Britain Changes Course 2.

Chapter III. Britain changes course : 1957- 1963. 

The Commonwealth

The Special Relationship

Britain’s loss of self confidence

The political process

Negotiations and French veto.

- The Commonwealth

The Commonwealth became less important from Britain, both in economic and political terms.

In economic terms, British exports to the Commonwealth, which represented 45% of the total in 1945, only accounted for 25% of British exports by 1960. Meanwhile, exports to continental Europe increased fast. Pressure from the most dynamic sectors of British industry, represented by the Federation of British Industry (later to become the Confederation of British Industry, the British equivalent of the French MEDEF), was exerted on the government , in order to facilitate access to European markets.  British exports to the Commonwealth suffered from serious competition from countries whose currency was not as highly priced as the Pound, and which offered industrial products of equal quality. 

In political terms, British military protection could no longer match that of the United States. By the late 1950’s, the Commonwealth, which originally included mostly states peopled and governed by English speaking, white protestants (the former “Dominions”, which  were granted home rule, and then independence, at an early stage: Canada, Australia, New Zealand) , was now dominated by a majority of black states, some of which were not 100% Christian, and some were influenced  by Socialists. Nigeria, the Sierra Leone, Ghana (former Gold Coast), Jamaica did not necessarily share the strategic concerns of Britain, and were more incensed by the situation in South Africa than by Soviet pressure on Europe. In South Africa, a member of the Commonwealth, the white minority exerted a dictatorship over the black majority, which lived in dire poverty in spite of the country’s wealth. The white regime  operated a system based on official segregation called apartheid. The South African whites were themselves divided between the Dutch speaking Boers, who were the majority, and the English speaking section, which was slightly less committed to apartheid.

Feelings within the Commonwealth were running high on this question. It seemed that, in other African countries, white minorities were trying to obtain independence from the mother country (Britain), only to establish racist regimes which would go on depriving Africans of their civil, political and social rights , thus perpetuating colonial  rule. This was certainly attempted in Rhodesia (North of South Africa, a country now called Zimbabwe) and, earlier, in Kenya. Britain was very uneasy about this. In its former colonies, it opposed unambiguously such attempts by white minorities, even when they were English speaking . However, in South Africa, the situation was more complex. On the one hand, black states felt very strongly about it and wanted the Commonwealth to condemn, and, possibly, take action against the racist South African regime. On the other hand, Britain had large investments in South Africa, a world  class  producer of diamonds, gems, and gold. British banks were heavily involved. A British condemnation of South Africa would not have much effect, and would eventually isolate the English speaking population among the South African whites.  Britain therefore procrastinated, tried to buy time and to prevent a diplomatic crisis. The black Commonwealth states went ahead regardless, and a motion condemning South Africa was voted by the Commonwealth in 1960, in spite of British opposition. This proved that Britain no longer controlled the organization, and encouraged the UK to reorient its policy. It would go on decolonising its former “empire”, but could certainly not rely on the Commonwealth for support. In I961, South Africa left the Commonwealth. Britain had, at one go,  lost the trust of black members, and  part of its influence in  South Africa.

-The Special Relationship

Relationships with the US deteriorated when the UK refused to join the European Defence Community, thus scuppering the whole project. They reached crisis point in 1956, during the Suez affair.

    Egypt, a former protectorate,  had been under British influence since the beginning of the XXth century, when, as part of the Entente Cordiale deal,  it was agreed by Britain and France that French influence would be paramount in Morocco,  and British influence would be in Egypt. Egypt, in 1956, was dominated by a nationalist officer, Colonel  Nasser, who was also a leader of the Non Aligned Movement, a movement by third world countries who refused both Soviet and Western domination, and tried to steer an independent course. This movement, in which India, another former British colony, led by Nehru, was also involved,  was not approved by Britain. Nasser had ambitious plans in order to develop his country’s economy, and wanted to build a dam on the Nile river, in order to generate electricity. He attempted to borrow funds to that effect from British banks, but the deal was blocked by the British government. Nasser retaliated, and decided to nationalize  the Suez Canal, a strategic link between the Mediterranean and the Red Sea, built by the French, and operated by an Anglo French  consortium. France too  had  a grudge against Nasser, who provided political and military support for the Algerian nationalist Front de Libération Nationale, who had just started their military campaign against France in Algeria (in November  1954).  The nationalization of the Suez Canal was considered as illegal. An agreement was struck between Britain, France and Israel, and the three countries intervened militarily in Egypt. From a purely military point of view the operation was a great success, paratroopers seized Port Said without difficulty. Politically, however, it was quite disastrous. The USA had not been warned, or informed, and condemned the Anglo French operation. The USA had a double objective: making it impossible for  European countries to pursue an independent policy in the region on the one hand, and on the other hand persuading Arabs in general and Egyptians in particular that the US would offer them protection in any case, and that there was no need to turn to their great rival , the USSR, for assistance.  Since the collapse of the Soviet Union, US policy has naturally changed, and direct military intervention in the Middle East  is no longer taboo.

In order to force the UK to withdraw, the US did not refrain from exerting direct financial pressure, selling Pounds on world markets, and withdrawing some of their assets from  Britain. This was less than friendly. The British Prime Minister, Anthony Eden,  had to resign. American friendship could no longer be taken for granted.

    Besides, the arms race between the US and the USSR dwarfed the British nuclear arsenal. Britain was certainly the only European power with nuclear capability between 1952 (when the first British bomb was tested in Australia) and 1960 (when the first French bomb was tested in Algeria), but , in terms of megatons, it was small compared to the two superpowers. British advice to the US  was no longer taken seriously, and was no more than a mild irritant. The US negotiated directly with the USSR, when necessary, for example during the Cuba crisis, and no longer included Britain in strategic decisions.

 In the eyes of the US, Germany was more important than Britain, especially in 1960. Germany had to be reassured, and Kennedy had to say “Ich Bin Ein Berliner” when the blockade of Berlin was started  by the GDR (German Democratic Republic, i.e. East Germany). This trend lasted throughout the 1960’s. President L.B. Johnson never  even bothered to visit the UK.

The US remained important, but as a patron rather than a partner. When it appeared that Britain could not mobilize on its own  the technology necessary to produce a missile with which it could deliver its nuclear bombs, it opened negotiations with the US to buy one. This spelled the end of British  sovereignty. The US agreed to sell them the Polaris missile system, which was fitted on British submarines throughout the I960’s and I970’s, in return for a base at Holy Loch in Scotland. The missiles had to be permanently serviced, and improved by US experts . In the context of the arms race, missiles could not just be bought “off the shelf”  like a shot gun, they had to be regularly updated by American staff to avoid detection and obsolescence. By committing itself to the deployment of US weaponry, the British government was abandoning the prospect of an independent deterrent – just when France was trying to create one. The agreement with the US was signed at Nassau (Bahamas) in 1963 .

Britain’s loss of self confidence.

In the late1950’s, the political atmosphere changed in Britain. The Government went to the polls, in 1957, with an incredibly optimistic slogan (“You’ve Never Had It So Good” i.e. : You have never been so rich), but this spirit soon vanished, in the wake of Suez, and of economic difficulties.  The option which journalists had called GITA in the past (“Going It Alone”), i.e. splendid isolation, was no longer open.

 The country suffered from “stop go” policies, which became known as “the British disease”. This could be described as  a perverted way  of implementing Keynes’s ideas. Keynes’s views were predicated on the notion that the first duty of government was to fight or prevent unemployment. The way to do this was through the stimulation of demand, which could be effected through the reduction of taxes, the commandeering of public works, and, first and foremost, by making sure interest rates should remain as low as possible.  This was a very attractive policy, which had considerable advantages for  the working class, for employers and for the state. The working class enjoyed a low rate of unemployment,  high wages  and access to consumption. Employers benefited from industrial peace, an increased output and  high profits. Government reaped the benefits of  social stability, general prosperity and significant tax returns on incomes and consumption.  This policy, in the late 40’s and 50’s, combined with the new mode of production adopted by the developed capitalist world since the 1930’s: the productivity gains made possible by technological progress (e.g. electrification) combined with a permanent rationalization of the work process, enabled industry  to increase wages, offer vast quantities of consumer goods  at an accessible cost, and finance the development of public services, such as health care and education. The system was a dynamic one, at the core of which was the notion of economic growth. Productivity, wages, profits were improving all the time. Hence the slogan “You’ve Never Had It So Good”. The period from 1945 to 1975 was called by the French economist Jean Fourastié “Les trente glorieuses”.  The whole fordist system collapsed in the 1970’s.

The problem about the British economy of the 1950’s was that the popular Keynesian policies of demand stimulation (called “go”)  led the British population to purchase not only British goods, but also goods produced abroad, leading to a rapid increase in the balance of payment deficits. Import controls (i.e. protectionism) could have been a solution, but where in contradiction with British liberal culture, and with the spirit of the times. Economic planning, and the development of those sectors where consumer demand was high, but British industry was not competitive enough, could also have been envisaged … if only Britain was not Britain. Britain is neither France nor Japan, where the idea that the government can legitimately intervene in the economy, identify technological and commercial targets, mobilize capital and appoint top level, well trained  managers is common place. There is no British equivalent of Colbertisme. Britain is a truly liberal, capitalist country, where the market dominates the economy and, some would say, the whole of society.

Besides, for a country like Britain, the trade deficit was a more serious problem than it would be for other nations, such as the USA, which have had a massive one for decades. Since the beginning of the XXth century, Britain had had a trade deficit in the fields of agriculture, but also industry. This was only compensated by the “invisibles”, i.e. the considerable amounts generated by the banking sector, insurance companies and the Stock Exchange. Britain attracted capital from all over the world ,and relied on this in order to finance its agricultural and industrial imports. It was dependent on the reputation of the City (where all the financial institutions are located) for its sheer survival , and the preservation of its living standards. What was at stake  was not just a question of prestige.

The reliability of the City depended to a large extent on the reputation of the Pound, since  any move affecting the value of the British currency would have incited foreigners to withdraw their assets from London and transfer them to the US, Switzerland, or some other financial centre. Paris , at the time, was not a significant centre, from the point of view of international banking or stock markets.

The trade deficit, if it increased permanently, could have affected international confidence in the Pound, and its value, thus plunging the City into a downward spiral, and, it was feared,  bringing about a terminal crisis for the British economy. Limiting the trade deficit was therefore deemed essential by the British governments of the 1950’s, and the only remedy they found was to reduce  the demand for  foreign goods, by reducing consumption. They therefore reversed, repeatedly, the Keynesian policies. They increased interest rates and taxes, stopped public expenditure. This was called a “stop” type of policy. The effect was immediate. Consumption stopped in its tracks, and the trade deficit was reduced overnight. However, the consequences for British society and British industry were also disastrous, since British producers were not selling any of their goods either. After a few months of “stop”, governments had to reverse their policies again, and start stimulating the economy … until the deficit increased again. Those contradictory policies lasted from the mid 1950’s to the early 1970’s, and clearly gave the impression governments had lost their grip over the economy.

Besides, from a political point of view, Britain was also less sure of itself. A significant section of public opinion (probably around 30%) was clearly hostile to the nuclear defence policy adopted by the government, which it found immoral, since strategic nuclear weapons  targeted civilian populations, inefficient, since it could never be used for fear of annihilation of the British population, and politically objectionable, since it tied the UK to the USA irrevocably. In a sense, the anti-nuclear movement can be considered as a political gesture rejecting US and Soviet control over Europe.  The Campaign for Nuclear Disarmament , including religious leaders and trade unionists, mobilized vast numbers of young people and intellectuals and organized large demonstrations. Even the role of Britain in the Second World War was criticized, and the systematic bombing of some German cities, such as Dresden,  – as opposed to strategic  objectives- , was judged immoral and useless from a military point of view.

-The political process.

The Prime Minister, Harold Macmillan, who succeeded Anthony Eden after Suez, was in a fairly strong position in political terms. He was personally convinced by his experts  that Britain should try and join the Common Market before it was too late – as indeed it was. The arguments were summed up by Edward Heath, who shared this idea, and said, in 1961: “ We now see, opposite to us on the mainland of Europe a large group comparable in size to the USA and the Soviet Union, and, as its economic power increases, so will its political influence”. The economic arguments were very real. The Common Market was succeeding. The growth rates of Germany and France was now much higher than Britain’s, tariffs had already been cut by 30%, American investment was flowing into continental Europe. But, as one can see from Heath’s quote, the political argument was also very much present.  Britain would suffer greatly from the emergence of a political giant on its doorstep, if it could not exert any influence over it. The argument was negative, and did not stem from any enthusiasm for the pooling of sovereignties, but was nevertheless very real. There is some evidence British policy has not changed much since that time.

         The chief ideological argument was perfectly in keeping with the all pervading British liberal philosophy: joining Europe would force Britain to face competition, and to become more efficient. This would stimulate British  industry. The argument sounded as if it was borrowed from Adam Smith.

From the point of view of political science, the process which led Britain to completely reverse its policy within a very short period is a textbook case which illustrated perfectly the high degree of centralization of power in the UK. The whole of the nation, including leading politicians, the press, Members of Parliament,  trade union leaders was culturally  hostile to integration. Therefore,  leading Britain to apply for membership in I961 was no mean feat.  The key character was the Prime Minister. Once convinced of the need to apply, he reshuffled his Cabinet, in July 1960, to include more pro Europeans (Duncan Sandys, Christopher Soames, Edward Heath). He then announced his decision to apply publicly, in July 1961, thus forcing his party to tow the line and accept his decision: a vote against him would have been a vote of censure for the government and brought it down. A major opponent within the Conservative party was a rather old fashioned Viscount Hinchingbrooke MP, who said, typically: “Do we ally ourselves with our history and all that we have done to make and maintain this enormous Commonwealth … or do we put obstacles in its progress at the behest of the USA, for the sake of a purely commercial and ideological connection with a corner of Europe ?” . Clearly, by 1961, the “enormous Commonwealth” was no longer an alternative to the Common Market, and the connection to the USA already a very strong one.

The Liberals, who had always been pro Europeans, supported Macmillan, and the Labour leadership, who was expecting to win the next elections, (and who did win in 1964) did not want the issue to divide its own ranks. They did not oppose Macmillan with a lot of energy. The more left wing unions, such as the miners , were clearly hostile, since they hoped that a sovereign labour government would be as radical as Attlee’s had been in the post war context, and introduce more democratic reforms. In practice, the Labour governments of the I960’s and 1970’s proved much less radical , as their margin for economic and social reforms proved very narrow. This helped convince unions, in the 1980’s, that membership of Europe would make no  difference either way in terms of  home policies and reforms. It would neither facilitate them nor hinder them.

The conservative press followed Macmillan, with a few exceptions, and became favourable to entry.

         Employers were less divided than they used to be. The most dynamic and forward looking section, the Federation of British Industry,  including large companies, was very favourable, and helped convince government experts and the Prime Minister himself. Small provincial firms, who made up the bulk of the Association of British Chambers of Commerce, however, had long been  hostile. They had found it easier to negotiate with partners in Australia, or anywhere in the English speaking world on the other side of the earth, who shared a common language, judicial system, commercial law, banking connections, insurance companies and moral values, than with foreigners across the English Channel. As the English used to  say, Africa starts at Calais. By 1961, even the ABCC was favourable to entry.

Negotiations and French veto.

Once the government had applied, negotiations started between British experts and those of the Common Market. Most technical issues were settled satisfactorily, with the exception of horticulture and sugar. The most difficult issue was that of the Commonwealth. Trade with the Commonwealth might be less important for Britain than it used to be, the opposite was not necessarily true, and some Commonwealth countries still relied heavily on Britain. Trade with Britain represented 82 % of the foreign trade of Mauritius, 51% of Nigeria’s, 56% of New Zealand’s , 33% of India’s, Ceylon’s, and Australia’s. Members of the Commonwealth in Africa and the Caribbean were given free access for their exports of raw material and foodstuffs, India for manufactured goods and tea, Canada, New Zealand and Australia for wool and jute.

This heralded the Lomé Agreements in the I970’s, designed to help countries of the ACP regions (Africa, Caribbean, Pacific) obtain access to European markets.

    In spite of the experts’ work, British entry was vetoed twice by France, in 1963 and in 1967. General De Gaulle’s motivations are still a matter for speculation, and should be distinguished from the official reasons which were given at the time.

His motivations were probably based on the conviction that Britain was, and would remain in the predictable future, culturally, politically and strategically oriented towards the rest of the English speaking world, including the USA. Britain was therefore different from all the continental European countries, whose outlook was dominated by their mutual relationships, and who had no links with a vast overseas population, sharing the same culture, and exerting  a significant  influence over world affairs.

 This was and largely remains true. British identity differs considerably from French identity, in the sense that it is not determined by a relationship with a particular territory, or by an administrative decision. It is based on culture, and is differentialist. This explains  why  British citizens abroad can remain British, not only from an administrative point of view, but also psychologically and politically, and never integrate the host societies, whether they live in Dordogne or the heart of Africa. Foreigners (i.e. non British) may be respected, and their cuisine appreciated,  but , whether they live in Britain, as immigrants, or in their own country, they are and will remain philosophically different, and will never be considered as equals. This view is put forward by French anthropologist Emmanuel Todd. English speakers will always be considered as closer allies than “foreigners”, even if they have an Australian accent.

 The French abroad integrate very fast , and lose their French identity rapidly, not bothering to register with French consulates . French identity is linked to place, to birth, or to the administrative decision which granted them  nationality, irrespective of their colour, language or religion. As defined by republican philosopher Ernest Renan, French identity means “the desire to share a common destiny”, i.e.  the building of republican France. This is based on the conviction men are fundamentally equal, irrespective of their culture and nationality,  and explains both the ideal of integration for immigrants and the rapid   identity shift  for the French who live abroad permanently.

German identity is again different, and was traditionally based on blood, or “race”: it could only be transmitted by direct lineage. People of German ancestry living in Russia or in Romania for centuries were generously given German passports, and granted German social rights,  in the 1990’s, even though they were not born in Germany, did not speak the language and had Russian or Romanian nationality. Conversely, the children of Turkish immigrants born, educated and working  in Germany found it impossible to obtain German nationality. Germany shares with the UK a differentialist outlook, based on the notion that national differences are permanent.

The political consequences of such differences in outlook are, and were,  considerable. On the one hand, the military links between the US and the UK were, and remain obvious. Whatever the political differences, the rivalries and ill feelings, solidarity has remained absolute between the two countries in the military field. The Nassau agreement, in I963, demonstrated that the relationship was indeed becoming even closer. The first veto was explained by strategic considerations of this type.

The second veto was provided with a different explanation: the British economy was facing such difficulties that,  De Gaulle said, it would wreck the common market in the case of integration. One should therefore wait for Britain to recover first. In fact, in the mid 1960’s, France was the enfant terrible of the Common Market, and attempted with some success to impose its own views on its partners, in a way which heralded Mrs Thatcher’s tantrums in the 1980’s. France refused to a large extent the political logic of European integration, the element of federalism which was present in the Rome Treaty. De Gaulle wanted to preserve French sovereignty at all costs, from European encroachments as well as from American pressure: France withdrew from the integrated military command of NATO, and there were no American troops left on French soil. This infuriated France’s neighbours and European partners. In European institutions, France practiced the politique de la chaise vide, refusing to attend meetings, and managed to convince its partners to leave aside most of the aspects of European integration for which provision had been made in 1957, and to concentrate on one aspect only: the Common Agricultural Policy. The agreement is  known as the Luxemburg Compromise. This determined the shape of European policies, and expenditure,  for the next 30 years. By the late sixties, agriculture represented 80% of European expenditure. There is no doubt this would have been impossible, had Britain been a member of the Common Market. The Common Market was moving in a direction favourable to France, but totally inimical to British interests. That the CAP , and the British contribution to the budget, should have been at the heart of the crisis of the 1980’s should not come as a great surprise.

After the veto.

There was a sense of relief in Britain after the second veto, even if true pro Europeans were disappointed. The big leap into the unknown was postponed for a few years.  France and Britain engaged in diplomatic exercises, known as “bridge building”, aimed at restoring good relationships in spite of the differences between them. The  decision to jointly build the Concorde was a case in point. New buildings were also erected for British and French cultural institutions in Paris and Oxfo