Jacques Delors’ contributions were immense

With the passing of Jacques Delors last month (27 December) Europe has lost one of its great statesman.

It is difficult to overstate the contribution Mr. Delors made to modern Europe. Through his intellect, vision and vast capacity for work, Mr. Delors forged two of Europe’s most ambitious projects; the single market for goods, services and people and the Monetary Union that begat the common currency, the euro. The ability to easily sell goods and services and to invest freely in all Member states transformed the European Community and later the European Union into an economic powerhouse.

The single currency eliminated the perpetual competitive devaluations that destabilized economies and strained relations between governments. The euro made doing business in Europe cheaper, more predictable, and far less risky. It also made it commonplace for many European families to take vacations in Greece, Italy or Spain and points between. The freedom to move freely between countries of the then European Community transformed people’s thinking about what it was to be European.

Early Career and Breakthrough

Born between the World Wars in 1925, Jacques Delors was a man from another era. Yet, today when politics too often center on polarization and division, his goals and his values are more relevant than ever. His father was badly wounded in World War I and Mr. Delors saw first-hand the destruction wrought by World War II. These horrors, as well as his deep faith, instilled in him the belief that unity and collective action were the only way Europe could prospect in the post war era.

He started his career at the Banque de France in 1945, working there until 1962. While at the national bank he joined, in 1950, the French Confederation of Christian Workers where he served as an economic advisor. Although his association with the French Socialist Party has been well documented, he did not actually join the party until 1974 and in fact served in 1969 as social affairs adviser to Prime Minister Jacques Chaban-Delmas, a Gaullist. He was later elected to the European Parliament in 1979.

The French presidential elections of 1981 and stunning victory of the Socialist Francois Mitterrand propelled Mr. Delors onto the world stage for the first time when he was chosen as Mr. Mitterrand’s finance minister. Soon after Mr. Mitterrand’s election, the French economy was pummeled by markets alarmed by the new president’s economic policies which included vast nationalizations of banks and industries. Budget and trade deficits exploded. At that time, European currencies were tied to the German mark through the European Exchange Rate Mechanism which only functioned properly if inflation was under control. This was not the case in France and the French franc was devalued three times between 1981 and 1983.

Mr. Delors was devout, and he was committed to social justice. But he was also pragmatic and understood that the heavy hand of government could seep treacle-like into the economy and stymie innovation and creativity. He held very strong views on the importance of fiscal discipline. He believed too that, properly regulated, open markets were the most efficient way to deliver economic prosperity.

Quietly, he worked to unwind some of the Mitterrand government’s privatizations and heavy spending. By 1984, President Mitterrand had radically changed his focus and the new French policy became price stability rather than high wages and full employment. The skillful turnaround directed by Mr. Delors impressed powerful people across Europe including British Prime Minister Margaret Thatcher and German Chancellor Helmut Kohl.

Brussels Bound

When the Luxembourger Gaston Thorn’s term as Commission president expired in January 1985, European heads of state and government set about finding his replacement. Typical Euro-squabbling ensued. Mr. Mitterrand insisted that a French national get the job. When he proposed his Foreign Minister Claude Cheysson, the nomination was promptly vetoed by Mrs. Thatcher. But Mr. Delors was a different story and having garnered the support of Britain and Germany as well as France his appointment was assured.

On his arrival in Brussels in 1985, the global economy was reeling from the low economic growth and high inflation brought about in part by the oil crises of 1973 and 1979. Instability on foreign exchange markets was endemic following Richard Nixon’s scrapping in 1971 of the decades long Bretton Woods system of fixed exchange rates. Cold war tensions ran high.

Europe was unmoored. Its economy, gripped by what critics called Euro-sclerosis, was burdened by high unemployment (8.6% in France, 9.5% in the Netherlands and nearly 12% in the United Kingdom) internal division and a fading sense of common purpose and its role in the wider world. Businesses were hamstrung by internal barriers to trade within the Community, including border controls and varying technical standards which were not mutually recognized across the member states.

That was to quickly change. Mr. Delors was convinced that to inject dynamism into the flagging EC economy required drastic action. He helped steer passage of the Single European Act in 1986 set the spark for the creation of a single market in which non-tariff barriers would be eliminated, mutual recognition of technical standards agreed and border procedures scrapped by January 1, 1993.

Agreement on the Single European Act created a dynamism that lasted throughout Mr. Delors’ 10-year presidency. It was perhaps the most impactful trade agreement ever negotiated and it brought about other dramatic political reforms as well. Under the Act, the European Parliament was given greater power, voting rules were reformed and the then 12 member states agreed to align their economic and monetary policies far more closely and prepare for a common currency.

More than this, the Single European Act gave people a sense that they were European as well as French, German, Dutch or Italian. For many this was liberating but for nationalists it represented a threat. The move toward closer European unity unleashed many of the forces – protectionism, xenophobia, nationalism – that have come to embody some quarters of the anti-European and anti-globalisation movements.

Mr. Delors saw the danger in this. In a September 8, 1988 speech to Britain’s Trades Union Congress in Bournemouth, England he said efforts to integrate economies and people must be balanced with social policies that would safeguard working people from the shock that greater economic dynamism can sometimes provoke.

“The globalisation of markets and new technologies affect our perceptions and our way of life. All those concerned with our society must adapt,” he said.

Passage of the Single European Act impressed both the German chancellor and the British Prime Minister. But while, Mr. Delors friendship with Mr. Kohl was to last the rest of the chancellor’s life, his relations with Mrs. Thatcher were about to take a decided turn for the worse.

In his Bournemouth speech Mr. Delors outlined what he called the Social Dimension of the internal market plan. Mr. Delors understood that economic unification, though significant, was only part of the equation. If the Single Market were to succeed, he believed, the vast new market and the efficiencies it would generate must be underpinned by protections of the workers’ rights and living standards that had been attained.

He proposed a series of Community-wide statues what would bolster social protections for Europe’s workers, including:

• The establishment of community-wide social rights including the right to bargain collectively and the protection for temporary workers.
• The creation of a statute for European companies through which workers were assured representation in decision making processes.
• The right to lifelong education for all workers.

Many of the British trade unionists in the audience held life-long suspicion of the European Community. Mr. Delors – who spoke English well but with an accent – worried he would be poorly received. But the trade unionists were also licking their wounds from a second straight election thrashing at the hands of Mrs. Thatcher, whom they rightly believed was bent on crushing union power. When Mr. Delors finished, he was greeted with a deafening ovation and serenaded with “Freres Jacques.”

The Bournemouth speech was the catalyst for the colossal Britain-EU melee that followed. Already suspicious of the notion of an ever-closer union, Mrs. Thatcher was not amused. She had invested a great deal in crushing Britain’s coal miners’ union, and she was not about to see the European project introduce social policies that she and her Conservative Party had roundly rejected.

Her response came swiftly. Two weeks later, she gave a speech to the College of Europe in Bruges, Belgium, where she threw down the gauntlet.

“We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels … The aim of a Europe open to enterprise is the moving force behind the creation of the Single European Market in 1992 … And that means action to free markets, action to widen choice, action to reduce government intervention. Our aim should not be more and more detailed regulation from the centre: it should be to deregulate and to remove the constraints on trade,” she thundered.

The Makings of Brexit?

The tensions between Brussels and London were further inflamed by the steady drumbeat of anti-European reporting that was carried in the British newspapers. The notorious tabloids were particularly critical. But it was not a tabloid journalist who wrote the most incendiary articles. Rather, it was a flaxen-haired journalist from the Daily Telegraph, a broadsheet widely read in Conservative Party circles. Boris Johnson, specialized in stories which framed Mr. Delors who was plotting to “rule” Europe at the expense of nation states. His articles about conspiracies and standards for everything from condoms to bananas distorted the truth and were often of dubious accuracy. But they were effective in nurturing an anti-European bias not only in Britain but in other European countries including Denmark. Other reporters in Brussels found Mr. Johnson to be amusing but unserious and none could have foreseen he would one day lead the Brexit movement and become Britain’s prime minister.

The foundations for Brexit had been laid.

Maastricht Maneuvering

While progress toward the goal of a Single Market by January 1, 1993 was steady, things were rockier on the road to monetary union. By 1990, Mrs. Thatcher was gone, done in by members of her own cabinet over her bombastic position on Europe. In her place was former Chancellor John Major whose demeanor may have been more tranquil but whose skepticism toward Europe was equally firm.

In December 1991, the heads of European Governments met in Maastricht, the Netherlands and agreed on the path to a common currency by the end of the century – all that is save for Mr. Major. The British Prime minister and his Conservative cohorts had developed a profound revulsion to the term Federal. To them, bizarrely, federalism meant a greater concentration of power in Brussels. They didn’t want the word federal included in the Maastricht Treaty that was being drafted and they certainly didn’t want Brussels to dictate Britain’s participation in a monetary union or a social dimension.

But Britain’s opposition was not the only roadblock at Maastricht. A subtler but equally problematic hurdle was the disconnect between France’s desire to restrain the power of the Bundesbank through the creation of a common Central Bank and Germany’s desire for a Europe-wide fiscal policy. Germany, forever haunted by the runaway inflation of the Weimar Republic worried about the budgetary profligacy of its neighbors, including France. A common currency would rule out the use of devaluations as a policy instrument and absent fiscal harmony, the Germans worried, a monetary union would not hold.

Enter Mr. Delors. It is difficult to imagine who else might have possessed the expertise and the political savvy to broker the Franco-German compromise that he engineered. The treaty contained a series of complex “convergence criteria” designed to soothe German fears. These included limits on annual budget deficits (3% of GDP) and overall debt (60% of GDP). The European Central Bank (ECB) was to be based in Frankfurt.

The name of the Community was to be changed to the European Union and to ease British qualms about “ever-closer union” the term “subsidiarity” was introduced indicating that whenever possible political decisions were to be taken at the level of government closest to the voters.

Many Germans – including finance Minister Theo Waigel – remained dubious. One German delegate pointed out both Italy and Belgium already exceeded the treaty’s the budgetary and debt criteria and were disinclined to impose the politically poisonous austerity measures required to get back on track. One senior German official told a journalist during the all-night negotiations – “we have let Italy and Belgium into the club and what happens when Greece, the cradle of Democracy, comes knocking at the door?” The answer would come in 2009 when Greece teetered on the brink of exiting the euro and the currency itself was at risk.

Mr. Major held onto Britain’s opt outs from the monetary union and social dimension – which never fully materialized in any event. At a press conference at the end of the marathon negotiations, Mr. Delors was asked why it was that he and Mr. Major had such different views of Europe.

“Well,” he said, “perhaps because some people prefer rugby and some people prefer (soccer),” he said.

In fact, Mr. Major was not entirely averse to European monetary cooperation. When the Exchange Rate Mechanism was established in 1979, Britain refused to join. Later London sought to impose price stability by through steps which linked the pound to the Deutschemark. This “shadowing” of the mark continued until Mr. Major became Chancellor of the Exchequer and in October 1990 Britain joined the exchange rate mechanism pledging to pursue policies that kept sterling within tight exchange rate bands vis-à-vis the mark.

After Maastricht, however, Britain’s position in the ERM became untenable. The markets knew full well that though Britain was a member of the mechanism, there was no possibly London would ever join the single currency. On September 16, 1992 this contradiction was brutally exposed by currency traders and a financial crisis ensued. Britain was forced to withdraw from the ERM and the possibility it would one day join the euro was forever buried.

There was more tension to come when in a May 1993 referendum the Danish people rejected the Maastricht treaty, forcing further amendments to the treaty which would enable Copenhagen to join.

Diplomacy on a Global Stage

If 1993 was a year of setbacks, it did bring some important successes as well. Oversight of trade policy is one of the European Commission’s most important responsibilities and as President of the Commission Mr. Delors played a key role in Europe’s negotiating efforts in the General Agreement on Tariffs and Trade negotiations of the late 1980s and early 1990s.

These trade negotiations highlighted one of the paradoxes that characterized Jacques Delors. He may have been a French Socialist and a former trade unionist, he may have been an ardent supporter of social justice and workers’ rights, but he was no protectionist. He believed in the power of trade – regulated by proper rules — and what trade could offer for people. Even at that time it was rare to find someone holding all these views simultaneously, today it would border on the impossible.

He was also uniquely positioned to work with the Germans and the British to thwart French efforts to sink the talks over Paris’ desire to protect French farmers. Behind the scenes he help co-ordinate the diverse European positions, allowing his negotiators space to reach agreement while at the same time keeping the heads of state and government from sabotaging the final deal.

The Uruguay Round, agreed in 1993 and implemented in 1995, extended global trade rules to cover services, agriculture, and intellectual property. The Uruguay Round accord also led to the creation in 1995 of the World Trade Organization — an organization that would be led by two men, Peter Sutherland and Pascal Lamy, who had served under Mr. Delors in Brussels.

Conclusions

Before Mr. Delors, the EU Commission president was considered a bureaucrat with responsibility for managing the thousands of Commission staff. Most of his successors – the current president Ursula von der Leyen being a notable exception — have also been viewed as managers who chair meetings, represent the EU in at the G7 or G20 and steer the college of 27 commissioners in devising EU wide policies.

But Jacques Delors was different. He was a visionary and as such he saw things that others just did not see. The backlash against globalisation had only just started during his tenure and yet he saw the public unease generated by a fast changing, increasingly integrated world. He understood that policymakers would disregard the need for social protections at their peril. He eventually came to see the threat of environmental degradation and regarded environmental protection measures as a vitally important component of a Single Europe.

Bringing diverse groups of people together required, he believed, something more than a common trade or competition policy. He created cultural and student exchanges including the Erasmus scholarship program launched in 1987 which facilitated cross border study among European students. To date, more than 13 million students have participated in Erasmus programs. He grasped as well that fiscal transfers were needed within the Union so that disadvantaged countries and regions could bolster their physical infrastructure and their citizens could develop their skills. His program of structural funds is still very much in place today.

While the Maastricht Treaty was a monumental achievement it was also imperfect, something Mr. Delors himself acknowledged. He was only too aware of the fiscal-monetary policy imbalance baked into the Maastricht treaty. But such was his commitment to European Unity that together with Mr. Kohl and Mr. Mitterrand he pushed the treaty through. The treaty’s imperfections would have consequences. The Euro crisis of 2009 exposed the cracks in an economic system of unaligned fiscal and tax policies and the Union-wide risks that can stem from government corruption.

But in forging a strong Europe with strengthened institutions, Mr. Delors also helped prepare the union to better meet ever more complex challenges. Resolute leadership from European institutions — the ECB and its president Mario Draghi in the case of the euro crisis, and the current EU Commission and its president Ms. von der Leyen in navigating EU responses to the COVID crisis and Vladimir Putin’s invasion of Ukraine – was essential in preventing catastrophe.

Yet, Mr. Delors powerful push towards European unity vividly exposed the dangers of prodding sovereign nation states of different traditions, perspectives, and orientations toward a political accommodation some might find uncomfortable or even unacceptable. This tension was at the root of Brexit. It also explains the anti-Europe hostility that arose in Poland and continues today in Hungary.

Still, the grumbling about Eurocrats and the amorphous concept of Brussels has failed to morph into another member state following Britain and leaving the union. The ongoing fiasco that is Brexit – a December poll in Britain showed that 55% of Britons thought leaving the EU was a mistake has deterred such a move.

Mr. Delors’ accomplishments are remarkable and are unlikely to be replicated any time soon in Europe or elsewhere. It is true that the conditions at that time were far more favorable to the bold moves he championed. In the 1980s and 90s, the memory of World War II’s devastation was still fresh and for many people peace in Europe, specifically peace between France and Germany, was the paramount objective of the European project. The goal of working with neighbors for the common good was still considered a worthwhile undertaking. Today, memories have faded and the long list of policy successes achieved by the EU – and other international organizations – are taken for granted.

And yet, young people growing up in Europe today do understand they have the freedom to study, to work, to travel and to invest in any of the 27 Member states – something that would have been unthinkable 50 years ago. Likewise, many young people in Britain fully understand what they lost with Brexit.

Despite its imperfections and despite the political and economic whirlwind that surrounds it, the European Union remains one of the most prosperous, stable, and safest places in the world. This is Mr. Delors enduring legacy.

As von der Leyen herself said last month: “We are all the heirs of Jacques Delors’s work of life: a vibrant and prosperous European Union.”