the constitutional crisis 1965-66

THE CONSTITUTIONAL CRISIS 1965-66

BY JOHN LAMBERT

1965 SAW the spectacle, rare in the post-war world, of a West European state openly refking to apply a Treaty formally entered into with other European countries. It saw the Head of State of one member country clearly indicate that he was seeking a revision of the Treaties setting up the European Communities, hitherto held up to the world, and more particularly to Britain, as sacred and unchangeable, and the governments of the remaining member countries refke this demand reasserting in solenm terms their attachment to the aims and principles which underlie the Treaties. Lastly it saw the issue of the hture shape and foreign policy of a united Europe play a major role in a national election campaign. All these developments arose because the latent clash of two conceptions about the uniting of Europe had come out into the open. It seems likely that this occurred because of the im- minence of the date on which the national veto power over a wide range of decision-making, destined to become gradually the concern of the executive bodies of the Community, would be formally and irrevocably surrendered in favour of majority voting; and possibly too because the ‘point of no return’ in the movement of ever-closer economic integra- tion either had been or was about to be reached.

From all these points of view the crisis which began in 1965- and was to last until January 1966-will furnish a rich field for students of the Community, be they political scientists or, at a later stage, historians. The present article is written in the belief both that a simple and necessarily incomplete account of the course of the crisis may be of value to future students, and that the issues involved are of direct and immediate interest to Britain-indeed that a just appreciation of them may be helpful in making momentous choices at a future date, conceivably not too far distant.

I have attempted to avoid judgments or drawing conclusions; nothing is stated as fact which cannot be confirmed from publicly available texts and the journalistic euphemism of the ‘reliable source’ is resorted to where it seems essential to the narrative to refer to events not fully in the public domain. The account of events with such far- reaching political ramifications cannot pretend to be exhaustive, and certain major questions, about motives and aims in particular, must remain unanswered.

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AN OPTIMISTIC START TO THE YEAR

J O U R N A L OF C O M M O N MARKET STUDIES

The European Community entered 1965 in a mood of considerable optimism, resulting from the successful Passage through the Council, in December 1964, of the ‘Mansholt Plan .1 Adopted in the early hours of 15 December, the Council’s self-a pointed deadline, as the major

the price levels that would apply for wheat and feedgrains throughout the Community for the farm year starting I July, 1967: from that date there would be no barriers to trade within the Community in grain or in pigmeat, eggs or poultry.

Despite the setting of a later date for its application than originally proposed-mid-1967 as against July 1964, in the first proposals and 1966 in the later version-the Mansholt Plan was significant from several points of view. It was a case where the Commission had made a proposal, entirely in conformity with the Treaty and aimed at achieving its realization ahead of time, but not specifically called for by a previous decision of the Council of Ministers. The resultant agreement represented the penultimate step, achieved earlier than had ever been thought possible, towards the completion of the common farm policy; and as such it was directly in the interests of France, for only free trade in farm produce, now set for mid-1967, could guarantee to French farmers the long-heralded benefits of the common policy.

More generally, the choice of I July, 1967, for the application of the common grain price brought forward the horizons of the economic union; the Commission was to modify in January its proposals for completing the industrial customs union, setting the same date of I July, 1967, for the final removal of intra-Community duties and the application of the common external tariff; and this in turn would not be acceptable without moves on other fronts such as that of tax barriers and the common commercial policy. Moreover, there were strong arguments for trying to complete the whole farm policy by that date, with common prices for other products where the policy required them, lest a disequilibrium be created between farming sectors. Lastly, the grain price decision had monetary policy implications: a single price level for basic foodstuffs set not in national currencies but in dollars would make a revaluation by member countries de fact0 impossible.

The almost unexpected ease with which this momentous move had been accepted, despite the political and economic difficulties which it raised, for Germany and Italy in particular, could hardly fail to lead to a mood of general optimism. The unease and mistrust which had hung in the air since the French veto on the negotiations with Britain in January 1963 seemed, at least superficially, to have been dispelled.

element in a ‘package deal’ of essentia P ly agricultural questions, it fured

THE CONSTITUTIONAL CRISIS 1965-66 197

There was, however, one warning note, the full significance of which was to emerge in the m m e of 1965. At the meeting of the Council of Ministers on I December, 1964, at which the technical details of the Mansholt Plan were under discussion, the Dutch Minister of Agriculture, M. Bisheuvel, made a statement to the effect that his government would not be able to agree to a final settlement on the financing of the common agricultural policy without some strengthening of democratic control at the European level. On 10 December, 1964, the Foreign Affairs Budget Committee of the Second Chamber of the Dutch Parliament adopted a draft resolution which received the backing of all political groups including those in opposition, and was thus sure to pass the full chamber. The wording of the resolution was as follows : The Chamber, given the statement of the Dutch government on I December, 1964, to the Council of EEC in respect of the extension and strengthening of the powers of the European Parliament, sharing the opinion of the government that the very existence of the European Commmties is threatened if the popular representation at the European level is not invested at the right time with the responsibilities which are its due in the activities and the development of those Communities, calls on the government to pursue energetically its action in favour of the democratiza- tion of the Communities.2-3

Dr Luns, the Dutch Foreign Minister, was to call the attention of the Council of Ministers to his colleague’s statement during the closing minutes of the night session on 14-15 December, 1964, at which the Mansholt Plan was adopted.

France was in the chair of the EEC Council for the first six months of 1965, and it was generally expected that there would be a strong drive to take as many decisions as possible during that period on the common agricultural policy. In January the EEC Commission did present a suggested programme, which was adopted by the Ministers of Agriculture at their first Council session, on 25-27 January. The major element was to be the new financial regulations: for as part of the 15 December package the Council had called on the Commission for proposals on two aspects of this, viz. (u) an extension of the transitional system to cover the two years between the expiry ofthe existing regulations on 3 0 June, 1965, and the entry into force of the common grain price on I July, 1967; (b ) the financing of the farm policy from July 1967 onward, on the assumption that common price levels and a free trade situation for almost all agricultural produce would be in force from that date. The Commission agreed to make its proposals on both points by the end of March. There wcre other agricultural decisions pending, some resulting from commitrncnts undertaken in the

198 JOURNAL OF COMMON MARKET STUDIES

December package-changes in the protection for fruit and vegetables, to meet commitments made to Italy; others long overdue-adoption of the basic regulations on sugar and on fats and oils, extension of the fruit and vegetables regulations to allow support buying; and others again inextricably linked up with the acceptance of a definitive financing agreement-in particular common price levels for other foodstuffs (milk, beef and veal, rice, sugar and olive oil) which would influence materially the shape and cost of the financing operation. The new regulation on protection for fiuit and vegetables was to be in the end the only one decided, and the implementing regulations receiving Council approval in May, the basic text being adopted in March.

During the first three months of the year the EEC Commission was concentrating much of its attention on the preparation of its proposals about the financing of the common agricultural policy. During this period views expressed by Dutch ministers at the end of 1964 were further reinforced when, on 2 February, the Second Chamber of the Dutch Parliament unanimously adopted a motion phrased in the same terms as the draft quoted above, with the addition of the following paragraph :

Declares that in its opinion there could be no question, on the occasion of the coming revision of the system of financing the European Agricultural Guidance and Guarantee Fund, of replacing the direct financial contributions of the Member States by revenues proper to the Community, in accordance with article ZOI of the Treaty, without a primordial role being attributed to theEuropean Parliament in the budgetary procedure of the EEC.

By mid-March the general lines of what the Commission was to propose had begun to be known. The Commission reached agreement on all but certain technical details at a night session held in Strasbourg (during the session of the European Parliament) on Monday, 22 March. The general orientation of the proposals was indicated to the European Parliament by President Hallstein himself on 24 March (a breach with the established practice, under which the Council is the first to be informed of Commission proposals, which manifestly rankled with the French government and was later to be frequently cited as evidence that the Commission had overstepped the mark).a A further meeting in Brussels on 3 1 March enabled the Commission to approve a final text which was sent to the Council of Ministers, with a copy to the nieiiiber governments, in accordance with the regular procedure.

THE EEC COMMISSION’S PROPOSALS The proposals sent to the Council of Ministers on I April, 1965, were

the most ambitious and far-reaching to be put forward by the Com- mission. Taking as their starting point the financing of the common


agricultural policy, they also covered the establishment of direct financial revenue for the operations of the Community, and the strengthening of the role of the European Parliament in the establishment of the Community budget. The Commission view was that duties under the Treaty and earlier Council decisions made the linking of these elements an unavoidable obligation, and it accordingly indicated that its proposals should be adopted as a whole. It was this link which was to be at the heart of the dispute which the proposals engendered.5

The fmancial regulation decided by the Council on 14 January, 1962, as part of the initial common farm policy agreement, provided for the gradual take-over by a Community Agricultural Fund of the full cost of the common agricultural policy. Detailed provisions were laid down only for the first three years, up to 30 June, 1965, with the share of national farm policy expenditure borne by the Fund (for market intervention, export rebates and structural investments) rising from one-sixth in the first year and one- third in the second, to half in the third year (1964-65). The Commission’s proposals for the remainder of the interim period (July 1965-June 1967) provided for this rhythm to be continued, with two-thirds of the cost borne in 1965-66, five- sixths in 1966-67, and the whole of eligible expenditure from I July, 1967, onwards. Payments into the Fund, which from the accounting point of view is one section of the overall Community budget, had been determined during the first three ycars on a double key, with growing part (10 per cent in the second year, 20 per cent in 1964-65) shared proportionately to net imports. The motivation for this was that countries gaining revenue from the levies on imports, rather than buying within the Community, should contribute proportionately more to thc overall cost of the farm policy; a ceiling was, however, set on the overall share to be required of all countries except France. As part of the Mansholt Plan package a new, lower, ceiling had been put on the Italian contribution for the two coming years (18 per cent in 1965-66 and 22 per cent in 1966-67) in recognition of the fact that Italy had paid in a large proportion in the early years whilst receiving very little from the Fund; Italian concern at this situation was to emergc even more markedly later in the year. Belgium and Luxem- bourg had obtained a virtual ceiling in that the special concession to Italy was not to result in an incrcase in their share under the previous formula. In view of these restrictions, and to meet Italian concern, the Commission proposed for 1965-66 and 1966-67 a fixed ratio to be laid down by the Council for the sharing of the costs.

There was nothing esstentially controversial in this part of the Commission’s proposals : they drew the necessary conclusions from the


Council’s decisions of December 1964, and met the long-expresed French desire to see the farm policy completed as soon as possible- outrunning in this the known positions of some other member governments which were reluctant, given the serious financial implications of common price levels in this highly subsidized sector, to see the common market (especially for dairy produce) complete within two years.

The second part of the Commission’s proposals on financing met directly the Council’s request of December. It took as its starting point the assumption that the single market system would apply from I July, 1967, with the full cost of the common policy borne by the Community Fund. The basic decision of January 1952 laid down (a point which had periodically aroused controversy, notably at the high- point of the British negotiations, in August 1962) that once the stage of the complete agricultural common market was reached, the revenues obtained from the import levies on foodstuffs should go directly to the Community, to finance the farm policy as a whole, instead of going to the national governments which would then have paid proportionate contributions. This was a point upon which France in particular had insisted at every opportunity: it rested on the sound argument that once internal barriers had been removed, a single market existed, and the financing of export subsidies came fiom central funds, the revenue from levies on foodstuffs entering this unified market area must logically be considered Community revenue. Thus the Commission had little choice but to make proposals giving effect to this prior commitment: from I July, 1967, the levies would go to the Community. It was estimated that they would yield some 600 milhon ‘unit: of account’ (equivalent to U.S. dollars) each year. If full financing were to be in effect, with the common policy completed and applying not only to grains, pigmeat, eggs and poultry, but also to dairy produce, beef and veal, and rice (as was the case from mid-1964 onwards), and to fruit and vegetables, sugar, fats and oil, durum wheat and tobacco, then total expenditure could be expected to reach approximately $1000 million for market intervention and export rebates, plus a further third of that s u m for improving farm efficiency (‘structural policy’). This figure did not take into account the further $4 million to be spent by the community, under the terms of the Mansholt Plan decision, on compensating German, Italian and Luxembourg farmers for lower grain prices over the period 1967-70.

A second element which the Commission had to take account was the planned completion of the industrial customs union. III its ‘Initiative 1964’ presented to the Council, October 1964, the Commission had proposed the abolition of the remaining intra-Community duties on


I January, 1967. In the light of the target date adopted for the single grain price, with its implications for free trade in foodstuff, ‘Initiative 1964’ was amended in January 1965 to provide for complete industrial free trade, and the concurrent full application of the common external tariff, on I July, 1967. This plan had yet to be adopted by the Council of Ministers, but reflected the tenor of earlier Council debates on this subject: it was also in keeping with the recurrent preoccupation about the balanced development of the different aspects of the economic union, namely that Gee trade in industrial and agricultural goods should be achieved on the same date.

For both foodstuffs and industrial goods the Community would then find itselffaced from mid-1967 with a problem which no customs union can avoid: the place at which duties and levies were collected would no longer necessarily be-and would, moreover, be to a decreasing extent-in the country in which the goods were to be consumed. The case most Gequently cited to illustrate this point was that of the high proportion of German imports entering the Community through the port of Rotterdam. A situation where the member States enjoyed the revenues from the customs duties they levied would no longer be equitable. A further argument of equilibrium and economic logic derived from the parallelism already mentioned : the revenues from levies were to go to the Community, and no distinction of kind could be made between them and the duties on industrial goods-a point under- lined by the case of ‘processed foodstuffs’ which are for tariff purposes assimilated to industrial goods.

The problem had been foreseen in the drafting of the Treaty, and the arguments of economic logic were thus backed by a legal text: Article 201 of the Treaty provides that ‘the Commission shall study the conditions under which the financial contributions of Member States . . . may be replaced by other resources of the Community itself, in particular by revenue accruing from the common customs tariff when the latter has been definitely introduced. For this purpose the Commission shall submit proposals to the Council.s Moreover, Article 2 of Regulation No. 25 (adopted in January 1962 as the basic text for the common grain marker machinery) referred as follows to the ‘single market stage’:

Revenue from levies charged on imports from t k d countries shall be the property of the Community and shall be appropriated to Community expenditure; the budget resources of the Community shall comprise such revenue together with all other revenues decided in accordance with the rules of the Treaty as well as the contributions of member States in accordance with Article zoo of the Treaty. The Council shall in due course initiate the procedure laid down in Article 201 of the Treaty SO as to implement the above provisions,


It was to Article 201 that the Commission specifically referred in the second part of its proposals. Under these the Council would establish the principle that customs duties should go to the Community from the date the common external tariff came into effect, viz. I July, 1967. The process would, however, be a gradual one: total revenues fiom customs duties were estimated at some 1.7 million dollars a year, making 2.3 million dollars with the product of levies, and this would far exceed estimated expenditure by the Community under all heads. The Commission’s proposal was therefore for a gradual transference of the revenues from duties to the Community budget, in a way not related directly to expenditure but increasingly steadily over a five year period. The details are likely, in view of subsequent developments and the Commission’s own amendments, to be of purely historical interest; they did, however, form an integral part of the Commission’s proposals and helped to determine reactions to them. The Commission estimated what proportions of total Community expenditure would be borne by each country for 1967 as a whole under the various share-out keys prevailing for the general operational budget, the Social Fund and the Agricultural Fund. This weighted scale was as follows: Germany 29-79 per cent, France 29.88 per cent, Italy 22-88 per cent, Netherlands 9.1 per cent, Belgium 8-14 per cent, and Luxembourg 0.21 per cent. During the first six months of 1967 national contributions would continue to be paid under the various keys. During the second half of the year the Community would have its own revenues accruing automatically: member States would pay over all agricultural levies plus the part the customs revenues needed to bring their contribution up to the weighted scale percentage of total expenditure. A calculation would then be made of the proportion of national levy and customs incomes remaining with the national budget for the year as a whole: during the following years (1968, 1969, 1970 and 1g71), the percentage of revenues remaining with the State would be reduced by one-fifih each year. Under this scheme, for example, a country required in the second half of 1967 to allot 60 per cent of its customs and levy receipts to the Community would pay in 68 per cent in 1968, 76 per cent in 1969 and so on through to 1972. From I January, 1972, onwards all levy and customs revenues would accrue directly to the Community.

With total Community expenditure under all heads estimated at 1,237 million dollars in 1967 and 1,758 million in 1968, then levelling off since the farm policy would be largely complete, receipts could thus be expected, both in 1967 and again from 1971 onwards, to exceed Community expenditure. Under the terms of the Commission’s proposal it would be for the Council, on the basis of Commission


proposals, to allocate the remaining funds to special tasks, or to re- distribute them to the member States : in establishing the overall budget account would have to be taken of the economic and social situation in the different regions of the Community and of the need to ensure a certain general financial equilibrium between the member States. These two phrases seem to have referred obliquely both to Italy’s development needs and concern at her general social problems, and to Germany’s recurrent preoccupation with the overall balance of financial advantage in the Community. The obverse situation was also provided for: should expenditure exceed direct revenues (as was estimated to be the case in 1968 and 1969) the gap would be met by national contributions on the 1967 scale.

A brief but significant clause in the Commission’s proposals was to the effect that once the final stage was reached expenditure should only be re-imbursed from the Community chest for measures decided in accordance with Community rules and procedure. This would serve to reinforce markedly the Treaty requirement of a common commercial policy to come into effect by the end of the transitional period.

The third section of the Commission’s proposals concerned a more influential role for the European Parliament in the procedure for establishing the Community budget. In putting this forward the Commission was acting once again in accordance with earlier Council deliberations. Thus on 23 December, 1963, on the occasion of the complicated agreement on a series of agricultural and trade policy questions (in particular the main points at issue in the regulations for dairy products, beef and veal and rice), the Council had adopted a statement running as follows: ‘On the occasion of its debate on the operation of the European Agricultural Guarantee and Guidance Fund the Council emphasized the importance which it attaches to the problem of the strengthening of the budgetary powers of the Assembly. It will take up this question at its session of February 1965, at the same time as the reports which it has received on the“merger”[of the three Executives] and the increase of the role of the Assembly.’ The question of the powers of the European Parliament had indeed been examined at length in the Permanent Representatives Committee during 1964 in connection with the merger, though without any action resulting, and the proposals the Commission was to make reflected closely the draft texts which had been put forward at that time by the Dutch, German and Luxembourg delegations.

The hands of the Commission were also tied in another way. Article 2 of Regulation 25, under which the Commission was acting in proposing the creation of direct revenues, referred as we saw both to


Article 200 on that subject and to ‘the procedure of Article 201 of the Treaty’. Article 201, already quoted above, continues :

The Cound, acting by meam of an unanimous vote, and after consulting the Assembly on such proposals, may lay down the provisions whose adoption it shall recommend to the member States in accordance with their respective constitutional rules.

The national constitutional rules referred to imply, in most member States, that the provisions in question have to be submitted for approval to the respective national parliaments. The Commission was therefore obliged, if its proposals were to have any chance of final acceptance, to take account of the known positions of these Parliaments, and in this connection the stand taken by the Dutch, both in the Council and in the Upper Chamber resolution, was unequivocal.

The proposals on the budgetary powers of the Parliament were in a sense minimal. They would, if adopted, result in giving the Parlia- ment a far more influential voice, whilst leaving the final decision with the Council. Under current practice, Community budget is drafted by the Commission (usin the estimates established by the various

changes it thinks fit, acting if necessary by majority vote, and sends the resultant budget to the Parliament, which has one month in which to give its approval or send the Council an ‘opinion’ in which it proposes amendments. The Council, after discussions with the Commission, can then establish the final budget by a majority vote: it can simply ignore or over-rule the Parliament’s views, as it can those of the Commission, and indeed has often done so.

Under the system proposed by the Commission the following procedure would apply: the preliminary draft established by the Commission would go as at present to the Council, which would make what changes it thought fit qualified by majority vote ifnecessary, and send the resultant text to the Parliament. Should the Parliament approve it, or fail to give a view within the month, the budget would be adopted. Should it make amendments by a simple majority vote, the draft would return first to the Commission which would either accept or reject the amendments. If the Commission accepted the Parlia- ment‘s amendments, the Council could have the final word with a decision adopted by a 5/6 majority on a straight vote on a ‘one country one vote’ basis. In a case where Commission and Parliament disagreed the Council could by a 4/6 majority decide for the Commission against the Parliament. In all other cases-and, in particular, where the necessary majority in the Council was not obtained-the Parliament’s amendments would stand.

institutions) and sent to t E e Council. The Council can make what


This complex formula met the Dutch requirement of an increased voice for the Parliament whilst leaving the possibility of the final word with the Council. It was criticized in some quarters as strengthening in fact not the Parliament but the Commission, which would rely on the backing of the Parliament in restoring cuts made by the Council.

DNERSE REACTIONS

The European Parliament, when it came to debate the Commission’s proposals in May, was to manifest its disappointment and dissatisfaction, holding that the proposals did not go far enough. The proposed amendments, adopted on 12 May, after a stormy debate but by 76 votes to none with 10 abstentions, would have meant the following changes. T he estimates drawn up by the Commission-and considered a draft budget rather than a preliminary draft-would be sent simultaneously to the Council and to the Assembly. The Council could then make its amendments, within twenty days, by qualified majority; and the Parliament its changes by a simple majority within two months. The Commission would pronounce on both sets of proposals. If it wished to depart &om the Parliament’s changes, it would inform Parliament and Council. Nevertheless, the Parliament’s version would stand unless w i t h twenty days the Council ruled by a 5/6 majority to amend the budget along the lines proposed by the Commission, in which case it would be deemed adopted. Should the Council, however, adopt by the same 5/6 majority a text departin &om the wishes of both

fiuther twenty days reject it by a two-thirds vote of those present and a majority of its members; otherwise the Council’s version would stand.

The Dutch Parliament, by a unanimous vote in the Foreign Affairs Committee of the Second Chamber on g June, was to back the line taken by the European Parliament-and also to call for direct elections. M. Luns told the Committee that although the government agreed with it in thinking the Commission had not gone far enough it would be prepared to accept the Commission’s proposals.

Reactions to the Commission’s proposals as a whole were largely positive. There was general acceptance, outside France, of the political and juridical argumentation linking the three parts of the proposals. In Germany there was reticence about some aspects, in particular the part on direct revenues, but criticism of the French hostility to the supranational implications. The French hostility to those parts of the proposals not directly concerned with farm policy finance was clearly manifested when the Council took the formal decision in April to transmit them to the Parliament, and the French

the Commission and the Parliament, then t a e latter could within a


delegate made it clear that this did not in any way imply approval. French press reports reflected a mood of anger in government circles at the audacity of the Commission scheme and at the linking of moves with major political content to the completion of the farm policy. An article in Le Nouvel Observateur on 20 May referred to the proposals as taking the French government by surprise.7

Experience on previous occasions, and in particular with the Mans- holt Plan, seemed at the time to indicate that a considerable period of preparatory work and negotiation would be needed before decisions could be taken on the wide range of interlocking problems before the Council, of which the new proposals were the most important. 30 June, 1965, was not looked on as a firm deadline for a decision since there would be no great difficulty in prolonging the status p o on farm policy financing until the decision was reached. Mr. Mansholt was reported on one occasion as saying that there remained two years in which to reach agreement.

The first general exchange of views on the proposals took place in May, and the first full debate at a Council session on 13-15 June in Brussels. On that occasion there was a sudden and unexpected change in the French position. The French delegation indicated that they would no longer insist on the revenues from levies going direct into Community funds on the day common prices came into effect. They held consequently that the Community would not have direct revenues in July 1967, but only in 1970, and that the whole problem of the budgetary powers of the Parliament could therefore be postponed until that time. There was on that occasion a general reluctance on the part of all delegations to accept the principle of direct revenues from 1967 onwards; however, no definitive commitments were taken on any side. There was no general debate at these sessions on the third part of the Commission’s proposals, relating to the powers of the European Parliament.*

THE CRUCIAL DEBATES

The Council of Ministers met again on the morning of Monday, 28 June, 1965, in Brussels, in an atmosphere of considerable uncertainty as to what could be achieved. Sig. Fanfani, Italian Foreign Minister, who was leading his country’s delegation, is reported to have stated clearly that the Commission’s proposals must be dealt with as a whole; there should be no illusions that the discussions could be completed in the three days left before the existing provisional agreement on farm policy financing expired on 30 June; he proposed therefore the adoption of a holding regulation, and a precise agreement on a working programme for tackling all the outstanding problems. The time was


further limited by the fact that the Foreign Ministers of the Six were to attend a meeting of the Council of WEU, with their British opposite number, Mr. Michael Stewart, on Tuesday and on Wednesday morning in Luxembourg, the second day’s session being the one devoted to ‘economic problem’ at which, under the compromise reached in 1963, the EEC Commission was present. Thus on the Tuesday the ministers of agriculture would meet alone to examine farm policy problems other than the main Commission proposals.

Sig. Fanfani’s view was countered at the beginning of the session by M. Couve de Murville, who was in the chair, and who stated that in the French view the problem before the Council was a simple one- the adoption of the new financial regulation, for the period from I July, 1965, to the end of the transitional period, without conditions. He is reliably reported to have stated at this point that the Six had always met their commitments, and that should they not do so ‘things would take a new turn . . . and the Common Market also’. With President Hallstein defending the Commission’s proposals against the criticism that they added conditions not resulting directly from the require- ments of the Treaty, and the German delegation supporting the Italian in insisting on treating the proposals as a whole, this basic clash remained unresolved as the Council went on to tackle the more technical problems involved.

There was general agreement during the Monday session that the Council should aim to complete the organization of the common farm policy and round off the industrial custom union for mid-1967, and the ministers of agriculture were asked to draw up on the following day a realistic time-table for the necessary decisions. (This they were in fact able to do at the Tuesday session on the basis of suggestions from the French Minister of Agriculture, Edgar Pisani). A degree of con- seiisus was forthcoming, as Monday’s discussion progressed, on a Luxembourg compromise suggestion that I July, 1967, should be set as a target for completing the farm policy organization, with common price levels, and should also inark the completion of the industrial customs union; the move to the single market stage for agriculture, with revenues going to the Community, should however be postponed until 1970. This solution was unacceptable to Italy, who was concerned to know the overall picture of the financial policy and what it would mean to her in practical terms, before agreeing to the settlement. Italian toughness throughout the session about the financing of the common agricultural policy arose from a realization of the significance in practical terms of the first three years’ results. During that period Italy had become, thanks to her economic boom and to an extent unforeseen a few years earlier, an importer of foodstuffs;

B


as such she had paid a major contribution to the agricultural fund; but owing to delay in Council decisions basic regulations, involving partial Community financing, had come in only belatedly for rice (in September 1964) and not at all for other products of major interest to Italy, fats and oils, hard wheat and tobacco.

Most of the afternoon was devoted to technical discussions on the details of the financial settleincnt for the remainder of the transitional period, complicated however by uncertainty as to whether this meant 1965-67 or 1965-70. Reliable accounts show the French delegation as continually insisting that this was the only problem to be settled, and others, in particular Sig. Fanfani, repeatedly recalling the political issues needing to be decided at the same time. At the end of the afternoon M. Couve de Murville was reported to have noted that the Council was in ‘almost total disagreement’ on the problems under examination. During the early part of the evening the debate moved on to the question of direct revenues: there was a feeling, expressed on the Italian side, that a move to direct revenues in 1967 might be premature, and the French view that a system of perequation or compensatory payments between governments could be instituted met with a favourable response. The Italian, German and Dutch delegations all reportedly expressed the view that there must be an overall fairness in the Community’s financial settlement. A short debate followed on the Monday evening about the powers of the Parliament, M. Couve de Murville expressing wonder that the problem should have been raised at all, since it need not arise until 1970 when levies were to go to the Community. Professor Hallstein, replying, reportedly recalled the views adopted by certain Parliaments and the fact that the ratification of the agreement on agricultural finance would be endangered if the powers of the Parlia- ment were not increased. Such an action, the French Foreign Minister replied, would mean a very serious crisis, and n w n e could know what would happen; it would change the situation in the Common Market. The debate was not pursued at any length.

When debates resumed on Wednesday, 30 June, the Council again covered one by one the problems at issue-the time-table for settling outstanding firm policy problems, the transfer of farm policy costs to the Community budget, the distribution of the financial burden. The debates were typical of the complex exchanges necessary at the early stage of Council of Ministers’ deliberations on a mass of interlocking problems, with six different national views, plus that of the Com- mission, to be expressed on each point. Towards the end of the afternoon another speech by Sig. Fanfani served to re-emphasize the need


to decide simultaneously on the three problems raised by the Com- mission. Shortly afier 7 p.m. there began an exchange lasting some two and a half hours in which the political clash clearly emerged: the general pattern of it can be reliably pieced together. A further reminder from M. Couve de Murville that the only point to be decided by midmght was the financial regulation brought a retort from German State Secretarv, Rolf Lahr, that the German delegation intended to continue to regard the Commission’s proposals as forming a whole. Some minutes later the French Foreign Minister made a solemn statement to the effect that the only commitment binding the Council was to complete the farm policy; were this commitment not to be met there would no longer be a Community; and there was a risk of that happening. He felt that what he had said earlier to his colleagues had not been taken seriously, and insisted that he was in earnest. M. Couve de Murville’s speech was followed by that of M. Spaak, who backed him, maintaining that the commitment on the farm policy must be met, and that the other problems of direct revenues and of the powers of the Parliament could be tackled at a later stage in the development of the Community. President Hallstein expressed firmly the view that the failure of the Council to reach agreement on the 3 0 June deadline would in no way indicate a lack of determination to meet commitments; he cited numerous Council commitments, in the farm policy field, still outstanding. He held that an agreement could in fact be reached in a relatively short period. Sig. Fanfani reminded the Council that no one date and time could be given over- riding importance: 3 0 June ‘not the year one thousand’. The firmest speech was that of the German Foreign Minister, Dr Gerhard Schroeder, emphasizing the will of all member countries to carry out their cominit- iiieiits, recalling once again that the Conunission’s proposals must be treated together, and reminding the Council of the many time-limits not met in the past. He announced that the German Bundestag had that very afternoon approved the text of the Treaty on the merger of the Executives, unanimously adding a protocol calling clearly for a strengthening of the powers of the European Parliament. Dr Luns, Dutch Foreign Minister, spoke along similar lines, and M. Werner for Luxembourg called for decisions on principle on the political issues to enable a settlement of the financial problem to be calmly debated.

After a break the Council resumed for a final late night session, starting by dealing in some detail with the sharing of the cost of the farm policy between the member States. A French proposal under which France would have borne directly part of the cost of easing the Italian situation was rejected by the Italians on the grounds that an


equitable overall settlement had to be reached. At midnight M. Couve de Murville offered to surrender the chairmanship to Sig. Fanfani, Italy being due to take over the chair for the next six month period, but the Council tradition was observed and the French Foreign Minister continued in the chair. At the end of the debate there remained major. divergences on the issue under discussion, four countries (France, Belgium, Luxembourg and Germany) being in general in favour of seeking a settlement for five years, Italy and the Netherlands being able to accept it only for two years.

The Council went into restricted session, with only ministers and the Commission present, and according to reports the Commission offered to present compromise proposals on the basis of the debate, whilst several ministers pleaded for this to be tried and for the sessions to be continued in July to seek agreement. The French Foreign Minister was adamant and insisted on closing the session.9 At 2 a.m., at the official press conference always given by the chairman of the Council at the close of a session, he announced that the Community was in a serious crisis, but would give no indication of what the con- sequences would be.

FRANCE WITHDRAWS The first official French reaction was not long in coming. On 6 July

an official communiquk from the Secretariat of the Council of Ministers announced that the French assistant Permanent Representative had made known that the Permanent Representative, M. Jean-Marc Boegner, had been ‘asked to return to Paris’. In addition, it was indicated that ‘for the moment the French delegation would not take part in the Council of EEC. In addition, the French government has also called for the cancellation of the session of the ECSC Council scheduled for 13 July.’ France would not take part in Permanent Representatives sessions to prepare for the Councils, nor send observers to negotiations carried on by the Commission under mandate from the Council. Lastly, as regards day-to-day affairs, ‘the French delegation will not take part in the work of the Committees and groups preparing drafts or carrying out studies for the realization of economic union, e.g. the Medium Term Policy Committee, the working party on fiscal harmonization. As regards the technical committees dealing with current matters, like the management committees and the steering committees of the funds, the position of the French government will be made known at a later stage.’ The policy thus set out was to be strictly followed by France throughout the rest of the year. French officials continued to attend meetings concerned with the running of

THE CONSTITUTIONAL CRISIS 1965-66 21 1

the common agricultural policy and of the association with Greece and Turkey.

It can be argued that froin a legal point of view the French action, as set out in the statement to the Secretary-General quoted above, and as carried through in practice, constituted an intentional infringe- ment of the Treaty of Rome. Article 5 of the Treaty lays down that . . .Member States shall take all general or particular measures wLch are appropriate for ensuring the carrying out of the obligations arising out of this Treaty or resulting from the acts of the institutions of the Community. They shall facilitate the achievement of the Community’s aims. They shall abstain from any measures likely to jeopardize the attainment of the objectives of this Treaty

and Article 146, para I , states that . . . the Council shall be composed of representatives of the Member States. Each government shall delegate to it one of its members.

The chairmanship of the Council, and with it that of other bodies meeting under the Council auspices, having passed to Italy, i t was decided from the start that all meetings would be held. In the early days of July discussions took place in the Permanent Representatives’ Committee, from which the French were absent, as to the suitability of continuing to meet. Three countries-Italy, Germany and the Netherlands-stood firm on maintaining the strictest observance of Treaty obligations, and of keeping all the institutions fuictioning as before, and Belgium and Luxembourg despite their hesitations attended the meetings which were called by the Italian chairman. All the various committees and expert groups which are convened by the Com- mission and meet under its chairmanship continued to hold their sessions normally.

Of particular procedural significance was the session of the special Council of Ministers of thc Coal and Steel Community, already scheduled for 1 3 July, and for the cancellation of which the French government specifically asked. The Italian chairman, Sig. Scarlatto, Minister of hidustry, took the view that since the meeting had already been called he had no power to cancel it at the request of a member government. At the start of the session the ministers of the five countries, in restricted session, finally determined that it was to be considered a normal legally constituted session, despite the absence of the French member, and also decided that written procedure should be adopted to obtain French assent to decisions which the Council would otherwise have been able to agree upon.

This precedent was followed in the case of the EEC and Euratom Councils. A session was called by the normal procedure for 26-27July, and prepared for in the normal way by the Permanent Representatives’


Committee. At the session when it took place the Council settled beyond doubt any question of its own ability to take decisions in the absence of a representatives of a member government: it decided to adopt a written procedure for three decisions, two relating to EEC and one to Euratom. France was to agree to these decisions by written procedure thus confirming her acceptance of the Council’s legality. It may be added that there was never any question of other Com- munity bodies-the parliament, the Economic and Social Committee, or the Courts of Justice-suspending their activities; indeed a case involving France was dealt with by the Court in the autumn. The Commission itself maintained, as far as its own activity was concerned, a policy of business as usual.

There can be little doubt of the political significance of the decision of the five countries to continue full operation of the Council machinery. French spokesmen were suggesting, especially during the early part of July, that the problems raised by the crisis could only be dealt with in bilateral diplomatic negotiations between governments. This was met with an equally firm assertion by the representatives of other governments to the effect that Community problems could only be discussed and settled in the framework of Community institutions. The fact that the Council continued to meet was to strengthen this position- and also to afford them a forum within which to concert their views, thus emphasizing the legality of their own position. This did not, of course, rule out intense diplomatic activity, both in contacts with France and in concerting the views of the other member countries.

THE COMMISSION’S COMPROMISE SUGGESTIONS

The EEC Commission took the decision early in July to present a further paper to the Council on the issues under discussion when the talks were broken OR This was done both as a political demonstration that progress had been made and a solution was not impossible, and also to provide a basis for further debate. When finally submitted on 22 July the new text took the form of a memorandum, intended to draw the conclusions from the views and preoccupations of the six member countries as they had been expressed in the previous debates, and to indicate the lines along which a compromise could be reached. It was thus daerent in kind from the proposals which the Commission had on past occasions put forward at the final stage of difficult debates, and which have come to be known as the ‘package deals’. This was emphasized in that the new text made no reference to the problem of the powers of the Parliament, except to state that the very limited enchanges of views in the Council did not make it possible to give any useful indications for the lines of possible agreement.


The essential problem which the Commission had to solve was to meet the majority view that a financial settlement had to be reached for the five-year period 1965-70, whlst at the same time reassuring Italy, who as a result of the unfair deal she felt herself to have had in the first three years wished to know the significance of the commitments she was entering into before agreeing to a settlement. It was also necessary to leave open the possibility of completing the farm policy by the earlier target date of I July, 1967. Lastly, new suggestions for farm policy had to dovetail with indications about the industrial customs union. The key to the Commission’s new ideas, as regards payments to the fund, was to set a fmed ratio for sharing the cost of the farm policy between the six countries: there would be an increasing part proportional to imports, but to imports in a given year, with the result that the exact percentage to be paid could be worked out in advance. As Iegard payments from the fund, the Commission took over a formula advanced by the French during the final Council sessions of the end of June and referred to by M. Pisani as ‘catching the train on the move’. Thus, for foodstuffs for which the market organization was complete, and single price levels fixed, the share of the fund in covering expenditure would, as originally proposed, continue to increase by 1/6 for the remaining two years to reach 6/6 from I July, 1967, onwards. For other products, where the common policy was not complete in time, the assumption would be that 1970 was the target date, and so the move from paying half of expenditure to paying all of it would be covered by an increase of 1/10 per year over the remaining period. If, however, the single market stage should be achieved in the meantime for a given product it would move at once to full financing. Linked to any settlement would be agreement on completing the industrial customs union with application of the common external tariff from I July, 1967, and a firm decision on removing tax barriers, notably through the harmonization of business turnover tax systems, by 1972.

On the question of direct revenues the Commission followed in its memorandum the lines of consensus in the Council. The date for the Community to have its own direct revenues should be postponed to 1970: the use from that time onwards of revenues from levies and duties, but also other possible sources, should be studied. From July 1967 until 1970 there would need to be a system of compensation: revenue from the common external tariff would no longer automatically be retained by the national governments, but would be shared out through an ‘equalization fund’. On the powers of the Parlia- ment the Commission reserved the right to make a statement at a later stage in the Council’s deliberations.

214 J O U R N A L OF C O M M O N MARKET STUDIES

These new proposals were examined for the first time by the Council at the end of July, and received a mixed reception. They were sent for study to the Permanent Representatives.

GENERAL DE GAULLE DEFINES THE FRENCH VIEW Throughout July it remained unclear exactly what the French

government was hoping to obtain as a result of its boycott, although as early as 7 July, Agence France Presse was reporting from Brussels that in diplomatic circles ‘according to the hypothesis most often put forward, General de Gaulle is thought to be intending to exploit to the maximum “the failings of his partners” and the “breach of commitment” to obtain a revision of the European Treaties removing from them any supranational ferment and reducing the Common Market Commission to a strictly technical role’.

The French President’s references to the Common Market in his press cotlference on g September were largely to confirm these prog- nostications. Since it both sheds light on French actions in the period leading up to the 3 0 June crisis, and was instrumental in determining the mood and attitude of France’s partners, the General’s statement on this subject deserves to be quoted at length:

What we wanted yesterday, and what we want today, is a Community which is both equitable and reasonable.

Equitable: that means that, taking account of their particular circumstances, agricultural products should be subject to the Common Market at the same time as industrial products. Reasonable: that means that nothing of any importance, either in the initial planning or the later operation of the Common Market, should be decided, and certainly not applied, except by the responsible authorities in the six countries, that is to say, the national governments subject to parliamentary control. But we know-and heaven knows how well we know it-that there is a different conception of a European federation in which, according to the dreams of those who have conceived it, the member countries would lose their national identities, and which, moreover, in the absence of a federator such as Caesar and his successors, Charlemagne, the Emperors Otto and Charles V. Napoleon and Hider each tried to become in the West-in his own fashion-and such as Stalin tried to become in the East, would be ruled by some sort of technocratic body of elders, stateless and irresponsible.

One knows also that, in opposition to this project devoid of all rcalism, France proposed a plan for organized co-operation between the states, evolving no doubt towards a confederation. This plan alone appears to her to correspond to what the nations of our Continent really are. This plan alone would one day ermit other countries like England and Spain to join in, because these countries, li L e ourselves, do not wish to lose their sovereignty. It alone would make an rrriertrc of the whole of Europe conceivable one day.

However, and whatever the reservations about the political theories involved, it looked as if the very long and detailed negotiations at Brussels were on the point of being concluded. Certamly, we had had the greatest difficulty in getting our partners-


in practice-to admit that farm produce should form an integral part of the Com- munity. Well, as everyone is aware, this is for us a sine qua tion condition, for, if it were not fulfilled, we should remain burdened with the very heavy cost-much greater than that of our neighbours-of supporting our agriculture, and we should consequently be handicapped in industrial competition, too. That is why we were only able to agree, in January 1962. that the Community pass into the second phase of the Treaty, whch involved reduction in customs duties, on the condition of a formal commitment to settle the agricultural problem, particularly from the financial point ofview, by 3 0 June of this year at the latest, and under conditions and following a timetable precisely laid down. Although at the time there were some tears and grindmg of teeth, we were able at the last moment to gain the agreement of our parmers, and we had the right to believe that they would meet their commitments by the agreed deadhe.

Whilst observing that the cumbersome international machinery built at great cost around the Commission frequently duplicated the qualified services of the six governments, we noted the competence of these officials on the basis of their work and observed that they refrained from excessive encroachments upon the only valid powers, which are thc individual states.

It was too good to last ! In Brussels, on 30 June, our delegation came up against a serious stumbling-block concerning the final definition of the frnancial regulation, as previously agreed on. Shortly before, the Comnlission had suddenly abandoned its political discretion and formulated terms in connection with this financial regulation whereby it would have a budget of its own, possibly of up to zo,ooo mdion new francs ($4,000 million), the states having made over into its hands the levies and customs receipts which would literally have made it a great independent financial power. And then those very states, having fed these enormous amounts to it at the expense of their tax-payers, would have no way of supervising it.

It is true that the authors of the plan alleged that the budget would be submitted to the Assembly for consideration. But intervention by this Assembly, which is essentially an advisory body, the members of which were in no way elected for this purpose, would merely aggravate the nature of the usurpation of powers which was being demanded. Finally, regardless of whether or not there was premeditated collusion with the Commission’s supranational claims, the attitude adopted by certain delegations (who stated their readmess to approve and support these claims), and finally the fact that some of our partners at the last moment went back on their undertakings, we had no alternative, in the circumstances, but to break off the Brussels ne otiations.

in what position our country risks finding itself if some of the provisions initially laid down in the Rome Treaty were actually enforced. It is on the basis of this text that from I January next the decisions in the Council of Ministers would be decided by majority vote; in other words, France would be exposed to the possibility of being overruled in any economic matter, whatsoever, and therefore in social and sometimes political matters, and that, in particular, all that has been achieved by French agriculture could be threatened at any moment, without France’s let or leave. Moreover, after this same date, the proposals made by the Commission in Brussels would have to be accepted or rejected in their entirety by the Council of Ministers, without the States being able to change anything, unless by some extraordinary chance, the Six States were unanimous in formulating an amendment. We know that the members of the Commission, although appointed by agreement among the governments, are no longer responsible to them, and that, even on the conclusion of

I must a ! d that in the light of this event we have been more clearly able to assess


their terms of office, they can only be replaced by the unanimous agreement of the Six, which, in effect, renders them immovable. One can see where such a subordinate position could lead us, if we allowed ourselves to deny, at one and the same time, our freedom of action and our Constitution, which lays down that ‘French soverei ty resides in the French people, which exercises it through its representatives a n r b y means of referenda’, without making any sort of exception at all.

That is the position. There is no doubt that it is conceivable and desirable that the great undertaking that is the Community should one day be got under way again. But that can take place, robably, only after a period of time the length of which no one can foresee. Who Lows, in fact, if, when and how the policies of each one of our partners, after some electoral or parliamentary development, will not finally come round to facing the facts which have once more come to the fore.

However that may be, France for her art is ready to join in all exchanges of views

arise, she envisages the reopening of negotiations at Brussels as soon as agriculture is brought fully w i t h the scope of the Common Market, and as soon as people are ready to have done with the pretensions which ill-founded, utopian myths raise up against common sense and reatty.10

A similar account of the reasons for the French action was given in the National Assembly on 20 October by M. Couve de Murville. After recalling that the Commission’s proposals had been made known to the Assembly before reaching the Council, he added:

Far tiom limiting itself to the mandate which we had entrusted to it, and strong in the right which is conferred upon it by the Rome Treaty of presentin proposals which may go as far as changes in that text-a right which is not dispute P but which it may be thought suitable to use only with due thought, the commission suggested a collection of measures of a political nature the ob’ect of which was to transform

itself a veritable political authority, less and less controlled by the responiible governments. Such was the meaning of a transfer of permanent revenues well exceeding foreseeable expenditure. Such was also the meaning of the apparent granting of powers of the Assembly, which, in fact, tended to make the Commission the arbitrator between the Assembly and the Council of Ministers.

M. Couve de Murville went on to explain that in the debate on these proposals the target of completing the financial regulation was lost to sight : . . . In fact, once the eternal debate on supranationality was opened up again, and the methods that had been used laid some governments open to all sorts of political and parliamentary pressures, Pandora’s box was open: it was tempting to do no more than seek to express individual claims, or even to give way to out-biddmg the others.

After a detailed analysis of the role of the Commission and of the Council in the Community system, the Foreign Minister went on to suggest that majority voting remained for the moment inconceivable, owing to the lack of a climate of mutual trust which moves to a political union might have engendered. He rejected the compromise proposals made after the June crisis and went on to insist that since I July there

on this subject which are proposed by t K e other governments. Should the occasion

the Community in the way it (the Commission) ha d always wanted, i.e. by making

THE CONSTITUTlONAl CRISIS 1965-66 217

was no avoiding questions other than the financing; it was up to the governments, and to them alone, to seek a solution.11

The official reaction of the other five Comniunity countries was not to be known until the Council of Ministers met on 25-26 October. There was, however, a spate of statements and declarations of all kinds from both parliamentary bodies and economic interest groups. The European Parliament itself at a debate in July had voted a motion re- futing the suggestion that the Common Market Commission had in any way gone beyond the term of its mandate, and calling on France to return to legality. The debate on the crisis at the European Parlia- ment’s session in October was one of the stormiest in the history of the institution. Gaullist deputies attempting to defend the French case were shouted down. M. Rent4 Pleven interrupted the speech of Gaullist spokesman M. de Lipkowski to brandish teleprinter excerpts from the speech which M. Couve de Murville was delivering in the National Assembly and to maintain that the line adopted was different. M. de Lipkowski’s speech prompted a sharply worded off-the-cuff reply from President Hallstein, who had earlier made a cautious speech on the crisis: the President of the EEC Commission said it must be clearly recognized that the reason for the crisis lay in the absence of the French from the Council sessions and was not the fault of others. The Parliament adopted a motion supported by all three political groups and opposed only by the UNR-UDT group, condemning the French boycott and calling for a return to the negotiating table.

The views of economic interest roups both at the Community

French press had full accounts of a paper prepared by the Conseil National du Patronat Franqais setting out the economic advantages France had gained from the Common Market’s operation and asses- sing the damage that would be done by a period of stagnation. A paper published in October by the French Farmers’ Organizations. presented a detailed account of the facts on the crisis and put the responsibility for the crisis fairly and squarely on the shoulders of the French government. The range of other statements made by trade and industrial groups in the Community would itself furnish material for a lengthy essay: it significantly reflects the attachment of economic circles to the success of the economic union, their satisfaction with the way it works, and their readiness to see it move forward in the direction of closer political unity.

FRANCE’S PARTNERS REPLY

The formal reaction of the other five member countries to the French attitudes came at the Council session at the end of October and caught

level and w i t h France itself were af ong similar lines. In August the


public opinion by surprise with its fumness. The Council had met on the afternoon of 25 October, under the chairmanship of Sig. Emilio Colombo, Italian Finance Minister and an old Community hand who had played a vital and constructive part both in the negotiations on British entry into the Community and in the negotiations on the new association with the independent African countries. In the evening the ministers met over dinner, the Commission not being present, to discuss the crisis. The result was the drawing up of a statement in the final drafi of which the hand of Sig. Colombo himself can be clearly detected. This was formally approved by the Council-the Commis- sion of course being present-next morning. The second paragraph was a solemn reaffirmation of the loyalty of the Five countries to the Community treaties. It stated:

The Governments of the Federal Republic of Germany, Belgium, Italy, Luxeni- bourg and the Netherkinds solemnly r e a m the necessity of continuing to implement the Treaties of Paris and Rome in accordance with the principles contained therein, in order to achieve the progressive merger of their national economies in both the industrial and agricultural sectors. This is the only policy which can enable Europe to develop, to raise the standard ofliving ofits population and to guarantee its influence in the world. The Governments consider that the solution of the problems confronting the Communities must be found within the framework of the Treaties and of their institutions.

The remainder of the declaration contained two appeals to the French. The first was to return to the Council table to continue the work on the financing of the common farm policy. To underline the goodwill of the members and their determination to reach agreement, the Council devoted a non-stop seven-hour sitting that afternoon to a thorough debate on the issues over which the break had come in June. Taking as its starting point the Commission’s July memorandum, the Council reached a large measure of agreement on a solution which quite clearly went a very long way to meet the views expressed by the French delegation during the June debates. The only points left undetermined were those where it was not possible for the ministers of the five governments to achieve a compromise without knowing in more detail the views of the French.

The last part of the Council declaration contained an invitation to the French government to attend a special session of the Council of Ministers from which, as the Council regulations allow in special circumstances, the Commission would be absent. This formula, which was seen as a major concession to France in view of her apparent dissatisfaction with the role played by the Commission, had first been proposed by M. Paul-Henri Spaak. His original stand in the Council on 30 June in favour of the French position had begun to alter following


President de GaulEs press conference. For a period he was reported to be hoping to play the role of mediator; by the time of the October meeting his views had tended to harden: the offer to hold a meeting without the Commission was seen as a gesture of conciliation not in any way setting a precedent.

Reports in usually reliable press sources in the days following the session hinted at a further text agreed between the ministers of the Five and not made public or entered in the Council nlinutes, although its contents had been made known to the French. It was thought to make clearer the limits of the position on which t h Five were agreed: no changes in the Treaty, no reduction of the role of the EEC Commission.

The Council’s decision was made known to France in a letter sent the following day by Sig. Colombo, in his capacity as chairman, to M. Couve de Murville. This letter, and the statement of the Council, were not to receive a formal reply: the French reaction was made known by word of mouth, by M. Couve de Murville himself, to the Italian Ambassador in Paris, and also communicated to the diplomatic representatives of the other member countries in Paris. The impression was given that France wished to see a meeting of Foreign Ministers of the Six, to discuss the problems which had arisen; but that such a meeting should not be a Council session and should not be held in Brussels. No further indication was given, although various bilateral diplomatic contacts took place.

A FURTHER EXCHANGE

The Council of Ministers met again for its regular monthly meeting on 29-30 November in Brussels, under Sig. Colombo’s chairmanship. The session, which had to deal with a number of tariff and other problems, decided to submit the budgets of the Communities to decision by written procedure. The procedure for establishing the budgets (operational budgets for EEC and Euratom, and also the Euratom research budget) was already well behind schedule (they should have been sent by the Council to the Parliament by the end of October). The financial experts of the Council, taking account of the views already made known unofficially by the Frcnch, had pared them down to allow only increases of the order which it seemed France could accept, in the hope that no objcction would be raised to the written procedure. Towards the end of the afternoon the sitting was suspended and the ministers met unofficially to agree the text of the communiqut which would express their position on the continued absence of France. The text agreed after some delay was approved by the Council in formal session. It noted the reception accorded by the French


government to the letter from the Council chairman, and empowered the latter to make known once more to the French government the positions of the five governments, namely that ‘they still believe that the problems under discussion must be solved with due regard to the rules of the Treaties and within the framework of the institutions’. Regretting the French failure to renew the talks, the Council once again called on the French government to resume its place in the institutions, and also to attend the special Council session, in Brussels, as soon as possible. This position was conveyed by Sig. Colombo to M. Couve de Murville when they met in Rome on 8 December on the occasion of the closing ceremony of the Vatican Council.

In the meantime the first round in the French Presidential election had taken place. It is beyond the scope of this article to analyse the role played by European questions in deciding the outcome. Two facts can, however, be recorded: all four candidates running against de Gaulle stated that it was their policy immediately to renew talks in the Common Market; M. Jean Lecanuet, who took as the main plank in his election programme not merely a return to the negotiating table but ambitious moves towards a European federation, gained a percentage of the votes which exceeded the most optimistic hopes of his supporters when he first stood. M. Lecanuet went so far as to call for direct elections to a European Parliament, and even the election of a European president. It was felt by some commentators that many French voters had for the first time been given the chance to realize that there existed a fundamental clash about the future of Europe and that de Gaulle’s policy was open to serious criticism. The weight attached to European questions was emphasized by the fact that M. Mitterand, in fighting his campaign on the second round, called himself ‘the candidate of Europe’. Despite the need to maintain his alliance with the Communist party, traditionally critical of Europe, he was able to adopt a line which received the tacit support of M. Lecanuet, and the open support of M. Jean Monnet who, on the first round, had announced his intention of voting for Lecanuet.

In the week before the second round on 19 December the NATO Council meeting in Paris gave the ministers of the other five member countries the chance to meet and discuss the crisis. They decided to hold a further Council Session on 20 December at which Sig. Colombo would officially convey to his colleagues the reply given him by M. Couve de Murville. The meeting, which took place in Brussels on 20 December, was the shortest ever held by the EEC Council, lasting less than two hours. Not having received a reply from the French the Council was unable to take any further action.

THE CONSTITUTIONAL CRISIS 1965-66 22l

The French reply was in fact conveyed verbally to the Italian Ambassador in Paris during the week after Christmas. It was then indicated that France would attend a meeting of Foreign Wnisters- not, it was reported, referred to as a meeting of the Council-and that this could be held in Luxembourg. The choice of Luxembourg was one which it was thought could sat is^ both sides, since it is not the normal Council seat but is, on the other hand, a major seat of Com- munity activity. The year ended, however, on a bitter note since it was also made known that the French government felt itself unable to adopt the Community budget by written procedure. This meant that both EEC and Euratom would enter 1966 without a budget. The Treaty allows an emergency procedure by which in such a case the overnments continue to pay monthly a twelfth of the previous year s budget, but this would restrict the Communities considerably; and the emergency procedure does not apply for the Euratom research budget.

The meeting to which the French had agreed took place in Luxem- bourg on 17 and 18 January. That this was an extraordinary session of the Council ofEEC was established by the use of the normal Council procedures, and by the presence of the Secretary-General of the Council Secretariat and the Permanent Representatives of the member countries. M. Pierre Werner, Luxembourg Prime Minister and Foreign Minister, was in the chair: Belgium, France, Germany and the Netherlands were represented by their Foreign Ministers and Italy by Sig. Colombo.

At the beginning of the meeting M. Couve de Murville set oat in some detail the two political issues which were of concern to his government: one was what he ieferred to as ‘the style’ of the EEC Com- mission, and the other the question of majority voting in the Council. On the first of these two issues, he submitted a memorandum in ten points-which inevitably came to be referred to as ‘the decalogue’- indicating fields where the French government felt that changes needed to be made in the way the Commission had been acting. The full text of the ten points was as follows:

I . Co-operation between the Council and Commission is the mainspring of the Community. This co-operation should operate at all stages. It follows that, before definitively adopting a proposal of special moment for the States as a group, the Commission should consult the governments at an appropriate level. T h consulta- tion does not reduce the Commission’s right to take the initiative and prepare matters which it is given by the Treaty; it merely requires this institution to use it wittingly.

z. A rule should be made that the Commission is never to unveil the tenor of its proposals to the Assembly or the public before they have been officially submitted the Council. What is more, the Commission should never take the initiative of publishing its proposals in the Official Community Gazette.

6


3. +) The Commission frequently proposes decisions to Council which, instead of relatlng to the crux of problems merely provide it with powers to act subsequently without specifying the steps which the Commission can take if it receives these powers (1963 proposal regarding trade defence, certain trade policy pro osals).

(b) h certain cases, Council can give the Commission the powers nee C L d to ensure the application of rules which it sets up. This transfer of powers should not mean that tasks assigned to the Commission should escape Council oversight. It is doubtless true that in certain sectors, such as agriculture, the Council can step in at application level through its voice in Management Committees. It should be noted, however, that far from being satisfied with this system, the Commission is s e e k to replace Management Committees with mere advisory committees whose views are not binding on it in any way (e.g. Regulation 19/65 on ententes, 1965 commission proposal regarding transport).

(c) The executive powers thus confided to the Commission should be clearly cir- cumscribed, and leave no room for discretion or own responsibility, otherwise, the balance of powers-feature of the institutional structure of the Community, h d a - mental guarantee granted by the Treaty-will not be respected.

4. The Treaty states: ‘A directive is binding on all member countries to which it is addressed as regards the result to be attained, while leaving the form, ways and means to the discretion of national authorities’.

It cannot be gainsaid that, in practice, the Commission frequently roposes directives which give a detailed description of the applicable rules. The sole P reedom left to the States, in such conditions, is the right to choose the national form which is to serve as a vehicle and to take the various national measures required to put things in order.

This practice is obviously an attempt by the Commission to transfer the matters covered by such directives from the hands of the nations to the hands of the community.

It follows that these mistaken procedures should be dispensed with. 5. In 1959, Council enacted provisional rules for the recognition of diplomatc

missions accrdted to the Community (letter sent by Mr. G. Pella, Council President, to Commission President on 27 July, 1959). These rules divide prerogatives between Council and Commission. In particular, letters of credence are presented to the Com- mission President who has established for this purpose a ceremony patterned on the one used in the States, though the Rome Treaty states that only the Council can make Community undertakings to non-member countries.

An end should therefore be put to current mistaken procedures, and Council should be given back all its prerogatives.

6. It follows that approaches by foreign representatives to the Commission should be brought, as soon as possible, to the attention of Council or the representatives of the State which occupies the chair.

7. The Treaty lays down rules-which vary with the organization involved- for the rocedure under which the Community maintains relations with other inter- nationaforganization. It looks as if the Commission has forgotten this fact-it seems to believe that it has a genuine power of discretion in this area.

The Council should assess, case by case and purely in terms of Community interests, the form and nature of links to be established.

8. Commission members should be required to observe a roper neutrality about the policies pursued by all member governments, in their pubLC statements.

9. Mormation policy should not be framed and implemented by the Commission alone, but by the Commission and Council together. Council should exercise an effective supervision of the activities of the Community Information Service-and not just on the budget side.

TffE CONSTITUTIONAL CRISIS 1965-66 223 10. The way in which the commitment, ordering and carrying out of Community

expenditure is supctvisecl should be revised to provide it with an effectiveness which it is well known that it does not possess at the moment.”

On the second issue, that of majority voting, the French position was clear: France wished for a firm guarantee that no country would ever be outvoted on an issue where it held that a vital national interest was at stake.

Debate on these two points lasted through the afternoon and evening of 16 January and the morning of 17 January. Ministers of the other five countries admitted that the issues in the French ‘decalogue’ should be examined, but took issue with M. Couve de Murville on particular points; thus Sig. Colombo pointed out that points 3 and 4 concerned actions taken in the past by the Council, for which the Commission could not be held responsible. On the issue of majority voting it was made clear to the French Foreign Minister that the other countries were not prepared to agree to any text involving a breach in the fundamental Rome Treaty principle that there should always remain in extremis the possibility of taking a decision (save in the fields specifically reserved by the Treaty) by a (weighted) majority vote. The argument was formulated in the debate in terms of refusing to allow a right of veto to be exercised by a country at its own discretion. On this basis the ministers of the five countries were as adamant as was M. Couve de Murville in seeking the right to refuse a majority vote on matters of major national interest. A compromise formula, proposed by M. Paul- Henri Spaak of Belgium, would have required in effect three ‘readings’ by the Council, a proposal that did not meet with unanimous agreement being sent back twice to the Commission for reflection and possible amendment; but this was rejected by the French delegation.

On the afternoon of the second day of the meeting, when it was clear that no solution was possible on the basis of existing views, the French delegation tabled a proposed timetable : agreement should he reached on the two political points at issue by the end ofJanuary; France would then return to the Council table, and the issue of farm policy fmance- and that issue alone-should be settled. The necessary steps would then be taken for the merger of the Executives to come into effect by I April; and other outstanding problems would be taken up subsequently with the merged Commission. This proposal provoked a strong negative reaction, both on the part of the Dutch delegation which saw in it an attempt to dictate to the Dutch Parliament over the question of ratifying the merger Treaty; and even more by Herr Schroeder, who was not at all able to accept the notion of dealing only with farm policy fuiance, leaving aside issues which Germany had

C


always held must be negotiated in parallel, in particular the progress of the Kennedy round.

With no solution in sight, the meeting was adjourned, to be resumed on Friday, 28 January, thus observing the point of principle, important to the five countries, that there should be only one extraordinary session without the EEC Commission.

Immediately after the Luxembourg meeting, on 20 January, several of the ministers were present in Strasbourg for the annual confrontation of the Council of Ministers with the Parliament, postponed from November on account of the crisis. In a lively debate many speakers, including the leaders of the Socialist, Chnstian Democrat and Liberal groups, warned against both a weakening of the powers of the Com- mission and an abandonment of the Treaty principle of majority voting. Mr Joseph Luns (the Netherlands), M. Spaak (Belgium) and Herr Rolf Lahr (German State Secretary for Foreign Affairs) all gave assurances on these points.

Debates also took place during the intervening week in several of the national parliaments. Dr Schroeder took part in a Bundestag debate at which spokesmen of all three main parties supported the stand he had taken in Luxembourg and called on him to continue to defend the principles of the Treaty.

The Permanent Representatives of the six countries met in Luxem- bourg on 26 and 27 January to prepare for the second part of the extraordinary session of the Council. They proved able to reach a large measure of agreement on the points raised by France concerning the activities of the Commission. The original ten points were replaced by a text containing seven points, which it was agreed should be discussed between the Council and the Commission (it was left unclear whether the reference was to the existing EEC Commission or to the future merged Commission) under the terms of Article 162 of the Rome Treaty, which states : ‘The Council and the Commission shall consult each other and shall settle by mutual agreement the particulars of their collaboration. . . .’

The text of the ‘heptalogue’ as finally agreed was as follows : I . It is desirable that the Commission, before adopting a proposal of particular

importance, should, through the Permanent Representatives, make appropriate contacts with the govemments of the member states, without this procedure affecting the right of initiative which the Commission derives from the Treaty.

2. Proposals and all other official acts which the Commission addresses to the Council and the member states shall only be made public after the latter have formally taken cognizance of them and have the texts in their possession.

The Official Gazette should be arranged so that legislative acts having a bindins force are published distinctly as such.

THE CONSTITUTIONAL CRISIS 1965-66 22s

3. The credentials of Heads of Mission of non-member states accredited to the Community shall be presented to the President of the Council and the President of the Commission, meeting together for th is p

4. The Council and the Commission x z o r m each other rapidly and fully of any a proaches relating to fundamental questions made to either Institution by non-

5. Within the scope of the application of Article 162, the Council and the Com- mission will consult together on the advisability of, the procedure for, and the nature of any links which the Commission might establish, under Article 229 of the Treaty, with international organizations.

6. Cooperation between the Council and the Commission on the Community’s dormation policy, which was examined by the Council on 24 September, 1963, will be strengthened so that the programme of the Press and Information Service shall be drawn up and carried out jointly, in accordance with procedures to be defined later and which mi ht include an ad hoc body.

into effect the Communities’ budgets, the Council and the Commission wil define methods of increasing the efficiency of control over the acceptance, authorization and execution of the Communities’ expenditures.

In addition it was agreed that the Chairman of the Council should convey verbally to the President of the Commission the Council’s feeling that Commission members should adopt restraint in their public state’ments. To examine in any detail what underlay the two lists of points, and what issues were at stake, would require an article in itself. Particular importance was attached by the French to information policy and the accreditation of ambassadors. On the first of these the text finally adopted proposes a procedure corresponding almost exactly to that established as early as 1962, under which a Board of Administration discusses the information programme of the Joint Press and Information Service of the Communities. The activities of the Spokesman’s Group, which deals directly with the press, were not referred to and come under the immediate responsibility of the Com- mission. On the question of the formal procedure for accepting the letters of accreditation of Ambassadors to the Community, it was subsequently recalled by Community experts that the procedure whereby the President of the Commission and the Chairman of the Council would jointly perform this ceremony had been proposed by the Commission in a letter to the current chairman of the Council in 1959 and that the proposal had not been accepted owing to the practical inconvenience that would be caused if the Council chairman had to be frequently in Brussels for such ceremonies.

The EEC Commission was to issue on 2 February through its spokesman a short statement indicating its readiness to discuss the seven points with the Council of Ministers. It was widely felt in Community circles that they did not in their final form imply any

mem I! er states.

f 7. Within t f e framework of the financial regulations for drawing up and utting

2.26 JOURNAL OF COMMON MARKET STUDIES

diminution of the Commission’s role in the Community, nor indeed any fundamental changes in its activities.

The issue of majority voting was a far more intractable one. The views of the five countries and of France were in a very basic sense incompatible: in essence, the Five were refusing to admit a veto right; and the French were claiming precisely such a final right to refuse a majority decision. It was repeatedly urged on the side of the other five countries that the problem was largely an imaginary one; and that there would in practice never be any question of putting a member country in a minority on a question which was known to be of vital interest to it. Not only would this be politically inconceivable in a Community; it would also be avoided by all concerned on the principle that what they did to another member country might well be done to them. In a debate which lasted late on the evening of 28 January, and was to end about 11 p.m. on the evening of 29 January,13 many ingenious formulae were advanced to bridge the gap.

The way out was finally to be found in a ‘gentlemen’s disagreement’ -an agreement to differ. All six ministers agreed to a statement which ran as follows:

I. When issues very important to one or more member countries are at stake, the members of the Council will try, within a reasonable time, to reach solutions which can be adopted by all the members of the Council, whde respecting their mutual interests, and those of the Communi , in accordance with Article z of the Treaty.

common market).

discussion must be continued until unanimous agreement is reached.

done in the event of a failure to reach complete agreement.

(This article a i m s at approximating t x e economic policies of members, to create a

2. The French delegation considers that, when very important issues are at stake,

3. The six delegations note that there is a divergence of views on what should be

4. However, they consider that this divergence does not revent the Community’s

Again it is outside the scope of this article to undertake an analysis of the exact significance of this text. It sets out divergent views about the implementation of the Treaty which were known to be held before the crisis broke out: it does not on the other hand constitute an agreed new interpretation of the basic texts.

Thls solution having been accepted, the Council also reached agreement on the terms under which the full work of the Community would be resumed. The budget of the Communities would be approved by written procedure before 15 February; the Council of Ministers would then meet with all members present, and continue its work, giving priority to the financing of the farm policy whilst dealing at the same time with the Kennedy round and the question of alignments on the common external tariff (following the expiry of

work being resumed in accordance with the normal proce 1 ure.


the 20 per cent suspension). On the same occasion, the representatives of the governments would begin talks about the composition of the future mer ed Commission and the Ministers expressed the hope

enable the merger to take effect by I July, 1966. In this connection the Dutch government subsequently made a pledge to the Dutch Parliament that it would not deposit the instrument of ratification until a satisfactory agreement had been reached about the membership of the hture Commission; and when the Belgian Senate ratified the mer er Treaty early in February the Belgian government gave a

Thus the way was opened for the Council to work again on all Community problems : and the list facing it was considerably longer than it had been in June 1965. It seemed too that more elements would in practice need to be settled concurrently -in a single ‘package’- namely, in addition to farm policy finance, the completion of the farm policy machinery, the remaining single price levels, the completion of the industrial customs union, the removal of tax barriers and some moves on commercial policy.

T h ~ s narrative has been strictly limited to the events of the crisis; it should not be deduced that there was no other Community activity. Even during the second half of the year the machinery of the common farm policy continued to operate, as did the European Social Fund and the’ Overseas Development Fund. The Commission continued to present proposals on a wide range of subjects to the Council. At the end of the year a further 10 per cent cut in cmtoins duties on industrial goods traded between the member countries took place as laid down in the Treaty. In the field of external relations the Commission delegation continued to take part in the Kennedy Round negotiations in GATT; the negotiations on Nigerian association with the Community were concluded in July-although no action could then be taken to formalize the result in a Treaty; negotiations with Morocco, Tunisia and Austria continued under the mandates already given by the Council in the first half of the year. Nevertheless, it became evident that neither in this field nor in others could the Community go on indefinitely without new decisions by the Council. By the time of the Council session on 20 December, forty decisions had been taken by written procedure and another twenty were pending-but none of these were on major issues.

It will not bc possible usefully to draw conclusions about the crisis or its outcome until some time has elapsed; to do so does not in any event fall within the scope of this article. It may, however, be worth- while to suggest what may have been the turning points in the crisis,

that it wo Ijs d prove possible to complete the necessary procedures to

sirm .f ar commitment.

228 J O U R N A L OF C O M M O N MARKET STUDIES

and to indicate what criteria might be used to judge the outcome. The turning-points, it can be argued, were: the French decision to press for an agreement on the new financial regulation, by the 30 June deadline, with no reference at all to the other two problems raised by the EEC Commission; the decision of the chair that Council and other sessions should continue to be held in the absence of French delegates; the Council statement of 26 October to the effect that there could be no question of a Treaty revision; and the firm refusal of the veto right by five delegations at the first Luxembourg session. In con- sidering the outcome it is instructive to compare the starting positions on the two political points and the compromise which emerged in Luxembourg ; secondly, the political and psychological balance in the Community in March 1965 before the Commission's proposals were made, or in June before the French boycott began, may be compared with that in February 1966 following the outcome.

The crisis of 196566 is to be seen as a constitutional clash, involving an attempt to change certain basic rules: but it was also probably part of a more long-term political confbct over the nature of the Community that in no way ceased when the immediate crisis ended on 29 January. The difference in question can be expected to persist and to be reflected continually in relations between the member governments inside and outside the framework of the Treaties. Nevertheless the institutional fabric of the Community has survived its biggest challenge. That it did so reflected both the continuing firm loyalties to the principles and aims underlying it and also the vested interests engendered by the successful operation of the Community so far.

1 For details of this plan see European Conimictiity of January 1965 (published by the Information Ofice of the European Communities, London).

2 Cf. written parliamentary question no. 121 of 22 April, 1965, put to the EEC Commission by Frau Strobel on behalf of the Socialist group (Joirral Oficiel des Cotnmutiautcs Ewuphentws no. 79 of 8 May, 1965).

a Author's own translation.

* For full details see European Community no. 5, May 1965 (Commission proposals). OThis is the wording of Article 200, taken from the English translation published by the

European Communities. ' Cf. Lr nouvel observateirr, 20 May, 1%5. * For a summary of the debates see reports in Agerice Europe. The full transcript of the debates

is published by the European Parliament in the four Community languages. These points were made by President Hallstein in a press codaence in Brussels on 1 July.

1965, the text of which is available in English from the Information Service of the EEC Coni- mission.

lo For full text see Le Mwde, 10 September, 1%5. l1 A full report of M. Couve de Murville's speech was given in LP Monde of 22 October, 1965. la Translation given in Agewe Europe of 18 January. 1966. la The historic connotations of this date in Community history were not lost on observers:

it was three years to the day since the French veto on British membership of the Community had taken effect.

Cf. Agencp Europe, 23,24 March, 1965.

the constitutional crisis 1965-66

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