So issues of supra-nationality versus nation-state sovereignty.

These are larger issues of

globalization. More specifically, and with reference to the recent Brexit vote, or issues that come up
in places like Denmark, Norway, or France for that matter, regarding whether unions should go
further, should we actually create, from the European perspective, a common constitution? Is there
one? Is there a shared idealism? Should we go further in our economic union? When we look at
these debates, they revolve around certain key issues that again are not Europe specific because if
we relate the same discussions to NAFTA or ACN or SARC or any regional transnational organization
we see the same concerns. Think of Canada regarding free trade or relations with a bigger neighbor
such as the United States. What are we worried about? Well closer relations are great, globalization
and all that, right? But... But what? What about national identity? Well, what do you mean national
identity? First you have to think what is constitutes national identity. And is it compromised with
closer relations through globalization? These are very large debates and discussions and we won't be
able to answer them. And the reason is because not because we don't have time, but because they
are currently being discussed and developed.

But from the perspective of the British, who we'll discuss in this course and as I've said, with
reference to the recent Brexit vote, does national identity depend on having a particular passport?
Currency in a symbol? Meaning, if you have pounds and a British passport rather than a European
one and Euro, does that mean you are sovereign? Or maybe more sovereign? Or remember that
you're sovereign? Independent decision making, is it obliterated by participation in transnational or
international organizations? Because of course those things are binding, are they? But really they're
not. We have no basis for an international organization whose decisions are binding on nation
states. But this is always the argument that is brought up. What about distinct legal and moral
codes? Forget about the inclusion of Turkey, possibly in European Union or Russia, if that ever
happens. Serbia, Eastern Europe. Let's talk about Western Europe itself. Or for that matter, Quebec.
French civil code, Napoleonic code to be exact, is different than British code. So even in this case,
can there be justification for a single legality that is devoid of traditions, particular to geography and
history? And finally, does separation just provide the basis for justification and legitimacy? How hard
is it to change one's history or divert from the past? These are all things that one must keep in mind
as we go forward and discuss the matters of European Union.

Before I end this section, I'd like to sort of say a few words, however, about the initial agreements
that are the cornerstone agreements of the European Union that I mentioned. The ECSC, the
European Coal and Steel Community, was an idea implemented right after the Second World War
based on the common devastation in both France and Germany. Both nations required rebuilding
and unlike what the French had wanted after the First World War, a removal of the coal regions of
Ruhr and Saar from Germany, they decided, as if you remember I said, that since that region was
geographically singularly rich on both sides, the French and German border, that common prosperity
could be yielded by common reorganization, utilization and rebuilding of coal and steel. It was
therefore very unique. It was a break with their past that the ECSC agreement is based on the idea
that the French and the Germans will pool their common national coal resources and log basically
how those resources are used, developed as steel for industrial development. How was this
beneficial to France? In fact, we could cynically say it provided them more security than what, you
know, their demands which were not met at Versailles would have. Instead of removing coal from
German production, now they had in fact an accounting of how that coal would be used. And of
course from the German perspective, it allowed them to normalize relationship, not just with France,
but the rest of the world immediately.

So for all the talk about Versailles being morally corrupt, and a bad stain on German history, because
they were made to sign war guilt clause, you can imagine the relation of German politicians to the
rest of the globe after the Second World War. The ECSC allowed a normalization to occur, and in fact
prosperity to proceed unimpeded. by curiosity or recrimination of gaze. The Franco-German
rapprochement therefore was the first step not just to ECSC, which was later extended to Italy and
the Benelux countries, Benelux being an acronym for Belgium, Netherlands and Luxembourg in 1951.
Therefore the EC in 1951 comprised France, Germany, Italy, Belgium, Netherlands and Luxembourg.
Logically from that, if you're going to pool coal as a resource and steel as the produce, you'd have to
create a common market, which was created in 1958, the European Economic Community, later
known as the EC, the common market. Ten years after, waiting to gauge whether naturally, the next
largest sector of European economies in the West were grouped together through CAP in 1968,
Common Agricultural Policy. We sometimes forget that European agriculture until about the 80s was
not modern in the sense that it had tracked vehicles or was mechanized. And in fact, it was a big
concern when one lifts people out of impoverishment. that the rural population does not lag behind.
And in fact, Europe needed to be able to feed itself. And so CAP, its first initiative was to raise the
standard of European farmers which constituted one-fifth of European labor in the 50s and 60s. It
did this by creating common prices so that an apple in France, for example, would be the same price
more or less as an apple in Germany. or an apple in Italy so that the farmers of those respective
countries were not disadvantaged by fluctuations of condition and prices. It therefore created a
common agricultural market and forced Europeans to adopt a “Europe buys Europe produce” policy.
Of course export agriculture crops and produce were available. However, if you were willing to pay
the higher price tacked on to that price was then re-implemented into the modernization and
economic incentive of the agricultural policy that was pursued from 1968 onward to benefit
European farms. Modernization such as tractors and green technologies were also implemented and
it should be noted once again in regard to green technology that this was based on necessity. That
especially in cases like the Netherlands where there were fewer farms and farms that were
reclaimed from swamps, efficiency and green technology was through necessity. But it contributed
in practice when it was European widespread to creating the first basis of modern agriculture in
Europe and the first time in history where Europe was able to feed itself. If you have older siblings or
uncles... parents, they can perhaps remember a time when it was not thought possible to go into
your supermarket freezer section and read something like Europe's best raspberries. CAP allowed, in
a period of about 20 years, Europe not only to become self-sufficiency, but export food.

And finally, if you were going to successfully pool the biggest sectors of the economy, create a
common market, the next rational thing you would need to do is create the basis of fiscal rationality
through a single currency so that you would not have fluctuations based on lesser values of the
Italian lira or French franc compared to the German Deutschmark. However, as a means of national
control and decision making, fiscal policy, you can imagine, was something that most European
states were unwilling to give up. Once again, in fact, the move came from the impetus of the
Americans. But this time, not by the Americans wanting them to do so. In fact, recent historians have
argued that the Americans dissuaded the project of the Euro. In this case, The American impetus was
from the failure of the United States Dollar and economy as part of the recession that was created in
the United States after Vietnam and through the 70s. In fact, in general, from 1960 to 1980,
European currencies were floating in that they were unstable. They were floating because pegged to
the US dollar, as the US dollar fluctuated, European currencies fluctuated.

Now let's break for another analogy for a second. Draw yourself in your mind or look at a wall and
project a line across the breadth of the wall. That represents the entire US economy. The United
States economy is that broad that if there is a fluctuation the sign or cost wave, meaning the
amplitude in the wave, will be slight, like a ripple. But of course if you now superimpose a European
economy which is one tenth the size and push that wave into the European economy, the amplitude
will be much, much greater. The same sort of analogy could be the effect of a wave in an ocean
compared to that in a swimming pool, and this is what we're talking about. European currencies had
been pegged to the US dollar as per Bretton Woods and World Bank policies for stability, and it had
provided them that until the 70s. In the 70s, a couple of things happened. A US recession caused by
costs for Vietnam, the United States pulling themselves and their currency off the gold standard,
OPEC restricting oil to Israel and US Israeli allies, and a very boneheaded decision by the Fed to begin
to print more money to solve the economic crisis. All this contributed to fluctuations in European
currencies that were enough for Europeans to forego their inhibitions of currency and begin to talk
about a single currency. And in fact one thing else you should be reminded of, which is that Europe
at this time was in fact informally a Deutschland zone. What I mean by that is that the German
currency was already the strongest among them. And informally, one could, in black market or even
officially in certain cases, use Deutschmarks throughout Europe as a sort of single currency that
everyone was willing to accept. So from the perspective especially of France, why not eliminate the
Deutschmark and replace it with something else? From the perspective of the Germans, why not
have an opportunity to be able to dictate financial policy for France. And so common market reforms
were undertaken in 1984. A single act, which was the legislation that would lay the basis for the next
20 years towards a single currency, was created in 1986. And in Maastricht, at one of the European
conferences in 1991, European nations participating in the Euro project decided that they would go
forward. From 1994 to 1999, in each European nation state, common institutions of Europe were
created. A European bank, a European Fed, a European organization for fiscal development. In May,
on May 1st, 1998, the Euro was actually instituted. In a very wise decision, currency was not
immediately transferred. European policymakers wanted to gauge market behavior, consumer
behavior, in order to be able to pull the project if something happened that was unexpected. They
therefore put the Euro into circulation on May 1st, 1998 without pulling national currencies,
investigate whether people would use Euro or their national currencies. At the same time prices
were made in all stores to show the Euro price or the price for example if you were in Italy in Liret
and to see exactly to how consumers would behave and to get Europeans more or less familiar with
using euro.

As of January 1st, 1999, the European stock markets fixed the rate of exchange of all European
currencies to the Euro, meaning that although the currencies were still in circulation, as of January
1999, whatever their value was in relation to the Euro, for example, the Deutschmark is this many
Euros, the Liret is this many Euros, the Frank is this many Euros, that would not change because no
longer would they be tradable on the stock market. The result therefore was that no matter how
high the currency placed in relation to the Euro, it would always decline in terms of value, forcing
consumers over a period to dump their currency in favor of exchange to Euro or face... sliding costs
gradually of their national currency. And in January 1st 2002, the Euro was instituted as the only
legal tender in the European community. At that time, Europe therefore formed a zone of 290
million, compared to the United States whose population at the time was 265. Europe was projected
to have 18% controlling 18% of world trade. whereas the United States had 16.6. However, these
sorts of statistics are false based on a realistic projection of the realities, which were that Europe was
an artificially connected economic region, which had achieved much, but was not a single political
entity, such as the United States.

So in closing, let's say some words about the British position. The British position, again, is
interesting not just in relation to the recent Brexit vote, but initially as the basis of history, as a
relationship between Britain and the European Union, which itself mimics the outcome of Brexit,
which was that they were not just hesitant, but preferred a limited, if any, union. During the time of
the bombastic Prime Ministership of Margaret Thatcher, one of the London tabloids spilled her
image in Parliament after making an impassioned plea that Britain stay out of European Union with
the headline, UK no way. The article ran Thatcher's comments, saying that Britain was Britain. This
was a direct quote. What did Thatcher mean, Britain was Britain? Well, there's a lot that goes into
this explanation, but remember to keep in mind our previous comments about in general
globalization and the arguments of supranational organizations versus self-determination. Thatcher
said Britain has a mighty self-image. We are “mighty Britannia” and we remain mighty Britannia. We
are leaders, not followers. We have a Commonwealth. We do have an international organization.
And we have, if you will, friends with benefits. We will not participate in common agricultural policy,
which will restrict Commonwealth imports, drive up the price of food in Great Britain for the sake of
helping out France, who we've had antagonism with over centuries, and Germany, who we fought
two world wars with. Moreover, post-war it should be said that the British condition, although
impoverished, was heartier in comparison to France and Germany. It was only in the mid-70s and in
the beginning of the 80s that the British economy began to waver. They had somewhat better
condition and a post-war boom for a certain time. They therefore did not feel to the same degree as
the French and Germans the need to reconcile and participate in a coalition that Thatcher, as we've
just clearly seen by some of her quotes, thought was counter to the self-image of mighty Britannia as
a leader, not a follower. And finally, Thatcher pointed out that any move towards Union, economic
or otherwise, would restrict the capability of the British government to determine the national
agenda of Great Britain with an independent foreign policy, which even when they participated in
European Union, which they finally joined in 1973, was on a limited basis. The same tabloid ran the
story headline, Britain as part, comma, apart. Meaning, Great Britain, we are now part of European
Union, but apart from it as well. What did it mean? Well, when they joined the EEC in 1973, they
joined with restrictions that France and Germany had to respect. They were exempt from CAP. They
were allowed to retain the Pound and their passport. They maintained that they would have a
foreign policy that was separate as demonstrated with their pan-Atlantic solidarity during the
problems in Yugoslavia and in the Iraq wars.