By RISTO PENTTILÄ*
British Prime Minister David Cameron’s much awaited speech on the European Union on Wednesday was a declaration of an ideological war, a war of ideas. Britain, he said, wants to create an alternative vision for the German order-liberalism that is currently driving European integration. Can he succeed? If history is any guide, he just might.
Cameron’s speech spelled out what everyone has known for some time: Europe is no longer a single project. Today, there are two Europes: One is the German-led inner group interested in further integration; the other is an outer group of states interested in free trade but not interested in transferring political authority to Brussels.
Cameron volunteered to lead the latter group. “I don’t just want a better deal for Britain,” he declared. “I want a better deal for Europe too.”
We have been there before. For almost 30 years, Western Europe was divided into two economic zones: The Inner Six were members of the European Economic Community (E.E.C.), which later became the European Union; the Outer Seven were the European Free Trade Association, or E.F.T.A.
The E.F.T.A. was founded in 1960 as a free trade alternative to a more politically oriented E.E.C. Founding members included three neutral states — Switzerland, Sweden and Austria — and four Atlantic nations — Britain, Denmark, Norway and Portugal. The former did not think the E.E.C. was compatible with their neutrality. The latter did not want to restrict their political and trade relations to Europe and opted for a looser arrangement. Finland became a special member in the E.F.T.A. once it worked out a way to do so without antagonizing its eastern neighbor, the Soviet Union.
Over the course of decades the E.F.T.A. lost members to the E.E.C. Britain, Ireland and Denmark joined the Inner Group in 1973. A second migration came in 1995 when Austria, Finland and Sweden joined the European Union. Today, the E.F.T.A. exists as a lobbying organization for four small countries outside the European Union — Norway, Switzerland, Iceland and Liechtenstein.
With his speech, Cameron has rekindled the spirit of the E.F.T.A. He is speaking to those Europeans who have misgivings about the direction Europe has taken over the past years. He speaks for free trade and a well-functioning market economy. He upholds national sovereignty against intrusions from Brussels. In short, he is trying to create a free market vision for Europe to compete with the more bureaucratic vision that Germany promotes. “Power must be able to flow back to member states, not just away from them,” he said. “Countries are different. They make different choices. We cannot harmonize everything.”
Berlin sees Anglo-Saxon neo-liberalism as one of the causes of the global financial crisis. Their answer to the excesses of the 1990s and the last decade has been “ordoliberalism.”The German term can be conveniently translated as order-liberalism, or regulation-based liberalism. The key idea is a free market economy under the strong regulatory control of the state. The aim is to ensure the survival and, eventually, the smooth functioning of the euro. If this leads to a further transfer of sovereignty to European institutions, so be it. Sacrifices have to be made.
The British are afraid that the German vision will lead Europe back to the mixed economies of the past. That’s why they have become increasingly hostile to Brussels over the past few years. Now they have come up with their own answer. It is a new version of the old E.F.T.A. — more free trade and less bureaucratic control of the economy. Like the founders of E.F.T.A., the British are unwilling to transfer more sovereignty to European institutions. They like Europe but they do not like its supranational institutions. It is a clear choice that many Europeans welcome.
Berlin, Paris and Brussels should wait a moment before trashing Cameron’s ideas. He is not against further integration within the euro zone. He wants to ensure that those outside the euro zone have fair access to the single market. This is not a destructive but a constructive approach.
We can pretend that Europe is still one big project and reject Britain’s new vision. Or we can admit that there are two mutually reinforcing Europes. If we do the latter, Cameron’s speech appears more constructive that many in Brussels will admit.
* Risto Penttilä is president of the Finland Chamber of Commerce and secretary general of “Northern Light,” the European Business Leaders’ Convention, which meets in Finland every two years to discuss Europe’s challenges and opportunities.
Internation Herald Tribune Published: January 23, 2013: http://www.nytimes.com/2013/01/24/opinion/global/camerons-vision-europes-challenge.html?_r=0