Letters to the editor

Polls and Comment

Library - an archive
of speeches

Economists write

Bibliography of EMU

The Euroland Economy



A  B  C  D  E  F G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W Y Z



The EU has 11 working languages, requiring both translation and simultaneous interpretation, and a 12th official language, Irish Gaelic, into which the Union's treaties and certain other key documents are translated (Austria, Belgium and Luxembourg share official languages with other member states). Currently, the most troublesome language is Finnish, which among European tongues is related only to Hungarian and Estonian. The number of EU linguistic combinations, already 110, will more than double when the next round of enlargement is completed early in the 21st century, bringing with it a crop of new and generally unfamiliar Slavonic languages.

Approximately one-third of the Commission's staff are interpreters or translators. Despite the assistance of machine translation, the ever-expanding volume of paperwork represents a heavy burden. Accordingly, proposals have been made from time to time to reduce the number of working languages to three or four, which would particularly ease the problems of the European Parliament, where language skills are low and the output of amendments, reports and draft legislation prolific. But fear of offending small member states - and of frightening off new applicants - has so far been enough to prevent reform.

Latin Monetary Union

In a rare previous attempt to achieve monetary union without political union, (another of the same epoch was the Scandinavian Currency Union), France, Belgium, Italy and Switzerland, soon joined by the Papal States and Greece, determined in 1865 to use the French franc as their common unit of account, while nominally retaining their own national metal currencies, each with gold and silver coins of identical weight and value. Britain and Germany were urged to join, but the system soon came under pressure when Italy printed paper money to finance military expenditure and over-production of silver led to its price falling below its value as legal tender. The resultant rush to mint silver coins and exchange them for hard currency led to unsuccessful demands for France to guarantee unconditionally the gold value of the other countries' reserves. The Union finally collapsed some 20 years after its inception, by which time the gold standard had replaced bimetallism and Germany had not only defeated France in battle but also unified the currencies of the German empire and centralised control of paper money.

Some have suggested a parallel between the Latin Monetary Union and EMU, with speculation against, for example, the lira leading to demands for a German guarantee of value. Striking as some of the similarities are, however, the dissimilarities are far too important to warrant such conclusions.


Dominated by Russia with little interruption since 1795, Latvia was annexed by the Soviet Union in 1940 under the infamous Molotov-Ribbentrop pact, invaded by Nazi Germany in 1941, recaptured by the Soviet Union in 1944 and finally liberated in 1991, after clashes with Soviet troops. Having been forcibly integrated into the USSR's command economy, and with a legacy of a large minority Russian population, many of them non-citizens, Latvia has found the transition to freedom difficult. Its application for membership of the EU was initially turned down by the Commission and although it is now accepted as a genuine candidate it is not expected to be admitted before 2006.

League of Nations

The League of Nations, founded in 1920 after World War I, was the precursor of the United Nations. Idealistic and ineffective, it operated by unanimity and failed to cope with Mussolini's aggression in Abyssinia or Hitler's invasions of Austria, Czechoslovakia and Poland. Germany, which had been admitted in 1926, withdrew in 1933, as did Italy in 1937. The USA never became a member. Jean Monnet was a senior official in the League, from which he doubtless drew the lesson that voluntary co-operation alone was not enough to prevent nationalism and war.

Legal instruments

The EC's principal legal instruments are Directives, Regulations and Decisions, each of which takes precedence over national laws. These all derive, some loosely, from clauses or general principles in the Treaty of Rome, the Single European Act, the Maastricht Treaty, the Treaty of Amsterdam and the various national Accession Treaties. In addition, the Court of Justice has created a body of case law. The choice of instrument, unless specified in a Treaty, is largely at the discretion of the Commission, which has the sole right to initiate Community legislation. (For the volume of legislation see Directive and for a general description see Community law.)

Legal personality

While the Community has 'legal personality', the EU does not. That means that the EU is not able to enter into treaties, take a seat on international bodies, own property or be a party to legal proceedings. Integrationists long to rectify this - as they see it - shortcoming: but anti-federalists object that to confer legal personality on the EU would be a significant step towards creating a United States of Europe with superior constitutional status to that of the member states. (See also 'Treaty of Nice'.)

Level playing field

The seemingly high-minded ideal that all member states should be treated equally. Sometimes, as when attempts are made to prevent the evasion of Directives, the term lives up to its promise. Often, however, it is used to justify protectionism or excessive harmonisation. The intrinsic harm of the concept is that it is generally based on levelling down; by seeking to achieve equality of outcome (for example, tax uniformity) it attacks the principle of comparative advantage, thereby striking a blow at the free-market system on which the global competitiveness of European companies is based. (See also 'Fiscal dumping' and 'Social dumping'.)


A word with two clear but opposite meanings and a hazy intermediate meaning:

  • As used by Continental commentators, liberalism denotes the Anglo-American model of free-market economics, in contrast to the European welfarist system generally known as social democracy
  • As used by American commentators, liberalism denotes left-wing political and economic ideas, in contrast to free-market principles
  • In the UK, liberalism generally refers to centrist or libertarian values.


See Small countries.


The practice, more crudely known as 'horse-trading', of linking agreement on one issue to agreement on an unconnected issue.


Long a buffer state between Germans and Asiatics, Lithuania was under Russian domination from the late 18th century, was annexed by the Soviet Union in 1940 under the infamous Molotov-Ribbentrop pact, invaded by Nazi Germany in 1941, recaptured by the Soviet Union in 1944 and finally liberated in 1991, after clashes with Soviet troops. The country was industrialised by the Soviet Union and forcibly integrated into the USSR's command economy, making the subsequent transition to a free-market economy very difficult. Its application for membership of the EU was initially turned down by the Commission and although it is now accepted as a genuine candidate it is not expected to gain admission before 2008.


Despite the rapid growth of all forms of lobbying in Brussels, there is no official register of recognised lobbyists or pressure groups. Over 10,000 (some say 20,000) people are believed to be engaged in 'interest representation' in the city, the majority being business groups. The Commission works actively with these bodies and sometimes funds them, with a view to encouraging the transfer of loyalties to the European level and widening the EU's 'competence', or right to assert its title to legislate.

Lomé Convention

The Lomé Convention (named after the capital of Togo, where the Convention was first concluded in 1975) is a three times renewed trade and aid agreement between the EU and 71 African, Caribbean and Pacific (ACP) states. Its purpose, now generally acknowledged to have failed, was to create a constructive post-colonial relationship that would invigorate these countries' struggling economies. The ACP countries, mainly former colonial territories of EU member states, enjoy duty-free access to the Community on almost all their exports, as well as grants from the European Development Fund (financed by member states but administered by the Commission) and soft loans from the European Investment Bank. The Fourth Lomé Convention of 1989 covered the years from 1990 to 2000. Under its terms the EU contributed development aid totalling 26 billion euros over the 10-year period; by way of notional return it gained access to raw materials that were in any case freely available on world markets. A feature of the Convention is its stabilisation fund to offset fluctuations in commodity prices. As is usual with such funds, however, resources are easily overwhelmed by market movements, leaving both sides unsatisfied. Moreover, some of the ACP preferential tariff arrangements (for example, on bananas) are in breach of WTO rules. Even the concept of supporting political stability in some of the most volatile parts of the world has not been a success: indeed, the EU has frequently had to suspend aid to Lomé states whose governments have failed to meet minimum human rights standards.

By 1995 it was clear that the Lomé strategy required an overhaul to de-emphasise subsidies and develop new priorities. Growing realism about the counter-productive effects of ill-targeted aid prompted the Commission to mount a review of resource allocation in advance of the forthcoming Fifth Lomé Convention. The prospect of expensive new commitments closer to home, particularly in Eastern Europe, was even giving rise to questioning whether the EU budget, already under constraint, would be able after 2000 to sustain any level of assistance to the ACP countries. (See Appendix 2.)


The smallest and richest member state of the EU and one of the founders of the Community, the Grand Duchy of Luxembourg derives its prosperity partly from its status as a tax haven and partly from the fact that many of the institutions of the EU are located there, including the Court of Justice, the European Investment Bank and the Court of Auditors. As a committed integrationist which is no threat to other countries, Luxembourg has supplied more than its share of Community officials, twice providing a compromise choice as Commission president.

Luxembourg Compromise

A loose arrangement which was never recognised by the Commission or the European Court of Justice, the 1966 Luxembourg Compromise effectively extended the life of the national veto beyond the transitional period allowed in the Treaty of Rome. Its genesis was the impasse known as the 'empty chair crisis', when France boycotted Council meetings for the last six months of 1965 in protest against bureaucratic supranationalism and the advent of qualified majority voting, thereby immobilising the Community. President Charles de Gaulle took the line that the Treaty of Rome was ambiguous or flawed, and that it was unthinkable that France should be outvoted by foreigners. Under the Luxembourg Compromise any decision which affected 'a very important national interest' would be deferred until a unanimously acceptable solution could be found, regardless of whether the Treaty prescribed majority voting. There were various interpretations of what counted as a vital interest and of the situation that would arise if agreement could not be reached, but the practical effect of the Compromise was to paralyse Community decision-making for the next 17 years.

Although the Compromise had no legal status and was seldom formally invoked, the spectre of another debilitating row killed off many Commission initiatives without a vote being taken. Unpassed draft regulations piled up and the single market programme stagnated, but fears that the imposition of laws by majority verdict might cause the EC to fragment delayed any serious re-examination. Gradually, however, the mood changed. A British attempt to block the CAP prices settlement in 1982 stiffened the resolve of the other member states (not least France, whose attitude had changed after François Mitterrand became president in 1981) to restrict the veto to matters of genuine national importance. The Stuttgart Declaration of 1983 sounded the death knell of the Compromise, accompanied by a flurry of explanatory minutes from all 10 member states.

If the Luxembourg Compromise had continued in use, the single market would not have come into existence and the Maastricht and Amsterdam Treaties would not even have reached the drafting stage. It remains, some say, as a theoretical weapon of last resort, but most national interests of importance are covered by the unanimity principle or by opt-outs, and the Community's affairs are now so extensive that the invocation of the Compromise on an issue of middling significance would invite painful retaliation. For practical purposes, therefore, the Compromise has been consigned to history.

Return to top