Year LII, 2010, Single Issue, Page 6
The Future of the European Union
Europe is currently experiencing three major crises. As explained by Alain Touraine in an article published a few months ago in La Repubblica (29 September, 2010), today’s Europe, “left without a future”, finds itself contemporaneously assailed by an unprecedented economic and financial crisis, by a dramatic political crisis (stemming from the European states’ incapacity to meet the challenges before them, i.e. to stimulate growth and reduce unemployment — both essential for getting their public finances in order), and by a profound cultural crisis, born of the incapacity to formulate a long-term plan for the future development of European culture and civilisation.
On all three fronts, our countries are urgently called upon to provide some answers. In short, Europe now needs to do much more than make minor adjustments to the existing Community framework. It needs to lay new foundations for European unification, and this can be done only through a strong act of political will.
Last spring saw Greece, the weakest link in the Eurozone chain, rocked by a financial crisis so severe that it threw into question the very survival of the monetary union and with it, that of the European Union itself. This crisis seems to have brought Europe, sharply, face to face with its own fragility. At the same time, by bringing out the contradictions that surrounded the birth of the single currency, it also seems to have forced the states, particularly those in the Eurozone, to appreciate anew the crucial need to think in terms of a common European destiny. This brutal exposure of the limits of the present European edifice has thus opened up a new phase in the process of unification, on whose outcome hangs the future of our whole continent.
The euro was the product of economic integration and the single market project, but also of the fall of the Berlin Wall and the end of the bipolar world order. The main objective behind its creation was political: it was considered necessary to strengthen the bonds between the Europeans in order to render their unity somehow “irreversible”, but also in order to obtain the binding commitment of Germany, newly reunified, to the European project. The thinking behind this “wager” — such may be defined this plan to create a currency without, at the same time, also creating a state — was that Europe’s political unification, however gradual, would, in any case, be unchallenged, and that the sense of solidarity between the European partners would remain constant over time. The Europeans deluded themselves that the birth of monetary union would quickly be followed by that of economic union, and by the implementation of a European growth and development plan. Although it was clear that the framework of the new European Union was not adequate to govern the single currency (this was already foreseen by the Maastricht Treaty, which indicated the need for a reform in this sense), it was hoped that the integration process would lead to gradual transfers of sovereignty in the political field too. From the economic perspective, it was believed that the criteria established by the Treaty to ensure homogeneity of the Eurozone (those relating to the national budget deficit, the public debt and inflation) would be sufficient to set all the members on the road to financial recovery and, providing there were no asymmetric shocks, guarantee harmonious trends across the different economies.
Instead (if we leave aside the euro’s successes as an international currency), the decade that has just ended saw the emergence and consolidation of trends, both economic and political, very different from the one that the introduction of the single currency had been hoped to trigger: the contradiction inherent in having a currency without a state has not become any less marked over time, and the steps that were meant to be advances towards stronger political unity have not been taken; on the contrary, the absence of adequate European institutions has actually triggered a gradual weakening of cohesion within Europe.
On the economic side, growth in Europe has been generally slow, leading even Germany, together with France, to fail to respect the very parameters that it had, itself, pressed for; in the countries that did manage to record stronger growth, this result was based on transitory and contingent strategies, which only led to an even more dramatic collapse once the global crisis exploded. The gap between the more solid economies, those of France and Germany in particular, and the shakier ones has widened dangerously, as it has become clear that the structural weaknesses were not restricted to budget discipline, but extended to productivity and the capacity to compete on the international markets. On the political side, the fact that the states were allowed to retain their ultimate sovereignty (albeit a sovereignty largely emptied of its true prerogatives), and thus their political power and capacity, has meant that the areas central to the national interest and those linked directly to the formation of political consensus (primarily taxation and foreign policy) have remained firmly in the hands of the member states. This framework has precluded the further advances needed to render the existence of the single currency politically rational and credible; in short, the states have shied away from investing their own resources in projects and programmes whose positive effects might strengthen, economically, commercially and industrially, the other members. Indeed, it is no coincidence that, in the strategic sectors (e.g. research and innovation, the cutting-edge branches of industry and areas of vital national interest, like the energy and military sectors), each country has always sought to defend its own competitiveness at the expense of that of the other EU countries, even when collaborating with them on joint projects.
As we endeavour to weigh up what these years of the single European currency have brought, we cannot help but note the European economy’s structural difficulties competing on the world stage, the increasing social polarisation (due to the widening of the divide between rich and poor and the difficulties managing the problem of immigration), and also the emergence of a dangerous divergence, within the Union, between the objectives and interests pursued by different member states; from the political point of view, there has been a deepening of the division between the Europeans, to the point that the prospect of political unification is now being supplanted by a trend towards re-nationalisation, a trend that has even left some wondering whether there actually exists solidarity between the European nations.
The present crisis has laid bare the untenability of this situation, which the Europeans seemed to want to ignore: the markets were the first to grasp the fragility of this divided Europe and sought to put the governments’ capacity to support one another to the test. The decisions taken last May to avert the risk of Greece defaulting on its debt (a situation that would have had immediate and extremely serious consequences for those member states holding large shares of Greece’s debt and, above all, would have led to the disintegration of the monetary union) provided a clear sign that choosing not to save the euro, and with it the existing common framework, is simply not an option for the fragile European countries: Europe’s collapse would cost them all too dearly. Even Germany, which wavered until the last minute, blocking all the decisions reached by the Eurogroup, ultimately had to give in: in the space of a few hours, the Treaties, which made no provision for bail-out clauses, had been modified and, albeit amidst uncertainty and contradictions, a process to reform the Stability Pact had been launched, a move that will result in muchtighter European constraints and checks on financial manoeuvres and on the states’ budgets.
The Greek crisis raised the problem of the need to save the euro precisely because it exposed the instability and contradictions of the single currency; this implies that the European Union, if it wants to find a new, sustainable balance, must break away from its past.
Until now, the response of the European governments and institutions has been to seek solutions that do not alter the current system. Indeed, behind the decision to tighten up the existing rules, and all the insistence that Europe’s difficulties stem from excessive debt, lies a dogged intention to continue along the old road, in short, a widely-held view that Europe does not need to create a new “single” policy, only pursue a course characterised by budgetary rigor. After all, a true European economic policy would imply a real transfer of sovereignty by the states, and this is precisely what, at present, Europe’s political leaders are not prepared to accept. In a speech given in September 2010, in Paris, during a debate organised by Notre Europe, the president of the European Council, Van Rompuy, who also heads the Task Force that, alongside the European Commission, is working out the new rules of European economic governance, explained extremely clearly the philosophy currently driving the Council (or rather the governments, although this actually applies to the Commission, too). According to him, the sole objective should be “Europeanisation of national politics”, because it is not a question of overcoming the national sovereignties, but rather of improving their co-existence. As Van Rompuy explains, faced with the risk of disintegration of the EU and a resurgence of nationalism, the point is not to criticise, as excessive, the weight of national policies; this weight has always been present within the Union, so why should it be deemed negative and not, instead, a source of greater strength? Europe is “a fact of life”, he says. “[W]ith its institutions it can force governments to cooperate”; it is a real entity that is founded on deep interdependence. The way in which Europe has reacted to Greece’s debt crisis has shown us “the invisible […] forces that hold us together.” Certainly, it has also provided “a fine example of what you might call the European tortoise: a slow, hesitant movement at first, which in the end surprised everyone — including the impatient stock markets!”; but of course, since “the European Union is not a state, decision-making procedures are complicated”; in the euro area alone, “we are dealing with 16 governments and 16 parliaments”.
What lessons, in Van Rompuy’s view, may be drawn from all this? First of all, that the Union must learn “to live with the dilemma of having a monetary union without a developed budgetary union. Since the euro was introduced the European institutions have been responsible for monetary policy, while the member states remain in charge of their budgetary policy and coordinate their economic policy. That creates tensions. Hence the sometimes tortuous decisions.” But the question is: “Can the euro survive despite this innate tension?” Van Rompuy replies with “an unambiguous ‘yes’”, commenting: “Our capacity to react during the crisis clearly showed this”.
As the continuation of this speech clearly shows, the crux of the matter is precisely the effort to ensure that the institutional balance on which the whole European edifice is built is never called into question, because to question it would inevitably raise the issue of the need to create a European federation equipped with sovereignty and its own resources. Anyone who believes that the current confrontation is between the intergovernmental method and the Community method is missing the point. As the words of Van Rompuy and also of Delors show, albeit from different theoretical standpoints, the two positions are actually almost identical. On the one hand, the President of the European Council (again during the speech delivered on the occasion of the debate organised by Notre Europe) explains that “when decisions are taken that concern the foundations of a currency and which also involve extraordinary amounts of money, it is quite normal that responsibility for those decisions should be taken by a head of government”. After all, “[T]he European Council is the place where different sides can find common positions, i.e. European positions. We do this in close cooperation with the other institutions […]; And the members of the European Council […] must all in turn cooperate with national political players, their parliaments, etc. It is the combination of all these links that constitutes the strength of our Union.” For his part, Delors, who laments the fact that the Community method is being destroyed and that Europe is somehow being led to ruin, when asked to say what, in his view, the European Commission’s role should now be — according to the Community vision it should embody the European executive power, but it has the structural defect of not being democratically legitimated —, replies: “It is not a question of asking the Commission to decide, the Commission is at the service of the governments: it should try and highlight the European interest, make proposals and oil the wheels. The better it plays its part, the better the Union works. […] But the governments want to sideline it” (interview given to Le Figaro and published on 16 June, 2010).
The intergovernmental method and the Community method are therefore two sides of the same coin; they are both products and instruments of a process of European construction that, following the failure of the project to found, immediately, a European federal state, fell back on a system in which the states were willing to relinquish competences, yet without attributing the European institutions with the democratic legitimacy and political power that this should imply, in other words, without transferring sovereignty. Up until Germany’s reunification and the end of the bipolar world order, it was, in any case, clearly understood that these two methods were complementary and transitory, and meant to create the conditions for the birth of a European federation. It was only from the start of the ‘90s, which coincided with the disappearance from political debate of the project to build a European federation understood as a federal state, that there emerged a tendency to theorise the idea that the Community was a sort of post-state model of democracy, to be preserved as such. What the crisis has revealed, in fact, is that blackmail on the part of the markets is a direct effect of the precariousness of the Community framework. The true challenge facing the Europeans, therefore, is to overcome both the intergovernmental method and the Community method by bringing about political unity, in other words, by transferring sovereignty and power to European level and putting an end to the states’ claim to be the sole source of democratic legitimacy.
The problem that the Europeans must now resolve is that of creating a European federal state. This is a fact that has now become clear to all analysts, economists and, in particular, to the political world, especially outside Europe, even though few believe that we are capable of carrying the task through. Yet failure to unite will leave our countries dramatically impoverished and will lead to a return of social tensions and discriminations that we thought we had consigned to the past: in short, the end of European civilisation, with all the consequences that this would have on the balances of power in the word as a whole. Such scenarios are a real possibility and not mere academic hypotheses.
It is clear, after all, that unless the political balances are radically changed, even the introduction of tighter rules of economic governance in Europe will serve no useful purpose (other than having, possibly, a short-term deterrent effect on some markets). Indeed, at the end of a dramatic recession that has ushered in a situation of stagnant growth, how can the states possibly manage to withstand the tensions generated by swingeing cuts made in the absence of realistic growth prospects? If it is true that deficit and debt reduction is crucial to prevent Europe from being bullied by the markets, why is it that the action of other countries in similar economic straits is not conditioned in the same way (Japan for example, to say nothing of the United States)? And why is it that Europe should be the region picked out, on the international financial markets, as the weakest link? How long can the European states struggle on in these conditions? As English historian Niall Ferguson, referring to EMU, pointed out in a book published a decade ago (The Cash Nexus: Money and Power in the Modern World, 1700-2000), history can give us only examples of how monetary unions fall apart when national fiscal policy demands become incompatible with the constraints imposed by a single currency.
Van Rompuy’s question of whether the euro can survive in the current international setting despite the structural handicap of being a currency with sixteen different and diverging fiscal and economic policies, would thus hardly seem to warrant his “unambiguous ‘yes’”, a reply both optimistic and unexplained. The problem of Europe is that, through the Community method, it has relinquished the possibility of conducting politics at European level; at the same time, the states have been left totally powerless by the depth of their inadequacy and their crisis at national level. This is the real reason for the weakness of Europe, which has become a continent that no longer plans for the future, that has lost the capacity to conceive of an original model of economic development, and in which investment of resources and mobilisation of society with a view to progress have become things of the past.
The point, then, is this: if the current crisis is forcing the states to start seeing things, once again, from a European perspective, on pain of disintegration of the Union, our first task must be to remove all the ambiguity that surrounds the term “European”. Clearly, the answer to the crisis is not to try and increase the competences or powers of control, necessarily conflicting, of the Commission, the European Parliament, or the Council. Such attempts (which, moreover, run the risk of being misleading) would only strengthen the reciprocal constraints and would inevitably lead to unrealistic economic recovery plans (of the kind repeatedly proposed and repeatedly seen to be worthless). Neither is it realistic to hope that, with the institutional instruments at its disposal, the EU is, today, already in a position to increase its budget, issue Union bonds to fund European economic recovery policies, assume powers of taxation, and begin harmonising the fiscal systems of the member states; to hopethis is to fail to see that these are all steps that cannot be taken unless the states first display a clear will to unite politically. This, therefore, is the real issue: to understand how and whether this will can be elicited, at least in some of the states, and in particular in those with the most developed European consciousness, France and Germany first and foremost. The questions to be asked, then, are: how might it be possible to bring about a return to the original European project, whose aim was to build a European federal state, and also to make people aware, once again, that a currency is an integral part of a state that, to work properly, must be set within an appropriate institutional framework and be part of an overall political programme? How can we make people aware, once again, that a currency, if it is to last, cannot for long remain divorced from fiscal policy, or from foreign and security policy; in short, from political sovereignty?
To go back to the analysis provided by Touraine, which we quoted at the start, the three crises currently assailing Europe are bound up with each other, and the quest to resolve them must start from the formulation of a new plan for the future development of European culture and civilisation. This plan can only be that of creating a European federal state: only in this new framework will Europe have a chance of returning to a situation of political and economic growth, and of reviving its fundamental values.
But turning this project into a solid prospect will demand the effort and commitment of everyone: citizens and society generally must start believing in it once again, not just wishing for it without any real hope of it happening. The question of Europe’s political future must become the main focus of political debate at European and at national level; in other words, as in the past, this issue needs to mobilise minds, so that ideas can be translated into action. Within Italy, France and Germany, in particular, given that these are the three countries that, for historical as well as political and economic reasons, are still the front on which the battle to build Europe will be won or lost, it has to become clear that the Europeans are faced with a choice of civilisation. It has to become clear it is the responsibility of these countries, first of all, to take the initiative in this sense, aware that the realisation of the federal state project depends on the presence of a vanguard to lead the way.
The road to be travelled is a difficult one, but the dramatic nature of the alternative makes it feasible that the states will be forced to set out on it. But for them to be able to do so — and this is indeed the first condition —, they need to have, as a guide, a clear vision of the ultimate objective. And this brings us to the first responsibility of those fighting for the European federation: to expose false solutions and point out, indefatigably, the road to be taken in order to build true unity.