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ADVANCE PRAISE FOR DESIGN FOR A NEW EUROPE

“This book is a remarkable account of the most recent developments in

the European Union. Professor Gillingham rethinks the process of European
integration and offers an original prescription on how to reconfigure it. His
Design for a New Europe calls for a mandate from the citizens, the return of
power to the states, further enlargement, substantial reform of the EU’s insti-
tutions and policies, and abandonment of the EU’s attempt to harmonize
laws. This work should be considered in any serious debate about the further
course of European integration.”
– Václav Klaus, President, The Czech Republic

“At a time when clear thinking about Europe’s political and economic future
is urgently needed, John Gillingham has provided a convincing diagnosis of
the EU’s present malaise and a challenging set of prescriptions which deserve
to be taken seriously by Europhiles as much as by Eurosceptics. While prais-
ing the EU’s achievements, not least in promoting and sustaining democ-
racy in previously undemocratic countries, Gillingham condemns the drift
towards bureaucratic centralism, which has produced an ever-widening gap
between institutions and the people. Moves to slim down the Brussels bureau-
cracy and to transfer some responsibilities to the member states, he rightly
argues, do not imply dismantling the EU, but rather rebuilding it on sounder
foundations.”
– Sir Geoffrey Owen, Senior Fellow, Institute of Management, London
School of Economics, and former editor of The Financial Times

“By combining the objectivity of the outsider with his insider’s knowledge,
Gillingham succeeds in painting a persuasive and compelling portrait of
the European Union after the rejection of the Constitutional Treaty. This
insightful study brings the major developments in Europe to life and puts
them into a global perspective. Design for a New Europe is a lucid, well-written
account of what is wrong with the EU and how it can be fixed. It is a must-
read for Europhiles and Eurosceptics alike.”
– Tom Zwart, University of Utrecht School of Law

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“John Gillingham has established himself as one of those very rare commen-
tators who can read European historian in three dimensions. He knows it
very well but is never overwhelmed by it: he can appreciate the creativity
of ‘ Old Europe.’ Now, he looks at the strange phenomenon, why Europe has
stagnated and why it has so much less to offer to the ambitious young than
the USA. The reason? Partly institutional, in the sense that the institutions
designed to make Europe work in the 1950s now have become a or even the
problem – a necklace of skulls. This is a very readable and extremely know-
ledgeable book.”
– Norman Stone, Bilkent University, Ankara, Turkey

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DESIGN FOR A NEW EUROPE

This is a book not only about how the European integration process broke
down, but also about how it can be repaired. That it should be fixed is obvious.
Europe’s long-term movement toward closer economic and political union
deserves credit for two immense historical achievements. One is to have cre-
ated a single-market economy across the continent, the overall benefits of
which continue to mount. Even more importantly, the European Union has
in the past strengthened democracies in places where they already exist and
helped spread them to where they do not.
The four chapters of this penetrating, fiercely argued, and often witty
book subject today’s dysfunctional European Union to critical scrutiny in
an attempt to show how it is stunting economic growth, sapping the vital-
ity of national governments, and undermining competitiveness; explain how
the attempt to revive the European Union by turning it into a champion
of research and development will backfire; and demonstrate, finally, how
Europe’s great experiment in political and economic union can succeed if the
wave of liberal reform now under way in the historically downtrodden east is
allowed to sweep the prosperous and complacent west. The European Union
will then have proven worthy of its immense responsibilities and renewed
Europe’s spirit in the process.

John Gillingham is professor of history at the University of Missouri,

St. Louis. His previous books include European Integration, 1950–2003
(Cambridge, 2003), and Coal, Steel, and the Rebirth of Europe, 1945–1955
(Cambridge, 1991), which was awarded the George Louis Beer Prize of the
American Historical Association for the best book on European international
history published that year.

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Design for a New Europe

John Gillingham
University of Missouri, St. Louis
Harvard Ukrainian Research Institute

v
cambridge university press
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press

The Edinburgh Building, Cambridge cb2 2ru, UK
Published in the United States of America by Cambridge University Press, New York
www.cambridge.org
Information on this title: www.cambridge.org/9780521866941

© John Gillingham 2006

This publication is in copyright. Subject to statutory exception and to the provision of

relevant collective licensing agreements, no reproduction of any part may take place
without the written permission of Cambridge University Press.

First published in print format 2006

isbn-13 978-0-511-19113-8 eBook (EBL)

isbn-10 0-511-19113-8 eBook (EBL)

isbn-13 978-0-521-86694-1 hardback

isbn-10 0-521-86694-4 hardback

isbn-13 978-0-521-68664-8 paperback

isbn-10 0-521-68664-4 paperback

Cambridge University Press has no responsibility for the persistence or accuracy of urls
for external or third-party internet websites referred to in this publication, and does not
guarantee that any content on such websites is, or will remain, accurate or appropriate.
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Abtop ppicb
qy c kniky ykpainc komy napodobi.

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Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . page 1

1 Governance . . . . . . . . . . . . . . . . . . . . . . . . 4
A Sorry State of Affairs 8
A Sad Situation 18
Empire by Stealth 25
Troubling Waters 29
A Dysfunctional Family 39
A Consequential Constitution 47

2 Economics . . . . . . . . . . . . . . . . . . . . . . . . . 55
A Multipolar World Order 58
Saving the Euro 63
Dismantling the Eurocracy 70
Hard Case: Germany 79
Hard Case: France 91
Hard Case: Italy 97
Steps in the Right Direction 106

3 Innovation . . . . . . . . . . . . . . . . . . . . . . . . 111
Food Fights and Their Consequences 115
Policy Cleanup 127
Dr. Frankenfood Goes Global 138
Dr. Frankenfood’s Lab 149

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x r Contents

4 Democracy . . . . . . . . . . . . . . . . . . . . . . . 156
The British Nonpresidency 159
The Budget Debacle 170
Decommissioned 175
At the Gates 184
The Meaning of the Maidan 194
The Eye of the Needle 199
Threading the Needle 208
Not a Bang and Nary a Whimper 216

Postscript: Neither Superstate nor

New Market Economy . . . . . . . . . . . . . . . . . . . 220

Acknowledgments 235
Notes 237
Index 277
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Introduction: The End of the Beginning

It almost had to happen. The crisis, which broke out across Europe in
early summer 2005 after the French and Dutch people repudiated the
proposed federal constitution, had been mounting for years: the Euro-
pean Union (EU) had somehow lost its legitimacy, and no one could
do much about it. The EU was never democratic; it had always been a
project run by an elite, which in turn justified its existence by results.
For most Europeans this was enough. The public had been led to believe
that the EU was a new kind of political and economic organization, for
which no substitute existed or could be found; it accepted the claim that
history had conferred special responsibilities upon this unique institu-
tion for directing an irreversible process of development, which would
strengthen Europe both morally and materially. This discredited teleol-
ogy was the foundation of the EU’s existence. To save the EU, one must
rethink the whole integration process.
The dead certainties of yesterday ring hollow because the EU has
long since broken down. The fallout has been widespread. European
diplomacy has degenerated into a free for all, revived old grudges, rekin-
dled ancient enmities, and fouled the political atmosphere. Civility has
subsequently disappeared. Cooperation, even on simple matters, has
become much more difficult. The US-EU friendship has been another
casualty. The rise of demagogic public rhetoric and the popularity of a
destructive pseudo intellectual literature, on both sides of the Atlantic,
strengthen the absurd impression that Americans and Europeans belong
to separate and mutually antagonistic civilizations. The chattering has
now become really nasty. The hostile ranting is both malignant and
contagious.

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2 r Design for a New Europe

The EU’s problems run deeper than most experts realize. They are not
merely a matter of inefficiency and waste, or even of bad policy, but of
design. The malfunctioning Brussels institutions are now out of control.
Much like a slow-moving juggernaut, they continue to reduce economic
growth, usurp authority from the member states (thereby weakening
them), misdirect resources on a grand scale, set conflicting priorities,
and generate unrealistic policies. The EU even strangles in its own red
tape, undermining the very purposes it was meant to serve. As a result,
Europe cannot cope with today’s challenges. Failure to repair or replace
the EU’s institutional machinery will bring the integration process to a
halt – or worse if no Plan B exists.
This book explains how the European integration process broke down
and also how to repair it. That it should be fixed is obvious. The EU
is sometimes likened to a coral reef, which grows in ways understood
only by trained specialists and cannot be pared, cut back, or other-
wise reduced in size without being destroyed. Such an idea is mis-
taken. The EU is more like a Rube Goldberg machine: an unnecessarily
complicated contraption for performing a simple task. Goldberg’s con-
trivances, however, would always work. The EU no longer does. The EU
can nevertheless be dismantled systematically and reassembled intelli-
gently to perform satisfactorily. What’s required is less a heroic feat of
engineering than a new principle of construction – democracy instead
of elitism.
Europe’s long-term movement toward closer economic and political
union deserves credit for two immense historical achievements. One is
to have created a market economy across the continent, the past bene-
fits of which have been considerable. It is an open question whether, in
a global economic world, this will continue to be the case. Even more
importantly, the EU has, over time, strengthened democracies where
they are in place and helped establish them where they are not. This is
a worthy contribution to peace, prosperity, and human dignity, whose
value can increase in the future.
We are living in an era whose greatest blessing is only now – and
episodically – becoming clear: it is the rediscovery of freedom. The ide-
als for which the EU stands are still alive and well within the often
slighted and ill-represented electorates of modern Europe – among peo-
ple like you and me – as well as in long misgoverned and corrupt nations
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Introduction: The End of the Beginning r 3

surrounding it. Europe will not only do mankind a service by nurturing

these neighbors’ political and economic development, it will also enrich
and renew its own spirit.
There is no turning back from the verdict of the constitutional refer-
enda. The European public is for the first time now a player in a drama in
which it was never assigned a role. Weak, inflexible, and overstretched,
the EU has reached the limits of its strength and must be overhauled
to survive. This is not a matter of choice but of method. Forget past
shibboleths. The grand project of European integration is dysfunctional
and in public discredit. Its rescue will require returning power to the
states, restoring growth, and strengthening democracy both within the
EU and on Europe’s borders. Leaving things as they are today will likely
result in slow decline. This, however, would be the lesser evil. Inaction
could also trigger panic. A design for a new Europe is needed now.
This book will explain what has gone wrong with the EU, why
present remedies may make things worse, and how the EU can redis-
cover its civilizing mission. The author’s purpose is to salvage the inte-
gration process in the only way possible: by jettisoning the Brussels insti-
tutions and rebuilding something different on a new platform, a demo-
cratic consensus anchored in a new vision of a future Europe. Such a
proposal would have seemed radical a year ago. Today it is simply nec-
essary.
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one

Governance

The legitimacy crisis currently facing the European Union (EU) may
be partly the consequence of human error or even the result of folly,
but at the heart of the problem is structural breakdown. For decades,
Europeans overlooked the high-handed and spendthrift ways of the
Brussels technocracy out of trust, believing that, in spite of it all, over
the long run the EU was an indispensable and irreplaceable engine of
progress. The public repudiation of the proposed European constitu-
tion has shaken this complacent belief to the roots. No matter how
emphatic the rejection, the episode is only a symptom of a deeper mal-
ady. The EU should no longer be imagined as a nascent political struc-
ture suffering teething problems: it is unsound and unraveling. The
design is flawed, and the machinery needs repair. Coordination is lack-
ing. There are no clear demarcations between its main institutions –
the European Commission, the European Council, and the European
Parliament (EP) – or between these institutions and powerful affiliated
bodies such as the European Court of Justice (ECJ) and the European
Central Bank. The relationship is equally blurry between the public
and private spheres, both of which influence policy making. The dense
thicket of snarled transnational structures that inextricably binds the
twenty-five member states to Brussels is the cause of endless jurisdic-
tional conflict between the central authorities and the states and among
the states themselves. One never knows who or what can speak or act
in the name of Europe. Confusion is endemic, and the threat of chaos
is seldom absent.
The EU chronically overshoots and has been vastly oversold. Its
vaulting ambitions far exceed its paltry resources. This will not likely

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Governance r 5

change soon: contributing member states refuse to pay more into the
common kitty and beneficiaries decline to settle for less, even as the
EU’s appetites continue to grow. It is as a result becoming very hard
for the EU to make credible commitments. The EU also lacks feedback
loops and subsequently cannot correct its mistakes. The EU has trouble
keeping track of its money and makes little effort to stem corruption.
The sorry state of affairs is hard to set right: the operating methods of
Brussels are arcane, opaque, and – being neither checked nor balanced –
simply out of control.
European institutions were created fifty years ago in a world where
democracy and capitalism had broken down and had to be reconstructed
from the top down. Their original design made little provision for the
development of open markets and almost none for self-government.
The founders’ era has long since disappeared – thanks in part, albeit
ironically, to the integration process itself. Many of the politicians,
bureaucrats, and policy experts who have built Europe in the past, and
who would do so in the future, do not yet realize, however, that their out-
moded methods are often counterproductive: they debilitate represen-
tative government, impair the market economy, and weigh each of them
down with the heavy hand of excess regulation. Such methods deserve
much of the blame for the present unpopularity of many of Europe’s
governments, the anemic economic growth of the past twenty years,
and the pervasive malaise from which the continent currently suffers.
Europe’s malady may require a convalescence spanning decades.
The cure will have to be found in the public forum. Democracy, devo-
lution, and open markets are needed to heal the Brussels institutions: a
future EU must rest on popular consent, the sovereignty of the nation-
state, the subsidiarity principle, and competitive economies. Only then
can Europe have a real government instead of the peculiar form of gov-
ernance from which it now suffers. “Governance” is the standard EU
buzzword for the perplexing maze of order and edict, directive and regu-
lation, and administrative law and judicial interpretation that comprises
the purportedly sacred and irreversible corpus of law and administrative
fiat – the acquis communautaire – by which Brussels tries to rule Europe.
It must be disentangled to be understood.
This will not be easy. Official Brussels, as The Economist’s astute
columnist, Charlemagne, once noted, is a club – something formed
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6 r Design for a New Europe

to exclude outsiders – predisposed to adopt insider jargon. Among

administrative and governmental bodies, bureaucracies, the EU indeed
holds a commanding lead in the cryptic art of inventing unnecessary
acronyms, using numbers in place of words, and adopting locations to
refer to events – all of which give the impression of having been scram-
bled through an Enigma machine to prevent de-coding. This misuse
of language poses, as intended, a barrier to transparency.1 Many schol-
ars have been infected with the EU virus. The time has come to talk
turkey.
The EU is truly in a sorry state of affairs. The European Commission,
which is supposed to lead it, cannot do so. Over the past few years, power
within the EU has not been exercised constitutionally – or within any
framework of written agreement or implicit understanding. It has rather
been seized extra-legally and, until recently, wielded irresponsibly from
behind the scenes by France, a nation intent upon projecting power on
the world stage. In the meantime, the Brussels governance machinery
grinds on, operating according to its own wasteful and perverse logic,
which mainly privileges insiders. Both powerful and fragile, the EU’s
only remaining source of authority is what survives of the myth that
sustains it. The loss of its shredded legitimacy may prove fatal unless
a new rationale for the EU can be found or an old one rediscovered.2
How did Europe get into such a mess?
Current problems date from the attempt of Jacques Delors, president
of the Commission from 1985 to 1995, to transform the EU into a
superstate.3 His intention was to introduce a European-level socialism
like the one he had tried in vain to build previously as French Minister
of Economics in the cabinet of François Mitterrand. Delors was the most
influential figure in the history of integration since Jean Monnet, but
his ambitions collided with the very different ones of the British Prime
Minister of the day, Margaret Thatcher.
She envisaged Europe as a large free-trade area. A compromise, the
Single European Act of 1986 (SEA), emerged from their numerous
clashes. The SEA removed impediments to internal trade but also
vested new powers in the Commission. It left unresolved the question
of whether the future EU would be organized horizontally though mar-
ketplace competition or vertically by means of strong, centralized insti-
tutions.
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Governance r 7

Delors exercised his new authority to maximum advantage. The

result is the present structure of the EU. He brokered a deal, first of
all, whereby the largest single program of the EU, the Common Agri-
cultural Policy (CAP), was reduced from three quarters to about half
of the total budget. The remainder went into so-called regional funds,
which fostered the loyalty of the new Mediterranean member states. He
also introduced the practice of budgeting in seven-year cycles, which
strengthened the executive power at the expense of the embryonic EP.
Delors was also midwife to the proposed European Monetary Union
(EMU), something designed to lead the way to a federal superstate. He
feared that without it, US-driven globalization would undermine the
“European social model.”
The EMU was the product of the Maastricht conference of 1992, the
scene of Delors’ greatest triumphs. The ensuing treaty included provi-
sions for two other vast new “competences” (jurisdictional claims), one
of them, “pillar two,” for home affairs (the police force), and the other,
“pillar three,” for security and foreign policy (diplomacy and defense).
These pillars were, however, hollow and not expected to become solid
until the future. Only the first pillar, the Single European Act, had any
substance whatsoever. How the three pillars related to one another, or
to the EMU, was unspecified in the text of the treaty. The unresolved
problems stemming from Maastricht would whiplash EU development
for many years and give rise to mounting conflict between those who,
like Delors, were intent upon “deepening” EU institutions and others,
like Margaret Thatcher, who sought to “broaden” the union by bring-
ing in new members. Before real progress at the EU is possible, Delors’
legacy must be settled.
The seriousness of the EU’s problems became apparent for the first
time at the Nice Summit of December 2000. It had been convened in
order to adapt EU institutions to the impending accession of ten new
members, eight of them from eastern Europe. Lorded over by the mag-
isterial Jacques Chirac, who then occupied the European Council’s six-
month rotating presidency, it degenerated into a donnybrook. For the
first time a still unwary public was exposed to the fierce animosity exist-
ing at the summits of power. Nice also produced an egregious patchwork
treaty, which overloaded the already creaking governance machinery,
left everyone unhappy, and bore the stamp of impermanence. Within
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8 r Design for a New Europe

a month, a movement was afoot to replace the tangled skein of prior

treaties and agreements with a new constitution designed to enable the
EU to operate more like a state.4 The various pros and cons of this
much-discussed but little understood document count for less today
than the ratification procedure. It brought the public into the policy-
making forum for the first time. Eurocrats and politicians can no longer
treat the EU like private property.

A Sorry State of Affairs

The Nice debacle also marked the definitive eclipse of the European
Commission, the agenda-setter for the European project. The Commis-
sion could no longer lead. Neither Delors nor any of his three succes-
sors managed to either staunch the burgeoning problems created by his
projects or clean up the Commission, which remains riddled with fraud
and shot through with bad practice. Jacques Santer, Delors’ successor,
had to step down as the result of a scandal. Called in as a white knight
in 1999, Romano Prodi proved himself to be pathologically windy at
the podium, ineffective in Brussels turf wars, and unfocussed. Prodi’s
authority soon evaporated. He was an impotent bystander at the Nice
brouhaha.5 His successor, Jose Manuel Barroso, has yet to get his own
agenda off the ground.
The new millennium has not been kind to the Commission. It is
no longer a cohesive body. An inverse correlation exists between the
sizes and strengths of most of its twenty-plus directorates. There is lit-
tle coordination between them, and they often work at cross-purposes,
when working at all. Some do almost nothing. Only a few directorates
have real policy-making authority, and even the ambitious programs of
the Commission’s most successful units, competition and internal mar-
ket, are no longer headed anywhere. Financial controls at the Commis-
sion are inadequate, and corruption is rampant. Private parties often
make public decisions. Important projects have been launched with-
out either mandate or supervision. The Commission must also compete
against other institutions with vague policy mandates. One of them, the
EP, is an expensive and meddlesome talk shop. Another, the European
Council, representing the member states, is in disarray. All the com-
ponents of the Brussels complex vie with the member states. Although
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Governance r 9

the Commission counts for less and less, its pretensions remain undi-
minished.
Romano Prodi knew he had a problem after the Nice shoot-out. In
the latter months of his ineffectual and openly ridiculed Commission
presidency, Prodi belatedly recognized the gravity of the growing split
between what the public demanded and what the EU was delivering,
but his efforts to close the breach were pitifully inadequate. Published
in July 2001, “European Governance: A White Paper” set out a master
plan for the Commission’s reform agenda. It recognized the urgency of
“connecting Europe with its citizens” by means of “democratic institu-
tions and representatives of the people.” To narrow the gap, the paper
– a characteristic Eurocratic amalgam of the trite, the apocryphal, and
the bewildering – proposed taking recourse to more “network-led ini-
tiatives” such as the “Telecoms Package.” This epiphany of regulatory
success grew out of lengthy consultation with relevant stakeholders on
the basis of a Commission working paper rather than in open public
debate. To imagine using lessons learned from utility regulation to cre-
ate democracy boggles the mind. Reading the white paper’s preten-
tious conclusion, “From Governance to the Future of Europe,” is like
watching someone try to steer a drifting ice floe. Called for in the white
paper are “structuring the EU’s relationship with civil society,” enlist-
ing local and regional governments in the process, and increasing inputs
of “expert advice.” Other recommendations include dovetailing official
and unofficial policy making, strengthening EU regulatory agencies, and
forcing “citizens to hold their leaders [accountable] for the decisions
that the Union takes.”6 Such an imposition of authority from the top
down not only reflects a novel form of representative democracy; any-
one outside of the Eurocracy would recognize it as an exercise in futility.
After Nice, the Commission’s projects and proposals are often dif-
ficult to take seriously. A green paper on entrepreneurship (or more
specifically the lack of it in Europe) pointed to a serious problem
but amounted to another iteration of the banal: “Entrepreneurship
is first and foremost a mindset. . . . Entrepreneurship is about people,
their choices and actions in starting, taking over or running a busi-
ness. . . . Risk-taking should be rewarded rather than punished.”7 Prodi
could have done little to change embedded risk-averse mentalities. Yet
where he might have acted, he did not.
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10 r Design for a New Europe

Prodi’s economic plan for 2003, the “growth initiative” called Quick-
Start, amounted to little more than a massive public works proposal.
Heavy-handed and unimaginative, it elicited a joint protest of the Big
Three, Schröder, Chirac, and Blair. They griped that “the Commission
is pursuing not one but many policies in the context of the Lisbon
strategy and that they are at best juxtaposed and at worst contradic-
tory. . . . Declarations are being made on various sectors: the hydrogen
economy, ship building, textiles and clothing, photovoltaic solar power,
arms, airspace, biotechnology and soon automobiles and steel. There
are, however, no overall guidelines.”8
There were, however, policy surrogates: a number of new zippy-
sounding bureaucratic organizations such as the Competitiveness
Council set up in February 2002, which housed separate sections for
the internal market, research, and industry. At its meeting in February
of the following year, the Council begat a new European Research Area
(ERA) (“a true internal market for science and knowledge”) before, in a
rousing conclusion, introducing as a remarkable administrative break-
through the “open method of coordination” based upon an organiza-
tional principle only recently discovered in Brussels. This deep insight
was that individual member states could better implement policy when
using customary methods rather than when responding to Brussels’ dik-
tats. If this new initiative was not enough of a snore, the internal mar-
ket commissioner presented to the Council Communication IP/03/214
as a follow-up to the previous year’s “Action Plan on Better Regula-
tion” as well as documentation on several other tedious outstanding
matters. The voluminous churning of paper produced scant results. In
a September 2004 press interview, Laurens Jan Brinkhorst, chairman of
the Competitiveness Council, denounced his forum as “Mickey Mouse”
and lacking “any team spirit and focus on an issue.”9
The Sapir Report of July 2003, which Prodi had commissioned,
should have provided the tonic needed to invigorate the Eurocracy.
It subjected the Brussels institutions to the most rigorous insider criti-
cism ever. Noting that the end of the long-term slowdown in economic
growth was not in sight – and specifically that the ambitious growth tar-
gets set at the Lisbon Agenda of 2000 for 2010 were completely unre-
alistic – the author, a prominent economist and EU consultant, and
his expert team concluded that far-reaching reform would be needed
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Governance r 11

to sustain the “European social model.” The Sapir group recommended

eliminating the CAP, reducing regional funding sharply as well as limit-
ing it to the poorest members of the community, and plowing the savings
from these two programs into research and development, which could
then develop into the centerpiece of a reformed EU. It also proposed
reforming tax and fiscal systems to stimulate innovation, increasing
funding of state-of-the-art research, and improving university educa-
tion. The report also advised that only projects that boost growth should
be supported and the practice of juste retour (proportionate shares)
halted; that regulatory agencies be given independence and shielded
from national pressures; and that EU funding be made less dependent
on member state contributions. The Sapir team also recommended, for
the first time in any official document, loosening the growth and stabil-
ity criteria governing the EMU.10 The report triggered heated protests
from several commissioners. Prodi refused to endorse it. No matter: this
was the fin de regime, and for months he had devoted much of his time
to becoming the standard bearer for the Italian Left’s campaign against
Silvio Berlusconi in the next election. Their contest would be like a
street-corner brawl between two wheezing middle-age drunks.11
The incoming Barroso Commission, which replaced Prodi in
October 2004, should have had a chance to do something construc-
tive. The auguries for reform were generally hopeful. The Dutch, who
then held the rotating presidency, had recognized the inescapable real-
ity that “Europe has lost ground to both the US and Asia, its societies
are under strain, and . . . ugly political forces are beginning to manifest
themselves. . . . At risk in the medium to long run is nothing less than
the sustainability of the society Europe has built, and to that extent the
viability of its civilization.”12 A report by a committee headed by for-
mer foreign minister Wim Kok contained these sobering words. It had
been set up to guide the incoming president, Jan-Peter Balkenende. Lest
its message not be clear enough, the Kok Report emphasized that “if
Europe cannot adapt . . . [its] working population will be unable to sus-
tain the growing army of pensioners, economic growth will stagnate,
[and] institutions will all face contraction and decline.” Officially aired
in November, the report drove home the fact – obvious to anyone with
a working knowledge of business or finance – that the European econ-
omy was in a deep hole and someone should start shoveling quickly.
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12 r Design for a New Europe

The Dutch presidency focused single-mindedly on this objective. Social

Europe would have to sit in the rumble seat. It has stayed there ever
since.13
The Kok Report nevertheless arrived too late for the new Com-
mission president, Jose Manuel Barroso. Demagogues in the European
Parliament had already tripped him up. The EP exercised a single impor-
tant decision-making power: it could vote down an incoming Commis-
sion by rejecting not the president but the entire slate of his candi-
dates. A former Maoist turned economic liberal, Jose Manuel Barroso
was Britain’s choice as Prodi’s successor and distinctly not the candidate
of either France or Germany, which preferred the buck-toothed Flemish
Francophile Guy Verhofstadt, the Belgian prime minister, or the com-
pliant backroom politician from dinky Luxembourg and patron saint of
Europe’s tax cheaters, His Excellency Jean-Claude Juncker.14
Barroso never got the honeymoon he wanted, even after bending over
backwards to appease hostile Franco-Germans and embittered Social-
ists. Not even an avowal of “hatred for US arrogance and unilateralism”
did him any good; his acceptance as vice president for economics, a new
office, of Günter Verheugen, a German advocate of industrial policy,
also failed to change the picture. Nearly 300 Members of the European
Parliament (MEPs) voted against his investiture.15 The worst was yet
to come. Barroso’s proposed cabinet – allocated as always by national
quota – was stacked heavily with promarket nominees, including those
for the crucial economic directorates, internal market and competition.
It also included Rocco Buttiglione, Italian Prime Minister Silvio
Berlusconi’s designated candidate for the justice directorate.
Buttiglione made an easy target for antineoliberals keen on knock-
ing Barroso down a peg – not to mention for underworked and overpaid
MEPs thirsting for a power grab. A traditional Catholic, Buttiglione
admitted in testimony to viewing homosexuality as a sin and, more
grudgingly, to preferring that women stay home rather than go to
work. Such beliefs are apparently politically incorrect in secular post-
modern Europe, where infidelity is considered an adult privilege and
“Catherine M.” gets honored as a Lindbergh of sex. Faced in November
with the prospect of having his entire slate rejected, Barroso sent Rocco
packing. This was the fate of someone from a Christian civilization who
adhered to values held by the Pope! The cheap-shot parliamentarians
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Governance r 13

turned Barroso into one of recorded history’s earliest lame ducks, while
making themselves look like fools.16
All this nonsense made little difference. The Commission Barroso
inherited was intellectually stifled, pervaded with institutionalized cor-
ruption, and nearly immobilized. The problem was long term and struc-
tural; it began with the existence of 30,000 or so unionized civil ser-
vants who could not be moved, let alone fired, and who could count
on support from their home countries when things got a bit hot.
Unlike national civil servants, they had no real political masters but
answered only to political appointees of different nationalities, many of
them mediocrities and most of them isolated from one another. Some
directors-general, according to Alisdair Murray, “[ran] their depart-
ments as virtual fiefdoms.”17
These officials currently earn up to $300,000 per year, pay taxes of
only 16 percent on their base salary and net three times as much as –
and in poorer countries many times more than – their national coun-
terparts. The perks are even better. They include cash bonuses (16 per-
cent) for living abroad, monthly household and child allowances ($200
per month plus 2 percent of basic salary), free private school tuition
for kids (up to $8,000 until age twenty-five), cash rewards for becom-
ing a parent (at an annual per child rate of $5,000), and moving and
settling-in costs. Medical coverage is generous, and pensions pay up
to 70 percent of the final salary. It’s a secure package that a senior
executive of a multinational corporation might envy and that almost
anyone would be reluctant to lose. This perhaps helps explain what is
demurely referred to at the Commission as the “politeness conspiracy”:
friends don’t snitch on friends. The wink-wink attitude runs from the
top down. There exists, in the words of the Commission’s former chief
auditor, a “dominant monoculture that allows those responsible to bluff
their way through the numbers.”18 This is hardly an ethic of omertà,
but it does produce an environment that does not suffer whistle-blowers
gladly.
Jacques Delors is responsible for many of the Commission’s prob-
lems, but they have since gotten worse despite half-hearted attempts
to correct them. Delors brought new money into the Commission but
established neither the necessary control nor the compliance machinery
needed for accountability. Payments for both the CAP and the regional
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14 r Design for a New Europe

funds pass through national disbursement agencies, which leave no

records behind. How such transfers – 80 percent of the total EU budget –
are made is hard to determine; why so much of them remain unspent
and pile up in bank accounts is difficult to understand; the beneficiaries
of the interest they bear are hard to find; and the legality of the expen-
ditures in question is often murky. Foreign aid is a special problem. No
one has yet been able to explain how the monthly payment earmarked
for the Palestine Liberation Organization (PLO) somehow ended up in
the hands of the Al-Aqsa Martyrs Brigade, which is on the EU’s list of
terrorist organizations.19
In 2003 only 10 percent of payments “faithfully reflect[ed] budgets
and expenditures”; the remaining 90 percent of the $130 billion could
not be accounted for. In 2002 more than $10 billion remained unspent.
Estimates of graft run from 7 percent to 37 percent of the budget. The
accounting firm of Deloitte, Touche managed to uncover $7 billion
worth of fraud in the 1997 budget in a study done for a committee of the
EP. The Commission’s feeble anticorruption unit, “Olaf,” which lacks
enforcement machinery, uncovered 10,000 cases of larceny in 2002 –
theft from the EU amounting to $1.5 billion. Little of this lost money is
collectable. Only 17 percent of the $1.8 billion stolen by Italians from
the CAP between 1971 and 2002 was ever recovered. By its own reckon-
ing, Olaf collected less than 2 percent of the 5.34 billion euros it could
account for as missing between 1999 and 2003. The actual amount of
the unrecoverable money was suspected to be far greater.20
No one knows the full extent of graft and corruption in the EU
because the community’s accountants work with hands tied. For eleven
consecutive years, the EU’s Court of Auditors has refused to sign off
on the Commission’s books. Its experts cannot rely on modern accoun-
tancy systems for their audits but must rather cut through a “convoluted
spaghetti” of words.21 The Commission has, moreover, failed to provide
proper balance sheets for over a decade. Until the necessary technical
reform is completed by about 2009, third world standards will remain
the rule in Brussels.
Olaf, the antifraud investigative body, is also a part of the account-
ability problem. Even though its staff had been doubled since 1999,
the number of investigations taking over a year to settle has risen
from 51 percent to 62 percent. Lacking official legal powers, it turns
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Governance r 15

increasingly to snooping in order to dig up dirt and, according to critics,

protect its turf. No less than three reports presented in July 2005 to an
investigating committee of the EP complained that the “lack of direct
judicial supervision” had given rise to serious abuses. One anonymous
senior official griped that “we are always being tapped . . . especially dur-
ing periods of conflict. . . . There is an eye [sic] to everything you write
and say.” Noting that “the legal situation was unclear as national laws
did not apply on the territory of the European Commission,” an Olaf
spokesman admitted that “[the investigative body] had the power to
check the content of e-mails, phone call records, and employees’ hard
drives without their permission.” Condemning such “Vichyite” meth-
ods, the Tory MEP Chris Heaton-Harris noted in disgust that eaves-
dropping by the Commission security service could only have the effect
of deterring potential whistle-blowers.22
Prodi could hardly take a pass on cleaning up the graft that had
brought down the Santer Commission and swept him into office. He
indeed declared a policy of “zero tolerance,” created a special new
agency for administration, and appointed the former Labour Party
wheel-horse Niel Kinnock “Sleaze Commissar” to direct it. Unfortu-
nately, Kinnock “did absolutely nothing to stem corruption. In fact
fraud [soon] doubled.” He did, however, “do his utmost to gag the offi-
cials who tried to blow the whistle on the crooks.”23 Not a single official
resigned under suspicion of fraud during Kinnock’s reign as anticorrup-
tion czar.
When chief accountant Marta Andreasen, an Argentine-born
Spaniard, warned Kinnock and the rest of the Commission in May
2002 that the EU budget was “an open till waiting to be robbed,” the
antichiseling chieftain suspended and eventually sacked her for disloy-
alty – something virtually unheard of at the Brussels Eurocracy. Even
after an internal audit had justified her allegations, Kinnock refused to
reinstate her. Prodi stood by his man. Andreasen is still trying to get
her job back. In July 2003, accountant Dougal Watt posted allegations
of high-level corruption on his website; he was soon shocked to discover
a pink slip on his desk even after a secret ballot of 205, or 40 percent,
of his colleagues from the Court of Auditors supported his claims. His
case remains on appeal.24 Another Scot, Robert McCoy, was not fired
but had to endure months of daily catcalls of “Gestapo,” “Gestapiste,”
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16 r Design for a New Europe

“Gestapista,” and so on in several other languages from his erstwhile col-

leagues. Financial controller for a cost-ineffective and nearly impotent
talk shop called the Committee of Regions (CoR), McCoy launched
a three-year one-man campaign against grafters. His initial disillusion-
ment resulted from the discovery that most of the 222 members of CoR,
which held regional conferences six times a year at different places in
the community, charged for first-class air travel without providing any
documentation and sometimes even without attending meetings. The
secretary-general of the ineffective body, one Falcone, actually rebuked
him privately, as well as in an e-mail circular, for requesting spot checks
for signatures on sign-in rosters. Separately, McCoy discovered that
printing contracts, including one for about $500,000, had been placed
without tenders. His attempt to void them was overruled. McCoy’s com-
plaints finally got action from the EP, which, within days, commissioned
two separate internal audits. They substantiated his suspicions but con-
cluded that no “substantial infringement” had occurred. The chiseling
was apparently okay. The disillusioned McCoy soldiered on despite the
daily harassment, resigned that “until there is a culture of doing and
getting things right instead of a culture of ‘ What can I get away with?’
this sort of thing will continue to happen.”25
Dorte Schmidt-Brown, a Dane, was another unlucky whistle-blower.
She got smeared by a contractor working for Eurostat, the EU’s statistics
wing, after reporting irregularities in his books, later suffered a nervous
breakdown, and now receives lifetime disability. Kinnock refused to sup-
port her accusations of libel until, after years of rumors and finally the
appearance of a muckraking article in a German glossy, Der Stern, by
the journalist Hans-Martin Tillack, the scandal broke out in the open.
Not even an extraordinary breach of press freedom could prevent this
airing of dirty linen. The violation in question was a European Court
of Justice (ECJ) ruling that the Belgian police were justified in raiding
Tillack’s home and seizing his notes on the grounds that they were based
on documents belonging to the Commission!26
Eurostat was too close to home to be overlooked. Founded with a staff
of just seven, by 2003 it employed 700 officials and had an annual budget
of $160 million. Eurostat was the source of the data used, for instance,
to determine regional aid allocation and to enforce the EMU’s stabil-
ity and growth criteria – serious stuff. In 1996 Eurostat’s director, Yves
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Governance r 17

Franchet, advised that the French government could legitimately trans-

fer about $4 billion in pension transfers from France Telecom to itself
in order to meet the crucial requirement that limited budget deficits to
3 percent of GDP; the amount made the difference. Eurostat had in fact
been at the center of power for years, and Franchet, as he subsequently
proved to an investigating committee, kept no less than three successive
Commissions apprised of its activities and problems.27
Olaf investigated Eurostat no less than six times, uncovering in the
process the existence of shell companies, slush funds, and rake-offs.
The full extent of its malfeasance will probably never be known. One
“cut out” at the center of the controversy, Planistat, received con-
tracts worth over $60 million between the early 1990s and mid-2003,
according to Pedro Solbes who as EU monetary commissioner during
part of this period was deeply implicated in the scandal. Another shell
company, CESD-Communautaire, received $32 million in contracts
between 1995 and 2003, about $5 million of which disappeared. A third
dummy, Eurogramme – as the unfortunate Dorte Schmidt-Brown dis-
covered – had received $3.5 million in 1995 and 1996 in EU contracts,
even though, contrary to its falsified books, it had had no turnover
the previous two years. Eurostat often charged the Commission several
times over for the same work and also billed it for data freely available
on the Internet. Still another phony outfit, Eurocost – which like the
rest of the implicated firms was directed by either Franchet or one of
his associates – closed down on being investigated and refused to hand
over the $900,000 salted away in a special bank account.28 Where did
all the money go?
The discovery by French investigators of a million-dollar slush fund
in Luxembourg touched off the scandal in the first place. A subsequent
report of an EP investigating committee uncovered evidence of lav-
ish expenditure on travel, dinners, horseback riding, and (curiously!)
volleyball, totaling another $6 million spent between 1996 and 2001.
According to one of the then few Euro-critical MEPs, Jens-Peter Bonde,
the problem was systemic: “This [was] not one crook, two crooks, or five,
but a parallel system of financing” that continued until July 2003 when
the whistle-blowing became earsplitting.29
The sleaze problem was indeed endemic. Even a Commission inves-
tigator admitted as much. “It appears,” wrote the author in the usual
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18 r Design for a New Europe

contorted bureaucratese of Brussels, “that it was a relatively extensive

practice at Eurostat to set up irregular reserves [known as ‘ financial
envelopes’] through a number of contracts held with various specific
contractors. According to the practice the value of contracts would
have been artificially increased to allow the funding of other activi-
ties financed by the monies paid to the contractor.” The report inno-
cently added, “Some of these contracts seem to have been fictitious.”
Such practices began under Delors when the Commission, purport-
edly “groaning under a rapidly increasing workload that was often dif-
ficult to reconcile with budgetary constraints and the fine print of pub-
lic accounting regulations,” resorted to “creative financing.”30 While
untruthfully denying that such double bookkeeping continued after
1999, once he had become antichiseling commissioner, Kinnock actu-
ally justified such fraudulence as “necessary to get the job done.” Is there
a more damning indictment of Commission methods?
The Eurostat scandal had no sequel. After enduring two months of
intense media pressure, Prodi, who had been familiar with its ques-
tionable practices for years, stopped stonewalling, admitted that past
abuses had existed, denied that either he or any of the three commis-
sioners most deeply implicated – Kinnock, Solbes (monetary affairs),
and Michaele Schreyer (budget) – knew about any improprieties until
recently, and promised to undertake heroic measures of sleaze abate-
ment. Prodi next let self-righteous EP committeemen blow off steam
and then, in a closed-door session, got serious about pots calling ket-
tles black. Neither big parliamentary faction was willing to press for
another Santer-like resignation. There was indeed, according to the EU
expert Thomas Rupp, a “kind of fraud which is tolerated because it is
within the bounds of what is expected and therefore does not lead to any
consequences.”31 The MEPs knew that while Eurostat had pushed the
envelope, it still played by the rules of wink-wink. They indeed played
by them too.

A Sad Situation
Two mighty towers of integrity stood proudly above the rest of the
Commission, the directorates for competition and the internal mar-
ket. These were places into and from which corruption did not seep.
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Governance r 19

They were also, as Carl Mortished of the London Times put it, “the
only [ones] where the European Commission has any power to do [any]
good.” President Barroso placed them front and center in his official pol-
icy agenda, Europe 2010: A Partnership for European Renewal. Published
in late January 2005, this document made no attempt to maintain a
balance between economic expansion on the one hand and the preser-
vation of the European social model on the other; the program “marked
a clear break with the recent past, when environmental concerns and
improving workers’ rights were given the same priority as the need to
govern growth.”32
Over the next few months the Parliament would serve as a mouth-
piece for the interests of Greens and Socialists as Barroso vainly tried
to advance his probusiness program. It focused on two measures needed
to complete the development of the half-finished internal market: the
so-called Services Directive (SD) to improve labor mobility and the
Financial Services Action Plan (FSAP) for a unified regulatory frame-
work for the euro. Although Barroso admitted that little progress could
be expected until the constitutional issue had been settled – which from
the vantage point of January 2004 could well have meant never – his
program was virtually dead on arrival.33 From mid-2002 on, competition
policy had met with a series of setbacks and reversals, which, at least in
the near term, limited its development as a policy-making tool; worse,
by January 2005 nearly every one of the ambitious initiatives from the
internal market directorate had failed. The exception was the SD, soon
to become notorious as the “Bolkestein directive,” which – by purport-
edly opening the gates of Paris to a future invasion of Polish plumbers –
provided the first big rallying point for the French Non campaign. The
project has now been trashed beyond repair.
Competition policy – in many respects similar to US antitrust law –
is at the core of the Rome treaty. Its purpose is to prevent the misuse of
public and private power and to optimize the production and delivery
of goods to the consumer. Rules to enforce fair play in the marketplace
are essential to its proper operation; collusion between producers will
take place in the absence of them. The competition directorate is the
only branch of the Commission with real teeth – vested with inves-
tigative powers – and able (chiefly by moral suasion) to impose fines in
order to enforce compliance. The Commission president, though not
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20 r Design for a New Europe

the Court, lacks the power to stand in way of such actions. Competi-
tion policy would be ineffective if those subject to it refused to accept
the legitimacy of its verdicts. A high priority of the previous commis-
sioner, Mario Monti, was therefore to strengthen national competi-
tion laws. His agency could also then concentrate on big cases, espe-
cially megamergers, while at the same time coordinating overall policy
anchored in common principle yet tailored to local specifications. The
future of competition law may depend on the strength of the national
enforcement machinery.34
The EU competition directorate has suffered successive setbacks
since mid-2002. Up to that point, Commissioner Monti, who built on
the work of three powerful predecessors, could look back to a string of
impressive breakups of cartels and mergers across a wide swath of indus-
try. His streak culminated in July 2001 by ending the “corporate copu-
lation” of two US giants, General Electric and Honeywell. The follow-
ing year, three reversals of Commission dissolution orders by the ECJ
brought an end to Monti’s aggressive pursuit of colluding producers. He
disbanded the Merger Task Force, hired a devil’s advocate to vet for
overactive prosecution, engaged a chief economist to strengthen case-
books, and slowed the pace of big operations such as the one against
Microsoft for bundling its Media Player software with the Windows
operating system. He also put up less resistance to political pressure.35
The impending bankruptcy of Alstom – French state champion, man-
ufacturer of the famous high-speed train, and employer of 110,000 – in
September 2003 was a turning point. Under intense pressure from Presi-
dent Chirac, Monti allowed the government a $2.5 billion bailout of the
beleaguered giant with the stipulation that it replace the existing plan to
inject cash into the company by stock purchases with a new one, which
relied on the sale of government-backed convertible bonds. The change
was a mere face-saving device. Member state bullying of the Commis-
sion would intensify over the following year, and state aid to ailing busi-
nesses would decrease only slightly, from $65 to about $63 billion and,
over the three-year period from 2000–2003, from an average about 0.59,
a two-tenths-of-a-point decline from the previous three years. The long-
term reduction of state subsidies had ended. The French, Germans, and
Italians (in that order) remained the most serious offenders. Today they
account for over half of the payouts of state aid.36
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Governance r 21

It can no longer be ascertained whether Neelie Kroes, Barroso’s can-

didate for competition commissioner, brought a handbag to her nomi-
nation hearings at the EP in October 2004 or, if so, what might have
been stashed away inside it. She would have been well advised to
carry Mace: the suspect Maggie-in-the-making got brutally mugged by
an attack pack of angry Socialists. Was she not a capitalist tool? Her
inquisitors were unimpressed that she had relinquished membership on
company boards and placed her portfolio in a blind trust: She was rich
and had earned her money in business! Unspeakable shame! Cover her
with it! Neelie got nailed. The 63-year-old Iron Grandmother staggered
but held her ground. The rough stuff was pointless. “Nickel Neelie” had
already been neutered. She in fact stood under orders from Barroso to
do nothing to threaten a French Oui in the constitutional referendum.
Condemned to inaction, Kroes could only engage in third-order quack-
quacking. In June 2005, she belatedly announced that state aid would
indeed be the main target of future investigations.37
The internal market directorate has not only been weakened, it has
been virtually put of business. This is a sad story of good intentions,
high ambition, and poor judgment that proved in the end to be a
monumental waste of time. The internal market directorate lacked the
well-defined remit and established tradition of its counterpart for com-
petition but held a general mandate to complete the construction of
the still only partly built single market. The task facing it was less to
enforce existing rules for the conduct of business than to make new ones.
Discharge of this responsibility rested heavily on the person in charge,
Frits Bolkestein of the Netherlands – a Commission titan.38
Seventy years old and with a background as an industrial execu-
tive (Royal Dutch Shell) as well as in Dutch politics (Liberal Party),
Bolkestein had in abundance qualities bureaucrats often lack – vision,
candor, and courage – as well as an overabundance of energy. Personally
charming, he tackled his job ferociously and with considerable aplomb.
He was among the first to warn the Commission that the EU was failing:
the euro had not brought about price convergence, cross-border invest-
ment had dropped, and net capital export from Europe had risen. Policy,
he insisted, had to focus on growth – stuck for years at less than
2 percent – and member states should be required to translate EU direc-
tives more promptly into national law. New initiatives were imperative
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22 r Design for a New Europe

above all: “a better regulatory framework [was] absolutely essential if

[Europe’s] companies are going to hold their ground in the face of global
competition.”39 Frits Bolkestein lobbied tirelessly for long-range poli-
cies, such as pension and mortgage market reform, needed to restore
competitiveness and also fought hard, though often unsuccessfully, for
a wide range of important technical reforms. They included provisions
for a single European patent (still under discussion), a new EU takeover
law (a huge setback), a unified basic corporation tax (a nonstarter),
unified accountancy standards (still alive), the parallel importation of
pharmaceuticals (a success), the standardization of corporate reporting
(still moving in the right direction), and the long-term spread of the
mutual recognition principle (fate still unknown). Bolkestein also lob-
bied doggedly to make the “Lisbon Agenda” of 2000 the centerpiece of
the Dutch and, later, Irish presidencies. He was, above all, the author of
the most ambitious economic program since the Single European Act
of 1986.
This was the Financial Services Action Program (FSAP). Its purpose
was to create a single regulatory system for the EU. The adoption of the
euro has had little impact on Europe’s banking structure, which remains
divided into national markets, is inefficient, and cannot keep pace with
dynamic change in world trade and finance. This entrenched system
retards growth but also prevents the euro from competing with the dol-
lar in international markets. Bolkestein directed a massive campaign to
turn the situation around. It involved the setup of no less than forty
standing committees composed of experts and stakeholders tasked with
finding solutions to a wide array of problems facing banking, finance,
and insurance. Dealing with issues ranging from the mundane (the high
cost of retail services) to the exotic (the regulation of new derivatives),
they were directed to have programs in place and ready for adoption by
January 2005. These committees worked intensely and, to all appear-
ances constructively, up to the last minute. Then nothing happened.40
The City of London, which Bolkestein expected to support reforms
from which it would be the chief beneficiary, dug in its feet. The Com-
mission could do nothing about it. The merits or demerits of the FSAP
need not be debated in order to explain the City’s behavior. It was due,
in a word, to asymmetry. As large as all other European financial mar-
kets combined, the City would have to bear disproportionate cost and
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Governance r 23

risk for the introduction of any new system based on compromise, while
having, at the same time, to compete with Wall Street. Its negative reac-
tion was rational and should have been predicted. The City indeed com-
plained incessantly about red tape, which had in recent years become
the largest single drag on profitability. Bankers, brokers, and traders had
to cope with a new set of regulations from the British financial services
authority, faced unknown costs from the US Security and Exchange
Commission sponsored Sarbanes-Oaxley (SOX) bill, and would have
to adjust to the new requirements of the Basel II process. The City was
in fact crushed by regulatory overload. Despite the flashing yellow lights,
the FSAP ground inexorably forward to the very end of the Prodi Com-
mission. Today, under Barroso, the FSAP has fallen beneath the radar
screen. Bolkestein’s successor as internal market commissioner, Charlie
McCreevy, an Irish accountant, dropped the project with nary a word
of explanation.41
The Services Directive (SD) – something of huge potential signifi-
cance – turned out to be another dead loss. Compared to the FSAP, the
SD was technically simple. It did not have to be thrashed out with repre-
sentatives of concerned interests but required only a single enactment
to enforce the “rule of origin,” which eliminated restrictive national
laws discriminating against job seekers from other parts of the EU. The
SD, which concerned 70 percent of the economy in the services sector,
would have done more to promote the single market than any mea-
sure since the Single European Act. The SD would have encouraged
labor mobility, stimulated growth, increased professional opportunity,
and given new meaning to the fourth and least respected fundamental
freedom of the EU guaranteed by the Treaty of Rome – the right to live
and work anywhere in the community. It would, of course, also have
endangered livelihoods and threatened entrenched interests across the
board.42
The SD was worth defending, even against unfavorable odds. Like
the FSAP, the SD was expected to add a half point to GDP. A sweep-
ing measure, such as the “Bolkestein directive,” should not, however,
have been slipped under the door: it would have affected too many
lives in too many ways. The attempt to impose it without serious and
protracted public discussion was a colossal misjudgment. Responsibility
for the blunder must rest primarily with Barroso. In the same month in
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24 r Design for a New Europe

which he told Kroes to remain silent regarding state aids, he assigned

high priority to enacting the SD. It would have been better, tactically,
to sit still during the run-up to the referenda and deal properly with the
matter later. The cat had, however, been let out of the bag – the SD
was coming up for discussion in the EP. President Barroso only made
things worse by vainly trying to defend the “Bolkestein directive” after
the Non tide began to rise in March. Facing an angry French public
and under intense pressure from a weakening Chirac, Barroso disowned
what had been the main project on the Commission’s agenda. A week
later, a desperate Frits Bolkestein flew to Paris for a last-minute res-
cue of the SD, the Oui cause, and Jacques Chirac – and to defend his
own good name after agitators and the gutter press managed to iden-
tify it with another “-stein,” the crackpot Transylvanian medical doctor,
whose infamous botched experiment took a singularly monstrous turn.
Speaking meticulous French, Bolkestein bravely explained the purposes
behind the directive to a mass television audience of critics – but with
little effect. Public admiration of his evident good will and intellec-
tual power neither turned the polls around nor stopped angry electrical
workers from cutting off the current to his summer home in northern
France. Bolkestein did manage to get his tarnished name off the front
pages: the lowly Polish plumber soon replaced him as the symbol of
France’s woes.43
The liberal agenda of the Barroso Commission broke down even
before the French and Dutch rejected the treaty. Opposition from the
court and the member states had worn down the competition office.
The grand plans of Frits Bolkestein were unpopular and unrealistic –
and where he failed, no one else could have succeeded. The Lisbon
Agenda had at least set sound priorities and crowded out the conflict-
ing demands of the Reds and Greens, which were reduced to mere
protesting. The EU had become both too weak and too inflexible to
handle the vast tasks it set for itself. There will almost certainly be
neither a sequel to the SEA nor another Jacques Delors at the Com-
mission. As leadership from the center broke down, power within it
devolved to one of the two big blocs of member states, a tight one
headed by France and Germany and a large, looser, and more diver-
sified one usually led by Great Britain. Until the double whammy of
the two referenda, the Franco-Germans held the upper hand. How they
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Governance r 25

used it bears close scrutiny: their misguided and even malign policy mis-
directed, weakened, and discredited the EU, antagonized the United
States, inflicted damage in East Asia, and accomplished nothing in the
process.

Empire by Stealth
The authority once exercised by the Commission under Jacques Delors
but lost by Romano Prodi did not gravitate to the European Council,
the other EU executive which was composed of heads of state and gov-
ernment. Since the Nice Summit, it has had little impact as a policy-
making forum. The authority of its rotating president is limited and
sometimes merely cloaks one of the two power blocs in the community,
the Franco-German couple or the looser one generally headed by the
United Kingdom. Although the Council can set priorities and influence
outcomes informally from behind the scenes, it has had little impact on
recent events. Consider the consecutive presidencies from mid-2003 to
mid-2005. The Italian presidency, which featured Silvio Berlusconi’s
theatrics, cannot be held responsible for the breakup of the Brussels
summit, where the treaty was supposed to have been concluded. The
Irish presidency, generally thought a success because it revived the con-
stitution, could not prevent the public rebuke given to the EU in the
June 2004 elections for the EP. The Dutch presidency of the second
semester got nowhere with its liberal agenda. The Luxembourg presi-
dency of the first six months of 2005, a stand-in for the Franco-German
duo, could not, finally, prevent the electoral repudiation of Gerhard
Schröder in early May, the rejection of the treaty at the end of the
month, or the humiliation of Jacques Chirac thereafter. The British
presidency, which began in July 2005, would provide a unique opportu-
nity to launch a reform campaign at a time when the EU faced upheaval
and events were in flux – a chance to make a fresh start, collapse catas-
trophically, or drift away into insignificance.
Sitting in the driver’s seat until recently, the French set the EU
on a futile course of competition with the United States in 2004
and caused big trouble in Asia until mid-2005. The grandiose pol-
icy posed a potential long-term danger to democratic development in
Europe and should provide warning of what can happen when political
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26 r Design for a New Europe

accountability is missing. After being humiliated at Nice, French Presi-

dent Jacques Chirac shunned the European Council and made a behind-
the-scenes policy with Germany. Although Chirac hoped to preserve
the “European social model” by strengthening national champions, his
main concern was defense policy and, in particular, the projection of
French power in Europe and European power in the world. Events have
favored him. The 9/11 attacks and the war against (Islamic) terror-
ism provided an initial “beneficial crisis” (to use Brussels jargon) – a
welcome opportunity to fill the heretofore empty “pillar two” (home
affairs). Bush’s War in Iraq presented an even more “beneficial crisis” –
for Chirac, indeed a godsend. The French president’s outspoken oppo-
sition to the unpopular venture had almost universal public appeal;
in 2003 anti-Americanism would become the quasi-official European
ideology.
Hostility to the United States provided excellent cover for pursu-
ing, in a new guise, a traditional policy of the French political Right:
Paris has managed, by projecting military power, to keep Germany in
tow, Washington out of step, and Moscow, Tokyo, and even Beijing
respectful of French status. Such foreign triumphs have confirmed and
legitimized to the French nation its claim to European leadership. It’s
all make-believe, of course. The military power in question was not
meant to be used in actual warfare but merely put on display. It was a
stage setting in the politics of illusion, not necessarily something bad –
only potentially dangerous. Illusion – claiming as verity something not
known to be true – shades imperceptibly off into delusion – tricking
others – and from there to self-delusion – tricking one’s self, which in
French farces often ends with cuckoldry. The pendulum swings back
and forth between the three. The proposal for a European Defense
Community (EDC) was a first notable effort to drape the exercise of
national power in Euro-raiment. The French themselves killed EDC off
in July 1954 after the fall of Diem Bien Phu. The second was the succes-
sive Fouchet Plans in the early 1960s, each of which featured French-
dominated European supreme commands, but they got nowhere. The
Cold War was too serious a theatre for such playground politics. Chirac
would try for a third time to secure French military hegemony in Europe.
The pendulum again began to swing.
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Governance r 27

France did not dismantle its nuclear capacity after the fall of com-
munism, as did South Africa; nor were its missiles, like those of the
United Kingdom, subject to a two-key control system with Washington,
which deprived Britain of independence. Nor did France, like Russia
and the United States, agree to a post–Cold War scale-down of nuclear
weapons. Rather, the French proudly maintained three atomic sub-
marines and began building a fourth. Also able to field about fifty air-
craft armed with nuclear weapons, the French obviously intended to
continue playing power-pool with the big kids. France has not, like
Germany, cut back – but continues to increase – its military budget and
remains the only real nuclear power in the EU. Chirac’s ambitions did
not, however, depend entirely on the existence of the standing French
force. His intention was to expand and, in a manner of speaking, Euro-
peanize it. The French Defense Minister Michèle Alliot-Marie has been
a tireless advocate of this position. Her imagination is boundless. “At
a time [after the constitutional referenda],” she intoned, “when a no
in two countries raises questions, defense is a pole of stability and con-
sensus, even among those who have said no.” She added, astonishingly,
that even though Europe spends half as much per capita as the United
States for defense (1.5 percent of GDP), “we are currently at the same
technological level as the United States – if we want to stay there we
have to do a lot more. That is the price for being not just an economic
power but a political power.”44
In this scheme, France would retain ultimate control; its partners,
Germany in particular, would supply the additional resources needed
to modernize France’s armed forces. Great Britain would be brought in
as an outrider. Beginning with the St. Mâlo agreement of 1998, Prime
Minister Blair would set Great Britain on an uncertain course of coop-
eration with the trans-Rhenanian couple by committing to the estab-
lishment of a multinational “European Rapid Reaction Force” (ERRF)
and apparently agreeing to outfit U.K. elements with compatible equip-
ment. This was nevertheless a small caliber development, which had
little bearing on the larger strategic issue of the French bid for super-
power status. It required an uncomfortable stretch but was not alto-
gether undoable. What France wanted did not necessitate achieving
strategic parity with the United States – the Soviet Union, after all,
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28 r Design for a New Europe

had never enjoyed it – but only making a threat credible enough to

establish a blocking position.45
Technological breakthroughs put this dream theoretically within
reach. Network-centric warfare holds the key to Chirac’s ambitious
grasp for geopolitical influence. According to one breathless descrip-
tion, the new strategy has led to a “growing conviction that the art of
warfare faces as dramatic a change as that which consigned the horse,
lance, and saber to the dustbin of history.”46 In Afghanistan and later
in Iraq, the United States demonstrated that intelligence supplied by
the Global Positioning System (GPS) enabled a handful of US troops
to overwhelm a much larger enemy in astonishingly little time. The
GPS leveraged effective military power like few other breakthroughs
in military history. The French decided that Europe should build one:
Galileo was born. This was, however, not the only military project afoot
at the EU; indeed, it was part of a larger long-term one for outer space.
The recently rejected constitution designated space as a new European
competence. Under the general rubric of research and development,
the EU plans to commit substantial funds to rocketry in the budget for
2007–2013. That both these related projects are officially described as
being civilian in character could fool only fundamentalist believers in
the Easter Bunny.47
There’s not a snowball’s chance in hell that the tax-strapped Euro-
pean public will accept a doubling of defense budgets so that in a decade
or two, Europe hyperpuissance can stand toe to toe and nose to nose with
the bully from across the street. The main threat posed by programs
like Galileo is not strategic in character, but political – and it is not
to the United States but to Europe itself. The pursuit of the superpower
chimera could prove ruinously expensive, but that is the least of its dan-
gers. It is reckless and irresponsible to build up a European security state
in the absence of strong democratic institutions: the end result of such
folie de grandeur would, if successful, be military dictatorship. The pro-
posed European constitution would not have remedied this deficit in
responsible government but significantly widened it.
Any policy governed by fear of US superpower domination is also
wildly off the mark geopolitically. The unipolar world, which France
and Europe dread, is rapidly disappearing. China is already an eco-
nomic hyperpuissance and is planning to become a military one by 2015.
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Governance r 29

Arming it, as France and a compliant Germany apparently intended

and might still intend to do, is seriously destabilizing and viewed, quite
appropriately, with alarm in Washington.48 Real European security can-
not, in any case, be located in outer space or found by waging brushfire
wars against failed states à la St. Mâlo. It depends on creating stable
democracies on the EU’s borders.

Troubling Waters
A man sits at a desk in a Brussels building. He shares office space with
seventy others, some of them with lengthy titles. These individuals
neither make nor sell anything. They buy very little. They command
nobody. Although much is written about them, their files are mostly
empty. Even though their jobs put them at the fulcrum of world geopol-
itics, they do not even officially exist. The man’s name is Nick Witney.
He heads the European Defense Agency. The men around him comprise
his general staff. No theory of integration or history of politics sheds
much light on how all of this came to be. A true fable may make things
easier. In 1859, a man on a San Francisco street corner declared himself
Norton I, Emperor of the United States and Mexico. He had no army,
no followers, and not even a place to sleep. He was in fact a bankrupt
rice merchant, but no one really cared about that. Norton found a gaudy
uniform and put it on. He printed money, and people saved it. He defied
Congress, proposed building a bridge over the Golden Gate, and even
founded a new religion. Norton had standing seats at the opera. He ate
in the best restaurants for free. When his dog, “Bummer,” died, hundreds
mourned. When Norton himself died, tens of thousands mourned.
Emperor Norton caused no real harm. The same is not true of the
obscure men in Brussels with the big pretensions: the policy they repre-
sent could have inflicted real damage had the proposed constitution not
been rejected – and might still do so unless their operation is either ter-
minated or brought under some form of public supervision and control.
The crisis in East Asia triggered by the new security policy may also
have lasting repercussions. Unlike the comic Norton’s empty claims,
policy made in the name of Europe is backed by force. It is not, however,
accompanied by responsibility. Unless Europe places limits to its ambi-
tions, comes to a better understanding of its real needs, and recognizes
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30 r Design for a New Europe

the extent of its actual powers, it will create big problems for itself in
the future. Its credibility will be shot altogether.
The force referred to earlier is French. Decisions regarding the use of
this power will not be made in Brussels, Strasbourg, Luxembourg City,
or any other European capital except Paris. Such matters are therefore
subject to the vagaries of French politics and the cupidity of the cur-
rent French head of state. That puts Europe at risk. The shadowy figures
behind the mysterious desks in Brussels pose an even more deep-seated
threat: How can Europeans – unable to hold even civilian Eurocrats
accountable – control a future EU military establishment shielded by
secrecy laws and supported by a multinational defense industry exempt
from competition and disclosure rules?
The United States – the target of Chirac’s wild shots – continues to
hope that reinforcing and bulking up the hollow vertical tube of the
Common Security and Foreign Policy (CSFP) will enable the EU to
carry part of the peacekeeping burden in the European theatre. It also
specifically endorsed the creation of an independent European rapid
deployment force to implement this responsibility, because the growing
disparity between US and European military proficiency would other-
wise put American lives unnecessarily at risk in joint operations. Until
recently, the Pentagon had no fear whatsoever of creating a European
competitor, because the EU does not pose a credible threat to US secu-
rity. The United States has long spent over twice as much per capita
on defense as the EU, has a big single market for military hardware
rather than many little ones, enjoys a virtually unsurpassable lead in
high-tech weaponry, and plunges five times more money into advanced
defense research than all the EU countries put together. Americans,
unlike Europeans, approve of a strong defense policy and are prepared
to pay for one in the future; it is a bipartisan matter.49
Europe’s new security policy originated in an intra-European struggle
rather than that between Europe and the United States. Its develop-
ment can only be understood as part of a political strategy for containing
Blair and the Brits. The policy is irrelevant to the current world conflicts
and meaningless in military terms; it is, like Norton’s empire, imag-
inary. Witney has announced plans “to boost Europe’s defense, tech-
nological, and industrial base” by developing “unmanned drones, new
armored vehicles, and advanced communications systems in a strategy
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Governance r 31

to become a military superpower and close the defense technology gap

with the United States.”50 At this stage, however, the striking power
of the 60,000-man ERRF being prepared since 1999 to intervene in far
corners of the world consists of a thirty-man planning staff in Tervuren
outside of Brussels and a French army headquarters building under ren-
ovation in Lille. Europe is pursuing the politics of delusion.
The Nice Summit of December 2000 provides the background to
the new emphasis on security policy. After the debacle, according to
Thomas Pedersen, a series of intimate but informal monthly Franco-
German meetings began to “strengthen cooperation.”51 Starting out
with agreement on the general shape of the proposed constitution,
these talks produced unity on several divisive old issues and some impor-
tant new ones. Set up in order to prepare common positions for forth-
coming European Council meetings, they were a huge coup for France.
Germany would move steadily toward French positions on both the
CAP and Enlargement. The spring elections of 2002 in France resulted
in the elimination of the Socialists in the first round and produced a
thumping victory for Chirac over his septuagenarian challenger, the
ultra-right wing Jean-Marie Le Pen, in the second. This victory was
somewhat deceptive. Many wore clothespins on their noses at the polls.
Others cried when voting for Chirac as the lesser evil. The outcome
of the election, nonetheless, substantially strengthened the French pres-
ident’s negotiating hand. Unable at the Schwerin meeting of July 2002
to agree on CAP policy, which Schröder wanted desperately to reform,
one of Chirac’s guests – the obliging Belgian Prime Minister Guy Ver-
hofstadt – proposed raising the organization of a European defense force
to a top community priority as a way to break the ice. The French
president seized the chance. The joint commitment to the new security
policy would provide the adhesive for the trans-Rhenanian relationship.
A couple of important considerations spoke in favor of the policy.
The French and Germans were partners in the aerospace field and
jointly controlled the European Aeronautic Defense and Space Com-
pany (EADS), the manufacturer of the Airbus. The conglomerate faced
big problems. Most European nations, including Germany, were slash-
ing military budgets. EADS had been frozen out of the only important
growing market for its products, the United States. It could not merge
with BAE, the remaining big British aerospace firm, because BAE would
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32 r Design for a New Europe

not give up its privileged position on the US market and would probably
soon be swallowed by one of the three big surviving American goliaths,
in any case. EADS needed new business.52
A larger consideration was also in play. Schröder demonstrated in
September that anti-Americanism could even win elections in Ger-
many. The untapped appeal of the demagogic approach proved to be
immense, especially with the United States mired in a foreign war. If
Vietnam had given a foretaste of this reality, Iraq would provide enough
to sate any glutton – a twelve-course meal with seconds readily avail-
able. Europe’s politicians could prepare and serve up unlimited amounts
of the sumptuous fare, if only President Bush, the reckless cowboy, could
be provoked into supplying enough food. Proving exceptionally mal-
adroit, Bush played the black-hat role to the hilt. The object of the
Franco-German ploy, Tony Blair, would, it was hoped, have to either
drop the “special relationship” with Washington or pay a heavy price
for it in Europe. The European Commission housed, and is supposed to
implement, the couple’s new policy. The choice of location was a mat-
ter of convenience as well as ideology. What took place there could be
kept out of view until sprung upon the public in the name of Europe.53
As so often, the United States provided a model for policy making.
The United States had pioneered in the promotion and exploitation of
a civilian space program for military purposes; this was the job of the
National Aeronautical and Space Administration (NASA). The GPS
put up in 1996 was only one venture to grow out of this civil-military
collaboration. The GPS made terrestrial targets visible anywhere in the
world, even at night and in bad weather. The system could thus provide
instantaneous intelligence on troop dispositions, both friendly and hos-
tile. Battlefield coordination took a quantum leap: commanders could
now adjust to troop movements on both sides, and deployment could
take place with unprecedented speed and efficiency. Otherwise costly
and protracted military actions could be settled within a few days. A
new kind of gunboat diplomacy had become possible but only if the
United States could dominate space – from which weapons could be
fired as well as guided. In 1996 President Bill Clinton declared the US
domination of space a top national priority. US Air Force Space War-
riors are wont to speak in awe of the realm as a “final frontier,” which
must be defended at all costs.
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Governance r 33

“Counterspace” weapons for threat elimination are a given of this

strategy. Three such portable systems – involving microsatellites so
small that “ten can be loaded in a reusable military orbiter” and built at
an astonishingly cheap price of $5.2 million per unit from off-the-shelf
components – are already up and running. The United States can, in
other words, physically destroy or temporarily disable any deployable
GPS-like system with electronic weapons costing mere tens of millions
of dollars – chicken feed in space weaponry terms. After heated US
protests that Galileo could interfere with US military operations, the
EU agreed to shift prospective bandwidths in order to make interference
with the GPS more difficult; if, however, such an event should occur
and the United States found it necessary to take action, the EU also
assented to accepting as legitimate what would amount to the chemical
castration of Galileo. The concession ruled out any use of the system in
future military confrontations with the United States. Galileo, if ever
built, will be militarily worthless.54
Economically, the same thing is also true. In 1999 President Clin-
ton opened the ample nonsecurity capacities of the US GPS system – a
sunken cost – free of charge to civilian end users. There is, in other
words, no commercial point to building a second system at present.
Claims for the economic benefits of the Galileo program – that it will
create 150,000 new high-tech jobs in a new industry, which by 2010
will produce 10 percent of GDP – seem wildly exaggerated. The real
purpose behind the project is strategic. A confidential letter of February
2002 rejecting a US offer of help in building a second system fully com-
patible with the existing one said as much. It frankly admitted: “Galileo
will give the EU a military capability.”55
This was officially denied until 2005. The program itself was wrapped
in a bafflegab calculated to confuse the public. It would protect endan-
gered species, help locate lost children, enable nice little old grand-
mothers to drive safely home on rainy days, and so forth. Policy mak-
ing now takes place on obscure ad hoc boards and committees housed
in the innocuous transportation directorate run by Jacques Barrot, a
former Chirac bagman once busted for violating campaign finance
laws. German-led Socialists in the EP, overlooking his conviction for
embezzlement, voted him into office. Barrot would be right at home
in his new position. The Frenchman answers informally to Günter
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34 r Design for a New Europe

Verheugen, the German Commission Vice President for Economic

Affairs. Funding is now routed through the budget for Trans-European
Networks (“TENs”), something set up innocuously to improve railroads
and highways, as well as via the framework programs for research and
development.56
It is impossible to get to the bottom of the control issue – to know who
or what will be in charge of the future Galileo system. The unknown
consequences stemming from the two constitutional referenda cloud
the picture still further. A consortium dominated by the French and
led by EADS, Alcatel, and Thales has now been designated the prime
contractor. The Germans feel cheated, however, and squabbling contin-
ues. The project still must be approved by the Council. Scheduled for
completion in 2010, Galileo may literally not get off the ground unless
the EU gets its budgetary act together.57
Philippe Busquin, though now out of office, was the lead man
for most of Galileo’s life. In early 2003 the tireless Belgian bureau-
cratic entrepreneur conducted four months of “consultation” (discus-
sion rounds for interested parties) to build a constituency for his pro-
gram; struck a partnership with the European Space Agency (ESA),
which disposed of the expertise the Commission lacked (in return for
the political clout that the European Space Agency mistakenly assumed
it to possess); and lobbied successfully for priority in EU policy making.
By October 2003 he had broadened his mandate to include not only
the heavens but a portion of the earth as well. Europe, he declaimed,
“was paying a very high price for artificial and uniquely European [sic]
separation between civil and military research.” He demanded the cre-
ation of a new “security culture” in which, he expansively explained,
“we should be able to foster co-operation between the traditionally dis-
tinct sectors of civil and security research by focusing on how to best
ensure the security of citizens in an enlarging European Union and a
globalizing world.”
A white paper of November set out the requirements. They included,
first of all, budgets from 5.4 billion euros in 2007 to 7.7 billion euros in
2113. Such funding, indeed the project itself, according to the paper,
could skip authorization from an Intergovernmental Conference (IGC)
of the European Council: “The need is to act now to create the key
components of a European space policy, even if space is not included
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Governance r 35

in the Treaty as a European policy.” The lack of statutory legitimacy

for such a program is a trifling matter, the garbled document pro-
ceeds, because “a number of legal bases can already be invoked which
enable existing EU politics to call upon space as a relevant technol-
ogy to support their implementation.”58 This was mission creep with a
vengeance.
Although Busquin felt confident that Franco-German support could
make up for the lack of an official mandate, he did face a short-run
money problem; indeed he would have no funds until appropriations
for the budget cycle for 2007–2013 had been agreed upon. To get cash
flowing in the meantime, China, India, and other prospective Galileo
partners would have to pay upfront. Bringing them into the project has
set the EU on a parlous course. Although not yet worried about Europe
hyperpuissance, the Pentagon gets grey hairs about China’s expanding
military budget – officially rated at 20 percent per year but probably
twice as rapid. Access to the military “side” of Galileo could eventually
enable the emerging Asian superpower to impair or disable the GPS
system in the event of war, for instance over Taiwan, thereby risking
American lives. The Joint Chiefs of Staff view the threat facing the US
Navy – whose mission was to interpose itself between the two belliger-
ents to stop an invasion – as especially grave. Chinese missiles now have
enough range, moreover, to reach the American West Coast, which
causes sleep loss in California suburbs.59
The architects of the Galileo policy view the spy satellite as a first
step toward a strategic partnership, a global alliance with China formed
to check what is still anachronistically referred to as “the world’s only
remaining superpower.” Joint Sino-French naval exercises in March
2004 (“for Beijing . . . the most sophisticated ever with a foreign navy”)
marked the beginning of a distinctly new course. While visiting Hu Jin-
tao to clinch a $12 billion arms deal for France in October, Chirac spoke
often and quite openly about the need for China and Europe to work as
a counterweight to the United States and “to build together the multi-
polar world which is in the process of being designed for tomorrow.”60
He also committed himself to lifting the arms embargo imposed after
the Tiananmen massacre in 1989. The vice prime minister of China
pledged in return to “continue to advance the . . . Sino-European com-
prehensive strategic partnership.” This was serious business.
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36 r Design for a New Europe

France had, to be sure, long cheated on the export ban – and is

known, for instance, to have supplied China with silent propulsion sys-
tems for submarines and critical components for missile guidance. End-
ing the embargo would, however, amount to throwing open the flood-
gates to a flow of the high-tech weaponry China needed to modernize
its armed forces – until, that is, it started copying it. French Defense
Minister Michèle Alliot-Marie’s flimsy excuse for the deal – that if the
Chinese were supplied with this stuff, they would not have to produce
it – met deservedly with loud guffaws. Marianne could turn this partic-
ular trick only once. Her pimp should have told her as much. But could
Chirac speak for Europe?
“The world,” reported the excited commentator Martin Walker, “has
just dodged a bullet. A majority of the 25 members of the European
Union agreed Monday [11 October] to ignore the urgings of the French
and Germans and maintain the arms embargo against China. Had
they not done so, the trans-Atlantic row between Europe and America
would have become very serious indeed.”61 Lifting the arms embargo
was not yet, however, a dead issue. The ludicrous Luxembourger, Jean-
Claude Juncker, held the chair of the rotating president of the European
Council for the first half of 2005. Savoring every unaccustomed moment
in the international diplomatic limelight and happy when cuddling
with Jacques Chirac, he pressed relentlessly for reconsideration of
the embargo. The effort emboldened the Chinese, who – mistaking
words for deeds – overplayed their hand on the Taiwan question. The
embargo still stands.62 This strange sequence of events requires a bit of
explanation.
In East Asia, the EU fished in troubled waters. The sudden yet relent-
less rise of China, and the growing economic dependence of both Korea
and Japan on its expanding markets, is shaking up the distribution of
power in the region almost overnight, reviving ancient enmities, chang-
ing long-standing policies, and resulting in significant realignments.
After an intense behind-the-scenes struggle in September 2004 ended
with Chairman Hu Jintao in full control of the Chinese armed forces,
a shift in policy ensued with far-reaching ramifications. It was mani-
fest in a new aggressiveness toward Taiwan and Japan – to wit, the
increased number of “incidents” involving the latter. They include vio-
lation of the waters around Okinawa in late November by an “unknown
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Governance r 37

submarine,” which prompted the first ever deployment of the post-1945

Japanese Navy against a hostile ship and resulted in a two-day chase; the
(organized) anti-Japanese demonstrations of March and April 2005; the
officially tolerated misbehavior at the Asian Games; the demands for
more and more apologies, and so forth.63
Japan is now quietly but decisively breaking with the fifty-year-old
“Yoshida doctrine” limiting military strategy to national defense, help-
ing build and joining the new US “star wars” antiballistic shield and
entering into mutual security arrangements with interlocking ground,
air, and naval forces at an “unprecedented level of interoperabilily
and intimacy.” “This is,” adds British foreign policy expert Lord David
Howell, “going hand in hand with an extensive command and con-
trol makeover, adding up to a force structure second only to that of
the Americans.”64 The new arrangements are calculated to strengthen
Japan and draw the United States more deeply into the defense of the
island nation.
The realignment of Japan and the United States in 2004–2005 may
be less consequential for the EU’s ambitions in East Asia, however,
than the change in Taiwan’s situation. Miscalculation played a large
role in bringing it about. Expecting the victory of Lee Teng-hui, the
leader of the pro-independence Taiwanese political party, in the Decem-
ber presidential election, the Chinese parliament rubber-stamped a
brutal antisecession bill. It amounted to an ultimatum that invasion
would result from any attempt to declare Taiwan’s independence from
China. A frightened Teng-hui quickly backed off, thereupon alienat-
ing the most fiercely pro-independence faction of his party. It cost him
the election. The opposition party dominated by Mainland Chinese,
the successor to the old Kuomintang (KMT), instead took office. Like its
ancient communist enemy, it held fast to a “one China” policy, although
there remained disagreement, of course, about which of the two should
run China. The KMT victory nevertheless deferred the independence
crisis.65
Events then took an unexpected – though historically not unprece-
dented – twist: a Beijing-staged reconciliation of the KMT and the Chi-
nese government took place, which will probably serve as a prelude to
an eventual relationship between the mainland and Taiwan like the
one existing between China and Hong Kong. In other words, Taiwan
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38 r Design for a New Europe

will eventually become part of China. In East Asia, the implications of

the secession bill crisis are not yet played out. In Europe, however, they
are. Chinese aggressiveness shocked the European Council into belated
recognition that the Franco-German plaything – the dilettantish new
security policy meant to trip up the Colossus – could wreak severe col-
lateral damage on innocent parties. The ultimatum to Taiwan killed the
attempt to lift the arms embargo. It did not, however, chasten China.
The state-controlled Galileo Industries (CGI) intends to gain full oper-
ational control of the surveillance system in the East Asia region by
2008, including targeting information for its new cruise missiles.66
Although shorn from the grand strategy it was supposed to serve,
Galileo has survived, thanks partly to the appointment of the veteran
EU Commissioner Karel van Miert as “mediator” of the increasingly bit-
ter disagreements between the idled Franco-German experts assembled
to build the future but unbudgeted space spy network. Militarily use-
less, commercially purposeless, and economically questionable at the
least, yet seriously destabilizing, Galileo is merely the most recent Euro-
pean grand project to substitute for sound policy – a fitting companion to
the unsafe Concorde and the oversized Airbus 380. Although provision
would normally be made for it in the budget for 2007–2013, the neces-
sary money can also be raised by means of a special treaty outside the EU
framework. Born in the shades of policy making, the program may yet
– along with the embryonic defense ministry, the European diplomatic
corps now under construction, the proposed institute for gender studies,
the nascent public prosecutors office, and the headquarters for the judi-
cial training network – linger in a grey zone of public unaccountability
with a host of other unauthorized and publicly unknown projects, which
have developed at the interstices of EU institutions.67
On December 27 the first of a proposed 30 Galileo satellites was
launched on a Soyuz rocket from the Cosmodrome in Kazakstan. If all
continues to go well, the system will be up and running by 2010.68 For
all of their lack of realism, the EU’s high-tech projects are still alive
and may even eventually see the light of day. More remains of them
than the now defunct proposed constitution, the nonstarting agendas
of Commissioners Prodi and Barroso, or the important recent Com-
mission economic initiatives spearheaded by Frits Bolkestein’s internal
market directorate but now in tatters. The futile military and faltering
Another random document with
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The Project Gutenberg eBook of The Survey,
Volume 30, Number 4, Apr 26, 1913
 This ebook is for the use of anyone anywhere in the United
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Title: The Survey, Volume 30, Number 4, Apr 26, 1913

Author: Various

Editor: Paul Underwood Kellogg

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Original publication: New York: Survey Associates, 1913

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*** START OF THE PROJECT GUTENBERG EBOOK THE SURVEY,

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Transcriber’s Note:
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 The Survey

Volume XXX

No. 4

WITH INDEX

New York
SURVEY ASSOCIATES, Inc.
105 East 22d Street
 THE COMMON WELFARE

REHABILITATION WORK AT DAYTON

If the immediate adoption of comprehensive, carefully considered
plans, and the unification of all important resources of relief can
accomplish it, the Red Cross work in the flooded district of Ohio will
mean rehabilitation at every stage rather than merely the
distribution of supplies. This is the end toward which the efforts of
Mr. Bicknell and his associates have been directed. The state and
local authorities readily grasped the idea, and showed a real
sympathy with its aim.
First of all, the Red Cross has itself received in direct contributions
at Washington the sum of $1,750,000. Much the larger part of this
was, of course, contributed with the appalling disaster at Dayton in
view, though from the beginning it was recognized that there were
serious needs elsewhere in Ohio, in Indiana and other states. The
Ohio authorities received in contributions $611,632, and it was
decided by the governor and the flood commission which he
appointed, to expend this also through the Red Cross. Finally, the
Dayton citizens’ relief committee, appointed by the governor and
presided over by John H. Patterson, who had taken complete charge
of the situation even while the river was overflowing the levees and
inundating the town, has been receiving donations directly. It has
been selected as the channel through which Red Cross funds
available are to be disbursed.
While Edward T. Devine and Eugene T. Lies went to Dayton
originally for the Washington Headquarters of the Red Cross, they
also are doing their work under the authority and with
appropriations from the local committee. They are assisted by
Amelia N. Sears, secretary of Woman’s City Club, Chicago, who took
part in the San Francisco rehabilitation work; Rose J. McHugh,
secretary of Funds to Parents Committee, Chicago; Ada H. Rankin
and Johanne Bojesen of the New York Charity Organization Society,
who helped in the relief of the victims of the Triangle shirt waist fire
and the Titanic disaster; Grace O. Edwards of the Chicago United
Charities; Edna E. Hatfield, probation officer, Indiana Harbor, Ind.;
Edith S. Reider, general secretary, Associated Charities, Evanston,
Ill.; Helen Zegar of the Compulsory Education Department, Chicago,
who was in special charge of the relief of Polish and other immigrant
families at the time of the Cherry Mine disaster. These Red Cross
agents are in turn aided by a corps of local citizens, especially
principals and teachers in the public schools, members of
spontaneously organized local committees, and others.
There is no longer talk of plans for rehabilitation, for rehabilitation
is in actual process. The careful Red Cross registration which was
begun before the end of the week in which the disaster occurred, is
proceeding rapidly. Four thousand families had been registered and
the supplementary visits largely completed at the end of two weeks.
On the basis of this registration, furniture is being provided,
assistance in repairing houses and cash donations of moderate
amounts, and other measures taken. All of these are intended to be a
distinct step, even if in some instances not a very long one, towards
the restoration of ordinary family life.
Among the measures which have been adopted in the
rehabilitation stage, as distinct from the emergent distribution of
supplies, are the following:
Houses which were occupied by owners of limited means and
which were comparatively slightly injured are being repaired by
gangs of carpenters who work in one section of the city after another.
The work mainly consists of putting frame houses on their
foundations, moving them back across the street, or doing such other
things as an owner unaided cannot do, but which a gang of half a
dozen men, some of whom are skilled carpenters can do in half a day
or a day. This service is not rendered if the owner is in position to
hire men to do it, or if the house is so badly injured that it involves
much labor and expense.
 Owners of lots, whose houses have been entirely demolished, and
who wish to rebuild on the same site, are to be given an army
pyramidal tent equipped with cots and tent stove. These tents will be
put up by a hospital corps, under the direction of an army surgeon
who will advise where on the lot the tent should be pitched, see that
sewer connection or latrine is in order, and give instructions as to the
use and care of the tent, so that the investment of about $100 which
the donation represents may not be wasted.
The greatest immediate need after food and dry clothing, is for
furniture and mattresses to replenish the thousands of homes whose
furniture is utterly demolished, or so badly wrecked as to be
practically useless. The first impulse was to ship in large quantities of
furniture and give it away, or sell it at cost. Fortunately, a live
furniture man, the president, in fact, of the National Retail Furniture
Dealers’ Association, was encountered accidentally early in the
proceedings. He was asked whether the retail dealers of Dayton
could not handle this matter themselves. One large furniture house
was entirely destroyed, but twelve others remained. All were in the
flooded district, but all proved to be uninjured above the first floor.
On the first floor the more expensive kinds of furniture had usually
been displayed. This was all gone, either bodily out of the window—
these were the more fortunate—or in a hopeless mess of mud and
wreckage in the building. The less expensive kinds of beds, tables,
chairs and dressers were largely stored on the upper floors. It was,
therefore, only a question of cleaning out the first floor—getting the
elevators into operation—often a hard job in itself—and securing
trucks or wagons for delivery. This was a still harder job, for those
that were not gone in the flood had been impressed into military or
relief service. But the retail dealers held a meeting of their
association, and agreed to handle the problem, and later the
department stores which carry furniture came into line. By
resolution they bound themselves not to increase prices. Requisitions
are therefore given after the Red Cross registration is completed, for
from $10 to $100 worth of furniture, according to the losses and
circumstances of the family, to be selected by the purchaser at any
one of a dozen stores from a list printed on the back of the
requisition. These orders are filled in the usual way by the dealer and
already such goods are being delivered.
 Transportation from Dayton and other points for women, children
and disabled men has been given by the railways through to the real
destination after the usual inquiries and precautions familiar to
those who work under the national transportation agreement.
In the first few days refugees were carried free without question to
points in the vicinity of Dayton, but on the opening of the Red Cross
headquarters, this indiscriminate free travelling was at once replaced
by the other system.
The first considerable issue of cash and furniture orders was made
on April 9—about $10,000. Since that time the number of registered
families ready for decision has been so great that it taxes the energy
of the central office in spite of the excellent facilities at its disposal.
In some instances these grants will have to be only first installments
on account of a larger plan; in many others, and it is hoped the large
majority, it will be all that is necessary. In each envelope with
furniture order or check, Mr. Devine is inserting, over his signature,
a printed slip as follows:
“The Dayton Citizens’ Relief Committee and the American Red
Cross beg you to accept this expression of sympathy for your losses
and hardships and their best wishes for the speedy restoration of
your prosperity and accustomed manner of living.”
FLOOD PROBLEMS TACKLED BY
DRAINAGE CONVENTION
The date of the Third National Drainage Congress which convened
in St. Louis April 10 to 12, seems almost to have been planned
providentially. Just as significance attached to a similar meeting in
New Orleans at the time of the Mississippi flood last year, the
attention of this year’s gathering was concentrated on the problems
which the floods of the central states have so insistently raised.
Important resolutions were passed in response to a suggestion
from President Wilson that Congress should formulate some plan for
the prevention of floods and their disastrous consequences. The
resolutions were addressed to the President and Congress. They
urged that the government, under the welfare clause of the
constitution, should take adequate measures to control the water
resources of the country, and continued:

“We respectfully petition the immediate consideration of adequate provisions for

flood control, for the regulation and control of stream flow, and for the reclamation
of swamp and overflow lands and arid lands, and in furtherance thereof we pray
that in your wisdom you create a body which will put in effect at the earliest
moment possible such plans, in co-operation with the several states and the other
agencies, as will meet the needs of the several localities of the United States, and
we believe the most effectual and direct means will be the establishment of a
Department of Public Works with a secretary in charge thereof who shall be a
member of the President’s cabinet.
“Be it further resolved that the wide scope of the problem of flood water control,
affecting practically all the states of the Union, can best be conducted under the
immediate supervision of the President of the United States in the exercise of such
authority as is conferred upon him by the Congress of the United States.”

Control and prevention of malarial diseases were the subject of

another important resolution. The prevalence of these diseases
throughout the country, especially in regions frequently flooded, was
declared to be a cause of “great disability, loss of earning capacity
and a considerable number of preventable deaths.” Since there are
well established methods of prevention, the Congress established a
section on malaria with Dr. Oscar Dowling of the Louisiana State
Board of Health as president and Dr. W. H. Deaderick of Little Rock,
Ark., as secretary. It was resolved further:

“That the several states be requested to appoint malarial commissions and that
the commission of the Southern Medical Association and other duly authorized
malarial commissions be invited to join in this movement and that the co-
operation of the federal government be requested through the United States Public
Health Service and the Medical Departments of the army and navy.”

These efforts to combat malaria followed an important discussion

of National Drainage and National Health by Dr. William A. Evans,
formerly health commissioner of Chicago and now health editor of
the Chicago Tribune. He pointed out that the aftermath from floods
was frequently more serious than the disaster itself, and referred to
the fact that in the flood of a year ago on the Wabash River there
occurred 400 cases of typhoid fever at Peru, Ind., and 100 cases at
Logansport, Ind. The main burden of his talk related to the fact that
with the drainage of low lands malaria could be almost, if not
entirely, extinguished. Malaria was declared to be the cause of more
disturbance and economic loss than all the floods. It was estimated
by Dr. Evans that the cost of malarial fever in the United States was
$160,000,000 per year. The notable reduction in cases of malaria
and deaths resulting therefrom in the Panama Canal Zone since the
American occupation was vividly pictured as indicative of what
scientific effort can accomplish.
PRESIDENT WILSON AND JERSEY
LEGISLATION
Before its adjournment this month the Legislature in New Jersey
finally passed a grist of bills in the field of social legislation. A large
proportion, if not a majority, of these were pending when Woodrow
Wilson left the state house at Trenton, and, as often happens,
especially in the case of bills which carry appropriations, they came
to a head during the last three weeks of the session. Mrs. Alexander
reviews the notable part the governor-president had in their
advancement.[1]
While no immediate steps were taken by the Legislature to relieve
the congestion at the state insane hospitals, a movement toward a
serious consideration of the whole subject of state care, custody and
treatment of mental defectives, including the insane, the epileptic
and the feeble-minded was inaugurated by a joint resolution
providing $2,500 for a commission to report before March 1, 1914.
The Legislature decided to continue the Prison Labor Commission.
In a general way the recommendations of this body were adopted.
The Board of Prison Inspectors insisted upon retaining the powers of
administration and control of the prisoners, leaving to the
commission the power to plan and direct operations. The Prison
Labor Commission is authorized to purchase a farm at an expense of
$21,000. There is also $17,000 immediately available for stock,
implements, buildings, fencing, fixtures and furniture for this farm.
The general appropriation bill available next November provides
$12,500 for the purchase of a quarry, $3,500 for the expenses of the
commission, and $12,000 for buildings and furniture for the farm.
The reformatory at Rahway has secured an appropriation of $5,000
for a foundry building. This is the beginning of a policy of trade
school instruction. The output of the foundry is to be sold to state use
account.
The appropriations for the other state institutions provide for a
continuance of the research work going on in the several state
institutions. The new reformatory for women at Clinton receives
$25,000 for a new cottage, the Jamesburg School for Boys $20,000
for a trade school building, and the epileptic village at Skillman
$55,000 to complete a custodial building and $110,000 for future
building.
Besides these appropriation measures New Jersey has enacted a
widows’ pension law, which will be reviewed in a later issue of THE
SURVEY, a bill providing for summer agricultural schools, and a new
parental school act which permits their creation under the
educational authorities. Another measure which was passed is a new
compulsory attendance law calculated to fill the gap between the
educational authorities and those of the state labor department
which went far to nullify the effectiveness of the old law. “Add to this
program,” writes an enthusiastic New Jersey social worker, “a few
odds and ends of laws and you can see Jersey is still hitting up the
pace.”
NATIONAL HEALTH BODIES PLAN TO
WORK TOGETHER
At the call of the Council on Health and Public Instruction of the
American Medical Association, forty-seven representatives of
volunteer and philanthropic bodies interested in some special phase
of the health situation in this country met on April 12 at the
headquarters of the American Association for Labor Legislation in
New York city.
Feeling that, with the multiplication of independent organizations,
there is danger of overlapping of function, interference in work,
duplication of effort and expense and lack of effective co-operation
for want of a common program of procedure, the American Medical
Association early in January addressed a letter to the executive
officers of about thirty of the more important national organizations
suggesting a conference to discuss a plan for co-operation. This
proposal met with a ready response. Among the bodies that were
represented at the meeting held in New York were the United States
Public Health Service, the National Committee on Mental Hygiene,
the National Association for the Study and Prevention of
Tuberculosis, the National Committee of One Hundred on Health,
the Metropolitan Life Insurance Company, the Russell Sage
Foundation, the National Child Labor Committee, the Rockefeller
Sanitary Commission and the National Commission on Milk
Standards. John M. Glenn, director of the Russell Sage Foundation
was chosen chairman of the meeting and John B. Andrews, secretary
of the American Association for Labor Legislation, who with Dr.
Frederick H. Green of the American Medical Association had made
many of the preliminary arrangements, acted as secretary.
Among the suggestions discussed by the representatives of the
various agencies were the following:
1. A central national health organization, composed of one
representative (perhaps the executive officer) from each of the fifty
odd national health organizations in the United States.
 2. An annual conference of this central organization in January
at which might be discussed one topic of paramount importance in
the health field, to the end that the work of the central organization
during the year be centered instead of scattered.
3. Establishment of a central bureau or clearing house with an
executive secretary and facilities for collecting and distributing
information relating to the work of the various health
organizations represented.
4. Provision of $10,000 to $20,000 for the expense of the central
bureau.
5. Appointment of a committee (of seven perhaps) to study and
carry forward the plans of the bureau of health organizations.
As a result of the discussion on these questions the following
resolutions were adopted:
Resolved, that it is the sense of this meeting that we should
organize as a conference, either independently of the American
Public Health Association or as a section thereof or of any other
organization which should later be decided, after investigation by a
committee to be appointed to work out details.
Resolved, that a committee consisting of fifteen members, of
which five shall constitute a quorum, shall be appointed by the
chairman at his convenience, to report at a subsequent meeting.
WIDOWS PENSIONS IN MASSACHUSETTS
That the private charitable societies of Boston oppose the plan to
transfer to the state the care of deserving widows with dependent
children as an independent class is indicated by the hearings on the
various bills now before the Massachusetts Legislature. Four bills
have been introduced at this session. The first of these (House Bill
No. 815) provides:

“If the parent or parents of a dependent or neglected child are poor and unable
to properly care for the said child, but are otherwise proper guardians, and it is for
the welfare of such child to remain at home, the juvenile court, the probate court,
or, except in Boston, any police, municipal or district court, may enter an order
finding such facts and fixing the amount of money necessary to enable the parent
or parents to properly care for such child, and thereupon it shall be the duty of the
county commissioners, or, in Suffolk County, the city council of Boston, to pay to
such parent or parents at such times and as such order may designate the money
so specified for the care of such dependent or neglected child until the further
order of the court.”

The second bill (House Bill No. 1369), which is even shorter,
restates the general principles of the first bill without providing
machinery for carrying its provisions into effect. It reads as follows:

“Children whose parents are unable to support them shall not be placed in state,
county or municipal institutions, but if either parent, or any relative or other
suitable person, is maintaining a home, payment shall be made to such parent or
relative or other person for the support therein of such children.”

House Bill No. 1366, the third proposed act, was prepared by
representatives of many of the principal charitable organizations of
Boston.
The bill does not so much state a new doctrine of relief for
dependents as define more clearly the duties of the local overseers of
the poor and more definitely chart their course in their work
preliminary to granting relief. The avowed purpose of the bill, in the
language of its proponents, “is to correlate the various public and
private agencies of the state into one co-operative relief system under
the general control and direction of the state Board of Charities and
to use the local overseers of the poor as the active disbursers of the
relief granted.” It is also made the duty of the overseers to the first
instance to determine whether the mother is “fit to bring up her
children and that the other members of the household and the
surroundings of the home are such as make for good character, and
that aid is necessary.” If this question is decided by the overseers in
favor of the applicant they then are charged with the further duty of
investigating the financial resources of the family and relatives,
although the law does not clearly state to what degree of
consanguinity this inquiry shall extend. They shall next inquire as to
“individuals, societies or agencies who may be interested therein.” If
they have by good fortune found anyone who is legally bound to
support the mother and child, they are directed to enforce the full
legal liability of the obligation.
They are admonished to get the family to work if possible, and to
secure such relief as can be obtained from organizations and
individuals. The law adds, however, that none of these directions
shall be construed “to prevent said overseers from giving prompt and
suitable temporary aid pending compliance with the requirements of
this section, when in their opinion such aid is necessary, and cannot
be obtained from other sources.” The bill provides, therefore, that
local overseers shall aid such mothers and children as they deem
worthy if they can find no one else who can be forced or coaxed into
doing it. The bill further provides that the overseers shall follow up
their initial activity by visiting the recipients of aid at least once in
three months and shall keep a careful detailed account of the
conditions found at each visit as a part of their official records. It is
made the duty of the State Board of Charity to supervise the work
done by the overseers and to report thereon in its annual report to
the state Legislature.
This bill was presented because of the report of the commission on
the support of dependent minor children of widowed mothers, and
the measure (House Bill No. 1770) proposed by the commission. The
general court of 1912 created a commission to investigate the
condition of widowed mothers, provided $1,000 for its expenses, and
ordered it to report at the present session. The commission as
appointed consisted of Robert F. Foerster of the department of social
ethics of Harvard University; David F. Tilley of Boston, for many
years a member of the Central Council of the Society of St. Vincent
de Paul and at present a member of the State Board of Charity, and
Clara Cahill Park of Wollaston, Mass.
The report of the commission and the arguments in support of its
bill in general were:
That the present system of outdoor relief is inadequate;
That frequent separation between the widowed mother and her
children occurs;
That the cause of the mother’s dependence is seldom purely local
but a matter in which the state in the large is concerned;
That therefore the state should grant the relief and not the locality
alone;
That while all needy mothers, whether widowed or not, are proper
subjects of the state’s bounty, yet widows are in a class which need a
different technique of relief.
The commission expressed its belief that widows’ families were the
most important single group in poverty and that they should be dealt
with by a method unhampered by the need of dealing with other
cases. The commission’s bill, it was argued, would further break up
indiscriminate relief, introducing state control and state standards
for a great group of dependents, continuing the process begun for the
feeble-minded, insane, blind and the like. The friends of the bill
believed that the state Board of Charity administered so much relief
that widows would not be adequately cared for by it. They urged that
while House Bill No. 1366 in terms disclaimed any intention of
regarding its proposed relief, pauper aid, yet in fact it could not fail
to be so regarded by possible claimants. The commission called the
aid it proposed giving subsidies rather than pensions, as it regarded
its aid as in no sense payments for services rendered but assistance
in rendering needed service to the state.
The report of the commission was signed by Professor Foerster
and Mrs. Park. Mr. Tilley presented a minority report stating that he
was fully in accord with the desire of the commission to adequately
assist widowed mothers with dependent children, but that he felt
that the report was based upon insufficient evidence. He further
believed that the present machinery of relief was entirely adequate
for the purpose desired.
The bill proposed by the commission provided for a permanent
commission of five, two of whom should be women, who should have
authority to order subsidies paid by the overseers of the poor, in such
sums and manner as the commission should decide. The commission
is authorized by the bill to make its investigations by its special field
agents, and it is made the duty of the overseers to visit the family at
least once in every four months and to report its condition to the
commission. Two-thirds of the amounts paid to families who have no
settlement and one-third of the amounts paid to all other families
shall be repaid to the overseers by the state Board of Charity. No
relative other than those legally bound to aid the family, and no
private society shall be asked to contribute any portion of the
subsidy.
The commission by its bill provided a new state machine designed
to administer a specific pension or subsidy to a specific class of
dependents. The bill proposed by the opponents of the commission’s
bill, defined and enlarged the present relief machinery of each
locality. The purpose of the friends of each bill is unquestionably to
render the same service to the needy widow.
 THE MASSACHUSETTS REPORT ON THE
RELIEF OF WIDOWS

PORTER R. LEE

Massachusetts deserves credit for being the first state to preface

mothers’ pension legislation with a formal study of existing
conditions. The Legislature of 1912 authorized the appointment of a
commission “to investigate the question of the condition of widowed
mothers within the commonwealth having minor children dependent
upon them for support,” and to report to the succeeding Legislature
“as to the advisability of enacting legislation providing for payments
by the commonwealth for the purpose of maintaining such minor
children in their homes.” The report of the commission giving its
findings and recommending legislation based thereon has been
published as is stated elsewhere in this issue,[2] David F. Tilley, one of
the members of the commission, dissenting from the conclusions of
the majority.
The success or failure of the mothers’ pension movement must
depend largely upon our ability to avoid the mistakes which have
characterized outdoor relief and other gratuitous payments to
individuals from the public treasury, and to read into the proposed
remedy a new and dignified meaning which outdoor relief has never
had. It may be that both these ends will be difficult to attain.
Certainly they can only be attained after the most careful study of the
operation of outdoor relief, both public and private, to ascertain to
what extent it has succeeded or failed and why. Such a study has long
been necessary in the interests of the poor and of efficient relief
work. To be successful it cannot be hasty, inexpensive or inexpert.
Quite as important as this study of outdoor relief will be a study of
the conditions under which children are admitted to institutions
which must be undertaken with much the same end in view.
Those who have felt the need of more facts before enacting
mothers’ pension legislation have been much interested in the study
which Massachusetts has been making. If all the possibilities of such
a study were realized in this report, a good many of our stumbling
blocks would be removed. The existing outdoor relief machinery,
public and private, an analysis of its success or failure and a standard
for future procedure would all have been revealed.
The report of the Massachusetts commission, however, gives us
very little help. It is marked by evident earnestness of purpose; but
its conclusions are of little value because they represent in almost
every case inferences from inadequate data. To a large extent this is
to be charged to the commission’s inadequate resources; but
whatever the reason the report as it stands does not give us a model
for other states. It does not give us even a clear relation between the
commission’s own findings and their recommendations. Because the
right kind of an outdoor relief study is necessary and because the
example of Massachusetts is likely to be followed by other states, it is
important to subject this report to somewhat critical examination.
The commission’s method of study was five-fold:
1. A questionnaire to fifty-seven child helping societies and
several public departments caring for dependent children as to the
circumstances under which the children in their care were
committed.
2. A questionnaire to various children’s agencies asking why
children are separated from their mothers in poverty.
3. A questionnaire to public and private relief agencies asking for
“the total income and the sources thereof, together with certain
other facts in each widow’s family receiving through it (the agency)
regular relief” for a definite period.
4. Special study of the Juvenile Court records of Boston and of
the results of a day nursery investigation.
5. A use of analogies, observations and “reasons of a non-
statistical kind” which suggest the desirability of legislation
granting pensions to mothers.
 Methods 1 and 3 brought the statistics upon which the chief
conclusions of the report are based. But the commission itself by a
series of statements regarding their accuracy robs one of any
confidence in the results obtained. For example, these statements
appear in the discussion of the statistics received from relief
agencies:

“Because of its small appropriation it [the commission] was enabled to make a

much less detailed and exact statistical study of the position of these widows than
would have been desirable.”

“The resources of your commission did not permit it to secure its information by
the personal visit of an investigator, hence the information must be less accurate
than it might otherwise have been.”

“The commissioners believe that despite the limited accuracy of some of their
relief statistics further study of the relief given by charities is not necessary.”

Moreover, regarding the information gained from the children’s

agencies as to the causes for the removal of children from their
homes, it may be doubted whether these agencies are competent
witnesses. The standard of work done by the public agencies and
many of the private agencies for the care of children in
Massachusetts is unusually high. It may be doubted, however,
whether any such agency after the most careful preliminary inquiry
is fully able to determine the real economic status of a family which
is usually a matter that requires long acquaintance. Many of these
societies receiving children who have been removed from their
mothers have very little first hand information as to the reason for it.
In fact, the report itself, in discussing the information secured
through this questionnaire regarding the insurance carried by the
families, states: “The fact that the children’s agencies failed to answer
this question in so many cases was undoubtedly because they did not
possess the information.” For the same reason it is doubtful if they
were competent witnesses on many other points calling for
knowledge of what happened before the children came into their
care.
 The statistics secured through method 3 are condemned even
more directly. After information had been secured through the
questionnaire to public and private relief agencies regarding 1,258
families, Mr. Tilley of the commission arranged for a special study of
one hundred of these in their own homes by trained visitors in the
service of the State Board of Charity. These studies revealed
conditions completely at variance with those stated in the returns
received from the agencies themselves. The report itself comments:
“It is clear that many records previously received from the overseers,
especially, but also from others, were glaringly incorrect.”
It is hardly possible to put confidence in conclusions based upon
data whose inaccuracy is so clear. It does not become any more
possible when the inaccuracy is frankly conceded by those who reach
the conclusions.
Another method of study used by the commission—the
compilation of analogies and other non-statistical reasons for
proving its case—is rendered impotent in much the same way. In a
carefully developed argument the report draws an analogy between
the proposed subsidy scheme for widows and the industrial accident
compensation plan. “The situation of dependents of men killed by
industrial accident is scarcely distinguishable from that of these
widows.... Consequently, widows through death of husbands by
disease or other non-industrial cause should be dealt with by a
similar principle.”
After developing this analogy somewhat elaborately, however, the
report says: “The commission rejects the principle of payment by
way of indemnity of loss,” apparently abandoning the workmen’s
compensation analogy just after making it serviceable.
It would not be difficult to point out other traits which are fatal to
the report as a basis for scientific action, for example, its constant
introduction of important conclusions with such expressions as “it is
obvious,” “the inference is,” “it is not unlikely,” “so far as information
was obtainable” and “important inferences are possible.” Moreover,
when conclusions are based upon statistics compiled from different
sources by different persons with different standards and possibly
different interpretations of the questions asked, a report giving these
statistics and the conclusions reached should give also a copy of the
schedule used in gathering them. The report does not include the
commission’s schedule.
With the purpose of the commission to point the way to the
adequate assistance of widows most of us like Mr. Tilley, who
submits a minority report, are in complete accord. During recent
years our enlarging conceptions of social treatment have condemned
utterly much of our supposedly efficient work in family and
individual reconstruction. There is a widespread conviction of sin in
this matter and an earnest searching for the remedy. The mothers’
pension movement is no doubt a result of this; but the conviction of
sin and the earnest search are true of many to whom mothers’
pensions seem a remedy of doubtful immediate value.
If we have failed in our relief work, the children of the widow are
not the only ones who have suffered. Upon the children of disabled
fathers, of incompetent and neglectful parents, of all those tragic
families who fall outside the commission’s category of “worthy,” our
sins are visited still more heavily. The commission was charged only
with the duty of studying the condition of widows; but it seems to
have taken some note of families of other types. We read:
“Consistently, widows through death of husbands by disease or other
industrial cause ... deserve an utterly different kind of treatment
from that accorded to the lazy and shiftless, the victims of drink,
gambling or other dissipation or persons in transitory or emergency
destitution. The commission does not believe that the same persons
who administer the general poor law should alone determine the aid
for worthy widows. Administration of such aid is sufficiently
complicated, difficult and frequent to deserve separate care.” It
might be noted incidentally that the cause of a husband’s death is not
always a satisfactory test of a wife’s moral habits, and that “widows
through death of husbands by disease, etc.” are not infrequently of
the unsatisfactory type described by the commission. But a still more
important comment is the following from Mr. Pear of Boston:
“It is well understood by social workers that those whom your
correspondent terms the incompetent, and willingly leaves to the
care of overseers of the poor are really in need of the most skillful
ministration. They too have children. To assume that they may well
be left to officials considered incapable of caring for respectable
widows is evidence of a complacency which social workers cannot
share.”
The report of the commission gives us much that suggests the fact
of our failure to provide adequately or helpfully for the families of
widows, a fact of which we had already become conscious. What we
need, however, is not so much evidence of the fact of failure as a clear
understanding of why we have failed. Why have public outdoor relief
and private charity conceived in as deep an interest in the destitute
widow as any mother’s subsidy program, failed to satisfy either the
widow or the charitable or society at large?
The failure has rarely been due to lack of aggregate resources.
Nobody familiar with the enormous totals spent for relief, public and
private, could doubt that. It must lie somewhere in the quality of the
service which brings relief with it. To determine just where it does lie
calls for a study requiring money, time and the sure touch of
somebody who knows what to look for. The mothers’ pension
schemes which the various states have worked out give us very little
that is new or of higher promise in the service that goes with relief.
The subsidy plan that follows the study of the Massachusetts
commission is no exception.
Few institutions have been subject to more criticism than public
outdoor relief. No institution has been under fire so long with so
little real effort to find out what makes it criticizable. It may well be
that public assistance in some form is indispensable in this country
and will be made to yield the results we seek. If so, its administration
must be revolutionized. Giving existing outdoor relief officials new
duties and responsibility to a new authority for part of their work,
which is an important part of the proposal resulting from the
Massachusetts report, will not revolutionize it. Nor will the giving of
new names to old practices not otherwise shorn of the defects which
popularize the new name do so. Again and again we have started
with a clear call to do justice to the widow. Every time we try to
translate our zeal into legislation we come square up against our
outdoor relief machinery. Some one of these United States has a
golden opportunity to make a study which will point the way to
justice not only for the widow and her children but for every other
person, old or young, who through our stupidity or his own fault, or
both, finds himself forced to seek assistance. But the Massachusetts
report does not point the way.
 THE LADINO SPEAKERS

MARY BROWN SUMNER

For four years New York has had a steadily growing colony of
Castilian speaking Oriental Jews. The major part of them speak a
Spanish dialect known as Ladino, but use Hebrew characters in
writing. Knowing no English, they have lived in isolation, the largest
group between Essex, Rivington, Christie and Canal streets. The rest
are east of Lenox avenue in about twenty blocks north of 100th
street.
The biggest step toward the Americanization of this group, which
now numbers 15,000 and is not yet too large or scattered to be
handled by a group plan, was the calling at the University Settlement
last month of a mass meeting of the race. Here Joseph Gedalecia,
manager of the Free Employment Agency for the Handicapped
established by the Jewish community of New York, and president of
the Federation of Oriental Jews, and other speakers proposed plans
for lectures on American institutions and opportunities and
suggested classes in English for the adults of the race.
In 1492 or thereabouts persecutions drove from the shores of
Spain the Jewish merchants and scholars to whom the nation owed
not a little of its development. They were welcomed by the
Mohammedans and settled both in European Turkey and on the
Asiatic coast. Most of the settlements of refugees preserved their
Castilian speech, and the Ladino dialect, which they use today, is
only slightly mixed with Greek or Bulgarian or Turkish or Arabic
words, according to the section of the Turkish empire in which they
happened to settle.
THE CALL IN LADINO