his Conservative party seemed unimportant, for Enoch Powell, then the chief critic, was not to turn to outright hostility until 1974. The fact that all Britain’s initial advantage was subsequently lost should not obscure the possibility that, had the oil crisis not struck then, and had Heath not lost the February 1974 election, Britain might have fitted into a novel triangular relationship with Germany and France in a way quite different from its actual halting, semi-detached progress thereafter.

      Denmark, in spite of some internal opposition, could take advantage of the experience of other small states in northern Europe, and its economic linkages with West Germany; Ireland (whose emergence from a long period of introspective isolation which stretched back to the late 1920s had now begun) increasingly found a political ally in France. But British entry posed questions for the future of the Franco-German entente, and since the accession terms represented an act of will by the Heath government, with the close support of business, banking and industry, rather than the nation as a whole, Britain’s long-term stance under the next Labour government remained problematic – something which not only French and German governments but those of Benelux and even Italy watched with trepidation.

      The new entrants’ responses differed from the beginning. As the Commission recruited new staff, experts and linguists, the Irish took up the offers speedily and successfully, the Danes less so, and the British with marked reluctance. Whitehall’s resistance to transfers, and fears among expatriates for their promotion, lost a great potential advantage during the next decade.³ Due to the lack of full cooperation between ministries, for example, Britain found its former colonies losing out on the share of Yaoundé/Lomé aid even as late as 1981, when they gained only 11 % of the total despite the existence of an informal system of apportioning on a geographical basis, because the form had been shaped originally with Francophone Africa in mind, on which UK representations subsequently made small impression. The Labour party also refused to take the seats allotted to it in the Parliament, as trades unions did in the Economic and Social Committee (Ecosoc) – again in contrast to the other entrants, ensuring an illusory Tory parliamentary contingent at the first direct elections in 1979.

      Meanwhile, the new Commission President, from France, Francois-Xavier Ortoli, encouraged the Paris Summit momentum on three broad fronts. As free trade agreements came into force with EFTA countries (Austria, Sweden and Switzerland, followed by Norway, Iceland, and Finland in January 1973, together with Portugal in 1974, newly liberated from dictatorship) it seemed for the first time since Messina that the ‘real Europe’ could be achieved. Discussion began with North African countries about long-term trading relationships, although nothing tangible was likely to emerge until the Council had agreed its own policy for the European side of the Mediterranean. By July 1973, EC and ACP countries started to negotiate both renewal and extension of the Yaoundé Convention, clearly necessary in terms of former British colonies, and despite this potent source of Anglo-French tension, what emerged as the Lomé Convention between the EC and forty-six Third World states was signed in February 1975.

      Secondly, the Commission began serious planning for the Social Fund and the new European Regional Fund (which was to have an important impact on the British budgetary question in the early 1980s, and on the attitude of poorer member states who began to argue for what in the end became ‘cohesion’).⁴ July 1973 brought the ‘Social Action Programme’, with involvement by management and unions in all member states. Thirdly, using the EPC machinery, the Nine successfully aligned their national policies at the CSCE meetings in Helsinki, an essential precursor of the final accord with the USA and the Soviet Union in 1975.⁵

      The era of détente in Europe seemed assured, not least because these three developments seemed to be an external sign of the ‘fundamental bargain’ made with the United States, that American firms which had already set up within the EC boundary should be treated as Community ones, offsetting the disadvantages of discrimination and trade diversion outside. But a currency crisis in January 1973 had forced the lira to float outside the ‘Snake’ (as sterling and the Irish punt had done since June 1972). The lira’s exit forced the remainder to stop supporting the dollar, then close to its floor against EC currencies. Despite French efforts to push Britain into the Snake,⁶ the Snake had, in effect, left the ‘tunnel’, and the last attempt to shore up the vestiges of Bretton Woods ceased, ushering in a dangerous era of violent fluctuations and huge capital movements, later styled ‘casino capitalism’ by Susan Strange. The crisis forced the EC to forgo plans for the first stage of monetary union. Nevertheless plans for a European Monetary Fund surfaced briefly and the Economic Policy Committee emerged at the end of 1973.

      That summer, the Commission won Council support for its first industrial and technology policy. But Ortoli reported to Council in indignant terms on the lack of progress with the internal market, intra-EC trade being still obstructed by a mass of quantitative restrictions and technical barriers. Member states, he implied, were responsible for the bureaucratic delays which obfuscated the customs union and which, intentionally or not, had increased since enlargement. While the EC prepared for the next GATT talks in Tokyo, it was clear that its own commitment to total harmonization, lacking member states’ consensus on the means, had created a vast backlog of work. The Council however showed no disposition to take up Ortoli’s more flexible alternative, which threatened the physical and psychological barriers to free trade in which each state still had such vested interests.

      On 6 October 1973 the Israeli-Arab War began, closely followed by the oil crisis and rampant monetary instability, leading to the first full-blown European recession since 1947. OPEC countries’ use of oil supply and price as weapons to deter Western support for Israel had not been entirely unforeseen (at least by the Heath government) but there was little short-term action that any EC state could take, certainly not to look for strategic energy alternatives unless, like the Netherlands, they possessed gas reserves. Italy suffered most (and received help with its oil supply from Holland and Britain) but none escaped the initial shock, and even when OPEC restored production levels, the price rise (initially from $5 to $11.65 a barrel, but finally $14) induced serious cost inflation and balance of payments problems, with lasting consequences for industry.

      The sauve qui peut among member states in late autumn and winter was such that for many observers (unaware of the oil companies’ swap agreements) the EC seemed to have lost its rationale as an economic, let alone a political, organism. Commissioners argued for a common energy policy, but Council ministers demonstrated themselves quite unable to broker a solution. The IMF Committee of Twenty did no better: only Italy and Britain tried out its recommendation that members should accept their oil deficits and not shift payments problems onto each other at the world economy’s expense. The USA, West Germany and Japan all deflated, the latter most drastically. Meanwhile, EC-USA relations almost ruptured over ECOFIN’s agreement to borrow $6 billion from IMF facilities with Saudi Arabian-OPEC underpinning.⁷ Although ECOFIN eventually got its money, thanks largely to the UK delegation, the US Congress vetoed further funding and it became clear that, without American backing, the EC could stand alone only on a limited scale and then only if it were united, well-briefed and determined.

      Such conditions proved rare during the next ten years as the Nine’s economies diverged sharply. Large reductions in output and working time occurred, and in Britain a three-day working week was introduced. Once the immediate crisis had passed, the underlying problems of meeting external deficits emerged, with almost insupportable consequences in Britain and Italy, together with contingent problems of recycling Arab petro-dollars into OECD investments. The effect was like that after an earthquake: a primary shock followed by disorientation, secondary shocks, immediate crisis responses, and then, at very different times, adaptation and reorganization.

      Taking the decade as a whole, the far-reaching consequences of this ‘mid–70S crisis’ can be seen to have been decisive in re-shaping European nations’ ideas and policies for the remainder of the century. It shifted concern from full employment to inflation (with notable impact on the relative strength of unions as against management, and on the EC’s concept of a ‘social area’), and led to new power relations in each society’s major centres of economic activity: finance departments became dominant over those of trade and industry, central banks and the financial ethos superseded industrial priorities, and accountants gained ascendancy over both engineers and personnel