Power players who have brought us together

A casual glance at British newspapers over the last few months might lead a visitor to these islands to believe that mad cow disease was caused by dictatorial bureaucrats in Brussels, and that the leaders of Europe were planning a new socialist republic, based upon minimum wages and state intervention in industry, and were hell bent on a master plan to subvert the national identity of the British people.

The visitor might have doubts about the press, but would see these sentiments echoed by politicians. The strident nationalism of John Redwood and Norman Lamont displays an anti-Europeanism not evidenced since the war. It might be shared by Margaret Thatcher out of office and out of Parliament, but even she did not go so far in office. She, after all, signed the Single European Act.

This impression is hard to reconcile with the facts. It is British cows which have BSE, fishing stocks are being depleted at unsustainable rates by British as well as European boats, and the main governments of Europe are staunchly conservative. Germany has not had a moderate social democratic government since the 1970s, France has a Gaullist as president, and even Spain has moved right. Europe is probably more conservative now than at any time since the first world war.

The gulf between popular myth and reality is very wide. It is therefore vital to inject some cold factual analysis into the debate, to set out the facts. We need to understand Europe, and that is what Keith Middlemas sets out to do in his new book. He expounds the history of the European project, spelling out why statesmen embarked on integration in the immediate postwar period, and explains simply and clearly how the European Community evolved towards Maastricht and the European Union.

The process of integration has been anything but smooth. The early postwar enthusiasm was easy to understand, at least from the perspective of mainland Europe. The first half of the 20th century had shattered the Victorian dream of an orderly progress towards a more rational and benign world, where science and technology, combined with emancipation and education of the masses, would lead us to a higher plane of human existence. The lives of those in power in the late 1940s and early 1950s were overshadowed by war. They all knew what it was like to lose friends and relatives on the battlefield, and most had played an active part in the killing. No wonder Konrad Adenauer was prepared to pay a price, and Jean Monnet and his fellow architects sought to bind France and Germany together so that their economic interests made war, if not impossible, then at least very costly. To the 19th century politician it was a familiar theme - the liberalism which Cobden trumpeted.

Yet, following the initial surge of integration, the European ship foundered on de Gaulle's French nationalism. Not until he was succeeded by a different French approach (that of Georges Pompidou) could the enterprise get under way again - with the first attempt at monetary integration (the now forgotten Werner Plan, forerunner of Jacques Delors's blueprint for monetary union), and the enlargement of the community to include Britain under Edward Heath. This burst of enthusiasm was stalled by the Opec oil shock, which knocked all the developed countries into economic turmoil and dangerously high levels of inflation. That, in turn, led to the Helmut Schmidt-Giscard d'Estaing axis and the pegged currency regime (the snake), which James Callaghan and Denis Healey decided to opt out of (participating generally in the European Monetary System, nevertheless, to keep their options open).

Next came Thatcher, bestriding the European stage with her Gaullist obstructiveness, only to be beaten into submission by a combination of Nigel Lawson and Geoffrey Howe on the government side, and Arthur Cockfield at the Commission, and made to sign the Single European Act in 1986. But whereas de Gaulle had effectively halted progress altogether, the British never had such an impact.

After the Single European Act, momentous events in the East paved the way for German unification - the most important event in European history since the war. It was the defining moment - and Francois Mitterrand and Helmut Kohl realised what was at stake: this was perhaps a last chance to finish the European project - to bind Germany and France together in such an intimate embrace that the risks of a greater Germany turning eastwards would be submerged within a European Union.

Three conclusions can be drawn from Europe's postwar history: that progress has been most rapid when an effective Franco-German relationship exists (Schuman-Monnet, Schmidt-d'Estaing, Mitterrand-Kohl and, perhaps, Chirac-Kohl); that external shocks (oil and the East) have provided a catalyst - eventually - for further integration; and that obstruction (de Gaulle, Thatcher and Major's mad cows) has not proved an effective brake on the integration process.

Middlemas brings his own particular approach to this history, which he brilliantly expounded in his earlier volume, Politics in Industrial Society, and his three-volume study, Power, Competition and the State. His central theme is "the concept of a long and continuous game between an increasing number of players of different power, status and interests, a game in which all of them used the needs that the modern state had for their participation to draw it and its component parts into an informal framework, from which there could subsequently be no retreat to a pristine minimal state". For Middlemas, it is these players who have "orchestrated" Europe. It is because integration has been in their interests that they have used their power and status to push the project along.

There is too much sense in this thesis to reject it outright. Middlemas's careful historian's eye has marshalled the evidence too convincingly. His focus on the "informal" history rather than the acts of the great statesmen (though these are not neglected) paints an altogether more complex and disjointed picture than the conventional simplicities of Europhiles and Europhobes. There is no room here for the partial and selective historical memories of Thatcher, Redwood and Lamont (or, indeed, Tony Benn and Peter Shore), nor for naive idealism.

Middlemas is clearly right to emphasise the increasing fact of integration among Europe's businesses and peoples. European firms are doing what Cobden once urged. It is hard to find pure "German" and "French" firms in much of their industrial structure. They are already multinational in the European sense, except perhaps for the great utility monopolies, and even here the pace of integration is fast. Labour mobility, language skills and the search for a regional identity within a wider framework than the national state all push the integration project further forward.

More importantly still, Middlemas points to the limitations of the nation state in delivering what its citizens want. Economic reality means that the British mortgage rate depends increasingly on what the Bundesbank decides, and the value of sterling rests less and less within the hands of a British chancellor. Economic sovereignty, if it ever existed, has little substance now. The combination of the growth of integration at business level - through alliances, ownership, networks and scale economies - and the internationalisation of financial markets makes the Little-Englander vision of Britain unsustainable. Though the government and the opposition may seek to attract Japanese and Far Eastern investment into Britain, such investment has less to do with the inherent strengths of Britain than with the combination of subsidies and access to European markets.

A Britain outside Europe would have little to offer. Even our cheap wages are not the product of unique success, but are in large measure explained by the successive devaluations necessary to hold the line on the current account of the balance of payments. It should be remembered that Britain cannot even balance its trade books with North Sea oil and gas. Germany, by contrast, has no oil, little gas, and has had to absorb the shattered East German economy. Those who write off the German economy as past its sell-by date, hopelessly sclerotic, about to be overtaken by a supercompetitive Britain, should pause for thought as to whether the integration of East Germany is something Britain could have managed over the past five years.

If Middlemas's central thesis is correct, that the integration process is best understood by considering the interests of the players (and their relative power and status), then it remains deeply puzzling why their voices are so mute in Britain - why the beef farmers and fishermen and the Eurosceptics have had such a field day. Why is our press and political debate so hostile? Why has this been reflected in opinion polls? Why do so many want to jump off the European project and, especially, keep out of European monetary and political union? On this question, Middlemas's approach is unsatisfying. The easy answer is that the power and status of those interests with most to lose have gone up, while those of the interests with most to gain have gone down. The more difficult answer relates to the nature of the choice which now faces Britain.

What Middlemas's book so clearly demonstrates is that the interests which have in practice mattered most in the European project have been those of France and Germany. To get to the next step, each has to give up a great deal: the Germans the Deutschmark and the French much national sovereignty over everything from their nuclear power and defence through to their farmers. They appear prepared to go along with this, because their perception of history is different from ours. Mitterrand and Kohl understood that at Maastricht. Few in Britain would recognise any relationship between German reunification and the Maastricht Treaty.

Middlemas's book can only improve the sad lack of understanding in Britain of what is at stake in the intergovernmental conference and preparation for further integration. But improving understanding and hence our perception so that we realise the triumph of prejudice over reason displayed in the press is only a necessary step. It is far from sufficient. It is quite possible that the politics of Britain's relative economic decline could reinforce an isolationist position. The costs to many of the players would, however, be enormous.

Dieter Helm is a fellow, New College, Oxford.