Is Taiwan the Next Hong Kong?
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THE forces making for closer union in Western Europe today are similar to those that created the union of the 13 North American colonies after the War of Independence. The states of Western Europe need to help each other defend their freedom, as did the American colonies. And, as were the colonies, the states of Western Europe today are also impelled to help each other overcome serious economic difficulties. In addition, the development of technology very definitely makes for larger economic and political units. The demands of modern war are such that the organization of adequate defense forces not only is beyond the capacity of any single Western European nation, it is even beyond the capacity of Western Europe as a whole. Hence the Atlantic Pact. In the economic field, the national units into which Western Europe is divided are too small to encourage the use of modern mass-production processes, such as are naturally employed in the United States, and increasingly will be employed in the U.S.S.R. and the emerging great nations of Asia. If Western Europe is to stand any chance of competing in the long run, we must find ways of breaking down the economic barriers that today split up the Continent.
But granted the similarity that does exist between the situation of North America 175 years ago and that of Western Europe today, it is nevertheless exceedingly important that the differences between these two historic situations be understood. The history of Europe for the last five centuries is essentially the history of sovereign national states. In the nineteenth century the unification of both Germany and Italy took place in harmony with technical and economic developments. More recently, however, the predominant tendency has been for the Continent to break up into smaller sovereign units. (I need only mention the break-up of Austria-Hungary in 1918.) True, we see today the beginning of the extinction of national sovereignties in Eastern Europe; but this is clearly taking place against the desire of the populations of those countries, and the methods which are being applied are not those which any democrat would think of adopting to achieve Western European union. The various European resistance movements during the war of 1939-45 were a revolt against Hitlerite Germany's attempt at forced unification, and those movements resulted in a pronounced strengthening of national consciousness. The keen feeling of national identity must be considered a real barrier to European integration.
Another respect in which Western Europe today differs strikingly from the Atlantic seaboard colonies in North America in the late eighteenth century is that when the colonies came together to form the United States they had a very limited population in a land with unknown but tremendous resources. Western Europe has strictly limited resources and a very large population. It moreover is rapidly losing its grip on the colonial empires which, during the nineteenth century, made up its deficiencies. The Norwegian nation is certainly very far from regretting that political developments are moving in this direction, but we cannot but realize that the emancipation of former colonial peoples may involve, at any rate in the first instance, a very serious loss of resources on the part of Western European nations. We are faced with an increasing pressure of population against limited natural resources.
Limited as are the natural resources of the Continent as a whole, the basis of the economic life of each separate unit is even more precarious. Nevertheless, each individual country has, over a period of time running in most cases into centuries, tried to develop a diversified economic life, agriculturally and industrially -- partly to meet the threat of isolation in case of war, partly for reasons of economic policy. The result is that each unit presents a complicated economic pattern, revolting from the point of view of liberal economic theory, but nevertheless a pattern which cannot suddenly be torn asunder.
Thus the problem of European union is extremely complicated, psychologically, politically and economically. The fact must be faced that Western Europe cannot achieve economic health and once more become self-supporting except in close collaboration with the United States. Atlantic collaboration is as vital in the economic field as it is in the field of security.
Next to the scarcity of natural resources, the chief obstacles to be overcome in the economic field before European union is practicable may be listed as follows: 1, the wide differences in living standards between Mediterranean countries on the one hand, and northern European countries on the other; 2, the widely varying levels of social security within the Western European community of nations; and 3, the differing views among states as to the primary aims of the economic policies of states, and even more the difference of views with regard to the best methods of achieving these aims.
The existence of these differences is the chief reason why many Western European governments now emphasize the idea that regional groupings are the most promising approach to the wider aim of European union in the economic field.
Britain's Labor Government and the labor governments of the three Scandinavian countries have made the maintenance of full employment and of a high level of economic activity the paramount aim of their economic policies, and they consider central planning and government control of economic activity necessary to achieve that end. The governments of most continental countries of Western Europe, on the other hand, trust in the free play of the forces of the market and decidedly refuse to secure for themselves the powers required to enable them to control economic activity. Their apparent aim seems to be to get back, at least in some important respects, to the situation of the 1920's -- or further back still, to 1910 -- both for their own nations and for Western Europe as a whole. Very similar thoughts evidently motivate the E.C.A. integration plan as presented by Mr. Hoffman in his address to the Council of E.R.P. nations in Paris on October 31, 1949. He there defined the substance of integration as "the formation of a single large market within which quantitative restrictions on the movements of goods, monetary barriers to the flow of payments, and eventually all tariffs are permanently swept away."
There is, however, a large body of opinion in Europe, and not only in the European labor movement, which regards the idea of a free market in the liberal sense on a continental scale as a delusion. There is, according to this view, a possibility or even a probability that the removal of present governmental controls would merely mean their replacement by the controls of international cartels, acting independently of the curbs and guidance of democratic agencies. As pointed out by Mr. Michael Hoffman in a Geneva dispatch of November 20, 1949, to The New York Times, the danger that such a development will result from present efforts to lift governmental controls is very real. This only proves the old truth that it is impossible to "turn back the clock" of history. The days of old-fashioned economic liberalism are gone, and in the words of this dispatch, "faster than the governments are acting to remove quantitative restrictions on imports, industrialists are joining hands across frontiers to prevent such liberalization from having any serious effect on the volume of trade."
The Norwegian people, in so far as they take an active interest in the problem, are definitely skeptical of plans for integration, which once more place our economy at the mercy of continental cartels. They are equally skeptical towards the idea of rapid integration of Norway's economy with that of the Mediterranean countries. We have grave doubts whether the group of nations that today are members of the O.E.E.C., or of the Council of Europe, form a natural unit, economically and politically. That this is not particularly a Norwegian view, nor a Socialist one, is borne out by the statement of Professor Bertil Ohlin, leader of Sweden's Liberal Party, in the Strasbourg Assembly debate on the rôle of the Council of Europe in the economic field. Professor Ohlin was somewhat skeptical as to the realism of thinking in terms of continents. It is not true, he stated, that water divides countries and peoples, nor does the mere fact that a group of countries are part of the same continent necessarily entail so large a common interest as to provide a rational basis for unity among them. He felt that neither in the short nor in the long run is it desirable to develop such a form of economic collaboration among the states of Western Europe as would tend to become an obstacle to the further expansion of economic relations between democratic Europe and the United States of America, or reduce the economic intercourse that now exists. In his opinion it was quite evident, from the Scandinavian point of view, that the economic advantages which would follow an expansion of trade between the Scandinavian countries and the United States were certainly not smaller than those which would be gained from more intimate trade or other economic relations between the Scandinavian countries and the countries of southern Europe.
Such a line of reasoning is even more natural for Norway than it is for Sweden, dependent as Norway is on extensive trade with all countries and on shipping in all waters. I am therefore pretty certain that there would be general and strong disagreement in Norway with the last sentence of the following statement by the Alsop brothers in their New York Herald Tribune column of November 23, 1949: "In the first stage, there would be three separate groups of 'integrated' states -- France and Italy; Belgium, Holland and Luxembourg; and the three Scandinavian countries. The first five countries would then be joined to form 'Fritalux.' The Scandinavians would then probably be brought into Fritalux."
Rather than envisage such a development, most Norwegians would tend greatly to favor the idea of expanding Scandinavian regionalism in the direction of a North Sea and a North Atlantic community, working in, that is, more closely with Great Britain and with the United States. For Norwegians, as members of the Northern European regional defense group under the Atlantic Treaty along with Denmark and the United Kingdom, such a development seems obviously desirable. This does not, of course, hold true for Sweden which is not a signatory of the Atlantic Pact. The fact that Sweden in all probability will maintain her military neutrality, however, is not necessarily a serious obstacle as far as economic coöperation is concerned; in December 1949, she joined with Denmark and Norway in accepting the invitation of Great Britain to explore possibilities for closer coöperation among the four countries in the financial field and for arrangements to increase the exchange of goods. At the time of writing, these exploratory talks are proceeding; and although there is little likelihood of their leading to the establishment of anything as ambitious as an economic bloc or a monetary union, there is good hope of achieving limited results in the field of payments and of commercial exchanges.
Even in such a small and comparatively homogeneous group as the three Scandinavian countries there are serious difficulties to be overcome on the way towards economic integration. At the risk of being classified as a representative of the kind of European statesmanship "so stumped by the trees of individual difficulties that it tends to overlook the forest and can move forward only under the urge of popular clamor inspired by a new vision" (as The New York Times recently put it in an editorial), I believe it right to point out the obstacles to be overcome. As far as Norway is concerned, there is very definitely no popular clamor for European union. There was such clamor for our joining the Atlantic Pact. But the adhesion of Norway to the Council of Europe aroused practically no popular response, and until fairly recently there existed in Norway no organization representative of the so-called "European Movement."
There is even considerable skepticism among the Norwegian people towards the idea of a Scandinavian customs union, and for several reasons. Industrially, Norway is considerably less developed than either Sweden or Denmark. Our main exports are food (fish and fish oils, whale oils), raw materials (pyrites and iron ore, timber, chemical fertilizers) or half-finished products (ferroalloys, wood pulp). What we have in the way of home market industries were harder hit during the war than the corresponding industries of the other Scandinavian countries. Norway also suffered considerably greater war losses than Denmark, losing half her merchant fleet and seeing her northern provinces and a half score of her cities totally destroyed. To pay her way in her economic relations, Norway had to concentrate her efforts during the present reconstruction period on rebuilding her devastated areas and on the development of export industries and the reconstruction of the merchant marine.
Under a Scandinavian customs union, Norwegian manufacturing industries producing for the same home market would stand no fair chance in competition with the much better equipped industries of Denmark and Sweden. If these Norwegian home market industries were put out of business, there would be serious dislocation and widespread unemployment. A considerable number of workers would have to be retrained, and capital would have to be invested in different industries. In other words, the establishment of a Scandinavian customs union is imaginable only if it comes into effect over a period of years. And it would create the need for increased dollar-financing on a large scale during this transition period to meet the problem of a readjustment of Norway's national economy. This is just one example of what constitutes the general problem in present-day Europe -- the contradiction between the short-term aim of viability and the long-term aim of closer economic unity. Norwegians believe that, for Europe as a whole no less than for Norway, too quick an advance in the direction of economic integration would delay the attainment of equilibrium with the dollar area, both for individual nations and for Western Europe as a whole.
Added to this is the fact that under modern conditions Scandinavia, as a unit, is far from large enough to constitute a balanced organism. The economies of our three countries are complementary only to a very limited extent. All three of us are dependent on extensive exchanges with both the sterling and the dollar areas. We also have important trade links with the Slav continental bloc, links which it would be desirable to develop in order to increase dollar earnings and save dollar imports. A Scandinavian customs union, therefore, could never aim at becoming a self-sufficient unit. It certainly must aim at adopting a low-tariff policy. Indeed, if we want to achieve a necessary increase in exports from Scandinavia to the United States, or for that matter from Western Europe as a whole, there is, to quote Professor Ohlin once more, "little doubt that the adoption of a low-tariff policy in both the European groups and in the United States would prove a much more decisive factor than the formation of a European tariff union alone."
Norway is, of course, aware that theoretically Western Europe can achieve a large measure of liberalization of trade and of integration, as defined by the E.C.A., and at the same time meet its dollar payments problem, if all countries adopt a policy of deflation which drastically reduces import requirements through mass unemployment. Such a development would be contrary to the declared aims of European Economic Coöperation as defined in the O.E.E.C. Convention, which in its preamble stresses the promotion of full employment, and in Article Seven refers to the obligation to proceed to financial stabilization "having due regard to the need for a high and stable level of trade and employment." In addition to this, a policy of general deflation would also be politically disastrous. It would create social conditions favorable to the growth of totalitarian movements, whether Communist or Fascist, and thus defeat the very object of United States aid to Europe -- to help maintain "political and social conditions in which free institutions can exist." That is why Norway insisted, in the new scheme for a European clearing union, on referring to the necessity of combating not only the dangers of inflation, but equally those of a deflationary policy.
All this must not be taken to mean that the attitude of Norway toward projects for economic integration is merely negative. For several years, through a Scandinavian committee of experts, we have been exploring possibilities for common Scandinavian development projects in various fields of activity. In December 1949 a common power development plan was submitted to the Governments of Denmark, Norway and Sweden, under which Norway would supply hydroelectric power for export to Denmark via Sweden. We hope this scheme will be accepted and will be followed by other common development projects.
When we pass from the field of economic integration to that of political unification we must once again face the fact that serious obstacles do exist. The setting up of the Council of Europe, with its Committee of Ministers and its Consultative Assembly, no doubt is a very important landmark in the history of inter-European coöperation. It would, however, be very unfortunate if the illusion were created that the formation of a United States of Europe is just around the corner. The Council of Europe is, and for quite a number of years no doubt will remain, an organization of sovereign states. We are only beginning to attack in earnest the problem of pooling these sovereignties.
In the Strasbourg Assembly there emerged in the course of last summer's debates two distinct schools of thought. The Latins (irrespective of party), most of the Benelux representatives and the British Conservatives favored what might be termed the constitutional, or the federal, approach to the problem. They wanted to start with a draft constitution for the United States of Europe. The Scandinavians, with hardly an exception and again irrespective of party, and most of the British Labor representatives, favored what might be termed the functional approach. They wanted to take up concrete projects for practical coöperation in various fields and to evolve such inter-European machinery as would be necessary to carry out the projects.
At its session in Paris in November 1949, the Committee of Ministers of the Council of Europe inclined towards the functional rather than the constitutional approach. It favored a policy of caution, of making haste slowly. Norwegians were very glad that such was the case. In the Norwegian view, there would be considerable danger of provoking a popular revulsion against the idea of European union, if precipitate action were taken. It takes time to put before the public measures for a pooling of national sovereignties, to explain fully their implications, and to make clear why the measures are needed.
In this connection I think it is important to point out that the so-called European Movement may be dangerous in so far as it creates the illusion in the United States that there exists in Europe much more of a mass movement for European union than is actually the case. No doubt, opinion in favor of union is considerably stronger on the Continent than it is in Scandinavia. I seriously doubt, however, that the European Movement has as wide popular support as it claims. Some of the resolutions adopted by the Strasbourg Consultative Assembly may give a similar impression to that created by rallies of the European Movement. The Assembly, consisting as it does of individuals without defined constitutional responsibility in their own countries, moves on a much less responsible level than does the Committee of Ministers. I am convinced that the Committee of Ministers is more truly representative of what popular opinion as a whole in Western Europe considers possible of achievement than is the European Movement or the Consultative Assembly.
In the meetings of the Assembly committees which have been held since the Committee of Ministers had its Paris session, the "federalist" view still seems to predominate, though in a more chastened form than during last summer's plenary session. There is every reason to expect, therefore, that there will be further controversy between the Assembly and the Committee of Ministers bearing not only on the question whether the federalist or the functional approach should be adopted, but no less concerning the relative powers of the two chief organs of the Council.
One word, before concluding, on the problem of Germany. The only possible solution, as Norwegians see it, is to bring the Western German Federal Republic into the family of democratic Western Europe. The Council of the E.R.P. countries has already admitted German representatives, and there is agreement between the Committee of Ministers and the Standing Committee of the Consultative Assembly that Western Germany should be admitted as an associate member of the Council of Europe in time for its representatives to take part in the forthcoming second session of the Assembly.
I say, the only possible solution. Having suffered five years of occupation at the hands of Germany, the Norwegian people could hardly be expected to give an enthusiastic welcome to German representatives. They realize, however, that if Western Germany were left outside the pale, German nationalism would be still further strengthened. But we are glad to know that responsible statesmen neither in the United States nor in Britain are in favor of permitting the Germans to rearm and admitting them to military coöperation under the Atlantic Treaty.
Perhaps American readers will feel that I am overcautious, both in this respect and in regard to the problem of European union as a whole. I am certainly not more so than the majority of my fellow-countrymen. I am deeply convinced that until the real problems involved in the achievement of European union are much more fully understood and appreciated by the general public in our democratic nations, we must proceed slowly. There is, therefore, real danger if American expectations are raised far beyond the possibility of immediate fulfilment.
The problem of European union is our common problem. It is one problem among many which face us within our North Atlantic community, and I am convinced it can find its solution only in the wider context of Atlantic coöperation. Western Europe does not on its own possess enough natural resources to constitute a self-sufficient economic unit. Nor would it be desirable to make any attempt in the direction of European autarchy. Europe certainly must break down internal barriers which are out of harmony with technological and economic realities. But there would be scant advantage and might be real danger if integration within Europe should, in any way, result in any kind of European isolationism. There must be ever closer coöperation across the ocean. We on the European side have before us the task of giving to our peoples a new vision, which must be a realistic one, of the necessity for closer union in our part of the world. Individual Americans can assist us enormously if they help all the people of the United States to understand why progress towards the goal of European union must of necessity be slower than was the process of establishing the United States. To many Americans, the inevitable slowness of the process may seem depressing. Viewed in a historic perspective and from the Norwegian side of the Atlantic, developments of the last two and a half years are momentous. The establishment of O.E.E.C., the creation of the Western Union, the conclusion of the Atlantic Treaty and the setting up of the Council of Europe are no mean achievements in such a short span. Let us hope that the march of world events will give us the time we need to solve the problem of European union by truly democratic methods.