EU at 60 - the longest period of peace in Europe in over 2,000 years
Saturday's 60th anniversary celebrations of the signing of the Treaty of Rome on March 25, 1957, which provided for the establishment of the European Economic Community (EEC) that was later called the European Union, had its genesis in 1950 when Robert Schuman (1886-1963), French foreign minister, proposed the creation of a European Coal and Steel Community (ECSC), where countries would pool coal and steel production.
Jean Monnet (1888-1979), a French civil servant, was the inspiration for the move and it was in response to French worries that the biggest Western European concentration of coal mines and steel production was in two areas in West Germany: the Ruhr Valley, and the Saarland — the Allies had already imposed output ceilings and the Saarland was a semi-autonomous region from 1947 to 1955 (in the late 1980s France again was in worry mode, this time about German reunification, and France succeeded in pushing Germany into actively supporting the development of a single currency).
In 1946 at the Swiss University of Zurich, Winston Churchill (1874-1965), then former British prime minister, had delivered a speech on the future of Europe. Churchill caused a sensation when he said that the future prosperity and security of European countries depended on the creation of a United States of Europe — and it's remarkable that his vision has been effectively fulfilled while the nation-states retained most of their sovereignty.
"We all know that the two world wars through which we have passed arose out of the vain passion of a newly united Germany to play the dominating part in the world. In this last struggle crimes and massacres have been committed for which there is no parallel since the invasions of the Mongols in the fourteenth century and no equal at any time in human history.
The guilty must be punished. Germany must be deprived of the power to rearm and make another aggressive war.
But when all this has been done, as it will be done, as it is being done, there must be an end to retribution. There must be what Mr Gladstone many years ago called 'a blessed act of oblivion'.
We must all turn our backs upon the horrors of the past. We must look to the future. We cannot afford to drag forward across the years that are to come the hatreds and revenges which have sprung from the injuries of the past. If Europe is to be saved from infinite misery, and indeed from final doom, there must be an act of faith in the European family and an act of oblivion against all the crimes and follies of the past.
Can the free peoples of Europe rise to the height of these resolves of the soul and instincts of the spirit of man? If they can, the wrongs and injuries which have been inflicted will have been washed away on all sides by the miseries which have been endured...I am now going to say something that will astonish you. The first step in the re-creation of the European family must be a partnership between France and Germany. In this way only can France recover the moral and cultural leadership of Europe.There can be no revival of Europe without a spiritually great France and a spiritually great Germany. The structure of the United States of Europe will be such as to make the material strength of a single State less important. Small nations will count as much as large ones and gain their honour by a contribution to the common cause."
Churchill did not envisage that the UK would be part of a United States of Europe.
The Schuman Declaration said that the proposed ECSC would make war between historical rivals France and Germany "not merely unthinkable, but materially impossible" and the founding members: France, West Germany, Italy, the Netherlands, Belgium and Luxembourg, can be proud that not only has there been the longest period of peace between major powers in Europe in over 2,000 years of written history, but it has coincided with an unprecedented prosperity that in 1950 most experts thought inconceivable — after all, most of the leading industrial nations of the world by 1945 had left Europe a wasteland, following three decades of war and economic misery.
Ireland the poorest country in 1973
When Ireland joined the EEC in 1973 along with the United Kingdom and Denmark, it was the poorest country in Western Europe and the first enlargement began a pattern where poor countries were admitted to the Community (named the European Union from January 1993) along with wealthy ones such as Sweden and Austria.
Ireland’s Gross Domestic Product per capita [Purchasing Power Standards (PPS) EU=100] on joining was almost two-thirds of the EU15 (countries that were members prior to 2004) average, according to the Central Statistics Office (CSO). See page xi here.
Organisation of Economic Cooperation and Development (OECD) data for 1973 using constant 2010 dollars, adjusted for price differences (PPS), show that Denmark’s GDP per capita at $24,800 was on top in the EEC compared with Ireland’s $12,200.
West Germany and France were at $20,600 and $20,300, while the UK was at $18,800.
Greece’s GDP per capita was $17,600 — compared with Japan’s $17,000.
In the continent of Europe in 1973, the Iron Curtain hemmed in millions in the vast prison that was the Soviet Union and its satellite states, while military juntas ruled Spain, Portugal, and Greece. In Italy, the Partito Comunista Italiano (PCI), was the most popular communist party in Western Europe with the support of about a third of the electorate.
By any measure, the enlargement to 28 countries and the development of the European Union from the wasteland in the aftermath of World War II, has been a remarkable success of gigantic proportions.
In terms of material standard of living as measured by individual consumption of public and private goods/services, adjusted for price differences, Ireland in 2016 had a 10th rank with Italy in the EU28 — Italy had a level of $19,200 in 1973, ahead of the UK and just behind West Germany and France.
300 years of rocky path to peace
The Peace of Westphalia (Treaties of Westphalia), signed in 1648, which ended the devastating Thirty Years' War, in which the major continental European states fought over religion and dynastic claims — the Holy Roman Empire (the First German Reich/ Empire), Spain, France, Sweden and the Dutch Republic — agreed to respect one another's territorial integrity and this is viewed as leading to the emergence of the modern nation-state. The peace also marked the decline of the political power of the Papacy of the Roman Catholic Church.
Voltaire (1694-1778), the famous French writer, wrote in 1767:
“En effet l’histoire n’est que le tableau des crimes et des malheurs” — “Indeed, history is nothing more than a tableau of crimes and misfortunes.”
The Peace of Westphalia did not stop Europeans fighting each other and Louis XIV (1638-1715) who was 10 years old when the process of signing the treaties had begun, had already been King of France for 5 years. Louis assumed full powers after the death in 1661 of Cardinal Mazarin his mentor and ruled in total for a European record of 72 years.
Soon France was at war with all its main rivals and Voltaire wrote on the age of the so-called Sun King in his account of the times of Louis in the book, "Siècle de Louis XIV":
"Il est certain qu’il était passionné pour la gloire, et même encore plus que pour la réalité de ses conquêtes. Dans l’acquisition de l’Alsace et de la moitié de la Flandre, de toute la Franche-Comté, ce qu’il aimait le mieux était le nom qu’il se faisait" — "It is certain that he passionately wanted glory, rather than the conquests themselves. In the acquisition of Alsace and half of Flanders, and of all of Franche-Comté, what he really liked was the name he made for himself."
Louis XIV also wrecked the French economy through triggering the exodus of French Protestants by revoking in 1685 the Edict of Nantes that since 1598 had recognised their rights. In largely agricultural France, the Huguenots came from towns where they were skilled craftsmen and professionals involved in a wide range of skills.
François Hollande, French president, host of a mini-summit of the leaders of the four biggest European countries (ex-departing UK) in advance of the 60th birthday of the EU, with Angela Merkel, German chancellor, Mariano Rajoy, prime minister of Spain (right of Merkel), and Paolo Gentiloni, Italian prime minister (left of Hollande), at the Hall of Mirrors, Palace of Versailles, France, March 7, 2017 — the Château de Versailles was the seat of French kings in 1682-1789 and until the Revolution the potent symbol of French royal power.
James J. Sheehan, emeritus professor in the humanities at Stanford University, wrote in his 2008 book "Where Have All the Soldiers Gone? The Transformation of Modern Europe":
"Between 1648 and 1789, the European powers had fought forty-eight wars, some of them, like the Seven Years’ War in the mid-eighteenth century, lasting several years and stretching around the world. Between 1815 and 1914, there were only five wars in Europe involving two great powers; all of them were limited in time and space, and only one of them involved more than two major states. From the end of the Franco- Prussian War in 1871 until the outbreak of the Great War in 1914, the European states were at peace with one another. This was the longest period without war in European history until it was surpassed toward the end of the twentieth century."
After the military defeat of France in 1871 and the launch of the Second German Reich/ Empire with the crowning of the King of Prussia as the emperor of a united Germany in King Louis XIV's Hall of Mirrors at Versailles, followed weeks later by a march of a dense column of 30,000 German soldiers, past l'Arc de Triomphe de l'Étoile in central Paris, and down the Avenue des Champs-Élysées, the humiliated French hungered for revenge.
Prof Sheehan wrote that throughout the second half of the nineteenth century, European manufacturing and agricultural production increased dramatically. Despite a growing population, per capita income rose, as did gross domestic product. Growth was geographically uneven and its benefits unequally distributed, but by 1900 European society was becoming increasingly orderly, peaceful, and prosperous. However, while they lived in peace, Europeans at the beginning of the twentieth century constantly confronted the possibility of war.
Otto von Bismarck (1815-1898), the German chancellor, had told a Russian diplomat in 1879:
"The great powers of our time are like travelers, unknown to one another, whom chance has brought together in a carriage. They watch each other, and when one of them puts his hand into his pocket, his neighbour gets ready his own revolver in order to be able to fire the first shot.”
Raimondo Montecúccoli (1609-1680), an Italian who was lieutenant general and field marshal of the army of the Austrian House of Hapsburg, wrote on war and military strategy:
“Philosophers may debate whether a permanent state of war exists in nature, but statesmen cannot doubt that there can be no real peace between powerful competing states; one must suppress or be suppressed, one must either kill or perish."
At the dawn of the 20th century, Prof Sheehan noted: "Preparing for war was the statesman’s most important duty — not his only duty, to be sure, but the one that took precedence over all others. Economic prosperity, commercial vitality, and social welfare were worthwhile goals; all of them contributed to the state’s power and stability, but they counted for nothing if the existence of the state was not secure. Security meant creating and sustaining the kind of army necessary to fight and win a modern war."
As the Ottoman Empire crumbled Russia supported its fellow Slavs in the Balkans while in 1908, Austria-Hungary announced the annexation of the majority Muslim Bosnia-Herzegovina — territory that formally was part of the Ottoman Empire. In neighbouring Serbia there were demands to annex the areas in Bosnia-Herzegovina with significant Serb populations.
Meanwhile, the UK worried about Germany's growing industrial strength and it opted to align with its traditional rivals: France in 1904 and Russia in 1907. This was called the Triple Entente and triggered German fears of encirclement with France and Britain in the West and Russia in the East. Italy had in 1882 signed a secret alliance known as the Triple Alliance, with Germany and Austria-Hungary.
June 28, 1914 in Sarajevo, capital of Bosnia-Herzegovina, it was St. Vitus Day — an important day for Bosnian Serbs, as it was a commemoration of the Battle of Kosovo in 1389 where the Serbs were defeated by the Turks. Bosnian Serbs as in the 1990s wished to unite with Serbia and 19-year old Gavrilo Princip, a Bosnian Serb, fired two fatal shots at the visiting Archduke Franz Ferdinand, heir to the Austro-Hungarian throne, and his wife, who were on their way to the City Hall.
The Austro-Hungarian Empire declared war on Serbia and within weeks with the tangle of alliances that had developed from the unification of Germany in 1871, the five great powers in Europe: United Kingdom, Germany, France, Russia and the Austro-Hungarian Empire, were at war.
After four years of carnage a Peace Conference opened in Paris on January 18, 1919.
Raymond Poincaré (1860-1934), president of France, made clear the importance of the date.
"On this day, 48 years ago, the German Empire was proclaimed by an army of invasion...in the Château at Versailles. It was consecrated by the theft of two French provinces [Alsace and Lorraine]...Born in injustice, it has ended in opprobrium. You are assembled in order to repair the evil that it has done and to prevent a recurrence of it. You hold in your hands the future of the world."
Delegates from 32 nations were present.
John Maynard Keynes (1883-1946), the renowned British economist of the European inter-war years, was a member of the British delegation at the Versailles Peace Conference where the post-1918 European map was drawn up by the victorious allies. He foresaw that a vengeful peace would have baleful economic consequences for both victors and vanquished. Winston Churchill, the British political leader, wrote in 1927 on the ending of hostilities in 1918, that "a knell rang in the ears of the victors, even in their hour of triumph."
In Keynes' prescient 1920 book "The Economic Consequences of the Peace," he outlined the inevitable "rapid depression of the standard of life of the European populations to a point which will mean actual starvation for some (a point already reached in Russia and approximately reached in Austria). Men will not always die quietly. For starvation, which brings to some lethargy and a helpless despair, drives other temperaments to the nervous instability of hysteria and to a mad despair."
In the second decade of the 20th century the empires of China, Russia, the Turks, Germany and Austro-Hungary had collapsed while in 1945 the empire of Japan had been vanquished and Britain emerged from the Second World War in a bankrupt state with its empire on a respirator — the then Lord Keynes led a delegation to Washington in the autumn of 1945, where the UK secured a loan of $4.3bn to avoid what Keynes called a "financial Dunkirk."
Economics of the peace
The United States emerged from the Second World War as the world's hegemon, and its only rival was the Soviet Union, which had extended its areas of communist control to include the captured territories of Eastern Europe.
The US through the founding of the North Atlantic Treaty Organisation (NATO) in 1949 in effect took responsibility for protecting Western Europe from the Soviet threat.
The International Monetary Fund (IMF) and the World Bank had been established in 1944 and in the early months of 1947, a senior US official warned about the dire situation in Europe:
"Europe is steadily deteriorating. The political position reflects the economic. One political crisis after another merely denotes the existence of grave economic distress. Millions of people in the cities are slowly starving. More consumer’s goods and restored confidence in the local currency are absolutely essential if the peasant is again to supply food in normal quantities to the cities. (French grain acreage running 20–25% under prewar, collection of production very unsatisfactory — much of the grain is fed to cattle. The modern system of division of labor has almost broken down in Europe.)"
In June 1947 General George C. Marshall (1880-1959), US Secretary of State said in a speech: "It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace,” and he committed the United States to consider a European recovery plan that would be developed by the Europeans and presented to the United States.
The US aid became known as the Marshall Plan.
In 2015, Professor Sir Ian Kershaw said in his ‘Out of the ashes: Europe’s rebirth after the Second World War, 1945–1949’ lecture (script; video) on the 70th anniversary of the end of the war, that the “first signs of potential integration seemed promising when 16 countries and representatives from the western zones of occupied Germany formed the Organisation for European Economic Cooperation in April 1948 [that would later become the Organisation for Economic Cooperation and Development (OECD)] to implement the Marshall Plan. But national interests immediately surfaced, and American expectations were to be swiftly disappointed. Britain, in particular, saw only disadvantages in a European customs union that was heading towards future integration. 'There is no attraction for us in long-term economic cooperation with Europe,' senior British civil servants adjudged. As George Marshall himself commented, Britain wanted to 'benefit fully from a European program[me] 'while at the same time maintaining the position of not being wholly a European country.'”
The UK received a third more Marshall Aid than West Germany — $2.7bn as against $1.7bn but in contrast with Germany, the post-war Labour Government did not make industrial modernisation the central theme in the use of Marshall Aid.
As Britain traded in the red, Germany reported its first post-1945 goods trade surplus in 1952 and in every subsequent year to 2016 — Volkswagen, the once Nazi-funded project that had selected a design proposal from Ferdinand Porsche (1875-1951) in 1937 for a "people's car," produced about 100,000 units in 1952 (Porsche in his early 20s had invented an electric motor for the first functional hybrid car).
According to Correlli Barnett (1927- ), the British military historian in a report for the BBC:
"In 1950, Britain's investment in industry and infrastructure came to only 9% of GNP, as opposed to Germany's 19%. Thus the actual total of the investment was a fifth less than the German total...Britain's estimated defence expenditure for 1950-1 — the final year of Marshall Aid — amounted to 7.7% of GNP — at a time when Germany and Japan were not spending a pfennig or a yen on defence."
In 1950 German real GDP per capita was 60% of the UK level and by 1996 it was 12% higher ("Britain and Germany in Europe 1949-1990"). OECD data in dollar terms show that Germany was 15% ahead in 2016 and Eurostat data adjusted for price differences (PPPs), show that in 2015 it was 14% ahead.
The World Bank said in a report, “Golden Growth: Restoring the Lustre of the European Economic Model,” published in 2012:
"Between 1950 and 1973, Western European incomes converged towards those in the United States. Then, until the early 1990s, the incomes of more than 100m people in the poorer southern periphery — Greece, southern Italy, Portugal, and Spain — converged to those of advanced Europe. Starting with the first association agreements with Hungary and Poland in 1994, another 100m in Central and Eastern Europe were absorbed into the European Union. Another 100m in the candidate countries in Southeastern Europe are now benefiting from the same aspirations and similar institutions that have helped almost half abn people achieve the highest standards of living. If European integration continues, the 75m people in the Ukraine and other countries of the Eastern Partnership will profit in similar ways."
Greece and Italy were the star economic performers in Europe in the period 1950-1973 and according to the World Bank, Europe’s growth from the first few years of postwar reconstruction until the oil crisis of 1974 was its fastest ever recorded.
Tariff barriers were reduced from the 1950s in both the US and Europe, promoting rising trade.
Real annual GDP per capita rose over 3.5% in Western and Eastern Europe and 4.5% in Southern Europe during this period. The average growth rate for all of Europe had not exceeded 1.5% in the previous 130 years according to the World Bank and this economic surge came after four decades of subtrend growth below 1% caused by destruction in 1914-18 and later depression.
"For the first time in the twentieth century, Europe outperformed the United States (which grew at 2.3%) and every other major economy except Japan. Growth in every European country save the United Kingdom exceeded USgrowth. Labor productivity growth was 2 percentage points higher a year in the west and 8 points higher in the south. The top performers in Western Europe (Austria, Germany, and Italy), Southern Europe (Greece, Portugal, and Spain), and Eastern Europe (Bulgaria and Romania) had growth rates that exceeded US rates by 2 percentage points or more. The gap in GDP per capita between Western Europe and the United States closed from 48% in 1950 to 28% in 1973. A similar pattern of convergence occurred in Southern Europe, with the gap closing from 79% to 65% over the same period. Slightly slower growth in Eastern Europe resulted in a slower pace of convergence with the United States, with the gap falling from 78% to 70%."
The UK has had annual budget surpluses only in 8 years since 1945 while France last had a budget surplus in 1974 when public debt was at a ratio of 22% of GDP.
Several countries experienced volatile growth in the decades after 1973 coupled with rising public debt and deficits.
Following a balance of payments crisis in the mid-1970s, the UK benefited from membership of the EEC/EU according to The Financial Times in 2016:
Britain joined what was then the European Economic Community in 1973 as the sick man of Europe. By the late 1960s, France, West Germany and Italy — the three founder members closest in size to the UK — produced more per person than it did and the gap grew larger every year. Between 1958, when the EEC was set up, and Britain’s entry in 1973, gross domestic product per head rose 95% in these three countries compared with only 50% in Britain.
After becoming an EEC member, Britain slowly began to catch up. Gross domestic product per person has grown faster than Italy, Germany and France in the 42 years since. By 2013, Britain became more prosperous than the average of the three other large European economies for the first time since 1965.
Michael Spence (1943- ), the US economist and Nobel laureate, has said that the phenomenon of sustained export-led growth, that has propelled both small poor countries and big ones such as Ireland, South Korea, and China, to strong growth, was unheard of before the latter half of the 20th century. "It is possible only because the world economy is now more open and integrated."
Humiliation of France: Proclamation of the 73-year old Prussian king Wilhelm I as German emperor in the Hall of Mirrors, Palace of Versailles, January 18, 1871. France had been defeated in a contrived war about who should succeed to the Spanish throne. Otto von Bismarck, first German chancellor, is in white.
Biggest demonstration for peace in history of Europe
Prof James Sheehan in the book cited above notes that on Saturday, February 15, 2003, "the largest demonstration in European history was held to protest the impending war against Iraq. In London, an estimated million people overflowed Trafalgar Square, filling the city’s streets from the Thames embankment to Euston Station; a million marched in Barcelona and in Rome, 600,000 in Madrid. A half million braved the freezing cold in Berlin’s Tiergarten, almost as many as usually attended the Love Parade held there in the summertime. Everywhere the crowds were peaceful. There were few arrests, no violence."
"For most people, the real issue was not who was right or wrong, but whether war was the answer."
Prof Sheehan wrote that European states had become "civilian states, states that retained the capacity to make war with one another but lost all interest in doing so. The result was an eclipse of violence in both meanings of the word: violence declined in importance and it was concealed from view by something else — that is, by the state’s need to encourage economic growth, provide social welfare, and guarantee personal security for its citizens. The eclipse of violence happened gradually. It was a slow, silent revolution, hidden in plain sight, but it was nonetheless a revolution as dramatic as any other in European history."
The European Union faces many challenges including falling populations, and while eaten bread is soon forgotten, the recognition of the past contribution of the institution is an important factor in its endurance — that's not to ignore the need to adapt to changing times.
Both a social and economic union
From its genesis in the 1950s in the aftermath of the worst man-made calamity in the history of mankind, there has been a generosity of spirit in extending membership to less developed countries, such as Ireland, Spain, Portugal and Greece and then in 2004, the biggest expansion resulted from the admission of the former communist countries from Eastern Europe — a momentous event in the modern history of Europe, which would have been considered inconceivable in 1987, when US president Ronald Reagan gave his speech at the Berlin Wall and said: "Mr. Gorbachev, tear down this wall!"
The Great Recession exposed flaws in the single currency project where politics trumped economics, while it should also be acknowledged that besides peace and economics, the EU has had a positive impact on social policy.
Paul Walsh, professor of International Development Studies at University College Dublin, wrote in 2009 during the second Lisbon Treaty referendum campaign (quote comes from a blog post here but link to original article within post is dead!): "Our European partners since 1973 always had good social values. Clearly, good education and health systems, social protection, gender empowerment, good political systems, care for the environment, research and innovation and protection of livelihoods was at the centre of the European project. Our focus on Europe may have been economic but I would argue that the foundation of our success was built around social freedoms that the EU helped us create. This is also going to be the foundation of our recovery."
In 2013 The Economist wrote: Angela Merkel, the German chancellor, "never tires of saying that Europe has 7% of the world’s population, 25% of its GDP and 50% of its social spending. If the region is to prosper in competition with emerging countries, it cannot continue to be so generous."
The Union has to maintain its multi-dimensional role but it must also be open to reform. With the UK, the most globalised big economy, leaving its biggest market and putting its trust in a mercurial American president, the EU has to keep the flag flying for a liberal economic order with a focus on trade, investment, immigration and regulation.
Perfection will never be found in multilateralism but the European Union is the most successful example of multilateralism in the history of the world.
These charts have been produced by Visual Capitalist from data back to Roman times, estimated by the renowned British economic historian, Angus Maddison (1926-2010). Latest data is provided by the IMF.
The first chart is a modification of one produced by Michael Cembalest of JP Morgan in 2008.
Note that the horizontal X-axis isn't to scale as earlier and later periods are not matched.
According to The Economist in 2011 this century has made a huge contribution to economic history. Over 23% of all the goods and services made since 1AD/CE (Anno Domini/Common Era) were produced from 2001 to 2010, according to an updated version of Angus Maddison's figures.
The Economist has its own chart here using Maddison's data.