The Energy Problem and Economic Nationalism

For some time now, it has been possible to note the emergence of a worrying return to protectionism in relations between the European states (but also between Europe and the rest of the world). This trend has been rather over-emphatically dubbed economic patriotism, and while this term is clearly intended to create a semblance of respectability, it fails to conceal the reality it belies: an insidious spewing forth of nationalism. A rapid succession of events in recent months confirms the truth of this. The Bolkestein Directive, which was meant to grant the countries of eastern Europe assess to the European labour market and to liberalise services across the EU, has been watered right down. More recently, French prime minister Dominique de Villepin burst with unseemly haste into the energy arena to announce the merger between Gas de France and the French utility company Suez, thereby blocking the bid for the latter by Italian energy group, Enel. This came just weeks after the Spanish government acted in much the same way to obstruct the bid of German energy giant E.ON for Endesa, Spain’s biggest producer of electrical energy. Even before this, Germany had introduced legislation making it particularly difficult for foreign companies to acquire stakes in its strategic industries. Meanwhile the EU, with the national governments breathing down its neck, has decided to impose duties on imports of shoes from China and Vietnam in a futile attempt to restrict the flow of these products onto our markets.
This defence of the “national champions” as they are rather extravagantly called, is just the tip of the iceberg of a much more complicated state of affairs that is repeatedly placing obstacles in the way of the birth of the single market — the same single market that was meant to guarantee the growth of the European economy and to allow its companies to achieve the necessary critical mass to compete with the global giants. Today, Europe’s big players can be counted on the fingers of one hand, and even the biggest of these are only 60 per cent the size of their American counterparts.
This national fragmentation of the European economy is costly both for consumers, the designated victims of monopolies, and for companies. But cost considerations aside, economic nationalism has far graver consequences when the sectors involved are the ones, like the energy sector, on which the wellbeing and security of future generations depend.
It is indeed no coincidence that at the root of the European Economic Community there lay not only the idea of a progressive integration of the national economies, but also that of the objective, embodied by Euratom, of launching a common energy programme in order to reduce Europe’s dependence on oil. In making this proposal, Jean Monnet had put his finger on one of the issues crucial to Europe’s economic growth, a problem subsequently ignored by the governments, which, lulled into a false sense of security by low oil prices and by the repeated discoveries of new oil fields, were unable to foresee the energy crisis that, fifteen years later, would strike the European economies.
When the Arab oil embargo and spiralling oil prices hit the industrialised countries, leading to severe imbalances of payments among countries, rocketing inflation, and devaluation of the weaker currencies, and creating the conditions for deep recession, the European governments did not close ranks as many expected them to do. Instead they acted disjointedly, seeking, as far as possible, to shield their own citizens from the worst effects. Observing the sorry spectacle of the European Community immediately crumbling in the face of adversity, Le Monde published a bitter comment by André Fontaine, entitled “It’s everyone for himself and God for everyone.”
What we have seen in recent months has been a repetition of this scenario, except that this time it has different and far more worrying implications. For around a decade, experts warned the oil importing nations that Hubbert’s peak was rapidly approaching and that the increase in supply could no longer keep up with the increase in demand; that the thirst of the developing economies for crude oil would inevitably lead to increasingly fierce competition for oil (in shorter and shorter supply) and to a new upsurge in prices.
Although it has turned out to be exactly as they predicted, the Europeans have still been taken by surprise, and have been acting in a disjointed manner, just as they did thirty years ago. However, the current situation is rendered all the more serious by the fact that, this time, Europe does not have to reckon with the United States alone, but also with India and China, countries whose demand for energy is increasing exponentially. But whereas the two Asian powers are busy building solid political and economic relations with oil producing nations the world over, and putting the energy question at the centre of their negotiations, the European Union is merely looking on. This is demonstrated by the paltry outcome of the extraordinary European Council summit of March 23rd and 24th, 2006, which had been meant to thrash out some answers to the problem of the EU energy situation, but in fact produced nothing more than empty chit chat.
And yet, faced with the harsh reality of the situation, there has been no shortage of reactions that show quite clearly the path that needs to be followed. Writing in the Corriere della Sera on March 26th, 2006, Tommaso Padoa-Schioppa denounced the flimsiness of any energy policy restricted to the purely national framework. “For all countries, the energy question is one that concerns security and international relations, not just industrial choices. It makes little difference whether oil, gas, electricity, and distribution networks are in public or in private hands. Energy policy and politics tout court are inseparable, even though it may not always be clear which of the two is leading the other … the European countries are too small to be able to mount an effective energy policy, and this is as true of Germany and France as it is of Estonia or Ireland. The United States, China and India are — like Europe — importers of energy and the security of their energy supplies is at the very heart of their international, political and military strategy. It is verging on the ridiculous to leave energy policy at the level of the Union’s individual member states.”
It is difficult to imagine a more eloquently argued accusation. Similar conclusions, albeit less forcefully put, were reached by German foreign minister Frank-Walter Steinmeier. “Peaceful economic development and energy security are inextricably linked” he wrote in the International Herald Tribune on March 16th. “Energy security involves the security of all stakeholders — producers, transit states and consumers. This global dimension also means that national efforts alone are inadequate and that we must find an alternative to confrontational approaches.” The European Union’s Trade Commissioner, Peter Mandelson has also acknowledged that “energy has become an important issue in our external policies. Europe needs a stronger common voice in negotiations on energy issues” (International Herald Tribune, March 21st, 2006).
These calls for a European energy policy are an implicit condemnation of the economic nationalism that is causing increasing friction between states, penalising consumers, favouring the establishment of monopolies, and preventing companies from growing to the dimensions they must have in order to be competitive. But how can we fail to note that, despite this awareness of the problem, and of the obstacle to its overcoming (i.e., nationalism), no one, and in particular no politician, seems able to indicate the solution? They simply wonder at the fact that, in this highly advanced phase in the process of integration, Europe is still unable to “speak with a single voice,” before once again adopting their old opposing positions. The President of the European Commission himself has affirmed that “economic nationalism has never been a solution” and that it is “absurd for the European countries to be seeking to protect themselves against each other” (Le Monde, February 23rd, 2006).
In truth, these repeated backward steps, which have characterised other stages in the process of European unification, should not surprise us at all. As long as there exist as many national governments as there are EU member states, the priority task of these governments is always going to be that of tackling the problems that arise as they arise, of necessarily making choices; and even when they are incapable of solving the problems that they encounter, they are nevertheless obliged to give their citizens the impression that they are acting in the defence of their interests.
Whereas in the past this approach simply produced a fruitless inertness, in today’s interdependent world, in which political and economic balances are changing to an unprecedented degree and with unprecedented speed, it could lead to the end of the European project and the marginalisation of our whole continent. Hence the pointlessness of mutual accusations of nationalism and protectionism. The only way out is to overcome the nation-states model through the creation of a European federal state, whose government would be properly equipped to face the challenges of the new emerging world order.
If this is, indeed, the objective to be pursued, we need to look extremely realistically at what concrete possibilities are offered by the current stage in the process of European unification, in order to identify the obstacles and the openings. What is becoming increasingly apparent to all is that Europe’s latest enlargement has created a highly heterogeneous Union, the majority of whose members are opposed to the prospect of political unification. This is the biggest obstacle to overcome. But it is hardly a new development: in fact, this resistance emerged as early as the time of the first enlargement of the European Community, when it was promptly denounced by the federalists.
In 1966, on the subject of the United Kingdom’s entry into the European Community, Albertini, in a letter to Spinelli, wrote: “The EEC, from a situation tending to push European unity in the direction of deeper integration, thanks to the six-member framework (the only one that has borne fruit), is now being transformed into a situation that is pushing European unity only towards enlargement, and thus towards its degeneration into a purely diplomatic entity.” And the UK did, indeed, do its utmost to bring the Community down to the level of a purely diplomatic alliance, placing endless obstacles in Europe’s path. Yet in spite of this, and of the subsequent enlargements, much progress has been made: the birth of the European monetary system, the election of the European Parliament by universal suffrage, the creation of the euro. But the important thing — and we must not forget this — is that all these achievements are fruits of the initiative of a vanguard led by France and Germany.
The need to create a vanguard that is not content to move at the speed of the slowest group has been imposed by the force of circumstance, and is today widely recognised by leading intellectuals like Jurgen Habermas, and by far-sighted individuals of the calibre of Carlo Azeglio Ciampi, who, on his latest visit to Berlin, had no hesitation in affirming “The objective is to move forward as a group of twenty-five, but it is unacceptable that, in the absence of unanimity, Europe’s political project should be distorted. Vanguards are thus to be welcomed: they are a symbol not of selfishness and of division, but rather of faith in the capacity to turn Europe’s potential into deeds. We already have outstanding examples of this: the Eurozone, the Schengen-Prüm system. Groups spearheading Europe’s advance — groups that will nevertheless remain open to all the other member-states — can promote the achievement of other concrete objectives, crucial to Europe’s success.”
The idea of the vanguard is now widely hijacked by Europe’s enemies who frequently hide behind the false argument that any initiative not shared by all the member states would provoke acute divisions within the Union. However, for the overwhelming majority of those who recognise the need for a vanguard, the decisive issue has become that of the project around which this vanguard should evolve. Many think that it should be the European “constitution,” once this has been reviewed and rendered acceptable to the French and the Dutch following their rejection of the original draft treaty. A European referendum on a new text would serve to separate the “good” from the “bad” Europeans and to legitimise its adoption in the countries voting in favour of it. In this way the vanguard would come into being spontaneously (from the bottom up, so to speak).
In truth, however, this is an illusion that would only delay further the solving of the real problem, which is not the drafting of a constitution, good or bad, but rather the creating of a federal state. To put to the European citizens a question that avoids this problem would be to be guilty of wasting precious time, especially now that Europe finds itself pushed increasingly close to the edge of history.
The order of priorities thus needs to be reversed completely, putting the objective of the European federation at the top of the list and identifying the core group of countries that, in view of their particular responsibilities and their history, are better placed than others to forge ahead with the endeavour that would truly separate the “good” Europeans from the “bad”. This endeavour must take the concrete form of a federal pact in which the constitutional principles that will guide the European federation are clearly stated. In this case, it would certainly make sense to hold a referendum to ask the European citizens whether they are for or against the creation of a United States of Europe founded on the constitution outlined in this federal pact. This, and this only, was the meaning of the question put to the inhabitants of the thirteen states after the Philadelphia Convention. And this is the example we must follow as we strive to restart the battle for European unity.

The Federalist