The Real Straight Banana

A coup against social Europe has been foiled – for the time being

By George Monbiot. Published in the Guardian 8th March 2005

There is a group of men and women which seeks to make life as difficult as possible for the progressives who support the European Union. They are members not of the UK Independence Party or the French National Front, but of the European Commission. Whenever we try to persuade our countrymen that the EU helps to raise our quality of life, defend human rights, protect the environment and ward off the market fundamentalism of the United States, they find some means of proving us wrong.

No one has wrongfooted us as deftly as a Dutchman called Frits Bolkestein. Until November, he was the EU’s internal market commissioner. In January last year, he produced a directive which claimed to be harmonising rules across the Union, in order to make it easier to trade in everything from hairdressing to hospitals.(1)

The Services Directive was promoted, as all such measures are, as a means of creating “millions” of jobs, and it is certainly possible that it could help stimulate the European economy. But it also appears to impose on member states a compulsory commercialisation of their public services, while destroying their ability to defend their people from corporate exploitation. It is – or was – due to have been approved by the end of this year.

The gremlin inhabits a few lines of text in the middle of the treaty, concerning something called “the country of origin principle”. Companies, it says, “are subject only to the national provisions of their Member State of origin.”(2) Roughly translated, this means that a company based in one European country but working in another is bound only by the rules of the country in which it is based. If a construction firm whose offices are in Lithuania, for example, has a contract in the United Kingdom, it need abide only by Lithuanian law while working over here. The obvious result is that every enterprising corporation in Europe will relocate its headquarters to the place in which the laws are weakest.

And then it gets really weird. The state responsible for enforcing the rules – health and safety laws for example – will be the one in which the company is based, not the one in which it is working.(3) If, for example, a Lithuanian construction company is forcing workers in the UK to use dodgy scaffolding, our own Health and Safety Executive won’t be able to do a damn thing about it. Instead, the Lithuanian equivalent must send its inspectors over here, and, without local knowledge, hampered by any number of translation problems, seek to defend the lives of British workers.

Given the way such markets work, the company they are monitoring will, more likely than not, be a British one flying a Lithuanian flag of convenience. But if that company is threatening your safety on a building site in Brixton, you will be able to seek protection only by protesting to the authorities in Vilnius.

It’s a formula, in other words, for a complete breakdown of the effective enforcement of the laws restraining corporations. The directive would, in the name of “bringing down barriers”, raise such barriers for anyone trying to defend their rights that effective public complaint would become all but impossible. This, of course, is the point.

You have to read the entire text to understand what its effects will be. In the preamble, for example, it tells you that a “derogation” (meaning an exemption) from the country of origin rule should be possible for matters “related to the safety of services”.(4) But when you get to Article 19 you discover that a member state may obtain a derogation for safety issues “in exceptional circumstances only”. I wouldn’t like to be the trade union lawyer who tries to make use of that safeguard.

At first sight the country of origin principle looks odd. The purpose of the internal market reforms was surely to engineer a single set of standards across the whole European Union. This rule, in theory, could lead to 25 different sets of standards being applied in the same country. But when you read the briefings produced by the corporate lobbyists in Brussels, you realise that it will indeed harmonise standards – at the lowest levels to be found anywhere in the European Union.(5) Once corporations have moved their nominal addresses to the countries with the weakest rules (just as ship owners register their vessels in Panama or Liberia), the countries with stricter laws will discover that to stay in the market they must drag their own standards down to match the weakest ones.

Bolkestein’s timing was almost perfect. He pre-empted the outcome of four other European proposals, which between them might have defined and protected essential public services and produced a single (reasonably high) set of standards for agency workers and migrant labourers.(6) He launched, in other words, a kind of coup against social Europe.

It has caused a massive rumpus in almost every member nation, but not in the capital of Europhobia. Here in the United Kingdom, while entertaining our customary panics about the banning of church bells, corgis and curved bananas, we remain ignorant of the real threats to our sovereignty. That’s the trouble with Eurosceptics: they’re never around when you need them.

But last week, with no help from our own champions of self-determination, all hell broke out in Brussels. Charlie McCreevy, the new internal market commissioner, admitted that the current services directive is “not going to fly” and suggested of Bolkestein that “another commissioner might have approached [this issue] in a different fashion” (7) – which is about as rude as any Eurocrat has ever been about another.

Of course, it’s not over yet. The corporations and their supporters have gone beserk. The Financial Times, which has consistently ignored or misrepresented the concerns of the directive’s opponents, thundered that McCreevy had “cravenly sounded the retreat before battle had even formally commenced”.(8) Malcolm Harbour, a British Conservative MEP, accused the commission of disrupting democracy.(9)(Funny, isn’t it, how the Tories’ concerns about sovereignty evaporate when a policy is good for big business?) Peter Mandelson, our gift to the rest of the Union, has urged the Commission not to “retreat in the face of illegitimate pressures”,(10) by which he appears to mean the people of Europe.

Directives like Bolkestein’s test the European enthusiasm of anyone with an interest in social justice to breaking point. For those of us who recognise that absolute sovereignty is impossible in the face of globalisation, and that ours is not a choice between alignment and isolation but a choice between alignment with Europe or alignment with the United States, his proposal suggests that we might as well give up: either way we get market fundamentalism. Men like him, and Mandelson, and Jose Manuel Barroso, have done a far better job of sabotaging the European project than any number of Kilroys and Le Pens.

Their proposal will doubtless resurface, and when it does the people of these benighted islands owe the rest of the EU a little more public vigilance and solidarity. But for now, though we played no part in it, we can celebrate a rare victory for an old ideal.


1. Commission of the European Communities, 2004. Directive of the European Parliament and of the Council on Services in the Internal Market. COM(2004) 2 final/3

2. Article 16 (1).

3. Article 16 (2) and Article 35 (4).

4. Paragraph 40.

5. See for eg EuroCommerce, November 2004. Proposal for a Directive on Services in the Internal Market. Position Paper. EuroCommerce, Brussels.

6. The British Medical Association lists the EU White Paper on Services of General Interest; the Qualifications Directive; the Temporary Agency Workers Directive and the EC’s Review of the Posting of Workers Directive. BMA Framework Response to the DTI Consultation on the EU Directive on Services in the Internal Market, 2004. BMA, London.

7. Tobias Buck, 4th March 2005. Row Erupts in Brussels over Plans to Throw Open EU Market for Services. The Financial Times.

8. Leader, 4th March 2005. Disservice to the EU. The Financial Times.

9. Malcolm Harbour, 3rd March 2005. Commission told to Promote Services Directive. Press release.

10. Raphael Minder, 15 February 2005. Mandelson urges fund to protect poorer EU regions. The Financial Times.