suffered from historical discrimination would be akin to opening a Pandora’s box—a vicious circle of competing and mutually reinforcing demands. This fear of social dissension is especially acute given France’s record of political and institutional instability, which reflects a national propensity to civil war. Political Instability vs. Bureaucratic Permanence The 1789 Revolution created a society but for almost two centuries failed to establish a stable government. Not until after World War II, with the defeat of the Vichy regime (1940–1944), did the Republican form of government emerge uncontested. As Franç ois Furet puts it, it was only through a long, painful and gradual “apprenticeship of universal suffrage” that the French came to terms with their revolutionary origins.5 The Revolution (1789–1799) and the First Empire (1802–1815), itself largely a by-product of the Revolution, influenced everything that followed in their turbulent wake. As each generation defined itself in relation to these momentous events, each revolution reinterpreted the 1789 rhetoric, adding yet another layer to an already traumatic legacy. Consequently, Franç ois Furet justifiably speaks of “that tyranny of history over French politics which is so characteristic of the French nineteenth century.”6 Geoffrey Best also speaks of an atmosphere of “permanent revolution” in France between 1789 and the early 1980s.7 The French played out their divisions in bloody revolutions (1830, twice in 1848, 1871), civil wars (1848, 1871, 1930s, 1940– 1944) and military coups (1851, 1880s–1890s, 1958–1961). As a result, between 1789 and 1958, France experienced one fascist state, two authoritarian imperial regimes, three competing dynasties, four full-fledged revolutions, five republics, about six civil wars, multiple aborted or successful military coups, half a dozen foreign wars, some stunning military defeats and no fewer than a dozen constitutions.8 A dozen different regimes and about as many constitutions attempted to tackle four political issues. The issue of political legitimacy was born of the struggle of the Republic against the monarchy, with the added complication of Bonapartism, a hybrid regime that combines a formal respect for democratic institutions with military rule. At the core of this issue lies the nature of legitimate

20


sovereignty (i.e., popular sovereignty vs. the dynastic principle). The issue of institutional organization deals with the tension between executive and legislative power, and between parliamentary representation and direct democracy. Its major stakes were the composition of the electorate, the nature of the voting system and the choice of an appropriate system of popular representation. The third issue, the defense of political liberties, presents dazzling challenges: the role of the Catholic Church in a secular society, the growing power of the press, the nature of public education and the elusive balance between the political system and individual rights. Finally, the struggle between the landed aristocracy and the rising bourgeoisie, and later between the bourgeoisie and the proletariat, shaped the social and economic question. In this respect, one cannot underestimate the role played by the seizure of biens nationaux (assets such as land, farms, mansions and castles) by the revolutionary government in the 1790s to punish aristocratic e´migre´s and the church. The 1789 Revolution transferred immense wealth from the nobility and the church to the bourgeoisie, the welloff segments of the peasantry and even the moderately affluent farmers. This forced shift of riches accounts for two phenomena that dominated French history until the 1940s. First, the aristocracy and the Catholic Church had no desire to accommodate the Republican system of government. Their diminished socioeconomic status fueled their opposition to the Republic. This historic transfer of property drove a wedge between Old Regime beneficiaries and the emerging Republican bourgeoisie and accounts for the fragmentation within the French state apparatus until the 1940s. Disgruntled sons of the nobility found employment as diplomats, judges, army officers, lawyers, priests and bishops in a Republic that their own family traditions taught them to abhor, and many crises that threatened the Republic until 1945 are explainable in terms of internecine elite strife. Second, this transfer of property accounts for the acceptance of the Revolution by the peasantry and the emerging middle class, which acquired new wealth. This helps explain their support for a politically moderate and socially conservative (non-socialist) form of government. The convulsive and protracted decline of Old Regime beneficiaries was finalized by the slow triumph of the anticlerical Republic over the church as well as by the slaughter of large numbers of officers of aristocratic origin during World War I and World War II. The conditions for the painstaking emergence of a stable parliamentary and secular democracy were met only after 1945. This traumatic legacy explains the insistence on the part of French political theoreticians on either the concentration of governmental power or its diffusion. Some leaders, like Napole´ on I (1799–1815) and Napole´ on III (1851–1870), sought to remedy this instability by strengthening the executive branch of government at the expense of parliamentary autonomy, judicial independence, freedom of the press and citizens’ rights. Others tried to pacify the citizenry by accepting the fragmentation of political power, sometimes to the point of paralysis. Such was the case for much of the Third Republic (1875–1940) and Fourth Republic (1946–1958) in which the Legislature’s considerable but dis-


21

organized and ill-channeled power was never properly counterbalanced by an efficient Executive. In view of these periodic crises, the French people long accepted strong central governments out of a need for stability and social peace in a fragmented polity. “Better to have a Caesar than civil war” is the practical wisdom of a people with too many bloody conflicts in their past. Thus, Rene´ Re´ mond identifies a tradition of ce´sarisme de´mocratique, or democratic authoritarianism, in France from Napole´ on to Boulanger (a popular general who briefly flirted with the idea of overthrowing the Third Republic in the 1880s) and from Pe´ tain to de Gaulle.9 Liberal critics Alexis de Tocqueville and Raymond Aron also observe that the French in their Rousseauist obsession with the uniformity of conditions are more interested in equality than in individual liberty. This accounts for the relative weakness of mediating institutions in France, such as labor unions, churches, grassroots lobbies and other civic and social organizations, and the paramount importance of state intervention in social solidarity. In fact, the 1789 Revolution and its aftermath destroyed what de Tocqueville calls “les corps interme´diaires” (citizens’ independent political, social, religious and labor organizations) and left citizens divided among themselves and atomized in front of a powerful state bureaucracy. The Revolution continued the monarchy’s centralizing efforts, and the Republic continued the Jacobins’ centralizing efforts. For much of the nineteenth and twentieth centuries, the French governmental apparatus thus benefited from the relative weakness and disorganization of civil society and imposed its conception of the common good as national glue for a fragmented citizenry. De Gaulle’s Institutional Stabilization In October 1958, Charles de Gaulle created a constitution that, with time, was accepted by all political parties as well as by the majority of the French population—a historical first, indeed. His vision of the Republic rested on the cultivation of governmental strength and national cohesion at the expense of institutional checks and balances. His constitutional plans, inspired by the 1930s governmental paralysis in the face of international peril and expressed in his 1946 Bayeux address, called for a strong presidency. His position was reinforced by the national emergency created by the war in Algeria (1954–1962) and military pressure on the French government. De Gaulle’s political and legal synthesis was characterized by the Executive’s domination over the Legislature, a nationalistic rhetoric, the defense of French grandeur and sovereignty, a belief in French exceptionalism, a sense of a particular French mission (helping developing nations, a special relationship with sub-Saharan Africa), political activism in favor of North-South relations, a comprehensive welfare state and a strong cultural ethnocentrism which would act as national cement. His diplomatic vision implied a Franco-German axis in Europe, with France acting as the senior partner, and a European confederation excluding Great Britain. London was deemed too committed to liberalism in international trade and diplomatically

22


and politically too close to the United States. Britain could also offer Germany an alternative partner in the European construction. De Gaulle’s vision of the Common Market rested on intergovernmental collaboration, as exemplified by the Fouchet plans (1961–1962). He rejected any supranational deviation, as was made abundantly clear by the 1965–1966 “empty chair crisis,” which he initiated to curb the Commission’s supranational tendencies. In his own quixotic and theatrical way, he was a fervent European: He advocated a strong European voice in international affairs, with Europe acting independently of both superpowers and brokering a (largely hypothetical) diplomatic “third way” for nonaligned countries. De Gaulle’s Fifth Republic, with its strong nationalistic rhetoric and populist appeal, was the first regime to enjoy broad popular consensus on the basic structures of the French polity. For all its imperfections, notably the shunning of the Parliament, his was the first stable and legitimate regime in France since 1789, the first one able to reconcile democracy and efficiency, and to secure both economic prosperity and social peace for a majority of the populace. Even the left-wing activism of the 1960s, culminating in the May 1968 protests which brought considerable changes to popular culture and social relations, did not significantly alter the balance of power between state and society. There is no final agreement on the significance of the 1968 disturbances. While Raymond Aron focused on the “psychodrama” played out by bourgeois and middle-class teenagers largely for narcissistic rather than political reasons, Philippe Be´ ne´ ton and Jean Touchard suggested at least 10 other interpretations.10 But the consensus is that the Fifth Republic’s institutional makeup withstood the 1968 storm largely unchanged. Since 1958, constitutional stability is no longer an issue, and since 1981 (with Mitterrand’s election), there is a trans-party agreement on the Gaullist Constitution. As a consequence, many today point to the eclipse of French revolutionary culture. This “end of French exceptionalism” has both positive and negative implications: Ideological adventurism is over but dissatisfaction, or malaise, has set in.11 Thus the French state has fallen victim to its own success. Whereas its troubled history required France to develop a strong central government to ensure national cohesion, today’s state, bloated and in many ways inefficient, is in the pangs of a legitimacy crisis. The French owe much to de Gaulle in terms of constitutional stability, but the system he created is more technocratic than democratic. It warrants more public scrutiny and democratic accountability than it permits, or has received. In 1996, Pierre-Andre´ Taguieff warned that the Republic’s very foundations are shaken by modernity: “The myth that has shaped France, which was formed during the French Revolution and which suppressed the memory of the monarchy . . . is the republican triad of liberty, equality and fraternity. It cannot be separated from a future of universality. French identity encompasses a vision of the nation state that is open towards humanity and that is theoretically non-exclusionary.”12 But this belief in the universality of “Frenchness” is questioned by the shrinking status of France in world affairs, by the economic crisis that marginalizes segments of


23

the population and by the challenge of Islam among French citizens of Arab origin, the beurs. The debate about the meaning of Frenchness, which Jacobinism, the Third Republic and Charles de Gaulle had defined in no uncertain terms, has again moved to the forefront of public life. This questioning has as much to do with the institutional makeup, immigration and the role of Islam in a secular Republic as with the impact of globalization and Europeanization on the post-war social democratic consensus. THE POST-WAR SOCIAL DEMOCRATIC CONSENSUS Since 1945, much has been made of a so-called French “model” of economic and social development. This social democratic model developed unimpeded for about three decades before being called into question. In economic terms, it rested on Colbertisme and dirigisme (i.e., state economic interventionism and subsidies in the domestic arena, notably in favor of the public sector) and mixed economy (i.e., the combination of public corporations and private companies in a capitalistic framework). The promotion of economic growth though administrative management (planification) was another defining feature of this statist ideology. In social terms, this model rested on a strong Etat-Providence (welfare state) which defined a specific French way of capitalist development. Michel Albert, CEO of AGF, a major French insurance company, deemed this brand of social market economy Rhinish capitalism and in 1991 published a bestseller, Capitalism vs. Capitalism, to defend it.13 Vivien A. Schmidt comments that Albert “opposed the ‘neo-American’ model characteristic of the United States and Great-Britain, which values individual achievement, risk-taking, and shortterm profitability, with what he described as the superior ‘Rhinish’ model, most closely linked with Switzerland, Sweden, and Germany as well as Japan, which values collective success and long-term industrial development.”14 With the demise of the USSR, the historical confrontation between capitalism and communism has been replaced by a (peaceful) struggle between competing capitalistic models: social democracy for much of Europe, liberalism for the United States.15 For decades, France’s social democracy enjoyed a trans-partisan consensus, but it has experienced growing problems since the mid-1970s, and even more so since the 1990s. Building the Consensus Following its liberation from Nazi occupation in 1944–1945, France embarked on an ambitious program of economic modernization and social solidarity under state supervision. These far-ranging policies originated in the pre-war period and in the Resistance ideology that developed underground during the German occupation. In 1936–1938, the Front Populaire cabinet (a coalition of Socialists and Leftleaning centrists backed by the Communist party) tried to reform French capi-

24


talism. This cabinet initiated social and economic reforms which, modest as they may appear in retrospect (a two-week paid vacation for industrial workers, a 40-hour cap on the working week, the extension of union rights and some nationalizations), were met with belligerent resistance on the part of French business owners who denounced Le´ on Blum, prime minister of the Popular Front, as a bloodthirsty Bolshevik. In fact, the Socialists’ goal was not so much to break with capitalism as it was to pull France out of the Great Depression and carry out a limited number of symbolic measures. Far from bringing capitalism down, Blum’s measures helped preserve it by averting revolutionary outbursts from a French proletariat that was hard hit by the Great Depression. However, Blum’s Socialist agenda, combined with the fact that he was Jewish, inflamed French conservatives, anti-Semites and nationalists. Their calls for assassination and resistance to his democratically elected government are indicative of the animosity of class relations in 1930s France. This antagonism fueled far Right extremism, as many militants openly preferred French fascism, civil war or even Hitler’s armies to what they considered the “Bolshevization” of France. The 1940–1944 Vichy regime can be interpreted as a form of revenge against the Popular Front in the name of national salvation—witness the rigged Riom trial, where Blum and other pre-war Socialist leaders stood accused of engineering the national decline that led to the French defeat in June 1940.16 The reformism of the post-war period was intended to defuse such catastrophic domestic antagonisms. It also reflected the ideal of national unity and reconciliation that inspired the underground Re´sistance.17 Following the 1940 defeat, many members of the upper bourgeoisie embraced economic collaboration with the Germans in order to salvage their fortunes. After 1945, former Re´sistance members believed that punishment of economic collaborators such as Louis Renault, whose automobile manufacturing company was nationalized in 1946, would launch a national revival based on economic and social solidarity. The post-war intellectual environment left little room for conservative or moderate Right thinkers. Left-wing values, either reformist or radical, dominated the intellectual landscape. All newspapers that surfaced or resumed publication in 1944 favored nationalizations, comprehensive social programs, workers’ participation and union development. The intelligentsia was dominated by Leftleaning intellectuals. As Tony Judt shows, starting with the Existentialists gathered around Simone de Beauvoir and Jean-Paul Sartre, the word intellectuel became synonymous with anti-capitalist and revolutionary values.18 Raymond Aron’s 1958 Opium of the Intellectuals remains indispensable for understanding France’s flirtation with Marxism in general and Stalinism in particular.19 It was not until the 1970s’ nouveaux philosophes that the domination of Marxist messianism over the French intelligentsia was finally shaken.20 In addition, reformist policies helped to placate French Communists’ demands and avoid their seditious actions. Thanks to his December 1944 pact with Stalin, de Gaulle had secured, if not their unwavering loyalty, at least the absence of outright armed rebellion. The Communist party’s calculated and belated entry


25

into the Resistance, combined with its tradition of secrecy and covert networking, as well as its “militarization” by means of the weaponry seized from the fleeing German armies, made its allegiance, or at the very least the abstinence of any military action, a critical prerequisite for the reestablishment of democracy in post-war France. In 1945–1946, the working classes’ abysmal situation provided fertile ground for Communist propaganda. The expulsion of the Communist party from the coalition government in May 1947 following the announcement of the Marshall Plan and the insurrectional strikes that followed inaugurated the arrival of the Cold War in France. Anthony Beevor and Artemis Cooper paint this disturbing picture of France in the fall of 1947: [P]ublic order operations took on an increasingly military aspect. . . . French troops on the North were strengthened to prevent Belgian Communists from slipping across the border to sabotage the mines and prevent them from reopening. But even the army did not have enough men for the tasks allotted. Altogether 102,000 reservists from the classes of 1946 and 1947 had been recalled from the middle of November. In addition, the French army had reformed the Senegalese troops guarding German prisoners of war into a further nine battalions ready for deployment. But even these reinforcements were not considered sufficient: the government announced on November 30 that it was recalling another 80,000 reservists from the class of 1943.21

In this context, extending social programs helped secure social peace by undermining the far Left’s influence on the working class. This statist model based on the welfare state soon benefited from a strong trans-partisan consensus.

Features of the Statist Model France, slow to change for much of its economic history, especially during the 1920s and 1930s, engineered a different socio-political formula in the postwar period. This unique formula rested on a growing economy and a series of compromises between free market forces and state intervention, between economic growth and social redistribution, and between inflationary tendencies and currency stability. Sweeping economic changes redefined the economic, social, political and cultural makeup of the nation—and reinforced the centrality of the state apparatus as the forum where all societal and political choices intersected. Economic efficiency and social solidarity formed the two pillars upon which the legitimacy of state intervention rested. Reconstruction of economic structures and modernization of social policies were the order of the day for all administrations, each of which significantly extended the state’s economic power in the name of the common good.22 From the late 1940s on, the emergence of the middle class was made possible by educational opportunities (democratization of education), professional promotion (upward social mobility) and welfare-state benefits. Reforms were geared toward new goals but followed familiar guide-

26


lines, starting with the modernization of the state bureaucracy and the education of the elites. The Third Republic (1875–1940) created many grandes ećoles, that is, prestigious graduate schools of business, engineering and education, functioning independently from the less prestigious and less endowed public universities and mostly reserved for the sons of the upper classes. These schools were destined to educate a privileged few in the technical fields that were useful to modernize the country and serve the state.23 After 1871, following the French defeat at the hands of Bismarck’s Prussia, the desire to foster a national revival materialized itself in the creation of the Ecole libre des sciences politiques to educate the governing elites who would put France back on its feet and lead it to military revenge against Germany. After 1945, history repeated itself. The June 1940 defeat was not viewed just as a military misfortune but also as the collapse of the entire state and its ruling personnel. In 1946, de Gaulle established the Ecole Nationale d’Administration (ENA) to lead the modernization of the state and the country: De Gaulle’s vision for a strong and great France expresses itself through the mixed economy and the welfare state. It is a time of national revival. Interested for different reasons in strengthening the state, both Gaullists and Communists sing the praise of the new state ideology. It is in this political context that one has to understand the creation of ENA and all the reforms that go with it. This omnipresent state, promoter of the common good, needs qualified civil servants. The ENA will provide them. The ENA will educate the civil servants for their new mission to serve the common good.24

These new governmental leaders were long characterized—and still are, to a large extent—by a common social background, schooling in the grandes ećoles, alumni solidarity that cuts across political affiliations and insures great administrative cohesion, an elevated sense of public service and a fair deal of elitism and cliquishness. They achieved great economic feats and insured social progress for the greatest number in France, but this “republican aristocracy” granted insufficient opening to lower- and middle-class talents or women.25 As Vivien Schmidt explains, [t]he corporatisme of many French CEOs is legendary; and it affects the private sector as much as the public. Quite typical is the story told of Claude Be´ be´ ar, head of Axa, the insurance group, when he took over another, larger insurer. In his first meeting with the top few hundred managers, Be´ be´ ar, a product of Polytechnique, singled out seven or so X graduates by greeting them with the familiar “tu” (a peculiarity of graduates of X that distinguishes them from all others) rather than the formal “vous,” the usual greeting. From this simple gesture, everyone in the firm understood that a new management team, made up exclusively of polytechnicians, was being formed.26

Article 2 of the October 1958 Constitution states that “France shall be an indivisible, secular, democratic and social Republic” (emphasis added). The


27

1789 Republican motto itself was “Liberty, Equality, Fraternity.” Fraternity, in the guise of social solidarity through distributive policies, is expected to balance and mitigate the leveling and potentially despotic requirements of equality and the atomistic and potentially divisive implications of liberty. The construction of an impressive system of Sećurite´ Sociale by Labor Minister Pierre Laroque in the late 1940s constituted fraternity through social solidarity. As Chapter 4 further discusses, French Social Security encompasses four entitlement programs: a national health care system of socialized medicine, a workers’ pension system, a workers’ compensation and disability system and, finally, allocations familiales, or allowance for families with children. From the late 1940s to the late 1990s, these allocations were granted automatically, regardless of the mother’s (and/or parents’) social, professional or marital status because they were meant to boost the birthrate and make France stronger. Conservatives consistently backed this program in the name of national power, and Socialists did likewise so as to help low- and middle-income families, working parents and single mothers. Sećurite´ Sociale legitimized the capitalist system in the eyes of many French citizens. Solidarity was hailed as the harbinger of a possible troisie`me voie between capitalism and communism, a “third way” eschewing the pitfalls of the other two systems. Capitalism was often associated with nineteenth-century Dickensian exploitation. And in a French society that was far less open and mobile, both geographically and socially, than that of the United States, strong social programs helped prevent pauperization and allowed recipients to identify with the growing middle class. The French Left and large segments of the Right equated capitalism with the United States, whose superpower status was both envied and criticized, whose protection was both desired and resented and whose economic dynamism was considered with a mixture of envy and apprehension.27 At the same time, for the majority of the French population, Marxism was clearly identified with the Soviet dictatorship—and therefore not an option. As a consequence, the overall French attitude vis-a`-vis international capitalism was one of qualified and suspicious acceptance, which fed the search for a hypothetical French model. French reformists embraced capitalism as “the lesser of two evils” and kept looking for a third alternative. At home, France’s mixed economy and welfare state were expected to bring about modernization while avoiding the social dislocation of unbridled liberalism. Abroad, they were expected to establish, or rather confirm, French difference vis-a`-vis all existing powers, notably the superpowers, thus securing an independent and safe place in a dangerous bipolar world.28 It was thus believed that this defense of a “third way” would reassert the Frenchness of France and the “Europeanness” of Europe vis-a`-vis the American model of capitalism. This belief, long held by the conservative governments that dominated France between 1958 and 1981, also animated the French Socialists after their electoral victory in May 1981, albeit in a much sharper version. During the 1960s and 1970s, the French Right upheld Colbertisme, which

28


was both an end in itself and a means of withstanding forces stemming from international competition. According to John Zysman, the French state, even in its most dirigiste guise, is certainly not omnipotent in the economy nor does it even attempt interventionist strategies in all sectors. Yet, equally important, the French do not see a sharp and clear cut choice between state control or direction and a free market, a dichotomy that often creeps into British debate. For the French, there are three decisions, not two. The state can do (faire), incite others to do (faire faire), or simply leave be (laissez faire). Leaving things to private forces, moreover, does not necessarily mean allowing free competition. It may imply, on the contrary, allowing private actors to negotiate market arrangements. The anti-market tradition runs deep in France, despite liberal protestations.29

In 1974, following President Georges Pompidou’s death from cancer, Giscard d’Estaing ran on a “liberal” platform against the Socialist candidate Franç ois Mitterrand and was elected by the narrowest of margins—an indication of the popularity of anti-capitalist rhetoric in the French public then. However, Giscard’s economic liberalism did not entail a Thatcherite-like withdrawal of the state from economic matters. According to J. R. Frears, Giscard rejected “classic liberalism” and favored “organised liberalism” which was “really nothing more than the concept of ‘social market economy’ which has been the dominant model of most successful West European economies since the Second World War.” As a consequence, Frears points out, “Giscard’s liberalism has been less dirigiste in rhetoric than in practice and, during his presidency, as measures like the relaxing of price controls in 1978 make clear, he has been less dirigiste than his predecessors.”30 Elie Cohen comments that, in true Jacobin fashion, economic intervention under Giscard’s conservative government served to legitimize political power: “The French state, even when it is unable to control the course of events, must give the impression that it is in control, otherwise it runs the risk of delegitimization. This kind of political discourse has long dominated the Right.” The Gaullists “held that the state should have control over the economy. The industrial advisors of Vale´ ry Giscard d’Estaing did not have words strong enough to castigate the conservatism of French capitalism. . . . When in the early 1980s, a radical and statist left comes to power, this kind of industrialist rhetoric is at a peak.”31 The Left approached the state’s relationship with capitalism in adversarial terms. Underlying Mitterrand’s desire to “break with capitalism”—his celebrated 1981 motto—was the Left’s belief that a combination of statist intervention, Socialist generosity and ideological diatribes would supercede hostile external forces because France’s recession was organized by an international “conspiracy” of plutocratic forces hostile to social progress and national independence. Their anti-capitalist rhetoric combined with nationalism fostered Jacobinisme social, or economic interventionism cum welfare state under state supervision.


29

In the end, France’s Socialist-Keynesian compromise, for all its national idiosyncrasies, was part of a wider continental framework, part of what Wolfgang C. Mu¨ ller calls a European “social democratic consensus . . . based first and foremost on the widespread acceptance of Keynesian policies.” As Mu¨ ller points out, this consensus started to unravel in stages starting in the 1970s, so that today “the present situation bears similarities with the 1960s insofar as the major political families advocate a set of similar policies.”32 Indeed, in the 1990s, a neo-liberal European consensus has rolled back, without altogether eliminating, the 1960s social democratic consensus. The Model Unravels From the late 1940s on, social protection intended to be comprehensive in scope, growing in quality and unquestionable in principle. France, like all Western nations, was able to develop its expensive welfare state thanks to exceptional historical circumstances—the 30-odd years of almost uninterrupted growth from the late 1940s to the early 1970s (Trente Glorieuses). During the 1970s recession, in order to maintain this expansionist consensus and to safeguard social peace, France chose inflation and currency devaluation over currency stability and budgetary restraints—an orientation that was called into question by the convergence criteria of the Maastricht Treaty. The 1973 and 1979 oil crises ushered in a period of economic vulnerability, and despite the sheltering effects of state interventionism, France by the late 1970s had to face a double-digit inflation rate, growing unemployment and a ballooning budget deficit. Conservative Prime Minister Raymond Barre then embarked on an anti-Keynesian monetary policy as he tried to defend currency stability, reduce the public deficit through a compression of public expenditures and curb inflation through a high interest rate policy. David Cameron characterizes these economic policies as contradictory and self-defeating.33 The growing unpopularity of these deflationary measures led to Giscard’s defeat and to the Left’s victory of May 1981. This uneasy alliance between Communists and Socialists, led by Franç ois Mitterrand, promised to “break with capitalism” and to use reflationary monetary policies to counter the economic crisis. Their initial plan was to strengthen the traditional features of the French model: nationalization of key companies in key economic sectors, more civil servants, stronger social programs, subsidies to public companies, budgetary deficit, and higher taxes. Mitterrand’s “more of the same” doctrine was an extension of the Conservatives’ economic policies, albeit with the aggravating factor of costly nationalizations. It was no rupture with the Colbertiste inspiration, no paradigmatic reorientation—only a leap in the same direction. By 1981, France’s welfare state had been living beyond its means for some years, but the Socialists’ victory proved that this notion had not impressed the French citizens. Mitterrand’s 1981–1983 “socialism in one country” program just bought more time.

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THE POST-WAR CONSENSUS AND EUROPEAN MEMBERSHIP How does European membership fit into this post-war consensus? The period stretching from 1951 to the mid-1980s was marked by an ambivalent French commitment, and membership remained beneficial to the Colbertiste status quo. But the costly failure of Mitterrand’s socialist experiment (1981–1983), persistent economic sluggishness during the 1980s and 1990s, the 1986 Single European Act (SEA), German unification in 1990 and the Maastricht Treaty combined to force France to forgo its initial ambivalence vis-a`-vis Europe and embrace a pre-federal European Union. From 1951 to the Mid-1980s: A Beneficial Membership From the 1951 ECSC European integration and its economic policy, and Hussein Kassim observes

to the mid-1980s, Paris was able to reconcile both the pursuit of national interests with few changes to without major changes to its institutional structures. that

[u]ntil the mid-1980s, French autonomy, understood as the ability of the state to originate and to translate its policy preferences into practice, did not appear to be significantly compromised by its membership of [sic] the EEC. France, like other member states, used European integration to pursue its national interest, but, unlike them, it was able to assume a position of leadership, enabling it to bring about a Europe that suited French preferences. . . . Crucially during that period, France was not compelled to undertake involuntarily any far-reaching domestic reform either to comply with Community rules or to implement EC action.34

European membership was regarded by French citizens, especially farmers, as a key component of the post-war consensus. The same French agricultural interests that had voiced their opposition to the 1957 Rome Treaty on the grounds that French farmers would be ruined by low Italian labor costs and high Dutch productivity, came to the realization that the CAP, instituted in 1962, was beneficial to them. They relished the subsidies from the European Agricultural Guidance and Guarantee Fund (EAGGF), the sheltering from international competition through the pre´le`vements (import taxes) and restitutions (export subsidies) system, and the protected access to other domestic markets within the Common Market. Their vote decided the outcome of the December 1965 presidential election in France. The French farmers’ negative perception of de Gaulle’s handling of the Brussels “empty chair” crisis and their fear of losing European subsidies in the Franco-European row led them to withdraw their support in the first round of the 1965 election. As a consequence, General de Gaulle, contrary to all political forecasts, was not elected in the first round. His opponent, Franç ois Mitterrand, benefited from his more positive European pro-


31

gram. The French farmers’ electoral pressure on the French president in the last months of the 1965 crisis led him to seek a quick settlement in January 1966, the Luxembourg compromise.35 This “empty chair” crisis originated in the confrontation between the intergovernmentalist vision defended by the French authorities and then Commission President Walter Hallstein’s ambition to secure autonomous financial resources for the Common Market budget. He sought to strengthen the Commission’s standing vis-a`-vis member states by pulling the institutional dynamics toward supranationalism. Also at stake was a provision of the Treaty of Rome, due to be implemented on January 1, 1966, that would have permitted qualified majority voting in the Council on a limited range of issues. De Gaulle withdrew his ministers from the Council in June 1965, and the European machinery came to a halt. After a six-month-long paralysis and with pressure coming from the French electorate, the January 1966 Luxembourg Compromise allowed any country to request a vote based on unanimity when vital interests were at stake. The meaning of “vital interest” was left undefined, thus allowing members to defend their national interest, no matter how narrowly conceived, in the European arena. The Luxembourg compromise, although never formally recognized by the Commission, affected the decision-making process within the Council of Ministers and achieved three positive goals for France. First, it allowed Paris to defend the sectoral interests it deemed paramount, such as agricultural subsidies. Second, it thwarted the Commission’s tendency toward supranationalism. Desmond Dinan uses strong language to make his point: “As it was, de Gaulle despised the Brussels bureaucracy, dismissing Commission officials as stateless and denationalized. . . . In a typically self-serving press conference on September 9, 1965, full of invective against the Commission and the European Parliament, de Gaulle . . . attacked qualified majority voting and insisted on unanimity.”36 Finally, as Anthony L. Teasdale points out, the Luxembourg arrangement reinforced the Franco-German dialogue, since to get out of the decision deadlocks that the stringent unanimity rule so easily permitted within the Council of Ministers, the two main players, Germany and France, had to agree beforehand in order to persuade, cajole or sway smaller member states into their bilateral compromise.37 France had thus integrated the European variable into its domestic policy making at an early stage and secured the political equivalent of a “charter member’s privileges” in an exclusive club. As John Zysman notes, the French state was able to conduct economic modernization while largely eluding parliamentary control and to implement Colbertisme while partially shielding French companies from international competition through a regional bargain with its European neighbors, especially Germany. European membership, as shaped by Paris, served to prod French industry into modernization while maintaining social cohesion and preventing anti-systemic and anti-Gaullist outbursts: “The Common Agricultural Policy (CAP) helped the French government escape a difficult trap in its drive for industrial growth. . . . Had the French been forced

32


to support their own agriculture, funds would have had to be drawn away from industry or from the pockets of other groups which might also resist expanded industrialization.”38 Until the 1984 Fontainebleau summit reforms, which altered the original CAP rules that favored Paris, Europe’s agricultural policy served to reduce French agriculture’s exposure to international competition. A similar observation could be made about French industrial policy. In Business in France, J. Szarka discusses the promotion of “national (industrial) champions” in certain areas and advances “the thesis that France’s strategy has been to attempt to get national industrial policy (that of backing a small number of sector leaders) adopted Community-wide.”39 Mark Wise confirms this perception: France’s “ability to alternate between lofty rhetoric replete with grand plans for European unity and fierce defense of narrowly defined national interests can irritate the UK. . . . But to an extent far greater than their ‘Anglo-saxon’ neighbour, the French can quite happily marry the pursuit of national interests with the quest for greater West European integration.” This explains why Jacques Delors and other French policymakers hold that France’s standing as a nation can be maintained only through Europe.40 The Ambiguities of the French Commitment to Europe Paul Taylor identifies three alternatives for the relations between national governments and the integration process.41 First, integration can be approached with enthusiasm by member states that readily accept restraint on their capacity for action, as in the supranational ECSC. A second conceivable relationship is based on a cost-benefit analysis, whereby the Community is seen as an instrument, or at best as the collaborator, of the nation-state. This utilitarianism is noticeable throughout the entire EU history, but especially during the 1970s, a decade of “national resurgence” because of four factors: • The return to power of anti-EC Labor in Britain in 1974, paralleled by the election of Helmut Schmidt, who was less idealistic about integration than Willy Brandt and more assertive in his defense of German interests. • The economic and social challenges induced by the oil crises, which each European state tried to confront through national responses. Divergent national macroeconomic policies—German deflationary policy, French acceptance of inflation and currency devaluation, British dis-industrialization—precluded any deepening of Community policy. • The vagaries of the international monetary system stripped national monetary policies of stability and predictability, and wreaked havoc on the European Monetary System (EMS). • The Luxembourg compromise led to a virtual institutional paralysis of the decisionmaking process within the Council of Ministers. By the late 1970s, the unanimity system had effectively become a veto system. This situation was compounded by a lack of energetic leadership within the Brussels Commission.


33

For these reasons, during the 1970s, the EC was more an instrument to pursue national objectives than an expression of European solidarity. But a third and last possible relationship between the nation-state and the European structure, says Taylor, is when the regional institution constrains member states. This typology shows that Paris pursued several objectives from the start, although with different emphases depending on the circumstances. The promotion of national interests—maximizing benefits and minimizing constraints—always remained a priority, with a view toward reducing “the terms of interdependence.” To put it simply, France sought to obtain what Zysman calls “the best terms of exchange . . . within the existing world order.”42 France’s desire for reconciliation with Germany was accompanied by a desire to modernize its economy through cooperation with a dynamic competitor and access to international markets. These goals were deemed important enough by the founding fathers to warrant loss of control over coal and steel policy in 1951 and to envision a future federal Europe. Indeed, Rene´ Pleven, Jean Monnet and Robert Schuman were all favorably disposed toward the concept of a United States of Europe. However, the failure of the European Defense Community (EDC) in 1954 signaled a retreat from the federal idea by French elites and paved the way for a Common Market focusing exclusively on economic collaboration and resting on intergovernmentalism and Franco-German bilateralism. Jean Monnet’s vision of a united Europe represented a bold historical rupture, as it demonstrated France’s willingness to negotiate sovereignty with a European entity. However, the late 1960s and the 1970s, with their “renationalization of European politics,” “Eurosclerosis,” institutional stalemate and policy stagnation, constitute a departure from that vision. The late 1980s and 1990s, in turn, redefined the terms of the debate and showed that, for both French Socialists and Conservatives, the two levels—national and supranational—had become indistinguishable. They thus embraced the notion that decisive action at the European level was imperative. For over 50 years, French governments have thus approached European integration both as a means toward achieving national goals and as a goal unto itself. As Anne Stevens puts it, “[t]he complexity of the French approach to the European Community has stemmed from the fact that it has always included elements of both Jean Monnet’s vision of the inevitable logic of greater Europe co-operation, and of Gaullist rhetoric. . . . The French response to the European Community illustrates the combination of ideological rhetoric and pragmatic, almost opportunistic, management that tends to constitute the formulation of policy.”43 France’s European diplomacy from 1951 to the early 1980s mixed pragmatism and vision, and retained a fair deal of autonomy of decision making. After that, the SEA, Germany’s unification, and the Maastricht and Amsterdam treaties narrowed its options. During the initial steps towards Germany’s unification, Mitterrand showed his reluctance. However, once convinced that German reunification was unavoidable, he rose to the challenge and, in a demonstration of exceptional partnership with Helmut Kohl, devised a bold response to this un-

34


precedented situation. Mitterrand understood that French diplomats had two alternatives. They could attempt a traditional state-centric response, perhaps by shifting alliances and creating a Franco-British front to counter Germany’s newfound economic and demographic superpower status. This nineteenth-century type of reaction would have sabotaged the very possibility of a united Europe and undermined three decades of Franco-German “privileged partnership.” Instead, France chose to “Europeanize Germany” through the Maastricht Treaty. This entailed a further deepening of the European construction, including a further Europeanization of monetary policy by accepting the single currency project.44 This choice signaled a historical watershed. If for a time Paris’ qualified collaboration with Europe seemed mostly the pursuit of French nationalism and Colbertisme by other means, with Maastricht the hour of reckoning had come. The Hour of Choice Maastricht itself was the result of a 10-year domestic evolution in the attitudes of French parties and citizens. So when was the watershed moment when French elites realized that European unification possessed a constraining impetus of its own? March 1983 can be regarded as the moment when they finally accepted the reality, if not every single implication, of France’s insertion in a global economic network. From 1981 to about 1982–1983, the French Socialists under Franç ois Mitterrand tried to build “socialism in a single country” through a series of Socialist-Keynesian policies including nationalizations, increased public spending and budget deficit. In fact, these reflationary measures, far from curing France’s economic ills, significantly aggravated its public deficit, undermined the value of the French currency, created further deterioration in the balance of trade and discredited the Socialist economic agenda. Massive capital flight from France also forced the government to abandon its anti-business stance. His Socialist utopia in shambles, Mitterrand turned to Europe as a substitute grand historical project, as Alan J. Dillingham makes plain.45 In March 1983, faced with a bulging budget deficit and persistent currency weakness, Mitterrand, after much soul-searching, decided against pulling the French franc out of the EMS. Unwaveringly, if grudgingly, he embraced budget balancing, currency stability and competitive austerity to restore France’s competitiveness in international markets. Whereas his pre-1981 rhetoric castigated private entrepreneurs, his post-1983 discourse celebrated them as “employers”— a useful social function in a time of growing unemployment. Investors and risktakers came to be celebrated as modern day adventurers in an otherwise dull and bureaucratic world. Mitterrand had, in effect, reconciled the French Socialists with private enterprise and capitalism—in fact, he had reconciled them with reality. Mitterrand’s change of heart was marked by the appointment of Jacques Delors, his former minister of the economy from 1981 to 1984, to head the Commission. Delors himself was animated with a bold vision of European unity, which met the needs of the times. As George Ross put it,


35

[s]omething extraordinary began to happen in the mid-1980s. The context around Community institutions began to change, the willingness of member states to contemplate European solutions to their problems increased and, most importantly, the European Commission came alive to reassert its claim as the “proposition force” for the EC’s forward movement. . . . [B]y the end of the 1980s the EC had once again become a central actor. It had experienced a phoenix-like revival, and a huge new push towards European integration was under way. . . . This momentum forward, strategized and overseen in large part by the Commission, took the Community from renewed market-building towards what might be called “state-building.”46

In order to withstand American and Japanese technological competition, Europeans sought closer economic ties. By the early 1990s, the negative integration of Europe—the removal of national impediments to the free flow of goods, services, capital and people—was well under way, while traditional European common policies, such as the CAP, no longer served French interests with the same efficiency as they had in the past. In turn, the failure of the Leftist economic agenda, combined with the worldwide impact of the fiscal conservatism and trade liberalization initiated by Ronald Reagan and Margaret Thatcher, led the French Conservatives to redefine their own economic options and to abandon their Colbertist tradition. This turnabout is evidenced by Prime Minister Jacques Chirac’s privatization program during the first cohabitation (1986–1988). Even though Chirac’s plans were cut short by the October 1987 market crash, there was no ideological turning back for French Conservatives. In the 1980s’ debate between “widening” vs. “deepening” Europe, Mitterrand chose the deepening of integration through the addition of monetary cooperation prior to any geographical broadening. By the mid-1990s, the effects of new common policies, especially the 1999 single currency deadline, made themselves felt.47 In 1980, Stanley Hoffmann highlighted the contrast “between an institutional system that has provided stability, continuity, and a great deal of efficiency in the functioning of the state, and a certain sense of sterility that results from the narrowness of the government class, the length of its power, a lack of imagination in shaping reforms that would match the considerable economic and social changes of the past thirty-five years.”48 However, by 1992, Roger Fauroux, former minister of industry, was able to declare that “young French graduates, contrary to the previous generations, are now fascinated by private entrepreneurship, and no longer by a career in public administration. In the last twenty years, a cultural revolution has happened for the French: They have caught up with the general European mentality.”49 The most dynamic among French citizens indeed caught up with Europe, but Europe moved faster than the French state; and as the next chapter will make clear, the French state could no longer postpone the overhaul of its institutional structures and policy-making procedures.

Chapter 2

Governmental Institutions and Culture: The Nation-State vs. European Institutions EU and French institutions matter because they reflect an evolving balance of power, influence procedures and shape policy outcomes. Gerhard Go¨ hler even says that “[p]olitical science is primarily concerned with institutions; questions of institutionalizing political order, of the legitimation of institutions, of their rise and decline have been the main subject of political thinking since its beginning.”1 Many of the Community’s powerful institutions—the Commission, the Council of Ministers, the Parliament and the European Court of Justice (ECJ)—were present at its inception. Others were created along the way. Some, like the European Council, the Tribunal of First Instance and the European Central Bank, have major policy implications, while others, like the Committee of the Regions, have a less significant role. Founding members committed themselves to “an ever closer union” and hence to a dynamic institutional process because, says George Ross, “[i]n contrast to ordinary international organizations, the EC was set up to contain a supranational ‘motor’ which would constantly press forward towards more integration.”2 The EU also enlarged its scope and means of action, and its common policies have deepened as much as they have widened. Community jurisdiction was initially restricted to four policy areas: CAP, transportation, competition and trade policies. The Council of Ministers’ jurisdiction used to be limited to trade and competition, budget, agriculture, fisheries and transportation. But today it has more specialized bodies: foreign relations, defense and security, justice and law enforcement issues, technological and industrial research, education, social and consumer affairs, public health and environment, telecommunications, culture, tourism, and so on. In addition, while originally the ECJ lacked the power to enforce its legal decisions, it slowly acquired more clout. For a long time, it seemed that the ECJ’s legislative output involved mostly technical, even esoteric, issues of mergers, monopolies, trade

38


barriers, direct and indirect subsidies and other trade and competition distortions. However, the extension of the Community’s competence since the SEA has widened the ECJ’s jurisdiction, and it is now shaping sensitive issues like immigration, gender equality, labor rights and anti-terrorism laws. Consequently, whereas only a handful of French governmental agencies originally participated in European policy making, starting in the late 1980s the number of agencies affected by regional integration expanded. In 1988, Alexandre Carnuletti, legal advisor to the French government for European issues, stated that “[t]oday more than 80% of [French] administrative bodies are involved in the preparation and implementation of community law.”3 As Anne-Marie Slaughter states, regional integration may then be construed as the partial transposition of state functions at a different, complementary, and at times “superior” institutional level:

The state is not disappearing, it is disaggregating into its separate, functionally distinct parts. These parts—courts, regulatory agencies, executives and even legislatures—are networking with their counterparts abroad, creating a dense web of relations that constitute a new, transgovernmental order. . . . Disaggregating the state into its functional components makes it possible to create networks of institutions engaged in a common enterprise even as they represent distinct national interests. Moreover, they can work with their subnational and supranational counterparts, creating a genuine new world order in which networked institutions perform the functions of a world government—legislation, administration, and adjudication—without the form.4

This polymorphous collaboration between the regional and national levels is especially important when it comes to the Commission. The Commission, a relatively small administrative body with only about 20,000 civil servants, a fourth of them involved in translation and interpretation, is smaller than, say, the French Ministry of Agriculture (about 30,000 strong) or the administration of the city of Madrid. It is officially the only EU institution to possess the right to initiate legislation, but its power regarding legislative implementation is almost non-existent. As Michelle Cini explains, “when it comes to street-level implementation, the Commission’s role is in fact a small one. Even before the subsidiarity principle, ‘actual’ implementation was very consciously left to national and subnational actors and their agents. The Commission’s role is thereby one limited to the supervision of implementation.”5 It can initiate and shape legislation and force member states to comply through action before the ECJ but has little implementation power of its own. In budgetary terms, the Commission’s influence is also modest. For the 1993–1999 period, the EU’s budget represented a mere 1.27 percent of the combined GDP of its member states, and on average only 2.3 percent of their public expenditures. The Commission’s operating budget itself accounted for only 4.6 percent of total EU expenditures; so it must rely on national administrations that are much more powerful in terms of personnel, budget and means to implement European laws.6 This emergence

Governmental Institutions and Culture

39

of multi-layered “policy networks” has thus redefined the institutional relationship between the EU and its members.7 These general considerations are reinforced by specific considerations pertaining to the very nature of the Fifth Republic. As Luc Rouban points out, “[t]he Fifth Republic presents itself as the creation of a particular politicoadministrative model. More than a theory of democracy, the Fifth Republic is above all a theory of the State.”8 France’s sometimes difficult relationship with the EU is largely due to its unitary political structure and state-centered political culture. Indeed, in her comparison of the impact of Europe on France, Germany and Great Britain, Vivien Schmidt observes that “[o]f the three major European powers, France has changed the most in response to the pressures of Europeanization: having undergone major economic and institutional transformation, it is now in the throes of a political crisis, in large measure because it has been unable to construct a coherent discourse capable of justifying those changes.” Accordingly, she argues that the EU, with its “quasi-federal structure” has a greater impact on unitary states such as France and Great Britain, than on a decentralized polity such as the German Federal Republic.9 Given these considerations, the purpose of this chapter is to show that the European polity has brought forth the transformation of France’s traditional institutional workings and a renewed conception of national interest and the means to attain it. France now tries to promote an enlarged conception of national interest including more input from sub-national interests and more lobbying at the European level. TRADITIONAL DECISION PATTERNS WITHIN THE FRENCH STATE France’s European policy making is dominated by the executive branch, which has the legal means to impose its will on the Parliament and to filter the input from political parties, pressure groups or public opinion. The 1958 Constitution contains both presidential and parliamentary elements, but it quickly evolved into a semi-presidential regime. Under its Titles II (especially Articles 8 through 16) and III (especially Article 21), the “two-headed” executive branch possesses both a strong presidency and a strong prime minister—a striking originality among Western democracies. The president’s status vis-a`-vis the prime minister and the cabinet (gouvernement) was reinforced by the November 1962 constitutional reform that provided for the direct election of the president by the people (Articles 6 and 7), ensuring presidential dominance of foreign policy. De Gaulle and his successors sometimes carried the institutional imbalance to such a point that John Keeler and Martin Shain justifiably speak of “hyperpresidentialism.”10 De Gaulle considered foreign policy his domaine re´ serve´ , an essential attribute of the presidency, not to be shared with Parliament, political parties, citizens or lobbies. The prime minister, despite considerable powers in domestic policy, usually takes a back seat to the president in international affairs. The practice of domaine re´ serve´ was never recognized in any legal text, but de

40


Gaulle’s charisma and presidential tradition have made it a central part of France’s diplomatic style. The only exception to this general rule is the three periods of cohabitation when a president and a prime minister from opposite political parties have co-managed France’s domestic and international affairs. France has experienced three periods of cohabitation: (1) between President Franç ois Mitterrand and Premier Jacques Chirac (March 1986–May 1988), (2) between the same Socialist president and another Gaullist prime minister, Edouard Balladur (March 1993–May 1995) and (3) between Gaullist President Jacques Chirac and Socialist Premier Lionel Jospin (June 1997–).11 The Fifth Republic retains one of the most distinctive features of parliamentary systems: the National Assembly can topple the cabinet by a motion of censure (a denial of confidence). In general, France’s constitutional architecture allows for parliamentary participation but precludes the Legislature from being a critical factor in foreign policy making. This is because the Constitution’s original intent was not to insure political and legal equilibrium between the executive and legislative branches of the government, but to obtain parlementarisme rationalise´ (i.e., to curtail legislative power). The principle of checks and balances was largely sacrificed to the Executive’s desire for efficiency. All the provisions under Title V (Articles 34–51) establish the Parliament’s secondary status. For instance, Articles 37 and 41 restrict the legislative domain, and attribute much legislative power to the Executive’s regulatory sphere. Article 38 grants the Executive wide legislative powers through regulatory ordinances. Article 40 curtails parliamentary initiatives by declaring inadmissible parliamentary bills and amendments “when their adoption would have as a consequence either a diminution of public revenue or the creation or increase of public expenditure.” Thus, according to John R. Frears’ perceptive assessment, “France remains a country where executive power remains almost totally immune from parliamentary scrutiny. . . . Vast areas of executive action and executive discretion remain closed to parliamentary inquiry because they do not give rise to legislation, and because parliamentary procedure as laid down in the constitution does not make it possible for the opposition to initiate regular debates.”12 The state looms large in the economic sphere also. As Jack Hayward shows, French capitalism took root in a culture that posited that the public interest stands above private interests and that the state has to regulate the three main features of capitalism: private property, competition and profit seeking. As a consequence, the “normative weight of national tradition was tilted in favour of state rather than market forces, and it was taken for granted that governments could decide what they wanted to happen and were able to make it happen provided they had the will.”13 Ezra Suleiman also underlines this “dilution” of the “distinction” between public and private, since French state officials act both as businessmen and economic organizers.14 France from 1945 to the late 1980s can then be described as a capitalist country that was neither entirely open to market forces nor totally closed to them and as a democratic polity where the Executive conducted much, if not all, of the country’s European and foreign


41

policy. As Anne Stevens explained in 1992: “France is not a corporatist political system. The state is not merely an equal partner with the groups that perform the main social and economic functions in society. . . . France, then, cannot be characterized as a centrally-planned, nor as a pluralistic, nor as a corporatist political system. Rather it is a mixed system in which market forces interact with civil society and with ‘autonomous governmental preferences.’ ”15 However, the Single Market and Maastricht brought so many changes that in 1995 William Safran could write that “[t]he policy process in France has become more pluralistic and incremental, the result of an interplay of a plurality of public and private preferences.” In turn, “the diversity of the business sector has been accompanied by three related symptoms: de´ se´ tatisation, de´ syndicalisation, and de´ planification (denationalization, the decline of unionization, and the reduction of planning).”16 However, from the late 1980s on, as the state and the economy opened themselves up to stronger European and global influence, many administrative bodies were still largely ill-prepared for the changes that the SEA and the Maastricht Treaty ushered in. Senior officials’ testimonies about the relative impermeability of the French bureaucracy to European influence until the 1990s abound. In 1992, Elisabeth Guigou, a 1974 ENA graduate and later minister of European affairs (October 1990–March 1993), offered a striking testimony concerning her colleagues’ franco-centric bias during the 1970s: At the Treasury Department in 1974, policymakers overlooked the Community out of complete arrogance. There was indeed a Europe Bureau, but its activities were on the fringe of events compared with the more “noble” priorities that headquarters had for its Africa bureau. The Director of the Treasury Department never went to Brussels, a city that was condescendingly conceded to the diplomats. On the other hand, the Director would frequently visit New York and Washington as well as our former African colonies. There was a flicker of interest in 1978, when the European monetary system began to develop. But no one really believed that it would survive.17

Josseline de Clausade, another senior official, offered a similar assessment in a 1991 official report: With the exception of the Ministry of Agriculture, whose agricultural policy for the last thirty years has been closely involved with the Community and which made a sustained effort with some of its bureaus, a focus on the Community or European interests has not really been a priority for the French administration. It is thus still too frequent that some bureaus develop regulations without concern for the already existing Community standards—with all the risks of incompatibility this entails. . . . The French administration . . . continues today to act and to legislate without really taking into consideration the existence of the other member-states.18

Thus, as Marie-Christine Kessler states, the comparative involvement of dominant civil servants organizations (grands corps) in European policy varied

42


greatly: “The grands corps, rather hostile or passive in the early years, have little by little become more active in Community policy.”19 The Ministries of Agriculture, Economy and Finances, Industry and Foreign Affairs were involved earlier and deeper in European policy making (because of the CAP, customs and competition policies) than, say, the Ministry of Education or the Ministry of the Interior (home security). A comprehensive view of needed institutional changes emerged only after 1992, but public administration reforms were sometime slow, as Caisse d’Amortissement de la Dette Sociale (CADES) chairman Benoıˆt Jolivet testifies. CADES is an ad hoc agency set up by the Ministry of Economy and Finance to administer the Remboursement de la Dette Sociale (RDS), a special tax earmarked for balancing the Social Security budget deficit. In a June 1997 interview with this author, Jolivet expressed his dismay that EU members still dealt with the welfare state crisis on essentially national terms, with little, if any, consideration for the international dimension of welfare issues.20 Until the mid-1990s, the French administration operated as a multi-tier system with respect to EU politics, with a core of EU specialists scattered in various ministries and governmental agencies and with the more or less “insular” bulk of the administrative apparatus lacking the expertise, time or opportunity to develop a more sophisticated understanding of the EU’s impact on national laws. This misinformation increased as one went down the pyramid of administrative power; the lack of information was greater in the regional and local state structures than in the Parisian power circles. This situation reinforced the perception of the EU as a distant, foreign entity, with little bearing on everyday life. It generated misunderstanding of the impact of European legislation on administrative business and prompted lawsuits initiated by frustrated citizens and businesses against the French administration for non-observance of EU laws and regulations. For Alexandre Carnuletti, France’s methods of training senior civil servants in the field of EU legislation were still piecemeal and ad hoc as recently as 1989. Agencies in charge of administrative planning and recruiting had only a vague idea of their needs in terms of personnel. The French educational system was remiss in three key areas: language instruction, comparative government and EU law. This was all the more damaging because French civil servants act both as administrative agents of the French state (or local governments) and as administrative agents of the EU. In addition, the intensification of European activities after the SEA, notably the multiplication of Community directives to complete the Single Market, had brought more agencies in direct contact with European legislation and processes. As Carnuletti observes, “[t]he trend today is for all ministries to be involved in one or more Community negotiations. In five years, governmental agencies not involved with European integration will be an exception.21 Thus, Europe had unevenly affected France’s bureaucratic apparatus and policy-making style. There was a direct and significant impact on the most internationally minded ministries and an uneven “trickle down” effect


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elsewhere. The traditional framework coexisted with growing pro-European attitudes. Consequently, says Frank Baumgartner, [n]o single policy style is ‘typical’ of France. . . . Even within France, it is possible to observe tremendous differences in how policies are made from one economic domain to another, from issue to issue, and over time. . . . Studies in agriculture, health care, science, nuclear power, industrial relations, local administration, and a variety of other issues have shown variation in policy style due to the different organization of state structures, economic slack, and organization of interests in each of these areas.22

As late as 1985, or one year shy of the signing of the SEA that would initiate momentous changes for French companies, the French system of higher education—which is public—had only six law schools offering post-graduate studies in Community law. This compares unfavorably with Germany, which had 16 such law schools at that time and Great Britain, which had 13. Only 13 universities in France offered interdisciplinary degrees in EC studies, as opposed to 36 in Germany and 29 in Great Britain. None of the best engineering schools, including the famed Ecole Normale Supe´ rieure and the Ecole Supe´ rieure des PTT, nor any school affiliated with the Ministry of Economy and Finances or the Ministry of Social Affairs, offered anything resembling a substantial curriculum in EU law. A 1992 report by the Conseil d’Etat (the government’s chief legal advisor for administrative law and overseer of French legislation) revealed the same situation at ENA and at the Regional Administrative Institutes (RAIs provide graduate-level education in law, finances and public administration to local government officials): Community law is almost totally absent from the curriculum of both ENA and the RAIs. In the Regional Administrative Institutes, study of EU law is limited to the structural funds—which hardly exhausts the subject. As for ENA, there is no attention given to these legal issues: Community law can be studied for three consecutive years only as part of a minor, and since 1988 only as part of a wider course in international issues, but not as a full-fledged topic. The next generation of civil servants, who will hold high positions of responsibility, may enter the administrative ranks without knowing anything about Community law.23

The Conseil d’Etat also reported that the permanent French delegation within the Comite´ des Repre´ sentants Permanents (COREPER) was only 35 strong. The legal services of the Ministry of Foreign Affairs, in charge of representing France before the ECJ, had only four full-time legal experts and one part-time expert. The 1990 Conseil d’Etat report to the government already warned of “the growing ascendency of Community norms” and of the need of the French administration to adjust to it. Apparently, little had been done between 1990 and 1992, between the pre- and the post-Maastricht administrative system.24

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CONSTITUTIONAL AND LEGAL ORDER The EU is a community of law whose instruments include directives, regulations and decisions (opinions and recommendations have no binding power) and whose legal activism is the most pervasive instrument of Community influence. Indeed, until the launching of the single currency in 1999, the EU, lacking a common police, army or foreign policy, was exclusively a legal construction. In this respect, Alan Cafruny and Carl Lankowski describe the European Court of Justice’s judicial action as “stealth federalism” and as “above and beyond the level of controversy” and argue that Brussels’ legislative impact is “largely hidden from view by use of the directive.” Granted, directives constitute “the EU’s dominant legal instrument” and “express a joint European decision in a national idiom.”25 Granted, European legislation remains impenetrable to the uninitiated, the non-lawyer layman, and can baffle even skilled practitioners. But Brussels’ impact is far from being “hidden from view.” For member states, the pervasiveness of EU legislation is an inescapable and growing phenomenon. In this respect, the 1992 Conseil d’Etat report states that “[o]ne out of six of the laws which the French have to follow are of Community origin. And this proportion is likely to increase rapidly if the current flood of regulations passed by the Commission and the Council continues.” The Conseil’s survey of French laws further indicates that in the 1990s, the Community introduced “more laws into our jurisdiction each year than the French government: about 54 percent vs. 46 percent.”26 This legislative influence makes itself felt the most in economic and financial domains, but no policy area is immune. Pierre Mazeaud, former chair of the National Assembly Legislative Committee and a prominent Gaullist leader, fears not so much a direct, “frontal” challenge to the constitutional order as “the insidious threat inadvertently included in the highly technical texts that abound in Community law.” He castigates the Community’s tendency to encroach on national privileges through “secondary law.” Community secondary law (droit de´ rive´ ) is the constant flow of legislation that comes not directly from the founding treaties but from their implementation, including less visible legal instruments such as the resolutions, communications, de´ libe´ rations and Beschlu¨ sse. Invocation of the principle of subsidiarity under Article 3B of the Maastricht Treaty often seems like a poor defense before the EU’s invasive legislative dynamism. Says Pierre Mazeaud, “[t]he current proliferation” of EU laws “assumes a character which, from the viewpoint of domestic law, could best be described as cancerous.”27 Technically speaking, EU law may be insidious but politically speaking it is crucial, as the following analyses on the changes to the Constitution, the legal order, the executive and legislative branches of government and the new definition of national interest will show.


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A Two-Tier Constitution The implications of European integration for the French constitutional order are profound. Since its enactment on October 4, 1958, the French Constitution has been modified no fewer than 11 times. Under Charles de Gaulle (1958– 1969), it was amended three times: in 1960 to form a vague “Community” with France’s former African colonies (Articles 85 and 86); on November 6, 1962, to provide for the direct election of the president through universal suffrage (Articles 6 and 7); and on December 30, 1963, to organize more efficient parliamentary sessions (Article 28). It was modified twice in the 1970s: on October 29, 1974, to address the issue of constitutional reviews of laws prior to their official promulgation (Article 61) and on June 18, 1976, for presidential campaign rules (Article 7). After 1992, it underwent six changes—three of them dealing with the implications of regional integration. On June 25, 1992, four articles dealing with the EU’s pooling of sovereignty (Articles 88-1 to 88-4) were added. On July 27, 1993, after a decade of political scandals, two articles were amended to reform the judiciary (Article 65) and to provide for the criminal liability of government officials (Article 68-1). On November 25, 1993, provisions for the inclusion of the Schengen agreements were made (Article 53-1). On August 4, 1995, the modified Articles 11, 28, 48, 49 and 51 facilitated the recourse to popular referendum and instituted a single, longer annual session for the French Parliament. March 1999 witnessed France’s third major constitutional adjustment to Europe (because of the Amsterdam Treaty) since 1992. Finally, the January 2000 amendments reformed the judiciary and introduced a constitutionally based form of affirmative action for women. The focus here will be on the 1992, 1993 and 1999 reforms. Maastricht challenged three notions central to traditional French identity: sovereignty, border control and citizenship. This treaty may be interpreted in many ways,28 but its pre-federal implications did not escape French constitutional scholars. As Joe¨ l Rideau argues, “[e]ven though the word ‘federal’ had not been inscribed in the Treaty on European Union, it seems indisputable that federal evolution underlies everything.”29 That is why early in 1992, 60 members of the Se´ nat, arguing that “the French constitutional judicial order is built around the very idea of national sovereignty,” challenged the treaty’s legality before the Constitutional Council by resorting to Article 54 of the Constitution, which states that “[i]f the Constitutional Council . . . declares that an international agreement contains a clause contrary to the Constitution, the authorization to ratify or approve this international commitment may be given only after amendment of the Constitution.” The Conseil Constitutionnel had already examined in 1970, 1971 and 1976 whether European integration challenged in any way national sovereignty as a central constitutional principle. In 1992, the Conseil ruled that the Maastricht Treaty contained no clause violating the Constitution. The Conseil Constitutionnel wisely stayed clear of the thorny question of the nature of the 1992 treaty. It did not rule whether it was a post-national structure, or

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“just” another international agreement, or whether it was a final compromise between the nation-state and Europe or just another step toward more integration. But its ruling means that this treaty is part of the French constitutional order. As a consequence, the government added four amendments (Articles 88-1 to 88-4) to the 1958 Constitution in a section entitled “On the European Communities and the European Union”(Title XV). Article 88-4 will be analyzed later in our discussion of the legislative branch. Articles 88-1 and 88-2 challenge French sovereignty and border control, while Article 88-3 addresses the issue of European citizenship. They are discussed below. Article 88-1 states that “[t]he Republic shall participate in the European Communities and in the European Union constituted by States that have freely chosen, by virtue of the treaties that have instituted these bodies, to exercise some of their powers in common.” This short, almost matter-of-fact addendum recognizes pooled sovereignty, on which Article 88-2 further elaborates: “On condition of reciprocity, and according to the procedures laid down in the Treaty on European Union signed on 7 February 1992, France shall agree to the transfer of powers necessary for the establishment of the European economic and monetary union as well as for the determination of rules relative to the crossing of the external borders of the member states of the European Community.” These lines allowed for the incorporation of the Schengen agreement into the French legal order. Youri Devuyst reminds us that “[c]omplementing the creation of the free movement of persons, the Schengen acquis is integrated in the EU via a Protocol. Schengen refers to the Agreement on the gradual abolition of checks at common borders of 14 June 1985 and 19 June 1990, signed by Belgium, Denmark, Germany, Greece, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal, Finland and Sweden.” Since Great Britain and Ireland declined to participate in this agreement, the other 13 countries engaged in closer cooperation in the domain of the free flow of persons. But the signatories themselves had “to accept the Schengen acquis in full.”30 Article 88-2 was reinforced by the November 25, 1993 amendment to the Constitution (Article 53-1), which further diminishes France’s freedom of maneuver in the domain of immigration policy. Anti-Maastricht forces of the Jacobin streak, such as Gaullists and Communists, and xenophobic groups, like the National Front, have specifically targeted this 1993 addendum, whose most important section states that “[t]he Republic may conclude, with the European states that are linked by commitments identical to its own in the matter of asylum and the protection of human rights and fundamental freedom, agreements determining the States’ respective competences in the examination of requests for asylum submitted to them.” Transfers of sovereignty, already well under way in the field of economic and monetary union, are thus broadened to home security issues. Further still, under the Amsterdam Treaty, immigration policy, still part of the “third pillar” of Justice and Home Affairs (JHA) and as such still under national control in the 1990s, will become part of “community” policies after 2004. Decisions within the Council of Ministers will be made on a qualified majority basis, and national


47

vetos will be made ineffective (Articles A, J, K and O). In December 1997, the Conseil Constitutionnel ruled that the ratification of the Amsterdam Treaty necessitated yet another constitutional reform. The Constitution was duly amended on January 18, 1999, and the amendments adopted by both houses (Assembly and Senate) gathered in Versailles in March 1999. In 2004, the Council should then be able to vote on a qualified majority basis (Article 189 B of the Maastricht Treaty) on a host of issues related to border crossing: border checks, visa procedures, asylum and illegal immigration policies. However, immigration in today’s France is a highly emotional and politically charged issue. Given the current economic and social malaise, and the recordhigh level of unemployment, any public debate on this topic may potentially weaken the cabinet and strengthen the xenophobic National Front. The narrow, disputed victory of pro-Maastricht forces in the September 1992 referendum brought hope to 1997–1998 anti-Amsterdam forces, which clamored for an “optout” clause for France on immigration policy. In 1998, Lionel Jospin, like Franç ois Mitterrand before him, “welcomed” the backing of the pro-Amsterdam Right against the left wing of his own Socialist party and his Communist allies. In 1998, as in 1992, the Gaullist party was divided between a nationalistic wing (Charles Pasqua) and pro-European elements (Edouard Balladur and Jacques Chirac). Gaullists then found themselves torn between their loyalty to President Chirac and their traditional opposition to supranationalism. Pro-European Gaullists allied with the moderate Right and Socialists, while anti-European Gaullists sided with the Communists and National Front. Pasqua finally broke with Chirac in the June 1999 European Parliament election when he created a dissenting, anti-EU Gaullist party. Article 8 (A–D) of the Maastricht Treaty further challenged Pasqua and likeminded souverainistes (defenders of French sovereignty) by recognizing a new category of citizens: EU citizens. In 1992, Article 88-3 transposed this new European norm in the French Constitution by addressing the right to vote and the eligibility of EU nationals in French municipal elections: “On condition of reciprocity, and according to the procedures laid down in the Treaty on European Union . . . the right to vote and of eligibility to stand in municipal elections may be granted only to citizens of the Union residing in France.” This flew in the face of French traditions, which closely tie nationality (membership in a political community) with citizenship (an array of rights and duties bestowed upon individuals by nationality). Article 3 of the 1958 constitution addresses these issues in no uncertain terms: “All French citizens of either sex, who have reached their majority and who enjoy civil and political rights, may vote under the conditions determined by law” (emphasis added). The traditional connection among nationhood, citizenship and the right to vote is henceforth altered. The Maastricht Treaty thus created a European citizenship long before a European nation was created. One symbol of this new situation is the European passport, with its burgundy cover and its text written in all eleven official languages of

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the Community. For Jean-Louis Quermonne, this document proves a steady but probably irreversible evolution toward a “European republic.”31 The EU is now an integral part, or maybe even the core, of the French constitutional order. For Henri Oberdorff, “our Constitution fully recognizes the specificity of European integration. France has constitutionally speaking become a member state of a greater whole. This adaptation of our Constitution will probably oblige the Constitutional Council to modify its jurisprudence in order to incorporate the consequences of European integration and to follow more closely the interpretations of the European Court of Justice.”32 A “dual Constitution” (Henri Oberdorff) or a “two-tier Constitution”(Joe¨ l Rideau) with elements of national sovereignty and of federalism has emerged.33 The European Court of Justice and the French Judicial Order Joint management of a growing number of common issues has now become routine, and this interconnection of decisional levels in Europe—some territorially based, like the member states and the Council of Ministers, others not territorially based, like the Commission—represents a shared exercise of national sovereignty. What follows then is a brief examination of the legal basis of EU laws’ superiority over national legislation, of the transposition of EC legislation in French law and of three examples of EU legal decisions affecting French policies. The Community law’s supremacy over national law has a clear basis in Article 189 of the Rome Treaty: In order to carry out their task, the Council and the Commission shall . . . make regulations, issue directives, make recommendations or deliver opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all member-states. A directive shall be binding, as to the result to be achieved, upon each member-state to which it is addressed, but shall leave to the national authorities the choice of form and methods. A decision shall be binding in its entirety upon those to whom it is addressed.

The Commission’s recommendations and opinions have no binding force but rather indicate the general philosophy that should inspire a national government’s actions in a specific policy area. Within Part Five (Community Institutions) of the Treaty of Rome, Section 4 (Articles 164 through 188) deals with the organization and powers of the European Court of Justice. Legal recourse before the ECJ against a faulty member state may be initiated by either the Commission (Article 169), or another member state (Article 170). The ECJ also reviews member states’ fulfillment of their legal obligations (Article 171) and “the legality of acts of the Council and the Commission other than recommendations and opinions” (Article 173). The ECJ gives “preliminary rulings concerning the interpretation of the Rome Treaty and the validity and interpretation


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of acts of the institutions of the Community” (Article 177). As the SEA and the Maastricht Treaty broadened Community competence, the ECJ’s jurisdiction extended significantly. (However, under Article L of the Maastricht Treaty, both Common Foreign and Security Policy [CFSP] and JHA do not fall in its jurisdiction because they remain intergovernmental policies.) The Court itself articulated early three principles establishing its legal authority. In the 1963 Van Gend en Loos case, it established the “direct effect principle” (principe d’application directe) whereby EU legislation penetrates national polities directly, with or without national transposition. This means that a French plaintiff may directly use a European directive or regulation in a French court of law. In Costa v. ENEL (1964), the Court established “supremacy” or, to use a milder term which the Court itself favors, “precedence” of Community law over national law: Should a conflict between a national legislation and European legislation develop, the latter always takes precedence. In addition, the principle of “immediacy” (imme´ diatete´ ) forbids national bureaucracies from delaying or altering European legal norms. The ECJ, in ruling after ruling, has consistently upheld the notion of the superiority of Community legislation over national legislation, be it the founding treaties, the primary Community law (“primary” or “original” in that it derives from the founding treaties), the “complementary” Community law (international agreements such as Schengen), and finally, “secondary” Community law (regulations, directives and decisions) based on Article 189 of the Rome Treaty. When the Community’s development was all but halted by the Luxembourg Compromise, the ECJ kept alive the notion of the Community as something more than just a trade alliance. The ECJ was instrumental in transforming the founding treaties and the ensuing legislation into binding transnational agreements. For Martin Shapiro, a treaty “among sovereign states was transformed through international law into constitutional and legal obligations directly binding on citizens. Moreover, these obligations took priority over conflicting legal obligations derived from the laws of the members. . . . [I]n a very real sense, the Court of Justice constituted the European Community.”34 Thanks to its procedures—majority voting system, secrecy of vote and non-publication of dissenting opinions—the ECJ is insulated from national allegiances and operates beyond the political reach of member states. However, the territorial (national) dimension of ECJ legislation does come into play in the implementation phase, since the Court’s decisions must be carried out by French judicial authorities. According to Anne-Marie Slaughter, [t]he most advanced form of judicial cooperation is a partnership between national courts and a supranational tribunal. In the European Union (EU), the European Court of Justice works with national courts when questions of European law overlap with national law. National courts refer cases up to the European Court, which issues an opinion and sends the case back to national courts; the supranational recommendation guides the national court’s decision. This cooperation marshals the power of domestic courts behind the judgment of a supranational tribunal. While the Treaty of Rome provides for this reference procedure, it is the courts that have transformed it into a judicial partnership.35

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Clearly, without Community law, Europe’s common policies would not work as well. But how did the ECJ become the arbitrator that it is today? Its 1963– 1964 decisions created the doctrines of direct effect, supremacy and immediacy, but these controversial rulings did not gain acceptance among national governments at the time. On the contrary, member states interpreted international law narrowly and technically. The list of the Court’s legal attributions in the Rome Treaty looks impressive, but in fact France expected the ECJ to use its clout to curb the Commission’s power—not to favor legal supranationalism. In addition, the very notion of the ECJ’s supremacy over national judiciaries was not included in any founding European treaty, so Paris applied the legal principle of lex posterior derogat legi priori (i.e., “the last law supercedes all previous laws”). For France to accept and enforce EU laws, both normative transposition (transposition) and administrative implementation (application) of EU legislation in the national framework were necessary. Normative Transposition Two phenomena explain how the ECJ was able to assert its jurisdiction over national courts. The first factor was judicial politics. In many countries, lower courts increasingly resorted to the ECJ’s preliminary ruling procedure (question pre´ judicielle) based on Article 177 of the Rome Treaty, and progressively embraced these ECJ rulings because of their professional competition with higher courts and also because this tactical maneuvering had few costs and many benefits for them—notably a higher professional visibility. On the other hand, higher courts were more reluctant to defer to the ECJ, since as national courts of last instance, they had much to lose in terms of judicial and political power. The ECJ welcomes this competitive dynamic between lower and higher courts as a means to expand its legal role within Europe. As Karen J. Alter shows, the ECJ’s strategy led to a “varied pattern . . . of acceptance and refusal by national courts of ECJ decisions and jurisdictional authority.”36 The resulting legal inconsistencies between lower and higher courts, and among national higher courts themselves, coupled with the need to regain legal coherence, explain the progressive acceptance of the ECJ’s judicial review authority by even the most reluctant national courts. In the French case, the Conseil d’Etat (the highest administrative court and the executive branch’s legal advisor) and the Conseil Constitutionnel (the highest constitutional court) held out longer than the Cour de Cassation (the highest court for civil and penal cases). The reasons for this discrepancy in adjusting to ECJ supremacy are simple: As the Executive’s advisor in legal matters, the Conseil d’Etat stood to lose more than the Cour de Cassation. The Conseil Constitutionnel, for its part, saw itself as the guardian of a Gaullist constitution based on national independence. The second reason behind the ECJ’s victory over national systems has to do with politicians’ inability and/or reluctance to challenge their own judiciary system. While in the 1960s and 1970s politicians were frustrating attempts at further economic integration, European law was quietly making headway within na-


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tional legal systems. Elected officials and senior civil servants tried in vain to “roll back” the wave of EC legislation. The famed 1979 Amendement Aurillac claimed to sanction all public officers, including judges, who would follow ECJ’s rulings when dissenting opinions were simultaneously voiced by French courts. Although adopted in the National Assembly, the Aurillac Amendment proved unenforceable and was killed by the Senate. Attempts by politicians and legislators to curb judiciary power were clearly perceived as anti-constitutional. In addition, the French Executive found it convenient to sidetrack parliamentary control by using European law as “a new layer of politics . . . when domestic channels of influence were closed.”37 Karen Alter identifies four factors that forced national acceptance of ECJ rulings. First, elected politicians had different time horizons from European judges: Working mostly in the short-term, they failed to grasp, or just dismissed, the long-term implications of the ECJ’s decisions. Their benign neglect was facilitated by the ECJ’s low-key, nonconfrontational approach: In some of their most consequential rulings in the 1960s and 1970s, European judges refrained from directly confronting member states on specific policy issues but stealthily used these cases to articulate the principles of European law that would later (in a politically more favorable environment) establish its superiority over national legislations. National politicians accepted the Court’s findings because they did not collide with national positions but also failed to challenge the legal reasoning behind these legal outcomes—the very reasoning that undermined their autonomy. In their tug-ofwar against the Luxembourg magistrates, national representatives won a number of battles over specific issues, but lost the war regarding the larger legal implications. Second, European politicians never presented a united front against the ECJ: Each country focused on its own legal issues, which deprived anti-ECJ forces of consistency of purpose. Third, pro-European Benelux countries easily accepted the ECJ’s authority because it equalized political power among nations. Fourth, national politicians dared not challenge the founding treaties on which the ECJ’s legitimacy rests.38 Administrative Implementation France has come a long way in its recognition of the EU’s judicial preeminence. One indicator of France’s judicial cooperation with the ECJ is the number of preliminary rulings French courts have solicited. According to Jonathan Golub, from 1972 to 1994, French judges requested no fewer than 486 “preliminary references” from the ECJ. This number compares favorably with Britain’s 186 and Italy’s 355, but also unfavorably with Germany’s 832.39 In his comparison of the French and British responses to integrative pressure, Robert Harmsen shows the contrast between yesterday’s opiniated defense of French judicial autonomy and today’s accelerated mutation: “Although the Cour de Cassation has demonstrated a functional complicity with respect to Community law . . . [f]or the Constitutional Council, this defence of national sovereignty has taken the form of a circumscribed compliance, cautiously managing the reception of

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Community law so as to limit its impact. The Conseil d’Etat, rather less circumspectly, has not shied away from direct non-compliance.” However, there was a reorientation of the highest courts’ legal thinking, since both public law jurisdictions have recently changed tack. . . . [T]he Constitutional Council and the Conseil d’Etat have recast the question of “integrity” of French law, construing it now primarily in terms of “influence” rather than “(non-)” compliance. In the case of the Constitutional Council, the switch is quite straightforward. The tentative emergence of a logic of “supranationality” would seem to indicate that a narrowly conceived defence of national sovereignty has been abandoned. . . . Where strategies of resistance long held sway, a critical dialogue is now slowly being opened.40

The superiority of Community law over national law was recognized both by the Cour de Cassation and by the Conseil d’Etat, although at a different pace and on different terms because, says Paul Fabian Mullen, of “the failure of the various French courts to adopt a system of judicial review in the immediate post-war period.” There long was “a reluctant partnership between national courts and the ECJ.” After initial reluctance, both the Conseil d’Etat and the Conseil Constitutionnel accepted the principle of the ECJ’s judicial review, paving the way for a 1975 watershed ruling by the Cour de Cassation. According to Paul Fabian Mullen, [i]n 1975, the Cour de Cassation . . . addressed the crucial question of whether an ordinary French law, subsequent to, but conflicting with, the law of the European Economic Community, should be denied implementation by French judges. The Cour ruled in favor of the European law, but demurely claimed that it was not exercising judicial review. Rather, the Cour stated that it was merely engaging in interpretation, a typical and normal function of judges. It found that the European law was a higher law and that it was natural to assign precedence to the higher law.41

After its 1975 Jacques Vabre landmark ruling, the Cour de Cassation did not distinguish between regulations and directives and reiterated its position in many domains, such as the prices of books and fuel, and taxation on motor vehicles. The Cour de Cassation also recognized the direct applicability of EC laws, which automatically supercede national administrative and legal measures, even in the absence of a formal procedure of legal transposition. In some instances, the Cour de Cassation even based its legal rulings directly on EC legislation. According to Marie-France Buffet-Tchakaloff, the first recourse by a French court of first instance to an ECJ’s preliminary ruling goes back to June 1965. The Cour de Cassation requested its first preliminary ruling in 1967 and frequently turned to the Luxembourg judges for judicial review, often requesting judicial guidance pertaining to substantial issues. On the other hand, the Conseil d’Etat “has been very slow to turn to the Court of Justice,” since it requested its first referral only in 1970.42 This court long held out against recognizing Community law, consulting the European judges only on narrowly technical


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issues. It resorted to the legal theory of the acte clair, declaring EU legislation to be sufficiently clear so as to avoid a referral to the ECJ. However, starting with its Nicolo ruling of October 20, 1989, this court recognized the primacy of EU founding treaties, regulations and directives. On the other hand, it simultaneously refrained from admitting the direct applicability of directives because, so its legal reasoning went, Article 189 of the Treaty of Rome is binding only in terms of the objectives to be reached. In this perspective, national authorities retain the right to choose the means and procedures of implementation of EU law in the national legal framework. The Conseil d’Etat interprets the obligation of the member state only in terms of results to be reached, and not in terms of similar implementation mechanisms across national borders. Interestingly, this opening of all French courts of last instance to outside judicial review parallels the novel judicial activism of the Conseil Constitutionnel within the domestic arena since the 1980s. Since the 1789 Revolution, the French legal order rested on two bases: statutory sovereignty and the prohibition of judicial review. But, says Alec Stone, since the 1980s there is a “judicialization” of policy making in France, with the Conseil Constitutionnel intervening more in issues of nationalization, privatizations, media policy, immigration and social policies.43 Indeed, Gary Marks observes that “regulatory initiative at national and European levels is increasingly intermeshed. In its 1992 report, the Conseil d’Etat estimated that the European Commission is consulted beforehand on 75 to 80 percent of French national legislation. Jacques Delors’ prediction that by the year 2000 about 80 percent of national economic and social legislation would be of Community origin has a solid base in reality.”44 Jacqueline Dutheil de la Roche`re is thus justified in saying that the ECJ’s jurisprudence “has revealed a limitation of the procedural and institutional autonomy of the member states.”45 Three Examples The ECJ now rules on sensitive issues such as state subsidies. Articles 92 and 93 of the Rome Treaty request member states to consult the Commission before granting financial aid to any national company or industry. Christian Lequesne states that “[u]ntil the mid-1980s, the French administration had not developed the habit of systematically checking with the Commission before granting subsidies to businesses.” However, with the completion of the SEA, “[t]he idea that Commission officials should be systematically informed about governmental subsidies, even though it may require preliminary negotiations regarding their amount, began to gain ground with the government.” The Commission decides on the amount considered and on the very principle of state subsidies, a cornerstone of Colbertisme. For Lequesne, this evolution testifies to the “growing degree of subordination of domestic public policy to the legal rules of Community actions.”46 In its January 4, 1989 ruling, the Conseil d’Etat even initiated a new policy of judicial review: It declined to consider any executive bill dealing with governmental subsidies that the executive branch had not previously presented to the Commission. This decision was made with a

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view toward insuring that the French government would conform to the proper consulting procedures and because, as Josseline de Clausade argues, “this ignorance of Community law . . . hurts France in many ways. Failure to notify the Commission of state subsidies, in application of Articles 92 and 93 of the EEC Treaty, can lead to legal action which would force the member state to seek reimbursement of the subsidies already granted. Such errors are all the more absurd as the Commission is not on principle opposed to state aids.”47 Another sensitive issue for the French civil service is the opening of administrative positions to non-French EU citizens. Until the 1980s, member states considered that in order to secure employment in their civil service, candidates had to be (or become) citizens. Article 48, Paragraph One of the Rome Treaty reads: “Freedom of movement for workers shall be secured within the Community by the end of the transitional period at best.” Its fourth paragraph, however, provides for a national loophole: “The provisions of this Article shall not apply to employment in the public service.” However, the ECJ gave an extensive and liberal interpretation to the first paragraph and a restrictive interpretation to the fourth paragraph. It ruled that this exception under 48-4 concerns only the administrative positions with a direct connection with the sovereign attributes of the state. This means that the French government can bar non-French citizens from entering core security activities: Diplomacy, defense, police, justice and fiscal administration. However, Article 48-4 may no longer be used to bar nonFrench EU nationals from working in the other areas of the French civil service; notably public transportation, public utility and telecommunication companies, post office, public hospitals, schools and universities. Public administration and civil service policies, long the member states’ private turf, are now considered by the ECJ part of its own judicial attributions. For Jean-Luc Bodiguel, this opening of the French administration to non-French nationals shows that the Commission considers workers and positions to be part of a wider, competitive market that should be open to all qualified candidates, regardless of their country of origin. This eases the free movement of workers within the Single Market area while questioning the French tradition of civil service.48 Josseline de Clausade then muses: How many local communities today are aware of the fact that in the future they will have to open part of their administration to EU citizens, as required by the Court of Justice of the European Union in its application of Article 48-4 of the EEC Treaty? . . . The Court has determined, in several judgements, that this derogation has to be strictly interpreted and concerns only positions which deal specifically with the public administration when it is invested with the prerogative of public power, or with the responsibility of safeguarding the general interests of the state.49

Accordingly, the concept that some tasks may be performed only by public administrations and/or companies for the sake of common interest is called drastically into question. This idea of service public has no foundation in the Rome


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Treaty, and the only indirect reference to it appears in Article 90-2. But since the SEA, the Commission uses Article 90 to dismantle national monopolies and public corporations. In the 1980s, former French state monopolies such as mail delivery and telephone services had to accept competition from private and foreign companies. In the late 1990s, Paris still defended its monopoly of railway transportation and partial monopoly of public utilities (gas and electricity), but policymakers, workers, unions and consumers are aware that their days are numbered. Lastly, until the early 1980s, the French government maintained control over the importation of crude oil and refined oil products and set minimum prices for retail sales of fuel. However, the Centres Leclerc, a chain of franchised supermarkets known for their bold pro-consumer initiatives, had been selling gas below these officially authorized prices. Their practice was challenged in domestic courts (the Toulouse Trade and Business Court) by mainstream distributors. The issue of the compatibility between the French system of price fixing and the Rome Treaty was then raised before the ECJ. According to Philippe Manin, the ECJ ruled that the French government’s “system of retail prices had effects equivalent to quantitative restrictions, because it prevented retail sales of gas at lower prices to the ultimate consumer, and, therefore, prevented importers from deriving any competitive advantage from imports of gas at lower prices.”50 The ECJ outlawed this kind of price regulation, which was subsequently abandoned by the French authorities. The ECJ and national courts have thus developed a complementary relationship, where the ECJ strengthens the national judiciary’s standing vis-a`-vis administrative power and where national courts enforce European law. Far from being a neutral observer of European integration, the ECJ promotes “an ever closer union,” and constrains national sovereignty. This may be why, according to Maria Mendrinou’s 1996 study, France falls rather in the category of “noncompliant” states.51

EXECUTIVE AND LEGISLATIVE BRANCHES Vivien Schmidt states that, of the three major European powers, France has changed the most in response to the pressures of Europeanization and that [b]y comparison, Great Britain and Germany have had to change relatively little: Great Britain anticipated many of the economic and institutional changes required by Europeanization and successfully resisted others, and Germany has until recently been able to avoid change due to its economic strength and its institutional organization. . . . [O]f the three countries, France has undergone the most significant institutional adaptation, weakened by the loss of executive authority and legislative power and the gain in judicial and subnational independence; undermined in its statist policy-making process by diminished government autonomy in formulation and flexibility in implementation; and disadvantaged in EU decision-making by its more conflictual culture.52

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As a consequence, this section focuses on the ways the executive and legislative branches participate in France’s European policy, and assesses how their involvement at the supranational policy-making level affects the domestic balance of power. The Executive Branch Jacques Delors’ 1985 White Paper for the completion of the Single Market led to the 1986 SEA; it involved no fewer than 282 directives due for implementation before January 1, 1993. This figure compares with a total of some 1,700 directives enacted by the EC since 1958. Clearly, the French government could not react in its usual empirical fashion to the SEA’s legislative tidal wave. The first adaptation was of a “vertical” nature. Within each ministry, a special unit was created (cellule europe´ enne), with the specific task of tackling European issues. The more complex “horizontal” adjustments were threefold. First, the French representation within COREPER in Brussels was somewhat beefed up. COREPER is mentioned in passing because it is a European institution more than a national one and because French participation within COREPER I and II does not differ significantly from the participation of other European countries. Second, the attributions of the Junior Ministry for European Affairs in Paris were strengthened. The Fourth Republic created this junior ministry (i.e., one which does not possess a full portfolio) in 1950. In 1958, de Gaulle terminated this pro-integration agency because he wanted to manage European affairs directly and on his own intergovernmental terms. In 1981, the ministry was reinstated by Franç ois Mitterrand. However, Chirac, in true Gaullist fashion, abolished it again in March 1986, and Mitterrand recreated it in May 1988. Today, this Ministe`re De´ le´ gue´ aux Affaires Europe´ ennes is accepted by all and placed under the authority of the Ministry of Foreign Affairs. However, until 1986, there existed no centralizing agency or streamlined mechanism to control the transposition of Community directives and regulations into national laws. Each ministry was responsible, within its own domain, for the transposition of European legislation into French laws, with no coordinating mechanisms. This made respect for deadlines for implementing EU legislation difficult, increased the risk of legal action against France for its inordinate delays in implementing Community decisions and kept French decision makers from developing a global perspective regarding the changes brought about by EU legislation and from devising strategies of coordination between the national and supranational levels. To deal with the SEA’s legislative inflation, then Prime Minister Jacques Chirac passed an administrative act on May 5, 1986, with the purpose of reinforcing the interministerial agency for EU issues, the Secre´ tariat ge´ ne´ ral du comite´ interministe´ riel (SGCI)—the third and most significant “horizontal” reform. The SGCI was first set up in 1948 to oversee the management of the Marshall Plan in France. It was in charge of the interministerial management of the 1951 ECSC and of the 1957 Common Market and Euratom, and in the 1990s was made


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responsible for the implementation of Title VI of the Maastricht Treaty (JHA). However, CFSP does not fall within its jurisdiction, largely due to the opposition from the Ministry of Foreign Affairs. This exception notwithstanding, its administrative responsibilities are essential. They include: (1) insuring interministerial coordination of French representatives in Brussels (Council of Ministers and COREPER); (2) organizing a smooth flow of information between the national level and the European level, mainly the Commission; (3) preparing interministerial position papers; (4) keeping the Parliament informed of governmental bills to the EU (in accordance with Article 88-4 of the constitution, as is explained further down); (5) following up on all ECJ cases involving France; and (6) maintaining a repository of EU legal documents on behalf of all French ministries and governmental agencies.53 This reform did not suffice, and Prime Minister Balladur enacted two more laws (January 25, 1990 and March 21, 1994) to increase administrative efficiency. In 1990, each ministry was made responsible for transposing EC law in its own domain of competence. This “departmentalization” was meant to insure greater accountability at the ministerial level. But the coordinating role of SGCI was also reinforced. Before negotiations in Brussels, each ministry submits to the SGCI a list of domestic laws and regulations likely to be affected by the upcoming negotiations. At this point, the SGCI identifies the “head ministry” (i.e., the one most affected by the potential legal changes). In order to avoid possible conflicts with EU legislation, this ministry must devise an e´ tude d’impact juridique, that is, a comprehensive list of national laws and regulations to be modified or abrogated. This legal brief must be turned in within one month to the SGCI, which forwards it to all governmental agencies involved and the Conseil d’Etat. The SGCI may then request that the Conseil give its legal opinion on the matter at hand. To avoid legal confusion and delays, the SGCI keeps a data bank of all Community directives already transposed and being transposed, which includes the means by which European laws are transposed— either through legislative action (Article 34 of the Constitution) or through administrative decrees (Article 37). The SGCI is responsible for the follow-up of the transposition of EU legislation. It sends the new directive to the prime minister’s coordinating office (SGG), to the head ministry and to all governmental agencies involved. Within three months of this official notification, the SGCI verifies that all departments have developed or are developing a timetable and a strategy for implementing this new piece of European legislation. After three months, the SGCI, the SGG and other agencies devise a final timetable and a set of procedures to implement this piece of legislation. The SGCI may ask the prime minister to arbitrate among diverging competing departments and interests (arbitrage). Significantly, the actors of the three successive cohabitations have carefully avoided disrupting this administrative machinery. France’s European commitment is too deep, and the interests at stake too important, to fall victim to domestic politicking. In many respects, cohabitations are almost non-events

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as far as France’s European diplomacy is concerned, which may explain why the literature on this topic is relatively rare. The Legislative Branch Parliamentary involvement in European affairs raises two issues: The power balance between the Parliament and the Executive in the definition of French policy vis-a`-vis Europe, and the rapport between the French Parliament and EU institutions. The French Parliament is bicameral. Members of the upper house (Se´ nat) are elected by an indirect voting system for six years. They tend to be moderate, even sedate, in tone and manners, politically conservative, and their function, which is often regarded as largely honorific, raises little interest among the French public. On the other hand, the Constitution gives wider powers to the lower house (Assemble´ e Nationale). Its members, the de´ pute´ s, are elected by direct suffrage for five years and are politically more assertive than the se´ nateurs. Although there exists a “legislative shuttle” between the two chambers to agree on common legislative texts, the Assemble´ e Nationale remains the Executive’s main interlocutor—hence our focus on this Assembly’s contribution with respect to Europe. In July 1979, both houses created a “Special Delegation for the European Union.” This innovation came in response to the direct election of the European Parliament (EP), which threatened to bypass the national legislature in its relationship with the French Executive and to weaken the insertion of the French Parliament within EC institutions. This reform was also motivated by another change. Until 1979, before the direct election of the EP, members of the National Assembly could become members of the EP. But after 1979, this “double mandate,” even if possible in certain cases, was far from being automatic because members of the European Parliament (MEPs) started to be elected through a distinct and separate ballot and because the Executive wanted to limit the EP’s influence on the French Legislature. There was also a general feeling that with the larger role played by the Commission, members of the French Parliament (MPs) ran the risk of becoming underinformed and marginalized. This was a real risk because of the growing legal workload done at the European level, because of the tilting of the political balance in favor of Brussels and because of the increasingly complex and technical nature of Community law, which demands a serious effort on the part of French MPs to stay abreast of EC legal developments. Until the late 1980s, the missions, means and overall input of the De´ le´ gations were fairly limited. MPs shared a tacit understanding with the cabinet that foreign policy was the president’s prerogative—but wanted to be better informed. As a consequence, the May 1990 Josselin Act provided that each De´ le´ gation be comprised of 36 MPs, with a view toward insuring a fair representation of political parties and standing legislative committees. They are appointed for the duration of the legislature. De´ pute´ s and se´ nateurs who are also MEPs can sit in this body. Although membership is not automatic, legis-


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lators involved with EU affairs tend to dominate the De´ le´ gations. Following Maastricht, the new Article 88-4 of the constitution strengthened the Parliament’s information and input by providing that “[t]he Government shall submit to the National Assembly and the Senate proposals for Community acts involving provisions of a legislative nature as soon as these have been conveyed to the Council of the Communities. During or out of session, resolutions may be voted in the framework of this article according to the procedures determined by the rules of each assembly.” Today the De´ le´ gation: • Examines all cabinet bills directed to the Council of Ministers in Brussels. The De´ le´ gation may present substantiated opinions regarding the French cabinet’s positions. Balladur’s June 29, 1994 “administrative act” states that the Parliament has exactly one month to take a position. During this time, French ministers are officially instructed not to discuss the text with their European counterparts and to oppose any action by the Council of Ministers on this particular piece of legislation. French officials may request a postponement of discussion of the said piece of legislation until after the French Parliament has had a chance to examine it. This procedure is comparable to the “scrutiny reserve” exercised by the House of Commons over the British cabinet’s proposed European legislative initiatives. If used, this re´ serve parlementaire reinforces ex ante democratic control over ministerial legislative initiatives. The De´ le´ gation may then request a plenary parliamentary debate and a vote on the proposed piece of legislation and thus influence France’s position within the Council. A 1996 report emanating from the De´ le´ gation states that the De´ le´ gation is “the originator of the great majority of the resolutions adopted by other legislative committees or during plenary parliamentary sessions. . . . As of March 26, 1996, of the 54 resolutions adopted by the National Assembly, 46—more than 85 percent—originated from a proposal submitted by the De´ le´ gation.”54 • Examines the Commission’s communications to the Council of Ministers, as well as the Commission’s Green and White Papers. • Informs French MPs by conveying EU-related information from EU institutions and French ministries. The De´ le´ gation draws the attention of the National Assembly’s standing legislative committees (such as Defense and Foreign Affairs, Finances, Legal Issues, Economic Affairs, Social Affairs, and Cultural Affairs) to important bills. Once negotiated in the Council of Ministers, the proposed piece of legislation is transmitted to the relevant legislative committee within the National Assembly. Depending on the recommendation by either a legislative committee or the De´ le´ gation, the legislative text agreed upon in Brussels is either adopted directly (without further discussion) or is debated in a plenary session for further amendments and final vote. • Requests the testimony from French ministers and high-ranking representatives of Community institutions, representatives of unions or business organizations, or French members of the specialized commissions of the EP. The De´ le´ gation is the seat of considerable fact-gathering activity. • Participates in the COSAC (Confe´ rences des organes spe´ cialise´ s dans les affaires communautaires), a gathering of about one hundred MPs from all member states’ parliaments, together with an EP delegation. These gatherings are held in Brussels, Luxembourg or other European capitals. Although included in the Amsterdam Treaty,

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the protocol concerning COSAC has had little effect. According to a 1997 De´ le´ gation report, “[t]he impact of the protocol remains modest. . . . [I]t does not carry, by itself, any guarantee of the effectiveness of the COSAC.”55 The COSAC, is in fact a “conference of Parliaments,” a forum to exchange opinions and information, which shuns further institutionalization because it does not want to compete with the European Parliament. It does not consider itself a second European house, since with the 1984 Spinelli report, the EP claimed for itself a status as legislator on an equal footing with the Council of Ministers.

A New Institutional Balance? For Christian Lequesne, “[w]hereas until 1992 the national Parliament represented only a marginal constraint for the French administration, the procedure of Article 88-4 has made it a vital part of the interministerial work.”56 The French Parliament is better informed of, and more included in, the executive branch’s European initiatives. It works harder on more legislative texts. Edith Cresson, former Minister for European Affairs (May 1988–October 1990) and later one of the two French Commissioners (1995–1999), considers French MPs to be the main source “of the official views needed by the government about the proceedings of Community negotiations.” However, as Jean-Luc Sauron points out, “[m]embers of Parliament have never shown any will to question the French institutional balance between the government and Parliament in the area of international negotiations. In 1979, 1990 and 1992, they merely sought to contribute to the government’s negotiating position.”57 John R. Frears’ 1981 observation concerning the junior status of the French legislature vis-a`-vis the cabinet still rings true today: “Whole areas of what in England would be called secondary legislation—for instance the implementation in national law of European Community Directives and Regulations—do not come before the French Parliament at all because it belongs to the ‘domaine du re´ glement.’ ” As John Frears observed in a later (1990) article, the French Parliament is a “loyal workhorse,” but a “poor watchdog.”58 Despite the French Parliament’s growing awareness of the European implication of its legislative initiatives, the traditional balance of power between the executive and the legislative branches goes unchallenged. There has even been an erosion of the Parliament’s status, both in the domestic arena, in relation to the Executive, and in the Community arena, in relation to the main European institutions, especially the Council of Ministers, the Commission and the European Parliament. French MPs suspect that the executive branch sometimes tries to “hide behind” Brussels, by claiming to be acting under EU pressure to impose its preferred policy orientation on the Parliament. This suspicion is often grounded in facts for budgetary and financial matters. Today, another preoccupation motivates French parliamentarians: What is the use of initiating national legislation, they reason, if it runs the danger of being struck down by the ECJ for non-conformity with European law? This self-aware search for ex ante com-


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patibility with European legislation demonstrates the extent to which the EU is internalized by French legislators. French lawmakers have accepted that the acquis communautaire—founding treaties, regulations, directives, decisions and ECJ rulings—bypasses national legislative bodies and that these laws do not need to be formally transposed to be the law of the land. The Parliament thus finds itself directly under the ECJ’s watchful eye. This situation is complicated by the fact that Commission directives have tended to become more numerous, detailed, and binding in terms of specific goals to be reached. Article 189 of the Rome Treaty stipulates that directives define policy goals to be reached and leave the implementation process itself up to the member states. This theoretical distribution of labor is not always respected in practice, as directives may be so detailed as to turn into virtual regulations. Often, directives no longer function as a legal framework within which member states’ lawmakers may freely operate but rather have become restrictive legal documents. In addition, the scrutiny reserve cannot always be respected, since it suspends France’s discussion of a particular text within the Council of Ministers for only one month—sometimes not enough time for the National Assembly to consider a particular bill. According to Robert Pandraud’s calculations, between December 1993 and February 1994, 52 bills of European origin were presented to the National Assembly. But as many as 19 (or 36 percent) had already been adopted by the Council of Ministers. This fait accompli made any attempts at parliamentary input futile: The Parliament is often informed ex post facto, after the fact, without any possibility of legislative control.59 What is more, the Conseil d’Etat, vigilant in its defense of the government’s prerogatives, demonstrates a restrictive interpretation of the bills that the SGCI forwards to it. According to Thibaud de Berranger, between 1992 and 1994, the SGCI forwarded 822 legal texts of European origin to the Conseil. Out of this number, only 226 texts—just 27 percent—were considered by the Conseil to be eligible for the National Assembly’s legal scrutiny. The rest were considered part of the executive administrative sphere (Article 37 of the Constitution) and hence outside the reach of the legislative branch (Article 34).60 In sum, Article 88-4 strengthens the Legislature’s legal and intellectual contributions, without translating into a gain of political power. In 1971, Michael Niblock observed that “France’s policy in the EEC context was a matter of presidential discretion and decision,” and John Frears drew a similar conclusion in 1990: “Executive power in France can do more or less as it likes.” In 1996, Franco Rizutto again echoed these words: “Parliament’s ability to scrutinise the activities of the Government in European affairs have [sic] not been greatly enhanced by the changes since 1992.”61 Although French legislators are on the whole more active than in the past, executive participation in a European level of decision making tends to worsen France’s institutional imbalance because of the cabinet’s maneuvering, the technical nature of European issues and the time constraints, which specialized parliamentary committees are often unable to meet. This imbalance is not, however, limited to the French case. With few

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exceptions—the Danish Folketing, the German Bundestag—many specialists agree that parliaments are left behind: They lost a historical opportunity to reassert themselves. TOWARD A NEW POLITICAL CULTURE Sovereignty and National Interest France’s weak domestic institutional checks and balances largely predate the emergence of the Community as a significant political influence on the French polity. On the other hand, left to grassroots initiatives, Europe’s unification would in all likelihood never have taken place. In 1992, Elisabeth Guigou, one of the main French negotiators of the Maastricht Treaty, pointed out that [f]or 45 years, we were used to creating Europe on the sly. Having been in charge of the administration which was dealing with these questions of European integration, I understood their complexity and technical nature, I knew the pride of the rare initiates able to see clearly in this opaque matter, to get one’s bearings in the codes, the rites and the Community jargon; and finally the repugnance the media had for a subject deemed boring and incomprehensible. Europe, it was well understood, was a matter for specialists.62

Since legislative and popular input into EC policy making has been minimal, what is really at stake with regard to the EU’s integrative pressure is not so much popular sovereignty as it is the sovereignty of the Executive. As a consequence, Paul Taylor’s observations about British sovereignty and the EU also hold true for France: The Executive “has squealed about the loss of sovereignty on behalf of both branches of government”—but it is its own power that it defended, not in any way, shape or form the Parliament’s. Taylor adds that democratic states the world over are increasingly constrained by economic, financial and budgetary considerations, so member states can “choose” between losing their freedom of maneuver to “amorphous (economic and financial) forces” and pooling it with Europe’s, thus regaining some sovereignty in the process.63 Thus, as Stanley Hoffmann argues, sovereignty is not synonymous with absolute control or autonomy. He first describes an “absolutist” conception of sovereignty, which, deeply entrenched in Jacobin culture, “led to a rejection of all the abandons and entrapments entailed by the infernal machine of the EC, with its treaties, its technocrats and its judges.” The epitome of this conception was de Gaulle’s belief that the nation-state is the building block of international relations and that international organizations (NATO, the UN, the Common Market) are artificial constructions whose membership should not be binding. But there also exists “a pragmatic and relative notion of sovereignty looked at not as an indivisible substance but as a bundle of competences that could be gradually pooled or transferred to common bodies, so as to substitute the efficiency of the whole to the inefficiency of the members.” Comparing sovereignty


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to an artichoke, he asks: After much peeling, when do you get at the heart of the “national artichoke” (i.e., to the heart of sovereignty, the last incompressible layer)?64 Behind this fundamental question lies another consideration: National and regional interests are not necessarily mutually incompatible. Their complementarity may rest on a common approach to common issues. In this respect, Wayne Sandholtz convincingly argues that “[m]embership in the EC has become part of the interest calculation for government and societal groups. In other words, the national interests of EC states do not have independent existence; they are not formed in a vacuum and then brought to Brussels. Those interests are defined and redefined in an international and institutional context that includes the EC.”65 The notion of territorial politics and policies has thus evolved so much since the SEA that France is switching from the Jacobin definition of national interest that emphasized the “national” to a vision of national interest that is much more inclusive of the European dimension. In contrast with the old tradition of aggregating and defining national interest in relatively autonomous and centralized fashion, French officials have over the last decades become more receptive to input from the civil society and have started lobbying Brussels at an early stage in the legislative process. Policy Definition Patterns and Forms of Post-Modern Authority Thus, “a quadruple decision making pattern,” to borrow Marie-Christine Kessler’s expression, characterizes EU policy making. This new matrix includes: (1) the EU’s inner decision-making patterns, (2) France’s domestic policy patterns, (3) a process of interest conciliation with other member states, and (4) a process of conciliation between the national and the Community levels.66 The formulation of French national interest is now more multi-layered, its decisional process more diffuse, and because of a watchful Commission and ECJ, the implementation process of Community legislation is more rigorous than in the past. The EU’s policy formulation is often the result of a cumulative process of micro-negotiations and micro-decisions by countless actors, public and private, over which the central government apparatus has little control. Despite recent reforms, the SGCI is unable to coordinate the myriad exchanges that French officials have with the Commission and with lobbies. Decisional patterns are more blurred than in the past and numerous parallel channels of influence on the policy-making process exist. The Commission and COREPER are surrounded by a growing network of private and semi-official experts, lobbyists, professional organizations and regional and interest representatives. According to Dusan Sidjanski, in the early 1990s there were 525 business lobbies active within EU institutions, and according to the Commission’s own estimate, there are about 3,000 lobbies with a total of 10,000 employees in Brussels.67 Regions, local governments, cities, unions and social and professional lobbies all vie for direct access to Commission and COREPER decision makers, sometimes by-

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passing the national level, sometimes working both at the national and the European level. The Commission itself long encouraged the development of such interest groups by recognizing their existence early. Among them were UNICE for industry, COPA for agriculture in 1958 and BFEC for banking in 1959. Today, among the most visible associations are the Confe´ de´ ration Europe´ enne des Syndicats (CES, a union lobby) and the European Roundtable of Industrialists (ERI, a corporate lobby). This “neocorporatist” development accelerated with the growth of the EU and was recognized by the Maastricht Treaty through the creation of the Committee of the Regions (Articles 189A–C), in which each of the five big European countries has 24 representatives. In 1991, Wolfgang Streeck and Philippe Schmitter observed “a shift away from the territorial-electoral-parliamentary realm of politics, toward more powerful mechanisms of functional representation of producer groups.” However, because interest representation in the EU has a short history and because it is fragmented, not integrated and “internally competitive,” it is more pluralist in nature than corporatist. These scholars even speak of an American-style form of “ ‘disjointed pluralism’ or ‘competitive federalism,’ organized over no less than three levels—regions, nation states and ‘Brussels.’ ”68 As Liesbet Hooghe and Gary Marks persuasively argue, central state apparatii have lost their former monopoly of interest representation and articulation of national interest.69 As a consequence, the French government tends to practice lobbying in Brussels at an early, preparatory phase of legislation making, since it is at that stage that the chances of influencing policy procedures and outcomes are the greatest. The sooner one intervenes in this multi-layered process, the greater the chance of being heard and having one’s input taken into consideration. For Michel Clamen, a professional French lobbyist for the sugar industry, lobbying EU institutions, notably the Commission, should not be narrowly construed as the opinionated promotion of one’s interest. Rather, it should be approached as an exchange of information and legal services with both COREPER and Commission representatives.70 Given the growing complexity of their professional responsibilities, Commission personnel welcome sensible legal and technical input from all parties involved, although business has a much better access than environmental and consumer lobbies. As Vivien Schmidt explains, “[d]ecisions that were formulated unilaterally in the past [at the national level] are now made at the EU level in consultation with member states. . . . As a result, businesses have gone from a system in which they had their say primarily at the implementation stage to one in which they also have input at the formulation stage when it comes to European regulations and directives.”71 Clamen also insists that the French government’s consultation of professional interests at the national level should be developed systematically and at an early stage in the preparation of any new piece of French legislation to be presented in Brussels. Otherwise, these interests groups may intervene at a latter phase, when French ministers have already made public their positions in the Council of Ministers. But at this stage in the game, it is too late for after-the-fact input to be considered by the French representa-


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tives, who have to jockey for the best compromise in Brussels and are constrained by their government’s instructions as well as by considerations of time and efficiency. To remedy this fragmentation, consultation tends to be carried out by specialized task forces within each ministry, with the SGCI insuring the coordination of intergovernmental work for both respect of deadlines and coherence of France’s position. The French government also tries to develop a system of information exchange and association with French MEPs. When consulted under the co-decision procedure, the Parliament delivers its advice in the form of legislative resolutions. The Commission then reexamines its initial proposal and in an overwhelming majority of cases—about 80 percent in the early 1990s— amends its first proposal by integrating parliamentary contributions. This amended proposal is then forwarded for adoption to the Council of Ministers, which can either adopt it as presented or reject it by a vote on a unanimous basis. It is easy to see why the French administration needs a coherent strategy here. France’s changing negotiating style within the EU parallels other domestic changes. What Henri Mendras calls France’s “second revolution” since the 1960s is characterized by the development of a sense of equality and individualism and a lessening of traditional, pre-1968 forms of social authority.72 French citizens desire more democratic transparency than some leaders are willing to concede—witness the innumerable judicial procedures against politicians since the mid-1980s for corruption and influence peddling. A neo-liberal (a` la John Locke), post-modern conception of the state is superceding the old Rousseauist vision based on formal and vertical lines of authority. Grandeur and prestige, the cornerstones of Gaullism, are out of touch with the democratic culture of our age. Instead, transparency, openness and accountability are the hallmarks of good governance. As Luc Rouban puts it, “[t]he notion of accountability tends to supplant the global legitimacy particular to the Jacobin state.”73 Criticism of the French elite system has become routine since 1968, especially since the persistent economic downturn and financial scandals of the 1980s. French popular expectations have changed faster than leaders’ managerial culture. Yesterday’s power was more hierarchical and vertical; but today’s society resembles a web, where communication, teamwork, participation and the search for consensual decisions are paramount. As Chapter 3 discusses next, this dispersion of the state power is especially apparent in economic policy making, formerly one of the chief attributes of the French state.

Chapter 3

Economic Policy: Colbertism vs. the Laissez Faire State The Fifth Republic long offered favorable conditions for the government to influence economic policy making, notably officials’ relative protection from parliamentary, judicial and democratic scrutiny, the educational homogeneity of senior leaders in government and public corporations, a trans-partisan technocratic culture and a social consensus against the laissez faire state. As the Harvard Business Review noted in 1991, the case for Colbertisme, dirigisme (state intervention in the economy through nationalizations of companies and subsidies) and protectionism was long an easy one to make in France, whereas economic liberalism, at least until the mid-1980s, lacked legitimacy.1 But, as Julius Friend shows, these traditional features are largely undermined by Europe: “France is attempting to cope with the readjustments arising from the abandonment of a state-guided economy, concomitant with the rise of a global economy.”2 Even after the Socialists’ conversion to economic realism in 1983 and the Right’s adoption of a privatization program in 1986, French liberalism remained qualified, and its acceptance was predicated upon the realization of noneconomic goals. Today, France’s neo-liberalism still retains a distinctively pro-state flavor. Given the above considerations, this chapter first considers the legal and political basis for the Commission’s regulatory powers, then proceeds to describe the divergence between the French and the EU administrative and economic cultures, and finally assesses France’s neo-Colbertisme in the late 1990s. THE COMMISSION’S REGULATORY POWERS Articles 81 to 97 of the Rome Treaty focus on competition, tax policies and legislative harmonization. Articles 85 to 88 establish the Commission’s powers

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of supervision with respect to member states’ competition policy, Article 91 bars dumping practices and Articles 92 to 94 address the charged issue of state aid. Articles 92 and 93 are of special importance. Article 92 states that except in a number of very specific cases provided for by the Treaty itself (social relief programs, natural disaster aid, protection of historical heritage or aid for underdeveloped regions), “any aid granted by a member-state or through state resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods shall . . . be incompatible with the common market.” Article 93 provides for enforcement mechanisms whereby the Commission can promote the Common Market’s level playing field. Finally, Articles 95 through 99 prohibit member states from levying special taxes on non-national goods. However, these seemingly liberal provisions, rather than describing the Commission’s original actual power, indicate its original potential for regulatory intervention. Because of the Luxembourg Compromise, Community legislation dealing with unfair national practices in the areas of competition, aid and tax policies was not fully enforceable until the SEA. Just as the ECJ had to undergo a process of gradual recognition by national authorities, so too did the Commission have to wait for politically propitious conditions to implement the Community’s liberal economic legislation. Indeed, the Commission became a central strategic actor only after Jacques Delors’ 1985 relaunch (relance) of the Single Market agenda. With the exception of farm subsidies, which fall under Directorate General (DG) VI’s jurisdiction, and transportation policy (DG VII), most of Europe’s competition policy is DG IV’s responsibility. Defined negatively, DV IV’s role consists of preventing businesses and governments from interfering with market mechanisms. Defined positively, DG IV’s mission consists in removing national impediments to free trade.3 What does it mean for French economic intervention? Speaking of France’s economic orientations, Michel Goyer contends that “the role performed by the process of European integration in the evolution of policy making in France . . . has been less than substantial. The Commission has not prevented French policymakers from trying to implement heroic policies in new high technology fields and the traditional patterns of state-nationalized firm interaction have been unaffected by the actions of DG IV.” Goyer further argues that the Commission’s impact has been “less than substantial,” for four reasons: • “[T]he Commission has always approved recapitalization of French national enterprises” (emphasis added). • “[T]he approval of state aid has not always been a one-shot deal” (witness Air France, a triple recipient, and Cre´ dit Lyonnais, a four-time recipient of state aid). • Public companies’ CEOs’ preferences have “always been for privatization once the financial health of the firm is restored.” • Day-to-day business management between the state and nationalized companies (managerial autonomy, payments of dividends and efforts toward financial health) has not been affected.4

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Goyer’s arguments should be addressed to demonstrate how much, in fact, the Commission affects France’s traditional economic policy orientations. To start with, Mitchell Smith reminds us that the “EEC Treaty leaves many details to be filled in” and that its “rules concerning Member State aid to industry are a product of the initial compromise between German liberalism and French wariness about opening markets and are integral to the EEC’s founding bargain. Thus the significance of Treaty Articles 92 and 93 and their precise implications have unfolded only over time.”5 In contrast to the pre–Single Market period, when national governments could easily erect non-tariff barriers to intraCommunity trade, since the mid-1980s, member states’ non-compliance with the DG IV’s regulations and the ECJ’s rulings has become more difficult and costlier. What Smith calls “the cost of defection” has risen sharply because: • First, the Commission enforces the “principle of equal treatment” (or “neutrality of rule”) whereby Community law applies equally to all members, regardless of their political weight. With Community regulations implemented in a non-preferential manner, political maneuvering by larger states is discouraged and often rendered ineffective. The Commission’s neutrality, in turn, has encouraged member states involved in disputes with DG IV to act as non-politically as possible and to adopt instead legal strategies. Member states are consequently more inclined to present their case within the guidelines laid out by Community law. • Second, the ECJ’s decisions have proved effective in backing up the DG IV’s liberalizing agenda. • Third, non-state actors that can initiate legal action with the ECJ, in case of nonobservance of Community legislation by state actors, strengthen the Commission’s power of scrutiny over member states’ non-compliance. Non-governmental actors thus reinforce the Commission’s position as an impartial enforcer of economic legislation. As a consequence, “[d]uring the past two decades, the European Commission has developed a rigorous regime of state aid control.”6

But what about Goyer’s argument that the Commission seldom opposes recapitalization of ailing public firms, that it even authorizes multiple rescue plans for the same company—as in the Air France and Cre´ dit Lyonnais cases? Mitchell Smith also refutes this line of reasoning. He points out that the Commission’s rate of rejection of state aid is not indicative of its overall influence in this area. The media, which shape the public’s perception of this issue, present a distorted picture of the Commission’s activities in this field: “Press coverage is outcomeoriented rather than process-oriented. . . . Furthermore, the media focuses on the large cases, such as Air France, Groupe Bull and Iberia, in which member state governments typically have most at stake.”7 Rather than focusing on the “outcome” (i.e., the rate of the Commission’s refusals measured against its approval of state aid), Smith suggests three different, more useful, criteria: Overall aid level, terms of approval in specific cases and changes in member states’ negotiating behavior. The Commission’s influence has permitted a “reduction of

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overall levels of state aid to industry during the past few years.” These reductions, often the result of highly technical compromises, may not always be noticed by the media. In addition, in return for their approval of some public aid, Commission officials have often secured substantial diminution of production capacity and structural reforms (consolidation, plant closure, deregulation, asset sharing) and thus have shaped national industrial structures. Finally, the media’s focus on the contentious cases hides from view the majority of cases, characterized by a complex, often highly technical give-and-take between national governments and the Commission. Whereas “a focus on negative decisions by the Commission suggests a zero-sum relationship between Commission capacities and member-state authority,” in reality, member states routinely negotiate aid packages with the Commission, and incorporate its preferences before making public announcements—thus helping to minimize the possibility of rejection by the Commission.8 In fact, Article 93-3 renders prior consultation obligatory. This multi-level process, concludes Smith, is so systematic that “a rejection of an aid package by the Commission is a measure of the policy-making failure of the member-state government, rather than a measure of the ferocity of the Commission’s commitment to reining in state aid.”9 It then appears that the Commission’s powers are stronger than what Goyer describes and that, indeed, they create a clash of economic and administrative cultures between the European Union’s economic liberalism and France’s Colbertism.

A CLASH OF ECONOMIC AND ADMINISTRATIVE CULTURES Colbertist Economic Culture While American mainstream parties never really questioned capitalism as the founding principle of the American way of life, in France, it was long approached with circumspection by all parties, albeit for varying reasons. As capitalism developed in the nineteenth century, many on the Right feared its emphasis on individual mobility, which fragments authority-based social institutions, undermines collective solidarity and promotes rootlessness and anomie. They denounced its anti-national implications. Capitalism’s emphasis on meritocracy and “earned” social status also undermined inherited wealth and the social order based on traditional authority. For the Left, capitalism was long synonymous with exploitative labor relations, unfair distribution of riches and confiscation of democratic power by corporate interests. French policymakers’ belief in the “invisible hand,” or spontaneous market harmony, was thus tenuous at best, while their fear of market dysfunctions ran deep. Thus, they tried to impose some sort of rationality on erratic market forces “from above” (i.e., through state intervention). In fact, Jacobinisme and dirigisme shared three overarching principles: centralization, or the definition of the common interest from above; nationalism, or the defense of national independence; and fear of social

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dislocation. French politicians were and still are skeptical about the market’s ability to insure the collective good as they define it. Distrustful of the private sector’s search for profit, they want to ensure through state supervision and regulation that long-term public benefits will not be sacrificed on the altar of private, shortsighted greed. This conception of the state as protector of the common good finds its best expression in the ideology of service public. Based on the idea that some economic activities are either too politically sensitive (nuclear energy), too socially important (mail delivery) or not profitable enough (public transportation in sparsely populated areas) to be left in the hands of private entrepreneurs, it provided the legal justification for the establishment of public companies and state monopolies. The French bureaucracy’s interventionism, though often cloaked in the noble mantle of service public, is sometimes, in reality, motivated by sheer bureaucratic rationale and the fact that some activities are cash cows, providing easy revenue for the profligate government—as in the case of SEITA, a tobacco company, which was privatized in 1993. One of the chief goals of the French public service is to provide minimum service to the public, regardless of holidays, weather conditions and labor relations. But this principle has not always been respected by public-sector unions, notably in the public transportation system, the Paris subway system (RATP) and the national railway system (SNCF). Public services (such as railway transportation or electric power distribution) are closely associated with the notion of public property (state ownership of the companies that perform such public services, such as SNCF for railways or EDF for public utilities), so service public is often presented as the French economic model by national authorities. It is associated with “mixed economy” (e´ conomie mixte), a mixture of private and public companies theoretically allowing for private and collective needs to be equally satisfied. As it supposedly balances legitimate private ownership and the search for profit with the exigencies of public interest, mixed economy claims to offer the best of both capitalism and socialism and is often presented by France’s policymakers and public policy analysts as the “national republican model.” Law professor Le´ on Duguit (1859–1928) who coined the expression service public, even contended that public service was the very justification for the existence of the central government. Modernizing French society in peaceful, democratic ways through enlightened governmental action has long been the core ideal of French technocrats, parties of the Left, and to a large extent, parties of the Right as well. The eighteenthcentury ideal of “the enlightened despot” was articulated by Enlightenment philosophers such as Voltaire as a wise, benevolent and all-powerful ruler acting with authority to serve society’s needs. This ideal found a novel incarnation in the Colbertist state as engineer of modernization. France’s top-down dirigiste approach allows the state to operate as the engineer of social and economic progress in order to avoid both crippling social conservatism and disruptive radical change. In a book published during the 1995 presidential campaign,

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Jacques Chirac presented himself as the defender of the French republican model of public service with these words: France enjoys a privilege envied by all the great nations of the world, including the United States: A strong State, served by an effective civil service. It took no fewer than fifteen centuries of turbulent events to create a State that finally united France by dominating special interests. For a French person, the notion of public service is inseparable from the State. . . . Nothing will be more precious to our compatriots, in the future, than the endurance of a coherent and impartial republican State.10

This mode`le re´ publicain posits an anti-minimalist, anti-liberal (anti–Adam Smith) definition of the state. In addition, French policymakers have a long tradition of interpreting Articles 85 through 94 of the EEC Treaty as a version of “managed liberalism” and not as “liberal liberalism.” For them, the Rome Treaty established economic competition as a means, not an end in itself. They insisted that the treaty instituted common (industrial) policies alongside competition policy. Competition policy within European borders was supposed to dispose of the weakest companies and industrial sectors in a socially non-disruptive and politically acceptable fashion, while industrial policy (including subsidies) was expected to help establish a European industrial base that could resist the pressure from international competition, notably from the United States. Competition was never viewed as an end in itself, but as one means among others, and its disruptive effects were supposed to be balanced by a common European industrial policy, akin to a European Colbertisme. The political reasoning underlying this economic stance is easy to follow. Economic losses dictated by market mechanisms are, politically speaking, highly visible. On the other hand, state intervention in the form of subsidies, tax exemptions and/or deferments, low-interest loans, public procurements and non-tariff barriers against foreign goods, even though they distort free competition and violate free market principles, often secure politically rewarding outcomes for policymakers. The cost of a plant closure is immediate and visible, and thus the temptation to blame political leaders for failing to defend French economic interests is great. As Herve´ Dumez and Alain Jeunemaıˆtre remind us, “state intervention in the market usually creates visible advantages while its costs are diffuse, invisible and spread over a period of time.”11 But industrial policy is not all backward-looking and does not wallow in nostalgia for the “good old days.” It serves several needs at once, as its desire to modernize is just as strong as its desire to avoid the disruptive influence of fading industries. That is why Elie Cohen, one of the best French specialists in national economic policy, identifies three different strategies within France’s industrial policy. First, the state can act as “brancardier,” literally “stretcherbearer,” or rescuer of declining industrial sectors, such as the shipbuilding, coal and steel, textile and shoe industries in the 1970s and 1980s. Economic policy is then essentially a social policy under another guise, and its main rationale is

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to accompany an industrial sector to its grave, while limiting the social damage as much as possible. Second, the state can act as a “master strategist” for French corporations, essentially functioning as an alternative and more lenient banker for firms and sectors in need. This role, even though embraced more resolutely by French authorities than by their European counterparts, is not original. However, governmental elites also promoted le Colbertisme high tech.12 This includes successful ventures such as the TGV (high speed train) and nuclear energy program, resounding commercial failures such as Concorde (aviation) and Bull (computer company) and mixed bags such as the Minitel (home computer). These grands projets involve high tech fields, substantial initial investments and high political stakes, and they symbolize France’s engineering wizardry and, in official eyes, its political grandeur. In a small number of cases, these industrial grand projects are conducted at the European level in association with other European countries. The most successful transnational ventures are certainly ArianeEspace and Airbus. Airbus was created in the early 1970s as a consortium of four European aviation companies—French, German and Italian, with later a Spanish partner—bent on challenging the United States’ near monopoly of civilian aircraft manufacturing. This consortium was born in uncertain and contested circumstances, since it benefited from considerable state aid, which the United States denounced as subsidies and the Europeans defended as reimbursable cash advances. Airbus is waging a highly visible commercial and technological battle against its American competitors, especially Boeing. As Airbus started from ground zero, for about a decade its existence posed little threat to the American giant. However, since its marked commercial successes beginning in the 1980s, the AmericanEuropean trade rivalry in the aircraft industry has had significant political and diplomatic ramifications. As Matthew Lynn explains, [f]or Americans, Boeing will always be in the right. Europeans, with the exception of those devotees of Americana sometimes found in Britain, will support Airbus. In a clash between continents, people root for the home team; the blinkers of nationalism come down, blinding the spectators to anything but the virtue of their own side. . . . More than pride is at stake here; the economic fate of continents hangs in the balance, with all that implies. Which is why compromise is impossible. And why the war continues without end and the battle rages without redemption. Too much is at stake to abandon the field now.13

Since the 1980s, France’s high tech grands projets have touched on new areas, such as telecommunications and television. France Te´ le´ com was born in 1984 partly as a reaction against Germany’s refusal to share cable technology, and the High Definition Television (HDTV) program was launched in the late 1980s to compete against Japanese technical superiority. Colbertism tries to organize international trade as much as domestic growth. The 1993 GATT debate, which focused on the issues of audiovisual (cinema)

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and agricultural trade, provides the most striking example to date of FrancoAmerican opposition in trade philosophies. Ever since the 1947 Blum-Byrnes agreement that first opened up the French market to U.S.-made films, France has led a vigorous campaign to subsidize and protect its home-grown audiovisual industry. National authorities, especially the Ministry of Culture, have long attempted to boost domestic film production by granting interest-free loans and paying royalties from TV and cinema showings to national directors, whether their films are commercial successes or flops. Bureaucratic barriers to foreign, especially U.S., films have also long been the rule. Special value-added taxes and a quota system imposed on non-French films on television, a strict regulation of the cable TV market and import quotas on Japanese VCRs have been some of the methods used. As Tyler Cowen shows, these legal and commercial dispositions are also backed by a strongly articulated justification for cultural protectionism and affirmation of national identity. French authorities do not want “French citizens to see American-made films on Japanese-made TVs.”14 While the United States denounces these measures as trade protectionism and argues in favor of unrestricted freedom of trade in a domain where its comparative advantage is uncontested, many Europeans, says Richard Pells, “feared that an open market for culture and ideas would not result in greater freedom and more choices for audiences. Rather, the market would simply be dominated by the largest and technologically most sophisticated media companies, most of which were American.”15 How Does the EU Affect Colbertism? Since the SEA, France’s economic policy and culture have transformed along five converging lines. The first major change is the privatization of public corporations, either for pragmatic reasons (the need to bring down the budget deficit), for ideological reasons (Chirac’s 1986 return to power) or because of external constraints (when the Commission predicates its acceptance of a financial rescue plan on the future privatization of the assisted company). The second change is the dismantling of state monopolies, notably in telecommunications, air transportation and energy production. The third change is the growing competitiveness of public companies, which tend to operate more as private ones. The fourth change is the progress of the Single Market, with the principle of non-distortion of trade and competition overshadowing state subsidies. The last change is the redefinition of the symbiotic relationship between the state and business. Privatization of Public Corporations France experienced three periods of nationalizations. The 1936 Front Populaire seized railway companies and some coal and steel companies for ideological reasons and also to steer France out of the Great Depression. In 1944–1945, de Gaulle followed suit to punish economic collaborators, weaken the far Left

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and initiate social change and economic modernization. In 1981–1982, Franç ois Mitterrand’s grand plans of public acquisition on behalf of the French state were justified by four goals: the fight against France’s crisis of de-industrialization, the need to reduce unemployment, the desire to fulfill electoral promises and the need to placate his Communist partners by gradually “breaking away from capitalism.”16 By 1982, the public industrial sector represented 21 percent of the gross national output, 23 percent of the industrial workforce, 28 percent of value-added production, 30 percent of exports and 49 percent of all industrial investments. The public sector represented 67 percent of the workforce in the energy industry, 66 percent in aeronautics, 50 percent in electronics and 25 percent in chemical industry. Thirty-nine banks representing about 90 percent of the active assets of the entire French banking industry came under state control.17 The state had thus become the most significant actor in the marketplace. Mitterrand fell vastly short of his economic goals, but his nationalizations were in many ways a mixed blessing. They worsened the budget deficit, permitted the retention of an artificially swollen workforce, drove French and foreign investment capital abroad and ended up costing the taxpayers dearly. But public recapitalization saved many companies that had been in the red since the 1970s from bankruptcy, and restructuring helped make them profitable—and attractive candidates for privatization. In 1986, influenced by Reaganism, Thatcherism and his own desire to undo what the Socialists had done, Prime Minister Chirac undertook a vast program of privatization, the first ever in French history. But this policy, un-Gaullist as it may appear, was not a commitment to liberalism. First, officials allowed only minimal penetration of French companies by outside interests by applying a 20 percent cap on foreign capital participation. The government also retained a strong voice in many companies’ strategic orientations by securing a “golden share” called noyau dur (hard core) which consisted of 20 to 30 percent of the company’s capital resting securely in the hands of a public company through which public authorities could make their opinion known. This resulted in a network of cross-participation, which insured that the government’s wishes would not be ignored. In addition, the selloff of public assets favored the Right’s political friends, and this “spoils system” became central to the struggle between Right and Left. In his 1988 presidential campaign, Franç ois Mitterrand advocated a policy of ni privatisation, ni nationalisation or “neither further privatizations nor further nationalizations.” This status quo came to be known derisively as ninisme, an odd-sounding name for an odd-looking and ultimately untenable policy. In fact, Socialist governments of the early 1990s discreetly sold slices of public companies, such as Total (an oil company whose public stake went down to only 5 percent of the capital), to make ends meet. As Vivien Schmidt states, [a]lthough the official policy of the Rocard government allowed neither privatization nor renationalization, the government either allowed for exceptions to the policy (in the cases

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of Pechiney and Renault) or, in an effort to generate new capital which it could not provide directly, it arranged for the recapitalization of industry through the trading of shares among nationalized banks and industries. The picture has been further complicated by the fact that, with the end of the ni-ni in Spring 1991, private and privatized companies can gain shares in nationalized companies up to a 49% interest.18

This stealth privatization meant that the Socialist government “allowed nationalized enterprises to float non-voting shares and to engage in the ‘illegal’ sale of subsidiaries (to which authorities turned a blind eye).”19 Upon the Right’s return to power in 1993, Gaullist Prime Minister Balladur perfected the system of cross-participation, with insurance giant UAP occupying a central role in this complicated web of interlocking proprietorship. But when UAP was itself privatized later in 1993, an era came to an end, signaling the end of the crossparticipation scheme and opening the way to many aggressive mergers and takeovers among French companies in the late 1990s, very much on the “AngloSaxon” model (TotalFina-Elf, AXA, Vivendi, Roussel-Hoechst). In a March 1999 issue, the Economist wrote that [t]he euro is expected to accelerate European cross-border deals. By creating the foundation of a pan-European market for capital, it exposes markets to stiffer competition. . . . So it seems few taboos are left in Europe’s once-sleepy banking business: banks are merging with each other, with insurers, fund managers and others like never before. Last year, the commercial-banking industry led all other sectors of business in the volume of mergers and acquisitions—there were $192 billion-worth of deals, more than a sixth of the total.20

While there are limits to this merger and acquisition philosophy, in April 1999 the Economist commented further that “[i]n a country that likes to sneer at Anglo-Saxon capitalism in its rawest form, the upheaval in French banking is shocking. Since Banque de Paris (BNP) launched a bid . . . for Socie´ te´ Ge´ ne´ rale and Paribas, two domestic rivals, France has been treated to a tooth-andnail takeover battle worthy of Wall Street at its most brutal.”21 Socialist Prime Minister Lionel Jospin (1997–), at first hostile to privatization, pledged to freeze his Conservative predecessor Alain Juppe´ ’s privatization program. He conceded that abandonment of state ownership would be decided on a case-by-case basis. But within a few months, he was forced to adopt a more pragmatic attitude in the face of the continuing removal of barriers within the European Union. For instance, the decision to privatize 25 percent of France Te´ le´ com in October 1997 was partly driven by the need to prepare the opening up of the EU telecom market in January 1999. A similar development took place with Cre´ dit Lyonnais. Competition commissioner Karel van Miert made his acceptance of a state aid package for this ailing bank contingent upon its full privatization by October 1999. In the case of GAN (an ailing insurance company), the government agreed in 1997 to privatize it by June 1998 in exchange for Brussels’ green light for a massive bail-out. It is thus clear that, as public

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companies are privatized, monopolies such as Te´ le´ com are also being dismantled. Dismantling Monopolies Article 127B of the Maastricht Treaty calls for a reduction of the government’s role in public infrastructures in the energy, telecommunication and transportation industries. This section will succinctly address these three areas in successive order. Electricite´ de France (EDF) long enjoyed a monopoly of electric power production and distribution. But in January 1996, the EU’s energy ministers agreed to liberalize the electricity market in order to allow large industrial customers to purchase their energy from providers other than EDF. In addition, European legislation decided to separate power generation and distribution. France’s rearguard battle against the pro-market tide was defeated by an October 23, 1997 ECJ decision. Basing the decision on Articles 30, 34, 37, 90 and 169 of the Rome Treaty, the European judges limited, without altogether forbidding, the concept of legal monopoly. While recognizing that EDF performs a public service, the Court also resorted to Article 37 to outlaw EDF’s monopoly of energy imports on French soil. In September 1998, Industry Minister Christian Pierret declared that France would allow competition in its energy market starting on February 19, 1999. In October 1998, the deregulation draft law was presented to the Parliament, which adopted it after heated debates. This progressive market opening was phased in, with a 25 percent opening in 1998, leading to a planned 33 percent by 2007. Interestingly, EDF has been preparing for this deregulation of European markets for more than 10 years by boosting its presence in foreign markets (in 1998 it supplied about 20 percent of Europe’s electric energy) and by aligning its services and tariffs with those of the most competitive European providers. Liberalization moves fast by French standards but not fast enough by Anglo-American standards. The Financial Times’ Paul Whitehead details the specifics of the opening of the French energy market, commenting that “[d]espite these concessions, there continues to be concern that the French proposals fall short of the required level of liberalisation.”22 In fact, Germany and Sweden opened their electricity market totally to European competition while Great Britain went even further by allowing all 15 British energy companies to operate beyond their regional limits and to sell electric power to households. In 1984, AT&T lost its monopoly and in Great Britain, British Telecom was privatized. In 1988, France-Te´ le´ com (FT) was set up as a separate company from the French Post Office, and while retaining its monopoly of distribution in France, it initiated a strategic alliance with Deutsche Telekom (itself privatized in November 1996). The market dynamic was thus inescapable, and FT saw its erstwhile monopoly challenged and dismantled by European legislation in 1993–1994. On January 1, 1998, the European telecommunication market was opened up to competition. The mobile phone market had already been liberalized in 1987 and the data transmission market in 1992. In 1998, compet-

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itors such as Cegetel/Vivendi and Bouygues (households), Siris (AT&T and Unisource, a European consortium) and Omnicom (businesses) started (rather slowly) to penetrate the telephone market. Since FT’s prices on local calls are competitive, the competition is focusing on the more lucrative sectors of the long-distance and international communications. As FT remains partially owned by the French state (63.6 percent in 1999, with an objective of 51 percent instead of the original 100 percent in 1988, and with 31.2 percent owned by the public, 3.2 percent owned by employees and 2.0 percent owned by Deutsche Telekom), an independent agency (Autorite´ de re´ gulation des te´ le´ communications, ART) was created in 1997 to oversee the development of the new market configuration. The creation of such independent regulatory agencies confirm Giandomenico Majone’s contention that “the regulation issue—what, how, and at what level of government to regulate—is the core of the compromise between the European Community and its member states that made the Internal Market programme possible.” Partial privatization thus does not mean total deregulation but rather regulation by other means (e.g., tax incentives rather than direct management). The example provided by France Te´ le´ com further validates Majone’s point that “[t]he emergence of a new style of regulation in Europe is a reaction to the failure of nationalization as a method of controlling and guiding the economy in the public interest.”23 In 1997, Communist leader Jean-Claude Gayssot was appointed minister of public transportation by Lionel Jospin to supervise the ailing Air France. This is sometimes interpreted as a preliminary step toward the opening of this company to private investors. In 1988, European countries decided to liberalize European air transportation, but the French authorities’ attempt to organize competition within a French framework ended as a fiasco. AOM, a carrier belonging to the public bank Cre´ dit Lyonnais, was set to compete against Air Inter, another public carrier, and a subsidiary of Air France. At the same time, the ministry of transportation added extra constraints on Air Inter (buying only French-made airplanes, retaining all employees), which seriously handicapped this company’s ability to compete. In addition, a number of political appointees with no real job in Air Inter were added to the company’s payroll. AOM practiced dumping on a grand scale without any reaction from French judicial authorities at the same time that Air France itself was forbidden by the European Commission (as part of its recapitalization deal) to intervene and help Air Inter, its subsidiary. The privatization process calls for four remarks. The first one deals with the public’s attitude. The successive privatization programs have been well received by the French public, which flocked to buy shares of the most lucrative companies. For instance, the privatization of France Te´ le´ com in October 1997 drew 3.8 million small shareholders. Starting with Chirac’s 1986–1988 neo-liberal endeavors, French citizens supported the development of the French stock exchange by generally rushing to buy the shares of newly independent companies. Whereas the 1981–1982 nationalization program created quite a political stir, the successive privatization programs since 1986 have provoked less con-

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troversy. Political parties and unions often disagree on the technicalities of the privatization (shares’ sale price, etc.) rather than on the principle itself. In the process, the public dichotomy between the state-centered capitalism (ownership of corporations, large number of public employees) and a more market-oriented version became very apparent. Today, French citizens still have to fully address the contradiction between their attachment to the state-as-protector (welfare state, high taxes, public employment, protective labor laws) and their support for the privatization programs (through their purchase of private capital). Second, since so many public companies (EDF, SNCF, FT, etc.) had been commercially successful abroad, it was more and more difficult for the French government to argue for defending its restricted access policy to the French market. The founding Republican principle of “public service” is now better served by private companies, a change which further erodes the legitimacy of the Colbertist state and its elites. Third, the ban on public support to industries decided by Brussels also forced French public corporations to find alliances with European and non-European private operators. In other words, privatization and globalization of erstwhile public companies went hand in hand. Finally, as of 1999, the French state was still saddled with a number of unprofitable public companies (Banque Hervet; Cre´ dit Foncier de France; SNPE, an ammunition company; EMC, a chemical company; and CGM, a maritime transportation company), which may be sold to the market only after the state makes them profitable again. The most profitable sectors and companies have long been emancipated from public control. Today, the public sector is composed of marginally profitable or lame-duck companies and of large, profitable companies (Air France, SNCF, PTT) whose strongly unionized labor force resists privatization. Their resistance is facilitated by their strategic positioning (transportation and mail industries) and by their ability to disrupt the economy in case of strike. However, labor policy in these and other public companies has steadily become more market oriented. Business Is Business—Private or Public After decades of playing second fiddle to governmental technocrats, French capitalists, both private and public, have matured at an accelerated pace since the mid-1980s and are coming of age. Once upon a time, a career in a public company meant a lifelong employment guarantee, relatively generous perks and often geographical stability. But today, the government has grown cautious and is reluctant to honor state employees’ demands for higher compensation and extensions of statutory tenure to all new hires. Abroad, French companies, public and private, have internationalized rapidly since the mid-1980s through a worldwide frenzy of acquisitions and at home by means of a rapid succession of mergers. These aggressive expansion plans necessitated more market-oriented labor policies. Starting somewhat prudently in the 1980s, but with more resolve in the 1990s, public companies’ CEOs broke away from decades of sometimes lax personnel management and now put a strong emphasis on competitiveness,

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profit and accountability. Although still not immune to a little bit of persuasion, especially from grandes e´ coles and ENA fellow alumni, they are more prone than in the past to resist political pressure. The idea that public enterprises may no longer serve as an artificial cushion against unemployment has gained ground. Today public companies are profit-seeking ventures bound by severe external constraints, and even state employees no longer view public ownership as a protection against swift labor adjustments to market changes. Union membership has always been low in France. Historically, French workers were skeptical about incremental changes, and today they still believe that pressure has to be exercised directly on government agents through street action and strikes rather than through institutional channels such as union participation. This underunionization of French labor prevented France from developing a truly social democratic system of labor-management relations, in contrast to Germany and Sweden, where representative and integrated labor associations have long negotiated with management by using pragmatic, not ideological, arguments. French unions have further weakened since rising unemployment of the 1970s. Today, France has the lowest union membership rate of all major industrial democracies in Europe. Workers’ associations are weak in the private sector but are disproportionately present in the civil service in general and public transportation companies in particular, a situation which heightens the likelihood of labor unrest in these areas. This has contributed to the ossification of some state agencies. Public employees’ unions are capable of vigorous action and, often backed by a public opinion which shares their concerns for employment security, can cause the government to put off or tone down reform plans, as Prime Minister Alain Juppe´ experienced in winter 1995 when his plans to trim down the Social Security budget deficit and to question SNCF’s special retirement programs were met with the strongest social protests France had experienced since 1968. This is why Socialists have often taken the precaution of entrusting politically volatile ministries to members of the Communist party. In 1988, Communist Anicet Le Pors was appointed minister of civil service and administrative reforms. Communist Jean-Claude Gayssot, minister of Transportation since 1997, has to deal with SNCF employees. When privatizating, Lionel Jospin was able to overcome labor opposition by proceeding incrementally, appointing negotiators known for their Socialist credentials, associating unions with the decision-making process, inviting them to review the bids, endorsing their preferences when they coincided at least broadly with the government’s plans and saving the most difficult cases—Air France, Renault—for the end. The shock to union activists and die-hard defenders of service public is thus softened by their Socialist political allies, who avoid the dreaded word “privatization” and instead call these operations “an opening up of capital.” By the same token, even the “Privatization Commission,” the regulatory agency in charge of overseeing the transfer of public companies to the private sector, was renamed “Transfers and Participation Assessment Commission.” However, this change of form does not mean that the substantive policy has changed: Jospin disposed in fast order (within two years of being elected) of many state assets,

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including CIC (a bank), GAN (an insurance company), AGF (another insurance company sold to the German giant Allianz), and withdrew the remainder of state participation in Usinor, Elf, Pechiney and Total. He also opened up the capital of formerly protected companies, such as France Te´ le´ com, Ae´ rospatiale, Thomson-CSF and Thomson-Multimedia. In 1998, he agreed with the Commission on a plan to privatize Cre´ dit Lyonnais in 1999 and even managed to sell off the Cre´ dit Foncier, a bank that was nationalized in 1946. Despite unions’ resistance to change, almost two decades of privatization and globalization have brought profound social transformation in French public companies. With its combination of massive layoffs and erosion of the erstwhile ironclad job security, this neo-liberal personnel policy raises the key issues of the future of both service public and the civil service, cornerstones of the French economic model, as is clear with the postal service (PTT) and France Te´ le´ com (FT). In 1991, PTT had 276,000 employees enjoying a lifetime employment guarantee. In 1997, it had only 254,000. Fewer postal workers are now hired as civil servants with lifetime tenure and more are hired on limited-duration contracts without job guarantee. Today, one PTT employee out of six falls under this contractuel status, which unions denounce as fostering vulnerability (pre´ carisation), especially since they are often assigned difficult tasks, such as night shifts, part-time work and on-call duties. PTT retirees are not always replaced, but their workload is redistributed among remaining employees, thereby augmenting state employees’ productivity (as well as motives for labor discontent). Under Community law, advertising through post office mail (publipostage) must be opened up to all European and international carriers in the year 2000. Already, U.S. companies such as Federal Express and United Parcel Service have been active in the lucrative French market for about a decade. They have thus forced the domestic post office to offer similar fast delivery services at competitive prices and generally to operate more as a private business. As labor relations remain volatile, PTT secured special treatment for its most lucrative accounts (i.e., those of large companies) in special facilities, which enjoy the latest technology and reliable personnel. The specter of a two-tier public system—a modern segment that competes in an open market in order to secure large companies’ accounts, a traditional segment for ordinary citizens and smaller businesses who cannot afford premium service—is now haunting the mail delivery industry in France. Yet in November 1996, following a FrancoGerman agreement, Paris secured an extension of the PTT’s monopoly (in the domains not already open to competition) until 2003. France Te´ le´ com is another company that is seeing its market monopoly and traditional labor policy simultaneously challenged. In the early 1990s, when news about the opening of the European telecommunications market to international competition and the privatization of FT began to surface, unions vowed to preserve the company’s advantageous labor status. But several strikes that marked the process of privatization between 1993 and 1996 were met with decreasing enthusiasm: In October 1993, 75 percent of FT employees went on

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Table 3.1 Evolution of Public Companies’ Workforce, 1984–1999

Source: Alain Lebaude, “La mutation sociale des entreprises publiques,” Le Monde, November 13, 1996, p. 1.

strike to protest the upcoming changes, 64 percent in 1995 and only 34 percent in 1996. The company is also shifting more personnel into its marketing department in order to boost its market share and encouraging early retirement, without new hiring, to lighten its payroll. SNCF provides another example of culture clash between public service and market demands. Because of its technical constraints and restrictive labor agreements, it is hard for SNCF, still a state monopoly in 2000, to abide by the “just in time” delivery requirements that have long driven private transportation companies, especially independent trucking companies with less labor protection, in their dealings with businesses. At both EDF and SNCF, public service cultures are opening up to a new market philosophy, hence their new emphasis on service to their clients.24 As Table 3.1 shows, there has been a steady decrease in the number of public employees and civil servants since the mid-1980s. In her 1997 book, European Public Service Companies and Social Relations, Yannick Moreau, a former senior advisor at the Ministry of Industry, examines the new conditions of public companies’ operations and puts forth four arguments. One, all companies must keep their costs down. Two, all companies must listen to and better serve their customers. Three, competition is here to stay, and little if any protection may be expected from public authorities. As a consequence, all companies must restructure, diversify their offerings and enter into strategic partnerships with foreign partners.25 These arguments may seem trite, except if one considers that they emanate from a Socialist and someone who spent her entire career as a Colbertiste civil servant. The Single Market Advances The dismantling of non-tariff barriers to trade and competition along with the termination of state hand outs satisfy the provisions of the SEA and herald the end of dirigisme. Karel van Miert, the DG IV commissioner (1995–1999) targeted France’s practices, notably in the case of Cre´ dit Lyonnais. In 1996, the loss-plagued public bank posted a $40 million profit and in 1997, a $200 million profit, a welcome departure from its recent record. However, considering that

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this financial institution received a $25 billion bail-out from the French taxpayers over several years, these profits are not a dramatic turnaround. Interestingly, France and the DG IV agree on the principle of the bank’s privatization but diverge on the procedures, volume and timetable for this operation. In March 1998, the Wall Street Journal plainly stated that the European Union’s patience with France’s continuing bailout of Credit Lyonnais is wearing thin. Only days ago EU competition chief Karel Van Miert was sharply critical of the bank for touting a five-fold increase in 1997 earnings, saying the result wasn’t very impressive at all, coming at the expense of illegal subsidies from the French government. The Commissioner can now legally force France to pony up a badly needed restructuring plan for the bank along with a timetable for its privatization.26

Manipulating France’s state budget to implement an ambitious economic policy was made impossible in the years leading up to the 1999 Maastricht deadline for adoption of the single currency by the obligation to drastically cut public expenses and after that date by the Stability and Growth Pact, which implies further “communautarization” (federalizing) of monetary and budgetary policies. This pact, agreed upon in Amsterdam in 1997, means that fiscal discipline supercedes industrial policy as traditionally understood by the French. It is thus clear, says Mairi Maclean, that as much as the privatization program, the termination of subsidies, “served as a mirror to a changing society.”27 In fact, in both Spain and France between 1981 and 1995, it was Socialist governments— not Conservative ones—that conducted industrial restructuring, downsizing, opening of markets and European unification in a capitalist framework. W. Rand Smith calls this costly policy The Left’s Dirty Job.28 This scholar argues that any government faces “four types of adjustment approaches.” Type A “stresses rapid market-driven adjustment that, far from avoiding or delaying adjustment, welcomes it.” This “market-embracing” view was clearly not embraced by either Spain or France. Type B “accepts the market as the final arbiter of restructuring strategy” but provides for “government intervention to effect an ‘orderly exit’ of workers whose jobs must be eliminated.” This “market-adapting” strategy was the one used, albeit with different methods and outcomes, by the two European neighbors. Between 1981 and 1983, France was also tempted to resort to Type C (“market-modifying”), which “[i]n exchange for labor’s compliance with restructuring measures . . . also seeks to restructure the institutions that govern capital and labor markets.” Finally, under Type D, adjustment “is delayed for as long as possible or avoided altogether. In the process, governments employ protectionist measures such as operating subsidies and discriminatory trade practices in order to favor domestic firms.” Because it is primarily concerned with labor stability, this “approach tends to favor nationalization of lame-duck businesses as an alternative to outright collapse.” It is easy to recognize that this “market-resisting” orientation is a familiar feature of both Colbertism and Mitterrand’s socialism.

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Despite its constant efforts, France has been unable to impose its industrial policy-making model on the Commission or to transpose it onto the European level. No other member state has backed Paris in its attempt to systematically develop European programs of industrial planning, and to this day, Airbus remains the only pan-European industrial project of global proportion. Jacques Delors himself was “greatly disappointed” with Europe’s lack of industrial strategy during his tenure as president of the Commission (1985–1995).29 The reasons for France’s failures to convince its European partners of the virtues of Colbertism are numerous. According to Elie Cohen, the concept of service public, which underlies such projects as the TGV, is totally foreign to the Commission, which pursues a segmented approach to economic policy making.30 Philippe Rollet concurs when he underlines the fact that European industrial policy is difficult to implement because its instruments (such as research aid, investment, regulation, trade policy) “are mostly part of other economic policies.” Coordinating the action of so many Commission Directorates (which are competitive and divided by nature and which operate along different parameters) around a common policy has proven effectively impossible. Thus, says Rollet, there are “varied European actions” in several domains but no overall European industrial strategy.31 Lacking cultural and institutional homogeneity, deprived of the sense of continuity that so strongly inspires French elites, animated with a different vision of the public good, internally competitive and open to the contradictory influence of 15 member states, the Commission is not a venue for France to advance its Colbertist conceptions. In addition, the Commission sees the completion of the Single Market and the removal of national impediments to trade as its main contribution to a panEuropean industrial restructuring. The European project seen from Great Britain, Germany and the Netherlands is more liberal (in the Adam Smith sense of the word) than Colbertiste, and these political divergences among European leaders go a long way toward explaining the lack of a European industrial strategy. From 1986 to the early 1990s (Objective 1992), the Commission’s energy was concentrated on the liberalization and deregulation of European markets, and from the 1992 Maastricht Treaty until 1999, it was absorbed by the completion of the Euro project. During the same period, the persistent unemployment (which diverted public resources for unemployment relief) and convergence criteria requirements curtailed governments’ ability to implement Colbertism through budgetary instruments. While Anand Menon and Jack Hayward simply argue that instead of a European industrial policy what has emerged is a patchwork of intergovernmental cooperation, Elie Cohen goes a step further by contending that the European union has been but a “decompression chamber” in the adaptation of French national capitalism to global competition; and that the “current crisis of the European idea is the inevitable consequence of the resignation of national governments before their own incapacity to explain the conditions of modernization to public opinion.”32

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State and Business: New Policy-Making Relations As Vivien Schmidt shows, the government’s former capacity to decide from a dominant position within the comfortable confines of a national framework has been significantly curtailed by European legislation, while at the same time businesses have gained direct access to EU policymakers, thus often bypassing the national level.33 At the policy definition stage, the three previous strategies used by the French government and businesses in economic decision making (co-decision, confrontation and accommodation) have been largely replaced by a multi-level governance (MLG) system including the Commission, the European Parliament, the ECJ, French business and social lobbies, plus 14 other member states and their lobbies. The French government is just one of many actors in a complicated network and hence is seldom the key decision maker. At the implementation stage, says Schmidt, the once selective enforcement of economic legislation by the French government, which often saw fit to grant exceptions to some businesses for politically expedient reasons, has been replaced by the uniform, exception-adverse implementation of Community legislation under the watchful eyes of both the Commission and the European Court of Justice. Table 3.2 summarizes the contrasts between France’s traditional policy-making style and the new decision-making style under the MLG system. Because of its close association with the state, France’s traditional economic system was sometimes called “capitalism without capitalists.” As many companies turned to the state or public banks rather than to more demanding private banks or international financial markets for financing, this “capitalism without capitalists” was also considered a “capitalism without capital.” But the post1983 period witnessed a steady delegitimation of this statist tradition and a concomitant rehabilitation of business. French public opinion, once suspicious of (in the case of the Right) or hostile to (the Left) capitalism, has matured considerably, even if old habits die hard. For instance, even though nationalizations have been thoroughly disqualified as an instrument of economic policy, privatizations are not pursued on their own merit but rather because of budgetary constraints because the pressure to privatize is too strong and the cost for failing to abide by the Commission’s regulations too dear. As Vivien Schmidt sums up, “French economic leadership is a pale shadow of what is once was.”34 France’s economic policy has thus become the art of the possible, rather than a grand alternative to capitalism. Today, there is a growing discrepancy between the government’s aspirations to influence domestic economic actors through neoColbertism and managed trade and its ability to effectively articulate and enforce a coherent economic policy. As Vivien Schmidt aptly comments, the French state has not really given up its position; rather it has adopted a different role and strategy so as to establish a kind of “market-oriented dirigisme.”35 In other words, the state is not abdicating, it is redefining its stance. As Emmanuel Godin points out, “[e]ach state can sift through and restructure the consequences of this globalization according to many factors.”36 Among these factors are the

Table 3.2 From National to European Decisional Framework

Sources: Adapted from Vivien A. Schmidt, “Loosening the Ties that Bind: The Impact of European Integration on French Government and Its Relationship to Business,” Journal of Common Market Studies, June 1996, Vol. 43(2), pp. 223–54; “Running on Empty: The End of Dirigisme in French Economic Leadership,” Modern and Contemporary France, May 1997, Vol. 5(2), pp. 229–41.

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public preference regarding the role of the state and the rapport between the public sphere and the private sphere. In the 1980s, Margaret Thatcher’s brand of liberalism envisioned a radically different society and vigorously “rolled back” the state in economic matters. Thatcherism is more doctrinaire than French liberalism, which seeks to preserve “French exceptionalism.” As Godin argues, neither the French Right nor the Left have been able to really internalize economic liberalism and articulate it in a coherent political discourse. Economic liberalism is instrumentalized as a managerial tool rather than an end in itself and serves to insure France’s modernization. It is used to reestablish the legitimacy of the state by taking on the task which the embattled Colbertisme assumed until the early 1980s. For instance, Jacques Chirac’s 1986–1988 privatization program was dictated by political circumstances rather than by deeply held convictions, as the social democratic themes he later developed during his 1995 presidential campaign show. Chirac is not alone in his dreams of a traditional social democratic society. In fact, many economic journalists from Le Monde, France’s leading intellectual daily paper, argue that there is enough “room to maneuver” within the capitalist system to allow for state intervention.37 As a consequence, in 1997–1998: • 25 percent of the French workforce was still employed, directly or indirectly, by the government. • Government expenditures represented 52 percent of the French GDP (as compared to 37 percent for Great Britain or 33 percent for Japan). • Unemployment compensation was structured in such a way as to partly discourage job seekers from accepting minimum wage positions. • State taxes on lower salaries were still so high that they often discouraged employers from hiring new employees. France’s average wedge (i.e., the sum of employees’ and employers’ social security contributions and personal income tax as a percentage of gross labor income) has been found by an 1997 OECD survey to be in the top three among all OECD industrialized nations. With close to 50 percent, France’s average wedge is well above the OECD’s mean wedge (32 percent). In other words, the cost of French labor is too high. As a consequence, companies either put off their plans to expand their activity, or delocalize, especially to nearby Great Britain, which enjoys a wedge of just 28 percent, or Portugal, which has a wedge of 30 percent. (In addition, Britain did not have minimum wage legislation until 1998).38

Until the mid-1980s, most senior civil servants resented the Commission’s intervention in economic matters: They often equated EC economic legislation with anti-national activism. But since the early 1990s, the once all-powerful ministries (economy and finances, budget, industry) have more widely accepted a realistic view of the limits of their own policy abilities. They welcome the Community’s decisions as a way to disengage the state from dying industries, to abandon its financial commitment to lame-duck companies and to force politically unpopular decisions on workers and unions. Neo-realist scholars such

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Table 3.3 From Traditional Colbertism to Neo-Colbertism

as Andrew Moravcsik have shown how this “surrender” to Community decisions, which apparently weakens member states, in fact serves their needs, as it generates desired outcomes without the associated political costs. For Moravcsik, the nation-state adjusts to new external constraints without abandoning its essential prerogatives.39 Vivien Schmidt reaches the same conclusion: “The state’s colonization of business . . . means that there remains a single interpenetrating elite setting the course of the French economy. As a result, the retreat of the state has not brought the end of state influence over business, only a different, and more modern kind that mirrors the modernization and internationalization of French business itself.”40 Table 3.3 summarizes the transitional changes between traditional Colbertism and neo-Colbertism. French culture is more business-friendly today than it was during the prosperous years before 1973, when the government did not have to confront double-digit unemployment. What Laurent Me´ nie`re wrote in 1993 still rings true today: “The French are discovering a State which is at once transformed and strangely identical to its old self.”41 The main parties of the Right (the moderate UDF and the Gaullist RPR party) and the Left (the Socialist party), despite occasional proclamations to the contrary, which mostly serve to placate their irate electorate, have all embraced pre-federal monetarist European policies. It is then clear that French policymakers will for some time still keep arguing in favor of several capitalistic models and attempt to reconcile the state and the market, Colbertism and liberalism.

Chapter 4

Social Policy: The Welfare State against the Constraints of Convergence The best-known European pioneer of welfare legislation is German chancellor Otto von Bismarck (1815–1898) who sought to counterbalance the influence of the German Socialist party over the industrial proletariat by enacting progressive labor laws destined to gain the loyalty of the working class to the Hohenzollern dynasty. His 1880s legislation was aimed at protecting industrial workers’ standard of living rather than equalizing wealth distribution in a German society that remained strongly hierarchical. His was a social legislation enacted by a conservative government in an attempt to win the allegiance of workers away from the Marxist party, unions and the Catholic Church. However, France adopted social legislation later than Germany. There are five reasons for this historical discrepancy. First, the 1791 Le Chapelier Bill disbanded all professional associations, notably the guilds, those medieval organizations of craftsmen that had closely regulated the professions, apprenticeship procedures and conditions of entrance into the trade, technical standards and other practices. Revolutionary legislators, many from the rising bourgeoisie, considered workers’ organizations and the right to strike as obstacles to the bourgeoisie’s need for a workforce that would be as little organized as possible. They also considered that “intermediate bodies” between the people and their elected representatives might foster social dissension. Second, the organized labor movement suffered a major setback in 1871. The bitter struggle pitting the French proletariat against the bourgeoisie played itself out in many revolutionary outbursts (1830–1832, twice in 1848) and culminated in the 1871 Commune, when a coalition of leftwing Parisian patriots seized control of the capital, which was then besieged by Prussian troops under Bismarck’s control, and forced their political enemies, the socially conservative Republicans, to establish their headquarters in nearby Versailles. Radical Communards pursued both a Socialist revolution and the con-

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tinuation of the war against William II’s army, but Versaillais wanted immediate peace with Germany and the social status quo, both in order to consolidate their grip on power. The conservative forces got the upper hand and conducted a merciless repression that crippled the workers’ movement for over a decade. The Third Republic, built on the ruins of the Commune, would be anti-German, anti-Socialist and socially conservative. The Third Republic’s class structure also explains the late emergence of public welfare legislation. French industrialization developed at a slower pace than in neighboring England and Germany, thus allowing the survival of a large group of land-owning farmers and small entrepreneurs who did not look kindly on social legislation for the urban proletariat. Independent farmers feared the creation of a “parasitical” urban class bent on destroying private property, and business and factory owners favored nonunionized employees, whom they could dominate more easily. And all feared higher taxes to pay for social benefits. As John Ambler explains, [u]nsurprisingly, attitudes tended to reflect economic interests. The petty bourgeoisie was particularly numerous in France. In the 1901 French census, 8 million people classified themselves as patrons, or owners of business, compared to 11 million workers and 7 million artisans. Small businessmen and property holders were strongly represented in centers of political power, particularly in the Senate, which overrepresented rural and small-town France and which regularly weakened or struck down social legislation passed by the (more progressive) Chamber.1

Fourth, after the Commune, the French labor movement was divided over the proper course of action vis-a`-vis capitalism. Followers of Jean Jaure`s, a moderate Socialist leader, favored incremental changes to improve workers’ conditions and, while expecting the replacement of capitalism with socialism, refrained from violent actions for fear of repeating the 1871 bloodshed. But Jules Guesde’s followers saw violent class conflict as unavoidable and even desirable. They refused compromise with capitalism and called for an all-out confrontation with conservative forces. For them, social legislation bettering the condition of the working class was but a distraction from their main objective—Marxist class struggle—and would serve to prolong capitalist exploitation by making it more tolerable. The split between the moderate Left (socialistes) and the radical Left (communistes) is symbolized by the December 1920 Tours convention, which saw the division of Jaure`s’ old Socialist party into anti-Bolshevik and proBolshevik factions and the emergence of a Guedist-Leninist (later Stalinist) French Communist party. Until the 1960s, social reformism was denounced by French Marxists as a ploy to buy social peace and to divert the proletariat from their historical mission, the birth of “scientific socialism” through an armed revolution. Finally, the Catholic Church’s theoretical social reformism coexisted with a conservative approach to political relations, as it emphasized individual obedience to existing social authority as well as respect for private property and the existing class structure. Catholic members of Parliament would reluctantly

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support legislation that would strengthen the Republic because of its anticlericalism and atheism. Despite a small following within the clergy and church members (Fre´ de´ ric Ozanam, Fre´ de´ ric Le Play) in favor of social Catholicism on behalf of the poor, the Church as an institution stayed clear of fighting the structural dysfunctions of capitalism. However, it did contribute to social progress by its insistence on family policy and especially allowances to help support couples with children.2 Bismarck’s social legislation was based on occupational status, with decentralized management by private professional organizations and with contributions and benefits based on personal income levels—the higher one’s income, the higher one’s contributions and potential benefits. Caps on taxes and entitlements were tied to one’s level of revenues. On the other hand, the model developed in Great Britain by Lord Beveridge after 1945 was designed to include all citizens. It was administered directly by state agencies in a centralized fashion and drew its financial resources from a general tax. Its benefits were available to all poor and low-income citizens, with maximums not tied to one’s income. The current French welfare system is a combination of a targeted model (in which the state steps in to protect the poorest segments of the population), a state-supported corporatist model (where some social groups work with public authorities to develop their own protection system) and an encompassing model (mode`le universel) wherein all citizens are covered under a common umbrella. The French model provides for a profession-based social insurance system and extends it to the unemployed in the name of social solidarity. It straddles the public and the private sectors, as it is managed by employers and employees’ representatives under state supervision (paritarisme), and is financed by both taxes and payroll deductions.3 France’s welfare state (Etat-Providence) rests on two pillars. The first is the Se´ curite´ Sociale (SS), or Social Security system, created on October 4, 1945 by then Labor Minister Pierre Laroque, with four features: a public health plan, a retirement plan, family allowances and workers’ disability compensation.4 The socialized health plan includes all salaried employees regardless of their income levels and occupations and may be supplemented by individual health insurance policies (mutuelles) with public or private insurance companies. The public retirement system comprises several branches. The most important is the re´ gime ge´ ne´ ral, which covers most salaried workers, or about 85 percent of the French workforce. In addition, there exist many profession-specific re´ gimes particuliers for public railways employees, farmers, self-employed persons, the military and various categories of civil servants. The second pillar of the welfare state is compensation for unemployment, which has two main components. The first is a professional insurance plan, to which all workers contribute and that under specific and ever tightening conditions of employment history and level of revenues compensates workers who involuntarily lose their position. The second component is a state solidarity plan for ex-workers who have exhausted their right to unemployment insurance, for people whose physical and/or mental chal-

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lenges prevent them from holding a regular job and for adults who have never worked and have fallen below the official poverty line. This segment of the population—les exclus, “those excluded from society”—has been growing steadily since the 1980s. The allocation of benefits is more generous for health care and family allowances than for pensions, which are based on personal employment history. Old-age pensions are less redistributive than medical benefits since pensions are closely related to each person’s employment history and level of contribution over a lifetime, whereas many recipients of public health care benefits receive more than they contribute (and could ever contribute) to the common pot. Within the pension system, the redistribution occurs more among generations than between rich and poor, and the benefits are tied to one’s employment record. The American and the French understandings of “welfare” and allocations familiales differ greatly. Public support to French families starts with the second child and increases as the number of children within the family grows, regardless of the professional and social status of the recipients. Family allowances in France are not associated with negative social stereotypes, nor are they frowned upon. Far from being a social stigma, they are seen as a “social right” won by the people over decades of political struggle to insure a better life for themselves and their children. In fact, they are considered part and parcel of women’s civil rights. Collective support for children has always been intended to promote a pro-birth policy aimed at augmenting the French population. France’s fear of demographic decline runs deep since World War I, which wiped out a generation of Frenchmen and left millions of Frenchwomen childless, widowed or unmarried. There is also a trans-partisan agreement in favor of allocations. What Jacques Barrot, a Centrist and former minister for health care and social solidarity (1995–1997), wrote in 1996 could come from any politician: “The two cornerstones on which the survival of an authentic community depends are life-long education and the safeguarding of social protection.”5 France’s Ministry of Social Affairs thus enjoys considerable political visibility and attracts political heavyweights. From 1997 to 2000, Martine Aubry, Jacques Delors’ daughter and the most prominent Socialist expert in social affairs, headed this important governmental agency.6 French political culture defends social protection as a key component of “social citizenship,” which implies that in addition to civil and political rights, citizens are endowed with certain “social rights” (droits sociaux, literally social entitlements) under the law. This philosophy was enshrined in the preamble of the 1946 Constitution, which established the Fourth Republic (1946–1958) after World War II. Upon his return to power in 1958, Charles de Gaulle discarded this document but he incorporated the 1946 social preamble in his October 1958 Constitution. In a sense, social protection is to French nationals what the “right to the pursuit of happiness” is to American citizens. As part of France’s civil rights and conception of a democratic polity, it is a self-evident truth and also something of a political taboo. As Douglas Ashford argues, French historical experience has made the welfare state an essential component of state formation

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and has brought it to the core of the national political culture. As a result, it is deeply embedded in France’s republican principles, so “it is probably correct to say that the French find the distinction between the state and e´ tat providence [sic] highly ambiguous.”7 Today, however, this social net is weakening, but it is also being mended through both national and European means, as the following pages will show. SE´ CURITE´ SOCIALE: AN INSTITUTION IN CRISIS The signing of the Social Security Act by Franklin D. Roosevelt in August 1935 is often regarded as marking the birth of modern social regimes. The 1930s also witnessed the birth of rudimentary social legislation in France, but it was the October 4, 1945 ordonnance (law) that instituted a nationwide system of social protection. The first motivation was political and aimed at creating a social democratic system as an alternative to both capitalism, which had failed worldwide in the 1930s Great Depression, and communism, which after World War II had engulfed Central Europe and threatened Western Europe. The second reason was inspired by Keynes’ vision of economic growth as spurred by demand. The redistribution of national wealth through social expenditures not only made social sense but also economic sense, since it generated additional purchasing power for the working and middle classes. According to Walter Korpi, the allocation of public resources was expected to act as an “irrigation system” in the economic system—which, thanks to a favorable international environment, it did until the mid-1970s. However, mounting domestic and international pressures on the French welfare system after this period, and even more so since the deepening of European economic and monetary integration, progressively transformed the former “irrigation system” into a “leaky bucket.”8 Se´ curite´ Sociale Finances SS revenues come from payroll contributions rather than from direct taxation and public subsidies. In 1994, SS revenues amounted to about FF 2,200 billion (or 1.5 times the amount of the state budget), of which FF 1,860 billion came from payroll taxes, while public subsidies amounted to FF 270 billion and taxation totaled about FF 70 billion. Employers’ contributions equaled about two thirds of the total payroll deductions, and employees’ contributions made up about one third. Table 4.1 shows that since the 1980s, the state’s direct contribution in the form of subsidies to the system has decreased (from about 16 to about 14 percent), but since there has also been a stubborn refusal on the part of French policymakers to lower payroll contributions (which have remained about equal in percentage, or just below 80 percent), there has been a notable increase in taxation to finance the welfare state (from 2.3 to 5.6 percent).9 French employees thus pay comparatively more for SS than workers in many OECD countries, which means high labor costs, especially for lower salaries,

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Table 4.1 Origin of SS Revenues, 1981–1993 (in percentage of total revenues)

Source: Louis-Charles Viossat, “Protection sociale et institutions sociales,” pp. 51–56, Tables pp. 53–55 in Marc de Montalembert, ed., La protection sociale en France (Paris: La Documentation Franç aise, 1995).

and causes high-cost production in the context of heightened international competition. A breakdown of SS expenditures in 1995 shows the key role played by pension payments in the economy. In 1995, they represented 50.2 percent of all social expenditures, while health care made up 23.3 percent, family allowances 8.6 percent and workers’ compensation and general “social affairs” (nursery schools, home assistance) together comprised 13.1 percent of the total. With barely 4.8 percent of SS expenditures, the operating budget was well within the norms of sound public administration.10 At the same time, the amount of socially redistributed revenue for households has jumped from 16 percent in 1950 to 41.5 percent in 1993. In other words, French households receive on average 41 percent of their gross income through redistributive mechanisms. This system of social protection thus operates as a “gigantic machine for redistributing revenues horizontally (from the employed to the unemployed, the healthy towards the sick, the young to the old), vertically (from the rich to the poor) and also transversally (throughout the course of the life cycle).”11 In the early 1990s, before French authorities and citizens could feel the full effects of the Maastricht convergence criteria, John Ambler could still pass a positive judgment on the welfare state: “The survival of the welfare state is hardly surprising, given the strength and breadth of the consensus that supports basic social security programs in most Western democracies. . . . In sum, the French welfare state emerged from the 1980s still under financial pressure, but strengthened by having survived (and tamed) the old socialism and the new liberalism.”12 But it has been under increasing pressure to change because of France’s continuing unemployment problem, the fast-paced privatizations of the 1990s, the march toward convergence imposed by the Maastricht Treaty, the Stability and Growth Pact (SGP) and the creation of the Euro in January 1999. In 1997, Jean-Michel Bezat wrote that “[s]ince 1992, the Social Security funds had become so weak that by 1996 the accounts showed an accumulated deficit of more than FF 300 billion.”13 In fact, both the yearly deficit and the total debt improved, as shown in Table 4.2.

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Table 4.2 SS Budget Deficit, 1994–1999 (in FF billion)

Source: Dominique et Miche`le Fre´ my, Quid 2000 (Paris: Robert Laffont, 1999), p. 1731.

Table 4.2 clearly illustrates the yearly deficits of the early 1990s and the vigorous cost-cutting measures of the mid- to late 1990s (in preparation for the Euro deadline). In 1996, the SS compounded debt amounted to exactly half of what taxpayers had paid in income tax in 1995. The welfare system’s current financial situation looks gloomy and its future bleaker still. The health system financing problems are here, and more trouble with the pension system looms ahead. The health system budget has been in the red since 1968 and shows no sign of improving. While remaining fairly stable as a percentage of the whole Social Security budget, from 35.9 percent in 1970 to 33.1 percent in 1993, the importance of health expenditures relative to the French GDP has more than doubled since the early 1960s, from about 4 percent of the GDP in 1960 to 9 percent in 1990. At the same time, the relative weight of the retirement system has dramatically increased, from 33.7 percent of social expenditures in 1960 to a whopping 42.4 percent in 1993. Of the FF 2,200 billion spent for social programs in 1994, over FF 900 billion were spent on retirement programs, as compared to FF 545 billion for health-related programs. Today, John Ambler’s optimistic 1990 assessment needs to be reevaluated in light of these financial strains. A trans-partisan consensus on the severity of the financial crisis has thus emerged in the 1990s among Conservative and Socialist leaders. For instance, there is a great deal of continuity between the April 1991 Rocard SS report (named after the center Left prime minister) and the January 1994 Balladur (moderate Right prime minister) reform.

Why Is Se´ curite´ Sociale in Crisis? The welfare state crisis is structural and by no means limited to France.14 A long time in the making, this questioning of a French capitalist “third way” has multiple domestic and international origins. The first cause is the relative rigidity of social expenditures in the context of the sluggish growth since the mid-1970s. The building of a generous “cradle to

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grave” system coincided with an uninterrupted period of economic prosperity. Thanks to this economic euphoria, social benefits were extended to new occupational groups and also became more generous. In the mid-1960s, about 75 percent of French workers benefited from SS; in 1980, 96 percent were able to enjoy its fruits. In addition, in the early 1960s, old-age pensions were calculated based on the compensations of the last 10 years of employment. But in the early 1970s, under the Boulin bill, they started to be calculated on the wages of the 10 best years of professional activity, a change that favored retirees, but one that wreaked havoc on the pension budget. Social legislation was sometimes driven by electoral politics, as in the case of the 1974 presidential election pitting Vale´ ry Giscard d’Estaing (moderate Right) against Franç ois Mitterrand (Socialist). As Douglas Ashford explains, [a]mong employers the most detested benefit was the garantie de ressources, a cornerstone of the unemployment insurance system erected in the prosperous days of the early 1970s. At sixty years of age the unemployed were guaranteed 70 percent of their salaries. With additional social benefits this meant that some salarie´ s could retire at more than their salaries. This generous agreement . . . was rather unwisely renewed in 1974 to attract labor support for the Right. A more rash extension was added in 1977 to [sic] when Giscard agreed to provide any worker retiring at sixty with the garantie de ressources to tide him or her over until the regular pension became available at sixty-five.15

Decades of conservative rule (1958–1981) did not hinder the growth of the welfare state and the taxes needed to fund it, so by 1981 two-thirds of the costly burden of the garantie fell on the employers. More generally, according to David Cameron’s calculations, the most expansionary presidents of the Fifth Republic in terms of social expenditures were de Gaulle himself (1958–1969) and Giscard d’Estaing (1974–1981). Georges Pompidou, de Gaulle’s immediate successor (1969–1974) and himself a Conservative, comes in a distant third in terms of spending relative to budgetary resources. Surprisingly enough, the most “thrifty” president turns out to be Franç ois Mitterrand (1981–1995).16 These differences, though real, remain relative, as the overall picture suggests a strong continuity in the spending habits of the French state: “Thus, in the early 1960s, when it epitomized the activist, interventionist state . . . the French government spent a larger share of the nation’s economic product on public programs and services than did government in any democracy.”17 From 1958 to the early 1980s, partisanship hardly affected the government’s spending inclination. However, starting in the mid-1980s, with the failure of Mitterrand’s socialism and the deepening economic integration, another trans-partisan consensus slowly emerged that sought to reform the welfare state in order to save it. However, by the time (early to mid-1990s) the necessity for structural reforms of the social policy became apparent to all, the SS debt had grown to monstrous proportions. Bad habits die hard because social deficit spending is an addictive practice. Since 1973, the growth rate of social expenditures has quickly outpaced that of

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Table 4.3 French Social Expenditures, 1950–1995 (as percentage of the GDP)

Source: Louis-Charles Viossat, “Protection sociale et institutions sociales,” pp. 51–56, citation p. 53 in Marc de Montalembert, ed., La protection sociale en France (Paris: La Documentation Franç aise, 1995).

revenues as measured by the GDP growth. As David Cameron pointed out in 1991, “[i]n most of the years since 1950, social spending in France increased by a larger percentage than the economic product of the nation, and as a result the ratio of spending to G.D.P. drifted upward over time.”18 In fact, since 1986, social security expenditure has grown on average an alarming 6 percent each year, outpacing both inflation and GDP growth. As Table 4.3 shows, social expenditures as a percentage of the GDP doubled between 1960 and 1981, and almost tripled from 1960 to the mid-1990s. At the same time, SS had become ever more complex and opaque. This bureaucratic labyrinth favors the status quo and can swiftly transform into a political minefield for would-be reformers. Reform-minded politicians and administrators face cultural resistance caused by the compounded effects of an accumulation of institutional and political rigidities over the years. There have been abuses of an overgenerous and undervigilant system of health care expenditure reimbursement by health care professionals (physicians, pharmaceutical companies, hospital administrators) and their patients. Until the 1980s’ costcutting measures, lax expense control management encouraged “medical tourism” whereby doctors were financially rewarded for overprescribing and overmedicating, and patients were easily reimbursed. Public programs thus developed ways to “isolate” themselves from the economic and financial demands imposed on the rest of French society. But French citizens are both welfare recipients and taxpayers, so there is now a “compassion and tax fatigue,” based on the growing perception that reforms of the public system have fallen behind those of the private sector. In the heat of the unions’ struggle against the 1995 Juppe´ plan targeting the SNCF’s special treatment for pension plans, Le Monde observed that “[w]hile the private sector has been the object of modernizing efforts, the institutions dependent upon the state (the civil service, taxation system, Social Security, public universities, SNCF, Air France, etc.) have remained, essentially, on the sidelines of the movement.”19 In 1997, Le Monde pointed again to the “disparities between the public and the private sectors” and reminded the public that civil servants often receive extra bonuses before their retirement in order to boost their pension, which is calculated on the last six months’ earnings. In addition, they have to work only 37.5 years (instead of 40

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years for private-sector employees), and the replacement ratio for civil servants is 75 percent of their last (and most generous) salary—instead of about 50 percent for private-sector workers.20 The general public sentiment is that the private sector’s efforts since the 1980s (more taxes, more unemployment) have not been paralleled by similar efforts in the civil service and SS. Following Pierre Laroque’s plans, SS fund management is entrusted to “social partners” (partenaires sociaux), that is to say labor unions’ and employers’ representatives under state supervision. To guarantee democratic involvement, workers’ representatives are ensured by law a majority in these tripartite councils. Unions thus wield political influence because of their participation in these organizations, a prerogative which they do not want to see questioned. This power is especially important for them, since France is one of the European nations where the labor force is least organized (the French unionization rate is notoriously low), the labor movement is most fragmented and labor negotiations are decentralized. In other words, unions have a vested interest in defending the clientelistic ways in which the welfare state has long been administered. But in February 2000, the Mouvement des Entreprises de France (MEDEF) (a corporate lobby) declared that it would withdraw from this management system in December 2000 because of government heavy-handedness and the institution’s resistance to reform. France’s unfavorable demography also plays a role in the current crisis. In fact, the balance between contributors and recipients has been upset for about two decades. In 2000, France’s population is about 60 million, with a labor force of just over 25 million. Its distribution by age groups shows, as in all EU countries (except Ireland and Spain), the “graying” of the population (see Table 4.4). In absolute numbers, there are not fewer youngsters and working adults under 60 than in the past—in fact, there are many more. But in proportion to the overall population, there are fewer of them. Following the adage “fewer children, less money,” smaller battalions of working adults must contribute to the pension and health care programs for comparatively larger contingents of retirees (who also live longer). There is thus a steady decline in the “demographic ratio” between the near stagnant number of contributors on the one hand and the growing number of retirees and recipients of the socialized health plan on the other hand. The demographic ratio decreased from 3 working people per 1 retiree to just 1.25.21 In addition, longer life expectancies for larger numbers of citizens entail a heavier strain on the SS budget. The system will be subject to further demands starting in the years 2005–2010, as baby boomers start to retire en masse. Senior Europeans (over 65 years of age) represented 10 percent of the continent’s population in 1960, but they will reach 19 percent—almost twice as many—in 2020. Intergenerational solidarity is then likely to further erode, and imaginative solutions to the pension and health care crises must be found soon. This imbalance is further aggravated by unemployment, so it is sometimes said that on average, retired people have a better standard of living than working people.22 Senior citizens’ powerful voting

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Table 4.4 Age Groups Distribution (by percent of the total population)

Note: All age groups not shown for clarity. Source: Paul Champsaur, ed., Tableaux de l’e´ conomie franç aise, 1996/97 (Paris: INSEE, 1996), p. 25.

leverage also makes would-be reformers think twice before rocking the boat, which explains why pension revenues have in fact grown faster on average than work revenues since the late 1980s. In 1960, pension expenditures represented 40 percent of all social expenditures, against 51 percent in 1999, and with an annual growth rate of 1.5 percent between 2010 and 2040, “retirement expenses will triple in the next 40 years and will make up between 15 to 16.6 percent of the GDP in 2040 (11.6 percent in 1998).”23 Even if the unemployment figure comes down (as it started to do in 1999), this reduction will not help the SS to pay pensions because other structural factors such as longer life expectancy and larger contingents of senior citizens weigh heavily on this issue. Another contributing factor to the SS budget deficit is the excess offering of health care services and the rise of medical costs because of the diffusion of new technologies and new medicines. France’s chronic oversupply of medical services has had dire effects on the finances of the health care system. From 1967 to 1995, the number of physicians jumped from 59, 000 to 169, 447—a 287 percent increase—while the French population grew from 49 to slightly over 58 million—an 18 percent increase. The first consequence of this relative medical overpopulation was a sharp decrease of the patient-physician ratio (“medical density”). In 1975, there were 667 people per doctor, in 1980, 498 and in 1990, 373.24 The population is potentially better served by larger numbers of physicians, but at the same time this has caused the number of medical procedures to proliferate beyond patients’ medical needs. This problem is largely driven by physicians’ professional and financial needs. There is also an imbalance in the choice of specialties by medical school graduates, as physicians tend to shy away from fields involving high professional risks (for fear of malpractice suits) such as anesthesiology and flock to “safer” fields. For instance, the total number of pediatricians in France has increased dramatically even though the birth rate has been dwindling significantly since the 1950s. There is also a glut

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of dermatologists, especially on the Riviera. The combination of a nonemergency, highly lucrative specialty, a favorable climate and an abundance of well-to-do retirees has led to a concentration of skin specialists in this part of southern France and simultaneously driven up global costs sharply because subsidized social medicine inhibits free market competition. Thus, from the 1960s to the early 1980s, when reforms started to curb spending excesses, the French health care profession had features reminiscent of the Common Agricultural Policy: A system of guaranteed prices, chronic overproduction and high political stakes. In addition, this medical proliferation has fostered a “Balkanization” of the medical profession, that is, the multiplication of representative institutions, which are in fact not so “representative” because of their very atomization. For instance, biologists have six professional associations to represent them, and public hospitals, with about 1.2 million employees, have no fewer than 60 different unions, which makes any reform of the profession a challenge. As David Wilsford puts it, “health care professionals, especially physicians, are splintered into competing groups, constituting a weak, fragmented interest sector.” He adds that the relative devaluation of the medical profession in France is evidenced by the relative loss of average revenues and social status. Their negotiating position vis-a`-vis the government has thus steadily deteriorated, even more so as the government encourages new physicians to work in public hospitals rather than in private practices. Since many more women are entering the profession than in the past and since many female physicians want to reconcile professional demands with family life, increasing numbers of new doctors choose to work for public hospitals, where time constraints are comparatively weaker than in private practice.25 Finally, much of the SS predicament is blamed on economic liberalism. For a long time, European integration was not seen as posing any specific threat to the welfare state. The pre-1973 years were spend-happy years. Social Colbertism and moderate international competition allowed the government to preserve the French way of life. Mitterrand’s 1981–1982 attempt at renationalizing France’s economic policy through social Keynesianism proved a major miscalculation and constitutes by all accounts the end of welfare as we know it. After that, the growing internationalization of France’s economic and monetary policy making by means of the SEA, the Maastricht Treaty and the Stability and Growth Pact revealed a growing imbalance in the European architecture between economic and monetary cooperation on the one hand and social issues on the other hand. As Robert Geyer remarks, [o]f the six main elements of the 1992 Project (the common market strategy, decisionmaking reform, integration strategy reform, political union, monetary union and the social dimension), four of them had a pronounced neo-liberal character. The strategy for the creation of a genuine common market . . . was based strongly on free market principles and enhancing the “four freedoms” of the movement of capital, goods, persons and

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services. Decision-making reform . . . within the EC/EU greatly enhanced the hand of market-oriented policies by creating qualified majority voting within the Council for issues relating to the creation of the common market. This made it easier for marketenhancing rules to be passed, while EC/EU social policy and market-constraining rules still had to be passed predominantly by a unanimous vote.26

The monetarist, anti-inflationary and anti-deficit philosophy of the Euro, combined with the European Central Bank’s independence in decision making, have severely curtailed states’ ability to resort to old Keynesian policies of budget deficit and monetary flexibility (since member states lose control of both the exchange rate and the interest rate of their currencies). Not surprisingly, the shifting of social policy priorities from providing social services to all at almost any cost to controlling expenses and raising recipients’ qualification requirements has met with considerable resistance in France. In 1994, in the face of further cuts to welfare state programs, Udo Rehfeldt repeated the social democratic tenets.27 First, social progress should not be considered solely as a byproduct of economic growth: A political will is necessary to ensure fairness in the distribution of economic wealth to which everyone—including unskilled workers and minimum- and lower-wage employees—contributes. Second, social benefits do not come as the proverbial “icing on the cake” of economic development. On the contrary, they actively contribute to institutional stability and ultimately economic prosperity by avoiding the “ghettoization” of certain social and/or ethnic groups. “Divided they fall,” is a cautionary adage that inspires French reformists who advocate the reintegration of “les exclus” into society’s fold for the sake of social peace. To put it briefly, it is better to have a social net than a network of prisons. For the defenders of the “social state,” the claim that social legislation and economic growth are mutually exclusive constitutes an intellectual fallacy, and this truncated conception of European integration worsens Europe’s democratic deficit. They point out that France’s high level of social spending does not prevent it from enjoying a positive trade balance since the mid-1990s, from exporting more per capita than Great Britain, from being a haven of international investment and from boasting the fourth largest economy in the world. Finally, welfare state defenders point out that labor costs are only one parameter in companies’ rational choices. The “cost of money” (interest rates), the local legal and tax framework, the quality of public infrastructures, the location of the country, the educational quality of the workforce and its geographical mobility, the projected trade opportunities and overall business climate are factors that affect companies’ hiring (and firing) strategies as much as, if not more than, the cost of labor. However, sluggish growth during most of the 1980s and 1990s has lent new strength to an opposing argument, which goes like this: A high level of public spending is acceptable as long as social expenditures keep pace with the GDP growth. However, as they have surpassed the growth rate of national wealth since the 1970s, they have become economically counterproductive and socially

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divisive. Today’s excessive social taxes penalize the creation of wealth and stifle individual initiative. This is the argument developed by Bank of France director Jean-Claude Trichet, who in the late 1990s criticized “unproductive expenses,” which he even defined as “all those public expenditures which we can reduce without harming economic growth.” Since the mid-1980s, Trichet and other defenders of the “Franc fort” policy (i.e., tying the value of the French franc to that of the deutsch mark by a policy of high interest rates and public spending reductions) insist that their orthodox monetary policy, despite its social costs and political unpopularity, ultimately benefits all citizens by securing international investors’ confidence in the national currency. This credibility, in turn, constitutes the key condition for stable economic development and governmental programs of social solidarity. On the other hand, unchecked social spending only burdens citizens with unproductive taxes and compromises a nation’s economic dynamism, thus imperiling everyone’s prosperity.28

WHAT ARE THE SOLUTIONS? Tax and Spend Incorporating the SS debt into the state budget, as some on the Left suggest, is impossible because of the Maastricht criteria regarding public debt (not to be over 60 percent of the GDP) and the exigencies of the Stability and Growth Pact. More state borrowing is just a short-term fix which worsens the situation in the long run by swelling the public debt, diverting additional resources toward servicing the national debt and ultimately undermining the French government’s international credit and ability to borrow for economically legitimate purposes. Since companies are already heavily taxed under the present system, additional payroll deductions are politically and economically unwise. The government has therefore turned to two new flat rate taxes, thus moving partly away from the long-established practice of financing SS through payroll deductions. In 1991, the Contribution Sociale Ge´ ne´ ralise´ e (CSG) included all sources of revenues (wages and capital). Initially set at 1.1 percent, it reached 2.4 percent in 1993— in effect, it more than doubled. The basis for the CSG was later broadened to include even the retired and the unemployed. On February 1, 1996, yet another tax, the Remboursement de la Dette Sociale (RDS) was instituted for a “limited” period of 13 years. Set initially at 0.5 percent, it includes all wages, capital investment, pensions and unemployment benefits. It is geared toward the reimbursement of SS debts and placed under parliamentary supervision so as to involve political parties in the collective trimming efforts. However, more and more French entrepreneurs and taxpayers cringe in the face of the increasing regulatory and financial burdens that the traditional welfare state demands. The welfare state, long considered a means for promoting solidarity among the French people, turns out to be a factor of division between employed and unemployed, businesses and bureaucrats, businesses and unions,

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and taxpayers and beneficiaries. There is a wedge between public sector employees who, despite sometimes difficult work conditions, still benefit from life tenure and a regular paycheck, and private sector employees, who must face both the demands of professional life and the danger of losing their jobs. Probusiness minister Alain Madelin was even terminated by Gaullist Prime Minister Alain Juppe´ early in 1995 for questioning the perks enjoyed by France’s 5 million civil servants. Ironically, Juppe´ himself attempted to trim civil servants’ pension plans later that same year—and faced vigorous opposition from public employees’ unions. That is why, in 1995, Ge´ rard de Vaublanc contrasted the situation of civil servants, who often go on strike to defend their salaries and/ or benefits, and private sector employees, who are always under the threat of downsizing and more preoccupied with saving their jobs than with increasing their purchasing power or social benefits.29 Controlling Health Expenses To control spiraling medical reimbursements, the government initiated public debates on the future of social protection (Assises de la Se´ curite´ Sociale) to garner support in its efforts to control both sides of the overspending equation: supply and demand of medical services. Controlling Supply Since there is a connection between the number of doctors and the surfeit of medical procedures, the government’s priority since the 1970s has been to curb the medical proliferation at its very source, that is to say, medical schools. French students traditionally enter medical schools through a competitive examination process known as the concours. For examinations (examens), there are no limits to the number of candidates eligible to receive diplomas—provided, of course, they satisfy the examination requirements. On the other hand, there is always a numerus clausus, or a limitation on the number of recipients eligible for a concours: only so many of the top candidates are admitted. This quota system, itself determined by the government, based on its assessment of the need for medical graduates, has become more stringent since 1972. In 1994, only 4,100 medical students were allowed to enter the second year of medical school, but since the plentiful medical generation of the 1970s is still active, the overall increase in the medical population has been hard to keep in check, as Table 4.5 shows. As David Wilsford shows, the number of medical graduates in France grew at a regular pace between the 1920s and the early 1970s, reached its historical peak in 1975 and then stabilized (in fact, slightly decrease) at around 8,000 per year. However, the total number of practicing physicians has steadily gone up and, in fact, more than doubled between 1970 and 1984.30 In 1995, more than half of all physicians were under 40 years of age, so they are not likely to retire soon. As a consequence, public authorities have created financial incentives for

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Table 4.5 Number of French Physicians, 1975–1995 (includes all medical specialties)

Source: Christophe Catala, “L’offre et la demande dans le domaine de la sante´ ,” pp. 123–29, citation pp. 126–27 in Marc de Montalembert, ed., La protection sociale en France (Paris: La Documentation Franç aise, 1995).

physicians to work in public hospitals, where costs are easier to manage than in the world of independent physicians. In addition, the MICA (Me´ canisme d’Incitation a` la Cessation d’Activite´ ), instituted in the mid-1990s, offers privately established doctors the possibility of early retirement between the ages of 56 and 60 in exchange for financial compensation. France found an ally in the Brussels Commission, which in 1998 proposed a cap on the number of hours transportation workers and doctors can work every week—although this measure would not apply to newly established doctors for seven years.31 Between 1983 and 1986, Socialist cabinets reformed the health system in several waves, and as David Wilsford explains, “[t]he first major area of socialist effort—and perhaps the one area in which they enjoyed the most unmitigated success—was the budgeting reform essential to containing hospital costs.”32 Until 1983, the government money that public hospitals received was based on tarif journalier, or the number of days patients spent in beds. This system had such an inflationary effect that, from the mid-1970s to the mid-1980s, “hospital expenditures had grown at annual rates of between 16 and 20 percent.”33 After 1983, the budget global (lump sum), a more streamlined system of financing, based on a more rigorous classification of medical conditions in 468 medical categories (DRGs or “diagnostic related groups”), each with different level of reimbursement, was instituted. These cost-cutting measures proved effective, and hospital expenditures were then held in check relative to inflation.34 Already unpopular under the Socialist cabinet, restrictive funding measures for public hospitals were further strengthened by Chirac’s Conservative government in 1986–1988. He also emulated the Socialists’ tough stance toward the influence of the pharmaceutical industry in the medical community—a major source of waste. Briefly suspended in 1981 for electoral reasons, the numerus clausus was promptly reinstated by the Socialists as early as 1982, and the further budgetary cuts they had envisioned for 1986–1987 were in fact implemented by the newly elected Chirac. The medical community expected Chirac’s junior minister for health, Miche`le Barzach, to be more lenient than her Socialist predecessor because she was a physician and because the medical hierarchy had made its support for Chirac known. But in fact, as Wilsford explains, “[i]n health care, it is clear that the Chirac government’s policies did not diverge significantly

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from its socialist predecessor’s. In the matter of fees and of the whole issue of controlling expenditures, the Chirac government was just as adamant that expenditures were out of control and that one essential way of controlling them was controlling how physicians practice medicine—at least by indirect watchdog, carrot and stick methods.” The 1987 Estates Generals of SS, a series of meetings between public authorities, health professionals’ unions and local officials, for all their political visibility, did little to alter the government’s policy orientation towards cost control. So, concludes Wilsford, “[h]ealth care policies under the conservatives resemble very closely the policies of their socialist predecessors.”35 Costly duplication of services within public hospitals are partly the result of the defense of personal fiefs by leading medical figures. The Socialists’ efforts in the 1980s to bring order to the fragmented and wasteful organization of hospital departments—as distinguished from their successful reining in of global costs—proved a failure. But since the early 1990s, there have been renewed and vigorous governmental initiatives to close smaller public hospitals, many located in small-to-medium towns (hoˆ pitaux de proximite´ ), and to promote consolidation of economically inefficient departments. Cooperation among public hospitals to avoid replication of health services within a specifically defined geographical region (la carte sanitaire) has thus been encouraged or forced. Since a January 1984 law, hospitals are encouraged to create syndicats interhospitaliers in order to share equipment, facilities and personnel as well as administrative, computing and accounting departments. Within this framework, they may offer common services to the public and are encouraged to carry out missions of self-evaluation and program efficiency assessments.36 The “rational management” of medical acts produced mixed results. Hospital-related expenses have gone down, but these measures have also discouraged personal initiatives among staff, sent nurses to the streets for highly visible (and popular) demonstrations in 1995– 1996 and made many inpatients turn to the private medical sector. Public hospitals are caught between their “public service” mission, their current economic imperatives and the competition from the private sector. One unintended effect of the budget reform has been to encourage private hospitals to specialize in surgery procedures (as opposed to general medicine) because these acts are more lucrative. Today, fewer public hospitals offer surgery than in the recent past. With about 130,000 physicians in private practice enacting about 4 million medical acts every year, it is proving a daunting task to track each doctor’s accounting records and penalize individual practitioners for excessive spending. However, since 1996, in order to counter the influence of the pharmaceutical industry in the medical profession, the government also encourages pharmacists to sell more generic drugs that have the same pharmaceutical benefits as namebrand medicines but which are far less expensive. In 1996, generic drugs represented only 5 percent of the French market, far less than in Germany, and their diffusion was expected to save SS between 1 and 5 billion francs every year.37

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Controlling Demand Though by no means the most troublesome SS account, family allowances have long been generous in their eligibility criteria. Allocations familiales were long granted regardless of the financial situation of the beneficiary because they are considered as an entitlement. But in June 1997, Lionel Jospin announced that families with two children, earning more than FF 25,000 (single provider) or FF 32,000 (two providers), would no longer be eligible for such allowances. Faced with vigorous opposition from the Right, the Left, the Church and family lobbies, Jospin renounced his scheme in December 1998. He promptly reestablished the allencompassing character of family allowances after the first child but simultaneously lowered the tax deductions that better-off families could claim for children. This face-saving measure also made economic sense from the government’s perspective, since the new legislation brings in more money than in the past. The government also requests hospital inpatients to contribute more than in the past toward the cost of their hospitalization. The patient’s copayment (ticket mode´ rateur) has steadily increased over the years. This evolution has proved detrimental to the poor, who cannot afford an individual complementary health coverage plan to pay for such expenses. In addition, the Ministry for Social Affairs issued a personal health booklet (carnet de sante´ ) in 1996 to discourage patients’ “medical tourism” by keeping track of their visits with health care professionals. Each SS health care recipient must produce this document when he or she consults a physician. In December 1998, the government’s effort to trim health care spending was partially thwarted by the Constitutional Council (CC). While the court accepted several key legislative proposals, such as the increased monitoring of private physician’s expenses, it rejected the government’s attempt to impose fines on the medical profession as a whole for cost overruns. The CC declared this proposal unconstitutional because it is collective in nature and penalizes the entire profession for the excess of some of its members. Many doctors also argued that the government’s attempt to reduce overall costs would only limit the number of visits that doctors could allow from each patient. Penalizing physicians as a group for overruns obviously was not a proper way to curb spending. As a consequence, physicians’ unions have recommended an individual follow-up of each doctor’s billing practice by SS managers and accountants. The government has rejected this suggestion because it would be extremely time consuming.38 As Table 4.6 suggests, the overall picture suggests that the government has been partly successful in its effort to rein in the deficit spending, and the 1991– 1993 imbalance between health cost growth and the GDP growth was reversed after 1994. Partial Privatization A senior civil servant in charge of a regional SS health office, Gilles Johanet, recommends “subcontracting” health insurance to private insurance companies,

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Table 4.6 Health Expenses Growth Compared with GDP Growth, 1991–1995

Source: Pierre Ducime`tre and Guy Nicolas, La sante´ en France 96 (Paris: La Documentation Franç aise, 1996), p. 95.

with the obligation of guaranteeing universal coverage.39 AXA, the largest French insurance company and number two in the world, is the government’s most visible partner in the research for solutions involving the private sector. AXA’s CEO Claude Be´ be´ ar suggested the creation of “health networks” whereby AXA would directly reimburse health plan recipients for their medical expenses. In exchange for this service, the company would receive a lump sum from SS, calculated on the average cost of health services provided to the patients. The reasoning is as follows: Should AXA lose money in the process, it would bear the financial loss without turning to SS for additional funding. If, on the other hand, AXA managed to make profits, it would share some of the profits with both SS and the medical profession. In exchange for their (voluntary) participation in this health network, recipients would benefit from a 10 percent deduction on their complementary health insurance plan (offered through AXA). To secure this service, recipients could only consult physicians associated with the AXA health network. In turn, these health professionals would accept management guidelines put forth by the network’s administrators, including the computerization of their office, the adoption of standardized accounting and medical procedures, and periodic assessments conducted by network administrators. By limiting patients’ choice of physicians, this system curtails the “demand” side of the equation. At the same time, by “framing” doctors’ ability to prescribe drugs, hospitalization, additional examination, surgery and other medical procedures, it deflates the “supply” side, thereby fighting against the proliferation of medical acts not based on health considerations but on economic imperatives. The specter of HMO-like organizations is looming high within the French health care profession, with its potential of limiting or denying health care to some “high cost” patients. But the majority of French physicians reject any policy based on financial imperatives and are not ready to accept managed care under governmental supervision. They insist that their medical recommendations should be based on medical ethics and not on economic consideration (la logique comptable).

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Reforming the Retirement System The first steps of this reform may be described as “more of the same.” To ensure the future of the pension program, payroll deductions have gone up and qualification requirements have become more stringent. Before 1993, retirement pensions were calculated on the 10 best years of one’s career, and full pension became possible after 37.5 years of full-time employment. But since 1993, the duration of contribution for private sector employees was raised to 40 years, and the new basis for assessing benefits includes the average salary of 25 years of activity, thus lowering the average pension. The “retirement ratio” between salary and pension has thus become less advantageous—with the noticeable exception of civil servants’ special regimes. However, the current spend-as-yougo philosophy (re´ partition) based on intergenerational financial solidarity, clearly demonstrated its limits. Furthermore, as additional payroll taxes are really “taxes on jobs,” they discourage companies from hiring by raising the average cost of labor, thus aggravating France’s unemployment. France has therefore turned to individual retirement schemes. Offering tax breaks to individuals and companies in order to create individual pension funds has received growing consideration since the late 1980s, despite the Left’s opposition and the Right’s hesitations. In fact, it was (and remains) one of the main bones of contention between the Left and the liberal Right (liberal as in Adam Smith), so it was only in February 1997 that the French Parliament finally passed a law allowing private companies to offer their employees retirement plans that are rougly comparable to American individual retirement accounts (401K and 403B). France must catch up, and in 1998 the Left-leaning weekly Le Nouvel Observateur bemoaned the Left’s opposition to the private retirement system over the last 15 years, which deprived “future French retirees of fifteen years of growth in the financial markets.”40 There are at least three reasons why these pension plans are approached with suspicion by a number of French decision makers. First, some remember the experience of the 1930s, when the stock market crash and the ensuing hyper-inflation destroyed retirees’ rente, a yearly income derived from private assets invested in the stock market, and threw hundreds of thousands of them into hardship and destitution. The Left argues that these pensioners would have been rescued by participating in a public pension plan, rather than relying solely on the market. The example of British billionaire Robert Maxwell, who in the 1980s illegally diverted pension funds to finance his ailing press empire, has done little to assuage fears about management of such “treasure chests.” Second, private retirement plans are seen as the epitome of the “each man for himself” liberal philosophy that condemns the weak, the poor and the working class in general. For French social democrats, pension funds would drive another wedge between the employed and the unemployed and are seen as yet another way towards a “two-tier” society of haves and havenots. At a time when social democratic values are under attack by the forces of

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the market, this emphasis on “social solidarity” remains one of the few distinguishing features of the Left. Third, behind this debate looms a turf war between private companies and public financial institutions. As Catherine Golliau indicates, “[t]he financing of retirement is a battleground between finance professionals—insurance brokers, bankers—attracted by a market that they hope will be lucrative, and administrators of government allocations—employers, workers’ unions—concerned with preventing any erosion of their resources and power.”41 The unions’ fear of seeing private insurance companies and banks divert workers’ retirement money into their pension funds is as strong as financial institutions’ desire to penetrate this largely untapped market. Pension fund advocates thus stress two arguments in favor of private retirement schemes: (1) The generalization of part-time and temporary employment since the 1980s makes it more difficult to increase payroll taxes and (2) the sums created by such contributions would help finance French companies, which are often undercapitalized, to expand their financial base. This retirement market is potentially gigantic, but since France is not yet ready for independent, U.S.-style pension fund companies, the management of the retirement funds would be entrusted to private insurers and bankers. French citizens have long been familiar with personal insurance policies subscribed to with public or private insurance companies. Individual policyholders contribute over many years to build assets which, at or around retirement age, are redistributed either as capital or annuities. In turn, the first collective retirement savings plan (Plan d’Epargne Retraite, PER) outside of SS was included in the French tax code in 1997. This pension fund scheme, which became effective only in the fall of 1997, collected about FF 30 billion within 12 months of its inception—a promising, although not yet economically significant, debut. Yet, in order to reduce the protest from its political constituencies (especially unions), in 1998 the Left significantly watered down the original draft of the 1997 bill. Tax deductions are not as generous as initially expected, employees are not forced to enroll and there are strict caps on what companies can contribute to this new system (abondements) and deduct from their taxable benefits. Significantly, these maximums are defined in relation to what both employees and employers must contribute to the existing SS pension plans. At the end of the contributing period, withdrawing the capital is not an option for employees, and their heirs cannot collect the remaining capital. Finally, the law makes it hard to switch plans if the financial performance is not satisfactory. Despite these restrictive legal dispositions, surveys show that a large majority of French citizens want to contribute to such plans. This reveals a profound cultural revolution among French workers as they become direct owners of companies’ stock through their retirement accounts and participate directly in the stock market. And, as Peter Drucker pointed out as early as 1976, if socialism is defined by the “collective ownership of the means of production,” the pension funds have, paradoxically, a “socialist” dimension to them. In 1999, liberal journalist Philippe Manie`re called the French public’s attention to this phenomenon with his book humorously entitled Marx on the Trading Floor.42

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French law also tries to limit the influence of pension fund managers on companies’ management. Pension funds cannot contain more than 65 percent bonds and cannot own more than 5 percent of the stocks of any company quoted in the stock market. But this slow progress of pension funds is being facilitated by the coming of age of the French stock exchange. Since the mid-1980s, the Paris stock exchange (Bourse) has modernized in terms of openness to new companies, accounting procedures, information dissemination, competitiveness and accountability. The Paris stock exchange Blue Chip Index (CAC 40, the equivalent of the Dow Jones Average) went up 20 percent in 1998 and doubled between 1995 and 1998. The Nouveau Marche´ (for start-ups) and the Second Marche´ (for medium-size companies) were also created to accommodate France’s new needs for financing through the market. This is why in late 1998 the Financial Times stated that “[m]ost UK and US investors see France as one of the most promising markets in continental Europe. . . . [A]nalysts believe France is about to experience a period of strong growth in the (start-ups) sector, fueled by a combination of favourable market conditions and changes in business practices.”43 This propitious change is especially important as the London and Frankfurt stock exchanges announced in 1998 a strategic alliance as a first step toward a pan-European market in blue chip stock which would offer greater liquidity and reduced transaction costs. Indeed, in late 1998, Amsterdam, Brussels, Madrid, Milan, Paris, Stockholm and even Zurich (although Switzerland is not a EU member) expressed interest in joining this association in order to form a single trading system for Europe’s blue chip companies. Early in 1999, Paris and Zurich merged some of their operations. With these developments, France has come under the watchful eye of U.S. pension fund managers, especially CalPERS, which with assets totaling $140 billion was in 1999 the most important fund in the United States. Its CEO William Dale Crist has called for an overhaul of the French corporate governance style, an overhaul that would allow for more accountability and more transparency from senior executives.44 UNEMPLOYMENT AND ITS DISCONTENT Until 1999, the French economy presented a striking contrast between positive macroeconomic indicators (low inflation, monetary stability, positive trade balance, rising productivity, shrinking public deficit and national debt) and stagnant work creation. The reasons behind France’s persistently high level of unemployment since the 1970s are many. In its 1992 survey of the French economy, the OECD pointed to anti-competitive labor laws and rigid wage policies: Certain public policies may also indirectly contribute to unemployment. The floor on the cost of taking on an employee set by the minimum wage and social charges may limit employment of youths, especially the least educated. . . . Unemployment benefits are not especially generous by international standards, but, for low-wage earners at least, they seem to provide sufficient replacement income to discourage job search and help maintain

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reservation wages. More importantly, they are too loosely connected to measures aimed at improving employability and may be drawn for an excessive period, a factor which tends to extend the average length of unemployment spells.45

As a consequence, this OECD report recommended “a refocusing away from compensation policy and early retirement provisions” to professional training and placement. Other reasons explain France’s high unemployment: insufficient connection between the education system and business, a population that is not geographically mobile enough, high taxes on labor, the overreliance on government-sponsored placement schemes, and so on. Social conservatives single out the competition between men and women for the same job openings, while the far Right National Front capitalizes on the general malaise by blaming immigrants for unemployment. However, “employment” as a social construction has lost some of its conceptual clarity. As Jacques Freyssinet points out, the definition of unemployment itself is not an obvious one: The International Labor Bureau has one, OECD and Eurostat another and French authorities yet another. In addition, the multiplication of short-term and part-time employment and the generalization of interim work for many individuals in France since the 1980s have blurred the distinction between employed and unemployed.46 Still, symbolic thresholds have been crossed with an alarming regularity: In 1979, 1 million French citizens were unemployed; in 1982, there were 2 million and 3 million in 1993. There are vast disparities in terms of gender, age and, of course, level of education, with unemployment figures reaching as high as 20 percent for high school dropouts. In addition, the destruction of a number of industrial sectors, such as textile and shoe manufacturing in the 1970s and coal and steel factories in the 1980s, has wreaked havoc on the economies of mono-industrial cities and regions. Unemployment that breeds anomie and social alienation has thus become what Pierre Rosanvallon calls the “new social question.”47 When fighting unemployment, French policymakers distinguish between an “economic treatment” (creating new jobs) and a “social treatment” (alleviating the consequences of joblessness). France’s social net protects against unemployment in two ways. First, there is an insurance scheme, the re´ gime conventionnel, created in December 1958 out of interprofessional agreements. It is financed by employees and employers and administered by “social partners” (i.e., unions and employers’ representatives within the Union Nationale Interprofessionelle pour l’Emploi dans l’Industrie et le Commerce [UNEDIC] system). Unemployment compensation (Association pour l’Emploi dans l’Industrie et le Commerce [ASSEDIC]) is reserved for employees who lose their job and is limited in time. For a maximum period of 27 months (depending upon the length of previous contribution), this compensation is given in its entirety. Then it diminishes fast. Second, there exists a solidarity scheme (which includes several programs) administered directly by the government, financed by taxes and opened to jobless and destitute people, regardless of their employment history. The welfare state shows here again a mixture of Bismarckian and Beveridgian

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features, since the solidarity regime covers people who may no longer benefit from unemployment insurance or people who cannot work for health reasons. It also provides them with minimum health insurance for up to 60 months. In 1999, about two thirds of the unemployed were thus covered under these two plans. In his 1986 Lettre a` tous les Franç ais, Mitterrand called for the creation of a special minimum insertion revenue (RMI), a legislative proposal which was adopted almost unanimously on December 1, 1988 and implemented within a month. This minimum revenue targets “social dropouts”—anyone over 25 years of age (or less than 25 years with a family) with no employment and no resources. It provides a small stipend (staggered according to the family situation) as well as a minimum health insurance. It is administered locally by local authorities under supervision of the prefect. Many RMI recipients live in the French overseas territories, most of them are long-term unemployed or people who go from one part-time position to another, and many have few professional skills and little schooling. Still others are socially isolated people, senior citizens, homeless people and single mothers. While many have ended their reliance on RMI for good, many more come in and out of RMI, and the ranks of potential recipients are swelling. The RMI was initially created as a temporary fix for no more than 500,000 people. It is now over a decade old and touches close to 2 million people (just over a million recipients plus their dependents, generally children), so the budgetary cost of RMI has exploded, from FF 7.23 billion in 1989 to FF 24.35 billion in 1994. With about 30 percent of the recipients under the age of 30, the RMI is sometimes denounced as encouraging passivity. As a consequence, though still considered as a right by the majority of the French people, more voices are now being heard in favor of linking RMI with a more aggressive employment strategy for RMI recipients (contrat emploi-solidarite´ or revenu minimum d’activite´ ). In 1997, one key Socialist electoral proposal was to reduce the workweek from 39 hours to 35 hours (so as to better “distribute” work and create new jobs) at the same level of compensation and in exchange for governmental subsidies. This proposal was voted into law in May 1998. Interestingly enough, the “Aubry Bill” (named after Martine Aubry, Socialist minister for social affairs and labor) came after the 1996 Robien Bill (named after Gilles de Robien, a moderate Right politician), a bill of less amplitude but similar inspiration. Already in 1995, Pierre Larrouturrou, a consultant, had sparked a national debate by promoting the idea of a four-day week to combat unemployment. Many companies and industries had already instituted some form of time reduction by spreading the workload over 52 working weeks of unequal length (actually 47 weeks, because of the five weeks of vacation prescribed by French labor laws). Under this annualisation system, employees agree to work more during some peak periods (for example, December for toy companies or summer for the hospitality industry) and less during less busy periods. Increased productivity, delocalization and better machinery are also likely to lessen the impact of this labor law on a number of French companies. The 35-hour week law placates

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the Left’s electorate and satisfies a post-modern craving for more leisure and “quality” time, but it also illustrates the Socialists’ partial misunderstanding of a free market economy. This measure implies that there are “only so many” jobs in an economy and that since it is unable to create conditions allowing the economy to grow, the government has to “cut the cake” in smaller pieces so that everyone has a chance to enjoy some of it. Shortening the workweek by governmental decree betrays a Malthusian perspective. It also contradicts the lengthening of the number of working years (from 37.5 to 40 years) to be eligible for Social Security retirement. Many entrepreneurs also castigate this legislation as an assault on companies’ productivity and as yet another illustration of doctrinaire politics and technocratic incompetence—all the more so, as oblivious to the OECD recommendation, French policymakers refuse to lower the minimum wage relative to the average wage. As Jean-Paul Fitoussi explains, “the ratio of the minimum wage to the average wage has been consistently increased.”48 France prides itself for what it calls “l’exception franç aise” (i.e., national economic, social and cultural idiosyncrasies). But France’s persistent high unemployment and its shocking contrast with other glowing macroeconomic indicators such as positive trade balance, low inflation and high productivity, really constitute the “French exception.” As a consequence, the social agenda that France could not defend by itself at the national level is being promoted at the European level. EUROPE’S SOCIAL AGENDA Desmond Dinan observes that Europe’s “social policy builds on a long history and a strong tradition of social legislation in the member states. Only the UK, during nearly fifteen years of Conservative government, disputed the philosophical underpinning of Western Europe’s social policy agenda.”49 The EU’s financial instruments dealing with social policy (unemployment, reconversion of declining industrial regions, development of poorer rural regions, women’s and youth’s issues, etc.) are many: The European Regional Development Fund (ERDF) deals with regional development, the European Social Fund (ESF) with workers’ geographical mobility and professional development, part of the CAP budget with the restructuring of traditional farms, and since 1993 commercial fisheries also receive assistance through a separate structural fund, the Financial Instrument for Fisheries Guidance (FIFG). Social policy frontiers are somewhat porous: Europe’s three structural funds, notably the ESF, deal extensively, through a variety of financial and legislative instruments, with issues of education, workers’ professional development, gender equality, youth programs, and so on. In fact, says Dinan, “structural policy . . . is a generic term encompassing regional policy (reduce spatial disparities, regenerate old industrial areas, assist rural development), aspects of social policy (combat long-term unemployment, foster vocational education and training) and a small part of the CAP [Common Agricultural Policy] (assist rural development).”50

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Articles 117 to 122 (Title VIII) of the Rome Treaty stress the desirability of a European social policy but they are not prescriptive. Articles 123 to 125 provide for the ESF, while Articles 126 to 128 deal with education, professional training and culture. Article 117 calls for the “harmonization of social systems,” while assuming that it would come as a natural by-product of the free functioning of the Common Market (Articles 48 to 57 thus provide for labor mobility). Under Article 118, it is the Commission’s role—in fact the DG V’s role—to encourage cooperation between member states in the social arena, but this Article also clearly specifies that the DG V’s directives should avoid imposing administrative, financial and legal constraints on businesses. Article 119 is prescriptive and calls for equal pay for women and men, while the non-binding Article 120 defends the principle of paid vacation. It was not until the mid1970s that Europe really developed social legislation. But because of the economic crisis and “renationalization of politics,” Europe’s first social action program was still quite timid. The early 1980s did not see much change either, in part because of Margaret Thatcher’s hostility to Community social legislation. However, with the 1985 White Paper on social policy, Franç ois Mitterrand in Paris and Jacques Delors in Brussels advocated European social cohesion just before the SEA. The SEA itself defends social legislation in its preamble. Its Article 118B calls for the improvement of working conditions, to be attained through qualified majority (not unanimity) voting. Its Article 130A stresses social cohesion as a desirable European goal. Following the SEA, the 1988 Cecchini report estimated that the Single Market would generate between 2 and 5 million new jobs until 1992. As it turned out, the Single Market, though a positive move in general, had some serious downfalls. If over 5 million new jobs were created, “an even greater number of jobs,” argues Nicholas Moussis, “were lost owing to industrial changes and the international economic recession.”51 Hence the need for further social measures after 1986. In the second half of 1989, France presided over the European Council and to nobody’s surprise, but to Great Britain’s dismay, pushed vigorously for a bold European initiative in the social area. The result of its efforts, the crowning achievement of its presidency indeed, was the signing by 11 out of 12 Community members of the December 1989 “Charter of the Fundamental Rights of Workers,” a landmark document, which Nicholas Moussis describes as “the bedrock of the construction of a social area, which is vital to the progress of the EU.”52 In 1992, many of the 17 articles of this social charter were added to the Maastricht Treaty as the “Protocol on Social Policy.” It was not made part of the Treaty itself, largely because of British opposition. Great Britain “opted out” of the social charter—or from a British perspective, 11 member states “opted in” while Great Britain retained control of its social legislation in the name of subsidiarity. In addition, extensive domains of labor laws, such as right of association and right to strike, were excluded. Still, Europe forged ahead without the United Kingdom, and Article 129 (under Title X) of the Rome Treaty (also Article 129 of the Maastricht Treaty) calls upon the Community to ensure a “high level of

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public health protection” by encouraging cooperation among member states. In the 1990s, general awareness of dangers to public health pushed European countries to reinforce their measures in this field. Article 152 of the Amsterdam Treaty insists on member states’ responsibility and posits that the EU only “complements” their action in the domain of public health. Delors wanted the EU to deepen its social commitment, and the 1993 White Paper on growth, competitiveness and employment may be considered his political testament. His “social legacy,” however, was put on the back burner because from 1992 to 1998 all of Europe’s efforts were focused on achieving the third stage of the European Monetary Union (EMU) and launching the Euro. The Amsterdam Treaty included a chapter on employment (or social protocol) which was further discussed and expanded at the November 1997 Luxembourg Council. After the 1998 election of Tony Blair in Great Britain and Gerhard Schroeder in Germany, 13 out of the 15 EU member states had Left or center Left governments (the exceptions were Spain and Ireland). This was an unprecedented political alignment, and the general perception was that European governments were offered a unique opportunity to define a European way of economic development. In addition, there was a general perception that the completion of the Euro agenda (January 1999) opened the way for common action in other (non-monetary) fields in order to bring some balance to the European project and made it possible, says Philippe Pochet, “to relaunch the discussion on other aspects of monetary integration (economic governance, taxation, employment, etc.).”53 During the British presidency of the EU (January to June 1998), Tony Blair’s newly elected Labor cabinet accepted the protocol while stressing that British social policy falls under national jurisdiction. In December 1989 in Vienna, in March 1999 in Milan, and with the June 1999 European elections in mind, leaders of social democratic and socialist parties drafted manifestos underlining the importance of fighting unemployment in the EU. Against the dangers of fragmentation, Europeans leaders called for a new “social citizenship” by means of a European legislative framework. But substantial policy differences remained, and everywhere, old style socialism fought it out with more moderate, center Left visions. In Great Britain, Robin Cook’s “Old Labour” lost to Tony Blair’s “third way.” In France, Jospin tried to combine the French Socialists’ neo-Colbertism and his own commitment to the Euro. And in Germany, the left wing of the SPD was defeated with the resignation of Oskar Lafontaine in March 1999, thus giving way to Chancellor Schroeder’s more moderate “New Middle.” Indeed, as Linda Hantrais notes, today the EU’s social policy is less a case of harmonization than one of organized compatibility and slowly growing convergence.54 Even though in 1998–1999 Franco-British collaboration on many issues took an unprecedented dimension (especially in defense policy and military-industrial policy), Lionel Jospin took exception with Tony Blair’s “social liberalism” and called for increasing European legislation to tackle unemployment. Germany took over the presidency of the EU during the first semester of 1999 with the firm intention of developing its social agenda. However, the negotiations around the Agenda

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2000 (the budgetary reforms prior to enlargement, and especially the CAP budget), the Commission’s abrupt resignation in March 1999 and NATOs’ war against Yugoslavia pushed social issues in the background of the European agenda. In March 2000, at the Lisbon European Council, the British government pursued its pro-labor agenda by stressing the importance of the liberalization of electronic commerce for Europe. The conclusions of the European Council called for establishing a European area of research and innovation, creating a friendly environment for starting up and developing businesses and modernizing the European social model. This “active welfare state” should include greater education and training opportunities (“the knowledge society”), modernized social protection and better “social inclusion.” France’s social democratic activism accounts to a large extent for the slow progression toward a strengthened social legislation at the European level. Jan Windenbank points out that because of its high level of social spending, France is especially at risk of seeing its jobs exported to countries with lower labor costs, and “[i]t is therefore not surprising that the French have been at the forefront of attempts to harmonise European social provisions in order to protect its own standards of welfare.”55 These efforts are thus both generous-minded and self-serving, as they attempt to defend a national version of social democratic capitalism. Indeed, Paris sometimes invokes subsidiarity to defend its welfare system when menaced by outside liberal legislation and simultaneously argues for more robust European social legislation when it cannot reach its goal through purely national means. France’s argument in favor of social Europe is threefold. First, Paris argues that Europe’s high level of unemployment could jeopardize the European project among European citizens. If the EU functions solely as a Single Market catering exclusively or mostly to the needs of international investors at the expense of workers’ welfare, it will be perceived as an anti-national, technocratic, and anti-democratic polity. In other words, standing up for workers’ rights is a way to remedy Europe’s democratic deficit. Second, the French want to prevent “social dumping” within Europe and avoid delocalization of European companies within Europe. Among the countless documents put out by French governments since the early 1980s, the March 28, 1996 memorandum for a European social model is a key text that presents France’s position for the 1995–1996 Intergovernmental Conference (IGC) that led to the 1997 Amsterdam Treaty. According to this document, what distinguishes Europe from other continents is its attempt to have “globalization without social exclusion,” an attitude exemplified by Europe’s fight against “social dumping” and its vigilance in international trade toward countries that use slave labor and/or child labor. Given France’s activism against various forms of “social dumping,” it is little wonder to see this country also at the forefront (together with Germany) of European efforts to harmonize tax regimes. Finally, France says “yes to a free market economy but no to a free market society,” thereby purporting to be a distinct capitalistic model for Europe. It has little confidence in market

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mechanisms to promote social progress by themselves. For instance, more than 40 years after it made law (under the prescriptive Article 199 of the Rome Treaty), equality of pay between men and women is still not a reality in Europe, or in France for that matter. In 1997–1999, France played a key role in the “three big Es”: the Euro, the enlargement of Europe (which included the Agenda 2000 budgetary reforms) and employment policy (or rather, unemployment). Already at the December 1994 Essen summit, member states had agreed to a common strategy: development of employees’ professional qualifications, more flexibility in working hours, lower labor costs and assistance for weaker groups (older workers, women, long-term unemployed). This strategy was confirmed by the Cannes summit (June 1995), the Madrid summit (December 1995), the Florence summit (June 1996), the Dublin summit (December 1996) and again in December 1998 in preparation for the Vienna summit, when Germany and France urged their partners to commit themselves to binding and verifiable employment targets and the fight against youth and long-term unemployment as well as gender discrimination in the workplace. The Treaty of Amsterdam (Articles 125 to 130) attempted to tackle this vexing issue of joblessness. Article 125 is especially significant as it mentions that member states should elaborate a coordinated strategy in favor of job creation. However, the overall result of these statements proved rather disappointing, and their assessment in terms of their direct impact on job creation has itself proven difficult. The “benchmarking” (international assessment) of national implementation efforts is inconclusive. France was especially concerned by these less than ideal outcomes and, in exchange for its reluctant acceptance of the German-inspired Stability Pact, which reinforces Maastricht’s budgetary discipline, initiated the first European summit entirely devoted to unemployment in the Union. Thus in November 1997, at the Luxembourg European Council, and in a rare show of political unity, the 15 member states agreed on a series of measures and recommendations.56 The key points are: • A common (rather than solely national) strategy to fight unemployment; • A yearly assessment of each member’s implementation efforts of the EU’s guidelines and quantified objectives for job creation; • The reorientation of national aid policy toward job creation (within the guidelines of the Single Market); • The simplification of bureaucratic and legal procedures for small and medium businesses; • The relaunch of infrastructure programs, especially trans-European transportation networks (TETNs); and • The reform of structural funds dealing with unemployment. • In 1998–1999, the National Assembly’s Delegation for the European Union produced no fewer than three reports devoted to employment.57

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The post–World War II “Keynesian bargain,” says Mark Vail, granted “workers extensive social protection and a share in the fruits of economic growth in exchange for labour’s quiescence.”58 As French elites concentrate so much power, they could claim the political benefits of the economic prosperity and social progress that stretched from the late 1940s to the early 1970s. However, when the social net started shrinking in the 1970s and unraveling in the 1990s, a crisis of elite delegitimization developed, to which French leaders responded by elaborating strategies of “avoidance of blame” by cloaking their “reforms with the standard camouflage of EMU.”59 At the same time, they tried to reverse the erosion of the welfare state by upholding the idea that social rights are derived not just from employment but from just belonging to the national body. For instance, in 1999, Lionel Jospin decided to extend minimum health coverage to the poorest French citizens (6 million, or about 10 percent of the population). This couverture me´ dicale universelle proves that to this day, and despite the questioning of its social democratic tenants, France still wants to combine a Bismarckian approach (with dues and rights based on labor) with a Beveridgian approach (with dues and benefits based on wider conception of social citizenship). At the same time, France attempts to muster EU resources on behalf of its social principles, a challenging proposition in the best of circumstances, since, says David Hine, Europe never had and still does not have “an homogenous and undifferentiated social model to defend.”60 Europe’s social agenda remains an ambiguous, incremental and disputed policy, and in many ways, the welfare state stands as a legacy of the post-1945 golden age of economic development.

Chapter 5

Monetary Policy: National vs. Federal Currency Between December 31, 1998 and January 4, 1999, a quiet revolution happened in the European and global financial markets. In eleven EU countries, all financial institutions switched their accounting and financial systems to a new official currency, the Euro. On January 4, 1999 the New York Times saluted the coming of this new denomination: “Europe is making history today . . . the Euro . . . is a political and economic achievement that seemed impossible and even quixotic as recently as three years ago.”1 The participating countries were Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Neither Greece nor Sweden qualified for this Euroland because in the years (1993–1998) leading to the selection of the “in group,” they ran high public deficits. Denmark and Great Britain, while preparing for it, abstained from joining this third stage of the Economic and Monetary Union (EMU). Greece will join the Euroland on January 1, 2001 and the Euro 11 will become the Euro 12. For the first time in history, 11 countries banded together to build a common currency. The Euro is then primarily a political choice, implying voluntary abdication of national monetary sovereignty, and it constitutes a victory of Europeans over their divisions and over themselves. Table 5.1 shows the impact of this momentous change. Following the setting of the conversion rate of participating countries’ currencies by the European Central Bank (ECB) in coordination with their central banks, the Euro was officially introduced on world markets on January 1, 1999. It thus became a single accounting unit used in cashless transactions such as stock market trades, bond purchases, international tenders, international contracts and public accounts. On the day it was created, the Euro was worth $1.175 or FF 6.56256. To celebrate the currency’s official launching, the French Finance Ministry offered 100 Euros to each baby born in France on January 1,

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Table 5.1 Comparative Statistics of the Three Main Trading Blocks, 1997

Source: Adapted from Greg Steinmetz, “U.S. Firms, Honed in Huge Home Market, Are Poised to Pounce in the New Europe,” Wall Street Journal, January 4, 1999, p. A5.

1999. Around 1,500 babies benefited from this offer. During the transition stretching from January 1, 1999 to June 30, 2002, private companies may neither be forced to nor prevented from using the new currency (the “no compulsion, no prohibition” rule), and no contract may be modified solely on account of this new denomination. Not until January 1, 2002 will Euro coins and bills go into circulation and be used by Euroland citizens in their day-to-day operations. The euro will then become a common currency, running in parallel with national currencies for retail transactions. European citizens will have six months to make the practical and psychological switch to the new medium. However, a number of small-scale pilot experiments were conducted in the 1990s to give consumers and businesses a foretaste. Several towns in France, Germany, and Italy took part in local tests of the currency changeover. On February 18, 2002, national bills and coins should disappear from circulation. German deutsch marks, French francs, Italian lira, and other Euroland currencies will cease to be used in everyday transactions and will cease to be legal tender. The Euro will be Europe’s single currency. The creation of this new denomination is not just a technical affair: It carries important symbolic and practical implications. With the introduction of the Euro in 11 countries with a combined population of almost 300 million people, Europe’s capital markets have undergone irreversible structural changes. European stock markets now conduct their trade in Euros and all share prices in Euroland stock markets are quoted in Euros. Europe’s premier security market, the London stock exchange, already switched to the new currency although Great Britain is officially keeping itself out of the Euro area. All transactions between

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banks and other financial institutions now take place in the new currency. International trade within Europe—which looks more like domestic exchange extended across different countries—and electronic transactions are conducted in Euros. European governments and others have already converted part of their dollar-based reserves into Euro-denominated ones. International price comparisons are made easier for consumers and businesses, thereby simplifying trans-border trade. Price transparency should prompt companies to clarify their pricing strategies toward their partners, suppliers and clients alike. Tourists and travelers will be spared the cost and inconvenience of currency exchange. Since January 1999, personal bank accounts can either be in the national currency or in Euros, and French banks send their customers statements calculated in both francs and Euros. In many supermarkets and grocery stores a system of dual pricing (double affichage) is now an everyday reality. Similarly, social entitlements, old-age and disability pensions, work and business contracts, credit and debit cards, ATMs, loans, taxes and all manners of investments also use the new denomination and dual pricing in their dealings with the public. As this chapter will show, the decision to create the Euro was born of necessity, changing circumstances, member states interest and good timing. At the same time, the Euro results from a semi-forced conversion to orthodox monetarism on the part of French elites since the 1980s. In turn, since 1992, the Euro has turned into an instrument for a federative evolution, with wide-ranging implications for national budgetary and fiscal policies. WHY DID FRANCE ADOPT THE EURO? Strictly speaking, the Euro was adopted rather than chosen by France for four reasons. That is to say that it was chosen as the lesser of several constraints, as the least undesirable option among, in truth, few other alternatives. First, it complements, even crowns, the long-term evolution of the European Single Market. The segmentation of European markets along national currency lines generates higher transaction costs, while foreign exchange risks hinder industrial competitiveness. According to the Commission, global transaction costs on European trade are estimated at about 0.5 percent of the EU’s GNP each year—a considerable figure compared to, say, the EU budget, which amounts to just about 1.27 percent of the European GDP.2 The reasoning here is that there could be no effective European market without a corresponding single currency. According to Jean Boissonnat, former board member of the Bank of France, “savings on the transaction costs could reach 0.3 to 0.4 percent of the European Union’s Gross Domestic Product (which means a saving equivalent to FF 25 billion for France).”3 The common currency simplifies and clarifies business transactions. In that sense, the Euro can be seen as the culmination of an incremental and cumulative process of economic integration, which started with the 1951 ECSC. For Desmond Dinan, “[w]ith the single market program off to a strong start in 1987 and 1988, the symbiotic relationship between 1992

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and EMU became a new Community orthodoxy.”4 The 1986 SEA dismantled the numerous non-tariff trade barriers that coalitions of policymakers and business interests had erected since the 1957 Treaty of Rome. By 1993, following the implementation of the Commission’s 282 directives on the Single Market, most customs and tariff barriers had officially disappeared in the EU, with notable restrictions in the energy and transportation industries. Obstacles to trade and investment across borders were lifted. Hence a boost to economic growth that created a competitive pressure on French businesses, translating into a flurry of mega-mergers in the 1990s, notably in the banking, armament and oil industries. Interestingly enough, French unemployment also started to recede in 1999, thanks to the strong economy in the United States, the positive impact of the Euro discipline on the budget, the national debt and the attitude of international investors. The narrowing of price variations across European countries thus helps bring about a genuine single market for consumers’ everyday transactions, such as car and computer purchases. Secondly, the Euro is meant to satisfy one of France’s deep-held aspirations, that of a political union. Ever since Jean Monnet’s groundwork, French leaders have been of two minds about political integration. They held reservations about its implications in terms of dissolution of national vetoing power but also wanted to create a medium (economic cooperation first, monetary union later) that would bind Germany to Europe. Even though French policymakers often instrumentalized the Community to serve their national purposes, there also existed a yearning to build a European entity that could speak with one voice in international, notably financial, affairs. Jacques Delors considered the Euro the most important step in Europe’s decade-long quest for its elusive political unity: “The constitution of a united Europe implies a historical analysis and a long-term vision.”5 Delors’ emphasis on the EMU as a pathway to European Political Union (EPU) differs from Altierro Spinelli’s preference for political union as a prerequisite to monetary unification. As the leader of the European federalists in the 1950s, Spinelli took a “maximalist” approach to European unification; an approach which was rebuked twice with the 1954 European Defense Community failure and the 1966 Luxembourg compromise. But if Delors took a more indirect, “minimalist” route, their goal was the same: the creation of a political Europe.6 For Jean Boissonnat, “[t]he Euro is born. Everything begins. . . . And it is a revolution. . . . Governments themselves seem surprised by their own boldness and slightly embarrassed by their own success. They would have been crushed by a failure. They do not know what to do with their victory.”7 After 1945, the fragmentation of European economies and currencies limited their worldwide use (with the exception of the deutsch mark). 1999 brought the hope that, thanks to the Euro’s impact, financial markets would recognize the continent as a single powerful player on international markets, especially vis-a`vis the United States. Clearly the single currency represents a historical watershed in that it brings to the foreground the issue of political federalism. It allows Europe to gain a critical mass and potentially to gain more stability in the midst

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of global economic turbulence. Hence, what monetary sovereignty is lost on the national level is regained at the regional level. The Euro may seem irrelevant to many Americans. At the same time, the U.S. government’s official position is that what is good for Europe is good for global trade and for the United States. The reality is more complex, as clearly the Euro entails “gains and losses” for the dollar.8 Diversification of assets on the world stage means that the monetary balance of power between the New World and Old Europe may shift. In some respects, the situation in the post-Euro era is reminiscent of de Gaulle’s 1960s challenge to American monetary supremacy. Is the Euro, then, Gaullism by other means? In fact, in the 1990s, many European leaders have grown concerned about the dollar’s instability, its unilateral impact on the balance of European trade, the huge U.S. trade deficit and the United States’ indebtedness. The Euro is, then, a political project in the guise of an economic one; or, as Robert Mundell puts it, “[t]he political case for the euro is not distinct from the general case for European integration.”9 The single currency is thus expected to give Europe a political clout corresponding to its weight in economic and financial affairs. For many French analysts, even though the U.S. economy is the first in the world, the dollar’s importance in world trade is disproportionate to the global weight of the U.S. economy. In 1999, the American economy represented about 20 percent of world wealth, but the dollar represented 61 percent of central banks’ equity (against 14 percent in deutsch mark and 7 percent in yen). The U.S. currency was used in 48 percent of global trade transactions (respectively 15 percent and 5 percent for the deutsch mark and the yen).10 The American currency has lost much ground to both the deutsch mark and the Japanese yen over the last decades; and the U.S. trade deficit is gigantic. But the relative diminution of the American share of world trade has not meant the disappearance of its currency as the denomination of choice for close to 48 percent of international contracts. But for French policymakers, a strong Europe on a equal footing with the United States would bring more stability to the global economy and make global trade less dependent on the American currency. In 1999, C. Fred Bergsten, former assistant secretary of the treasury for international affairs, wrote that [t]he Euro now represents an economy almost as large as the United States and will be even larger when all 15 EU countries become members. It enjoys considerably larger trade flows and monetary reserves and can boast a far stronger external financial position as a sizable creditor area; in contrast, America’s net foreign debt now approaches $2 trillion. As soon as the European Central Bank establishes its credibility, the euro will become a global financial asset and produce a portfolio diversification from dollars into euros by private investors and central banks that could ultimately reach $500 billion to $1 trillion.

The United States’ ability to fund its external deficit through monetary creation, a phenomenon which amounts to an interest-free loan to the United States,

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should henceforth be limited because of competition for Euro: “The existence of a real competitor to the dollar means that the United States will have to pay higher interest rates to attract foreign capital to finance its large external deficits.”11 Thirdly, France’s push toward the Euro is a direct reaction to Germany’s reunification. When faced with the emergence of an 80-plus million colossus in their midst, European policymakers rose to this historical occasion. The fall of the Berlin Wall and the disappearance of the Soviet Union meant that a new era had dawned on the European continent. Europe’s shifting power balance demanded a substantive break from the timid and divisive political approach of the 1960s and 1970s. France struck a historical “grand bargain” with its neighbor. For Paris, gaining some leverage over Germany’s monetary policy was both a matter of historical idealism and hard-nosed realism: better a Westernized Germany—even at some cost to French sovereignty—than one that, set loose on the European continent, would try to act as a balance between Europe and Russia. Hence the central Maastricht bargain: French support for Germany’s reunification in exchange for Germany’s support for EMU and especially the single currency scheme. Multilateralism in the form of deepened integration was seen by European leaders as the only alternative to the structural imbalance— both economic and political—created by German reunification. Peter J. Katzenstein points out that Chancellor Kohl relinquished some of Germany’s newfound sovereignty because “Germans have eliminated the concept of ‘power’ from their political vocabulary. They speak the language of ‘political responsibility’ instead.” A “culture of restraint” permeates Germany’s diplomacy: Germans went from an obsession with power to the avoidance of power through the cultivation of a Western identity, “contractual bargains” and pragmatic multilateralism “creating a European system of associated sovereignty and German semisovereignty.” The Europeanization of Germany’s political culture and outlook is thus “based on a broad definition of European identity” which was receptive to the Maastricht wager.12 During the Cold War, European and German division were closely interconnected, but after the collapse of communism, German reunification and European integration also went hand in hand. For France, the alternative was, literally, between the Germanization of Europe and the Europeanization of Germany; and, as Bernard H. Moss points out, Maastricht was France’s reply to German reunification: “EMU as it emerged at Maastricht was an attempt to supersede the power of the Bundesbank with its Euro clone. Fearful of the consequences of German reunification, Mitterrand rushed the process.”13 At the December 1989 Strasbourg European Council, Paris and Bonn struck their grand bargain. France lent its support to Kohl’s efforts toward German reunification in return for an IGC and the EMU, which at Kohl’s insistence was soon coupled with another IGC on political cooperation. Despite considerable British reservations, the deal was approved by other European leaders in Dublin in April 1990. Chancellor Kohl also needed his allies’ approval because he wanted to expedite the business of national reunification, so as to

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capitalize on his popularity during the October 1990 German legislative elections. Europe thus simultaneously accepted a widening of Europe (since they accepted the former East Germany without any waiting period, contrary to Portugal and Spain in the 1980s) and a deepening through monetary integration. Fourthly, France’s espousal of the Euro may be explained by its reservations toward an uncontrolled process of globalization. Since world financial markets can shift around the globe enormous amounts of capital within seconds, French leaders realized that a medium-size country like France (or any other country for that matter) cannot hold its ground in case of international speculation against its national currency. The fast-paced liberalization and integration of capital markets since the 1980s, facilitated and accelerated by swift technological developments, provide for extreme capital mobility. And the financial markets’ volatility regularly undercuts states’ abilities to lead independent (read “Keynesian”) monetary and budgetary strategies. Daily trade on global capital markets reaches about $3,000 billion, which far out weights France’s yearly GDP estimated at about $1,500 billion in 1999.14 Since many French policymakers construe international monetary relations as essentially coercive, creating a European currency based on a continent-wide economy might reduce for France and for its European neighbors, its main trade partners, the adverse effects of monetary disturbances. This is why Yves-Thibault de Silguy states that “the debate about France’s monetary independence has lost all meaning because financial markets have become the policemen of the global economy.”15

FRANCE’S EVOLVING MONETARY POLICY Toward the Franc fort Policy For France, the Euro did not happen through a “spontaneous” evolution. Rather it came about through sheer determination and hard work, themselves the result of a process of elite socialization to monetary liberalism, which from the early 1980s on fundamentally altered the public debate and economic policy orientations. According to Alan J. Dillingham, “[f]rom 1945 until the early 1980s, French leaders had been committed to a policy of high economic growth based on a highly inflationary strategy of state-guaranteed finance, explicitly designed to advance French power internationally and to bolster political stability at home.”16 From 1945 to 1971, the international monetary stability under the Bretton Woods agreement made possible this “inflationary strategy” by sheltering the franc against international speculative pressures. But French authorities did not always use the flexibility of the exchange rate mechanism wisely. France’s relatively insulated monetary regimen was called into question by the end of the Bretton Woods system in 1971, by the double-digit inflation after 1973, by the revolution in capital markets’ operations and by the technological progress in the information and telecommunication fields of the 1980s. After Bretton Woods, from the early 1970s to 1983 (Mitterrand’s economic turna-

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round), the floating exchange rate created a vicious circle of currency depreciation and high inflation, which stymied France’s economic growth. This is why the following sections chronicle the (sometime reluctant) march toward the franc’s domestic and international stability as well as the emergence of a transparty consensus in favor of monetary liberalism, which culminates with the single currency. At the December 1969 European Summit in The Hague, which took place in the wake of the monetary uncertainty created by the wage explosion of June 1968, de Gaulle’s abrupt departure (April 1969) and the subsequent franc devaluation (minus 11.1 percent in August 1969), the six members of the (then) Common Market decided to lay the groundwork for a monetary union. They entrusted Luxembourg’s Prime Minister Pierre Werner with the task of drafting a proposal, which was made public in October 1970. The Werner Report called for increased exchange rate stability in Europe (i.e., a narrowing of parity fluctuations), the liberalization of capital markets, the creation of a central bank and a European currency. As Hans Tietmeyer, former chairman of the German Federal Bank, argues, for the Werner Report, the transfer of monetary power to transnational structures and procedures was a political move of the utmost importance. For Werner, the EMU would act as a ferment in the political dough of nations, leading to the EPU, without which the EMU would not survive long.17 However, due to double-digit inflation, Eurosclerosis and European political divergences, Werner’s ideas lost their luster after 1973. The European exchange rate mechanism tried to limit currency variations within a 4.5 percent range called “the snake,” but it exploded after the 1973 oil crisis and the subsequent dollar devaluation. The years between 1973 and 1979 were the nadir of European cooperation, and it was a bitter paradox when Henry Kissinger proclaimed 1973, a year of rancorous transatlantic and European relations, the “Year of Europe.” With the exception of the deutsch mark (DM), European currencies started to float erratically and several currencies were forced to leave the snake. France left the Exchange Rate Mechanism (ERM) in 1974, came back in 1975 and left it again in 1976. From 1976 to 1978, under the floating exchange rate mechanism, only the national currencies closely pegged to the DM (Benelux’s and Denmark’s) enjoyed stability, which meant that the snake was effectively a deutsch mark zone. At the September 1978 Franco-German summit of Aix-La-Chapelle, German Chancellor Helmut Schmidt and French President Vale´ ry Giscard d’Estaing agreed to re-launch the process of monetary integration, and in the July 1978 Bremen and December 1978 Brussels European Councils, they persuaded other European leaders to establish the European Monetary System (EMS), comprising the ERM and the European Currency Unit (ECU), an accounting unit for public transactions. The EMS, established in 1979, provided for a common discipline toward currency stabilization, for cooperation mechanisms to help currencies that came under attack and for the ECU, which was solely a European accounting unit (EAU) and little known outside of the specialized governmental circles.18 The eight participating coun-

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tries (all the EC members at the time, except Great Britain) committed again to limiting their currency variations within pre-defined fluctuation bands (the standard range was 4.5 percent, extended to 12 percent for Italy, Spain and Portugal), while Germany strengthened its institutional commitment to uphold weaker currencies. The EMS grew more stable, and in June 1989, the Spanish peseta joined the system, followed in October 1990 by the British pound. Both currencies were allowed wider fluctuation bands. For Philippe Moreau-Desfarges, “from 1979 to 1992, the EMS is an unqualified success” and “represents a zone of stability.”19 However, with the DM used as a reference currency, the system remained asymmetrical and vulnerable to inner tensions as well as to outside speculative assaults against weaker denominations. In addition, since it permitted national governments to pursue autonomous macroeconomic policies, it opened the door to international speculation against weaker currencies, and it did not provide for enough stability. As Jean Boissonnat says, “[t]he European Monetary System was strong enough to show us the right direction, yet weak enough to convince us to move beyond it.”20 It had the merit of teaching France monetary discipline and Germany to trust its partners enough to go beyond a mere policy coordination, toward a real currency merger.21 In addition to the accelerated integration of financial markets, which made the cost of inflationary policies more expensive by imposing higher borrowing rates on profligate governments, the pegging of exchange rates among European currencies in the late 1970s and 1980s helps explain the shift toward disinflation in the late 1980s. However, Raymond Barre’s unpopular budgetary policy in 1979–1981 led to the Left’s victory in May 1981. As explained in Chapter 3, it would take the failure of Mitterrand’s socialism for French leaders to commit with renewed vigor to the EMS. In 1983, the continuation of the Socialist government’s expansionary, deficit-driven Socialist-Keynesian policies was not compatible with the rules of the ERM, since it implied further monetary adjustments. Alan Dillingham points out, Helmut Kohl was not prepared to countenance another formal devaluation of the franc without some change in the underlying direction of French policy. This in itself represented an important shift away from earlier practice within the regime; initially, the emphasis within the EMS had been on small, frequent parity alterations. It was not until 1981 that the practice of insisting on pledges of domestic policy reform in exchange for authorizing currency devaluations was initiated (and not until 1982–83 was this practice applied to France).22

Mitterrand then faced a choice between, on the one hand, pursuing his reformist program which meant letting the franc float (thereby de-pegging the franc from the deutsch mark and in effect leaving the EMS), and on the other hand, changing the course of his macroeconomic policy, which meant keeping the franc within the European Monetary System and repudiating his electoral commitment to social spending in order to implement a new austerity program.

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Mitterrand’s left-wing opponents cast France’s choice as one between asserting French independence and keeping Socialist electoral promises on the one hand and surrendering control to market forces on the other. However, President Franç ois Mitterrand and Minister of the Economy Jacques Delors understood that without international monetary credibility, any French-inspired grand plan for European monetary policy would be stillborn. During the unilateral economic reflation of 1981–1983, the franc was realigned no fewer than three times, each time with the aquiescence of France’s European partners, but it was still overvalued vis-a`-vis the deutsch mark. After their Keynesian fiasco, the Socialists’ monetary policy was justified by the need to win the confidence of global capital. This policy was pursued at great costs, including the abandonment of the Socialists’ electoral promises, a deep identity crisis within the French Left, as well as mounting unemployment and pauperization (nouvelle pauvrete´ ). After 1983, France’s Franc fort policy—a strategy of competitive disinflation and pegging the franc to the deutsch mark—was successful in monetary terms but costly in terms of unemployment. Jacques Mazier sums up France’s unsuccessful search for a new model combining Colbertism and monetarism: France’s economic policy gradually approached a norm inspired by both German orthodoxy and Anglo-Saxon “liberalism,” in the sense of a neo-conservative, free-market approach to economic policy—halting of structural policies, freeing of prices, financial deregulation, recourse to defensive flexibility in wage relations. . . . Handicapped by the failure to modernize its productive apparatus efficiently, the political desire to link the franc to the mark . . . France found itself increasingly constrained within the Community.23

In other words, France switched from monetary unilateralism (1981–1983) to constraining multilateralism after 1983, from the Franc faible to the Franc fort. This entailed a departure from earlier lax practices and a trans-partisan convergence of national policy preferences. This international credibility, won the hard way through orthodox monetary and fiscal measures, constitutes in many ways a point of no return, since this fundamental 1983 turnabout was never questioned by governing elites. But it was challenged as la pense´ e unique (the drastic narrowing of policy options) by dissenting factions within the Socialist and Gaullist parties, as well as by radical parties of the Left (Communist party) and Right (National Front), all of which defended l’autre politique (“the other policy”) and whose ideas enjoyed considerable popular support during the 1994 and 1999 European elections.24 After 1983, la pense´ e unique became the French government’s prevailing monetary culture (even though it contradicted France’s state-centered industrial culture). Combined with Jacques Delors’ leadership at the Commission, stronger Franco-German bilateralism and the drive toward the Single Market, consensus in favor of closer monetary cooperation permitted pan-European initiatives. In

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February 1988, German Foreign Minister Hans-Dietrich Genscher took the initiative with a memorandum for the creation of a European Monetary Zone and a European Central Bank. The Bundesbank was forced to accept the plan, and the June 1988 Hanover European Council commissioned Jacques Delors to further explore the ways and means of such a momentous endeavor. In June 1989, the Madrid European Council adopted a resolution based on the Delors plan that called for the creation of the EMU, a three-stage evolution toward the single currency, which became one of the most important parts of the Maastricht Treaty. The Council decided that the first stage of the economic and monetary union should begin on July 1, 1990. On that date, restrictions on capital movement within the EU were lifted. This liberalization of European capital markets provided for a further impetus toward monetary integration. The central banks’ governors increased their consultation and cooperation procedures and promoted monetary cooperation on a wider scale. To proceed to stage two, a revision of the Treaty of Rome was initiated through an intergovernmental conference (IGC) on economic and monetary affairs which, at Helmut Kohl’s insistence, ran in parallel with another IGC on political union. These negotiations led to the 1992 Maastricht Treaty which, because of ratification delays and several referendums (September 1992 in France, June 1992 and May 1993 in Denmark), came into effect on November 1, 1993. Phase two of the EMU was marked by the creation of the European Monetary Institute (EMI) on January 1, 1994. This institution, headed by Belgian representative Alexandre Lamfalussy, was assigned two tasks by Articles 109E to 109L of the Maastricht Treaty: to increase the central banks’ cooperation in monetary matters with a view toward meeting the convergence criteria and to prepare for the establishment of the European System of Central Banks (ESCB), a new federal system comprised of national central banks (NCBs) and the European Central Bank (ECB). On July 1, 1997, Willem (Wim) Duisenberg, former head of the Netherlands’ central bank, succeeded Alexandre Lamfalussy. On May 2, 1998, the European Council, taking into consideration the Commission’s recommendations (themselves based on the 1997 national monetary and budgetary performances), chose unanimously the members of the “in-group” (the first wave Euro zone members), who could proceed to phase three of the EMU, and the members of the “out-group.”25 On May 25, Euroland members appointed the president and the executive board of the ECB, who took office on June 1, 1998 (thus officially replacing the EMI). Because the Euro was a currency basket including the Danish krone, the Greek drachma, the Swedish krona and the pound sterling, it was not possible to determine before the official changeover (January 1, 1999) the irreversible conversion rates at which the Euro would be replacing participating currencies. Phase three officially started on January 1, 1999 with the creation of the Euro and the devolution of central banks’ monetary authority to the ECB. For France, says Desmond Dinan, “the EMS tended to be seen as a forerunner of EMU,” and in many ways, “the Maastricht convergence criteria were but an extension of the Franc fort policy.”26 In fact, Europe’s monetary union was seen

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as the only longer-term solution to France’s quest for currency stability. French leaders internalized this monetary union so much that, as David Cameron indicates, they rejected any compromise that would forever lock the EMU “into the second, transitional stage.” Indeed, with the support of the Italians, the French drafted an additional Article (109j.4) and a Protocol (10) that stipulated that, in the event a majority of states had not satisfied the criteria of 1996 and a date for the beginning of stage three had not been set by the end of 1997, the third stage would start on January 1, 1999 and would include whichever states qualified as of mid-1998. The French amendment, agreed to by Mitterrand’s colleagues, assured that the Community would get to the third and final stage of EMU in a finite and relatively short period of time. As the 1997 deadline came to be seen as “unrealistic,” this “irreversibility clause,” with its 1999 deadline, loomed as one of the most consequential clauses in the entire Treaty. 27

The EMU constitutes Mitterrand’s most constraining legacy to his successors, and because of this fait accompli, even Chirac’s considerable reservations toward Europe have melted like snow in the sun. During the 1995 presidential campaign, he sent out contradictory messages, promising to promote both a stronger European cooperation and a more independent France and to defend both the Euro and the welfare state of old. After his May 1995 victory, he wavered another six months, even firing Minister of the Economy Alain Madelin in summer 1995 because he found him too pro-market. It was only with the October 1995 Juppe´ plan in favor of budgetary austerity that Chirac was forced to make choices he had long tried to avoid. Lionel Jospin went down the same road: His pre-1997 reservations toward Maastricht and the Stability Pact have given way to accommodation, realism and orthodox monetarism—balanced by calls for a more social Europe. To honor France’s international commitment to building the EMU, he chose to shed his initial ambivalence toward the Maastricht Treaty and the Stability Pact once in power (June 1997). It may then be said that Mitterrand had effectively sacrificed socialism to European integration and that Chirac had done likewise with Gaullism. The Convergence Criteria and the 1992–1993 Monetary Crisis Euroland countries had to meet a host of stringent conditions aimed at proving real macroeconomic convergence among their economies and genuine, longterm political commitment. These entrance conditions reflected the positive economic performances of 1988–1990, when the EU’s GDP grew on average by 3.5 percent a year (from 1991 to 1997 the annual growth hardly reached 2 percent). Articles 104 to 109 of the Maastricht Treaty set the parameters for Europe’s monetary cooperation. Under Article 109E, member states should strive to avoid excessive public deficits. Article 104C deals with phase three of

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EMU by declaring that member states should avoid (not just try to avoid) such deficits. The five convergence criteria are as follows: 1. The public deficit should be less than 3 percent of the GDP or declining toward that threshold; 2. The public debt should be less than 60 percent of the GDP or declining toward that threshold; 3. The inflation rate should not be more than 1.5 percent above the inflation rates of the three best performing EU countries; 4. The national currency must stay within the fluctuation bands of the EMS (in other words there should be no significant fluctuation, either appreciation or depreciation, within the two years prior to phase three of the EMU); 5. The long-term interest rates should be less than 2 percent over the average interest rates of the three best-performing EU countries.

These convergence criteria bear a strong German imprint, since Bonn was reluctant to swap its robust deutsch mark for a potentially weaker currency without a formal agreement to curb public spending and tame inflation. These prerequisites for the Euro—comparable levels of inflation and interest rate, compatible public deficit and public debt and exchange rate stability—were indispensable to demonstrate an ironclad political commitment to the endeavor and to establish credibility with global capital markets. The convergence criteria expressed a political will to reach the single currency that was all the more important as Germany’s reunification wreaked havoc on the EMS. As the cost of its national reunification proved much higher than originally expected, inflation-shy German leaders avoided currency depreciation by implementing a tight monetary policy (i.e., raising interest rates) rather than through fiscal policy (i.e., raising taxes). Other central banks followed suit by offering higher interest rates to attract international investors, a decision that imposed recessionary pressures on European economies. EMS members paid—at least partially—for the cost of German reunification by means of increased interest rates, slower growth and mounting unemployment. Budget deficits soared, and the very possibility of reaching phases two and three seemed in doubt. The lengthy ratification process and the dubious results of the September 1992 French referendum and the Danish double referendum (no in June 1992, then yes in May 1993) did little to alleviate international concerns over the feasibility of the Euro. In addition, there were concerns over Italy’s and Great Britain’s lack of competitiveness and relative currency overevaluation. As Desmond Dinan formulates it, “a unified market with a free flow of capital . . . put the EMS under enormous pressure.”28 These factors plunged the European currency markets into turmoil. In September 1992, the British pound and the Italian lira were forced to exit the ERM and started to float, while the French franc was rescued only through massive German intervention. The same speculation also forced the devaluation

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of the Portuguese escudo and the Irish pound. The peseta remained in the system but was devalued four times in three years. In August 1993, financial markets again tested Europe’s resolve and solidarity, this time singling out the French currency. Huge international sell-offs imposed dramatic changes to save the ERM from imploding. The fluctuation bands were widened to 15 percent, which meant that currencies were permitted to float within the ERM. EU members wisely refrained from reinstating capital control (because of the Single Market), which in turn allowed European economies to start recovering by keeping inflationary tendencies in check and lowering interest rates. The crisis had three other consequences. First, after 1992–1993, weaker currencies outside the ERM, notably the British pound and the Italian lira, benefited these countries’ exports, while France and Germany with “virtuous” and strong denominations were handicapped and experienced sluggish growth and mounting unemployment. The lira lost about 25 percent of its value relative to the DM in just three years, which boosted Italian exports but caused considerable ill will between Germany and Italy. By another ironic twist, the lira rejoined the ERM in November 1996, just in time to qualify for the Euro. Italy’s monetary tribulations contrast with France’s relative sturdiness with the Franc fort policy, but both countries qualified for stage three of the EMU. The irony was not lost to the French (and German) opponents of Maastricht’s monetary liberalism. Secondly, the EMS withstood the financial turmoil of 1992–1993, though not unaltered, and the most significant achievement of the convergence criteria was the defense against inflation: “The fact that inflation failed to accelerate in virtually all industrialized countries which experienced a major devaluation after September 1992 was a major surprise to most observers, and seems to constitute a break with respect to the experience of the large devaluations in the 1970s.”29 To avoid a return to the 1992–1993 turmoil and to secure European currencies’ internal stability (keeping inflation in check) and external stability (exchange rate mechanism), stringent austerity programs were implemented by many European capitals after 1993. So after that date, the order of the day was reduced public spending and investments, higher taxes, fewer tax breaks, more cuts in social programs and other benefits, wage compression and toughening of labor laws to favor labor mobility, which in effect fostered job vulnerability. Since exchange rates could no longer be used to absorb economic differentials, such as divergent industrial policy strategies, growth rates, productivity and the like, labor markets had to become more flexible. Thirdly, for anti-Maastricht observers, the European leaders’ dogged refusal to question the convergence criteria entailed a forced march toward EMU. They charged that France’s monetarist policy lost its anti-inflationary justification at some point in the late 1980s, when France’s inflation came under Germany’s and fell to a historical low. That is when, they argue, monetary stability became an end in itself, regardless of the state of the real economy. They charge that the Franc fort turned into an instrument of competitive disinflation, a growth

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strategy based on lowering costs at the expense of labor, social and welfare policies. Their arguments received wide public attention, since from the 1980s high unemployment seemed to become a permanent feature, not just a temporary mishap. In her 1996 book, which was received with some fracas in France, Viviane Forrester articulated a profound fear that under this new capitalistic system, workers were fundamentally expendable. As Eric Cahm points out, the “doomsday scenario” of workers’ impoverishment and marginalization that her book evokes seemed to crystallize French fears and malaise in the late 1990s. Despite, or maybe because of its simplifications, her polemical essay became an overnight best-seller: “The importance of her book thus lies less in its exact content, which may seem irritatingly assertive and exaggerated, than in the fact that she has touched a raw nerve: many of the French have, instinctively, grasped that there will be no end to unemployment, and that neither Left nor Right can claim to offer solutions to this and other French problems.”30 Lasting unemployment started to recede beginning only in 1999, and the French elite came to be seen as either incompetent, indifferent, disconnected or cynical—or all of the above. This situation has proved a bonanza for the French far Right, which articulates and amplifies voters’ discontent with the post-1999 extension of Maastricht discipline ensured by the European Central Bank’s independence and the Stability and Growth Pact (SGP).

THE EURO AFTER MAASTRICHT The Case For and Against Central Banks’ Independence “Greenspanization” (a neologism referring to Federal Reserve Board Chair and anti-inflation hawk Alan Greenspan) is a worldwide process whereby central bankers have secured considerable freedom of maneuver in the realm of monetary policy from elected officials who find it harder to steer national economies because of interlocking monetary, budgetary and financial constraints. The proponents of this system see central bankers as being immune to the day-to-day pressure and short-term electoral concerns of elected officials, but this argument fails to impress many. The growing importance of monetary policy has thus brought to the political forefront the issue of the European Central Bank’s independence. In fact, if France surrendered much of its monetary sovereignty with the Maastricht Treaty, it simultaneously attempted to limit the extent of its loss and drove a hard bargain with its European partners after 1992. As this section will show, French resistance took four forms: A constant insistence after 1993 on an “economic government” (a political body that would balance the ECB’s power), a failed attempt to secure the presidentship of the ECB in 1998, repeated calls to Wim Duisenberg to lower interest rates and the emphasis on growth and social Europe as much as on stability after 1998. The exercise of considerable power by unelected technocrats has raised the central issue of the democratic accountability of self-governing banks. Robert

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Elgie points out that “[i]n order to eliminate the propensity towards short-term, electorally motivated business cycles, governments have ceded monetary policymaking powers to unelected central bankers.” However, this scholar argues that moves in the 1990s granting greater freedom of decision making to central monetary institutions “have not challenged the basic foundations of indirect political accountability.”31 He points to the fact that central banks’ independence should be construed as a continuum rather than as a dichotomy (i.e., full-fledged freedom from vs. total subjection to political authorities). Elgie further argues that the long history of central banking institutions reveal evolving degrees of freedom from political control. For instance, he contends that the Bank of France, created by Napole´ on in 1800, enjoyed, as a private institution, substantial autonomy until the 1920s, when it progressively fell under governmental control before its nationalization by the 1936 Front Populaire government. In 1993, Edouard Balladur, in an effort to prepare France for the single currency, enacted legislation that granted the Banque de France significant power over monetary matters. But according to Elgie, this institution’s level of economic independence—its ability to freely initiate and sustain a full range of monetary decisions without outside political intervention, notably the commitment to guarantee price stability, key interest rate movements, exchange rate parities and regulation of the banking industry—is superior to that of its political autonomy, which includes nomination procedures for key appointments, makeup of the board of directors and decision-making procedures. Some degree of political (read “democratic”) control is still exercised by the French government, which asserts its authority through its appointments of senior executives to the Banque, which is also under the statutory obligation to make a yearly report to the French Parliament.32 Even though the government does not and can not give specific instructions and the Banque does not and can not receive any, a modus vivendi based on mutual recognition has been worked out. For instance, when after about six months of indecisiveness Jacques Chirac publicly reaffirmed France’s commitment to meeting the Maastricht criteria in October 1995, the Banque responded in kind by lowering its interest rate.33 For French leaders, the neo-liberal reforms of the French central bank’s status were imposed by the EMU. But for Germany the idea of a bank controlled by a government was always naturally anathema. After the 1945 defeat, Germany’s patriotism could not express itself in strictly political terms. Whereas in the 1960s, France developed a compensatory political nationalism, which helped ease the traumas of the 1940 defeat and of a succession of colonial losses, after 1945, Germany’s sense of pride focused on its economic miracle and its strong national currency. The deutsch mark’s international recognition as a strong and valuable currency was based not only on Germany’s industrial strength but also on the Bundesbank’s (Buba) independence from political pressure. The decision to entrust European monetary policy to a self-governing bank modeled after the Buba was a given in German economic culture. The very location of the new ECB in Frankfurt, which was also headquarters of the German central bank, is

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thus a potent symbol of the continent’s commitment to monetary orthodoxy. The ECB is more independent (or less politically accountable, as its opponents would put it) than the central French institution. As Peter Ford states, “the guardian of the euro’s purity, the European Central Bank, enjoys a level of independence in setting monetary policy that is unmatched anywhere in the world. The ECB chairman and other board members serve an eight-year term and cannot be reappointed. And unlike the US federal reserve, which is mandated to pursue the twin goals of low inflation and economic growth, the ECB’s charter gives it only one priority: price stability.”34 In fact, Article 2 of the ECB’s charter states that “the primary objective of the ESCB shall be to maintain price stability. Without prejudice to the objective of price stability, it shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community.” The ECB’s mandate to maintain price stability provides markets with a measure against which its performance may be measured: Price stability is defined as a year-onyear increase in the harmonized index of consumer prices (HICP) of below 2 percent for the Euro area as a whole. This monetarist ideological consensus is espoused with more (in the case of Tony Blair and Jose Maria Aznar) or less (in the case of Lionel Jospin and Oskar Lafontaine) enthusiasm by European leaders. Tenants of this neo-liberal catechism argue that central banks’ independence guarantees the best macroeconomic results. However, many observers counter that the “correlation between central-bank independence and lower inflation” is not “clear-cut,” but rather “decidedly mixed” and may even be “spurious.” More than statutory independence, what matters is “widespread public acceptance of the need to make fighting inflation a primary economic-policy goal.”35 Bankers’ independence from politicians is usually considered a good thing—this assumes that this independence is used wisely. But during economic slumps, an inflexible interest rate policy acting as monetary straitjacket just worsens the situation. Calls for broadening the mandate of the ECB are being made every day, based on the argument that in a period of strong unemployment, high productivity and relatively slow growth, inflation is an unlikely possibility. The ECB is perceived as being overzealous in its commitment to anti-inflationary philosophy and too resistant to the idea of lowering interest rates when risks of inflation are at a historical low. Critics of the ECB’s monetarism also argue that in its attempt to move away from political influence represented by short-term political (democratic) interests, the central bank falls under the influence of very short-term international (undemocratic) financial interests. These critics like to remind bankers that there exists (or should exist) an unbreakable connection between free political life (democracy) and open market (capitalism) that is violated by the promotion of unaccountable technocrats to position of great power. In monetary, budgetary and financial matters, democratic governments are expected— required, rather—by markets to operate with as much clarity and openness as possible; but the ECB is not held to the same democratic standards. In fact, it

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operates away from public scrutiny and parliamentary supervision: “If the bank’s decision-making process were reasonably transparent and open to democratic oversight, the pain could perhaps be explained and justified. Under the current regime, however, bitter and restive publics may get nothing but dismissive hauteur. The result will be further widespread alienation from the entire European project.”36 Indeed, when it comes to the politically sensitive issue of the leadership in monetary policy and that of the external representation of the Euro zone in international fora, the Euro’s institutional architecture is every bit as complex and opaque as other EU institutions. Articles 105 to 109D of the 1992 Treaty deal with the ECB’s institutional mechanisms. The ECB and the 15 NCBs of the EU are referred to as the European System of Central Banks (ESCB). The ECB and the 11 NCBs of the Euro area are referred to as the Eurosystem. Decisions for the Euro policy are made by the Governing Council of the ECB (i.e., the ECB’s executive directors plus the 11 governors of the NCBs of the Euro area) when the 11 Euro zone members meet. When the Governing Council meets in a plenary session (i.e., with the 15 governors of the EU’s 15 NCBs), it does not make any decision affecting the Euro. Every month after the meeting of the Governing Council, the ECB’s president (Wim Duisenberg) and vice president (Christian Noyer) give a press conference. The president starts the conference with an introductory statement that explains the decisions taken by the Governing Council. This statement is immediately available on the ECB’s Web site. However, the bank’s secrecy of deliberation and voting procedures are an irritant to many democrats, since Wim Duisenberg made it clear that, in order to avoid market expectations and anticipations, the ECB would not publish verbatim minutes and voting records of its board meetings. However, he left open the possibility to have, at some point in the future, a summary of the arguments and the views expressed during the board meeting and a macroeconomic forecast. The ECB is not the only secretive body dealing with the Euro behind closed doors. Ecofin, the Council of Economy and Finance Ministers that deals with economic and financial matters, has traditionally been closed to outside prying eyes (journalists, legislative committees, etc.). Euro 11 (Conseil de l’Euro), the Ecofin Council of Ministers restricted to the constituent members of the Euro zone, is no less private. The newly formed Economic and Financial Committee (EFC) replaces the 40-year-old Monetary Committee and works to prepare and facilitate the Ecofin decisions. It has been called “Europe’s most powerful economic policy-making panel.” It does not announce its meetings in advance, does not publish any press releases and meets behind close doors. By an ironic twist, it is headed by a Frenchman, Jean Lemierre.37 The organization of the Euro’s representation in the international arena is just as Byzantine as that of its managing bodies. In international meetings, a “trinity” represents the Euro. This trinity, comprised of representatives of the Commission, of the Euroland members that are also G-7 members (France, Germany, Italy) and of the ECB, will speak for the Euro. Competition among nations to influence the Euro policy thus takes place

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within existing institutions. This is why the May 1998 Brussels Council witnessed an ugly row between France and its EU partners over the chairmanship the ECB. France held out for Jean-Claude Trichet, governor of the Bank of France, whereas other countries backed Wim Duisenberg. This exercise in oneupmanship on the part of France created lasting discomfort and ended with an awkward compromise. Wim Duisenberg reluctantly accepted to step down at mid-term (he would theoretically serve only four years out of eight) and JeanClaude Trichet would succeed him. Except in terms of domestic political gains, it is hard to understand the rationale behind France’s brinkmanship in Brussels. The French had already secured a French vice presidency (Christian Noyer) of the ECB, which is independent anyway. But, as noted in the beginning of this section, this French attempt to seize control of the ECB is part of a wider attempt to secure more political leverage. Thus, the Colbertist idea of an “economic government” counterbalancing the ECB’s monopoly of decision making has long been defended by French leaders but rejected by its partners. Peter Norman points out that for former Bundesbank directors Hans-Otto Po¨ hl and Hans Tietmeyer, “France’s aim of creating a political counterweight to ‘control or influence’ the ECB did not conform with the Maastricht Treaty.”38 For the Germans, the ECB’s independence is a cornerstone of the treaty and not negotiable under any circumstances. From 1993 to 1998, Paris was thus isolated on this highly sensitive issue until German Finance Minister Oskar Lafontaine started questioning the ECB’s stance in 1998. However, whereas the idea of an “economic government” is a natural in French monetary culture, Lafontaine was quickly disavowed by Chancellor Schroeder because he violated a solidly established political German taboo by publicly questioning the central bank’s interest rate policy, which for many is akin to challenging its very independence. Calling for “a dialogue” between the political authorities and the monetary authorities, as both Oskar Lafontaine and Dominique Strauss-Kahn did in 1998–1999, is considered in France as a normal democratic suggestion, whereas in Germany it violates the implicit code presiding over the relations between political and banking authorities.39 Significantly, a frustrated Oskar Lafontaine resigned in April 1999, giving no explanation for his decision, but his disagreement with Schroeder over monetary and social policies played a key role in his departure. He was succeeded by Hans Eichel, a loyal supporter of Schroeder and not one to question the ECB’s independent status. Neo-liberal monetarists point out that Europe’s monetary policy making is thoroughly insulated from short-term political and electoral pressures, but dissenters reply that its narrow, myopic focus on anti-inflationary policy is not technical. The ECB’s decisions, far from being apolitical, determine very directly who the winners and losers of the new economic order are. It is a political choice with political, economic and social consequences, as more and more people are paying a high price in terms of a degradation of their work conditions (notably wage and benefits compressions) or unemployment in order to satisfy the demands of international capital. This is why, since 1992, at every step of

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the way, France matched Germany’s call for financial stability, represented by the Stability Pact, with its own defense of more growth. The 1997 Stability and Growth Pact In October 1997, the Amsterdam Council endorsed a “Stability and Growth Pact” (SGP) which reinforced the Maastricht Treaty’s monetarist orientation by extending member states’ budgetary discipline beyond the creation of the new currency. The German government felt the need to reinforce Article 104C of the Maastricht Treaty, which called on member states to “avoid excessive public deficits.” In 1995, Helmut Kohl and his finance minister, Theo Waigel, drafted a stringent Stability Pact for two reasons. First, the German government was facing mounting domestic opposition at the prospect of losing their “tried and true” deutsch mark to a new and untested currency. Second, they wanted to cut short any French (or European) attempt to relax the Maastricht criteria. The initial German proposal provided for automatic sanctions in case any Euroland member should let its public deficit run over 3 percent of its GDP. Many, if not most, European governments were already close to this spending level, and various segments of German public opinion voiced considerable doubts about Germany’s commitment to the single currency. Chancellor Kohl, although initially the strongest proponent of the new currency, progressively developed significant reservations as its official deadline drew nearer. While hardening their position, German authorities shied away from calling for a revision of the treaty itself, because this procedure would have been politically difficult, even dangerous, given the sour mood of European public opinion, and too timeconsuming. The Commission watered down Germany’s initial proposal, and the two versions of the text were intensely negotiated at the December 13–14, 1996 Dublin Council, which saw the adoption of both a compromise version of the SGP as well as an agreement on the new exchange mechanism (ERM). By a significant omission, this pact was not made part of the Amsterdam Treaty and thus was never discussed or ratified by national legislatures.40 Germany and its more or less willing partners felt the need to address possible post-1999 budgetary disorders because lax governments might be tempted to run large public deficits in the hope of being rescued by the ECB (as lender of last resort) or by a concerted effort of other Euroland members. The temptation to “spread around” the consequences of their own overspending existed. For instance, a bitter dispute developed between Germany and Italy over Italy’s ability to qualify for the Euro. It is true that lax countries could also be directly punished by international financial markets, as their cost of raising capital on open markets could be potentially higher. However, the discipline offered by capital markets is not the best one, since international investors act gregariously and react too early or too late, excessively and with a volatility that makes matters worse. In addition, one country’s lack of discipline may reflect badly on all the others. In the absence of clear and predictable sanctions, any Euro

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zone nation that would pile up excessive public debts may then try to resort to the ECB’s direct intervention. Securing as much independence as possible for the ECB is one way of eschewing such a pitfall. Another way to avoid budgetary laxity is for member states to formally commit to corrective procedures toward budgetary transparency. Thus the pact provides for multilateral surveillance of each Euro zone member by its peers and for the possibility of a financial penalty against intemperate governments. Acting at the Commission’s request, the Council notifies the delinquent member of its probationary status. If no significant action is taken during this 12-month “grace period,” the Council may ask the incriminated state to make what is initially a “deposit” of up to 0.5 percent of its GDP. This includes a flat rate of 0.2 percent of the GDP plus an additional penalty of up to 0.3 percent, depending on the seriousness of the infringement. This deposit is automatically converted to a fine if within two years of receiving the Commission’s warning the offending government does not redress its budgetary course. The strengthening of budgetary convergence is effectively a multilateral management of national finance that obliterates the distinction between the domestic and the international levels. Many French and European observers have attacked the SGP with the argument that it further erodes member states’ discretion in economic matters.41 However, David Stasavage believes that the conditions for an effective stability pact are not met. He points to a number of features and procedures that limit the SGP’s credibility.42 First, its sanctions are far from automatic. Article 104C of the Maastricht Treaty considers excessive public deficit in excess of 3 percent of the GDP. The SGP uses similar guidelines, but the final determination of what constitutes “excessive spending” is neither clear nor automatic. The pact makes what some consider overly lenient provisions for “exceptional and temporary circumstances.” A recessionary dip of less than 0.75 percent of a country’s GDP is not considered serious enough to justify a budgetary imbalance over 3 percent of the GDP. For a recession of between 0.75 percent and 2 percent of the GDP, the Commission may be called upon to assess the country’s needs. However, excessive spending (over 3 percent) would be automatically accepted if it resulted from a serious recession (over 2 percent dip in GDP) or if other exceptional circumstances imposed a temporary recourse to a significant budgetary imbalance in order to prime the economic pump through deficit spending. So, according to Stasavage, the mechanisms for triggering sanctions lack clarity. Secondly, the Commission has secured for itself the right to initiate litigious procedures. This body does not interpret the stability criteria in the same detached, apolitical manner as, say, the ECB or the ECJ would. The Commission’s modus operandi is to find agreement among member states by cultivating political consensus. With compromise as a priority, the Commission could ill afford to single out a delinquent member state, especially a powerful one. Already in 1995–1996, the Commission labored to win concessions from Germany and to secure a more flexible version of its initial Stability Plan. Thirdly, the implementation of the budgetary rules laid out by the SGP is en-

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trusted to the Council of Ministers, a body whose procedural rules and politically motivated decisional orientation imply that, in order to impose fines on a profligate state, a vote by a qualified majority has to pass. However, as Stasavage points out, any Euro zone member threatened with possible penalty is also in a position to weaken, maybe even undo, a coalition of states in favor of sanctions. For instance, should France run large public deficits, it could offer political support to some states on unrelated issues (such as CAP, structural funds or enlargement) in exchange for a mollification of these countries’ stance on France’s budgetary record. Stasavage’s contention has merit, since Europe’s historical record of collective sanctions against wayward states shows little evidence of a united political will to deal with unruly behavior. Sanctions for non-respect of SGP criteria are open to political interpretation, whereas sanctions for non-respect of the Maastricht criteria were automatic (exclusion from phase three of the EMU). Some European politicians even suggested an accounting and political distinction between “bad deficit” (operating budget deficit) and “good deficit” (structural investment, such as public works, transportation networks and the like), which cost much in the short term but benefit all economic actors and future generations. In light of this, it is unlikely that “potential sinners” (all Euroland constituents may experience macroeconomic difficulties) will be keen to condemn “current sinners” because they may themselves be targeted next time around.43 Thus, the SGP confers much discretionary power to both the Commission and the Council and provides no automatic mechanism to retaliate against spend-happy governments. Finally, this sword of Damocles hanging over politicians’ heads does not encourage clarity of public accounting procedures, since member states may be tempted to “cook the books.” Already in 1996–1997, some states resorted to creative accounting to qualify for entrance in the single currency area. For instance, France consolidated the positive balance of the Caisse des De´ poˆ ts et Consignations (a public bank dealing with local governments’ finances) and that of the French Post Office with its own public accounts to reach the 3.0 budget deficit landmark. Therefore, the Wall Street Journal’s George Mellon offers a provocative answer to his own question: “How do you qualify for the Euro club? By cheating.” He castigates politicians who “continue on their free and easy ways, doing things quite legally that would land a corporate treasurer in the pokey.” In conclusion, he sarcastically observes that “[t]here are plenty of virtual budgets to be found around Europe, but little budgetary virtue. . . . But budgetary shenanigans on the continent feed Euroskepticism.”44 The Euroland constitutes henceforth a single economic and monetary area, with one inflation figure, one money supply (interest rate) policy and one exchange rate. The Euro hinders national budgetary autonomy; however, it does not provide for preventive measures for dealing with a national recession or any solidarity mechanisms in case a member state experiences economic difficulty, such as unemployment on a massive scale.

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Unemployment and Europessimism The Euro is not Europe. Important as it may be, it constitutes no panacea for current economic woes, notably unemployment and regional imbalances. Europe’s high unemployment is often blamed on the Euro’s monetary criteria, and resentment against Europe runs deep among economically disenfranchised Europeans. To complicate matters further, as the Euro slowly came into existence in the 1990s, its main architects either retired (Franç ois Mitterrand) or were voted out of power (Helmut Kohl), and in the late 1990s, a new generation of leaders took office everywhere in Europe. These new leaders also brought with them a new political orientation: In 1999, 13 out of 15 EU countries leaned to the Left. After 1998, a new wave of social democrats (Jospin) and social liberals (Blair, Schroeder), elected on pledges to re-launch their economies and fight unemployment, had to contend with the budgetary commitments made by their predecessors. These policymakers inherited a 1992 Bundesbank-inspired commitment to a monetarist orthodoxy many of them denounced at the time of the signing of the treaty and a 1997 SGP that further constrains their economic policy-making abilities. As Peter Ford says, many see their desire to set a new course for European economies through public intervention as directly antithetical to the strict monetary guidelines which inspired the EMU and which the ECB was entrusted to protect: New, more interventionist-minded policymakers in power in Bonn and Paris seem at odds with the very principles on which Maastricht was built. Duisenberg, defending those principles from his office in Frankfurt, has been scolding governments that he fears will boost their spending beyond the 3 percent deficit rule next year, and insisting that only continued fiscal discipline and structural reform will create jobs. This message is not to the taste of leaders who are focused on growth, many of whom won office because of voter fatigue over the economic austerity measures that their predecessors imposed in order to meet Maastricht criteria. They are seeking to create jobs, not shed them, for example through a French-inspired scheme to finance public works through a Euro-loan.45

Because labor is structurally less mobile than capital, mass unemployment may be used (if not directly caused) by business owners, notably transnational corporations, to undermine labor’s claims and lower labor costs as a part of production costs. Critics thus blame the European project for its narrowly conceived monetarism that favors another kind of convergence in the EU, that of mass unemployment and widening economic chasm between capital holders and workers. They charge that the exaggerated returns on investment demanded by international financiers impose sacrifices on workers and the middle class. This forces governments to downsize the real economy (the production and exchange of goods and services), which is being sacrificed to financial manipulations—to “casino capitalism.”46 In the process, the long-term public interest is sacrificed on the altar of investors’ short-term greed. Ultimately, as the welfare state loses

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its economic and social policy-making abilities, it is “hollowed out” and delegitimized. Left-leaning European politicians act under the assumption that raising interest rates slows down the circulation of money and decreases industrial output, causing layoffs and spending cuts by households and businesses, thereby aggravating negative economic trends. They point out that lowering interest rates makes it easier for businesses to borrow capital, invest, buy, sell and hire new employees. In this view, “priming the pump” contradicts controlling prices. However, the French situation shows that its rigid labor legislation, dissuasive tax legislation, partially ill-adapted education system, and sometimes overgenerous welfare state, as well as union activism in the public sector and cultural rigidities (insufficient geographical mobility, linguistic limitations), all limit the theoretically positive effects of lowering interest rates. The fact remains that Euroland governments’ long-term ability to sustain the austerity required to make the Euro credible is predicated upon a reduction of unemployment on the continent. This was especially true in the late 1990s when the greatest risk facing these leaders was no longer inflation but recession. Governments do not focus only on monetary issues but on larger issues of economic growth, prosperity for all and social stability. In this respect, David Andrews and Thomas Willett remind us that “[c]entral banks typically emphasize inflation control, whereas finance ministries generally assign greater value to broader economic objectives such as unemployment and industrial competitiveness; thus ceteris paribus the greater the degree of independence of central banks, the greater the overall weight given to price stability objectives.”47 In fact, the most dangerous time for the Euro was not January 1, 1999, but its 1999–2002 infancy, when any hesitation or mistake by the new ECB could have a disproportionate impact on international investors. The 1992–1993 “speculative assaults” against the EMS serve as a chilling reminder of these investors’ vigilance. Governments’ politicking and criticism of the European Central Bank for domestic reasons in the early stages of phase three of the EMU may open the door (the Pandora’s box, rather) to international doubt about the Euro’s health. And in 1999, the ECB had not yet established a reputation or a track record of orthodox monetarism. The ECB president’s task is especially important, since in institutional terms the ECB (not unlike the Commission) is dwarfed by the size of the member states’ administrative apparatus. The ECB has only about 500 employees whereas the 11 central banks constituting the Euro zone (or Euro 11) have a cumulative payroll of about 60,000 employees. No doubt the ECB will develop its own identity in time and not become a secretariat or a technical facilitator. The U.S. Federal Reserve System itself, which was established by the 1913 Federal Reserve Act, operated for the first 22 years of its existence as a decentralized system and became centralized only after the Great Depression had shown its structural inadequacies and the need for the centralization of authority. This, warns Wolfgang Mu¨ nchau, is a cautionary tale for Europeans, who cannot afford a similar period of trial and error.48

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Fiscal Policy Coordination There is a close connection between EMU and structural economic reforms in Europe. The definition of the European monetary policy is federal; its implementation belongs to the national level and fiscal and social policies remain largely national. Since governments can no longer resort to competitive devaluation and differential interest rate manipulations, there exists a natural temptation to manipulate national tax rates and bases (corporate tax, capital gain tax and value added tax) to attract foreign businesses and boost employment at home. With trans-border transaction costs down and intra-EU prices more transparent, in the absence of coordination among EMU states with respect to fiscal and social policies, there will be strong incentives for businesses to move to EU countries with the lowest social costs and the lowest environmental and regulatory standards. Not all kinds of competition are healthy, and differential tax regimes create significant obstacles to the completion of a real Single Market. In that sense, tax coordination may not be opposed per se. Europeans have thus to reconcile continental economic integration with national taxation policies, and the post-Euro debate is currently dominated by the notion that a minimum of fiscal policy coordination is called for to avoid a “beggar thy neighbor” policy of competitive undertaxation and deregulation. For instance, in a joint 1999 article, Oskar Lafontaine and Dominique Strauss-Kahn argue that market mechanisms are intrinsically positive but also need correctives. Given the extreme mobility of capital and the relative overtaxation of labor, competition among EMU countries to offer the lowest tax rate to footloose corporations is detrimental to all. In many cases of tax discrimination, the loss of public revenues is quite significant. And for these two leaders, the need to be competitive and the need to fund public spending should not be construed as mutually incompatible.49 Taxation is a sensitive political issue: As the Boston Tea Party indicates, revolutions have been fought over it. This is why tax “federalists” prefer to speak of tax coordination rather than harmonization in so far as they do not advocate higher taxes, or a one-size-fits-all, centralized approach. They reach not for uniformity but rather for compatibility and seek to avoid different tax rates on competing European goods and services. They also underline that a common currency does not create common prices or tax regimens. For instance, according to a 1998 survey by Conseil Europee´ n des Jeunes Agriculteurs (CEJA), a European organization representing young farmers, the Single Market is not yet a reality for farm equipment and agricultural products such as fertilizers, herbicides and pesticides. This study points to differential transportation costs but also to “taxes on importation of agricultural machinery” to explain “the large difference in prices between member-states.”50 Another study shows that in 1998 the sales tax on fast-food products such as McDonald’s was 12 percent in Portugal and 22 percent in France. The same Big Mac costs 2.19 Euros in Portugal but 3.36 Euros in Finland.51

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In December 1997, European authorities appointed Dawn Primarolo, Britain’s secretary for finance, as head of a group of EU and member state officials to investigate “tax dumping,” because “[t]hese governments believe tax competition erodes tax bases and shifts the tax burden from capital to labour.”52 Among the features identified by the Primarolo group as detrimental to fair competition are tax breaks that lack transparency, apply only to non-residents, are granted without the beneficiary bringing any real economic benefit to the host-country and ignore or contradict OECD guidelines for multinational companies. According to the Primarolo recommendations, such special tax status should be discarded by all member states by January 1, 2003. France and Germany see tax coordination as an indispensable corollary to monetary unification. They look beyond the Euro for the level playing field and stress that economic fairness through a common tax policy does not mean equalization; it means working toward a framework for capital, corporate and value-added taxation. They also suggest extending the qualified majority voting within the Council of Ministers (Ecofin) in order to “communautarize” fiscal policy. Against them, Luxembourg, Great Britain, Spain and Finland defend their own tax policy-making authority in the name of subsidiarity. As tax policy touches the very core of the traditional role of Westminster, Britons see outside changes to British fiscal laws as a direct challenge to old British liberties. This is why, says Nigel Forman, it is “difficult to persuade the people of Britain who care about these democratic processes and safeguards that membership of EMU will be both accountable and legitimate.”53 In addition, British leaders and businessmen are afraid to jeopardize the position of the City as the center of the European bond and security market. Great Britain’s willingness to cooperate on fiscal matters with its European neighbors is thus not so much a test of its commitment to Europe, but rather a test of its eligibility for membership in the Euro zone. Despite their reluctance to accept European legislation on such sensitive matters, the British fear being marginalized, especially since the volume of existing trade with the EU has already forced many UK companies to adopt Euro-denominated financial and accounting systems. Besides, shutting down tax havens is a necessary step in the further liberalization of European capital markets, an objective that Britain holds dear. To this day, Great Britain is an active participant in stages one and two of the EMU but has opted out of stage three and is spearheading the resistance against tax harmonization. However, the Labor government plans to hold a referendum on the single currency membership (stage three) after the 2002 legislative elections. All these reasons help explain why the eleventh FrancoBritish summit in Saint Malo in December 1998 was one of “constructive engagement” on the thorny issue of fiscal cooperation. The debate around “fiscal dumping” is part of a wider debate that also touches on social and environmental dumping and has many ramifications. As Jim Kelly points out, there is more to financial reforms than first meets the eye: Shifting the tax burden from labor to capital and energy-hungry businesses is a hugely complicated endeavor. For one thing, international comparison (and regulatory

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action) is difficult because the tax burden depends on many variables, including the tax rate and the tax base. French and German companies on average have higher tax rates than their British counterparts, but their tax base is lower. Tax reforms imply deep structural changes that are extremely technical: “Putting companies in the EU on the same footing will demand fundamental and timeconsuming reforms—not just of each member state’s corporate and personal tax systems but of the underlying legal and tax structure of companies themselves.”54 Indirect state aid posing as tax clauses is often hidden in national tax codes, and companies and governments heartily collaborate to develop sophisticated ways to circumvent anti-subsidy rules: lower tax rates, waiving of employer contributions, deferment of taxes due, or an accelerated depreciation of assets. Coalitional patterns have thus emerged to block serious reform attempts. The Duchy of Luxembourg, long a tax haven, backs Great Britain’s refusal of any energy tax, and in return Great Britain supports Luxembourg in its opposition to capital tax. Some limited progress has been made on duty-free operations, but the overall progress on other tax issues is painfully slow. Duty-free status (in airports, on airplanes, ferries and cruise ships) was called in question in 1999 when the industry failed to win an extension of its favorable status. The abrogation of the status resulted from the implementation of a 1991 directive that allowed for a seven-year transition period and touched products such as tobacco and alcohol. As a consequence, from 1991 to 1999, the duty-free business experienced a tremendous growth. But in July 1999, the Channel Islands (Jersey, Guernsey) were still resisting the cancellation of their duty-free privileges. Other market-distorting mechanisms also resist the EU’s harmonization attempts. The Union’s “transitional tax regime” was set up in the 1970s. It established a value-added tax across the Community and set minimum rates for excise duties on cigarettes and alcohol. After that, tax-policy reform virtually came to a halt. Attempts at coordinating corporate taxes have been stymied since the mid-1970s, and so were attempts on savings taxes since 1990 and energy taxes since 1994. From 1995 to 1999, the efforts of Single Market commissioner Mario Monti and competition commissioner Karel van Miert were not rewarded. Many disagreements remain, and the overall picture is one of confusion and contradiction. For instance, the French government demands that the EU clarify how consumers will be protected in transnational deals and wants the issue of grievance procedures addressed before agreeing to further liberalization. Further, a new and controversial legal provision in the 1999 budget bill also made it harder for French companies to settle abroad and mandated delocalizing companies to pay a 26 percent capital gains tax (which is the same tax rate as when the company is sold).55 Many exceptions to the rule are also permitted. For instance, Ireland negotiated with the Commission a single rate of corporate tax of 12.5 percent to be introduced by 2003. To provide yet another example, in fall 1999, Peter Chapman wrote that “British foot dragging over the savings tax proposal and Spanish intransigence on the energy levy mean they stand little chance of making significant progress” in these areas.56 This is all the more

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surprising as the EU as a whole had accepted the principle of an eco-tax on fossil fuels in the wake of the 1992 Rio de Janeiro Earth Summit. The eradication of predatory corporation tax exemptions in the peripheral parts of the EU, such as the Canary Islands, Gibraltar, Trieste, Andorra, San Marino, Liechtenstein, the Channel Islands and the Isle of Man, is still an unfinished business. And the French government itself negotiated with the Commission a special pro-development tax status for Corsica. By way of conclusion, it may be said that the launching of the Euro was a “victory” in the narrow sense of the word because it was not accompanied by any significant technical mishap. But it takes more than not creating mayhem in week one of its inception for the Euro to be considered a real success. It has to withstand the test of time and affect structural changes in world financial markets, including with global investors and borrowers. It also has to create significant behavioral changes among lending institutions, business owners, entrepreneurs, consumers and labor markets. This is all the more important, since with the exchange rate, interest rate and budgetary spending safety valves closed, structural adjustment comes mostly from labor. This explains why European legislators try to reconcile the Euro with the welfare state. For instance, the October 1998 Portschach Council recognized that the Euro deprived Euro zone governments of fiscal discretion and emphatically stated the need for more budgetary, social and fiscal policy coordination. This is nothing new, since from the beginning, the Euro project has been a political choice that welded and bent technical constraints to a bold historical vision. As Stewart Toy states, in “cutting the Franc loose, . . . practicality won over Gallic pride.”57 In the difficult compromise between independence and influence through constraining multilateralism, Paris has chosen influence—reluctantly, but with no chance of turning back.

Chapter 6

Security Policy: National Autonomy vs. Deepening Integration The construction of a European Security and Defense Identity (ESDI) is characterized by many taboos and awkward compromises, and its slow institutionalization process is regularly overtaken by international developments, such as the 1991 Gulf War and the 1990s Yugoslav crises. However, as Jolyon Howorth says, France plays a critical role in these ESDI attempts: “Pressure for its gestation has come overwhelmingly from France. . . . From the outset, the French were the prime movers.”1 In fact, security issues are no longer part of French “foreign policy” in the classical sense of the term, as Paris tries to secure at least a broad convergence between its aims and Europe’s. However, Paris often speaks on behalf of Europe while serving its own interests and entertaining conflicting notions such as a stronger EDSI and an intergovernmental decisionmaking process. France also often finds itself isolated on key issues such as NATO and nuclear armaments but can be a stalwart ally when the need arises, such as during the Gulf War. It can even morph into a security leader, as in Bosnia and in the administration of war-torn Kosovo under United Nations French envoy Bernard Kouchner. In order to shed light on France’s defense role, traditions and innovations, this chapter first sums up France’s autonomous defense philosophy during the Cold War. It then shows that the 1989–1994 period witnessed only a limited reassessment of its military analyses. In sharp contrast, the post-1995 years witnessed an acceleration of institutional and strategic changes with a rapprochement with NATO, the professionalization of French armed forces and the development of European initiatives, leading to the 1999 Helsinki summit. Despite a number of recent changes, European security today remains characterized by complex institutional machinery as well as persistent doctrinal and strategic divergences.

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THE COLD WAR STATUS QUO The 1945 Legacy Because of dissimilar World War II experiences, Great Britain and Germany developed a strong Atlantic culture, while France did not spontaneously accept the United States as a benevolent and reliable protector. Great Britain’s special relationship with the United States rested on mutual trust, common sacrifices and a convergence of strategic views. Their common political thinking included anti-communism and the desire to frame Germany and Italy in a broader security structure, as well as a mixture of distrust and pity for France, a country that surrendered to the Nazi juggernaut in 1940, collaborated with the German occupying forces and, under de Gaulle’s brief post-war leadership (1944–1946), made unwarranted claims of independence and status. Germany learned that a strong military and nationalism carry horrific consequences. Directly administered by Allied armies until 1949, it remained divided between East and West, with Berlin a central focus of East-West antagonism. Post-1945 German leaders craved domestic stability, national security and international democratic recognition, all of which could be obtained only through a close association with and partial submission to U.S.-inspired security plans. In fact, the Federal Republic of Germany was born in 1949, the same year as the Atlantic alliance, and owes its very existence to the presence of American troops on its soil. But France, which had neither a strong military nor strong patriotic feelings in 1939–1940, learned the hard way that it needed both if it wanted to survive as a free country. Because France was rescued only in 1944, after the 1940 defeat and a four-year occupation by Nazi forces, it never trusted the Americans to come to its rescue when it needed it—only when it served their own purposes and domestic politics. In addition, during the winter 1944 German offensive in the Bulge, de Gaulle clashed with U.S. military commanders who planned to withdraw from Strasbourg to better organize their defense against the German counter-offensive. Seated in Paris (liberated in August 1944), de Gaulle knew that an Allied withdrawal from Strasbourg, a highly symbolic city for both French patriots and German invaders, would mean its destruction by revenge-minded Nazis. He violently opposed the American plan and finally convinced General Eisenhower to hold on to the city. But this incident durably soured Franco-U.S. relations, convincing the French that the Allies stood ready to sacrifice France for the pursuit of the war and convincing the Americans that the French entertained unjustifiable claims of independence. The February 1945 Yalta conference, to which de Gaulle was not invited, further convinced him that the Soviets and the “Anglo-Saxons” had carved out Europe in rival spheres of influence. This “Yalta myth” would prove a driving force in France’s interpretation of the Cold War. In addition, French leaders resented the U.S. military commanders’ post-1945 plans to occupy France militarily, as if it were a defeated Fascist state. Already in 1940, Roosevelt had granted diplomatic recognition to the Vichy regime in

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the hope of securing its help against the Germans and to prompt the French navy, then a considerable force in the Mediterranean, to stay neutral at least or, at best, to join the British war effort. For de Gaulle, Vichy had no legitimacy, and only he, representing the Free French, could speak for his country. Roosevelt’s persistence to see in him a maverick at best and another Franco at worst humiliated him beyond words. De Gaulle’s fear of seeing France subjugated to “Anglo-Saxon” domination was confirmed in his eyes when, after the November 1942 liberation of North Africa from the Axis forces and his own relocation from London to French Algiers, a competing candidate for the leadership of the Free French, General Giraud, received U.S. backing. De Gaulle easily outmaneuvered his opponent but never forgot nor forgave the Americans’ attempt to discard him. After August 1944, he secured independent means of communication with Stalin, with whom he signed an agreement in December 1944. This brought him the allegiance of the French Communists at home and also, in his view, reasserted his independence from the Anglo-American “condominium” over Western defense. The Bipolar World Seen from Paris From the beginning, the Fourth Republic (1946–1958) was bogged down in colonial wars, first in Indochina (1946–1954) and then in Algeria (1954–1962). This fostered a chronic institutional frailty and financial dependence upon Washington. With de Gaulle ousted from power after 1946, and with the French Communists standing at the city gates like armed barbarians, the Fourth Republic gladly signed the April 1949 Washington Treaty that created the Atlantic alliance. Even de Gaulle backed the treaty, as he believed that war with the Soviet Union was imminent. But a major attempt at building a European defense force was made soon thereafter, its failure having major implications for the reinforcement of the American involvement in Europe. With the onset of the war on the Korean peninsula in June 1950, the United States was concerned that a similar scenario would take place in Europe, with a Soviet-backed East Germany launching an assault on West Germany to force German reunification. American leaders lobbied their European allies to accept German rearmament, which France refused for several reasons, many of them contradictory. First, Paris feared a resurgence of German militarism: Peace with Germany was only five years old and the scars of Nazi atrocities still very fresh. Second, Paris feared the neutralization of Germany, with Bonn negotiating a neutral status directly with Moscow in exchange for Russia’s acceptance of German rearmament. French diplomats remembered the 1922 Rapallo Treaty, which signaled the inter-war German-Soviet rapprochement, culminating in the 1939 von Ribbentrop-Molotov pact allowing Hitler and Stalin to carve out Poland and the Baltic countries in 1940. Third, France feared a “Weimarization” of the Federal Republic, with the newly born republican state faced with an antidemocratic army dominated by former Nazi officers. (The 1919–1933 Weimar

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Republic was plagued by far Right extremism for all of its brief existence.) Fourth, France feared that West Germany would attack East Germany to impose reunification on its own terms, dragging Europe, yet again, into a world war. Finally, Gaullists feared a supranational entity that would strip France of its freedom of action, while Communists vilified the democracies’ resistance to Soviet hegemonic plans. In order to control German rearmament, in October 1950 France suggested the Pleven Plan establishing a European Defense Community (EDC), a supranational defense structure with both military and political bodies, backed by international guarantees, including British participation. While some French federalists believed that they could capitalize on the success of the 1951 ECSC, others cast the dilemma in starker terms: either the EDC or a new Wehrmacht. At first, European and U.S. allies were reluctant, but after much diplomatic bargaining, they were convinced by the French proposal. However, on August 30, 1954, the French National Assembly rejected the plan. Why, and with what consequences? The primary reason is that the 1950 cabinet was no longer in power in 1954, and as majorities change, so do political platforms. The second reason is that after Stalin’s death, the USSR appeared less threatening, especially as Nikita Khrushchev spoke of a “peaceful coexistence” between East and West. Third, the United Nations’ intervention in Korea had turned the tide of war and nullified North Korea’s hegemonic designs. By 1954, the 1950 sense of urgency had dissipated. And finally, an unlikely coalition of Communist and Gaullist members of Parliament voted the supranational EDC out of existence. As Raymond Aron and Daniel Lerner show, the EDC caused a commotion of historic proportions in France; and the consequences of its failure were momentous for European security.2 Germany was allowed to rearm and to enter NATO in 1955. Attempts at building a political Europe were stymied for a long time, and Europe focused solely on economic matters. From the mid-1950s to the early 1990s, with European political and military cooperation frozen by the Cold War bipolar structure, Europe’s economic integration would proceed, but in disconnection with its political and defense persona. The very expression “national defense” also became a misnomer because of the common threat emanating from the Soviet Union, because of the common defense guaranteed by the U.S.-led NATO and because of the self-evident geopolitical solidarity of Western European nations. However, French nationalists attempted to ignore this reality through diplomatic unilateralism, especially vis-a`-vis NATO. March 1966: France Exits NATO The Fourth Republic was pro-American because of Cold War pressures and because of its financial needs to sustain its colonial wars. Charles de Gaulle had reviled this dependence upon American money and goodwill and, upon his return to office, tried to reassert France’s status by following three distinct paths. First, in September 1958, he suggested to the United States and Great Britain a triumvirate or “directory” over NATO, effectively bypassing other allies and

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reserving the political and strategic direction of the Atlantic alliance to the triangle Washington-London-Paris. This attempt was short-lived, never received any serious consideration from the Anglo-Americans and frustrated NATO members. Clumsy as it was, it testifies to one of de Gaulle’s longest-held aspirations, that of seeing France treated by the United States as an ally equal to Great Britain and above the former Fascist states.3 Second, with the 1961–1962 Fouchet plans, the French leader proposed to his Common Market partners a political union of European states, forming a more cohesive European identity, but one respecting national autonomy. His vision of a European confederation with close political and military coordination without integration was rejected by Belgium and the Netherlands, who wanted to keep the U.S. security guarantee and were suspicious of French motives. This “concert of nations” scheme speaks of two other Gaullist ideas: that of a confederation of nation-states (l’Europe des patries) and that of a “European Europe,” a coded expression designating the strengthening of Europe’s political muscle. Finally, with the January 1963 Franco-German Friendship and Reconciliation Treaty (the Elyse´ e Treaty), de Gaulle played on Konrad Adenauer’s francophilia and tried to cement FrancoGerman cooperation, seemingly at the expense of Germany’s commitment to Atlantic solidarity. But in May 1963, the Bundestag added a preamble to the treaty, insisting on Germany’s links with the United States and thereby defeating de Gaulle’s intentions. De Gaulle’s abrupt refusal of the British candidacy to the Common Market just days before the Elyse´ e Treaty did little to help his case with German parliamentarians. The subsequent nomination of the proAtlantist chancellor Ludwig Erhardt to replace the aging Adenauer shrunk the treaty to a more symbolic dimension. The security provisions of the treaty receded into the background; and only in 1982–1983 did Mitterrand and Kohl dare revive them. These attempts show that de Gaulle repeatedly questioned the Cold War order in Europe, but his diplomatic initiatives proved fruitless. His decision to withdraw France from the allied military integrated structures in 1966 can be seen as the dramatic culmination of a long-term effort to change the balance of power within the alliance. In fact, this withdrawal was gradual, since France’s Mediterranean fleet came back under national control in 1959, following the failure of the 1958 memorandum. But why did France leave NATO? The personal dislike between de Gaulle and Lyndon B. Johnson, combined with each leader’s refusal to meet the other one face-to-face, undoubtedly played a role. Beyond personality conflicts, de Gaulle resented the Anglo-American condominium over NATO. He saw the Pax Americana as a way for Washington to impede the growth of a strong Europe. By 1966, de Gaulle believed that the British-U.S. “complicity” ruled out any possibility of balancing the organization in favor of Europe. Since he could not alter the organization from within, he felt that exiting the structure was his only alternative. His decision was also based on a more sober risk assessment. After the October 1962 Cuban missile crisis and the Soviet backdown before John F. Kennedy’s firm stance, de Gaulle was con-

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vinced that the superpowers would not directly confront each other in their inner, most vital circles of interest—that is, the Soviet Union would never attack Berlin or Western Europe, and the United States would not militarily challenge the Soviet Empire in Cuba and Central Europe. Instead, he conjectured, their confrontation would spill over to outer, non-vital circles of interest, such as SouthEast Asia. To better serve world peace, as well as its own interests, France had to regain more freedom of maneuver. It had to facilitate the dialogue between the hostile superpowers by developing a “third diplomatic way.” In addition, in 1966–1967, de Gaulle feared American intervention in Vietnam as the greatest danger to peace. He feared a confrontation with China and thus attempted to regain its autonomy of decision-making by recognizing China in August 1964, causing widespread criticism in the United States. De Gaulle never advocated neutralism or non-alignment, but rather a “third way,” based on national independence and freedom to engage both superpowers. In his view, leaving the U.S.-dominated NATO and recognizing China were means of establishing France’s credentials in the world as a nation subject to none and friendly to all. De Gaulle’s vision of a confederal, yet assertive, Europe with independent nuclear armaments, a “European Europe,” based on the Franco-German partnership, never materialized, but it remained an inspiration for his successors. In this respect, the 1972 Defense White Paper sums up France’s strategic and doctrinal orientations. Paris structured its defense along three circles: its national “sanctuary,” its solidarity with the Atlantic alliance and its overseas commitment to Africa and French territories. Each circle placed France at the center, often obviating solidarity and mutual assistance, as shown by the document’s key concept, that of an independent nuclear armament. Nuclear Sovereignty The first French nuclear test took place in the Sahara in 1960. From then on, at least from a psychological perspective, France felt freer from the United States than other European powers. And at least from a doctrinal standpoint, it separated its nuclear armament and strategy from that of its allies. France’s nuclear armament or force de frappe had a nationalistic, go-it-alone underpinning. Its posited “sanctuarization,” which meant that in case of a military confrontation in Europe, Paris would hold back its nuclear strike until France itself or its “vital interest”—whose definition was left conveniently hazy—were threatened. Elements of the French First Army stationed in the west of Western Germany would serve as a threshold force. In case of the annihilation of this force and with its “sanctuary” menaced, France would step up its defense dramatically by resorting to its pre-strategic, short-range, small-scale nuclear missiles, Pluton. For French analysts, Pluton was not an extension of conventional forces, not a tactical superartillery system on the battlefield, but the beginning of the nuclear process. It would function as France’s unique and ultimate warning against any aggressor, who would thus be warned that France’s next step would be intercontinental

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ballistic missiles aimed directly at the enemy’s cities. In other words, Paris never excluded the possibility of launching the first (pre-strategic) nuclear strike against the Warsaw Pact. In May 1978, President Giscard d’Estaing declared that France would never use its nuclear arsenal against a non-nuclear state . . . except if such a state were allied with a nuclear power. In other words, France could strike any Warsaw Pact member, aiming not at its military forces and installations but at its population centers. Given the respective sizes and resources of the USSR and France, French nuclear doctrine also insisted on the faible au fort (of the strong by the weak) deterrence. This notion of minimal (or proportional) dissuasion meant that France refused the possibility of an arms race. Paris saw no rationale for competing with the powerful Soviet Union and building thousands of warheads. The destruction its small arsenal could visit upon Warsaw Pact countries would be unacceptable because it would be out of proportion with the enemy’s expected gains (however, this scenario assumed a rational calculation on the enemy’s part). France also refused the U.S. scenario of flexible response and advocated massive retaliation, since the U.S. nuclear scenario transformed Europe into a battleground between the superpowers. Contrary to the United States and the USSR, France is a small country and even one limited nuclear strike would mean the end of the country. French nuclear weapons were not primarily conceived of as a battlefield arsenal but as a political instrument of deterrence and as the weapon of last resort in a desperate situation. As Pascal Boniface states, “only nuclear armaments function as deterrence, but that is all they do.”4 However, nuclear Gaullism raised substantial practical and political questions. First, French leaders never clarified whether they would use their nuclear warheads to rescue their NATO allies, leaving the question open to endless speculation. French strategists had little confidence in America’s willingness to sacrifice its cities for European cities and argued that no U.S. president would sacrifice, or even expose, New York or Los Angeles to a Soviet nuclear strike in order to save Paris or Rome. Gaullists insisted that France’s independence reinforced the Western defense by adding uncertainty and complications to the Soviet military plans and by making their military gamble a costlier one. Second, Bonn strategists were uneasy with the idea that France accepted the loss of a part of Germany to buy itself some time, instead of fighting in the frontline for the defense of German territory. Paris’s scenario of massive French engagement on the Rhine contradicted both the forward deployment (battle on the Oder-Neisse rivers) theory and the in-depth, or territorial, battle concept (somewhere between the Elbe and the Rhine rivers). However, the very presence of French troops in West Berlin and in West Germany, all potential hostages to a Soviet attack, meant that France’s battle plans implied action somewhere in Germany—and hence carried the disturbing implication of an improvised coordination with NATO. Such life-and-death issues as interoperability, logistics, infrastructures and linguistic impediments, divergent chains of command and strategic objectives were virtually swept under the rug by self-assured French

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strategists. German leaders also balked at the reasoning underpinning Pluton’s conditions of operation. Given its limited range (120 kilometers), Pluton would strike on German soil. French strategists circumscribed German objections by discreetly pre-positioning Pluton units deep in German territory in order to be able to reach Warsaw Pact countries. Finally, French nuclear defense was supposedly tout azimut, meaning that French warheads did not target any one country in particular—only in 1983 did French documents mention the USSR as its potential target. This fictional neutrality was meant to insist on France’s freedom within the Western bloc. This is also why France refused to see its nuclear arsenal included in the Mutual and Balanced Forces Reduction (MBFR) talks and in the Russo-American Strategic Arms Limitation Talks (SALT) and Strategic Arms Reduction Treaty (START) negotiations. Samy Cohen rightly described the Fifth Republic as a “nuclear monarchy,” stressing the linkage between the French presidents’ enormous power in foreign policy and their nuclear decisional monopoly.5 However, France’s independence was more apparent than real, as it always benefited from U.S. protection because of its geographical location, while refusing the cost—political and military— associated with this situation. Since the Americans were able to fend off French attempts to gain more leverage within NATO, Paris often found itself something of a maverick among Atlantic alliance members. Changes in this French posture started in the mid-1980s, stumbled between 1989 and 1994 and accelerated after 1995. Working with Europe: The 1980s Revival During the 1970s and 1980s, the European Political Union (EPU) dialogue was a prelude to the Common Foreign and Security Policy (CFSP) initiated by the 1992 Maastricht Treaty. But EPU in the 1970s showed little progress, contrary to the 1980s period, which also witnessed renewed East-West tensions because of the invasion of Afghanistan in 1979, the Communist crackdown against Solidarity in Poland in 1981 and the Euromissile crisis of 1982–1983, partly initiated by the 1979 decision to deploy intermediate-range nuclear missiles, with new U.S. Pershing missiles to face the Soviet SS 20. At the same time, the mid-1980s saw renewed concerns about the American commitment to Europe. In October 1986, at the Reykjavik (Finland) summit between Ronald Reagan and Mikhail Gorbachev, prospects for a U.S.-Soviet arms agreement loomed large, which Europeans interpreted as the “decoupling” of the Atlantic alliance. At the same time, President Reagan’s Strategic Defense Initiative (SDI) seemed to render French nuclear armaments obsolete. In May 1981, Mitterrand was elected; in October 1982, Kohl was elected. Their mutual trust allowed the two leaders to promptly strengthen their bilateral cooperation. In 1982, a permanent Franco-German commission on security and defense was formed. In 1982–1983, Mitterrand backed Kohl and the United

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States in their decision to install Pershing missiles despite Soviet threats, as well as neutralists’, pacifists’ and Green party members’ protests. The issue of Pershing deployment was heated, and its outcome uncertain. Inspired by the pacifist slogan “Better red than dead,” Germans were deeply divided, the German Socialist party sided with pacifists and Kohl was very much embattled. But Paris proved such a good ally, says David Haglund, that “by the mid to late 1980s, France had become one of the ‘best students’ in the Atlantic classroom, at the very moment that the long-time teacher’s pet, the Federal Republic of Germany, was learning the joys of playing hooky.”6 In January 1983, on the twentieth anniversary of the January 1963 Elyse´ e Treaty, Mitterrand delivered in front of the Bundestag a firm endorsement of Helmut Kohl’s pro-NATO decisions. However, Paris never considered extending its nuclear deterrence to cover German territory, preferring a deepening Atlanticization of German defense through the U.S. nuclear guarantee. If the nuclear doctrine was still taboo, concessions on conventional forces were possible: In 1983, Paris created the Force d’Action Rapide (FAR), a 47,000-strong rapid deployment force seen as a goodwill gesture toward Germany, since its mission was rapid deployment on a forward battlefield such as Bavaria. The FAR enhanced France’s engagement in and mobility on the eastern front and constituted an important political gesture toward German leaders. The usual ambiguities resurfaced: Always trying to placate arch-Gaullists, Paris attempted to reconcile solidarity with Germany with national independence. German analysts saw in the FAR France’s rear-door reentry into NATO, while Paris proclaimed it a victory of European defense. These difficulties notwithstanding, the two Rhine neighbors multiplied joint maneuvers in the mid-1980s, notably with “Bold Sparrow” in September 1987. Involving 55,000 German troops and 20,000 French troops from the FAR, it was conducted deep in German territory, taking French forces from France to near the Czech border in a demonstration of European solidarity on behalf of Germany’s defense. Pleased by this display, Kohl suggested the creation of a binational unit, and 1989 witnessed the birth of the 5,000-strong Franco-German brigade. In 1988, the Franco-German Defense and Security Council was created with a mandate to elaborate common defense conceptions, and its political significance is underlined by David Haglund: “What stands the Council apart from the Commission (which it has absorbed) is the political importance of its membership: the heads of state and government, and the ministers of foreign affairs and of defense, as well as the top-ranking military officer in each country.”7 However, Franco-German cooperation remained fraught with political ambiguities and operational problems. In France, everyone but the traditionally Germanophobic Communists welcomed the reawakening of military cooperation with Bonn, albeit for different, even opposite, reasons. Atlanticists saluted it as a re-entry into the Atlantic fold, Europeanists hailed it as progress toward Europe’s EPU and Gaullists saw it as a way of steering Germany away from its Atlantic course. Both countries seemed to follow a hidden agenda: Germany was suspected of trying to bring France back into NATO and France was sus-

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pected in Germany of trying to sever the vital link between Bonn and Washington. Crucial questions remained unanswered regarding weapons system compatibility, operational procedures, chain of command and conditions of engagement. France’s semi-estrangement from NATO, its nuclear reserve and its cold assertion of using both Pluton and Hade`s (Pluton’s next generation of small-scale tactical missiles, although with an extended range of 450 kilometers) on its own political terms all ensured a permanent divergence between French and German defense doctrines. As long as Paris seemed to force Bonn to choose between Paris and Washington, and as long as Germany remained divided, no genuine cooperation on core issues was conceivable. Only after the end of the Cold War and with a French rapprochement with NATO did Germany feel safe enough to accompany French initiatives or take initiatives of its own to strengthen the European pillar of defense within the Atlantic camp. Another cornerstone of France’s independent stance was its nation-based armament industries and its role as a major arms exporter, especially in subSaharan Africa and the Middle East. Paris made it a point of honor to develop French technology and exports in the name of employment and grandeur. As Genevie`ve Schme´ der explains, “[i]n the industrial field, the search for national ‘grandeur’ and military autonomy implied technological prowess and advanced armaments capabilities. Independence in the production of military goods and technologies vis-a`-vis foreign suppliers, especially the United States, required the development of a powerful arms industry and a high level of public resources committed to military R&D.” In the strategic fields of nuclear industry, space, aeronautics and electronics, “outside the United States, no country had ever made technological autonomy as central to its security posture as had France.”8 France’s military-industrial complex was well served by the country’s tradition of administrative secrecy and semi-isolation, as well as by a carefully cultivated mixture of misinformation, passivity, Realpolitik and short-sighted nationalism on the part of the French citizenry. Whereas in Germany the peace movement combined with, and even absorbed, the anti-nuclear movement, in France neither of these formations existed, or existed only as voiceless, irrelevant factions. In France, elite cohesion and homogeneity on strategic choices, combined with unions’ desire to save French jobs, conspired to establish a functional complicity shrouded in silence. Therefore, in the 1970s, French arms exports ranked third in the world behind the United States and USSR but, says Schme´ der, “first on a per capita basis.”9 Countries such as Israel (until the 1967 war), South Africa, Libya, Algeria in the 1970s, Saudi Arabia and Iraq in the 1980s became chief customers. On the eve of the 1991 Desert Storm offensive against Saddam Hussein, France was by far Baghdad’s main supplier of military hardware. How can one assess France’s Cold War stance? Its much-vaunted Gaullist consensus was based on the stifling of public debate, with the Parliament, political parties and the public offered no avenue to participate in the crafting of security policy and no means of holding public officials accountable for decisional failure and excess spending. A fair bit of magical thinking inspired the

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French citizens’ trust in nuclear deterrence, which was used as an excuse to avoid facing the troublesome exigencies of conventional warfare. After two world wars made it obvious that Europe needed the United States for its own protection, it can only be said that denial of reality colored the French leaders’ belief in their strategic autonomy. Discreet, under the table strategic collaboration with the United States and NATO did not offset public statements of distrust and defiance of the United States’defense policy. France’s so-called “sanctuarization” was often criticized as “Maginot-line mentality,” an allusion to the 1930s Maginot line, a technically impressive but strategically idiotic defense line made of buried fortresses and heavy artillery, a static monolith erected against the fast-moving Nazi army. Schme´ der even speaks mercilessly of a French “tradition of preparing for the last war,”10 which left France underprepared in terms of air projection and military intelligence capability during the Gulf War. Indeed, under de Gaulle, “between 30 percent and 50 percent of all military expenditures was devoted to nuclear research development, production and operation.” In 1991, this figure was still as high as 22 percent.11 France’s budget was thus unbalanced, putting most of its financial eggs in the nuclear basket, and its conventional forces were overstretched among their French, European, African and global (French overseas territories) commitments. During the Cold War, France benefited from the German division and could assume an independent posture behind German territory in the (relative) safety of the second line. France never saw its grandiose claims put to the test, so the additional power it enjoyed because of its force de frappe seemed to balance the deutsch mark. But after 1990–1991, France appeared as one of the big diplomatic losers of the thawing of the Cold War: Its nuclear weapons were devalued as an instrument of international policy, and Mitterrand took several ill-inspired initiatives in Winter 1989. Caught in its old paradigms, Paris did not significantly reduced its defense budget until 1994, or at least comparatively less than its allies. But the 1995 Chirac election initiated a major intellectual reorientation, a long overdue strategic mutation which cannot be separated from Europe’s growing economic and budgetary constraints. THE 1989–1994 STRATEGIC EVOLUTION New Geopolitical Realities On November 9, 1989, the Berlin Wall came down; on October 3, 1990, Germany was reunified (under Article 23 of the 1949 German Basic Law). In April 1991, the Warsaw Pact was officially terminated, and in December 1991, the USSR disappeared as a multi-nation Communist empire. New security concerns were thus raised during the 1989–1991 period: • The German question, including respect of 1945 frontiers with its eastern neighbors, notably the Oder-Neisse border with Poland;

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• The integration of Russia and of newly independent states into a renovated security configuration; • The political, economic and social stability of the emerging states; • The preservation and adaptation of the Atlantic alliance, notably the connection between the United States and Europe; • The preservation and adaptation of the European Community; and • Defense issues such as the role of nuclear deterrence in a multi-risk context, arms reduction negotiations and the feasibility of reduced defense spending, expected to yield substantial “peace dividends.”

The scenario of a major war between the West and Russia became obsolete and, as Dimitris N. Chryssochoou states, “[t]he Soviet threat has been replaced by a complex of fluid and ‘secondary’ dangers: local or regional instability, civil and identity-based conflicts, revisionist tendencies in the regional subsystems, nuclear proliferation and even potential resurrection of past dangers such as nationalist groups and parties in Russia.”12 Indeed, the 1990s witnessed a multiplication of civil and ethnic wars, of lower intensity and peripheral conflicts, as well as terrorism and nuclear smuggling. Until 1989–1991, Europe’s security architecture was frozen by bipolarity and excluded Russia and half of Europe from the dialogue. But after 1991, the situation was fluid, volatile even, and called for engaging and including Central Europe, Russia and the Commonwealth of Independent States (CIS) in a global security dialogue. The November 1991 NATO Rome summit officially defined the West’s new strategic concept with the MC400 document, which pointed out that NATO had less to fear from a “calculated aggression against the territory of the Allies” than “the adverse consequence of instabilities” experienced by the emerging nations of the former Communist bloc. Also included were broader security missions such as “preventive diplomacy, crisis management and peacekeeping.”13 NATO was thus shedding its old Cold War identity and taking on new, original tasks, as exemplified by the 1991 North Atlantic Cooperation Council (NACC) and the 1994 Partnership for Peace (PfP). The situation also drew a number of European economic responses: In 1990, the Pologne-Hongrie: Actions pour la Reconversion Economique (PHARE) program was initiated to help rebuild Poland and Hungary, and in 1991, the London-based European Bank for Reconstruction and Development (EBRD) was launched, with Jacques Attali, a close advisor to President Mitterrand, as its first chairman. In 1989–1991, French defense initiatives mixed the old and the new, the kneejerk Cold War reflexes with the timid dawn of a fresh strategic thinking. In November–December 1989, Mitterrand visited Kiev and East Berlin and gave the appearance of lending a hand to moribund Communist regimes or, worse, of attempting to revive a pre-1914 Eastern alliance with Russia against German resurgence. He also insisted that German unification should happen slowly. His improvisation and faux pas prove that French diplomacy was caught unprepared

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by the 1989–1991 events. Some said then that Gaullism had reached its intellectual limits and may even have outlived its political usefulness. For instance, the December 1989 Strasbourg European Council decided to accelerate European integration; but in 1990, France decided to withdraw its troops from German soil with little, if any, consultation with Bonn. A compromise ensued in 1991, allowing a French armored division to remain in Trier. During the August 1991 attempted Communist coup in Moscow, Mitterrand resigned himself immediately to the fait accompli and did not lend his support to the embattled democratic forces in Russia. Mitterrand’s exaggerated fear of Russian reprisals and of German power clouded his judgment, while his genuine proEuropean feelings also inspired him toward sounder initiatives. In May 1992, at the La Rochelle Franco-German meeting, the decision was made to create the Eurocorps (headquartered in Strasbourg), but a divergence of opinion about its use vis-a`-vis NATO remained. Long-term progress was finally made possible through the 1990–1991 IGC on EMU and EPU that led to the Maastricht Treaty. With the balance between bomb and mark now obsolete, with the mark abandoned for the yet-to-come Euro, Mitterrand boldly declared a moratorium on French underground experiments in 1992 and even mentioned “concerted deterrence” as a possible European concept. Maastricht would enshrine a number of conceptual breakthroughs. Maastricht and CFSP Maastricht altered the terms of the debate on European security by establishing under Title V Article J.4.1, a CFSP dealing with “all questions related to the security of the Union, including the eventual framing of a common defense policy which might in time lead to a common defense.” It recognizes the Western European Union (WEU) as an integral part of the development of the EU and, on France’s insistence, incorporated the Petersberg tasks of the WEU (humanitarian and peacekeeping missions) into the treaty. The WEU declared itself ready to serve under the Conference on Security and Cooperation in Europe (CSCE) or United Nations mandates for peacekeeping operations, conflict prevention and crisis management, and symbolically moved its permanent council and general secretariat from London to Brussels on January 1, 1993. Further, the treaty establishes a distinction between common positions (Article J.2, voted on a unanimous basis) and joint actions decided by Qualified Majority Voting (QMV) (Article J.3), in which no one is forced to participate but which cannot be blocked by a member state except if that state shows that the projected action compromises its interest directly in important ways. This is known in Europarlance as constructive abstention or abstention constructive. While calling for the institution of a high representative for the CFSP, a “Monsieur PESC” heading up an early warning and planning unit (for monitoring, assessment and policy definition), the member states insisted on the authority of the Council of Ministers. CFSP thus falls under the intergovernmental second pillar and is

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managed by the General Affairs Council. CFSP draws on a distinction between the Community’s first pillar foreign relations including trade, technology and scientific issues on the one hand and diplomacy and security, or “high politics,” on the other hand, which remain intergovernmental. The Parliament’s role in CFSP is minimal, and the coordination by the troika members leaves much to be desired.14 The February 1994 White Paper 1994 again saw contradictory messages. On July 14, 1994, the Eurocorps, including German troops, participated in the national military parade on the Champs-Elyse´ es. The striking symbol of German troops parading on Paris’ famed boulevard caught everyone’s attention. But the 1940 memories of Hitler’s armies marching into Paris were well in the past, and a majority of the French public reacted well to this peaceful German military presence. However, because of institutional and electoral concerns in France, the 1994 White Paper on Defense offered only a limited reappraisal that fell vastly short of addressing Europe’s changes. The cohabitation (co-management of policy issues) between Socialist President Mitterrand and Gaullist Prime Minister Balladur limited the extent of possible dissent and innovation. The proximity of the May 1995 presidential elections forced Balladur, a prospective candidate, to conceptual prudence. There was also strong domestic resistance from Gaullists and Jacobins, partially counterbalanced by Defense Minister Franç ois Le´ otard’s strong European persuasion. The sudden loss of France’s Cold War strategic assets caused disorientation and confusion and above all hesitation. For instance, a discussion on the merits of Mitterrand’s 1992 moratorium on underground nuclear experiments in the South Pacific was carefully avoided; so was a firm resolution to either lift the moratorium or to ban the tests altogether. The status quo was also obvious in the preservation of conscription, the continued commitment to African security agreements and the maintenance of France’s standing forces at about 500,000. The document also built on the old by reaffirming the special relationship with Germany and the role of the WEU as a key security player, while calling to strengthen its links with the EU and NATO. Important shifts were noticeable in other areas. Whereas the 1972 White Paper insisted on a “three circle” Francocentric theory, the 1994 Paper laid out six scenarios: S1 is a regional conflict not threatening France’s vital interests; S2 is a regional conflict threatening its vital interests; S3 is a threat against France’s overseas territories; S4 deals with its defense agreements with sub-Saharan allies and other international commitments; S5 deals with peacekeeping operations and international mandates; and S6 is a major threat to Europe. France thus switched from its 1972 nationcentered “circle” theory to multi-risk scenarios, where only S3 and S4 did not mention Europe as their central focus of attention. The White Paper also recommends more cooperation with a reformed NATO. It insists on the projection

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of French forces in out-of-area (hors zone) operations, the need to collaborate with Europe for armament programs, the EU enlargement and its associated security changes. The lessons of the Gulf War (air superiority, targeted bombing, technological imperatives, military intelligence and observation) had been learned. Therefore, French strategists insisted on the need for more mobility and projection capability (calling for the building of a European long-range military transportation plane), more military intelligence (particularly observation satellites) and the development of European C4I (command, control, communication, computers, intelligence) capabilities. For this document, the defense of national borders no longer represents the crux of France’s military engagement, and the notion of interdependence is more apparent than the old independence chimera. Germany released its own White Paper the same year, but substantial differences with France remained. Whereas France insisted on force projection beyond the NATO area, Germany remained preoccupied with guaranteeing its security in Europe within the Atlantic structure. France looked to develop the Eurocorps as a European-led force to be projected in out-of-area zone missions, but Germany feared it would turn into an Afrikakorps serving France’s global policy outside the NATO area, such as in the Balkans, and outside Europe, such as in sub-Saharan Africa. Germany thus insisted on keeping conscripts within the Eurocorps to make sure there would be no French suggestion to use this force beyond the NATO limits. In 1994, the strategic convergence between the three main European powers thus remained elusive. Germany shared France’s desire for a stronger ESDI but partook of Great Britain’s Atlanticism; France cultivated a strong relationship with Germany, but Bonn accepted more supranationality for defense decisions, whereas London and Paris were keen on intergovernmentalism and ad hoc arrangements. In addition, France was one of the slowest Western nations to cash in on peace dividends: From 1989 to 1994, its military expenditures remained stable relative to its GDP and even augmented relative to its state budget. As a consequence, in its February 1994 consideration of the French White Paper, the Economist aptly titled its piece “French Defence: No Change, Yet.”15

SINCE 1995: A REVOLUTION IN SLOW MOTION The End of Nuclear Gaullism The resumption of underground nuclear testing in French Polynesia in 1995– 1996 was a unilateral reaffirmation of Gaullist power politics that backfired beyond Chirac’s greatest fears and forced him to face the political and strategic impasse of the “go-it-alone” doctrine. Why did Chirac decide to resume testing after a three-year moratorium? First, he sought to step out of Mitterrand’s shadow. He also wanted to placate his electorate and the Gaullist party by reasserting French independence in “high politics” at a time when the country was abandoning its sovereignty in monetary matters. As the 1995 Juppe´ austerity

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plan drew criticism for “caving in” to Europe’s federalist and monetarist demands and was met with vigorous opposition at home, what had become impossible in Europe—the theatrical assertion of independence—was played out in the distant (distant from Paris, that is) Pacific. But German, European and international indignation was stronger than expected, and large segments of the French population (never consulted, as always, in nuclear matters) also disapproved. South Pacific countries and Japan felt deeply insulted by what they considered a display of French arrogance and a deliberate violation of their environmental sovereignty. This contradiction between the deepening of Europe symbolized by the Maastricht Treaty and the nuclear psychodrama raises the issue of the justification of the French atomic position. Surprised by the strident international condemnation, France articulated a belated rationalization of its nuclear tests. In September 1995, Chirac proposed to Germany a discussion on concerted deterrence (dissuasion concerte´ e), arguing that these experiments were conducted in the name of European defense. His timing and motivation were questioned, and his suspicious argument delayed genuine discussions about the European nuclear deterrence for a few years. Chirac’s diplomatic fiasco revealed the obsolescence of the five key Gaullist nuclear arguments. The first argument posits that only nuclear powers are truly sovereign, whereas non-nuclear countries are politically subordinate and do not hold the same rank in international relations. Germany’s newfound status, based on the strength of its currency, economy and social model (Modell Deutschland) nullified this assertion. According to the second argument, national nuclear deterrence and inclusion in a military alliance are mutually incompatible. Mitterrand broke this Gaullist taboo by suggesting in April 1992 the concept of concerted deterrence. In addition, NATO’s transformation rendered a partial Europeanization of France’s force de frappe (nuclear weapons) conceivable. Third, Gaullism asserted that France’s resources allow it both to conduct an independent nuclear program and to prepare credibly for a sustained engagement in central Europe, combining vast quantities of tanks, heavy artillery and air power. The reality of France’s dependence on U.S. air and intelligence superiority during Desert Shield and Desert Storm dispatched this illusion within days. In this respect, Genevie`ve Schme´ der does not mince her words: After the cold war it became impossible for France to keep simultaneously a national arms industry, strategic and pre-strategic nuclear weapons, a navy organized around nuclear aircraft carriers, 350 fighter planes with a range of 1000 km, a professional “Rapid Intervention Force,” a corps of 800 modern tanks, general conscription and 45,000 soldiers maintained permanently abroad while developing the new flexible and sophisticated weapons which French officials believe are necessary in the new situation.16

Fourth, France claims the right to a special, independent diplomacy, a Sonderweg to which Germany had supposedly no claim. But in 1991, Germany’s

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decision to recognize Slovenia and Croatia forced Europeans, many of them in favor of maintaining a multi-ethnic Yugoslavia, to hastily grant diplomatic recognition to the two emerging countries. France protested, but Germany refused to placate its demanding Western ally, and Paris realized that German diplomatic reassertion did not mean an undemocratic Germany. Germany’s newfound assertiveness disturbed its Maastricht allies, but it was only a logical and predictable adjustment to the 1989–1991 geopolitical mutations. France was no longer exceptional, if it ever was. The last argument concerns public opinion. Until the mid-1980s, with the exception of the Greens, there never was any serious challenge in France—either in Parliament, the media, the establishment or public opinion—to the force de frappe. De Gaulle hoped that the nuclear bomb would bring solace to the traumatized French ego (the 1940 defeat and two lost colonial wars in Indochina and Algeria), but the consensus he helped manufacture evolved after him into a national mythology somewhat resistant to outside realities. For a generation, French citizens believed that their security issues had been solved. But starting in the mid-1980s, the French establishment and media were abuzz with discussions of France’s defense doctrine. With such a major institutional change as the Eurocorps under way, with its independent nuclear posture all but discredited, with its budget efforts harnessed to meeting the EMU criteria, after 1995, says Jolyon Howorth, “the semi-official formula chosen by the French government has been concerted deterrence.”17 This reassessment culminated in Chirac’s February and May 1996 addresses to the nation, which initiated deep changes in France’s strategic concepts, conscription policy, nuclear deterrence, budget and industry, and cooperation with Europe and NATO. Professionalization and Downsizing: L’arme´ e de me´ tier One lesson of the war against Iraq for France was its insufficient readiness to intervene with its allies in a non-European field of action. In 1990–1991, France’s Ope´ ration Daguet mobilized only 12,000 troops (in 1991, the French army was 239,000 strong, including 132,000 conscripts and 32,000 civilian personnel). This compares unfavorably with the British military which, 109,000 soldiers and 35,000 civilians strong in 1991, sent 35,000 troops to the Gulf, faster and with less disruption to its normal operations.18 As a consequence, in February 1996, Chirac announced the reduction of the duration of conscription and, in May, its progressive abandonment. This professionalization of the French military initiated a conceptual and political revolution. Conscription was long synonymous with the Republican system of government, since it was the 1789 Revolution that created la leve´ e en masse, or conscription, to fight the people’s war against European royal armies made up of aristocratic officers and dragooned or mercenary soldiers. This Republican myth was further reinforced by the 1914–1918 war and its somber though heroic proclamation of “the sacred union” of all Frenchmen, regardless of class and creed, in the war effort. According to the projected changes, the French military should go from 500,000

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to 350,000 troops between 1997 and 2002, with a stronger emphasis on force projection in coordination and close association with European allies, instead of a massive tank presence in eastern France and Germany to face the now defunct Soviet threat. The 12-month-long draft has been brought down to 10 months, and should be totally phased out by 2002. Instead, a one-day appel de pre´ paration a` la de´ fense was decided on after much debate. Desirable as this change may be, this transition to l’arme´ e de me´ tier (a professional military) was decided on without consulting with the German authorities, which were faced with a fait accompli, as they were with the winter 1995 nuclear tests. Germans feared that France would focus on out-of-area operations and no longer (or only marginally) help Germany in defending the European continent. France’s abandonment of conscription also created a serious domestic issue in Germany, where conscription has long been contested by the majority of German youth. (Many young Germans prefer to serve their draft time in civilian organizations.) The French military is now geared toward more projection and is more professional, less expensive and better coordinated with its allies, notably NATO—albeit not fully integrated in the Atlantic structures. A Qualified Reconciliation with NATO France’s relation to the Atlantic security community is one of solidarity in critical circumstances (the 1962 Cuban missile crisis, the 1983 Euromissile crisis, the 1990–1991 Gulf War and the 1994 Iraqi threat on the Kuwait border) mixed with relentless criticism of and departure from U.S.-led integrative structures.19 While French leaders, including de Gaulle, called for and eagerly signed the 1949 Washington Treaty, there was a rift between France and the rest of the Atlantic community in that France always advocated greater European participation in and leadership of their own defense. Consistent with the French desire for a Europe-puissance, or Europe as a political power, Gaullism without de Gaulle is a given in France’s strategic culture. As this section discusses, Paris was instrumental in promoting the concept of a European pillar of defense through the Western European Union, the Eurocorps and its attempts to Europeanize NATO. In March 1948, an embryonic defense organization called the Western Union (WU) was created by the Brussels Treaty between France, Great Britain and Benelux. The WU did not include Germany and Italy, lacked military capability and political will and was quickly overshadowed by the 1949 Washington Treaty. The August 1954 EDC failure was a coup de graˆ ce for any prospect for an independent European defense organization, and the October 1954 Paris conference transformed the WU into the Western European Union (WEU), which Italy and Germany joined. The WEU remained dormant until the mid-1980s, when Europeans reawakened it from its political slumber because of the Strategic Defense Initiative and the Reykjavik summit, which stirred the fear of strategic decoupling. The 1984 WEU meeting in Rome reinvigorated its struc-

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tures, and its missions were further defined under the 1987 The Hague platform, but Cold War bipolarization still limited its options. In 1988, Spain and Portugal joined the WEU. After the February 1992 Maastricht Treaty recognized this organization as a central component of CFSP, the June 1992 WEU meeting in Petersberg (near Bonn) injected new life into it. During this summit, European ministers admitted Greece as a new member, Norway, Turkey and Iceland as associate members, and Denmark and Ireland as observers. They established a military planning cell and defined humanitarian, rescue, peacekeeping and international law missions for the organization. These Petersberg tasks are specific, ad hoc, humanitarian and peacekeeping missions in crisis areas. In 1993, the WEU council and secretariat moved from London to Brussels to develop closer links with both the EU and NATO (SHAPE is headquartered in the Belgian city of Mons, close to Brussels). Eurocorps, for its part, is rooted as much in a political rationale as it is in a military rationale and is not exempt from ambiguities. In 1992, the FrancoGerman meeting of La Rochelle created the Eurocorps. Based on the FrancoGerman brigade created in 1988, it comprised 50,000 troops from France, Germany, Belgium, Luxembourg and Spain. The Petersberg Declaration seemed the beginning of an independent mandate for semi-independent European forces. However, Bonn saw the Eurocorps as evidence of French rapprochement with NATO, while Paris insisted on the Europeanization of German security culture. France, Germany, Spain and Belgium want to integrate the WEU within the EU and strengthen its autonomous capability but still choose to retain the Council of Ministers (and the European Council) as the locus for decision making. For Paris, European security rests on two pillars: an Atlantic pillar under NATO with American participation and a European pillar represented by the WEU and Eurocorps, acting under the authority of European governments through the Council of Ministers (not the supranational Commission and Parliament). To ensure greater credibility of European security collaboration, Paris argued in the mid-1990s that NATO ought to be restructured and a Euro-U.S. partnership established to replace the U.S. leadership. However, for Great Britain, the WEU served mostly as a liaison between the EU and NATO, which meant that there was only one pillar of European defense, provided by NATO, which should remain under American leadership. Given these reservations, why did France move closer to NATO? There are at least four reasons. First, new security imperatives called for a fresh look at France’s estrangement from the organization. Europe’s backseat in the Gulf War coalition and its failure to act decisively in the Balkans proved that NATO remained the linchpin of Western defense and forced a reassessment of Gaullism. After 1991, NATO had become a hybrid organization. It was a collective defense organization ready to provide assistance in case one member was attacked, and at the same time it developed as a peacekeeping structure that could operate under United Nations supervision. Its Cold War, Article V mission—collective defense against the Soviet bloc— was officially balanced by the need to engage Russia in international cooperation

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and to develop humanitarian and peacekeeping operations. France also anticipated that NATO’s post-1991 reorientation would permit a renovated institutional and political balance between allies and thus aspired to reform NATO from the inside. Second, in order to live up to its self-image as a global power, Paris always stood ready to participate in worldwide missions, and aloofness from NATO would not have been consistent with its aspirations. As Jolyon Howorth notes, France was the nation most involved in the Balkans crisis through multilateral actions: “[W]ithin the relevant international bodies, France has generally exerted the greatest and most constant pressure for military involvement of one sort or another. At the same time, the French government has consistently held back from autonomous action and has insisted on situating the French military contribution within the contexts of the international community, under the aegis of the United Nations.”20 Third, working with NATO diminished the doctrinal gap between France and its European allies, notably Germany, and constituted a necessary (albeit not sufficient, as it turned out) condition for progress in CFSP. Finally, France’s fear of being further marginalized and missing a historical window of opportunity was a powerful incentive. The January 1994 Atlantic meeting in Brussels seemed to advance the FrancoAmerican compromise toward more Europeanization. In Brussels, Americans and Europeans promoted the concept of the complementarity between NATO and the WEU, and the EDSI. These two breakthroughs converged in the possibility of Combined Joint Task Forces (CJTFs), that is, NATO logistics and capabilities (infrastructures, military intelligence logistics, notably air projection capabilities) under European (WEU) command for specific, European-led operations and missions (outside of SACEUR control). According to a 1994 report by Peter Grumbel, [t]he NATO alliance is set to give Western Europe the independent military capability that France has been seeking for more than 20 years, marking a striking rapprochement between France and the U.S. . . . Reversing a longstanding policy, the U.S. is giving explicit recognition to the validity of an independent Europe-only defense, and is ready for the first time to allow the Europeans to use NATO equipment and resources for their own military operations. . . . In return, France is formally softening its own objections to taking part in NATO’s integrated military command.21

Europe’s theoretical ability to deploy troops outside the NATO framework raises two questions: Would it weaken or strengthen the alliance? Is it promoting European autonomy or is it just an oblique U.S. way to control European security developments while claiming to support them? Under the 1994 agreement, NATO and WEU forces were deemed “separable but not separate,” and for Paris, at least, the arrangement was meant to redistribute power between transatlantic allies. It also led to an institutional division of labor whereby CJTFs would intervene for Petersberg missions (lower scale, humanitarian, peacekeeping duties) and NATO would keep a monopoly of Article 5 missions (collective

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defense of alliance members’ territory). This flexibility allowed French Defense Minister Franç ois Le´ otard to attend the September 1994 NATO meeting in Seville (Spain), the first time a French defense minister had done so since 1966. In December 1995, France reintegrated NATO’s military committee but still refused to integrate its armed forces (i.e., to have French troops under NATO command). However, many observers agree that CJTFs and WEU are not likely to emerge as NATO’s rivals. According to Dimitris Chryssochoou, “[i]n political terms, it means that CJTFs, as a US-approved and NATO-sponsored idea, enable a US-controlled development and implementation of ESDI.”22 Against the background of the IFOR in Bosnia (in application of the U.S.sponsored Dayton Accord) and the PfP dialogue, the June 1996 Berlin summit seemed to further reinforce the EDSI within NATO. CTJFs were accepted as a concept in 1994, but implementation measures were suspended for two years. In 1996, they were formally authorized. The United States and its allies also agreed to create a European Deputy-SACEUR (Supreme Allied Command Europe), who would take command in case of a Europe-specific crisis, but the United States was adamant about keeping control of the Supreme Allied Command Europe, the Supreme Allied Command Atlantic (SACLANT) and Allied Forces Southern Command (AFSOUTH). France wanted to “Europeanize” AFSOUTH by securing the position for a European general but ran into an American wall. This is why, in many ways, the July 1997 NATO summit in Madrid represented for France a step back on two key issues. Regarding NATO enlargement, the United States imposed on some of its European allies, notably France, three future members (Poland, Hungary and the Czech Republic) and refused to include Romania and Slovenia, which Paris supported. France denounced this decision as doubly hegemonic: a political show of force, since Washington wanted to retain absolute control of decisions affecting NATO’s future and an economically skewed deal whereby European taxpayers would pay for U.S. firms to sell NATO-compatible weapon systems to new NATO members. As the deadlock on AFSOUTH command structures also proved to be complete, France felt it had no choice but suspend its rapprochement with a NATO that the United States did not really want to reform. For Nicole Gnesotto, the Madrid summit testified first to the “extraordinary permanence of French ambitions,” second to “the United States’ no-less systematic opposition” and finally to “Europe’s continual indifference toward the very idea of Europe as a political power.” For her, the French refusal to proceed is justified by the fact that for Washington, the Atlantic alliance may only be “technically dusted-off but should remain politically unchallenged.”23 French policymakers often feel that U.S. leaders fail to appreciate the extent to which they adjust their doctrinal and political choices. For instance, in 1986, Paris refused permission to cross French airspace to U.S. bombers on their way to a bombing raid against Qaddafi’s Libya. But in January 1996, France welcomed at the southern military airport of Aix-en-Provence several U2 observation planes on their way to the Balkans. Such shifts, French strategists argue, testify to France’s adaptation to

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post–Cold War conditions—a flexibility that they do not always see reciprocated by Washington. On the other hand, seen from the Pentagon or the White House, France’s rapprochement with NATO may seem to be little more than a sideshow in the United States’ global dealings or a case of too little, too late, not warranting any substantial U.S. political concessions. However, spurred by the Kosovo crisis, Europeans pressed on with their reforms: At the June 1999 Cologne European Council, EU leaders adopted the principle of a politically autonomous capacity of action for NATO (thus recognizing NATO’s self-mandate in Kosovo) and appointed Javier Solanar, ex-NATO secretary general, as Europe’s CFSP leader. From Bilateral Cooperation to CFSP What kind of security architecture can the EU build? As David Haglund argues, there remain competing designs, from a Brussels leadership for a Pax Brusselana to a narrow or enlarged Carolingian Europe (a Europe articulated around the Franco-German axis) and various coope´ ration renforce´ e scenarios, not to forget the yet-to-come Europeanization of NATO.24 To answer this question, this section will focus on the combination of bilateral and European action, and on some breakthroughs such as European industrial cooperation, talks about concerted deterrence and coope´ ration renforce´ e under the Amsterdam Treaty. Franco-German collaboration is not CFSP; it constitutes an example of both subsidiarity and coope´ ration renforce´ e in security issues. As Patrick McCarthy argues, both countries are “condemned to partnership,” and their relationship “has been riddled with conflict because it is not primarily an alliance of two friendly powers against outside forces, but rather a way for one to control the other and for the other to control itself.”25 There have been periodic tensions in their security dialogue (1963, early 1970s, 1989–1999) but nevertheless a progressive buildup of mutual confidence and a partial convergence of interests and visions. France has abandoned its exaggerated claims of independence. Its 1991 scrapping of the Hade`s program (which, even with a 450-kilometer range, would have landed on East German territory) and its 1994–1997 evolution toward NATO allowed Berlin to envision more political commonality, precisely at a time when German diplomacy was coming of age. While still embracing their tradition of accountability, morality, sensitivity to other nations’ perceptions, rule of civilian power and multilateralism turning away from power politics, German diplomats are shedding their Cold War inhibitions. While now operating as a bridge between Eastern and Western Europe, Germany is also firmly anchored in the EU through the Euro, and there is no doubt where its heart is.26 Franco-German bilateralism is expressed in the December 9, 1996 Nuremberg declaration about a “Common Concept on Defense and Security” articulating the framework, orientation, strength and limits of Franco-German strategic cooperation. This key diplomatic document reaffirms the two countries’ common destiny and the existence of a common vital interest in each other’s stability.

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French and German security interests are considered “inseparable” because both face the same new risks, such as ethnic conflicts and border disputes on the European periphery. This concept had already been solemnly affirmed between Paris and London, so its implementation between Paris and Bonn does not constitute a breakthrough. Rather, it is a belated recognition of reality. However, other key principles have more substance. The document reaffirms a strong common desire to reinforce Franco-German security cooperation. This coope´ ration renforce´ e found its institutional expression in the 1988 Franco-German Defense and Security Council, which in 1996 was reaffirmed as the instrument to increase bilateralism, and in the European Armament Agency (EAA) created in November 1996. Headquartered in Bonn, it includes British, French, German and Italian procurement programs, with a majority of Franco-German programs. The Nuremberg document also proclaims a strong bilateral willingness to increase dialogue on nuclear deterrence in a European context, to insert the WEU into the EU and to develop political and technical capabilities to conduct European-led military operations independently of NATO but with NATO capability support. Despite all this, this document is not exempt from the usual diplomatic ambiguities. The beginning of the declaration states that NATO is “indispensable” (though not central) but also that it must be “reformed.” Germany considered that France at long last recognized NATO’s nuclear armament as a central player of European defense, whereas France underlined their joint call for the further Europeanization of a reformed NATO. Further, is the declaration a bilateral, binational treaty? Or is it simply a common policy statement? The ambiguities remain. But what is certain is that this secret diplomacy caused a stir. Investigative journalists leaked the document to the public on February 30, 2000, causing the Executive to speed up its communication to the French Parliament. It is also clear that the Franco-German coope´ ration renforce´ e exists despite or rather because of the persistence of ambiguities, which allows leeway between two countries with partly different interests and strategic cultures. For instance, Helios I and II intelligence satellites and the Horus radar observation satellite were developed in the mid-1990s following the Gulf War. Bilateralism is not limited to Berlin. In July 1993, the Franco-British Joint Commission on Nuclear Policy and Doctrine was established with the mandate to explore nuclear doctrine but with no mandate to discuss specific scenarios for the use of nuclear weaponry. In 1994, the French FAR was paired with the 57,000-strong British Field Army. In November 1994, John Major and Franç ois Mitterrand decided to create a joint air command structure, which was established in October 1995 through the Franco-British Euro Air Group based at High Wycombe in Great Britain. The same year, collaboration on a long-range military aircraft that was already under way among France, Germany, Italy, Spain and Portugal was strengthened when Great Britain joined the consortium. In the 1990s, Paris and London conducted most of Europe’s military research and development (R&D). For instance, in 1992, the United States devoted $213 billion to military R&D, France $29 billion, Great Britain $24 billion and Germany only $10 billion.27 Great Britain

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resolved some of its most basic reservations vis-a`-vis Europe, partly thanks to the Franco-British collaboration in Bosnia (Sarajevo) in 1992–1993 with the FORPRONU and to Tony Blair’s election as prime minister. At the 1995 Lisbon WEU summit, France’s Mediterranean collaboration also established the beginning of joint navy and air force structures with Italy, Spain and Portugal through the EUROFOR and EUROMARFOR in 1996–1997. Jolyon Howorth rightly concludes that “France has thus situated herself at the heart of a European network of integrated military units involving the main countries of the EU. For a country which once held to the rejection of integrated command structures as a point of principle, this is a considerable shift.”28 Europe’s CFSP has gone from being the lowest common denominator to achieving some significant breakthroughs. On November 15, 1999, EU defense ministers chose Javier Solana, ex-NATO chairman, to head the WEU and set up a permanent political and security committee in charge of CFSP. This link between the WEU and the EU is to be included among the IGC 2000 institutional reforms. On November 23, 1999, at the Luxembourg WEU summit, defense ministers decided that the Eurocorps could take over the command of the KFOR in Kosovo by the end of 2000 and officially appointed Solana as “Mr. CFSP.” On December 10–11, 1999, the Helsinki European Council took several historic decisions regarding both enlargement and security policy. In a move that is sometimes compared for its importance to the creation of the Common Market or the birth of the Euro, the EU invited six new countries (Bulgaria, Malta, Latvia, Lithuania, Rumania and Slovakia) to join the membership talks, while Turkey was granted EU candidate status with conditional provisions regarding economic and political reforms. (Six countries had already started membership negotiations in March 1998: Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia.) At Helsinski, it was also decided that IGC 2000 should complete its work by the end of the year, with new institutional changes to be phased in and completed by the end of 2002. The meeting also decided to create by 2003 a rapid reaction force of 60,000 troops for EU-led military operations in which NATO would not have to be involved. A permanent political and security committee (sometimes compared to COREPER) was set up, along with a military committee with military staff. Through considerable labor and bargaining, Europe began to define security coherence indicators (this loose wording was preferred to the more charged “convergence criteria”) such as R&D orientation, percentage of national budgets devoted to defense, system compatibility and projection capability development. Having cleared the Euro hurdle, Europeans now realize that CFSP is not just a political choice but also an economic choice. European industrial cooperation has thus become the logical corollary of CFSP. A 1993 WEU report states that “[t]he weapons systems used by European NATO member states are very different and incompatible in terms of munitions and spare parts. Soldiers of one country can do nothing or very little with the weapons and equipment of another allied country. This leads to limited effi-

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ciency and diminished combat value, and also higher costs because of the obligation to keep multiple stocks and separate logistics.”29 Europe’s defense industries in the mid-1990s were marked by excess production capacity, the fragmentation of European arms firms and duplication of weapon systems. Since the mid-1990s, the European defense industry has undergone considerable change, especially as the 1996 Chirac reforms had a considerable impact on French procurement policy. New weapon systems are more technology-intensive and hence costlier; at the same time, shrinking home and foreign markets drive up the research and manufacturing costs per unit. Outside markets have been steadily shrinking because of the end of the arms race and the loss of Iraq, probably France’s best client prior to the Gulf War, while cheap Russian exports and U.S. defense budget cuts and industrial restructuring sharpened competition for French firms. For instance, the 1994 merger between Martin-Marietta and Lockheed gave birth to a company bigger than the entire French aeronautics industry. In addition, African markets are less lucrative than in the recent past because some markets (Zaire) are less captive and because of local efforts toward democracy and good governance. The late 1990s were marked by industrial restructurings on a grand scale. For instance, on October 14, 1999 the alliance between German DASA (a subsidiary of Daimler-Chrysler) and French MATRA created the European Aeronautic, Defense and Space Company (EADS). The new giant is first in Europe and third in the world behind Boeing and Lockheed-Martin, and it includes civilian aircraft (Airbus, ATR), Eurocopter, ArianEspace (commercial satellite launcher), military aircraft (Dassault, Eurofighter) and missiles, in addition to other products. Consistent with this arms reduction program, several independent nuclear programs were abandoned in the 1990s: the underground launch silos situated at Plateau d’Albion, the pre-strategic nuclear missile Hade`s and the fission material plants at Marcoule and Pierrelatte. Nuclear strategy was also affected. During the Cold War, France refused scenarios including nuclear war; its force de frappe was seen essentially as a deterrent and war a failure of deterrence. In many respects, it was a political argument in the guise of a military weapon. Chirac’s post-1995 reconceptualization permits a debate on concerted deterrence, and the notion of widened sanctuarization, yesterday’s anathema, is being timidly discussed. For instance, a permanent Franco-British nuclear committee was set up in 1992 to deepen a mutual doctrinal understanding, but there is no shared targeting and no division of geographical labor among British and French nuclear submarines. This shows that if the national framework is seen as too small for a realistic nuclear doctrine, nuclear collaboration still raises many questions. Since the goal of force de frappe is not to please France’s allies but to intimidate enemies and deter them from foolish endeavors, how flexible is France’s national nuclear doctrine? Do France’s allies really want the French guarantee and do they trust it? What do they feel about trading the real U.S. protection for a hypothetical French umbrella? What about the EU’s neutral states, such as Austria and Ireland? What about the pro-Atlantic states, such as

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Denmark and the Netherlands? British technology is at least partially American, so what would the role of Washington be in this endeavor? In its effort to accommodate European countries, the French deterrence doctrine could become clouded, that is to say partly inefficient, because with nuclear armaments psychology and credibility are paramount. The core issue may well be that since deterrence laws are not flexible, concerted deterrence should not be conceived of as the beginning of EPU but as its acme, coming after much strategic convergence and cross-socialization. While nuclear positions are moving at a glacial pace, the Amsterdam Treaty extends the scope on qualified majority voting in CFSP but frames it narrowly. It allows for strengthened cooperation if: • It serves Union interests while respecting founding treaties and acquis communautaire, without intruding on the Community’s exclusive domain of competence or extending beyond the member states’ jurisdiction. • It concerns at least a majority of EU members without affecting the rights and duties of members that wish to abstain. • It is used as a last resort and authorized by the Council voting on QMV after consultation with the European Parliament.

Thus, as Dimitris N. Cryssochoou states, “[f]lexibility has been partially elevated to a modus operandi of the system,” while deepening has been postponed.30 In conclusion, this chapter argued that the 1960s debate between de Gaulle and Kennedy over the European security architecture was settled in favor of American conceptions and interests—until the 1990s changes. Today, rather than a major Eastern threat, Europe faces more diffuse risks such as drugs and nuclear smuggling, environmental hazards, ethnic conflicts, mass migration and population displacement. The current recognition of the existence of common risks and the possibility of collective goals and means is slowly creating a convergence of vision and a security community based on the recognition of the indivisibility of national security interests. Today, we are witnessing the reopening of the historical debate about the nature and the future of European security. European economic integration and security policy are no longer separate as they were during the Cold War; they overlap. They may even converge one day. A rapprochement of strategic cultures among European allies, combined with financial pressures, has proven a greater incentive than any predefined plans, but many obstacles remain. For one thing, Europe’s defense institutions resemble a patchwork, since the EU, WEU and NATO do not have the same members. For another, nowhere is the EU’s retreat from the federal objective more apparent than in CFSP because of the proliferation of multi-national initiatives and extra treaty arrangements. Europe’s defense mutualism thus has a hybrid character. It is a compromise between Europeanism and Atlanticism, and a compromise between integrative

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steps and intergovernmentalist strides. Divergent interpretations may then be presented. Some argue that the current mixture of pragmatism and vision strikes the right balance between the EU and its member states and allows for flexibility and creativity. Just as the EPU in the 1970s and 1980s was often initiated and sustained by national efforts rather than through Community channels, Europe’s defense in the 1990s remains a concordance without merger. Others argue that the existence of alternative (national) institutional channels for security building has weakened the EU’s role in CFSP. In fact, European interdependence (rather than integration) was born of the national failings, and the logic sustaining European collaboration toward EDSI is inspired as much by the need to face common threats and work toward cost sharing as by a vision of what Europe should be. Although this teleological element is not always absent from political calculations, it does not inspire the day-to-day intergovernmental bargaining. The community of threat has been recognized, the community of means is under way but still very patchy. The community of goals (beyond the extended requirements of security) is more problematic. In sum, the CFSP is a “nascent” community where many taboos linger between European players, as well as between the United States and its European partners.31 The notion of the indivisibility of EU members’ security has gained full acceptance, and a patchwork of cooperation, convergence and integration rather than across-the-board integration presides over EDSI. In the realm of high politics, member states still constitute the driving force. French citizens have accepted the termination of nuclear experiments, the professionalization of the military, the end of conscription, the development of CFSP and their country’s participation in peacekeeping and humanitarian missions—even at the cost of French lives. For instance, France lost about 60 soldiers, mostly to snipers, during the Sarajevo siege without public opinion questioning France’s participation in the United Nations’ Bosnian operation. But, sources of divergence with the Atlantic security community (nuclear doctrine, dominance of Atlantic alliance by the United States, the role of the United Nations) remain vivid in French strategic culture. And for all its European rhetoric, France remains reluctant about a supranational CFSP and believes in variable geometry and intergovernmentalism as well as abstention constructive and coope´ ration renforce´ e. Whatever the limits of French defense policy may be, says Ronald Tiersky, “[w]hat the French do in these matters is important. France is a key actor in European security. . . . France will play, as it has for four decades, a complex role in Atlantic security structures, and therefore in American security interests in Europe.”32

Chapter 7

Territorial and Identity Politics: Jacobinisme vs. Post-Modernism The effects of the economic crisis, globalization, Europeanization and market changes on the nation-state are intertwined and analytically hard to distinguish. While for France, Europe operates as a key agent of globalization of trade and finances, thus forcing changes to its national structures and procedures, the EU is also being used as a shield against some of the most dislocating aspects of globalization. However, in its attempt to regain some of its lost “flexibility” through an association with Europe, France, willingly or not, has put many of its national eggs in the transnational basket. This is why, considering the current “decoupling” between nation and state that the European Union seems to cause (or only “facilitate,” depending on the viewpoint), many argue that French political identity, defined here as its territorial organization, center-periphery relationship and sense of national values, is a casualty of European integration. The fixed certitudes of Jacobinisme regarding French governance and cultural distinctiveness are being replaced by a new rapport between Paris and the provinces and by a more fluid, less self-assured official persona. This evolving politics of space and self causes much anxiety, leading many to clamor: “I want my identity back!” For better or for worse, but certainly for good, the definition of Frenchness, a former meeting grounds laid out by the Third Republic and de Gaulle, has morphed into a battleground between the advocates and the opponents of a post-Jacobin identity. At stake is an anguishing dilemma: Does Europe menace France’s territorial integrity and personal identity or are they just modified by regional integration through a natural, innocuous, even beneficial process?

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THE END OF THE UNITARY STATE? The French central state has always played a key role in local governance, notably by means of the allocation of resources through structural and economic programs (ame´ nagement du territoire). Alain Guyomarch et al. say that “[t]he traditional picture of the French state was that of the most centralized country in Western Europe. The key to this centralization lay in its wide-ranging administrative and judicial powers over local authorities, and its key role in strategic economic planning and resource management.”1 However, the EU forms an institutional mosaic permitting more players (not just nation-states) to have their say. At the same time, market forces, decentralizing reforms and EU programs permit new forms of partnership between the central state and local authorities to emerge. Institutional Patchwork European policy making is characterized by a high degree of interplay between public (sub-national, national and trans-national) and private (business, unions, social and environmental lobbies) actors. As Yves Me´ ny, Pierre Muller and Jean-Louis Quermonne argue, “European policies are the outcome of complex compromises and interactions” in a game of bargaining which is “fluid, unstable and often unpredictable” and which alters the established rule of domestic policy making.2 This analysis is consistent with James Caporaso’s vision of the post-modern state as “abstract, disjointed, increasingly fragmented, not based on stable and coherent coalitions of issues or constituencies.”3 This mosaic of power is evidenced by the geographical dispersion of EU organizations—15 national capitals plus three seats of Community powers: Brussels, Luxembourg, Strasbourg—and its institutional heterogeneity—15 national executives, plus one European, 15 national parliaments plus one European, 15 national judiciaries, plus one European. This uneasy and evolving compromise between competing forces and policy levels explains why the EU’s influence is heterogeneous and ad hoc. Therefore, the impact of European integration is not a consistent and across-the-board phenomenon, either among different member states or within a given national polity, and the retreat of the state is intrinsically uneven and conditional. For a country like France, enamored with geometric and rational constructions (such as the metric system or the centralized education system and governance structures), the EU appears as a very un-Cartesian, un-French formation. As Yves Me´ ny et al. remark, “since the [EU’s] rules are less precise, the system is more open, and easier to penetrate, than bureaucratic, corporatist national systems. But as the rules of the game are not formalized, all kinds of co-optation, indeed all kinds of coalition, would appear to be possible.”4 Nongovernmental interests and private lobbies thus enjoy direct access to the European policy-making mechanisms, and their input no longer needs to be mediated by central elites. Networks or clusters of policy-shaping agents, in-

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cluding regional, professional and social interests, have established direct links among themselves and with European institutions. According to Hussein Kassim’s definition, “[t]he policy networks approach assumes that a government department and interest group come together to form a ‘power dependency relationship’ in which resources are exchanged. The public actor receives information and support, while the interest group has the opportunity to influence the content of the policy.”5 Polymorphous and heterogeneous transnational networks thus tend to coexist with, complement, nuance, contradict and sometimes supplant the clear lines of authority and power configuration that yesterday revolved around l’Etat central, the French central government. Today, this state has many more parameters with which to contend, and its authority has to be negotiated with more policy actors. In particular, the EU’s involvement in national policy formulation has modified the balance of power between the French central state and sub-national authorities, notably large cities and re´ gions. The Redistribution of Regional Power French governmental structures are unitary and centralized (not federal), with three levels of local governance: the 36,500 communes (townships), 96 de´ partements (plus 4 overseas) and 21 re´ gions (plus Corsica and 3 overseas). This is probably the most dense local governance network among all European countries. It has long been recognized that this number of “independent” municipalities is too high, since it limits their financial capabilities and favors fragmentation of resources and duplication of services (many French townships have fewer than a few hundred inhabitants). Various forms of partnerships and associations have developed over the years, but a structural challenge to this dispersion is still to come. The central authority is represented in de´ partements and re´ gions by prefects who play a major role in the local life. However interesting it may be, a detailed description of these structures and their relationship goes well beyond the scope of this chapter.6 As a consequence, this chapter only discusses how territorial structures and center-periphery relations are modified by market forces, national decentralizing reforms and European policies, all of which reinforce each other’s influence through legislation such as the SEA and the Schengen Treaty. With the opening of all national borders to EU goods, services, capital and workers, French regions have found new partners beyond the traditional “cage” of the Hexagone. This issue is especially significant because France’s central location facilitates openness to trade (since it shares borders with five EU members plus Switzerland and lies at the crossroads of north-south and east-west road and railway traffic) but is contradicted by its centralized political and administrative structures. The following examples illustrate the intrinsic tension between, on the one hand, the French regions’ Europe-oriented geographical assets and economic opportunities and, on the other hand, centralizing, Parisianbased Jacobinisme. The northern region of Nord-Pas de Calais, along with the

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Dutch ports of Amsterdam and Rotterdam, is one of Europe’s main gateways to the British islands. The underground, underwater Chunnel (the famed “Channel tunnel”) connects the British city-port of Dover with the French city-port of Calais and has significantly redirected the regional economy toward Great Britain and trans-European traffic. The eastern province of Alsace, culturally and linguistically a Franco-German hybrid, has always looked to the BadenWu¨ rttemberg region on the other side of the Rhine for tourism, commerce and employment. Savoy in the French Alps, buttressed against the dynamic Lyon region, has been connected to northern Italy continuously since the Romans, and today the entrepreneurial spirit of Italy’s northern provinces constitutes a powerful economic magnet for their French neighbors. Further south, the Montpellier-Toulouse Mediterranean crescent is expanding with a passion its century-old kinship with Northern Spain, especially with Catalonia and Barcelona as economic and cultural powerhouses. Elsewhere, extensive transborder urban areas, called Eurocite´ s or Euroconurbations, erase the last visible remnants of international borders, especially when French is spoken on both sides. For instance, the Lille-Roubaix-Tourcoing metropolis (located in the Nord region) straddles the Franco-Belgian border, allowing French citizens, among other things, to routinely drive to Belgian supermarkets on Sundays and holidays. French labor legislation forbids many stores from opening on certain days, but the more market-oriented Belgian laws allow them to remain open year round—and for longer hours. The Single Market only accelerated this trend. According to Bernard De´ zert, between 1984 and 1990, the Nord’s regional exports to the European Community jumped from 62.5 percent to over 71 percent. Today still, Germany is the Nord’s first client, well ahead of the not-so-distant Paris region, which comes only in second place.7 The French citizens’ spontaneous economic commuting is indeed changing the power balance between this region and Paris, since Eurocite´ s officials on the French side, rather than defending French customs and practices, must adjust to the European ways of conducting all manner of business. Thus the provinces’ search for more resources and optimum resource use, combined with the Single Market legislation, has affected the spatial distribution of resources, power and opportunities within France (as within all member states). This being said, all French regions are not evenly integrated in the European economic and transportation networks. Many factors remain that limit some regions’ connections with their European counterparts: Geographical distance (Atlantic provinces such as Brittany), insularity (e.g., Corsica), demographic weakness (Limousin in the center), traditional agriculture (in much of the center and south). There is little in common between Corsica, which lives largely off tourism, traditional agriculture and governmental subsidies, and the powerful Provence-Alpes-Coˆ te d’Azur (PACA) region. In PACA, for instance, the French Silicon Valley, Sophia-Antipolis (in the Cannes-Nice area) has an international outlook that attracts European start-ups and international venture capitalists. Sophia-Antipolis, although geographically close to Corsica, is a far cry from Corsica, which remains insular and parochial in more ways than one. A new


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spatial and political typology thus surfaces, with an emerging polarization between the outer, economically dynamic provinces (including Paris) and the regions of the hinterland that lack the positioning, population, resources and economic base to keep pace with this restructuring. The imbalance between richer cities/provinces and poorer ones is aggravated by the fact that new rules of local public action have emerged since the 1980s, notably the contracting out of public services (e.g., water distribution, garbage collection) and programmatic partnerships with the private sector. Richer, more developed cities and provinces can benefit from these new economic management practices more easily than the poorer ones, which still have to rely on shrinking public resources and traditional managerial practices. For instance, Europoˆ les are clusters of dynamic cities closely connected by geographical proximity (without fusion), efficient transportation networks and economic complementarity. Therefore, Bernard Jouve and Christian Lefe`vre explain that the current reorganization of the urban space everywhere in Europe is a key component of the reordering of the national political space.8 The notion of a “hollow state” (i.e., a central state deprived of some of its most significant policy attributes) is also related to the decentralizing reforms initiated by the central power. This issue is addressed by John Loughlin and Sonia Mazey, who inquire about The End of the French Unitary State, with particular respect to the strengthening of the re´ gions since 1982.9 Territorial reorganization long had a bad reputation in the Fifth Republic because, in April 1969, de Gaulle lost a referendum that would have provided for regional restructuring along with a diminution of the Senate’s powers—a move that se´ nateurs, many of them from la France profonde, denounced as anti-democratic. After the 1969 failure, structural territorial reform appeared as politically illadvised to the Right, which limited itself to a succession of piecemeal, tactical and technical modifications, which were just a rationalized administrative management without power redistribution (de´ concentration). However, influenced by the 1968 anti-authoritarian values, the Socialists had vowed since the 1970s to decentralize France as a reaction against the Right’s authority and centralized administrative planning and in the name of political modernization, pluralism, local democracy, respect for regional cultures and overall managerial efficiency. Central to their reformist agenda, the 1982 Defferre laws (named after Gaston Defferre, then minister of the interior and of decentralization) impacted profoundly the redistribution of authority by granting more autonomy and power to re´ gions. They received full legal recognition and, like the communes and de´ partments before them, became collectivite´ s territoriales (i.e., full-fledged institutions of local governance with an independent legal persona and status). They were granted more financial autonomy, with the central government limiting itself to a posteriori supervision instead of the previous a priori legal control (tutelle) of local finances. New or higher regional levies (e.g., car registration fees, driver’s license tax and tax on real estate transactions) were earmarked to secure their financial viability. Regional councils (i.e., legislative assemblies)

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were set up in each regions’ main city, with the executive power entrusted to the pre´ sident du conseil re´ gional, and with direct, universal-suffrage regional elections providing more legitimacy and political visibility to the new bodies. These presidents’ official attributions now include presiding over the regional council, preparing the re´ gion’s budget, overseeing its implementation, heading the local administration, developing the regional economic plan and outside networks. The regions’ jurisdiction was also broadened to include new responsibilities such as secondary education, welfare and unemployment management, vocational training, infrastructure planning and cultural life. In the same Defferre reform, presidents of departmental councils (conseils ge´ ne´ raux) also saw their attributions reinforced (presiding over their council, preparing the budget, etc.), and their jurisdiction strengthened (notably for transportation, secondary education and social assistance policies). Municipalities saw their own role in planning, housing, social assistance, public services and procurements policies fortified.10 To avoid a protracted legal battle and filibustering by the Conservatives, the Socialists left the communes structures untouched in 1982, although their upgrading was long overdue. Their 1982 breakthrough bill thus provided for a wide framework to be filled by further legislative action. Between 1982 and 1986, 40 laws and 300 de´ crets (i.e., administrative regulations) were enacted to complement and implement the 1982 legal provisions. Territorial reforms were put on hold between 1986 and 1988 during Chirac’s premiership, but upon the Left’s return to power in May 1988, they were accelerated. In particular, regional accounting offices (Chambres Re´ gionales des Comptes) were set up to insure public transparency and accountability of regional finances. In 1992, another important change laid down new rules clarifying the financial compensation, professional development and budgetary accountability of local elected officials. With their legitimacy, finances, personnel and democratic procedures firmly in place only 10 years after the 1982 Defferre bill, regions and other subnational actors used Articles 130A to 130E (Title V) of the Rome Treaty calling for a balanced development among European regions to receive further recognition through Article 198 of the 1992 Maastricht Treaty that created the Committee of Regions. From then on, they would have their own official forum as part of Europe’s institutional design. The issue of the assessment of these reforms thus arises. This question is very much debated. John Loughlin and Sonia Mazey caution us that the “picture which emerges is a complex one,” and that analysts’ “individual evaluations . . . vary.”11 In fact, despite some persistent limitations, there has been a genuine territorial and power rearrangement. Compared to some well-off municipalities and/or de´ partements, some regions are still restricted in terms of taxing, spending and borrowing abilities. Regional prefects remain powerful figures, especially in rural and less developed provinces where they face little competition from heavyweight politicians. In addition, the practice of holding “dual”—both local and national elected offices (such as the de´ pute´ -maire)—suggests that a local mandate still needs to be reinforced by a national elective mandate in order


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to be truly effective. Despite these limitations, the reforms have deeply impacted France’s territorial governance and culture. For instance, in relative terms, local taxes, especially municipal taxes such as taxe d’habitation (real estate tax) and utilities tax (especially water bills), have gone up significantly, while the state income tax has gone down in relative terms. Regional elections have become a familiar part of the electoral landscape, as regional councils provide a strong local power base as well as a national platform for political heavy-hitters. For instance, the 1998 e´ lections re´ gionales drew citizens’ and the media’s attention to Provence-Alpes-Coˆ te d’Azur where the incumbent president, Charles Millon, accepted the support of the far Right in order to be reelected. For many months, his notorious dalliance became the focal point of French politics and is still considered today as a cautionary tale for all moderate and Conservative politicians. Thus, regional politics now matters a great deal at the national level. In addition, the Right’s changing attitude toward the re´ gions shows how much Jacobinisme has been questioned even by its former defenders. When Chirac was elected in 1995, there was no counter-move on the part of the Right to undo the Socialists’ territorial reforms. Emmanuel Ne´ grier thus offers the following astute assessment: “The decentralisation reforms were implemented without changing the pre-existing structure of local authorities. . . . As a result of this situation, the de jure distribution of power is often amended by the de facto pressures which the different levels of local government face. . . . In this way, even if it was founded on a pre-existing territorial network, the extension of the powers of local authorities considerably amended the landscape of local government.”12 This change is possible because most, if not all, political actors internalized institutional and cultural changes and also because European legislation, notably the SEA and the Maastricht Treaty, recognized the provinces’ emancipation. Since applications for the EU’s structural funds are handled directly by the prefect in his/her capacity as representative of the central authority at the same time that regions have established themselves in Brussels, the issue of the EU’s impact on French territorial governance will be addressed next. With regards to the rapport between the regions and Europe, John Loughlin and Sonia Mazey write that “French regions are now competing with each other and with other European regions not only for EU funds, but also for inward investment. Hence the growth of the French regional lobby in Brussels.”13 The 1982 Defferre law did facilitate the Europeanization of the French regions by creating the institutional tools they needed to connect directly with Brussels and by permitting additional EU funds to reach local authorities. Most French regions have their own lobbying network in Brussels, often in association with other French regions in a “federation of regions.” Nord-Pas de Calais was the first region to open its own Brussels office in 1989, followed by Rhoˆ ne-Alpes in 1990. Two regional federations, Grand Sud and Grand Est, had already established themselves in 1986 and 1989.14 In fact, all sorts of networks of lobbying organizations are active in Brussels, among them the Atlantic Arc (for the Atlantic regions from France, Great Britain, Portugal and Spain) and net-

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works of cities sharing inner-city problems or high tech–based economies. In addition to this lobbying, the local government’s representation in EU affairs has developed in other ways: • Within the French delegation in COREPER, a sous-pre´ fet (deputy prefect) represents local interests. • The Comite´ des Re´ gions created by the Maastricht Treaty comprises 189 representatives of local and regional political bodies. Twenty-four French representatives sit on this advisory body. The SEA had already recognized the existence of sub-national authorities. • The European Investment Bank also provides for long-term, low-rate public loans to EU members and directly to regions for structural and public interest reforms. • Regional politicians may also use their Brussels connection to gain greater political visibility in their own region and at the national level, as well as with other partnerregions (at home or abroad) for functional and/or programmatic cooperation. The prospect of additional funding only strengthens local officials’ desire to shine in the Brussels sky.

The Commission long realized that Europe’s unequal economic development and geographical disparities hinder integration. They limit the Single Market and create pockets of resistance to the EU’s legitimacy and common policies. Member states themselves gladly accept the EU’s redistributive solidarity, which provides for more outside (non-national) funding and borrowing abilities for the local agencies. As decades of geographically uneven growth since 1951 prove, the free market does not naturally smooth out local differences and may even exacerbate them. When the economic crisis started to hit Europe in 1973, entire regions such as Lorraine and Nord in France lost their textile, coal and steel industries. Joblessness reached alarming proportions in mono-industrial cities and regions, and consequently, from the mid-1970s on, Europe had to refocus its aid policy away from CAP and more toward industrial, unemployment and vocational training policies. Until the 1984 Fontainebleau reforms and the subsequent budgetary changes, the CAP represented about 70 percent of all European expenditures. In the late 1990s, the CAP had gone down to about 40 percent, while regional aid and “structural funds” were boosted to about 35 percent—a significant increase.15 The EU’s financial contributions to ailing regions and member states through its regional policy, say Guyomatch et al., may then be interpreted “as a series of ‘side payments’ to states to encourage them to participate in other policies (where they may appear to be ‘losers’) and in the process of integration.”16 Brussels thus developed four financial instruments known as structural funds: the European Agricultural Guidance and Guarantee Fund, the European Regional Development Fund, the European Social Fund and another fund for commercial fisheries. The Maastricht Treaty itself introduced a Cohesion Fund and the Trans-European Networks (TENs) to better link peripheral and distant regions. Objectives were set for all structural funds,


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and specific programs developed (RECHAR for declining coal industry, RETEX for textile industry, NOW for women, HORIZON and HELIOS for citizens with disability, URBAN for city development, SOCRATES for education, ERASMUS for university students, LEONARDO for vocational training, etc.) These “pay-offs” to peripheral countries (Greece, Ireland, Portugal, Spain), regions (the Mezzogiorno, or Italian south) and economic sectors help assuage, if not altogether eliminate, anti-European feelings among the poorer constituents. They also help avoid the perpetuation of political divergence among member states. For instance, Germany’s political energy and domestic aid are naturally directed toward its poorer Eastern La¨ nder, while France, Italy and Spain want their poorer Mediterranean areas to come first. Europe’s participation in these regions’ development thus facilitates integration and a commonality of purpose despite marked territorial and political polarities. Structural funds are based on the principles of partnership (i.e., the Commission consults directly with both national and local powers), additionality (i.e., EU funds should not replace regional or national funds but should be matched by them) and subsidiarity (i.e., decisions must not be centralized by Brussels but, whenever possible, should be left to the political level closest to the citizens whom they are going to impact). A “zoning” system (zonage), based on macroeconomic indicators such as GDP and unemployment rate, was defined to establish needs of and eligibility for EU’s funds. Therefore, assistance is structured around six complementary objectives. Objective 1 deals with lessdeveloped regions with a GDP of less than 75 percent of the EU’s average GDP; Objective 2 with declining industrial regions and industrial reconversion; Objective 3 with long-term unemployed citizens, especially youth and the longterm unemployed; Objective 4 with vocational training and professional insertion for young Europeans; Objective 5a with agriculture and fisheries modernization; and Objective 5b with development of fragile rural areas (e.g., mountains). Objective 6 was added in 1995 to address the specific issue of underpopulated Arctic regions in Finland and Sweden. Given all these programs, the overall EU contribution is substantial. According to a 1998 report by the French Parliament, in 1994 about 25 percent of the EU population, or about 92 million citizens, received help through Objective 1, which represented 67.6 percent of all structural funds. Only 4.4 percent of the French received Objective 1 assistance, but 100 percent of the Greek population of about 9 million received such assistance. However, as many as 25.9 percent of French citizens received EU support under Objective 2 programs. Pierre Moscovici, junior minister for European affairs (1997–) also reports in his 1999 book (which is a pro-European manifesto) that in France “close to 50% of credits for territorial infrastructures and economic development come from Europe.”17 All is not perfect, though, as structural funds are often used as substitutes for national aid (instead of being matched by national contributions). They may also go unspent either because regions do not have the managerial and administrative capacity to tap into Brussels’ complicated machinery or because there is no national matching program,

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which bars many funding requests from consideration by the Commission. This reinforces the role of the Prefect as the expert on structural fund policy and limits local governments’ ability to “emancipate” themselves from the French central authority. Since prosperous cities (e.g., Lille, Grenoble, Lyon) and regions have more independent expertise and managerial resources to lobby Brussels and get what they want,18 the prefect’s role as a gatekeeper in less “Europeanized” regions remains a vital one. As a condition to its aid, the Commission may request recipients (cities, re´ gions, etc.) to form partnerships and alliances (e.g., LEADER program) with their neighbors to optimize resource use. In addition, regions are also constrained by EU legislation, notably in the fields of environmental, industrial aid and agricultural restructuring policy, where they have to abide by European, rather than national, rules. The acquis communautaire thus affects local authorities directly (with or without the central state’s approval) and without reservation (with or without a formal transposition in the national legal framework). For instance, says Sonia Mazey, [a]s employers, French regional authorities are bound to comply with Union social policy and legislation based upon the EU Social Charter. More specifically, regional authorities must comply with EU legislation relating to health and safety at work, work-related benefits and worker representation. The European Commission has also sought since the mid-1980s to restrict the number of public administration posts which, under Article 48 of the Treaty of Rome, may be reserved for nationals.19

Regions directly implement a growing European legislation, notably in the fields of environmental protection (water and waste legislation) and public procurements (civil engineering, electrical goods, etc.), where EU safety standards routinely supersede national ones. Finally, Europe’s fiscal coordination is likely to have further implications for regions since they derive much of their funding from value-added taxes. In conclusion, it may be said that relative to market forces, decentralizing efforts and EU intervention, France is experiencing a significant shift of territorial and administrative power without political fragmentation. For Sonia Mazey, “the Europeanization of French regional government since 1982” and “new forms of regional regroupings and processes . . . are becoming increasingly difficult to reconcile within the existing legal and constitutional framework of the European Union, based as it is at present, solely upon the nation state.”20 Europe’s economic fabric may find itself at odds with its political structuring, but there are limits to the loss of power by the French state. The 1982 law and its successors emphasized devolution of power without federalization, and today no credible politicians or political commentors speak of a “federal France.” French regions are too numerous and their resources too limited to represent a strong challenge to the central authority. They pale in comparison with German or Spanish provinces, and proposals to reduce their number to anywhere between


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10 and 15 (so as to make them comparable in strength to German La¨ nder) have come to nothing. In addition, different administrative styles and legal cultures still characterize and hinder local collaboration across international boundaries. The overall picture suggests that an aggregation of situational, pragmatic, subnational and transnational bargains (rather than grand plans for national independence or federalization) drive the EU’s decision-making dynamics. In the domain of “low politics,” France has moved away from its Jacobin hierarchical administrative style toward a more managerial model based on consultation, association and participation with both its sub-national authorities and Brussels. If the Etat central has undoubtedly lost some of its attributes to both the subnational and transnational levels, l’Europe des re´ gions is not yet a reality—far from it. THE MEANING OF FRENCHNESS French authorities’ acquired willingness to frame national issues in a wider institutional and political context has had a deep impact on the national political culture. European integration and the changes it brought to the national mores have resulted in an accelerating cultural transformation of French citizens and political parties alike. Traditional party cleavages have been redesigned since the Maastricht referendum and socialization to Europe’s values has penetrated all French circles. Europe as a Partisan Fault Line After an initial commitment in the 1950s to a transnational vision of European unity exemplified by both the ECSC and the EDC, French authorities “commodified” Europe in the 1960s and 1970s to serve their national goals. However, stripped since the SEA of many of its dirigiste privileges and since the Maastricht Treaty of much fiscal, budgetary and monetary autonomy, the French state is no longer in a position to sustain the dual logic of French participation in the European project. In some ways, France is coming back to its initial vision of a federal Europe—or at least a federal core based on monetary policy. The transnational vision that it willingly embraced in the early 1950s and abandoned in the 1960s is now being forced on France by circumstances Paris helped to bring about. This means that for Paris, brinkmanship a` la de Gaulle (i.e., the empty chair crisis of 1965–1966) is no longer a viable alternative to routine bargaining, diplomatic trade-offs and carefully channeled opposition within the EU. Europe is then an inescapable fact. In a January 5, 1999, editorial following the creation of the Euro, the Washington Post asked a provocative question: “Is France Still a Country?” The Post offered the comment that “each nation in ‘Euroland’ has ceded a huge chunk of sovereignty, with consequences for their economies and democratic institutions that are today impossible to predict.”21 It has thus become clear to all that France’s future no longer rests

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only within itself. Europe now frames governmental choices, structures public discourse and is largely internalized by governing elites, but its pro-market orientation is forcefully contested by dissenting factions within mainstream parties. For several decades, a majority of French citizens refused to face the facts and chose to be protected by Colbertisme and the welfare state. Mitterrand’s 1981 and 1988 presidential victories, Chirac’s double-talk and reluctant Europeanism (at least until November 1995) and Lionel Jospin’s victory in May 1997 on a Leftist program all point to the persistent hope—or illusion—among the French that they might be spared the harsh realities of Europeanization and globalization. In fact, until Maastricht, France saw no contradiction between integration and the nation-state and believed that its nationalism was compatible with its proclaimed universalism. Jacobins even argued that universalism takes its full meaning only when completely incarnated in a nation and thus considered France as an exception among nations. Hence the core Jacobin sophism: French nationalism is not selfish, it is universal in principle. The majority no longer accepts such sophisms, and Europe now operates as a new fault line among French parties. Moderates within the Socialist party and the center Right have found in European integration a calling and a mission, making most of their members Europe´ ens de conviction. The Gaullist party is profoundly divided between Europe´ ens de raison such as Jacques Chirac, Europe´ ens de conviction such as former premier Alain Juppe´ and die-hard Eurosceptiques such as Charles Pasqua. Much to their chagrin, the Communists and the Greens have had to accept the EU in order to maintain their alliance with the Socialists, secure governmental portfolios and avoid sliding into political irrelevance. They are torn between their governmental involvement and their refusal of liberalism and monetarism, and seldom waste a chance to castigate Europe’s fabric and orientation. And the most consistently anti-European party is undoubtedly the National Front. Consequently, new, surprising political alignments in favor of Europe or against it have consistently blurred the traditional political landscape since the 1992 referendum. Dissenting minorities within the Socialist, Communist and Gaullist parties cultivate similar topics such as national independence, defense of Republican values, anti-Americanism and hostility to international markets. Their mixture of defensiveness, populism, nationalism and so-called valeurs re´ publicaines attracts a substantial minority of voters. Against them, a majority of Socialists and moderate Right (including Gaullist) leaders find themselves as strange bedfellows promoting Europe. Surprising changes of heart spice up France’s rich political life, as even former defenders of French sovereignty may morph into vigilant partisans of the EU. For instance, Je´ roˆ me Monod, former chairman of the Gaullist party and president of the Roundtable of European Industrialists (corporate lobby), recently published a book in favor of a federal and sovereign Europe.22 Finally, all elections since the Maastricht Treaty demonstrate the ongoing fracture within the French electorate between anti- and pro-European voters. Considering the enduring polarization of public opinion relative to European integration since Maastricht,


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observers have thus identified the existence of “several Frances.” One France is prosperous, professional, urban, young, multilingual and sees in Europe a chance for professional promotion and personal mobility. The other France is more rural, poorer, less educated, often unemployed and alienated from “the system.” It considers Europe as a ploy concocted by rootless French elites to strip France of its identity, welfare state and traditional ways of operating. Their alienation is reinforced by the fact that the management of European integration as an elite-driven project is totally at odds with the government’s quest for legitimacy to support its European policy in the public arena. The Political Management of Europe in French Public Discourse In fact, William Wallace and Julie Smith rightly comment that “European integration started as an elite project, in which popular consent was largely assumed. . . . The initial bargain was elite-led, as all subsequent partial bargains have been.”23 While the direction of France’s European policy was always an Executive privilege, the political management of the official discourse on Europe vis-a`-vis French public opinion went through three distinct phases. In the 1950s, the bold supranational attempts represented by the ECSC and EDC were politically highly visible and generated considerable public controversy. The Fourth Republic’s genuine Europeanism was demonstrated by both the ECSC and ECD, but popular protests (especially from Communist and Gaullist opposition) were such that governmental leaders exhausted themselves in their substantial efforts to control political damage. Consequently, from the 1960s to the early 1990s, French leaders switched to a strategy of building Europe “by stealth” to neutralize anti-European opinion. National interest was often used as a cloaking device for advancing integration, but many of the integrative decisions were secretive and subterranean. However, with Mitterrand’s decision to hold a referendum on Maastricht in September 1992, Europe moved back to the center of the public agenda and discourse. The presidentialization of foreign policy and the eclipse of Parliament after 1958, the economic benefits of membership, the careful management of the European discourse by governmental elites, the technical nature of European debates and their low mobilizing potential (compared to, say, education or welfare policy) help to account for the democratic deficit of France’s European policy in the 1960s, 1970s and 1980s. Then, French officials did not feel the need to articulate a discourse of justification for what was essentially a technocratic project. Only in December 1965 and in 1972 did Europe play some role in electoral politics. In 1965, French farmers, fearful of losing CAP subsidies, cast their vote against the incumbent president, de Gaulle, whose “empty chair” boycott of the Council of Ministers had blocked the European machinery. Seven years later, the 1972 French referendum on the Common Market’s first enlargement can hardly be considered decisive in terms of consciousness raising

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among French voters. In fact, voter turnout for this referendum was discouragingly low, and there was little debate about the ultimate meaning and implications of enlargement itself. For those who cast a favorable vote, allowing Great Britain to access the Common Market was a way of repairing the damage occasioned by de Gaulle’s abrupt refusals of 1963 and 1967. It was a way of righting an abnormal situation, rather than a giant leap forward, as was the referendum on the Maastricht Treaty. It was not a choice in favor of a prefederal Europe. Consequently, from the 1960s to the 1990s, as Helen Drake and Susan Milner observe, “a vague ‘permissive’ consensus characterised the nature, if not the absence, of the public debate on Europe, based on two key ideas.” These two ideas were “the importance of Europe to guarantee peace, and particularly to harness and balance German interests; and the message . . . that French interests could only be served within a framework larger than the individual nation, in other words, Europe as an extension of French grandeur.”24 Until 1973, the exclusion of Great Britain and the special relationship with Germany boosted France’s status and functioned as a sales aid to French public opinion. In addition, from 1973 to Tony Blair’s election in 1998, British Euroscepticism and Margaret Thatcher’s doctrinaire liberalism “had the effect of disguising the economic liberalism implicit in Mitterrand’s espousal of European integration.”25 All parties in power since President Giscard d’Estaing (1974–1981) have contributed to the growth of Europe and embraced a pro-integration discourse, but public resistance to their efforts has been no less sustained, if muted until 1992. The official quiescence contrasted with rampant subterranean alienation and opposition. Jacques Chirac wavered chronically on the European issue until his winter 1995 austerity plan, and it is only with Lionel Jospin that a consistent effort to integrate Europe within a rejuvenated public discourse was attempted. As George Ross explains, European integration has always moved forward on two levels: “international relations” and “national politics.” In most, if not all, EU member states until very recently, the first level of negotiation, with the secrecy and regal trappings of “high politics” conducted by heads of state and government, has worked to insulate the second from serious confrontation with the profound implications of change. This situation became politically untenable in the late 1990s, however. Lionel Jospin and his team thus have tried to redefine the French approach and to engage the French much more deeply in unfolding processes.26

All too often, when continental integration was not masked in the rhetoric of French nationalism, Europe was used as an alibi for socially painful legislation and economic adjustments. Political elites as a whole were reluctant to recognize their loss of control and to admit that France’s very definition of interest was a flux, not a fixed reality. However, since June 1997, Lionel Jospin has developed a new discourse of justification that integrates European and domestic politics, distancing himself from the old Gaullist taboos. Today, say Helen Drake and


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Susan Milner, “the integrity of the sacrosanct triptych of sovereignty, state, and nation is open to question.”27 Not so long ago, the French trans-partisan consensus defended this “sacrosanct triptych,” as well as an active state in economic matters (Colbertisme, dirigisme) and a patriotic discourse centered around the nation-state (Jacobinisme). Today, the new consensus between the French Right and Left is quite different. Market-driven Colbertisme has gained ground, the welfare state is being trimmed and Europe has been internalized in the public psyche. Today, Socialist Minister for European Affairs Pierre Moscovici sums up well the new mainstream tenants of the post-Jacobin state. Like the majority of postMaastricht, post-Euro Socialists and Conservatives, he is opposed to the U.S.inspired “liberal temptation” in the economy and also opposed to souverainistes who still seek to place the nation-state above its international obligations and commitments. He defends France’s “cultural exception” (the defense of French cultural products in international trade negotiations), social democracy (rather than social liberalism) and declares himself to be a “modern Keynesian.”28 France’s current challenge is then a clear one: It needs to define a post-Colbertist identity to cope with the changes. This is why the future of the welfare state and the sense of French exceptionalism, both cornerstones of national identity, are especially disputed questions today. Toward a Post-Jacobin Identity The issue of the welfare state and unemployment is not a puny one. With about 18 million unemployed in Western Europe in the late 1990s, plus large numbers of semi-employed and others in precarious positions, the “social question” looms enormous on the European political landscape. According to Tony Judt, social solidarity through redistributive programs is not primarily an economic problem because “[r]ich countries can almost always find the resources to pay for social benefits if they choose.” As a consequence, “the decision on how to do so is in the first instance a political one.”29 As the EU has been largely unable to deal with some of the negative social consequences of globalization, nation-states have to modernize their social assistance programs with renewed vigor. This is because, as Judt argues, the U.S. liberal model is not wholly exportable for social and historical, rather than political, reasons. First, European (and notably French) citizens expect the state to remain at the forefront of social relief programs. Western European citizens have traditionally put expectations on the state in terms of social solidarity that it can ignore only at the risk of inviting electoral retaliation and/or social implosion. For Judt, a technical, ahistorical conception of the relationship between business and society (“Cut all taxes, deregulate business, and you’ll automatically lower unemployment”) is a simplistic representation that negates historical and cultural differences. There is not one kind of capitalism but several, and within a given polity, economic factors cannot be fully separated from cultural and social ones. Judt thus offers

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the enlightening illustration of this connection: “When the French demand that their government provide shorter working hours, higher wages, employment security, early pensions, and more jobs, they may be unrealistic but they are not irrational.”30 However, this traditional world view shows its age, and it is very far from representing all of post-Maastricht France. While some neo-Colbertist observers may still defend it, pro-liberal, pro-Euro commentators, for their part, vigorously denounce it. For instance, Franç ois Rachline, a French academic, precisely argues that the rapport between service public and market economy defines the capitalist model France desires. But Alain Minc, a senior public official, disagrees in a 1994 official report to the prime minister in which he calls for a bold new synthesis between France’s traditions and Europe.31 Europe is now bigger than the sum of its parts. The 1970s economic crisis magnified political differences among European nations and sent them off in different directions. However, the 1990s have strengthened Europe despite its economic and legitimacy crises. In the 1970s, Paris seemed to maintain the possibility of sustaining multiple agendas, but after the SEA and Maastricht Treaty, France finds itself with no fall-back plan. Today, France’s belief in its exceptionalism is tempered by pessimism, and with much groaning and foot dragging, the French have started to accept the full impact of international competition. In truth, the blurring of its national identity is not the only reason behind France’s current malaise. To put things into perspective, one should remember that pessimism—or at the very least skepticism—in intellectual matters is considered in France as evidence of intellectual seriousness, whereas U.S.style optimism is considered with a mixture of curiosity and suspicion. The Economist has aptly defined this national belief in the French difference as a “peculiar mixture of chagrin and pride.”32 So perhaps the current unease is just a normal, if disagreeable, growing pain in a European process of integration and transformation of national identities that, according to Serge Berstein, is “irreversible and ineluctable.”33

Conclusion The first part of this conclusion offers a summary of the main points and arguments developed in this book. The second part makes the case that France is a transnational polity, which means that it operates in a European system of shared governance that is no longer entirely national nor fully federal. This conception of a transnational polity posits that the ongoing Europeanization of member states should not be conceived merely as a “vertical” phenomenon whereby the EU somehow impacts nation-states “from the top down.” France is not a passive recipient of the EU’s legal and political output, and Brussels does not operate in a vacuum. On the contrary, Europeanization is understood here as a continuous, reciprocal and multi-faceted exchange whereby the whole (the EU) affects what John McCormick calls “the elements” (the member states),1 which in turn affect one another and the whole. The dynamic resulting from this exchange possesses a momentum of its own that generates evolving sets of opportunities and constraints for both the nation-state and the regional body. In fact, the EU and the nation-state serve each other’s needs. As Alan S. Milward suggests, Europe’s initiative capacity finds its source in the reticence and/or failure of European states to come to terms with certain issues. “The historical evidence shows that the real argument has never been about whether it is desirable that a supranational Europe should supersede the nation state, but about whether the state can find a political and economic base for survival.”2 To survive and better adjust, European powers have resorted to the imaginative solution of qualified integration. This is why, despite the economic recession and anti-Maastricht protests of the 1990s, there was no going back to the nationalized politics of the 1970s. Instead, European nations’ inadequacies in the international order led to the reinforcement of the EU as a partly transnational arrangement. The EU and the nation-states thus collaborated on a ra-

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tional redistribution of resources that entailed a growing interpenetration of policy levels, or transnationalism. As described by Wolfgang Wessels, “[t]his stage of state evolution is characterized by an increasing degree of cooperation, in vertical terms between governmental levels, and in horizontal terms, among several groups of actors. The ‘multi-level’ interactions of civil servants of several national and international administrations thus reinforce trends towards specific forms of the ‘sharing’ or ‘fusion’ of powers between ‘bureaucrats and politicians.’ ”3 The emerging transnational polity is the French state’s adaptive response to outside pressures and a way to gain new tools to fulfill its missions. The EU and the nation-state complement rather than rival each other, and consequently, this conclusion’s second section argues that since it does not try to replace the nation-state, the EU’s identity is a work in progress, a fluctuating compromise between the two levels of governance. It also argues that since the nation-state itself is an evolving entity, its traditional self-definition in terms of national sovereignty and national interest is a problematic exercise at best. RETROSPECTIVE This book charted the “Europeanization” of the French polity, understood as the changes brought to the structures and organization of the state apparatus, its missions, scope and range of action, its sense of national identity and the definition of “Frenchness.” This restructuring is a threefold phenomenon, characterized by (1) the erosion of traditional political and economic parameters, (2) the emergence of new means and models of public action and (3) a paradigmatic redefinition, including a search for renewed political legitimacy by French elites. Chapter 1 considered how historical circumstances have enabled governmental leaders to shape the direction of national economic activities, while remaining in a capitalistic framework. This first chapter discussed how, since the birth of its Republican system of government in the late eighteenth century, the defining feature of French politics has been the close identification of nation and state and the domination of the political-bureaucratic strata (socie´ te´ politique) over the citizenry (socie´ te´ civile). The Republican tradition born of the 1789 Revolution closely identifies the French people and their Republic, and the Republic itself with the government. The people’s will is thus supposedly enshrined in the institutional organization of the state. This view is consistent with Rousseau’s interpretation of the general will, whereby individuals abdicate their independence in the name of the common good. Liberal analysts a` la John Locke even observe that the French long preferred the relative predictability of equality under the watchful eye of the state to the rewards and uncertainties of personal freedom. The French certainly long held that individuals and communities had to conform to a pre-defined, “one size fits all,” secular democratic culture centered on the state. Espousing this Republican monism was akin to being French. There is, however, an increasing distance between this idealistic, authoritarian and largely fictional representation of the French state as an ob-

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jective organizer of public interest and the realities of contemporary French society. This questioning of the Republican orthodoxy coincides with a loss of economic and diplomatic alternatives to a European Union conceived of as “an ever closer union,” as Title 1, Article A, of the Maastricht Treaty clearly states. The distinctive features that since 1945 insured institutional efficiency and made possible ambitious policies of economic and technological developments—such as the nuclear energy program—outlived their usefulness after the 1970s. Today, they constitute France’s “comparative disadvantage” in the race to adjust to regional integrative constraints. Chapter 2 assessed how a composite legal order has emerged, in which the EU’s legislative output overshadows that of the French government. In the process of implementing Community law, French courts are called upon to disregard domestic laws and regulations that run contrary to EU legislation—and this, whether the French laws were enacted before or after the European laws. Member states abide by the ECJ’s jurisprudence, and decisions handed down by ECJ judges have built a law-based community. It has become clear to all that in terms of their direct impact on the member states’ domestic legal order, ECJ rulings resemble international law less than domestic law. The Treaty of Rome and subsequent European treaties have thus created their own legal order that imposes itself directly, and without temporal limitations, on EU members. The acquis communautaire thus possesses an autonomous normative power, which implies that member states are no longer traditional nation-states. However, the EU does not yet constitute a full-blown federal framework: Europeanization unevenly affects the features of French legal and institutional architecture. More than a generation after the so-called May 1968 democratic “revolution,” the Legislature still takes a backseat to the Executive. The education system is still politicized, underperforming, wasteful of human and financial resources and characterized by great inertia and resistance to structural changes. Many shady deals still link public companies and political parties, with the judicial branch painstakingly trying to bring more democratic accountability to the issues of political financing and government intervention in the economy. At the same time, European unification has permitted a stronger French judiciary system, backed by the ECJ, and increased parliamentary contribution to the debates over—if not the shaping of—the nation’s European policy. Chapter 3 argued that France’s economic policy was long a major component of its state-centered public culture and often considered as a manifestation of its sovereignty, and even of its grandeur. At the core of this Colbertisme lies a rhetoric of modernization as articulated by governmental elites which established an identification between governmental economic orientations and the “common good,” or national interest. The components of this economic policy are many. Among other features, one notices a strong public sector backed by a number of state monopolies (e.g., electric power distribution and railway transportation); sectoral policies, including prestigious grands projets; the creation and promotion of national champions (champions nationaux) through subsidies, managed

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trade, public procurements and direction of research and development. Chapter 3 also detailed how the Single Market, trade liberalization within European borders and the overall extension of Community competence has called into question the economic (and therefore social) compact that defined the basic relationship between the French state and the citizenry since 1945. According to Vivien A. Schmidt, [w]hile European integration has directly changed the way in which government leads and business competes, its indirect effects have altered the manner in which government and business interact, replacing the former close, nearly symbiotic relationship with one in which government leads less and business competes more. In other words, it has in a very real way ensured the rise of business and the decline of the nation state, at least as traditionally understood. For while business has become less dependent on national governments and more interdependent and international, the French state has become more dependent on the European Union, having lost many of its traditional powers and some of its national sovereignty.4

France’s economy adjusted dramatically to the pressures and opportunities of the 1980s and 1990s. As Wolfgang Mu¨ ller and Vincent Wright point out, “[c]ross-border raids multiplied in the 1980s and early 1990s: between January 1988 and June 1992 France was Europe’s most voracious predator . . . followed by the United Kingdom.”5 As French capitalism mutated and international competition sharpened, social policy could not be unaffected by the economic changes. This is why Chapter 4 focused on the Social Security crisis and the questioning of social policy by economic liberalism. The lingering economic crisis of the 1980s and 1990s (which started to abate only in 1998–1999) jeopardizes the very existence of the welfare state and, by imposing a choice between social democracy and economic liberalism, forces political elites to redefine the basic social compact. In this context, the pressures of unemployment, budgetary deficits and social discontent, compounded by a legitimacy crisis, make the question of the relationship between the French state and the EU a most timely one. Chapter 5 argued that since the liberalization of the capital markets and the information technology revolution of the 1980s and 1990s, the increase in economic and financial interdependence has brought structural changes to France’s macroeconomic policy, notably by constraining its ability to conduct its industrial and financial policies independently from their European (and global) environment. After decades of lax monetary policy culminating in the 1981–1983 counterproductive Keynesianism, France espoused the Franc fort policy within the EMS and opted for a closer connection with the deutsch mark. This orthodox monetarism limited its margin of maneuver, since “high international financial capital mobility undermines monetary policy autonomy when exchange rates are fixed. Even in semifixed exchange rate systems . . . high capital mobility implies that independent and inflationary monetary policies are made more costly

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through an interest-rate risk premium.”6 In the wake of Germany’s reunification, France pushed for a legal framework that would anchor Germany in the heart of Europe—thereby avoiding a German “balancing act” between the EU and Russia—and one that would enmesh its economic and monetary power in a European entity, thus preventing a further consolidation of the already existing deutsch mark zone. With the Maastricht Treaty, French leaders advocated the creation of a new European currency that would mitigate Germany’s uncontested monetary superiority by diluting its autonomy of decision through the ECB and a common, or single, currency. This single currency would constitute the logical culmination of the Single Market and epitomize the completion of the EMU (first pillar of the Maastricht Treaty).7 Chapter 5 also made the argument that the Euro works as an engine for further integration, in so far as national public fiscal and budgetary policy (government taxing and spending policies) are virtually frozen by the SGP, thereby emptying the concept of democratic accountability of some—critics say much—of its substance. Hence the strong Jacobin backlash in France, which blames the Euro for its technocratic, anti-democratic and anti-national inclinations. Chapter 6 charted the passage from Gaullist autonomy to CFSP. Until the early 1990s, the Red Army threat acted as a unifying force, so the issue of European security was frozen by bipolar world structures and guaranteed under the Pax Americana. Despite many attempts, France’s Cold War aspirations for independence and a global diplomatic role were not matched by its resources and capabilities. But its continuing ambition, assertive style and at times abrupt moves annoyed and irritated its friends and allies, who saw them as a display of arrogance but often failed to understand the underlying insecurity and fear of loss of status that has motivated French leaders since World War I. The 1989– 1991 events forced a strategic reconceptualization on all Western players. Cold War defense, with its emphasis on military means and border protection, gave way to security, a broader doctrine that includes the quest for economic prosperity, environmental and social stability and political democratization. The end of the Cold War thus eroded the principles around which France had constructed its diplomatic identity. France’s nuclear power, the core of its independent diplomatic and military doctrine, was promptly devalued after the reunification of Germany and the collapse of the USSR. As a consequence, France’s traditional insistence on autonomy and independence, its hallmark from the 1960s to the 1980s, gave way to more international cooperation with European countries, along with peace-building and humanitarian missions and outreach to central European and Balkan countries and NATO, as well as fulfillment of international law mandates. In the 1990s, France aspired to a strengthened European security community based on common interests and means; a community where burden sharing and cost sharing represent stronger incentives toward CFSP than federal plans of European integration. A slow process of doctrinal, operational and strategic reassessment is thus under way. Chapter 7 concerned itself with the current paradigm shift at the heart of

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French politics. France’s malaise since the mid-1980s is characterized by an identity crisis, the apparent powerlessness of the state, the insidious demise of public morality, the delegitimization of mainstream political leaders and the concurrent progression of anti-systemic forces. In addition, the acrimonious debate over immigration and the role of Islam in a secular Republic further questions past assumptions about the nature of French identity. General de Gaulle retired in April 1969 and died in November 1970, but much of his legacy was maintained by his political successors. However, Mitterrand’s European policy, which structured Chirac’s choices, constituted a departure from the letter and the spirit of Gaullism. In effect, it symbolized de Gaulle’s political death. In sum, while Chapter 1 gave an overview of the France that once was, Chapter 2 illustrated the current move toward multi-level legal governance. Chapter 3 observed the march toward a French version of economic liberalism, which may be termed “market-driven Colbertisme.” Chapter 4 reported the tribulations of the welfare state and the fear of a two-tier society of haves and havenots, which Paris wants to avert through a stronger European social legislation. Chapter 5 reported the unambiguous transition from a national currency to the Euro, which may be called a federal currency. Chapter 6 detailed the switch from military “independence” to increased European security policy cooperation. Finally, Chapter 7 described the changes brought to territory- and identity-based public policies. France was used as a case study to demonstrate that in the process of building their continental organization, European nations, either willingly or because they just became trapped in the integrative e´ lan, have struck substantial compromises, relinquished or adopted potent political symbols and procedures and established powerful precedents. These transnational developments came through a complicated combination of international constraints, interstate bargaining and EU-dominated development. This accounts for the fact that the EU is now a tangled affair, whose relationship to the nation-state undergoes a constant evolution, whose very identity is fluid and whose existence contributes to a novel definition of national interest.

THE NATION-STATE, PRESENT AND FUTURE Comparing the Comparable Analyzing the EU in comparison to, or worse still, by analogy with, the nation-state—be it unitary, like France, or federal, like Germany—leads to a methodological impasse. Political concepts and the terminology forged in the study of national entities are too often transposed, or rather projected, onto what is obviously not a nation-state. What at first glance appears to be significant EU constitutional and political weaknesses—the EP’s lesser standing, the absence of trans-national political parties, citizens’ lack of identification with EU institutions, the uneven policy agenda—seems so only when compared with conventional nation-states. The EU is a young political formation—not even 50

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years old—and judging it by the yardstick of national formations with a much longer past hinders our understanding. The EU’s quasi-experimental status reflects its functional adaptation to the power dynamics in Europe, and as Stanley Hoffmann and Robert Keohane word it, it “looks anomalous” only “from the standpoint of traditional state-centric theory.” Because of its multi-tiered and asymmetrical character, the EU described by these two scholars is “essentially organized as a network that involves the pooling and sharing of sovereignty rather than the transfer of sovereignty to a higher level.”8 From this perspective, the relationship between regional and national authorities is not a zero-sum game, but rather an exchange of services and resources. A fundamental ambiguity (the tension between nation-states and the regional body), as well as an absence of linear development (a constant game of stop and go since its 1951 inception), permeate the EU’s history—hence the need for a plurality of explanatory models if we want to make sense of this unusual polity.9 For instance, Stanley Hoffmann’s 1979 “Fragments Floating in the Here and Now” very much reflects the somber mood associated with Eurosclerosis: There was, to be sure, a collective project at the outset; its very ambiguity about ends— federalism or confederacy? a strong entity or a contribution to global solutions? free trade or common dirigisme? a new power bloc in the world, or an exercise in transcending power politics?—helped it grow in the beginning. But later, when each new step seemed to require clarification of the final goals, its ambiguous nature began to plague it.10

Ironically, the same observer reversed his 1979 position in 1991: Almost as soon as they were made, forecasts of Eurosclerosis were falsified by the negotiation and final ratification (in early 1987) of the Single European Act. Since 1987, furthermore, the movement toward completion of the internal market mandated by the Single European Act has been remarkably smooth. . . . In other words, the EC has recently been continuing, even accelerating, its practice of “pooling sovereignty” through incremental changes. . . . For issues on which sovereignty is pooled, authority to make decisions is removed from individual states.11

Any serious consideration of the EU must then take a “long” historical view— relatively long, that is, since it is only 50 years old—and discern trends rather than random events or just focusing on the latest developments. In this perspective, recurring cycles of Community “advances” and “retreats” befit the EU’s hybrid nature and reveal the nation-states’ changing needs and strategies. As Wayne Sandholtz argues, the intergovernmental view of the EU is not a theory of European integration, but rather an account of one dimension of the EU, namely, state-to-state bargaining. Even at that, it probably underestimates the extent to which states’ interests and preferences, and therefore the nature of the bargaining, are shaped by the context of membership. . . . [W]e

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probably do not need, and cannot create, a single theory of European integration. . . . [R]ather, we can theorize various parts of the complex set of phenomena that is the European Union. Different kinds of theory will be suitable for different aspects of the EU.12

Given these considerations, arguing that France now constitutes a transnational polity posits the emergence of an elaborate functional complementarity without organic fusion between the “whole” and the “parts.” This view is inspired by James Caporaso’s argument that “disproportionate attention is focused on the tug-of-war between Member State and EU institutions, on the assumption that the emergence of European authority structures comes at the expense of national ones.”13 It is then necessary to conceptualize the rapport between the so-called “whole” and “parts” in innovative terms. Caporaso developed the following conceptual template to understand the historical evolution of state configurations. The Westphalian state is a type of organization where the monopoly of legal force, bureaucratization of authority and centralized control of resources take place within clearly defined territorial boundaries. The regulatory state “corresponds to the transnational political structures associated with attempts to control imperfections of international economic exchange, including failures of exchange to occur.” And in the post-modern state, forms of governance are segmented, polycentric and dispersed, “and often lacking in clear spatial (geographical) as well as functional (issue area) lines of authority.”14 Clearly the dominant frame of reference for the European state has too often been the Westphalian model. Compared to this conventional and heuristically limited concept, the decentralized, polymorphous nature of European policy networks makes the EU look like an incomplete, even imperfect, polity. However, if we are to follow Caporaso’s classification, it may be argued that the EU is a combination of the regulatory and post-modern state, one that is characterized by a multi-layered policy-making system. The current examination of the connection between the “outside forces”— whether regional like the EU, or global like capital markets—on the one hand and the nation-state on the other hand generates particular anxiety in Western Europe because this is where the nation-state was born. This interrogation causes special trepidation in France, where modern nationalism and democratic politics were born as twin emanations of the 1789 spirit and where state and nation were long indistinguishable. Politically speaking, much of this anxiety stems from the defense of entrenched positions and the defense of social and political interests, as well as from cultural automatism. However, a detached academic analysis identifies the nation-state and the welfare state as historical constructions whose features and existence are subject to change. From this perspective, the current transformation of the French nation-state into a transnational polity is just another moment in a series of historical metamorphoses.

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The State as Historical Artifact Long before the European Union, the issue of the future of the state elicited considerable debate, and contemporary speculations about its extinction have been preceded by numerous similar predictions. For instance, Peter Drucker makes the following tongue-in-cheek observation: “Since talk of the globalization of the world’s economy began some 35 years ago, the demise of the nation state has been widely predicted. Actually, the best and brightest have been predicting the nation state’s demise for 200 years, beginning with Immanuel Kant in his 1795 essay ‘Perpetual Peace,’ through Karl Marx in ‘Withering Away of the State,’ to Bertrand Russell’s speeches in the 1950s and 1960s.”15 The “state” is changing because it does not possess a fixed essence and because its structures, functions and resources are shaped by the past (history) and the present (the international environment). Post-industrial Western democracies no longer compete for territories like they did for so many centuries—and not so long ago. Instead, they now vie for market shares and world influence through peaceful means, while simultaneously cooperating on a wide range of issues: wealth production and international financial stability, immigration and human rights issues, policing organized crime, patent law protection, development aid and emergency assistance programs, security and non-proliferation policies, environmental protection, and others. Susan Strange puts it quite clearly when she says: “For the nature of an individual state to change very radically is neither new nor unusual. . . . War, revolution, demographic change, great enrichment or sudden impoverishment, inflation or depression, even climatic or ecological changes can account for profound political changes.”16 In this respect, the French national character and the functions of the French state have undergone drastic and rapid changes over the last few decades. From the 1950s to the 1990s, France went from being an aggressive colonial power engaged in a bitter war in Algeria, a conflict that created yet another civil war, to a stable country peacefully committed to a European project. Discussions about the so-called demise of the state are thus often clouded by the lack of recognition of the historical relativity of the concept of state. As James Caporaso points out, “ ‘[f]orms of state’ is an umbrella concept that encompasses many historically specific state structures. . . . [T]here is no such thing as a ‘state,’ or even a ‘modern state’ or ‘nation state’ with trans-historical and cross-societal significance.”17 The acme of the European welfare state may be dated between 1945 and the early 1970s, and was contingent on specific historical parameters. The welfare state, just like the nation-state, is a historically constructed reality. So are its missions and purpose. But neither operates “above and beyond” civil societies. They are a part of a relational web of power interconnecting demography, technology, trade, environment, security, culture, and so on. The argument could certainly be made that the tax pressure and government expenditures associated with the post-war welfare state increased disproportionately in relation to society’s resources during the 1945–1973 decades, and even more so after the oil

200


crisis. Thus, what seems like a crisis of the French welfare state today is in fact nothing more than its readjusting to its “natural” (i.e., sustainable) size and functions. Therefore, what Claude Imbert called in 1989 “the end of French exceptionalism” is simply the recognition that France is not so unique after all and that it has to abide by the rules of the common (international) game. This coming to terms with the post-modern capitalistic world, says Imbert, only signals “the end of a certain dissonance in the concert of Western nations.”18 Thus, far from being an historical oddity or an outside menace, the EU is the state’s response to its own limitations and inadequacies. Nation-state and welfare state have long been mythologized, but the current surfacing of transnationalism demonstrates the relativity of their claims, notably the claims of sovereignty and national interest. Sovereignty and National Interest One of the chief arguments underlying the defense of “national sovereignty” is that it is the main venue through which to preserve and promote national interest. According to Jacobin theories of the nation-state, national sovereignty and national interest are but two sides of the same coin. They imply each other to such a degree that they are, supposedly, analytically and politically indistinguishable. However, as Samuel P. Huntington remarks, contemporary national interests are becoming increasingly enmeshed, causing a gradual erosion of the conventional, state-centered definition of national sovereignty.19 Already in the early 1950s, Robert Schuman, Jean Monnet and other founding leaders recognized, by merging their economic welfare, that industrial cooperation among European neighbors would make war impossible—and hence they actively sought limitations on national autonomy. This is why Gary Marks, Liesbet Hooghe and Kermit Blank argue that for national policymakers, sovereignty may be but one goal among others and that it may usefully “be sacrificed for efficient policy provisions.”20 These scholars point out that national executives accept— indeed often actively agree—to a qualified devolution of national authority for a variety of reasons. They may do so to reap greater benefit through international cooperation, to bypass domestic opposition, to avoid difficult choices and shield themselves from domestic popular discontent, to insulate themselves from internal political pressure, to secure international recognition, and so on. In a 1995 special issue devoted to “The Myth of the Powerless State,” the Economist added that [t]he myth of the powerless state has also prospered for another reason: politically, it is extremely convenient. Towards the end of the 1970s, governments began lowering their barriers to trade and international finance because of mounting evidence that the barriers were doing more harm than good. . . . Better to say that changes in the world economy left them [i.e., political leaders] no choice but to liberalise. The same smokescreen is enormously helpful to “modernising” left-of-center politicians.21

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A state also possesses interests that extend well beyond its formal, geographical borders: the stability of the international financial and economic system, stability of supplies, openness of international markets and trade routes, regional collaboration on a multitude of issues (security, immigration, etc.), environmental safety, technological cooperation and a certain measure of predictability, all of which can be achieved only through increased joint efforts and multilateralism. This wider definition of national interest is the one that inspires European collaboration today. National polities have thus been Europeanized (or transnationalized) in the sense that they have adapted their structures and oriented their procedures toward European policy making. As Dietrich Rometsch and Wolfgang Wessels assert, the two levels (national and European) are “interwoven and mutually dependent.” As a consequence, “it no longer seems to be justified—except for purely analytical reasons—to differentiate between a ‘European’ level and a ‘national’ level in an institutional context.”22 At the same time, a functional collaboration, no matter how close, does not entail fusion, and there is little to indicate a total eclipse of differences. Anne-Marie Slaughter thus observes the existence of a form of “transgovernmentalism,” which she defines as the disaggregation (but not the disappearance) of national state structures (the Parliament, the judiciary, etc.) into functionally distinct parts that are deeply involved in international collaboration with their foreign counterparts. They are thus “engaged in a common enterprise even as they represent distinct national interests” and create “a genuinely new world order in which networked institutions perform the functions of a world government—legislation, administration, and adjudication—without the form.”23 During the Cold War, France often claimed that it was acting to build a Europe possessing its own identity and speaking with its own voice in international affairs. Part of the price for reaching this goal is the strengthening of the European Union at the expense of member states’ traditional conceptions of national independence. With the EU pressing hard since the 1980s, and even more so since the 1990s, for a vast array of institutional and policy changes, France must reform its own structures with its back against the wall. It would be a mistake to believe that these reforms are imposed unilaterally by Brussels. For Paris, the choice is no longer between independence and outside constraints—if it ever was—but among various sets of obligations. The French are now realizing that they must operate in a post–Cold War, post-Gaullist and postdirigiste universe, one that calls for a new political synthesis and new cultural attitudes. These transformations are hard to achieve, but they are indispensable. In fact, they are already well under way, and amidst much introspection, analysis and criticism, the Fifth Republic is altering its substance, style, instruments, rhetoric and sense of purpose. The European Union epitomizes de Gaulle’s second death, and with it, France slowly lurches toward the Sixth Republic.

Notes INTRODUCTION 1. John McCormick, The European Union: Politics and Policies (Boulder, CO: Westview Press, 1996), pp. 1–2. 2. Stanley Hoffmann, “Thoughts on the French Nation Today,” Daedalus, Summer 1993, Vol. 122(3), pp. 63–79, citation p. 74; James A. Caporaso, Gary Marks and Mark A. Pollack, “Does the European Union Represent an n of 1?” European Community Studies Association Review, Fall 1997, Vol. 10(3), pp. 1–5, citation p. 1. 3. Alberta Sbragia, “The European Community: A Balancing Act,” Publius, Fall 1993, Vol. 23(3), pp. 23–38, citation p. 24. See also Alan W. Cafruny and Carl Lankowski, eds., Europe’s Ambiguous Unity: Conflict and Consensus in the Post-Maastricht Era (Boulder, CO: Lynne Rienner, 1997); Curt W. Gasteyger, An Ambiguous Power: The European Union in a Changing World (Gutersloh: Bertelsmann Foundation, 1997). 4. Guillaume Courty and Guillaume Devin, L’Europe politique (Paris: La De´ couverte, 1996) identify three sets of interrelated forces that fuel the integration dynamics: “la strate´ gie des e´ tats” (the member states’ inner working and the interplay of domestic politics and European politics), “la dynamique des institutions” (the dynamics of EU institutions), and “l’organisation des inte´ reˆ ts” (social and market forces). 5. Pierre Maillet, “Du constat de l’he´ te´ roge´ ne´ ite´ a` l’ide´ e de ge´ ome´ trie variable organise´ e,” pp. 17–44 in Pierre Maillet and Dario Velo, eds., L’Europe a` ge´ ome´ trie variable: Transition vers l’inte´ gration (Paris: L’Harmattan, 1995). 6. Yves Doutriaux, Le traite´ sur l’Union europe´ enne (Paris: Armand Colin, 1992), pp. 104–10. See also Pierre Maillet, ed., Trois de´ fis de Maastricht: Convergence, cohe´ sion, subsidiarite´ (Paris: L’Harmattan, 1993). 7. Abram Chayes and Antonia Handler-Chayes, The New Sovereignty: Compliance with International Regulatory Agreements (Cambridge, MA: Harvard University Press, 1995). 8. Luis E. Lugo, ed., Sovereignty at the Crossroads? Morality and International

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Politics in the Cold War Era (Lanham, MD: Rowman and Littlefield, 1996); Walter B. Wriston, The Twilight of Sovereignty: How the Information Revolution Is Transforming Our World (New York: Scribner, 1992); David J. Elkins, Beyond Sovereignty: Territory and Political Economy in the Twenty-First Century (Toronto: University of Toronto Press, 1995). 9. Thomas Risse-Kappen, “Exploring the Nature of the Beast: International Relations Theory and Comparative Policy Analysis Meet the European Union,” Journal of Common Market Studies, March 1996, Vol. 34(1), pp. 53–78, citation p. 53. See also Simon Hix, “The Study of the European Community: The Challenge to Comparative Politics,” West European Politics, January 1994, Vol. 17(1), pp. 1–30. For a dissenting view of Hix’s interpretation, see Andrew Hurrell and Anand Menon, “Politics Like Any Other? Comparative Politics, International Relations and the Study of the EU,” West European Politics, April 1996, Vol. 19(2), pp. 386–402. 10. Jacques Delors, quoted by Christian Lequesne, “Union Europe´ enne et coordination gouvernementale: Quid novi en France?” pp. 259–77, citation p. 269 in Franç ois d’Arcy and Luc Rouban, eds., De la Ve`me Re´ publique a` l’Europe: Hommage a` Jean-Louis Quermonne (Paris: Presses de Sciences Po, 1996). 11. William Safran, The French Polity (White Plains, NY: Longman, 1995), pp. 319– 20. 12. Jacques Chirac, August 27, 1997 address in Politique Etrange`re de la France, July–August 1997 (Paris: La Documentation Franç aise, 1997), pp. 149–50. 13. Yves-Thibault de Silguy, Le syndrome du diplodocus: Un nouveau souffle pour l’Europe (Paris: Albin Michel, 1996). 14. James A. Caporaso, “The European Union and Forms of State: Westphalian, Regulatory or Post-Modern?” Journal of Common Market Studies, March 1996, Vol. 34(1), pp. 29–52, citation p. 30. 15. Vivien A. Schmidt, “Business, the State, and the End of Dirigisme,” pp. 105–42, citation pp. 106–7 in John T. S. Keeler and Martin A. Schain, eds., Chirac’s Challenge: Liberalization, Europeanization, and Malaise in France (New York: St. Martin’s Press, 1996). 16. Robert Ladrech, “Europeanization of Domestic Politics and Institutions: The Case of France,” Journal of Common Market Studies, March 1994, Vol. 32(1), pp. 69–88, citation p. 69. 17. Jolyon Howorth, “A Tale of Three Cities: Washington-Paris-Bonn and the Triangular Asymmetry,” West European Politics, July 1997, Vol. 20(3), pp. 219–26, citation pp. 219, 225. For a dissenting interpretation, see Philip H. Gordon, France, Germany and the Western Alliance (Boulder, CO: Westview Press, 1995). See also Helga Haftendorn, “Le triangle strate´ gique Bonn-Paris-Washington,” Politique Etrange`re, Fall 1996, Vol. 96(3), pp. 553–67. 18. United Nations/Economic Commission for Europe, Economic Survey of Europe in 1996–1997 (New York/Geneva: United Nations, 1997), especially “External Balances,” pp. 46–50; Eurostat, Basic Statistics of the European Union (Brussels: Publishing Office of the European Community, 1996), pp. 256–57. See also OECD, Economic Survey of France (Paris: OECD, 1997). 19. For a description of this French sense of exceptionalism, see Sanche de Gramont, The French: Portrait of a People (New York: G. P. Putnam’s Sons, 1969). For a consideration of its demise, see Theodore Zeldin, The French (London: Collins Harvill, 1983); Claude Imbert, “The End of French Exceptionalism,” Foreign Affairs, Fall 1989,

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Vol. 68(4), pp. 48–60; Dominique Frischer, La France vue d’en face: L’image de la France analyse´ e et juge´ e par des e´ trangers (Paris: Robert Laffont, 1990). 20. Haig Simonian, The Privileged Partership: Franco-German Relations in the European Community, 1969–1984 (Oxford: Clarendon Press, 1985). 21. Ge´ rard Bossuat, Les fondateurs de l’Europe (Paris: Belin, 1994), p. 229. See also Ge´ rard Bossuat, L’Europe des Franç ais, 1943–1959: La IVe`me Re´ publique aux sources de l’Europe communautaire (Paris: La Sorbonne, 1996). 22. Helmut Kohl, quoted in Politique Etrange`re de la France, September–October 1995 (Paris: La Documentation Franç aise, 1995), p. 228. 23. David G. Haglund, Alliance within the Alliance: Franco-German Military Cooperation and the European Pillar of Defense (Boulder, CO: Westview Press, 1991); Julius W. Friend, The Linchpin: French-German Relations, 1950–1990 (New York: Praeger, 1991). 24. Jack Hayward, “La Cinquie`me Re´ publique et l’inte´ gration communautaire,” pp. 23–43, citation p. 40 in D’Arcy and Rouban, eds., De la Ve`me Re´ publique a` l’Europe. 25. Francois Gogel, ed., Les conditions de l’inde´ pendance dans le monde moderne (Paris: Cujas, 1977); Danielle Bahu-Leyser, De Gaulle, les Franç ais et l’Europe (Paris: PUF, 1981). 26. For a consideration of Chirac’s attitude vis-a`-vis Europe, see Corine Balleix, “Discours politique et inte´ gration europe´ enne: Les gaullistes face au projet de banque centrale europe´ enne,” Revue d’Inte´ gration Europe´ enne/Journal of European Integration, Fall 1993, Vol. 17(1), pp. 7–52. For anti-Maastricht Gaullists, see Philippe Se´ guin, De l’Europe en ge´ ne´ ral et de la France en particulier (Paris: Belfond/Le Pre´ aux Clercs, 1992) (with Marie-France Garaud) and Deux France? (Paris: Plon, 1994) (with Alain Minc). For a general appraisal of French political parties vis-a`-vis European unification, see Franç ois Saint-Ouen, Les partis politiques et l’Europe: Une approche comparative (Paris: PUF, 1990), pp. 99–124. Specifically about de Gaulle and Europe is Pierre Maillard, De Gaulle et l’Europe: Entre la nation et Maastricht (Paris: Tallandier, 1995). 27. Maurice Larkin, France Since the Popular Front: Government and People, 1936– 1996 (New York: Oxford University Press, 1997); James Corbett, Through French Windows: An Introduction to France in the Nineties (Manchester: Manchester University Press, 1996). On the current malaise, see Alain Duhamel, Les peurs franç aises (Paris: Flammarion, 1993); Jacques Julliard, La faute aux e´ lites (Paris: Gallimard, 1997); Roger Cohen, “For France, Sagging Self-Image and Esprit,” New York Times, February 11, 1997, pp. A1, A6; Craig R. Whitney, “French Jobless Find the World Is Harsher,” New York Times, March 19 and 20, 1998, pp. A1, A6. 28. John Laughland, “Fortress Europe,” The National Review, April 8, 1996, Vol. 48(6), pp. 44–46, citation p. 44. See John Laughland, The Tainted Source: The Undemocratic Origins of the European Idea (London: Little, Brown, 1997). 29. Brian T. Hanson, “What Happened to Fortress Europe? External Trade Policy Liberalization in the European Union,” International Organization, Winter 1998, Vol. 52(1), pp. 55–86, citation p. 56. 30. Jacques Mallet, “Has the European Community Been a Benefit to France’s Foreign Trade?” pp. 121–34, citation p. 129 in Franç ois-Georges Dreyfus, Jacques Morizet and Max Peyrard, eds., France and EC Membership Evaluated (London: Pinter, 1993). 31. Jean Baneth, “ ‘Fortress Europe’ and Other Myths about Trade: Policies Toward Merchandise Imports in the EC and Other Major Industrial Economies (and What They

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Mean for Developing Countries),” World Bank Discussion Papers, Vol. 225 (Washington, DC: World Bank, 1993), p. viii. 32. Gisela Hendriks, “Germany and the CAP: National Interests and the European Community,” International Affairs, Winter 1988–1989, Vol. 65(1), pp. 75–87, citation p. 77. 33. Safran, The French Polity, p. 30. 34. Napoleon Marayevas, “The Agricultural Strata in the European Union and the Common Agricultural Policy,” pp. 97–130, citation p. 109 in George A. Kourvetaris and Andreas Moschonas, eds., The Impact of European Integration: Political, Sociological and Economic Changes (Westport, CT: Praeger, 1996). 35. Pierre Gerbet, La France et l’inte´ gration europe´ enne: Essai d’historiographie (Berne: Pierre Lang Verlag, 1995). 36. Franç ois-Georges Dreyfus, Jacques Morizet and Max Peyrard, eds., France and EC Membership Evaluated (London: Pinter, 1993); Gregory Flynn, Remaking the Hexagon: The New France in the New Europe (Boulder, CO: Westview Press, 1995); Vivien A. Schmidt, From State to Market? The Transformation of French Business and Government (New York: Cambridge University Press, 1996); Keeler and Shain, eds., Chirac’s Challenge; Hussein Kassim and Anand Menon, eds., The European Union and National Industrial Policy (New York: Routledge, 1996); Jolyon Howorth and Anand Menon, eds., The European Union and National Defence Policy (New York: Routledge, 1997); David Hine and Hussein Kassim, eds., Beyond the Market: The EU and National Social Policy (New York: Routledge, 1998); James Forder and Anand Menon, eds., The European Union and National Macroeconomic Policy (New York: Routledge, 1998); Alain Guyomarch, Howard Machin and Ella Ritchie, France in the European Union (New York: St. Martin’s Press, 1999). For comparisons with other European countries, see Wolfgang Mu¨ ller and Vincent Wright, eds., “The State in Western Europe: Retreat or Redefinition?” Special issue of West European Politics, July 1994, Vol. 17(3). 37. Franç ois Scheer, oral testimony at the Centre d’Etudes des Relations Internationales (CERI) conference on “Franç ois Mitterrand’s Foreign Policy after the Cold War,” Paris, FNSP-CERI, May 13–15, 1997. See Samy Cohen, ed., Mitterrand et la sortie de la guerre froide (Paris: PUF, 1998). 38. Ronald Tiersky, France in the New Europe: Changing Yet Steadfast (Belmont, CA: Wadsworth, 1994), pp. 5, 2, 260. 39. Hoffmann, “Thoughts on the French Nation State Today,” pp. 64–69. 40. Ge´ rard Noiriel, The French Melting Pot: Immigration, Citizenship and National Identity (Minneapolis: University of Minnesota Press, 1996); Alec G. Hargreaves, Immigration in Post-War France (New York: Routledge, 1987), Voices from the North African Community in France (New York: Routledge, 1991), and Immigration, “Race” and Ethnicity in Contemporary France (New York: Routledge, 1995); Patrick Weil, La France et ses e´ trangers: L’aventure d’une politique de l’immigration, 1938–1991 (Paris: Calmann-Le´ vy, 1991). 41. Edouard Balladur, quoted by Jean-Marc Trouille, “The Franco-German Axis since Unification,” pp. 53–64, citation p. 58 in Tony Chafer and Brian Jenkins, eds., France: From the Cold War to the New World Order (New York: St. Martin’s Press, 1996). 42. “France’s Changing View of the World,” Economist, February 10, 1996, pp. 47– 49. See also “Can Chirac Change France?” Economist, May 13, 1995, pp. 13–15. 43. See P. Terrence Hopmann, “French Perspectives on International Relations after the Cold War,”International Studies Quarterly, April 1994, Vol. 38(1), pp. 69–93.

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44. Hussein Kassim, “French Autonomy and the European Union,” Modern and Contemporary France, May 1997, Vol. 5(2), pp. 167–80, citation p. 179. 45. Michael Mann, “Nation-States in Europe and Other Continents: Diversifying, Developing, Not Dying,” Daedalus, Summer 1993, Vol. 122(3), pp. 115–40, citation pp. 116, 121, 126. 46. Paul Taylor, The Limits of Integration (New York: Columbia University Press, 1983), pp. 298–99. 47. James A. Caporaso and John T. S. Keeler, “The European Union and Regional Integration Theory,” pp. 29–62, citation p. 35 in Carolyn Rhodes and Sonia Mazey, eds., The State of the European Union, Vol. 3, Building a European Polity? (Boulder, CO: Lynne Rienner, 1995). 48. Raymond Legrand-Lane, “Sovereignty and Supranationalism,” pp. 163–74, citation p. 171 in Dreyfus et al., eds., France and EC Membership Evaluated.

CHAPTER 1 1. Helen Drake and John Gaffney, The Language of Leadership in Contemporary France (Dartmouth, NH: Darmouth University Press, 1996), p. 15. 2. James E. Jacob and David C. Gordon, “Language Policy in France,” pp. 196–233 in William R. Beer and James E. Jacob, eds., Language Policy and National Unity (Totowa, NJ: Rowman and Allanheld), 1985. 3. Stanley Hoffmann, “The Nation, Nationalism and After: The Case of France” (Princeton, NJ: Princeton University, Tanner Lectures Series, March 1993), citation pp. 2, 4. 4. Isser Woloch, “On the Latent Illiberalism of the French Revolution,” American Historical Review, December 1990, Vol. 95(5), pp. 1452–70; Ferenc Feher, The Frozen Revolution: An Essay on Jacobinism (New York: Cambridge University Press, 1987). 5. Franç ois Furet, Revolutionary France, 1770–1880 (Cambridge: Blackwell, 1992), p. 494. 6. Ibid., p. 306. 7. Geoffrey Best, ed., The Permanent Revolution: The French Revolution and Its Legacy, 1789–1989 (London: Fontana Press, 1988). See also Franç ois Furet, Interpreting the French Revolution (New York: Cambridge University Press, 1981); Robert Gildea, The Past in French History (New Haven, CT: Yale University Press, 1994); Suzanne Berger, “The French Revolution in Contemporary French Politics,” French Politics and Society, Spring 1990, Vol. 8(2), pp. 53–64. 8. Pierre Birnbaum, La France aux Franç ais: Histoire des haines nationalistes (Paris: Le Seuil, 1993) and La France de l’affaire Dreyfus (Paris: Gallimard, 1994); Michel Winock, La fie`vre hexagonale: Les grandes crises politiques, 1871–1968 (Paris: Calmann-Le´ vy, 1986); Herman Lebovics, True France: The Wars Over Cultural Identity, 1900–1945 (Ithaca, NY: Cornell University Press, 1992). 9. Rene´ Re´ mond, La droite en France de 1815 a` nos jours: Continuite´ et diversite´ (Paris: Aubier, 1954). 10. Raymond Aron, The Elusive Revolution: Anatomy of a Student Revolt (New York: Praeger, 1969); Philippe Be´ ne´ ton and Jean Touchard, “Les interpre´ tations de la crise de Mai–Juin 1968,” Revue Franç aise de Science Politique, June 1970, Vol. 20(3), pp. 503– 42.

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11. Franç ois Furet, Jacques Julliard and Pierre Rosanvallon, La Re´ publique du centre: La fin de l’exception franç aise (Paris: Calmann-Le´ vy, 1988). 12. Pierre-Andre´ Taguieff, La Re´ publique menace´ e (Paris: Textuel, 1996), p. 81. 13. Michel Albert, Capitalisme contre Capitalisme (Paris: Le Seuil, 1991), English translation: Capitalism vs. Capitalism: How America’s Obsession with Individual Achievement and Short-Term Profit Has Led It to the Brink of Collapse (New York: Four Walls Eight Windows, 1993). 14. Vivien Schmidt, From State to Market? The Transformation of French Business and Government (New York: Cambridge University Press, 1996), p. 169. 15. Roger Cohen, “France vs. U.S.: Warring Views of Capitalism,” New York Times, October 20, 1997, pp. A1, A6. See also Lester Thurow, Head to Head: The Coming Economic Battle among Japan, Europe and America (New York: Morrow, 1992). 16. Jean Lacouture, Le´ on Blum (Paris: Le Seuil, 1977), pp. 269–340, 443–506. See also Pierre Birnbaum, Un mythe politique: “La Re´ publique juive” de Le´ on Blum a` Pierre Mende`s-France (Paris: Fayard, 1988). 17. Henri Michel and Boris Mirkine-Guetze´ virch, Les ide´ es politiques et sociales de la Re´ sistance: Documents clandestins, 1940–1944 (Paris: PUF, 1954), pp. 359–78; James D. Wilkinson, The Intellectual Resistance in Europe (Cambridge, MA: Harvard University Press, 1981), pp. 25–106. 18. Tony Judt, Past Imperfect: French Intellectuals, 1944–1956 (Berkeley: University of California Press, 1992) and Marxism and the French Left: Studies in Labour and Politics in France, 1830–1981 (New York: Oxford University Press, 1986). See also Dick Howard, “Can the French Intellectuals Escape Marxism?” French Politics and Society, Winter 1998, Vol. 16(1), pp. 38–47. 19. Raymond Aron, The Opium of the Intellectuals (London: Becker and Warburg, 1957). 20. Pascal Ory, L’Entre deux Mai: Histoire culturelle de la France, Mai 1968–Mai 1981 (Paris: Le Seuil, 1983); Pascal Ory and Jean-Franç ois Sirinelli, Les intellectuels en France de l’affaire Dreyfus a` nos jours (Paris: Armand Colin, 1986). 21. Anthony Beevor and Artemis Cooper, Paris after the Liberation, 1944–1949 (New York: Doubleday, 1994), p. 332. 22. On the state as modernizer in France in the 1950s, see Warren C. Baum, The French Economy and the State (Princeton, NJ: Princeton University Press, 1958); Alan S. Milward, The New Order and the French Economy (Oxford: Clarendon, 1970); Harvey B. Feigenbaum, The Politics of Public Entreprise: Oil and the French State (Princeton, NJ: Princeton University Press, 1985). 23. Grandes e´ coles are an old French tradition. In the eighteenth century, the monarchy created the Ecole Royale des Ponts-et-Chausse´ es for bridges and roads, and Ecole Royale des Mines for engineering studies. The revolutionary government created Ecole Polytechnique (science and engineering) and Ecole Normale Supe´ rieure (science, humanities and education) in 1794. The leaders of the 1880s and 1890s, bent on disseminating a non-Catholic education, created prestigious teachers’ schools: Ecoles Normales Supe´ rieures at Saint-Cloud (1880), Se`vres (1881) and Fontenay (1882) and also Ecole des Hautes Etudes Commerciales, for business, Saint-Cyr for army officers, Ecole Centrale for engineers, schools for colonial administrators, and so on. This tradition goes all the way back to King Francis I (1494–1547) who created the Colle`ge de France to disseminate the new Renaissance thinking which the old Sorbonne, dominated by con-

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servative Thomist theologians, refused to teach. The Sorbonne itself was a 1253 creation of Robert de Sorbon, a close advisor to King Louis IX (1214–1270). 24. Jean-Michel Gaillard, L’ENA, miroir de l’Etat: De 1945 a` nos jours (Brussels: Complexe, 1995), pp. 43–44. 25. Pierre Birnbaum, Les sommets de l’Etat: Essai sur l’e´ lite du pouvoir en France (Paris: Le Seuil, 1977); Pierre Bourdieu, The State Nobility: Elite Schools in the Field of Power (Stanford, CA: Stanford University Press, 1996); Michel Crozier, La socie´ te´ bloque´ e (Paris: Le Seuil, 1970); Ouˆ va l’administration franç aise? (Paris: Editions d’Organisation, 1974); Ezra Suleiman, Politics, Power and Bureaucracy in France: The Administrative Elite (Princeton, NJ: Princeton University Press, 1974). 26. Schmidt, From State to Market? p. 412. 27. Michael M. Harrison, The Rise and Fall of Anti-Americanism: A Century of French Perceptions (New York: St. Martin’s Press, 1990). 28. John T. Marcus, Neutralism and Nationalism in France: A Case Study (New York: Bookman Associates), 1958, pp. 33–84. 29. John Zysman, “The French State in the International Economy,” International Organization, Fall 1977, Vol. 31(4), pp. 839–78, citation p. 853. 30. J. R. Frears, France in the Giscard Presidency (Boston: G. Allen and Unwin, 1981), pp. 20–21. See also Diana Green, “Industrial Policy and Policy-Making, 1974– 82,” pp. 139–58 and R. Formesyn, “Europeanization and the Pursuit of National Interests,” pp. 219–43 in Vincent Wright, ed., Continuity and Change in France (Boston: G. Allen and Unwin, 1984); as well as Vale´ ry Giscard d’Estaing, French Democracy (Garden City, NY: Doubleday, 1977). 31. Elie Cohen, Le Colbertisme High Tech: Economie des Te´ le´ com et du Grand Projet (Paris: Hachette, 1992), p. 387. 32. Wolfgang C. Mu¨ ller, “Political Traditions and the Role of the State,” West European Politics, July 1994, Vol. 17(3), pp. 32–51, citation pp. 32, 47–48. 33. David Ross Cameron, “From Barre to Balladur: Economic Policy in the Era of the EMS,” pp. 117–57, citation pp. 127–128 in Gregory Flynn, ed., Remaking the Hexagon: The New France in the New Europe (Boulder, CO: Westview Press, 1995). 34. Hussein Kassim, “French Autonomy and the European Union,” pp. 167–80, citation p. 167 in Modern and Contemporary France, May 1997. 35. John Lambert, “The Constitutional Crisis, 1965–1966,” Journal of Common Market Studies, May 1966, Vol 4(1), pp. 195–228. See also John Newhouse, Collision in Brussels: The Crisis of June 30, 1965 (New York: Twentieth Century Fund, 1967). 36. Desmond Dinan, Ever Closer Union? An Introduction to the European Community (Boulder, CO: Lynne Rienner, 1994), pp. 55–57. 37. Anthony L. Teasdale, “The Life and Death of the Luxembourg Compromise,” Journal of Common Market Studies, December 1993, Vol. 31(4), pp. 567–79. 38. Zysman, “The French State in the International Economy,” pp. 839–40, 857. 39. Jean Burrell, review of J. Szarka, Business in France (London: Piman, 1992), Modern and Contemporary France, 1993, NSI(3), pp. 473–74. 40. Mark Wise, “France and European Unity,” pp. 35–74 citation pp. 65, 70 in Robert Aldrich and John Connell, eds., France in World Politics (New York: Routledge, 1989). See also Jacques Delors, La France par l’Europe (Paris: Grasset, 1988). 41. Paul Taylor, “The Nation-State in the European Community: Superficial Realities and Underlying Uncertainties,” International Journal, Summer 1984, Vol. 39, 577–98. 42. Zysman, “The French State in the International Economy,” p. 839.

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43. Anne Stevens, The Government and Politics of France (New York: St. Martin’s Press, 1992), pp. 290, 300. 44. Colette Mazzucelli, France and Germany at Maastricht: Politics and Negotiations to Create the European Union (New York: Garland Publishing, 1997). 45. Alan J. Dillingham, “The Cost of Convergence: The Case of France,” ECSA Review, Spring–Summer 1996, Vol. 9(2), pp. 9–13. 46. George Ross, Jacques Delors and European Integration (New York: Oxford University Press, 1995), pp. 26, 2. 47. Julius W. Friend, The Long Presidency: France in the Mitterrand Years, 1981– 1995 (Boulder, CO: Westview Press, 1998), pp. 200–218, 262–66. 48. Stanley Hoffmann, Preface (pp. vii–xiv), citation p. xiii in Philip G. Cerny and Martin A. Shain, French Politics and Public Policy (New York: St. Martin’s Press, 1980). 49. Roger Fauroux, “Le retour de l’industrie,” French Politics and Society, Summer 1992, Vol. 10(2), pp. 30–33, citation p. 30.

CHAPTER 2 1. Gerhard Go¨ hler, “Institutions in Political Theory: Lessons for European Integration,” pp. 1–19, citation p. 1 in Dietrich Rometsch and Wolfgang Wessels, eds., The European Union and Member States: Towards Institutional Fusion? (Manchester: Manchester University Press, 1996). 2. George Ross, Jacques Delors and European Integration (New York: Oxford University Press, 1995), p. 4. 3. Alexandre Carnuletti, “L’administration franç aise face a` la re`gle communautaire,” Revue Franç aise d’Administration Publique, October–December 1988, Vol. 48(4), pp. 523–39, citation p. 524. 4. Anne-Marie Slaughter, “The Real New World Order,” Foreign Affairs, September–October 1997, Vol. 76(5), 183–97, citation pp. 184, 195. 5. Michelle Cini, The European Commission: Leadership, Organisation and Culture in the EC Administration (Manchester: Manchester University Press, 1996), pp. 160–61. 6. Brian Ardy, “The European Budget,” pp. 119–31, citation p. 129 in Philippe Barbour, ed., The European Union Handbook (Chicago: Fitzroy Dearborn, 1996). 7. Hussein Kassim, “Policy Networks and European Union Policy-Making: A Skeptical View,” West European Politics, October 1994, Vol. 17(4), pp. 15–27; Patrick Le Gale`s and Mark Thatcher, eds., Les re´ seaux d’action publique: De´ bat autour des policy networks (Paris: L’Harmattan, 1995). 8. Luc Rouban, “La modernisation de l’Etat et la fin de la spe´ cificite´ franç aise,” Revue Franç aise de Science Politique, August 1990, Vol. 40(4), pp. 521–44, citation pp. 522–23. 9. Vivien A. Schmidt, “Discourse and (Dis)Integration in Europe: The Case of France, Germany, and Great-Britain,” Daedalus, Summer 1997, Vol. 126(3), pp. 167– 97, citation p. 169. 10. John T. S. Keeler and Martin A. Shain, “Presidents, Premiers and Models of Democracy in France,” pp. 23–52, citation p. 25 in John Keeler and Martin Shain, eds., Chirac’s Challenge: Liberalization, Europeanization, and Malaise in France (New York: St. Martin’s Press, 1996). 11. Alain Guyomarch et al., France in the European Union (New York: St. Martin’s Press, 1999), pp. 26–31, 45–50.

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12. John R. Frears, “Parliament in the Fifth Republic,” pp. 47–68, citation pp. 62–63 in William G. Andrews and Stanley Hoffmann, eds., The Impact of the Fifth Republic on France (Albany: State University of New York Press, 1981). 13. Jack Hayward, The State and the Market Economy: Industrial Patriotism and State Intervention in France (New York: New York University Press, 1986), pp. xi–xiii. 14. Ezra Suleiman, Elites in French Society: The Politics of Survival (Princeton, NJ: Princeton University Press, 1978), pp. 230, 240. 15. Anne Stevens, The Government and Politics of France (New York: St. Martin’s Press, 1992), pp. 286–87. 16. William Safran, The French Polity (White Plains, NY: Longman, 1995), pp. 154– 55. 17. Elisabeth Guigou, Pour les Europe´ ens (Paris: Flammarion, 1992), pp. 15–17. 18. Josseline de Clausade, L’adaptation de l’administration franç aise a` l’Europe (Paris: La Documentation Franç aise, 1991), pp. 20, 28. 19. Marie-Christine Kessler, “Les grands corps face a` l’Europe,” pp. 183–201, citation p. 183 in Franç ois D’Arcy and Luc Rouban, eds., De la Ve`me Re´ publique a` l’Europe: Hommage a´ Jean-Louis Quermonne (Paris: Presses de Science Po, 1996). 20. Interview with Mr. Benoıˆt Jolivet, CADES, French Ministry of Economy and Finance, Paris, June 1997. 21. Alexandre Carnuletti, “La formation des agents de l’Etat aux affaires europe´ ennes,” Revue Franç aise d’Administration Publique, July–September 1989, Vol. 51(3), pp. 509–18, citation p. 510. 22. Frank R. Baumgartner, “The Many Styles of Policymaking in France,” pp. 85– 104, citation pp. 88, 92 in Keeler and Shain, eds., Chirac’s Challenge. 23. Marceau Long, ed., Conseil d’Etat: Rapport public 1992 (Paris: La Documentation Franç aise, 1993), pp. 34–39. 24. Marceau Long, ed., Conseil d’Etat: Rapport public 1990 (Paris: La Documentation Franç aise, 1991), pp. 12–13. 25. Alan W. Cafruny and Carl Lankowski, eds., Europe’s Ambiguous Unity (Boulder, CO: Lynne Rienner, 1997), p. 8. 26. Long, Conseil d’Etat: Rapport public 1992, pp. 16–17. 27. Pierre Mazeaud, “L’Europe et notre Constitution,” Le Monde, January 20, 1996, p. 13; Pierre Mazeaud, ed., Droit communautaire et constitutions nationales (Paris: Assemble´ e Nationale/De´ le´ gation pour l’Union europe´ enne, Report Vol. 2630, March 1996), pp. 29–34. 28. Jean-Louis Quermonne, “Trois lectures du traite´ de Maastricht: Essai d’analyse comparative,” Revue Franç aise de Science Politique, October 1992, Vol. 42(5), pp. 802– 18. 29. Joe¨ l Rideau, “France,” pp. 67–135, citation p. 118 in Jean-Claude Masclet and Didier Maus, eds., Les Constitutions nationales a` l’e´ preuve de l’Europe (Paris: La Documentation Franç aise, 1993). 30. Youri Devuyst, “The Treaty of Amsterdam: An Introductory Analysis,” ECSA Review, Fall 1997, Vol. 9(3), pp. 6–14, citation pp. 8–9. 31. Jean-Louis Quermonne, Le syste`me politique europe´ en, des communaute´ s e´ conomiques a` l’Union europe´ enne (Paris: Montchrestien, 1993), p. 152. 32. Henri Oberdorff, “Les incidences de l’Union Europe´ enne sur les institutions franç aises,” Pouvoirs, March 1994, Vol. 69(1), pp. 95–106, citation p. 98. 33. Ibid., p. 98; Rideau, “France,” p. 133.

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34. Martin Shapiro, quoted by Alberta Sbragia, Publius, Fall 1993, p. 34. See also Eric Stein, “Lawyers, Judges and the Making of a Transnational Constitution,” American Journal of International Law, January 1981, Vol. 75(1), pp. 1–27, citation p. 3. 35. Anne-Marie Slaughter, “The Real New World Order,” pp. 188–89. 36. Karen J. Alter, “The European Court’s Political Power,” West European Politics, July 1996, Vol. 19(3), pp. 458–87, citation p. 468. Information regarding the ECJ’s jurisdictional supremacy presented in this section comes from this excellent article. See also Pierre Servan-Schreiber, “La Cour de justice: pivot de la construction europe´ enne,” Politique Etrange`re, Spring 1996, Vol. 61(1), pp. 87–97. 37. Alter, “The European Court’s Political Power,” p. 481. 38. Karen J. Alter, “Who Are the ‘Masters of the Treaty’? European Governments and the European Court of Justice,” International Organization, Winter 1998, Vol. 52(1), pp. 121–47. See also Renaud Dehousse, The European Court of Justice: The Politics of Judicial Integration (New York: St. Martin’s Press, 1998). 39. Jonathan Golub, “The Politics of Judicial Discretion: Rethinking the Interaction between National Courts and the European Court of Justice,” West European Politics, April 1996, Vol. 19(2), pp. 360–85. See also Alec Stone Sweet and Thomas L. Brunell, “The European Court and the National Courts: A Statistical Analysis of Preliminary References, 1961–95,” Journal of European Public Policy, March 1998, Vol. 5(1), pp. 66–97. 40. Robert Harmsen, “European Integration and the Adaptation of Domestic Constitutional Orders: An Anglo-French Comparison,” Revue d’Inte´ gration Europe´ enne/Journal of European Integration, Fall 1993, Vol. 17(1), pp. 71–101, citation pp. 85–86. See also Rosa H. Jansen, Dagmar A. Koster and Reinier F. Van Zutphen, eds., European Ambitions of the National Judiciary (London: Kluwer, 1997); Alec Stone Sweet, AnneMarie Slaughter and Joseph Weiler, eds., The European Court of Justice and National Courts (Oxford: Hart, 1998). 41. Paul Fabian Mullen, “Legitimate Options: National Courts and the Power of the European Court of Justice,” ECSA Review, Winter 1998, Vol. 9(1), pp. 2–7, citation pp. 3–5. 42. Marie-France Buffet-Tchakaloff, La France devant la Cour de Justice des Communaute´ s Europe´ ennes (Paris: Economica, 1985), pp. 91–99. 43. Alec Stone, “Constitutional Politics and Malaise in France,” pp. 53–86, citation p. 78 in Keeler and Shain, eds., Chirac’s Challenge. 44. Gary Marks, Liesbet Hooghe and Kermit Blank, “European Integration from the 1980s: State-Centric v. Multi-level Governance,” Journal of Common Market Studies, September 1996, Vol. 34(3), pp. 341–80, citation p. 357. 45. Jacqueline Dutheil de la Roche`re, “La jurisprudence de la Cour de Justice des communaute´ s europe´ ennes et la souverainete´ des Etats,” pp. 233–64, citation p. 247 in Claude Goyard and George Vedel, eds., La Constitution et l’Europe (Paris: Montchrestien, 1992). 46. Yves Doutriaux and Christian Lequesne, Les institutions de l’Union europe´ enne (Paris: La Documentation Franç aise, 1995), pp. 100–102. 47. De Clausade, L’adaptation de l’administration, p. 21. 48. Jean-Luc Bodiguel, “Une conception ‘europe´ enne’ de la fonction publique?” in d’Arcy and Rouban, eds., De la Ve`me Re´ publique a` l’Europe, pp. 163–81. 49. De Clausade, L’adaptation de l’administration, p. 45. 50. Philippe Manin, “Le prix de vente des carburants en France devant le juge euro-

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pe´ en,” Droit et pratique du Commerce International/ International Trade Law and Practice, 1985, Vol. 11(4), pp. 637–55, citation p. 637. 51. Maria Mendrinou, “Non-compliance and the European Commission’s Role in Integration,” Journal of European Public Policy, March 1996, Vol. 3(1), pp. 1–22, citation p. 2. 52. Schmidt, “Discourse and (Dis)Integration in Europe,” pp. 169, 194. 53. Most of this information comes from Christian Lequesne, Paris-Bruxelles: Comment se fait la politique europe´ enne de la France (Paris: FNSP, 1993), pp. 59–96, 98– 132. See also Marie-Christine Kessler, La politique e´ trange`re de la France: Acteurs et processus (Paris: Presses de Sciences Po, 1999), especially Chapter 6, “La politique europe´ enne,” pp. 189–216. 54. Assemble´ e Nationale, La De´ le´ gation de l’Assemble´ e Nationale pour l’Union europe´ enne: Compe´ tences et activite´ s (Paris: Assemble´ e Nationale/De´ le´ gation pour l’Union europe´ enne, Report of March 26, 1996), p. 10. 55. Henri Nallet, Maurice Lingot and Alain Barrau, eds., Rencontres parlementaires europe´ ennes: XVIIe`me COSAC (Paris: Assemble´ e Nationale/De´ le´ gation pour l’Union europe´ enne, Report Vol. 488, 1997), pp. 9–10. 56. Doutriaux and Lequesne, Les institutions de l’Union europe´ enne, p. 114. 57. Jean-Luc Sauron, L’application du droit de l’Union europe´ enne en France (Paris: La Documentation Franç aise, 1995), p. 65. 58. John R. Frears, “Parliament in the Fifth Republic,” p. 51 and “The French Parliament: Loyal Workhorse, Poor Watchdog,” West European Politics, July 1990, Vol. 13(3), pp. 32–51. 59. Robert Pandraud, L’Assemble´ e nationale et l’Europe: Quelle influence sur la le´ gislation communautaire? (Paris: Assemble´ e Nationale/De´ le´ gation pour l’Union europe´ enne, June 1994), p. 37. 60. Thibaud de Berranger, Constitutions nationales et construction communautaire (Paris: LGDJ, 1995), pp. 422–23. 61. Michael Niblock, The EEC: National Parliaments in Community Decision-Making (London: Chatham House, 1971), p. 10; John Frears, “The French Parliament: Loyal Workhorse,” p. 50; Franco Rizutto, “The French Parliament and the EU: Loosening the Constitutional Straitjacket,” pp. 46–59, citation p. 57 in Philip Norton, ed., National Parliaments and the European Union (London: Frank Cass, 1996). 62. Guigou, Pour les Europe´ ens, p. 15. 63. Paul Taylor, “British Sovereignty and the European Community: What Is at Risk?” Millennium: Journal of International Studies, 1991, Vol. 20(1), pp. 73–80, citation pp. 74, 78–79. 64. Stanley Hoffmann, “Thoughts on the French Nation Today,” Daedalus, Summer 1993, p. 72. 65. Wayne Sandholtz, “Choosing Union: Monetary Politics and Maastricht,” International Organization, Winter 1993, Vol. 47(1), pp. 1–40, citation p. 3. 66. Marie-Christine Kessler, “Les grands corps face a` l’Europe,” p. 187. 67. Dusan Sidjanski, “Eurosphe`re: dirigeants et groupes europe´ ens,” pp. 279–98, citation pp. 293–94 in d’Arcy and Rouban, eds., De la Ve`me Re´ publique a` l’Europe. See also Sonia Mazey and Jeremy Richardson, eds., Lobbying in the European Community (Oxford: Oxford University Press, 1993). 68. Wolfgang Streeck and Philippe Schmitter, “From National Corporatism to Trans-

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national Pluralism: Organized Interests in the Single European Market,” Politics and Society, 1991, Vol. 19(2), pp. 132–64, citation pp. 135–36, 159. 69. Liesbet Hooghe and Gary Marks, “Contending Models of Governance in the European Union,” pp. 21–44 in Cafruny and Lankowski, Europe’s Ambiguous Unity. 70. Michel Clamen, Bruxelles au jour le jour: Petit guide des ne´ gociations communautaires (Paris: La Documentation Franç aise, 1996). 71. Vivien Schmidt, “Business, the State and the End of Dirigisme,” p. 131 in Keeler and Shain, eds., Chirac’s Challenge. 72. Henri Mendras, La seconde re´ volution franç aise, 1965–1984 (Paris: Gallimard, 1989). 73. Rouban, “La modernisation de l’Etat,” p. 541.

CHAPTER 3 1. Jean-Louis Barsoux and Peter Lawrence, “The Making of a French Manager,” Harvard Business Review, July–August 1991, pp. 58–67, citation p. 60. See also JeanLouis Barsoux and Peter Lawrence, Management in France (London: Pinter-Cassell, 1990); and French Management: Elitism in Action (London: Pinter-Cassell, 1997). 2. Julius W. Friend, “A Crisis of the State? The French Case,” pp. 85–105, citation pp. 85–86 in Patrick McCarthy and Erik Jones, eds., Disintegration or Transformation? The Crisis of the State in Advanced Industrial Societies (New York: St. Martin’s Press, 1995). 3. Michelle Cini, “La Commission europe´ enne: Lieu d’e´ mergence de cultures administratives. L’exemple de la DG IV et de la DG XI,” Revue Franç aise de Science Politique, June 1996, Vol. 46(3), pp. 457–572. 4. Michel Goyer, review of Vivien Schmidt, From State to Market? French Politics and Society, Fall 1997, Vol. 15(4), pp. 74–79, citation pp. 78–79. 5. Mitchell P. Smith, “Autonomy by the Rules: The European Commission and the Development of State Aid Policy,” Journal of Common Market Studies, March 1998, Vol. 36(1), pp. 55–78, citation p. 58. 6. Ibid., p. 75. 7. Mitchell P. Smith, “Integration in Small Steps: The European Commission and Member-State Aid to Industry,” West European Politics, July 1996, Vol. 19(3), pp. 563– 82, citation p. 564. 8. Ibid., pp. 565–66. 9. Ibid., p. 577 10. Jacques Chirac, La France pour tous (Paris: NIL, 1994), p. 56. 11. Herve´ Dumez and Alain Jeunemaıˆtre, “L’Etat et le marche´ en Europe: Vers un Etat de droit e´ conomique?” Revue Franç aise de Science Politique, April 1992, Vol. 42(2), pp. 263–74, citation pp. 263–64. 12. Elie Cohen, Les grandes manoeuvres industrielles (Paris: Belfond, 1985) (with Michel Bauer), L’Etat brancardier: Politiques du de´ clin industriel, 1974–1984 (Paris: Calmann-Le´ vy, 1989), Le Colbertisme High Tech: Economie des Te´ le´ com et du Grand Projet (Paris: Hachette, 1992), and La tentation hexagonale: La souverainete´ a` l’e´ preuve de la mondialisation (Paris: Fayard, 1996). 13. Matthew Lynn, Birds of Prey: Boeing vs. Airbus: A Battle for the Skies (New York: Four Walls Eight Windows, 1997), p. 229.

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14. Tyler Cowen, “French Kiss-Off: How Protectionism Has Hurt French Films,” Reason, July 1998, pp. 41–47. 15. Richard Pells, Not Like Us: How Europeans Have Loved, Hated and Transformed American Culture Since World War II (New York: Basic Books, 1997), p. 276. 16. Howard Machin and Vincent Wright, eds., Economic Policy and Policy-Making under the Mitterrand Presidency, 1981–1984 (New York: St. Martin’s Press, 1985). 17. “Public-Prive´ : Questions-Re´ ponses,” Le Monde Economie, November 19, 1996, p. 2 (special issue on French privatizations). See also Mairi Maclean, “Privatisation in France 1993–94: New Departures, or a Case of plus ç a change?” West European Politics, 1995, pp. 273–90. 18. Vivien Schmidt, “An End to French Economic Exceptionalism? The Transformation of Business under Mitterrand,” California Management Review, Fall 1993, Vol. 36(1), 75–98, citation p. 83. 19. Vivien Schmidt, “Running on Empty: The End of Dirigisme in French Economic Leadership,” Modern and Contemporary France, May 1997, Vol. 5(2), pp. 229–41, citation p. 232. 20. “Easier Said than Done,” Economist, March 13, 1999, pp. 83–87. See also Vivien A. Schmidt, “La France entre l’Europe et le monde: Le cas des politiques e´ conomiques nationales,” Revue Franç aise de Science Politique, February 1999, Vol. 49(1), pp. 51– 78. 21. “French Banking: Two into Three Won’t Go,” Economist, April 10, 1999, p. 69. 22. Paul Whitehead, “Unconcerned as the Guillotine Looms,” Financial Times, November 6, 1998, p. III. See also Anne-Marie Rocco, “L”Allemagne et la Grande-Bretagne acce´ le`rent la libe´ ralisation de l’e´ lectricite´ europe´ enne,” Le Monde, April 29, 1998, p. 17. 23. First citation: Giandomenico Majone, “The Rise of the Regulatory State in Europe,” West European Politics, July 1994, Vol. 17(3), pp. 77–101, citation p. 77. Second citation: Giandomenico Majone, “Paradoxes of Privatization and Deregulation,” Journal of European Public Policy, June 1994, Vol. 1(1), pp. 53–69, citation p. 68. 24. Alain Lebaude, “La mutation sociale des entreprises publiques,” Le Monde, November 13, 1996 (special issue on public companies’ new labor policy). 25. Yannick Moreau, Entreprises de service public europe´ ennes et relations sociales (Paris: Aspe, 1997). See Fre´ de´ ric Lemaıˆtre, “La gestion des entrepises de service public en Europe se rapproche de celle du secteur prive´ ,” Le Monde, October 16, 1996, p. 17. 26. “EU Antitrust Chief to Turn Heat Up on Credit Lyonnais,” Wall Street Journal, March 25, 1998, p. A14. See also Douglas Lavin, “Credit Lyonnais Is Set to Announce Sharp Profit Rise,” Wall Street Journal, March 18, 1998, p. A12. 27. Mairi Maclean, “Privatisation, Dirigisme and the Global Economy: An End to French Exceptionalism?” Modern and Contemporary France, May 1997, Vol. 5(2), pp. 215–28, citation p, 216. 28. W. Rand Smith, The Left’s Dirty Job: The Politics of Industrial Restructuring in France and Spain (Pittsburgh, PA: University of Pittsburgh Press, 1998), pp. 10–14. 29. C. Grant, Delors: Inside the House that Jacques Built (London: Nicholas Brealey, 1994), p. 156. 30. Cohen, Le Colbertisme High Tech, pp. 382–84. 31. Philippe Rollet, “The EC Industrial Policy and its Impact on French and European Industries,” pp. 22–31, citation pp. 23–24 in Franç ois-George Dreyfus et al., eds., France and EC Membership Evaluated (London: Pirten, 1993). 32. Anand Menon and Jack Hayward, “States, Industrial Policies and the European

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Union,” pp. 267–90, citation pp. 286–87 in Hussein Kassim and Anand Menon, eds., The European Union and National Industrial Policy (New York: Routledge, 1996); Elie Cohen, “Europe between Markets and Power: Industrial Policies—Specialization, Technology, Competition and Foreign Trade,” pp. 137–56, citation p. 154 in Yves Me´ ny, Pierre Muller and Jean-Louis Quermonne, eds., Adjusting to Europe: The Impact of the European Union on National Institutions and Policies (New York: Routledge, 1996). 33. These three strategies are: (1) accommodation, where interest representatives cooperate on implementation strategies, this strategy includes numerous exceptions to the rule and concessions from the state in the form of financial incentives, subsidies and loans, facilitation of tax payment and preferential public procurements; (2) cooptation, where business imposes its agenda on the government and where the initiative rests squarely with corporate interests; and (3) confrontation, where societal interests confront the state by demonstrating in the streets. This typology is based on Vivien A. Schmidt, “Loosening the Ties that Bind: The Impact of European Integration on French Government and Its Relationship to Business,” Journal of Common Market Studies, June 1996, Vol. 43(2), pp. 223–54, and “Running on Empty.” 34. Schmidt, “Running on Empty,” p. 229. See also Jack Hayward, “Changing Partnerships: Firms and the French State,” Modern and Contemporary France, May 1997, Vol. 5(2), pp. 155–65. 35. Schmidt, “Running on Empty,” pp. 236–39. 36. Emmanuel Godin, “Le ne´ o-libe´ ralisme a` la franç aise: une exception?” Modern and Contemporary France, 1996, NS4(1), pp. 61–70, citation pp. 64, 67–68. 37. Henri Guaino, “Des marges de manoeuvre existent,” Jean-Marc Daniel, “Le de´ bat sur le de´ ficit de l’Etat,” and Erik Izraelwicz, “L’Etat et le marche´ : un faux de´ bat?” Le Monde. Dossiers et Documents, September 1997, Vol. 257, pp. 1–4 (special issue on France’s economic policy). See also Le Monde: Dossiers et Documents, May 1996, Vol. 1996 on the same issues. 38. OECD Economic Surveys, France: 1997 (Paris: OECD 1997), pp. 55, 72. 39. Andrew Moravcsik, Why the European Community Strengthens the State: Domestic Politics and International Cooperation (Cambridge, MA: Minda de Gunzburg Center Publications Office, 1994). 40. Vivien Schmidt, “The End of French Economic Exceptionalism?” p. 96. 41. Laurent Me´ nie`re, Bilan de la France, 1981–1993 (Paris: Hachette, 1993), p. 26.

CHAPTER 4 1. John S. Ambler, “Ideas, Interests, and the French Welfare State,” pp. 1–31, citation p. 7 in John S. Ambler, ed., The French Welfare State: Surviving Social and Ideological Change (New York: New York University Press, 1991). 2. Peter Baldwin, The Politics of Social Solidarity and the Bourgeois Basis of the European Welfare State, 1875–1975 (Cambridge: Cambridge University Press, 1990); Denis Pelletier, Les catholiques en France depuis 1815 (Paris: La De´ couverte, 1997), pp. 62–95. 3. Bruno Palier and Giuliano Bonoli, “Entre Bismarck et Beveridge: ‘Crises’ de la se´ curite´ sociale et politique(s),” Revue Franç aise de Science Politique, August 1995, Vol. 45(4), pp. 668–97. 4. Pierre Laroque, Succe`s et faiblesses (Paris: Armand Colin, 1961); Les institutions sociales de la France (Paris: La Documentation Franç aise, 1980).

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5. Jacques Barrot, “Le Cap de Bonne Espe´ rance,” Le Monde, September 5, 1996, p. 12. 6. Martine Aubry, Pour une Europe sociale (Paris: La Documentation Franç aise, 1988). 7. Douglas E. Ashford, “Advantages of Complexity: Social Insurance in France,” pp. 32–57, citation pp. 36–37 in Ambler, The French Welfare State. 8. Walter Korpi, “Economic Growth and the Welfare State: Leaky Bucket or Irrigation System?” European Sociological Review, September 1985, Vol. 1(2), pp. 97–118. See also Walter Korpi, “Un Etat-Providence conteste´ et fragmente´ : Le de´ veloppement de la citoyennete´ sociale en France: Comparaisons avec la Belgique, l’Allemagne, l’Italie et la Sue`de,” Revue Franç aise de Science Politique, August 1995, Vol. 45(4), pp. 632– 67. 9. Louis-Charles Viossat, “Protection sociale et institutions sociales,” pp. 51–56, Tables pp. 53–55 in Marc de Montalembert, ed., La protection sociale en France (Paris: La Documentation Franç aise, 1995). 10. “Half a Century of Social Security,” News from France, October 13, 1995, p. 4. For more statistics and figures, see Les comptes de la protection sociale 1990–1995 (Paris: La Documentation Franç aise, 1996). 11. Viossat, “Protection sociale et institutions sociales,” p. 53. 12. Ambler, The French Welfare State, pp. 25, 27. 13. Jean-Michel Bezat, “Le poids pre´ ponde´ rant des retraites dans la protection sociale,” Le Monde, March 29, 1997, pp. 1, 15. See also “Le nouveau gouvernement de M. Juppe´ a pour priorite´ s la re´ forme de la Se´ curite´ Sociale et la re´ duction des de´ ficits,” Le Monde, November 9, 1995, pp. 1–36 (special issue on the new cabinet and budget deficit policy). 14. Richard Gillespie and William E. Paterson, eds., “Rethinking Social Democracy in Western Europe,” West European Politics, January 1993, Vol. 16(1) (special issue). 15. Douglas Ashford, “Advantages of Complexity: Social Insurance in France,” p. 49 in Ambler, The French Welfare State. 16. David R. Cameron, “Continuity and Change in French Social Policy: The Welfare State under Gaullism, Liberalism, and Socialism,” pp. 58–93, citation pp. 72–83 in Ambler, The French Welfare State. 17. Ibid., p. 61. 18. Ibid., p. 71. 19. “Les re´ formes sans la me´ thode,” Le Monde, November 30, 1995, p. 16. 20. Yves Mamou, “Disparite´ s entre le secteur public et le secteur prive´ ,” Le Monde, May 13, 1997, pp. 1, 14. 21. Paul Champsaur, ed., Tableaux de l’e´ conomie franç aise 1996/97 (Paris: INSEE, 1996), p. 91. 22. Bruno Maquart, “Les re´ gimes de retraite,” pp. 81–86, in de Montalembert, La protection sociale en France. 23. Jean-Michel Bezat, “Retraites: inventaires avant la re´ forme,” Le Monde: Dossiers et Documents, February 1999, p. 1 (special issue on the French retirement system). 24. Champsaur, Tableaux de l’e´ conomie franç aise 1996/97, pp. 35, 62–63. 25. David Wilsford, “The Continuity of Crisis: Patterns of Health Care Policymaking in France, 1978–1988,” pp. 94–143, citation p. 94 in Ambler, The French Welfare State. 26. Robert Geyer, “Globalisation and the (Non)-Defence of the Welfare State,” West European Politics, July 1998, Vol. 21(3), pp. 77–102, citation p. 87.

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27. Udo Rehfeldt, “Effritement du mode`le social europe´ en,” Le Monde Diplomatique, July 1994, p. 25. 28. Jean-Claude Trichet, “Pour la Banque de France, l’urgence est a` la re´ duction des de´ penses publiques,” Le Monde, April 30, 1996, p. 16. 29. Ge´ rard de Vaublanc, “Trop de fonctionnaires,” Le Monde, October 10, 1995, p. 1. 30. David Wilsford, Doctors and the State: The Politics of Health Care in France and the United States (Durham, NC: Duke University Press, 1991), Figures 4.2 p. 98, 5.1 p. 130 and 5.2 p. 131. 31. Michael Smith and Robert Taylor, “Brussels to Widen 48-Hour Limit,” Financial Times, November 11, 1998, p. 2. 32. Wilsford, “The Continuity of Crisis,” p. 105. 33. Ibid., p. 107. See also Patrick Hassenteufel, Les me´ decins face a` l’Etat: Une comparaison europe´ enne (Paris: Presses de Sciences Po, 1997). 34. Nathalie Roman, “Budget et comptabilite´ des e´ tablissements de sante´ ,” pp. 137– 42 in de Montalembert, La protection sociale en France; Wilsford, “The Continuity of Crisis,” pp. 108–10. 35. Wilsford, “The Continuity of Crisis,” pp. 131, 128. 36. Sophie Albert, “Le service public hospitalier,” pp. 131–35 in de Montalembert, La protection sociale en France. 37. “Le gouvernement incite les pharmaciens a` vendre des me´ dicaments ge´ ne´ riques,” Le Monde, September 26, 1996, pp. 1, 31. 38. Jean-Michel Bezat, “Le gouvernement subit un camouflet sur la maıˆtrise des de´ penses de sante,” Le Monde, December 20/21 1998, p. 8; Alain Beuve-Me´ ry, “Martine Aubry cherche un nouveau syste`me de re´ gulation des de´ penses de sante´ ,” Le Monde, December 23, 1998, p. 7. 39. Gilles Johanet, Se´ curite´ Sociale: l’e´ chec et le de´ fi (Paris: Le Seuil, 1998). 40. Thierry Philippon and Natacha Tatu, “Franç ais: Comment vos retraites ont e´ te´ ampute´ es,” Le Nouvel Observateur, November 5–11, 1998, pp. 76–78. 41. Catherine Golliau, “Fonds de pension: Pour sauver vos retraites,” Le Point, March 15, 1997, pp. 76–86, citation p. 79. The best French book on retirement and pension funds policy is Franç ois Charpentier, Retraites et fonds de pension: L’e´ tat de la question en France et a` l’e´ tranger (Paris: Economica, 1996). See also Bruno Dumons and Gilles Pollet, L’Etat et les retraites (Paris: Belin, 1994); Raoul Briet and Catherine Zaidman, eds., Perspectives a` long terme des retraites (Paris: La Documentation Franç aise, 1995); Le Monde: Dossiers et Documents, February 1999, Vol. 273 (special issue on the French retirement system); Franç ois Chesnais, “Des retraites a` la merci des marche´ s,” Le Monde Diplomatique, April 1997. 42. Peter F. Drucker, The Unseen Revolution: How Pension Funds Socialism Came to America (New York: Harper and Row, 1976); Philippe Manie`re, Marx a` la corbeille (Paris: Stock, 1999). 43. Samer Iskandar, “Funds from Overseas Spur Fresh Round of Activity,” Financial Times, November 27, 1998, p. 11. 44. Philippe Manie`re, interview with William Dale Crist, “Fonds de pension,” Le Point, August 8, 1998, pp. 44–48. 45. OECD, 1991/92 Economic Surveys: France (Paris: OECD, 1992), p. 113. 46. Jacques Freyssinet, Le choˆ mage (Paris: La De´ couverte, 1999), pp. 10–25. See also Henri Guaino, ed., Choˆ mage: Le cas franç ais (Paris: La Documentation Franç aise, 1997).

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47. Pierre Rosanvallon, La nouvelle question sociale: Repenser l’Etat-Providence (Paris: Le Seuil, 1995). 48. Jean-Paul Fitoussi, “Wage Distribution and Unemployment: The French Experience,” The American Economic Review, May 1994, Vol. 84(2), pp. 59–64, citation p. 59. 49. Desmond Dinan, Ever Closer Union? An Introduction to the European Community (Boulder, CO: Lynne Rienner, 1994), pp. 394–95. 50. Ibid., p. 403. See also Ian Davidson, Jobs and the Rhineland Model (London: Kogan Page, 1997). 51. Nicholas Moussis, Access to European Union: Institutions and Policies (Brussels: Edit-Eur, 1995), p. 182. 52. Ibid., p. 175. 53. Philippe Pochet, “The New Employment Chapter of the Amsterdam Treaty,” Journal of European Social Policy, August 1999, Vol. 9(3), pp. 271–28, citation p. 271. 54. Linda Hantrais, “French Social Policy in the European Context,” Modern and Contemporary France, 1995, NS3(4), pp. 381–90. See also “La dimension europe´ enne de la sante´ ,” pp. 30–35 in La Sante´ en France, 1994–1998 (Paris: La Documentation Franç aise, 1998). 55. Jan Windenbank, “Challenges to French Social Policy in the 1990s: The Cases of European Integration and Persistent Unemployment,” Modern and Contemporary France, 1995, NS3(4), pp. 379–80, citation p. 379. See also Michel Lallement, “Vingt ans de politique franç aise de l’emploi: Un regard critique,” Modern and Contemporary France, 1995, NS3(4), pp. 391–400; Franç oise Gollain, “Le de´ bat sur la re´ duction du temps de travail,” Modern and Contemporary France, 1996, NS4(1), pp. 71–79; Bernard H. Moss, “French Left Euroscepticism and the Myth of Social Europe,” Modern and Contemporary France, November 1998, Vol. 6(4), pp. 535–37. 56. About the Luxembourg Council, see Alain Barrau, ed., Apre`s l’Euro, l’emploi (Paris: Assemble´ e Nationale/De´ le´ gation pour l’Union Europe´ enne, Report vol. 904, 1998), pp. 72–107, 114–117. 57. Alain Barreau, ed., Apre`s l’Euro, l’emploi; Pour l’emploi (Paris: Assemble´ e Nationale/De´ le´ gation pour l’Union europe´ enne, Report vol. 1182, 1998), and 2000: Une e´ tape nouvelle dans la politique europe´ enne de l’emploi? (Paris: Assemble´ e Nationale/ De´ le´ gation pour l’Union europe´ enne, Report vol. 1944, 1999). 58. Mark I. Vail, “The Better Part of Valour: The Politics of French Welfare Reform,” Journal of European Social Policy, November 1999, Vol. 9(4), pp. 311–29, citation p. 313. 59. Ibid., pp. 313, 323. 60. David Hine, “Introduction: The European Union, State Autonomy and National Social Policy,” pp. 1–13, citation p. 3 in David Hine and Hussein Kassim, eds., Beyond the Market: The EU and National Social Policy (New York: Routledge, 1998). See also Stephan Leibfried and Paul Pierson, eds., European Social Policy: Between Fragmentation and Integration (Washington, DC: Brookings Institution, 1995).

CHAPTER 5 1. Edmund L. Andrews, “With Euro, Europe Reinvents Itself,” New York Times, January 4, 1999, p. C11. 2. Delegation of the European Commission in France, En route pour l’Euro (Paris:

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Delegation of the European Commission in France, December 1996), p. 8 (special issue on the Euro). See also Daniel Gros and Niels Thygesen, European Monetary Union: From the EMS to EMU (White Plains, NY: Longman, 1998), pp. 261–316. 3. Jean Boissonnat, La re´ volution de 1999: L’Europe avec l’Euro (Paris: Sand, 1998), pp. 102. 4. Desmond Dinan, Ever Closer Union? An Introduction to the European Community (Boulder, CO: Lynne Rienner, 1994), p. 419. 5. Jacques Delors, Preface (pp. i–vii), citation p. v in Philippe de Schoutheete, Une Europe pour tous: Dix essais sur la construction europe´ enne (Paris: Odile Jacob, 1997). 6. Gianni de Michelis, “La ve´ ridique histoire du traite´ de Maastricht,” Limes, 1996, Vol. 96(1), pp. 249–56, citation p. 249 (special issue on “La France en question”). 7. Boissonnat, La re´ volution de 1999, pp. 8, 11. 8. Richard W. Stevenso, “The Euro: For U.S., Gains and Losses,” New York Times, January 4, 1999, p. A6. 9. Robert Mundell, “The Case for the Euro,” Wall Street Journal, March 24 and 25, 1998, citation from March 25, 1998, p. A8. 10. Pierre-Antoine Delhommais, “La naissance d’une devise europe´ enne unique met en cause l’he´ ge´ monie du dollar,” Le Monde, January 1, 1999, p. 2. 11. C. Fred Bergsten, “America and Europe: Clash of the Titans?” Foreign Affairs, March–April 1999, Vol. 78(2), pp. 20–34, citation pp. 26–28. 12. Peter J. Katzenstein, “United Germany in an Integrating Europe,” Current History, March 1997, pp. 116–23, citation pp. 117 and 120. See also Peter J. Katzenstein, ed., Tamed Power: Germany in Europe (Ithaca, NY: Cornell University Press, 1997). 13. Bernard H. Moss, “France: EMU and the Social Divide,” pp. 58–86, citation p. 68 in Bernard H. Moss and Jonathan Richie, eds., The Single European Currency in National Perspective: A Community in Crisis? (New York: St. Martin’s Press, 1998). 14. George Graham, “Forex Trading System Planned,” Financial Times, September 15, 1999, p. 8. 15. Yves-Thibault de Silguy, “Un nombre significatif d’Etats-membres seront preˆ ts a` adopter l’euro en 1999,” 7 Jours d’Europe (Paris: Delegation of the European Commission in France, December 1997), p. 9 (special issue on the Euro). 16. Alan J. Dillingham, “The Costs of Convergence: The Case of France,” ECSA Review, Spring–Summer 1996, Vol. 9(2), 9–13, citation p. 9. 17. Hans Tietmeyer, “L’Europe de la Bundesbank,” Limes, 1996, Vol. 96(1), pp. 297– 316. 18. See Daniel Gros and Niels Thygesen, European Monetary Integration, especially “A Brief History of European Monetary Integration” (New York: Longman, 1998), pp. 3– 107. 19. Philippe Moreau-Desfarges, “Le tournant de Maastricht,” Politique Etrange`re, Spring 1993, Vol. 58(1), pp. 21–33, citation p. 27. 20. Boissonnat, La re´ volution de 1999, p. 52. 21. Karl Kalthenhaler, Germany and the Politics of Europe’s Money (Durham, NC: Duke University Press, 1998). 22. Alan J. Dillingham, “The Costs of Convergence: The Case of France,” ECSA Review, Spring–Summer 1996, p. 9. 23. Jacques Mazier, Maurice Basle´ and Jean-Franç ois Vidal, When Economic Crises Endure (Armonk, NY: M. E. Sharpe, 1999), p. 199. 24. Philippe Saint-Marc, “Une e´ conomie barbare: La dictature irrationnelle des

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marche´ s,” pp. 155–66 in Jean-Marc Chardon and Denis Lensel, eds., La pense´ e unique: Le vrai proce`s (Paris: Economica, 1998). 25. Euro 1999: Rapport sur l’e´ tat de convergence et recommandation associe´ e en vue du passage a` la troisie`me phase de l’UEM (Brussels: European Communities Publishing Office, March 25, 1998); for report on France, see pp. 27–28. 26. Dinan, Ever Closer Union? p. 420. 27. David Cameron, “France and the European Union: The Dilemmas of Integration in the Chirac Era,” unpublished paper prepared for the conference on “Chirac’s Challenge: Public Policy and Protest in France” (Seattle, WA: University of Washington, Center for West European Studies, April 12, 1996), p. 10. 28. Dinan, Ever Closer Union? p. 420. 29. Alessandra Amitrano, Paul de Grauwe and Giuseppe Tullio, “Why Has Inflation Remained So Low after the Large Exchange Rate Depreciations of 1992?” Journal of Common Market Studies, September 1997, Vol. 35(3), 330–46, citation p. 330. 30. Eric Cahm, “French de´ prime collective in 1997: Illusion or Reality?” Modern and Contemporary France, 1997, Vol. 5(4), 479–82, citation p. 480. See also Viviane Forrester, L’horreur e´ conomique (Paris: Fayard, 1996). 31. Robert Elgie, “Democratic Accountability and Central Bank Independence: Historical and Contemporary, National and European Perspectives,” West European Politics, July 1998, Vol. 21(3), 53–76, citation pp. 53–54. See also Robert Elgie and Helen Thompson, The Politics of Central Banks (New York: Routledge, 1998). 32. Elgie, “Democratic Accountability and Central Bank Independence,” pp. 55–60. 33. Pierre-Antoine Delhommais, “La Banque de France assouplit sa politique mone´ taire en abaissant de 7% a` 6, 60% un de ses taux directeurs,” Le Monde, November 3, 1995, p. 7 34. Peter Ford, “Enter the Euro,” Christian Science Monitor, December 7, 1998, pp. 1, 8. 35. Sheri Berman and Kathleen R. McNamara, “Bank on Democracy: Why Central Banks Need Public Oversight,” Foreign Affairs, Vol. 78(2), March–April 1999, pp. 3–8, citation pp. 4–5. 36. Ibid., p. 7. 37. Jean Lemierre, “On n’est plus tre`s loin du gouvernement e´ conomique,” Libe´ ration, January 13, 1999, pp. 1, 3; Tim Jones, “Secretive Panel Refuses to Lift Its Veil,” The European, January 21–27, 1999, p. 15. See also “Euro-11/Ecofin,” European Voice, July 15–21, 1999, p. 12; Kalthenhaler, Germany and the Politics of Europe’s Money, especially Chapter 34, “Challenging Bundesbank Dominance: The Franco-German Economic and Finance Council Initiative,” pp. 56–68. 38. Peter Norman, “Paris Designs on EU Bank Attacked,” Financial Times, January 20, 1997, p. A1. 39. Wolfgang Mu¨ nchau, “Power Struggles over the Euro,” Financial Times, November 6, 1998, p. 19. 40. “And What Alice Found There,” Economist, December 14, 1996, pp. 24–25. 41. Reuters, Euro: Les enjeux pour la France: Points de vue recueillis par Reuters (Paris: Economica, 1998); Jean-Paul Fitoussi, Le de´ bat interdit: Europe, monnaie, croissance (Paris: Arlea, 1998). 42. David Stasavage, “Le pacte de stabilite´ de l’UEM; cre´ dible et efficace?” Politique Etrange`re, Winter 1997–1998, Vol. 62(4), 567–82, citation p. 567. Our discussion of

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the limits of the SGP in this paragraph owes much to this scholar’s insight. See also Martin Weale, “Monetary and Fiscal Policy in Euroland,” Journal of Common Market Studies, March 1999, Vol. 37(1), pp. 153–62. 43. Stasavage, “Le pacte de stabilite´ de l’UEM,” p. 579. For an equally sceptical assessment, see Miriam L. Campanella, “EU Fiscal Discipline after 1999: The Pact of Stability,” ECSA Review, Fall 1998, Vol. 11(3), pp. 8–12. 44. George Mellon, “How Do You Qualify for the Euro Club? By Cheating,” Wall Street Journal, January 27, 1997, p. A23. 45. Peter Ford, “A Test of Euro’s Mettle,” Christian Science Monitor, November 6, 1998, pp. 1, 6. 46. Susan Strange, Mad Money: When Markets Outgrow Governments (Ann Arbor: University of Michigan Press, 1998) and The Retreat of the State: The Diffusion of Power in the World Economy (New York: Cambridge University Press, 1996). 47. David M. Andrews and Thomas D. Willett, “Financial Interdependence and the State: International Monetary Relations at Century’s End,” International Organization, Summer 1997, Vol. 51(3), 479–51, citation pp. 489, 495. 48. Wolfgang Mu¨ nchau, “ECB: Subservience or an Identity of Its Own?” Financial Times, November 3, 1998, p. A3. 49. Oskar Lafontaine and Dominique Strauss-Kahn, “Tirer le meilleur parti de l’Euro,” Le Monde, January 15, 1999, pp. 1, 13. See also Jacques Delors, “Une amitie´ a` faire vivre,” and Karl Lamers, “France-Allemagne: Il reste beaucoup a` faire,” Le Monde, January 22, 1998, p. 14. 50. Michael Smith, “EU Urged to Improve Single Market,” Financial Times, December 4, 1998, p. 32. 51. Pascal Galinier, “Des prix a` ge´ ome´ trie variable,” Le Monde, December 31, 1998, p. 12 (special issue “L’euro superstar”). 52. Emma Tucker, “Brussels Acts to Stem Tax Breaks,” Financial Times, November 11, 1998, p. 2. 53. Nigel Forman, “The Euro and Parliamentary Democracy,” pp. 129–37, citation p. 129 in Andrew Duff, ed., Understanding the Euro (London: Federal Trust, 1998). See also Werner Bonefeld, “British Experience: Monetarism Hiding Behind Europe,” Journal of European Area Studies, May 1999, Vol. 7(1), pp. 55–71. 54. Jim Kelly, “EU Members on Quest to Define a ‘Harmful Regime,’ ” Financial Times, December 9, 1998, p. 4. 55. Tim Jones, “Union Tries Harmonization by Stealth,” European Voice, February 18–24, 1999, p. 13 (special issue on taxation policy in the EU). 56. Peter Chapman, “Hopes Fade for Agreement on EU Tax Plans This Year,” European Voice, September 2–8, 1999, Vol. 5(31), p. 1. 57. Stewart Toy, “Cutting the Franc Loose: Practicality Won Over Gallic Pride,” International Business, August 16, 1993, pp. 42–43.

CHAPTER 6 1. Jolyon Howorth, “National Defence and European Security Integration: An Illusion Inside a Chimera?” pp. 10–22, citation pp. 10, 12 in Jolyon Howorth and Anand Menon, eds., The European Union and National Defence Policy (London and New York: Routledge, 1997).

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2. Raymond Aron and Daniel Lerner, eds., France Defeats EDC (New York: Praeger, 1957). 3. See Fre´ de´ ric Bozo, La France et l’OTAN: De la guerre froide au nouvel ordre europe´ en (Paris: IFRI, 1991); Georges-Henri Soutou, L’alliance incertaine: Les rapports politico-strate´ giques franco-allemands, 1954–1996 (Paris: Fayard, 1996); Hans Stark, ed., Les relations franco-allemandes: Etat et perspectives (Paris: IFI, 1998). 4. Pascal Boniface, “La force de dissuasion: Quelle doctrine?” pp. 59–68, citation p. 62 in Philippe Tronquoy, ed., La France et sa de´ fense (Paris: La Documentation Franç aise, 1997). 5. Samy Cohen, La monarchie nucle´ aire (Paris: Hachette, 1986). 6. David G. Haglund, Alliance within the Alliance? Franco-German Military Cooperation and the European Pillar of Defense (Boulder, CO: Westview Press, 1991), p. 101. 7. Ibid., p. 75. 8. Genevie`ve Schme´ der, “France,” pp. 79–116, citations pp. 79, 93 in Mary Kaldor and Genevie`ve Schme´ der, eds., The European Rupture: The Defence Sector in Transition (Cheltenham, UK: United Nations University Press, 1997). See also Edward A. Kolodziej, Making and Marketing Arms: The French Experience and its Implications for the International System (Cheltenham, UK: United Nations University Press, 1989). 9. Schme´ der, The European Rupture, p. 105. 10. Ibid., p. 88. 11. Ibid., p. 92. 12. Dimitris N. Chryssochoou, Michael J. Tsinisizelis, Stelio Stavridis and Kostas Ifantis, Europe in Change: Theory and Reform in the European Union (Manchester: Manchester University Press, 1999), p. 105. 13. Ibid., pp. 127–28. 14. Elfriede Regelsberger, Phillippe de Schoutheete and Wolfgand Wessels, eds., Foreign Policy of the European Union: From EPC to CFSP and Beyond (Boulder, CO: Lynne Rienner, 1997). 15. “French Defence: No Change, Yet,” Economist, February 19, 1994, pp. 58–59. 16. Schme´ der, The European Rupture, p. 113. 17. Jolyon Howorth, “Consensus and Mythology: Security Alternatives in PostGaullist France,” pp. 16–34, citation p. 30 in Robert Aldrich and John Connell, eds., France in World Politics (New York: Routledge, 1989). 18. Bertrand Tiroch, “Les arme´ es franç aises a` l’horizon 2015,” pp. 30–40, citation p. 33 in Tronquoy, La France et sa de´ fense. 19. Michael M. Harrison, The Reluctant Ally: France and Atlantic Security (Baltimore, MD: Johns Hopkins University Press, 1981). 20. Jolyon Howorth, “The Debate in France over Military Intervention in Europe,” pp. 106–24, citation pp. 111–12 in Lawrence Freedman, ed., Military Intervention in European Conflicts (Oxford: Blackwell/The Political Quarterly, 1994). 21. Peter Grumbel, “NATO to Give Western Europe Independent Military Capability,” Wall Street Journal, January 11, 1994, p. A6. 22. Chryssochoou et al., Europe in Change, p. 134. 23. Nicole Gnesotto, “France-OTAN-Europe: la difficile conjugaison des contraires,” pp. 42–48 citation pp. 46–47 in Tronquoy, La France et sa de´ fense. 24. Haglund, Alliance within the Alliance? pp. 64–68 and 197–200.

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25. Patrick McCarthy, ed., France-Germany, 1983–1993: The Struggle to Cooperate (New York: St. Martin’s Press, 1992), p. 3. 26. Philip H. Gordon, “La normalisation de la politique e´ trange`re de l’Allemagne,” Politique Etrange`re, Summer 1994, Vol. 59(2), pp. 497–516. 27. M. Rame´ , “La rationalisation de la Recherche et du developpement,” pp. 137–44, figures p. 138 in Emile Blanc, ed., Vers une Europe de la de´ fense? (Paris: Dunod/IRIS, 1992). 28. Jolyon Howorth, “Consensus and Mythology: Security Alternatives in PostGaullist France,” p. 36 in Aldrich and Connell, France in World Politics. 29. M. Zierer, rapporteur, The European Corps (Brussels: The Assembly of the Western European Union, WEU, Document 1400, November 23, 1993). 30. Chryssochoou et al., Europe in Change, p. 149. 31. Ibid., p. 148 32. Ronald Tiersky, The Mitterrand Legacy and the Future of French Security Policy (Washington, DC: National Defense University, 1995), p. 2. See also Karl Kaiser and Thierry de Montbrial, Agir pour l’Europe: Les relations franco-allemandes dans l’apre`sguerre froide (Paris: IFI, 1995).

CHAPTER 7 1. Alain Guyomarch, Howard Machin and Ella Ritchie, France in the European Union (New York: St. Martin’s Press, 1999), p. 191. 2. Yves Me´ ny, Pierre Muller and Jean-Louis Quermonne, eds., Adjusting to Europe: The Impact of the European Union on National Institutions and Policies (New York: Routledge, 1996), pp. 6–7. 3. James A. Caporaso, “The European Union and Forms of State: Westphalian, Regulatory or Post-Modern?” Journal of Common Market Studies, March 1996, Vol. 34(1), pp. 29–52, citation p. 45. 4. Me´ ny et al., Adjusting to Europe, p. 15. 5. Hussein Kassim, “Policy Network, Networks and European Union Policy Making: A Sceptical View,” West European Politics, October 1994, Vol. 17(4), pp. 15–27, citation p. 17. 6. For such an overview, see Maryvonne Bonnard, ed., Les collectivite´ s locales en France (Paris: La Documentation Franç aise, 1996), pp. 25–110. 7. Bernard De´ zert, La France face a` l’ouverture: europe´ enne: The`mes transfrontaliers (Paris: Masson, 1993), pp. 105–6. See also Roland Axtmann, ed., Globalization and Europe: Theoretical and Empirical Investigations (London: Cassell, 1998). 8. Bernard Jouve and Christian Lefe`vre, “De la gouvernance urbaine au gouvernement des villes? Permanence ou recomposition de l’action publique en Europe,” Revue Franç aise de Science Politique, December 1999, Vol. 49(6), pp. 835–53. 9. John Loughlin and Sonia Mazey, eds., The End of the French Unitary State: Ten Years of Regionalization in France (1982–1992) (London: Frank Cass, 1995). 10. Michel Verpeaux, “Les lois de de´ centralisation depuis 1982,” pp. 11–16 in Bonnard, Les collectivite´ s locales en France. 11. Loughlin and Mazey, The End of the French Unitary State, p. 4. 12. Emmanuel Ne´ grier, “The Changing Role of French Local Government,” West European Politics, October 1999, Vol. 22(4), pp. 120–40, citation pp. 123–24.

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13. Loughlin and Mazey, The End of the French Unitary State, p. 3. 14. Sonia Mazey, “French Regions and the European Union,” pp. 132–57, citation p. 147 in Loughlin and Mazey, The End of the French Unitary State. 15. Neil Nugent, Government and Politics of the European Union (London: Macmillan, 1995). 16. Guyomarch et al., France in the European Union, p. 203. 17. Alain Barreau, ed., Pour une politique re´ gionale plus efficace et plus juste (Paris: French National Assembly/Delegation for the European Union, Vol. 1280, 1998), pp. 15– 17; Pierre Moscovici, Au coeur de l’Europe (Paris: Le Pre´ aux Clercs, 1999), p. 64. 18. Guyomarch et al., France in the European Union, p. 211. 19. Mazey, “French Regions and the European Union,” p. 138. 20. Ibid., p. 151. 21. “Is France Still a Country?” Washington Post, January 5, 1999, editorial p. A10. 22. Je´ roˆ me Monod and Ali Magoudi, Manifeste pour une Europe souveraine (Paris: Odile Jacob, 1999). 23. William Wallace and Julie Smith, “Democracy or Technocracy? European Integration and the Problem of Popular Consent,” West European Politics, July 1995, Vol. 18(3), pp. 137–57, citation p. 151. 24. Helen Drake and Susan Milner, “Change and Resistance to Change: The Political Management of Europeanisation in France,” Modern and Contemporary France, May 1999, Vol. 7(2), pp. 165–78, citation p. 167. 25. Ibid., p. 168. 26. George Ross, “Europe Becomes French Domestic Politics,” pp. 87–114, citation p. 111 in Michael S. Lewis-Beck, ed., How France Votes (New York: Seven Bridges Press, 2000). 27. Drake and Milner, “Change and Resistance to Change,” p. 173. 28. Moscovici, Au coeur de l’Europe, pp. 19, 117, 124. 29. Tony Judt, “The Social Question Redivivus,” Foreign Affairs, October 1997, Vol. 76(5), pp. 95–117, citation p. 100. 30. Ibid., p 107. 31. Franç ois Rachline, Services publics et e´ conomie de marche´ (Paris: Presses de Sciences Po, 1996), p. 19; Alain Minc, La France de l’an 2000 (Paris: Odile Jacob/La Documentation Franç aise, 1994), pp. 5–8. See also Ezra Suleiman and Guillaume Courty, L’aˆ ge d’or de l’Etat: Une me´ tamorphose annonce´ e (Paris: Le Seuil, 1997). 32. “Is France Still Exceptional?” Economist, November 8, 1997, pp. 53–54. 33. Serge Berstein, ed., Les cultures politiques en France (Paris: Le Seuil, 1999), p. 394.

CONCLUSION 1. John McCormick, The European Union: Politics and Policies (Boulder, CO: Westview Press, 1996), pp. 1–2. 2. Alan S. Milward, The European Rescue of the Nation-State (Berkeley, CA: University of California Press, 1992), p. 437. 3. Wolfgang Wessels, “Administrative Interaction,” pp. 229–41, citation p. 230 in William Wallace, ed., The Dynamics of European Integration (London: Pinter, 1990). 4. Vivien A. Schmidt, “Loosening the Ties that Bind: The Impact of European In-

226

Notes

tegration on French Government and Its Relationship to Business,” Journal of Common Market Studies, June 1996, Vol. 43(2), p. 225. 5. Wolfgang Mu¨ ller and Vincent Wright, “Reshaping the State in Western Europe: The Limits to Retreat,” West European Politics, July 1994, Vol. 17(3), pp. 1–11, citation page 5. 6. Torben Iversen, “Wage Bargaining, Central Bank Independence, and the Real Effect of Money,” International Organization, Summer 1998, Vol. 52(3), pp. 469–504, citation p. 469. 7. Richard Youngs, “The Politics of the Single Currency: Learning the Lessons of Maastricht,” Journal of Common Market Studies, June 1999, Vol. 37(2), pp. 295–316. 8. Stanley Hoffmann and Robert O. Keohane, “Institutional Changes in Europe in the 1980s,” pp. 1–39, citation p. 13 in Stanley Hoffmann and Robert O. Keohane, eds., The New European Community: Decisionmaking and Institutional Change (Boulder, CO: Westview Press, 1991). 9. George Tsebelis and Amie Kreppel, “The History of Conditional Agenda-Setting in European Institutions,” European Journal of Political Research, January 1998, Vol. 33(1), pp. 41–71. 10. Stanley Hoffmann, “Fragments Floating in the Here and Now,” in The European Sysiphus: Essays on Europe, 1964–1994 (Boulder, CO: Westview Press, 1995), p. 182. 11. Hoffmann and Keohane, “Institutional Changes in Europe in the 1980s,” pp. 6–7. 12. Wayne Sandholtz, “Membership Matters: Limits of the Functional Approach to European Institutions,” Journal of Common Market Studies, September 1996, Vol. 34(3), pp. 403–29, citation p. 405. 13. James A. Caporaso, “The European Union and Forms of State: Westphalian, Regulatory or Post-Modern?” Journal of Common Market Studies, March 1996, Vol. 34(1), pp. 29–52, citation pp. 33–34. 14. Ibid., pp. 34, 39, 45. 15. Peter Drucker, “The Global Economy and the Nation-State,” Foreign Affairs, September–October 1997, Vol. 76(5), pp. 159–71, citation p. 159. 16. Susan Strange, “The Defective State,” Daedalus, Spring 1995, Vol. 124(2), pp. 55–74, citation p. 62. 17. James A. Caporaso, “The European Union and Forms of State,” p. 31. 18. Claude Imbert, “The End of French Exceptionalism,” Foreign Affairs, Fall 1989, Vol. 68(4), pp. 48–60, citation p. 49. 19. “Efforts to define national interest presuppose agreement on the nature of the country whose interests are to be defined. National interests derive from national identity. We have to know who we are before we can know what our interests are.” Samuel P. Huntington, “The Erosion of American National Interests,” Foreign Affairs, September– October 1997, Vol. 76(5), pp. 28–49, citation p. 28. 20. Gary Marks, Liesbet Hooghe and Kermit Blank, “European Integration from the 1980s: State-Centric v. Multi-level Governance,” Journal of Common Market Studies, September 1996, Vol 34(3), pp. 341–80, citation p. 349. 21. “The Myth of the Powerless State,” Economist, October 7, 1995, pp. 15–16, citation p. 16. 22. Dietrich Rometsch and Wolfgang Wessels, The European Union and Member

Notes

227

States: Towards Institutional Fusion? (Manchester: Manchester University Press, 1996), pp. xii–xiv. 23. Anne-Marie Slaughter, “The Real World Order,” Foreign Affairs, September–October 1997, Vol. 76(5), pp. 183–97, citation p. 195.

Glossary of Key French Expressions A la carte (Europe a` la carte): Scenario whereby European Union (EU) member states freely choose the policy areas in which they wish to participate. L’abstention constructive: This concept enables any single EU country to abstain from participating in a common policy while not preventing other member states from deepening collaboration in the same policy area. L’acquis communautaire: The founding treaties, Commission regulations, directives, decisions and the European Court of Justice’s (ECJ) rulings that constitute the EU’s legal corpus and which must be adopted and implemented by new members. L’autre politique (“the other policy”): refers to the anti-Maastricht monetary policy promoted by French defenders of national sovereignty and partisans of the social democratic welfare state. It presents itself as an alternative to la pense´ e unique.* Les beurs: Second-generation Arabs or French citizens of North African descent. Le capitalisme rhe´ nan: A form of capitalism encompassing a general social concern, the welfare state with government-sponsored public infrastructures. Le ce´ sarisme de´ mocratique: A type of political regime which often surfaces in times of great peril. It is characterized by a strong military leader and a number of democratic features such as a parliament and a more or less free press. Napole´ on (1799–1815), Pe´ tain (1940–1944) and de Gaulle (1944–1946 and 1958–1969) are examples of leaders under this type of regime. La cohabitation: It is the coexistence in Paris of a president and a prime minister of different political persuasions, who are forced to co-manage a number of policy issues. As of February 2001, there were three periods of cohabitations: between Socialist President Franç ois Mitterrand and Gaullist Prime Minister Jacques Chirac (March 1986–May 1988), between Mitterrand and Gaullist Prime Minister Edouard

230

Glossary of Key French Expressions Balladur (March 1993–May 1995) and between President Chirac and Socialist Prime Minister Lionel Jospin (June 1997–).

Le Colbertisme: Named after Jean-Baptiste Colbert (1619–1683), Louis XIV’s finance minister. A form of economic policy combining state intervention, subsidies, protectionism, managed trade with a mixed economy (e´ conomie mixte*). La communautarisation: A political and legal process whereby national policies are increasingly defined and implemented in coordination with other member states and EU institutions. Cour de Cassation: The highest French court for civil and penal cases. Conseil Constitutionnel: The highest French constitutional court. Conseil d’Etat: The highest French administrative court and the government’s chief legal advisor for administrative law. Also the technical overseer of French legislation. Conseil de l’Euro: Also called Euro 12, it is the EcoFin Council of Ministers restricted to the Euroland members. La coope´ ration renforce´ e: The “strengthened cooperation” between at least eight EU members in some policy areas. Schengen and the Euro are two examples of such coope´ ration renforce´ e. Les corps interme´ diaires: The “intermediary social bodies” between the government and citizens, such as political parties, unions, churches, non-governmental organizations, etc. Le dirigisme: State intervention in the economy through nationalization of companies, subsidies and other regulatory measures. La dissuasion concerte´ e: This “concerted deterrence” refers to the cooperation among European states in nuclear policy, doctrine and strategy. Le double affichage: A system of dual pricing and labeling used in many supermarkets and grocery stores in the Euroland. Prices shown are calculated in both the national currency and Euros. Les droits re´ galiens: Literally “regal rights.” The government’s exclusive field of jurisdiction (e.g., defense and security, diplomacy, justice, monetary and budgetary policy). L’e´ conomie mixte: A mixture of public and private companies in a capitalist framework which allows for state intervention in economic policy making. As it supposedly balances legitimate private ownership and individuals’ search for profit with the public interest, mixed economy claims to offer the best of both capitalism and socialism. It is often presented by France’s policymakers and public policy analysts as the “national republican model.” L’Etat-Providence: The French welfare state includes both Se´ curite´ Sociale* (itself a more diverse entitlement program than the U.S. Social Security) and unemployment benefits. Some analysts even include public education as a feature provided by EtatProvidence. L’exception franç aise: The belief that the French mixture of welfare state, public service and diplomatic, economic, political and cultural difference make France’s polity unique (or “exceptional”).


231

Le Franc fort: Starting in 1983 after the failure of Mitterrand’s reflationary policy, this monetary policy tied the value of the French franc to that of the deutsch mark by a policy of high interest rates, anti-inflation measures and public spending cuts. This orthodox monetary policy had high social costs and generated much protest and dissent within political parties. However, it also allowed France to meet the Maastricht convergence criteria. The European Monetary System (EMS) is the forerunner of the European Monetary Union (EMU) and the Franc fort discipline a forerunner of the discipline of the Maastricht convergence criteria. Les exclus: French citizens marginalized by poverty, unemployment or other socioeconomic ills. In the 1980s and 1990s nouvelle pauvrete´ * (“new poverty”) in France swelled the ranks of marginalized citizens. Les Girondins: A moderate Republican faction during the 1789 revolution that advocated extensive rights for the provinces and denounced Parisian centralization. Les grands corps: The civil servant technocratic organizations/lobbies, usually based on grandes e´ coles* networks, that dominate the French state apparatus. Les grandes e´ coles: The best graduate and post-graduate (business, finance, law, engineering) schools that graduate many future senior civil servants. Les grands projets: Major industrial projects, such as Concorde, TGV, Minitel and telecommunications developed under state guidance. They involve high-tech industries, substantial initial investments and high political stakes. They symbolize France’s engineering prowess, Colbertisme* and political grandeur. Le Jacobinisme: During the 1789 revolution, the most radical and militant Republican faction. They advocated intolerance against dissenters and violence against their political enemies. Modern day Jacobins (also known as souverainistes*) defend national sovereignty, political centralization and the central role of the state in the economic and social life. Le mode`le re´ publicain: The “republican model” based on a secular ideology, the welfare state, Colbertisme* and public intervention in the economy. La mondialisation: Globalization of the economy. Le ninisme: “Ni nationalisation, ni privatisation”—that is, neither nationalization (of private companies) nor privatization (of public corporations). Franç ois Mitterrand’s economic program during the 1988 presidential campaign. La nouvelle pauvrete´ : The mounting unemployment and impoverishment since the early 1980s, against which both the welfare state and the government labor policy were powerless until 1998–1999. La pense´ e unique: An expression used by anti-Maastricht forces to denounce the narrowing of policy alternative and the loss of national autonomy in monetary, budgetary and fiscal matters. Anti-Euro activists, most of them souverainistes,* advocate l’autre politique,* “the other policy” (i.e., regaining more room of maneuver vis-a`vis international financial markets). La planification: Economic planning. La pre´ carisation: The increased economic and social vulnerability of a growing segment of the French population since the early 1980s. Also known as la nouvelle pauvrete´ .*

232


La relance: The “relaunch” of European integration refers mostly to Jacques Delors’ vision and program of the mid-1980s, which led to the Single European Act (SEA). La Se´ curite´ Sociale: This pillar of the French welfare state combines a public health plan, a retirement plan, family allowances and workers’ disability compensation. French political culture defends social protection as a key component of “social citizenship,” which implies that in addition to civil and political rights, citizens are endowed with certain “social rights” (droits sociaux, literally social entitlements) under the law. Le service public: “Public service” refers to a number of economic activities (e.g., mail service, railway transportation and public education), most of them performed by public companies and public servants. It is inspired by a Colbertist economic and social philosophy (the state’s guiding hand in the production and distribution of wealth). Souverainistes: Defenders of French sovereignty, generally against the European Union and la pense´ e unique.* They are the modern-day Jacobins* and usually advocate l’autre politique.* Les Trente Glorieuses: Thirty-odd years of almost uninterrupted economic growth from the late 1940s to the early 1970s. La troisie`me voie: The “third way,” either economic (neither socialism nor liberal capitalism) or diplomatic (independence from both the superpowers during the Cold War) that defines French difference. La zone Euro: Euroland or EU member states using the Euro.

Brief Chronology of French History (1936–2000) 1936–1938 1940 (June) 1940 (July)–1944 (July) 1944 (June) 1944 (August) 1945 (May) 1946 1946–1954 1950–1954 1951 (April) 1954–1962 1957 (March) 1958 (May)

1958 (September) 1960 (February) 1961–1962 1963 1963 (January)

Front Populaire. Le´ on Blum Prime Minister. Defeat before Hitler’s army. Vichy regime rules France and collaborates with Nazi Germany. D-Day in Normandy. Paris liberated. De Gaulle’s provisional government established. Nazi Germany surrenders. After Charles de Gaulle’s resignation, the Fourth Republic is established. War in Indochina (Vietnam). European Defense Community (EDC) debate and failure. Paris Treaty creates the European Coal and Steel Community (ECSC). War in Algeria. Rome Treaty creates both the Common Market and the Euratom. The Fourth Republic succumbs to military pressure. Charles de Gaulle comes back to office. His new constitution establishes the Fifth Republic. De Gaulle’s memorandum to NATO. First French nuclear test in the Sahara. Fouchet Plans. Charles de Gaulle refuses British candidacy to the Common Market for the first time. Franco-German friendship treaty between Charles de Gaulle and Konrad Adenauer.

234

Brief Chronology of French History

1965 (June)–1966 (January)

Empty chair crisis and Luxembourg compromise.

1965 (December)

Presidential election. De Gaulle reelected after a disputed campaign.

1966 (March)

France exits NATO.

1967

Charles de Gaulle refuses British candidacy to the Common Market for the second time.

1968 (May–June)

Social, political and economic crisis paralyzes France and weakens Charles de Gaulle’s hold on power.

1969 (April)

Charles de Gaulle resigns.

1969 (May)–1974 (April)

Georges Pompidou president (Conservative).

1972

French referendum on first enlargement allows Great Britain, Ireland and Denmark to join the Common Market.

1974 (May)–1981 (May)

Vale´ ry Giscard d’Estaing president (Moderate Right).

1978

European Council established.

1979

European Monetary System and European Currency Unit established.

1981–1983

Socialist-Keynesian economic policy.

1981 (May)

Franç ois Mitterrand (Socialist) elected president.

1983 (January)

Franç ois Mitterrand lends his support to Chancellor Kohl by delivering a pro-NATO address to the Bundestag.

1985

Jacques Delors appointed Commission president.

1986

Single European Act.

1986 (March)– 1988 (May)

Cohabitation between President Mitterrand and Prime Minister Chirac.

1988 (May)

Franç ois Mitterrand elected to a second term.

1992 (February)

Maastricht Treaty is signed.

1992 (September)

French referendum on Maastricht Treaty.

1995 (May)

Jacques Chirac elected president.

1997 (June)

Socialist Lionel Jospin elected prime minister.

1997 (October)

Amsterdam Treaty signed by EU member states.

1997 (November)

Luxembourg summit on social policy.

1999 (April)

Amsterdam Treaty ratified by all EU member states.

2000 (July– December)

France chairs the European Council.

Selected Bibliography Andersen, Svein S. and Eliassen, Kjell A. Making Policy in Europe: The Europeanification of National Policy-Making. London: Sage, 1993. Bossuat, Ge´ rard. Histoire des constructions europe´ ennes au XXe`me sie`cle: Bibliographie commente´ e des travaux franç ais. Berne: Peter Lang Verlag, 1994. Bourjol, Maurice, ed. La communaute´ , l’Etat et le droit: Bicentenaire de la Re´ volution et marche´ unique europe´ en. Paris: LGDJ, 1990. Carfantau, Jean-Yves. L’e´ preuve de la mondialisation: Pour une ambition europe´ enne. Paris: Le Seuil, 1999. Cassesse, Sabino and Wright, Vincent, eds. La recomposition de l’Etat en Europe. Paris: La De´ couverte, 1996. Chantepie, Philippe, Gautier, Louis, Piot, Olivier and Plihon, Dominique. La nouvelle politique e´ conomique: L’Etat face a` la mondialisation. Paris: PUF, 1997. Cre´ peau, Franç ois, ed. Mondialisation des e´ changes et fonctions de l’Etat. Brussels: Bruylant, 1999. De Berranger, Thibaud. Constitutions nationales et construction communautaire. Paris: LGDJ, 1995. De Boisdeffre, Martine. Le travail gouvernemental et l’Europe. Paris: Ecole Nationale d’Administration, 1994. Dyson, Kenneth and Featherstone, Kevin. The Road to Maastricht: Negotiating Economic and Monetary Union. Oxford: Oxford University Press, 1999. Henning Loedel, Peter. Deutsche Mark Politics: Germany in the European Monetary System. Boulder, CO: Lynne Rienner, 1999. Heisenberg, Dorothe´ e. The Mark of the Bundesbank: Germany’s Role in European Monetary Cooperation. Boulder, CO: Lynne Rienner, 1999. Lasserre, Rene´ , ed. La France contemporaine: Guide bibliographique et the´ matique. Paris: PUF, 1978. Le Gloannec, Anne-Marie. Entre union et nation: L’Etat en Europe. Paris: Presses de Sciences Po, 1996.

236

Selected Bibliography

Lesourne, Jacques, ed. Ou` va l’Etat? La souverainete´ e´ conomique et politique en question. Paris: Le Monde, 1992. Maillard, Pierre. De Gaulle et l’Europe: Entre la nation et Maastricht. Paris: Tallandier, 1994. Marti, Serge and Ragot, Vanessa. L’Euro en Poche. Paris: La Documentation Franç aise, 1998. Mazzucelli, Colette. France and Germany at Maastricht: Politics and Negotiations to Create the European Union. New York: Garland Press, 1997. Newman, Michael. Democracy, Sovereignty and the European Union. New York: St. Martin’s Press, 1996. Philip, Christian and Soldatos, Panayotis, eds. Au-dela` et en deç a` de l’Etat-nation. Brussels: Bruylant, 1996. Pirro, Ellen B. and Zeff, Eleanor E., eds. The European Union and the Member States: Cooperation, Coordination, and Compromise. Boulder, CO: Lynne Rienner, 2001. Prate, Alain. Les batailles e´ conomiques du Ge´ ne´ ral de Gaulle. Paris: Plon, 1978. ———. La France en Europe. Paris: Economica, 1995. Rideau, Joe¨ l, ed. Les Etats membres de l’Union europe´ enne: Adaptations. Mutations. Re´ sistance. Paris: LGDJ, 1997. Rosanvallon, Pierre. L’Etat en France de 1789 a` nos jours. Paris: Le Seuil, 1990. Sabourin, Paul-Bernard. L’Etat-nation face aux Europes. Paris: PUF, 1994. Siendentopf, Heinrich and Ziller, Jacques. L’Europe des administrations? La mise en oeuvre de la le´ gislation communautaire dans les Etats-membres. Brussels/London: Bruylant/Sage, 1988. Silguy, Yves-Thibault de. L’Euro. Paris: Le Livre de Poche, 1998. The´ ret, Bruno, ed. L’Etat, la finance et le social: Souverainete´ nationale et construction europe´ enne. Paris: La De´ couverte, 1995. Ve´ drine, Hubert. Les mondes de Franç ois Mitterrand: A l’Elyse´ e, 1981–1995. Paris: Fayard, 1995. Vidal, Jean, ed. Mise en oeuvre du Traite´ de Maastricht et construction europe´ enne. Paris: ENA/La Documentation Franç aise, 1992–1993. Walsh, James I. European Monetary Integration and Domestic Politics: Britain, France and Italy. Boulder, CO: Lynne Rienner, 2000.

Index Acquis communautaire, 184, 193 Adenauer, Konrad, 6, 151 Airbus, 72–73, 84 Albert, Michel, 23 Alter, Karen J., 50–51 Ambler, John, 90, 95 Andrews, David, 142 Aron, Raymond, 21–22, 24, 150 Ashford, Douglas, 92, 96 Aubry, Martine, 92, 112 Aznar, Jose Maria, 135

Balladur, Edouard, 12, 47, 57, 76, 95, 134, 160 Barre, Raymond, 29, 127 Barrot, Jacques, 92 Barzac, Miche`le, 104–5 Baumgartner, Frank, 43 Be´ be´ ar, Claude, 107 Benelux countries, 3 Bergsten, C. Fred, 123 Berstein, Serge, 190 Best, Geoffrey, 19 Beurs. See Immigration Beveridge, Lord, 91, 111, 118 Bezat, Jean-Michel, 94 Bismarck, Otto von, 89–91, 111–12, 118

Blair, Tony, 115–16, 135, 141, 164–65, 170, 188 Blank, Kermit, 188, 200 Blum Le´ on. See Front Populaire Bodiguel, Jean-Luc, 54 Bodin, Jean, 16–17 Boissonnat, Jean, 121–22, 127 Bonaparte, Napole´ on, 17–21 Boniface, Pascal, 153 Buffet-Tchakaloff, Marie-France, 52 Cafruny, Alan, 44 Cahm, Eric, 133 Cameron, David, 29, 96–97, 130 Caporaso, James, 1, 4, 176, 198–99 Carnuletti, Alexandre, 38, 42–43 Cecchini Report, 114 Chirac, Jacques: defense policy, 161–77, 195; and Euro, 130, 134; as Eurorealist, 47, 56, 186, 188; and Gaullism, 130, 196, 200–201; and globalization, 4; and Maastricht Treaty, 7, 130; as prime minister, 35, 56, 74–75, 78, 87, 104–5; and service public, 72; and French state, 72, 180–81 Chryssochoou, Dimitris N., 158–61, 167, 172 Cini, Michelle, 38

238

Index

Clamen, Michel, 64 Cohabitation, 6, 40, 57–58 Cohen, Elie, 28, 72–73, 84 Cohen, Samy, 154 Colbertisme: in crisis, 29, 74–88, 186, 189–90, 193–94; definition, 23–29, 67, 70–74, 193–94; support for, 27–28; and welfare state, 28 Cold War, impact on France 24–27, 147– 59, 195, 201, 212 Commission, regulatory powers, 67–70 Committee of the Regions, 178–82 Common Agricultural Policy, 9–10, 30– 32, 100, 182, 187 Common External Tariff, 7 Commune, 89–91 Communist Party, 24–27, 89–91, 155, 186 Constitution: and balance or powers, 39– 40, 58–60; and welfare state, 26–27 Cook, Robin, 115 Cowen, Tyler, 74 Cre´ dit Lyonnais, 68–70, 76, 78 Cresson, Edith, 60 De Berranger, Thibaud, 61 De Clausade, Josseline, 41, 54 Defferre Bill, 179–81, 184 De Gaulle, Charles: American policy, 123, 149–54; departure from power, 126; economic policy, 30–31, 39–41, 74; European policy conceptions, 6, 21– 22, 30–31, 56, 150–52; German policy, 6, 9; and nation-state, 4, 21–22, 30–31, 45, 62; 1958 constitution, 39–41, 45; presidential powers, 39–40; social policy, 92–93, 96, 179–80; and Stalin, 24; and Vichy regime, 74, 148–49. See also Gaullism Delors, Jacques, 4, 13, 32–34, 53, 56, 84, 92, 114–15, 122, 128–29 Denmark, 2 De Silguy, Yves-Thibault, 4, 125 De Tocqueville, Alexis, 21 De Vaublanc, Ge´ rard, 103 Devuyst, Youri, 46 De´ zert, Bernard, 178 Dilligham, Alan, J., 34, 125, 127

Dinan, Desmond, 31, 113, 121–22, 129, 131 Dirigisme. See Colbertisme Drake, Helen, 15, 188–89 Dreyfus, Franç ois-Georges, 10 Drucker, Peter, 109, 199 Duguit, Le´ on, 71 Duisenberg, Willem (Wim), 129; and European Central Bank, 133–38 Dumez, Herve´ , 72 Dutheil de la Roche`re, Jacqueline, 53 Ecole Nationale d’Administration. See Grandes e´ coles Eichel, Hans, 137 Elgie, Robert, 134–35 Elyse´ e Treaty, 6, 151 Erhardt, Ludwig, 151 Etat-Providence. See Welfare state Euratom, 56 European Central Bank, 101, 119, 133– 38 European Coal and Steel Community (ECSC), 2, 5–7, 30–32, 56, 185, 187 European Court of Justice, 68–69; and French judicial order, 48–55, 193; jurisdiction, 37–38; trade policy agenda, 8 European Defense Community, 33, 122, 149–50, 185, 187, 195 European Union, theories of integration, 2–3, 196–201 Europeanization: definition, 5, 33–35, 191– 93, 196; as process, 5, 12, 176, 196– 201 Exception franç aise, 6, 113 Fitoussi, Jean-Paul, 113 Flynn, Gregory, 11 Ford, Peter, 135, 141 Forder, James, 11 Forman, Nigel, 144 Forrester, Viviane, 133 France: Catholic Church, 20, 90–91; conception of capitalism, 23–30, 40–41, 67, 70–74, 189–90; conception of republic, 17–19; identity in crisis, 4–6, 15, 62–65, 74–88, 175–90, 196, 199– 201; labor movement, 80–82, 89–91;

Index and Maastricht, 125–33; retirement system, 108–110; and Single Market, 74– 88; social democracy, 23–29, 113–18; traditional identity, 4–6, 15, 192–93; unemployment, 110–13, 141 Franc fort policy, 6, 102, 125–30, 132– 33, 194–95 Frears, John R., 28, 40, 60 Freyssinet, Jacques, 111 Friend, Julius, 67 Front Populaire, 23–24, 74, 134 Furet, Franç ois, 19 Gaffney, John, 15 Gaullism: in crisis, 65, 196, 200–201; as political philosophy, 4, 21–22. See also De Gaulle, Charles Gayssot, Jean-Claude, 78–80 General Agreement on Tariffs and Trade, 10, 73–74 Genscher, Hans-Dietrich, 129 Gerbet, Pierre, 10 German Democratic Republic, 9 German Federal Republic, 73, 80; and Common Agricultural Policy, 31–32; French policy, 6; Franco-Prussian War, 26, 89–90; Maastricht Treaty, 125–33; quest for democratic legitimacy, 9; and Single Market, 77, 80–81, 84; and Stability and Growth Pact, 117, 133–41 Geyer, Robert, 100 Giscard d’Estaing, Vale´ ry, 28–29, 96, 126, 153, 188 Gnesotto, Nicole, 167 Godin, Emmanuel, 85, 87 Golliau, Catherine, 109 Golub, Jonathan, 51 Gorbachev, Mikhail, 154, 164–65 Gordon, Philip, 5 Goyer, Michel, 68–70 Grandes e´ coles, 26–27, 41, 80 Greenspan, Alan, 133 Guesde, Jules, 90 Guigou, Elizabeth, 41, 62 Guyomarch, Alain, 11, 176, 182 Haglund, David, 155–56, 168 Hallstein, Walter, 31

239

Harmsen, Robert, 51 Hayward, Jack, 7, 40, 84 Hine, David, 11, 118 Hitler, Adolf, 24, 148–49, 160 Hoffmann, Stanley, 1, 11, 17, 35, 62, 93– 94, 197 Hooghe, Liesbet, 64, 200 Howorth, Jolyon, 5, 11, 147, 163, 166 Huntington, Samuel P., 200 Imbert, Claude, 200 Immigration, 12, 23, 47, 196 Islam. See Immigration Jacobinisme: in crisis, 175, 181, 185–86, 189–90, 192–93, 200–201; definition, 18–19, 70–71, 192–93, 200; and 1789 revolution, 17–19 Jaure`s, Jean, 90 Jeunemaıˆtre, Alain, 72 Johanet, Gilles, 106 Johnson, Lyndon B., 151–52 Jolivet, Benoıˆt, 42 Jospin, Lionel, 76, 80–81, 141, 186, 188; and Maastricht Treaty, 130, 135; social policy, 106–7, 115–18 Jouve, Bernard, 179 Judt, Tony, 24, 189 Juppe´ , Alain, 7, 76, 80, 97, 103, 161, 186 Kassim, Hussein, 11, 13, 30, 177 Katzenstein, Peter J., 124 Keeler, John, 11, 39 Kelly, Jim, 144–45 Kennedy, John F., 151 Keohane, Robert, 197 Kessler, Marie-Christine, 41–42, 63 Keynes, John M., 93 Khrushchev, Nikita, 150 Kissinger, Henry, 126 Kohl, Helmut: and Euro, 125–41; French policy, 6; and German reunification, 33– 34, 124–25; and Maastricht, 33–34, 125–30, 141; and Stability and Growth Pact, 138–40 Korpi, Walter, 93

240 Lafontaine, Oskar, 115, 135, 137, 143 Lamfalussy, Alexandre, 129 Lankowski, Carl, 44 Laroque, Pierre, 27, 91, 98 Larrouturrou, Pierre, 113 Laughland, John, 8 Lefe`vre, Christian, 179 Legrand-Lane, Raymond, 14 Lemierre, Jean, 36 Le´ otard, Franç ois, 160, 167 Le Play, Fre´ de´ ric, 91 Le Pors, Anicet, 80 Lequesne, Christian, 53, 60 Lerner, Daniel, 150 Locke, John, 17, 65, 192 Loughlin, John, 179–84 Lynn, Matthew, 73 Maastricht Treaty: as Franco-German choice, 33–34, 125–33, 194–95; and French identity, 45, 125–33, 194–95; French opponents to, 46–47 Maclean, Mairi, 83 Madelin, Alain, 103, 130 Majone, Giandomenico, 78 Major, John, 169–70 Mallet, Jacques, 9 Manie`re, Philippe, 109 Manin, Philippe, 55 Mann, Michael, 13 Marks, Gary, 53, 64, 200 Marxism, in France, 24–27. See also Communist Party Maxwell, Robert, 108 Mazeaud, Pierre, 44 Mazey, Sonia, 179–84 Mazier, Jacques, 128 McCarthy, Patrick, 168 McCormick, John, 1, 191 Mellon, George, 140 Mendras, Henri, 65 Mendrinou, Maria, 55 Menie`re, Laurent, 88 Menon, Anand, 11, 84 Me´ ny, Yves, 176 Millon, Charles, 181 Milner, Susan, 188–89 Milward, Alan, 191

Index Minc, Alain, 190 Mitterrand, Franç ois, 96, 186; anticapitalistic policy, 28–29, 75–76, 78, 83, 100, 125–27; defense policy, 154–62, 169– 70, 195; and Euro, 124, 141; European policy, 6, 30–31, 125–26, 194–96; and German reunification, 33–34, 127–30; and Maastricht Treaty, 7, 34–35, 127– 30, 187, 194–95; and Fifth Republic, 22; social policy, 96, 112, 114–18 Mixed economy. See Colbertisme Monnet, Jean, 33, 122, 200 Monod, Je´ roˆ me, 186 Monti, Mario, 145 Moravcsik, Andrew, 88 Moreau, Yannick, 82 Moreau-Desfarges, Philippe, 127 Moscovici, Pierre, 183, 189 Moss, Bernard H., 124 Moussi, Nicolas, 114 Mullen, Paul Fabian, 52 Muller, Pierre, 176 Mu¨ ller, Wolfgang, 29 Mu¨ nchau, Wolfgang, 142 Mundell, Robert, 123 Multi-level governance, 85, 196–201 National Front, 46–47, 111, 186 Ne´ grier, Emmanuel, 181 Niblock, Michael, 61 Norman, Peter, 37 North Atlantic Treaty Organization (NATO), and France, 150–52, 164–73 Noyer, Christian, 136–37 Oberdorff, Henri, 48 Ozanam, Fre´ de´ ric, 91 Pandrau, Robert, 61 Pasqua, Charles, 47, 186 Pells, Richard, 74 Pierret, Christian, 77 Planification. See Colbertisme Pleven Rene´ , 33 Po¨ hl, Hans-Otto, 137 Pompidou, Georges, 28, 96 Primarolo, Dawn, 144

Index Quermonne, Jean-Louis, 48, 176 Rachline, Franç ois, 190 Reagan, Ronald, 35, 75, 154, 164–65 Rehfeldt, Otto, 101 Re´ mond, Rene´ , 21 Renault, Louis, 24 Revolution, role in French history, 17–21, 163, 192 Rideau, Joe¨ l, 45 Risse-Kappen, Thomas, 3–4 Rizutto, Franco, 61 Rocard, Michel, 95 Rollet, Philippe, 84 Rome Treaty, 2, 5–6 Rometsch, Dietrich, 201 Roosevelt, Franklin, D., 93, 148–49 Rosanvallon, Pierre, 111 Ross, George, 34–35, 37, 188 Rouban, Luc, 39, 65 Rousseau, Jean-Jacques, 17, 21 Safran, William, 4, 10, 41 Sandholtz, Wayne, 63, 197–98 Sauron, Jean-Luc, 60 Sbragia, Alberta, 1 Schain, Martin, 11, 39 Schapiro, Martin, 49 Scheer, Franç ois, 11 Schengen Treaty, 46–48, 177 Schme´ der, Genevie`ve, 156–57 Schmidt, Helmut, 126 Schmidt, Vivien, 5, 11, 23, 26, 39, 55, 64, 75–76, 85–86 Schmitter, Philippe, 64 Schro¨ der, Gerhard, 115–16, 137, 141 Schuman, Robert, 33, 200 Se´ curite´ sociale. See Welfare state Service public, 53–55, 71–82. See also Colbertisme Sidjanski, Dusan, 63 Single European Act, 8, 13, 30, 56, 74, 185, 193–94 Single Market, 68–70, 82–88, 114, 121– 22, 181–85, 193–94 Slaughter, Anne-Marie, 38, 49, 201 Smith, Adam, 72 Smith, Julie, 187

241

Smith, Mitchell, 69–79 Smith, W. Rand, 83 Sovereignty: evolving visions of 3, 62– 65, 196–201; French conception of, 15– 17, 20 Spinelli, Altiero, 122 Stability and Growth Pact, 83, 100–102, 117, 138–40 Stalin, Joseph, 24, 149–50 Stasavage, David, 139–40 Stevens, Ann, 33, 41 Stone, Alec, 53 Strange, Susan, 199 Strauss-Kahn, Dominique, 137, 143 Streeck, Wolfgang, 64 Structural funds, 182–85 Suleiman, Ezra, 40 Taguieff, Pierre-Andre´ , 22 Taylor, Paul, 13, 62 Teasdale, Anthony L., 31 Thatcher, Margaret, 10, 35, 75, 87, 114, 188 Tiersky, Ronald, 11, 173 Tietmeyer, Hans, 126, 137 Toy, Stewart, 146 Trichet, Jean-Claude, 102, 137 United Kingdom: defense policy, 148–49; and European Monetary System, 126– 27; and fiscal coordination, 143–46; and single currency, 119–21; social policy, 113–15 Vail, Mark, 118 Van Miert, Karel, 76, 82–83, 145 Vichy re´ gime, 19, 24, 148–49 Voltaire, 71 Waigel, Theo, 137 Wallace, William, 187 Welfare state: in crisis, 93–118, 189–90, 194, 199–201; French conceptions of, 23–27, 91–93 Werner, Pierre, 126 Wessels, Wolfgang, 192, 201 Whitehead, Paul, 77 Willett, Thomas, 142

242 William II of Prussia, 90 Wilsford, David, 100, 103–5 Windenbank, Jan, 116 Wise, Mark, 32 World War I, impact on France, 20, 92, 195

Index World War II, 20, impact on France, 24, 148–49, 195 Wright, Vincent, 194

Zysman, John, 28, 31, 33

About the Author MICHEL R. GUELDRY is Associate Professor of French Studies, Monterey Institute of International Studies. Professor Gueldry has published extensively through book chapters and articles in journals such as French Politics and Society, La Revue Franç aise, and European Community Studies Association Review.

France and European Integration: Toward a Transnational Polity?

University dynamics and European integration

European Integration: Scope and Limits

European Integration and Supranational Governance

The European Union: A Polity of States and Peoples

The European Union: A Polity of States and Peoples

Theorizing European Integration

European Financial Integration

Theorizing European Integration

Theorizing European Integration

European Integration Theory

Science and Polity in France: The Revolutionary and Napoleonic Years

Transnational Constitutionalism: International and European Perspectives

The Politics of European Integration: A Reader

European Integration and Disintegration: East and West

SME's and European Integration: Internationalisation Strategies

The European Parliament, the National Parliaments, and European Integration

Interlocking Dimensions of European Integration

The economics of European integration

European Integration and Political Conflict (Themes in European Governance)

European Integration, Regional Policy, and Growth

European Economic Integration: Limits and Prospects

European Union Law And Defence Integration

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Making the European Polity: Reflexive Integration in the EU (Routledge Studies on Democratising Europe)

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University dynamics and European integration

European Integration: Scope and Limits

European Integration and Supranational Governance

The European Union: A Polity of States and Peoples

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Theorizing European Integration

European Financial Integration

Theorizing European Integration

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European Integration Theory

Science and Polity in France: The Revolutionary and Napoleonic Years

Transnational Constitutionalism: International and European Perspectives

The Politics of European Integration: A Reader

European Integration and Disintegration: East and West

SME's and European Integration: Internationalisation Strategies

The European Parliament, the National Parliaments, and European Integration

Interlocking Dimensions of European Integration

The economics of European integration

European Integration and Political Conflict (Themes in European Governance)

European Integration, Regional Policy, and Growth

European Economic Integration: Limits and Prospects

European Union Law And Defence Integration

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