Year LV, 2013, Single Issue, Page 136

 

 

A PRE-CONSTITUTIONAL PACT
FOR FEDERAL POLITICAL UNION
OF THE EUROZONE

 

 

In the current global framework, characterised by acute tensions and rapid changes, Europe continues to be blocked not only by the economic and financial crisis (still far from over, despite the hesitant signs of a recovery), but also, and even more, by a deep political and cultural crisis that is exposing the impotence of the single states and the inadequacy of the level of integration thus far reached. As the Syrian crisis has shown, although the Europeans need to be able to act as a single, leading player on the international stage, this is not possible as the nation-states retain their sovereignty in the field of foreign policy; furthermore, Europe’s monetary union has not been followed by either economic or political union.

Therefore, even though there has also been the problem of the sovereign debt crisis in some eurozone countries, this cannot be considered the only cause of Europe’s present difficulties. Their root lies, rather, in Europe’s continued division. It is this that is preventing the development of true European policies. The monetary union is merely the litmus test of this situation: the countries of the euro area, by relinquishing their national currencies to create a single currency, gave rise to a profoundly interdependent system; but by leaving responsibility for economic policy in the hands of the national governments they have prevented the launch of a European economic policy and, in so doing, created the conditions for a widening of the gap between the more stable and virtuous countries and the ones with a weaker sociopolitical system, a gap that undermines the soundness of the euro.

What the crisis has shown, therefore, is that Europe has no hope of salvation unless it completes the process of its integration by creating a political union. Indeed, it has become clear that it is now necessary to start the process of bringing this union into being, as this is the condition that will allow completion of the monetary union and creation of the banking, fiscal and economic unions. In other words, the time has come to render the solidarity between the member states structural (institutionalised) and, equally, for each state to relinquish a further slice of sovereignty and agree to transfer part of its powers to a supranational government.

Today, more than sixty years since the Schuman Declaration, marking the start of the unification process,proposedthe creation of the ECSC as the first step towards the creation of a European federation, the time has come to accomplish this objective.


The Problems
of the Transition from Monetary Union to Federal Political Union.

There are no historical precedents: the European endeavour is the first-ever attempt to create a supranational government through democratic means, a circumstance that helps to explain not only the difficulties and slowness of the process, but also why the framework of power outside Europe has been instrumental in compelling the European countries, powerless in the face of the new challenges, to advance towards integration.

Europe is now in a situation that highlights, more clearly than in the past, the stark choice it faces: to “unite or perish”. But, today, the transition to political union appears particularly complex on account of the fact that the framework of the European Union does not coincide with the framework in which it is feasible to make the federal leap forwards. Some European states, in rejecting the possibility to adopt the euro, have made it clear that they are absolutely opposed to any further transfer of sovereignty. For this reason, the problem of creating a political union cannot be solved merely by increasing the powers and resources held by the existing Community institutions. Basically, since these institutions represent, and answer to, all the states, they cannot be responsible for governing the eurozone. Thus, either we differentiate between the European institutions according to the fields in which they operate (which would therefore amount to a differentiation of their powers, functions and composition), or we duplicate them, creating new ad hoc institutions for the eurozone. Another possibility is to have all the countries that decided not to adopt the euro withdraw from the EU framework; this, however, does not seem a feasible option at the present time, both because the countries in question would need to opt to do this (and the UK, in particular, has no immediate reason for wanting to make such a choice), and also because too many of the EU countries, fearing that this solution would weaken the single market, have no intention of supporting it. Therefore, it all comes down to finding a way of reconciling political unity of the eurozone with the safeguarding and continued proper functioning of the Community framework.

In this difficult setting, the impetus for change has to come primarily from the euro area countries themselves. After all, the European institutions, while clearly aware of the problem (examined, by them, in several clear-sighted and important analyses), lack the power to impose institutional changes; moreover, for the structural reasons already highlighted, they are not in a position to put forward independent and decisive proposals. The European Commission, in particular, struggles to clarify its role vis-à-vis, respectively, the European Union and the eurozone.

Only the governments of France and Germany seem to be seriously addressing these problems, but their positions are traditionally very distant. France has always been in favour of strengthening the eurozone with ad hoc institutions, which, however, it conceptualises in intergovernmental terms: a strengthened eurozone council endowed with functions of government (understood in terms of coordination between national governments) and a parliament representing the national parliaments, whose members would, therefore, not be directly elected, but appointed by the latter. Germany, on the other hand, always anxious to protect the integrity of the single market, has always envisaged the Union evolving as a whole, and has always declared itself in favour of political union (which, according to its interpretation of the concept, might be achieved by assigning greater powers to the European Parliament and by transforming the Commission into a true government, and the Council into a Chamber of the States).

Neither of these approaches has proved capable of adequately addressing the need to strengthen the framework of monetary union. However, the fact that these two countries both seem committed to finding a solution to the crisis — they have announced that they will advance specific proposals for the eurozone in the spring — suggests that they may well find some common ground. France, for its part, seems to have acknowledged the need to rapidly achieve political union and the necessary characteristics of this union, relinquishing its vision of a specific eurozone parliament, separate from the European Parliament. Germany, having already accepted (with the creation of new instruments of solidarity together with the clarification of new rules in this area)further differentiation between the eurozone and the rest of the EU, recently advocated, through Chancellor Angela Merkel, enhancement of the governance capacity of the eurozone council, thereby shifting the emphasis away from the idea of a strengthening of the Commission in this area. It thus seems that France and Germany may be moving towards a common position. In the framework of the proposals on the table,the most significant points of possible convergence seem to concern the introduction of: i) enhanced coordination of the eurozone governments (through the eurozone council, or even starting with an enhancement of role of the board of governors of the European Stability Mechanism), ii) an additional budget for the eurozone, financed with own resources (to enable it both to intervene in the event of asymmetric shocks and to launch a common solidarity and growth policy), and iii) parliamentary control, exercised by the European Parliament acting in restricted composition, of the action of the eurozone government.

These are proposals that have the huge advantage of being achievablein the short term; indeed their initial steps can be taken through recourse to ad hoc treaties and simplified revisions of the Treaties (along the lines of what happened with the ESM Treaty), thereby circumventing the risk of embarking immediately, in what is still a very uncertain stage, on radical Treaty reforms whose repercussions would be impossible to predict. What is more, these initial steps would certainly not be minor advances, given their potential to end the current deadlock and trigger a rapid and decisive transition towards a true political union. The key points of this possible platform are, on the one hand, the attribution of fiscal power to the institutions of the eurozone (i.e. both the power of taxation — which may be exercised through the creation of new ad hoc taxes, such as a carbon tax, and/or a redistributionoftaxesalready in force— and the power to raise revenue by issuing debt bonds), together with the power to use the resulting resources to implement common policies; and, on the other, the identification of ways of guaranteeing democratic control (clearly indispensable) of these powers. All this can come about only by resolving the complex issue of differentiation within the European Parliament in order to allowthe single currency’s government to be controlled by representatives of the citizens directly involved (i.e. the euro area citizens whose taxes would be funding the eurozone budget, and whose lives would be affected by the economic policy decisions taken in this area).

The reaching of convergence, primarily between France and Germany, on how to solve these two crucial issues would effectively seal the birth of an embryonic European power, supported by a real, albeit provisional, government. In this new framework it would be easier to discuss the definitive institutional architecture of the federal union, the evolution and role of the European Commission, and the transfer, to the new political union, of sovereignty over foreign and security policy and of the relative powers.


Why a pre-Constitutional Pact is Necessary.

A convergence on positions of this type within the eurozone can only really be reached through the intervention of a third interlocutor, capable of introducing the federalist vision into the debate between France and Germany and, when it is time to decide, of giving substance to the federalist point of view. Indeed, the risk is that both these countries, finding it difficult to converge towardsa compromise that is always going to be difficult, will choose, once again, to delay the decision. As the current Italian government evidently well understands, Italy is the only country that can play this role, acting as both mediator and stimulus. An Italian initiative would therefore be decisive, and the first opportunity to mount one could be the preparation of the inter-parliamentary Assizes that the Italian government and two chambers were recently (in a motion passed by the Italian parliament last June) called upon to convene ahead of the European elections. This assembly, which should see the participation, primarily, of national and European representatives of the eurozone countries, could already propose and broadly outline the terms of a pre-constitutional pact — between the eurozone countries and the countries about to join the single currency, or, should these fail to agree unanimously, evenonly between those that arewilling tostart the process— that would frame in a federal sense the decisionscurrently beingtaken to strengthen theeurozone, thereby giving themforce and credibility. This initiative would serve not only to pave the way for the creation of the provisional eurozone government (with the characteristics outlined earlier), but also to bring out its truepolitical significance and indicate the path to its completion. A debate of this kind would turn the European elections of May 2014 into a great democratic opportunity, while Italy’s six-month presidency of the EU, repeatedly invoked by Italy’s prime minister as an opportunity to move the political union project forward, would provide ideal setting for the signing of this pre-constitutional agreement.

Efforts to convene the inter-parliamentary Assizes in Rome with the precise objective of debating this issue would be important in another sense. Making the transition to political union without holding a public debate and without involving citizens, also through the media, is simply inconceivable; from this perspective, the Rome assembly would provide the perfect opportunity for showing public opinion Europe’s true face — that of a great project of civilisation, which, being a model of peace and solidarity, prefiguresthe possibility of enlarging the orbit of democracy to a point at which the idea of a global community assumes real substance. At the same time, it could well represent the Europeans’ last chance to count, and play a role, on a world stage now dominated by the great continental powers.


The Nature of the pre-Constitutional Pact.

The pre-constitutional pact to be discussed and signed by the eurozone countries clearly could notprovide a detailed outline of the institutional architecture of the final federal union. That would be possible only if the parties involved had already reached an agreement, in principle, on the definitive model to be adopted. It must, however, state that the countries signing the agreement undertake to accomplish the construction of the federal political union, thereby underlining the profound significance of the reforms that they intend to implement in the eurozone; and it must contain references to the key steps, at institutional level, necessary to start this construction, and the procedures that might be adopted.

The pact must open with a premise in which it is made clear that the aim of the subscribing countries is to carry through to completion the process of European unification begun on 9 May 1950 with the Schuman Declaration, which proposed to create the ECSC as the first step towards the creation of a European federation. Strengthening the monetary union through the progressive realisation of a federal political union is, in fact, the only way of safeguarding the European unificationproject. Indeed, if the single currency were to collapse, the whole Community edifice would crumble and Europe would once again find itself prey todifferent forms of nationalismand competitionbetween the member states. European unity, which must now take the concrete form of political union of the eurozone, is the only real antidote to the tragedy of division and conflict in Europe and the only way to make war between Europeans impossible. The introductory premise must also highlight the shared values and common choices, both in the sphere of international politics and at social and economic level, that underlie European integration. Particular emphasis must be placed on the vocation of peace building with which the united Europe first came into being and, as a result of this, its propensity to help build the foundations of robust international cooperation. As regards the political union’s internal choices, there are several important aspects that should be underlined: in particular, the need to promote models of sustainable development (from both the environmental and the intergenerational perspective) and its determination to defend and improve the welfare state and the citizens’ living and working conditions, but in strict compliance with balanced budget principle, so as not to jeopardise the future of the younger generations.

All this should in fact serve to spark the realisation that there exists a European people in the making, which has a shared history and shared values, models and interests — a people that, if the right opportunity and setting are created, coulddevelop an awarenessof its own identity and present itself to the world as a community of destiny.

Having laid these premises, the agreement must go on to focus on the reforms that are needed to make the union between the countries of the euro(a union open to all countries wishing to adopt the single currency and accepting its political implications)irreversible. It must therefore specify, at the very least, the following aspects:

a) it must specify the institutional reforms needed to rapidly strengthen the monetary union, pointing it in the direction of the objective of federal political union. In particular, it must specify the instruments of government that are crucial in order to overcome the current configuration of the EMU, which, leaving decision-making processes and mechanismsof legitimation at national level, is based on the creation ofmutual constraints. Indeed, the new framework will inevitably imply the transfer to European level of the decision-making power and democratic control necessary to allow the implementation ofa common economic policy, thus going beyond the mere coordination of national policies. The first pillar will therefore be the additional budget, created ad hoc for the eurozone and financed by own resources that will initially be minimal but nevertheless sufficient to make the necessary interventions (currently impossible) in the fields of eurozone stabilisation and economic policy. As regards the revenue feeding this budget, the eurozone governing bodywill have to be guaranteed the power to decide how much is to come from taxes, and which ones (in this regard it must be given the possibility to establish new ad hoc taxes and/or to agree, within the framework of the European Semester, under the coordination of the European Commission, the division of certain tax receipts between the eurozone and the broader EU), and how much is to be raised through the issuance of debt (for the execution of specific investment policies). At the same time, the procedures for ensuring democratic control of this new eurozone prerogative will also have to be indicated, first of all establishing, by common accord, the mechanism allowing the European Parliament to operate in restricted composition (in other words, the mechanism allowing the creation, within the Parliament, an ad hoc commission of eurozone MEPs empowered tovoteon this matter, or the institutionalisation of an offshoot of the European Parliament, again made up of eurozone MEPs). It will also be necessary to establish the prerogatives of this eurozone governing body in relation to the new budget, giving it greater powers than those currently held by the European Parliament in relation to the Community budget. There will, in fact, also be a need for parliamentary legitimisation ofdecisions concerning revenue (and no longer just of those on spending); the national parliaments, too, should be involved in thisprocess, thereby rendering more democratic the coordination of the national budgets with the eurozone one.

The creation of this embryonic power of taxation and the development of the necessary democratic parliamentary control constitute, in the current phase, the essential first steps in strengthening the monetary union and starting the creation of a federal political union of the eurozone;

b) it must specify the procedures through which the institutional reforms set out in point a) should be implemented. The method used to pursue the political integration project is a key issue, and the choice of method is closely linked to the depth of the necessary political will in the different countries intending to start the process. Some of the desired modifications could (as in the case of the ESM Treaty) be introduced through the signing of an international treaty between the countries concerned, alongside simplified Treaty revisions. And some of the first steps in establishing an additional budget for the eurozone could also be taken in this way. This first phase, potentially rapid to accomplish and based entirely on the political will of the countries in favour, could be framed as a preliminary one, serving to create a situation more conducive to the subsequent advances. However, because of the political value of the reforms identified, in a subsequent phase it will certainly be necessary to draw the national parliaments, the European Parliament and the Commission itself into a process designed to integrate the eurozone reforms into the framework of the EU Treaties, and to define the relations between the eurozone countries and the countries remaining outside the euro area. The first possibility, in this respect, is to convene a convention in the manner envisaged by the Lisbon Treaty. Such a convention should, first of all, be given a specific mandate to draft a reform of eurozone governance that makes provision for the creation of a fiscal power and for control of the same by the European Parliament acting in restricted composition and equipped with enhanced powers. It should also be called upon to address the central issue that, still unresolved, is currently holding back the process of differentiated integration, i.e. the need to allow subsequent eurozone reforms to be decided within this narrow framework. In this regard, to consolidate the existing international treaties (the ESM Treaty and the fiscal compact), some scholars have suggested making provision for a protocol on EMU to be annexed to the TFEU, and setting up a specific procedure for revision of this protocol that allows the eurozone member states to modify the TFEU provisionsspecifically relating to EMUwithout the need for ratification by the non-eurozone EU member states.[1] Finally, it will have to address the problem of the overall restructuring of the EU in the light of the reform of the eurozone. A Treaty revision procedure of this kind would, of course, require the agreement of the countries outside the euro area, Great Britain first and foremost, if only at the inevitable inter-governmental conference that would follow this type of convention. Should it prove impossible to obtain the agreement of all the EU countries, the countries intending to proceed with the reforms in question could convene a constitutional assembly, to be made up only of MPs and MEPs from these countries, but also involving the European Commission in order to identify the political and institutional formulas that might render the framework of the politically integrated eurozone compatible with the Community framework of the current European Union. It is clear that the Treaties in force do not make provision for reforms, or an assembly, of this kind, just as it is clear that the new eurozone structure that emerges cannot be subject to the unanimous approval (first at an intergovernmental conference and then in the various national settings) of all twenty-eight EU members. For this reason, the convention must also work out the clauses that will allow proposals relating to reforms within the euro area to come into force following their ratification by a majority of the eurozone countries, and the system for allowing the non-eurozone EU members to approve the parts that relate to the restructured European Union. It must be understood, however, that the chances of this process working are dependent entirely on the political will of the countries involved.

In conclusion, should it prove possible, with the support of the European institutions, to introduce, in the eurozone countries, the kind of pre-constitutional pact herein discussed, which may also serve to remind the citizens of the deeper values and true meaning of European integration, the political climate will change radically and the growing disenchantment with Europe might be turned back into support for an extraordinary project fostering social, political and cultural growth.

Luisa Trumellini



[1] See Thierry Chopin, Jean-François Jamet, François Xavier Priollaud, “Reforming the European decision making process: legitimacy, effectiveness and clarity”, in The Federalist, 55 (2013), p. 81.

 

Share with