Israel's Path to Europe

The Negotiations for a Preferential Agreement, 1957–1970

Gadi Heimann, Lior Herman

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351258425
• Edition: 1
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

Relations between the new state of Israel and the European Union in the first twenty years of the Community's existence were a major policy issue given the background of the Holocaust and the way the new nation was established. This book focuses on Israel-European Community relations from 1957 to 1975 - from the signing of the Treaty of Rome (1957), which officially established the Common Market, to the conclusion of Israel's Free Trade Agreement with the Community. It reveals a new and key facet of Israeli diplomacy during the country's infancy, joining the many studies concerning Israel's relations with the United States, France, Germany and Britain.

1 The path to economic integration

This chapter discusses the path to European economic integration. It outlines the context, interests, capacities and institutional settings and constraints which are essential in understanding the negotiations between the EEC and Israel.

Historical background: the establishment of the European Economic Community

In March 1957, at a momentous event, Six West European countries—France, West Germany,¹ Italy and the three Benelux nations—gathered in Rome to sign the Treaty establishing the EEC, the essence of which was the creation of a common market. A common market is one of the most ambitious and far-reaching possibilities for international economic integration,² far beyond a customs union. Whereas countries in a free trade area eliminate mutual tariffs and cancel trade quotas, membership of a customs union requires in addition the implementation of a common tariff policy vis-à-vis third parties. A common market supplements the customs union with deeper and extensive arrangements: free movement of goods, services, capital and labor. Finally, a common market also involves generating and coordinating common policies in a range of fields, including foreign trade, agriculture, welfare, labor, consumer protection, health and safety and more.³ Thus, the members of a common market relinquish and share a substantial portion of their economic sovereignty and are precluded from reaching autonomous decisions with regard to considerable policy areas. The high level of integration characteristic of a common market also has far-reaching political significance. In some cases, a political union develops following economic integration: both the American and German Federations began as customs unions. Sometimes economic integration is motivated by political, no less than economic, considerations: the establishment of the common market in Europe is a clear example of such a case.⁴ This enterprise was rooted in fears of another war in Europe following Germany’s economic recovery. In addition, a number of West European statesmen simultaneously recognized that the future of their nations—in terms of security, welfare and prestige—required that Europe would become “more than a geographical term,” using Metternich’s language. For hundreds of years, the nations of Europe had constituted the center of the world. However, in the wake of the Second World War, two peripheral giants—the USA and USSR—had emerged as superpowers, swiftly relegating the proud European states to a secondary status. Nations which until only recently had ruled the world found themselves pushed aside and confronted by a series of new challenges—security, economic and political—without the tools necessary to confront the new reality effectively. Indeed, following the Second World War, West Germany’s steel production was greater than it had been on the eve of the First World War—18.7 million tons in 1952 as opposed to 17 million in 1913. Yet while in 1913 this figure represented 20% of global production, by 1952 West Germany’s share of the international steel market had declined to 8.7%. France’s steel production (10.9 million tons) totaled a third of the amount produced by the USSR, while Italy’s (3.5 million) constituted less than a tenth of this.⁵ The European countries understood that the solution to this current crisis was to overcome their traditional rivalry, historical enmity and the fresh wounds left by the war in order to join hands and consolidate their power. The only way for the French, Germans, Italians, or Dutch to attain a central role in the international arena was as “Europeans.”⁶ Indeed, the conditions for such a step were ripe. The trauma of the two recent world wars had clarified beyond any doubt that the powers of divisiveness—national chauvinism, historical residue, together with religious, linguistic and ethnic divides—were responsible for the great disasters that had beset the continent and caused its present humiliation. It was thus essential to find a way to overcome these divides. Concurrently, many believed that the European nations possessed a sufficiently wide and strong common basis to enable close cooperation and even future unification. Many French, Germans and Italians felt that they shared a history and tradition which had been molded, it should be noted, by centuries of bitter struggles and bloodshed. Two of these visionaries, Jean Monnet and Robert Schuman, translated these new yearnings into action. Others, less idealistic and more practical, desired integration mainly for economic reasons; the latter did not view European integration as a tool designed to disintegrate the nation state, but rather as a way to strengthen it, following two world wars which had brought their countries to the brink of collapse.⁷

The first buds of European integration in the economic field appeared as early as the customs union agreement signed by the exiled governments of Belgium, the Netherlands and Luxembourg in London in 1944 and later implemented in 1948. This became the kernel of future economic integration on the continent and the model which guided it. Furthermore, in 1947 France and Italy signed an agreement concerning the establishment of a parallel customs union, although this entailed greater difficulties than those facing the relatively integrated economies of the Benelux countries and was never implemented. The process of European integration was accelerated by US economic aid to the Western European countries in the framework of the Marshall Plan (1947) and the establishment of the Organization for European Economic Cooperation (OEEC) in 1949. This body, intended to coordinate between the countries receiving aid, served as an initial foundation for economic cooperation between nations that had recently slaughtered one another on the battlefield. The visionaries dreaming of a Federal Europe—such as the Frenchmen Robert Schuman and Jean Monnet, the German Walter Hallstein, the Italian Alcide de Gasperi, or the Belgian Henri Spaak—desired much more and viewed the OEEC only as an initial basis for a continually deepening process of integration.⁸ However, the hopes of the European Federalists, which were shared by the US, that the organization would develop into a free trade area or a customs union proved unrealistic, largely due to the negative attitude of the UK and other nations, including the Scandinavian countries. The alternative was to relinquish the idea of a wide framework involving all Western European countries and focus on those which in principle viewed the integration process positively. However, the supporters of European integration were realistic and pragmatic; aware of the problems and obstacles they faced, they preferred to consolidate a strategy of gradual, stage-by-stage progress. Indeed, they discerned that first stage in such a process must necessarily center upon the limited sectors wherein the nations felt that cooperation was desirable:⁹ for this reason, it was decided in this first stage to focus on the coal and steel sectors. Many Europeans still feared a further war between Germany and its neighbors; ensuring that two resources of great military strategic importance were available to all would make such an eventuality unlikely. In May 1950, Schuman famously called for the creation of a joint French-German coal and steel organization, as well as supra-national bodies to manage these resources. This arrangement was not limited to France and Germany but was also open to any other European states wishing to join. The newly created West Germany controlled the lion’s share of these resources and thus had no real economic interest in responding to the initiative. Yet for political reasons the new Chancellor, Konrad Adenauer, viewed joining the enterprise as of the utmost importance—he believed that it would accelerate Germany’s re-acceptance into the family of nations, enable the country to gain full sovereignty and allay the fears of its former enemy on the western border. Despite strong opposition to Schuman’s plan among German industrialists, Adenauer was determined to enter the initiative and he was able to neutralize internal criticism through a sophisticated employment of the US’s enthusiastic support.¹⁰ This facilitated negotiations between the six West European states—France, Germany, Italy and the Benelux countries—which soon led to the birth of the European Coal and Steel Community (ECSC) (1951). The ECSC was founded upon two elements which recurred also as guiding principles in the communities which were established subsequently: the inter-governmental element, which reflected the division into European sovereign nation states; and the supra-national element, intended to allow the consolidation of a shared European policy and advance the process of integration, the new European framework.¹¹ Two bodies were created: the Council of Ministers, comprised of representatives of the member states, possessed legislative authority, while the supra-national executive High Authority was assigned managerial functions.¹² The latter was authorized to reach decisions directly connected with the topics covered by the community treaty. Only decisions regarding wider fields fell into the bailiwick of the Council of Ministers which, as was noted, represented the member states’ interests. In addition, the High Authority enjoyed financial independence because its budget was funded by a special levy on profits from the steel and coal industries. These two factors endowed the High Authority with freedom of action, giving ECSC a n...

Table of contents

• Cover Page
• Israel’s Path to Europe
• Routledge Studies in Modern European History
• Title
• Copyright
• Contents
• Acknowledgments
• List of Illustrations
• Introduction
• 1 The path to Economic Integration
• 2 The Israeli Economy Confronts the Common Market Challenge
• 3 Pursuing a Range of Options
• 4 A Covert Understanding Between the Commission and Israel
• 5 The End of the Dream of Association
• 6 The Decision to Begin Negotiations on a Trade Agreement
• 7 The Low Ebb of Israel-EEC Negotiations
• 8 A Non-Preferential Agreement
• 9 Israel’s Return to Association
• 10 A preferential Agreement
• Conclusions
• Appendix 1 List of Archives and Abbreviations
• Appendix 2 Illustrations
• Index