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Year LIII, 2011, Single Issue, Page 1



The European Project
Faces its Day of Reckoning
In the face of the dramatic worsening of the current financial and economic crisis (which at the time of writing this editorial seems to be pushing Greece towards bankruptcy and is also hitting Italy hard) it is clear that, for the Europeans, the choice “to unite or perish” is not only very real but also imminent. It hardly needs to be pointed out that Greece’s default would have devastating effects on the whole of the eurozone and would, particularly in view of the weakness of countries like Italy, unleash a domino effect that would bring down the single currency and even the European Union itself. It is widely believed that, should this scenario materialise, the economic damage would almost pale into insignificance compared with the enormous political harm that would be done: for the Europeans, both as a whole and as single countries, it would mean exiting the global stage and losing all capacity to influence international negotiations and the redefinition of global power relations. Even German chancellor, Angela Merkel, has realised this, finally admitting, after much equivocation, that “if the euro fails, then Europe fails”.
In truth, there has long been a growing awareness in Germany (and also in France although in different ways) that Europe needs a sea change: a return to the ideals of the founding fathers whose original intention was to lay the foundations not of a market — this is what, over the past decade, the Union has wanted to represent — but of a federal political union. It is no coincidence that today we are starting to hear, in essence, echoes of various speeches made in the mid-1990s which called for the creation of a federal core within the Union through the immediate introduction of forms of political union between the most deeply integrated and most pro-European countries (one example is the proposal put to the Bundestag on September 1,1994, by CDU/CSU parliamentary group chairman Wolfgang Schäuble, together with Karl Lamers). At that time, these interventions were insightful, far-sighted analyses that sought to highlight the risks Europe faced should it fail to find a rapid solution to the paradox of a currency without a state, and should it prove unable to curb the risks of a watering down and renationalisation of Europe that were inherent in the pursuit of enlargement without the creation, alongside this process, of adequate European institutions. These warnings were not heeded (with results that are only too clear to see) and today, fifteen years on, the same ideas, precisely because they are the only ones that offer a reasonable outcome to the crisis, are returning to the fore. The recipe now advanced tends to be that of the creation of a Federation within the Confederation,starting with the Eurogroup countries.
Every crisis, as we repeatedly hear nowadays, precisely because of the threat it represents, must also be seen as a stimulus, and therefore as an opportunity for change. What this means for the Europeans, for whom the need to overcome difficulties and stalemates has always been the stimulus that has allowed them to advance (sadly almost the only one), is that the current crisis is their biggest chance of making, at last, that fundamental leap towards political union, precisely because the alternative is no longer slow and tolerable decline, but rather out-and-out catastrophe. For the Europeans, this imminent catastrophe is spelled out primarily in the warnings coming from the rest of the world, which is horrified at the prospect that our continent will fail to take the path leading to true unity and, as a result, will implode, creating a chasm at the heart of the fragile international equilibrium that is currently struggling to emerge and triggering a series of largely unpredictable chain reactions. The messages coming from the United States and China, as well as from the rest of the developing world, are unequivocal, as are all the analyses, studies and reports produced by the various international institutions and think tanks, which, without exception, make it clear that the Europeans must create effective forms of political unity if they are to prevent the entire Community edifice from crashing to the ground.
Moreover, data documenting the level of economic and financial interdependence created by the single market and the euro show, beyond doubt, that the Europeans now share a common destiny. And the untenable nature of the present situation means that they have no choice but to seek new solutions — solutions that must inevitably target, as their final outcome, the creation of a European federal power.
Indeed, the various aspects of the emergency that the states are now called upon to tackle show that the birth of a European federation (or “United States of Europe” as many prefer to style it) within the present Union must, necessarily, be the ultimate objective of the reforms that are so urgently needed. Four issues, in particular, can be deferred no longer.
The first is the need to find formulas capable of institutionalising (and “interiorising”) the mechanisms of reciprocal solidarity. For Germany, in particular, this is a very delicate point. Of course, Germany is not the only country to take a stand — several eurozone countries have opposed the decisions that have been taken in this regard —, but it is the key country given the decisive influence it wields in Europe and the fact that its support is the conditio sine qua non of any intervention. The Germans are, objectively, the main contributors to the various bailout funds that have been created to counter the attack on the sovereign debts of the most fragile EMU countries. Now, after twenty years of trying to set boundaries to prevent the monetary union from being turned into a transfer union, they are having to back down over the questions of the no-bail out clause and the ECB’s involvement in protecting the government bonds of the PIIGS countries. Every time the European governments are blackmailed by the markets into taking decisions in this direction, which they do slowly and with great difficulty, a fierce debate is reopened in Germany, which has recently even involved the German Constitutional Court. At the present time, the question of whether or not the emission of Eurobonds should represent the start of a process ultimately destined (regardless of the technical formula adopted) to pool the debts of the eurozone countries seems to be the front on which all the German fears are concentrated and crystallised. As well as being unwilling to grant help, blindly, to countries that have accumulated disproportionate debts, the Germans are also worried about the risk of being dragged down by the weakness of their partners. In many ways it is hardly surprising that these feelings should be widespread in German public opinion. After all, the national governments have never been willing to countenance a full political evolution of the eurozone, and the rules governing monetary union have neither unified the economic policies of the different states, nor created effective convergences between them. As a result, they have continued to be, basically, in competition with each other. And herein lies the structural anomaly exposed by the markets: the existence of a monetary union created in the absence of adequate political institutions. But as long as this intergovernmental/Community framework survives, the contraposition of national interests will continue to be the factor that prevails, and not always in a rational way (the idea that is better to go it alone will always have a certain appeal). The conflict between, on the one hand, the requirement (rational and politically far-sighted) to implement forms of solidarity capable of preventing the domino-effect collapse of the weaker countries (which, as has been seen, could ultimately even include France) and, on the other, the severe internal tensions that this requirement is producing in Germany looks likely to last. It is a conflict that will require the German government to display remarkable agility, at least until it proves able to approach it with a different objective, namely that of injecting new “substance” into the process of European construction through the creation of a federation, a true state that, despite initially having to be (as is often rightly recalled) “slender”, will nevertheless have the capacity to turn the European people into a federal people living in a single political community, founded on institutions capable of governing in the interests of everyone.
The second issue is the need to limit the sovereignty of the eurozone countries in matters of budgetary policy. This, of course, immediately raises the question of the democratic legitimacy of the organ that would be given the power to intervene in this highly sensitive area. Under the pressure of the present emergency, it has been decided that the supervisory powers of the Commission should be increased and more effective sanctions introduced. The idea is to accomplish this through the activation of a Community mechanism that need make no provision for supranational forms of democratic control, given that the Commission would act as referee to enforce the decisions of the Council (wherein the European citizens, as such, are not represented, but the national governments negotiate agreements). The assumptions underlying this strategy are, first, that the sovereign debt problem of less virtuous countries is due exclusively to a lack of volition on the part of the governments in question; second, that the problem of the democratic deficit can again be glossed over, in this case by involving the national parliaments in the approval (basically ex-post) of the decisions taken by the Council; and third — and this is the crucial assumption — that all this is actually workable: in other words that the states, under protection, can reduce their debts and make the structural reforms that are needed to boost their productivity, growth and competitiveness, thereby allowing a narrowing of the gap between the virtuous and fragile economies within the eurozone.
It goes without saying that all this is highly unrealistic. Under pressure from the crisis, indebted countries can certainly take steps to balance their current budget (i.e. make cuts and bring in austerity measures, and not just because they are incapable of coming up with anything better: the urgency imposed by the markets leaves little room for alternatives), but they do so at the expense of their capacity to invest and support the economy. And if this is all they do, then what is triggered is a vicious cycle, not a virtuous one. This is not to say that countries like Italy and Greece should not be taking this opportunity to set their accounts in order and, above all, to undertake a radical reorganisation of their politics and society. However, the necessary quantum leap is feasible only in a new political setting, i.e. not in a narrow national framework, but in the context of a process leading to the creation of a new democratic European state. What is more, the democratic deficit created by the restriction of national sovereignty in budgetary matters risks becoming untenable even for Germany. The boundaries that (as long as the nation remains the only democratic framework of reference) are imposed by the German Constitutional Court could in fact generate serious tensions: the conflict between democratic control left in the hands of a Bundestag entitled only to monitor German national interests and the growing need for European “government” could become explosive.
The third issue is directly linked to the second: the eurozone countries must find the instruments to promote, at European level, a plan for growth, development and employment. Precisely because the resources — not to mention, sometimes, the capacity — to address the issue of economic recovery are lacking at national level, yet economic recovery remains crucial for solving the debt problem, this plan must clearly be promoted at European level. To be successful, a European plan of structural investments designed to boost the economy in key sectors depends on the presence of essential political conditions: “minimum” conditions that, to date, have been absent in Europe. Over the past two decades, the European Commission has drawn up plans that could have provided strong foundations for the recovery of our continent, but they never got beyond the drawing board. The main reason for this is the failure of the states to invest directly, partly because these have been years of poor growth and limited funds, but above all because, in an area deeply integrated economically but divided politically, each state has preferred to wait for the others to make a move, so as to be able to enjoy the benefits to be gained from investments, without running the risks associated with being the first to make them.
Therefore, if a European plan is now to manage, at last, to move from the drawing board to reality, the first condition that must be met is that it be, in the main, financed by independent European funds. This raises the dual objectives of European own resources and a European budget offering (compared with the current EU budget) much more scope for structural investments. These are objectives that imply a political vision of the process of European construction and they are feasible only if the governments genuinely wish to steer Europe in the direction of a federal union. European own resources were already envisaged by the Treaties, but it is no surprise that, under the pressure of material difficulties, they were gradually eliminated. This left the EU budget reliant on the member states and their direct transfers, which effectively distorted its purpose (in this regard, the analysis contained in the report by three MEPs, Haug, Lamassoure and Verhofstadt, is crystal clear). The introduction of the power of taxation at European level corresponds to the laying of one of the foundation stones of a fiscal union (the other being the unification of the public debt): it is, therefore, a political act, acceptable and implementable only to the extent that there actually exists the political will to accomplish it.
Finally, the need to implement profound transformations in the European setting in order to allow the birth of an economic and fiscal union cannot be divorced from the need to adopt the instruments that will enable Europe to have a single foreign and security policy, and thus to assume the role (and responsibilities) of a true global power. The false solutions attempted by the Europeans in recent years, particularly the latest reforms set out in the Lisbon Treaty — the introduction of the role of High Representative of the Union for Foreign Affairs and Security Policy and of the possibility of structured cooperations for countries wanting closer integration in the field of defence —, have shown once again that unless the issue of political unity is definitively resolved (through pooling, at European level, of the national sovereignties) then all forms of interstate cooperation, however structured and detailed, will inevitably fail to produce the necessary results. Indeed, rhetoric aside, the EU’s dwindling influence on the global stage provides confirmation that it is in the political as well as in the economic sphere (given that the two are interlinked) that the future of our continent is at stake.
While it is true that any plan that might be implemented at this stage immediately brings us back to the problem of the Europeans’ lack of political unity, it is also crucial to appreciate that the framework in which this need for a plan could be addressed is not that of the 27-member European Union, but the smaller one of the Eurogroup. This is a decisive point, underlined by the fact that Germany and France are thinking about the need for a separate treaty for the eurozone countries, which would stand alongside the Lisbon Treaty. The real will to go beyond the limits of the European Union in its present form and to take the process of European unification to a whole new level can now be demonstrated, initially, only by abandoning the idea that the changes needed should stem from the framework of the 27-member EU and from reform of the existing Treaties. Indeed, unless we can overcome the belief that a future eurozone economic government must be designed and negotiated with countries, like Great Britain, that are not even part of it and are, moreover, opposed to any strengthening of the European institutions (retaining, what is more, the power of veto in the EU framework), then we clearly remain trapped by the same contradictions that have led the EU to spend an entire decade discussing nominal reforms of the Treaties, only to then produce the Lisbon Treaty, which was immediately seen to be totally inadequate.
Thus, the first decisive battle will be fought not in the context of an assembly of the 27 EU member states, convened to discuss reform of the Lisbon Treaty, but rather in that of a newly created European framework, narrower than that of the European Union — a framework determined by the need to face, together, the same deadly threat and by the will to react in unison.
Many genuine supporters of European unification, and also the EU institutions themselves, might well react with apprehension to this idea, seeing it as a seismic change liable to rock the ground beneath the foundations of the European edifice that has gradually grown up over the years. In actual fact, precisely because the crisis has shown that the EU equilibrium is unsustainable, resumption of the journey towards greater integration is now the only chance of saving that which Europe has already constructed; and this is possible only starting with the countries that are most closely interdependent and most ready, politically, to take this step.
At this point, those who represent the EU institutions and those who really believe in the validity of the Community model could best contribute by taking part in the discussions on the provisions that would be necessary in order to make the rules of the new Eurogroup Treaty compatible with the Treaty provisions already in force in Europe, and on the redefinition of the institutions within the new dual framework. These are ideas that, albeit in a very basic form, have already been studied in the past, particularly in the mid-1980s, when the Spinelli draft treaty on European Union and the opposition from Great Britain raised the question of the need to examine, should the founder members ratify a Treaty-Constitution, the compatibility between the proposed Union and the rest of the European Community, in which Great Britain, Denmark and Greece would undoubtedly have chosen to remain. In the mid-1990s, the problem was raised again, this time in political terms (as already recalled), in view of the imminent introduction of the euro and enlargementof the Union.
The conditions for the construction of a more cohesive Eurogroup within the context of the current EU were laid out in this very review as early as the 1980s (The Federalist, issue n. 2, 1986), albeit using the jargon of the time. Expressed in today’s language, these conditions are the following: a) the core group must remain open to those countries that might subsequently express the desire to join it, on condition that they respect its terms and are ready to accept any new rules it might introduce; b) the core group must guarantee, in its dealings with countries that are only EU members (i.e. not members of the Eurogroup), full compliance with EU regulations and procedures; c) it must be decided whether, in the context of intergovernmental and community relations within the European Union, the members of the Eurogroup will act uti singuli or through common institutions (it nevertheless being accepted that in majority votes by the Council of Ministers and in the establishment of the number of Commission members each country can have, the Eurogroup will always count in proportion to the number of its member states); d) the composition of the institutions must be reviewed, bearing in mind that while they must not be duplicated, they may fulfil a dual function, acting as organs both of the new Eurogroup and of the Union. The Parliament and the Commission, in particular, could retain their present composition, although in situations in which they are acting as organs of the Eurogroup, the representatives of those countries that are EU members only would become mere observers, with the right to speak but not to vote; e) the budget of the Eurogroup must be separate from that of the European Union (which should keep its existing budget) and financed by own resources.
Obviously, in addition to these key points, a great many other questions were, and still are, raised, presenting various thorny technical-legal problems; but, in truth, provided there is the political will to solve them, they are certainly not insurmountable ones. Furthermore, compared with the past when ideas of this kind were considered, today there are other factors that have come into play, making a procedure of this kind more plausible and necessary than before — namely, the unifying influence, for the Eurogroup, of the single currency and the urgency imposed by the present crisis. These factors have also made it necessary to think about drawing up the new treaty through a procedure that would initially exclude the non-eurozone countries — these would participate only in the definition of relations between the European Union and the Eurogroup — and, above all, would not give them the power of veto(which, under the terms of the existing Treaties, they retain).
One of the criticisms that can certainly be leveled at France and Germany’s proposal to create a new treaty for the eurozone is that such a treaty would be the result of yet another unilateral decision taken by the EU’s two leading countries (i.e. a product of the Franco-German “directorate”), and a further demonstration of their inability to go beyond intergovernmental-type solutions. This is, to an extent, a valid criticism. The European Union, precisely because it is still an intergovernmental-type organisation (as the German Constitutional Court never tires of repeating), acts basically in accordance with the initiatives and, above all, the will of the states. Therefore, the fact that today the impetus for change still has to come from the two countries that have traditionally been the main driving force of the process of European unification, and that the nature of this impetus is still confederal, must surely be taken as a sign of the real nature of today’s Europe, and of its political limits. But we must not be fooled: the new entity that would come into being could not be anything other than a sort of provisional government, bound to bring to light all the limits of a solution that fails to address the issue of democratic legitimacy and the transfer of sovereignty. Paradoxically, however, its creation makes the democratic constituent battle for the foundation of a true federation within the European Union a possibility once again.
This is the battle for which we must now prepare, and there is no time to lose: it is necessary to lend support to the creation of a new, narrower framework in the complete awareness that this is the groundwork prior to the real political struggle. The political and social forces, associations and civil society can no longer stand by and watch: the time for thinking about the problem in vague, future terms is over. In order to move beyond the current intergovernmental model of organisation and respond to the need to establish a new form of democratic legitimacy, it is necessary to get the people involved, and this means mobilising the consensus of the citizens around a specific project (that of a federation within the confederation) that is underpinned by strong and clearly defined political motives and ideals. It is the European people who will legitimise the new European state power that must be brought into being, thereby providing, at last, a point of stability. And, in the process of so doing, the people will gradually assume a true federal identity; indeed, the unfolding of this whole process should eventually lead the people to demand, from the national governments, the creation of European sovereignty, and thus the possibility of creating a new political power. The sooner politics and the social forces realise that they must strive actively to steer the mobilisation of public opinion in this direction, indicating an objective that is at once concrete and ideal, the sooner it will be possible to reverse the process of degeneration that is under way in our countries, a process that is destined to continue until a credible project for the future can once again be placed at the heart of political debate and struggle.
With this in mind, the federalists are preparing to launch a European Citizens’ Initiative (as provided for by the Lisbon Treaty) to request a European sustainable development plan for growth, economic recovery and employment, to be supported by funding for infrastructure investments drawn from EU own resources (revenue from European taxes). It is a proposal that tackles one of the issues that the Europeans cannot escape, and its real objective is the mounting of an initiative within the Eurogroup. But since, at present, we lack the tools to move towards a narrower framework than the present one, it is necessary to appeal to the European Union to highlight the importance and benefits of such a plan and, at the same time, the impossibility of implementing it in the current 27-member framework. The evolution of institutional debate will be one of the factors deciding the ambit in which the above request is pursued, but the basic fact remains the same: if there exists the determination to begin directing the will of the citizens towards European solutions capable of giving the Europeans a future once again, then there is no reason not to act now. There are no more excuses: the sooner this cultural and political leap forwards is taken and the work is started, the sooner we will be able to start averting the nightmare scenario of the definitive collapse of the European edifice.
The Federalist


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